THE PRESIDENT’S TRADE POLICY AGENDA

I. Overview and the 2004 Agenda................................................................................................. 1

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

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

III. Bilateral and Regional Negotiations........................................................................................ 105

A. Free Trade Agreements..................................................................................................... 105

1. Chile ....................................................................................................................... 105

2. Singapore ................................................................................................................ 106

3. Jordan ..................................................................................................................... 107

4. Israel ....................................................................................................................... 108

5. U.S.-Central American FTA (CAFTA) Negotiations............................................... 108

6. Australia FTA Negotiations..................................................................................... 109

7. Morocco FTA Negotiations..................................................................................... 110

8. Southern Africa FTA Negotiations.......................................................................... 110

B. Regional Initiatives ........................................................................................................... 110

1. Free Trade Area of the Americas ............................................................................. 110

2. Enterprise for ASEAN Initiative.............................................................................. 112

3. NAFTA.................................................................................................................... 113

4. MEFTA.................................................................................................................... 115

5. APEC ...................................................................................................................... 116

C. The Americas ................................................................................................................... 119

1. Canada .................................................................................................................... 119

2. Mexico .................................................................................................................... 122

3. Brazil and Southern Cone....................................................................................... 123

4. The Andean Community ........................................................................................ 126

5. Central America and the Caribbean........................................................................ 127

D. Western Europe................................................................................................................ 130

1. EU ........................................................................................................................... 130

2. EFTA ....................................................................................................................... 134

3. Turkey..................................................................................................................... 134

E. Central, Eastern and Southeast Europe............................................................................ 135

F. Russia and Newly Independent States............................................................................... 137

1. Normal Trade Relations Status................................................................................ 137

2. Intellectual Property Rights .................................................................................... 138

3. Generalized System of Preferences ......................................................................... 139

4. WTO Accession ...................................................................................................... 139

5. Bilateral Trade Agreements and Bilateral Investment Treaties ................................ 140

6. Country Specific Issues........................................................................................... 140

i

Table of Contents
G. Mediterranean/Middle East.............................................................................................. 141

1. Morocco.................................................................................................................. 141

2. Egypt....................................................................................................................... 141

3. Israel ....................................................................................................................... 142

4. Jordan ..................................................................................................................... 142

5. Trade and Investment Framework Agreements ...................................................... 143

6. WTO Accession ...................................................................................................... 143

7. Intellectual Property Rights .................................................................................... 143

8. Bahrain.................................................................................................................... 143

H. Asia and the Pacific.......................................................................................................... 143

1. Australia.................................................................................................................. 144

2. New Zealand........................................................................................................... 144

3. Association of Southeast Asian Nations.................................................................. 145

4. Republic of Korea ................................................................................................... 150

5. India........................................................................................................................ 158

6. Pakistan .................................................................................................................. 160

7. Afghanistan............................................................................................................. 160

8. People’s Republic of China...................................................................................... 161

9. Japan ....................................................................................................................... 165

10. Taiwan .................................................................................................................. 182

11. Hong Kong............................................................................................................ 184

12. Sri Lanka............................................................................................................... 184

I. Africa ................................................................................................................................. 184

1. SACU FTA............................................................................................................... 184

2. Implementing AGOA.............................................................................................. 184

3. Promoting Economic Reform, Growth and Development...................................... 186

4. Expanding Bilateral and Regional Trade and Investment Relationships................. 186

5. Facilitating Sub-Saharan Africa’s Integration into the Multilateral Trading System 188

IV. Other Multilateral Activities .................................................................................................... 189

A. Trade and the Environment.............................................................................................. 189

B. Trade and Labor................................................................................................................ 192

C. Organization for Economic Cooperation and Development............................................ 196

D. Semiconductor Agreement............................................................................................... 205

E. Steel Trade Policy ............................................................................................................. 205

ii | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
V. Trade Enforcement Activities .................................................................................................... 209

A. Enforcing U.S. Trade Agreements..................................................................................... 209

1. Overview................................................................................................................. 209

2. WTO Dispute Settlement........................................................................................ 210

3. Other Monitoring and Enforcement Activities ....................................................... 210

B. U.S. Trade Laws ................................................................................................................ 212

1. Section 301 ............................................................................................................. 212

2. Special 301.............................................................................................................. 214

3. Section 1377 Telecom ............................................................................................. 219

4. Antidumping Actions ............................................................................................. 219

5. Countervailing Duty Actions.................................................................................. 220

6. Import Practices (sections 337, 201, 421, China Textiles Safeguard)..................... 221

7. Trade Adjustment Assistance.................................................................................. 224

(A) Labor .......................................................................................................... 224

(B) Firms and Industries................................................................................... 225

8. Generalized System of Preferences ......................................................................... 226

VI. Trade Policy Development....................................................................................................... 229

A. Trade Capacity Building ................................................................................................... 229

1. FTAA-Hemispheric Cooperation ............................................................................ 230

2. Central America...................................................................................................... 231

3. Africa ...................................................................................................................... 231

B. Congressional Affairs........................................................................................................ 232

C. Private Sector Advisory System and Intergovernmental .................................................. 233

D. Policy Coordination......................................................................................................... 237

Annex I. U.S. Trade in 2003

Annex II. WTO Background

Annex III. List of Trade Agreements

TABLE OF CONTENTS | iii
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

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

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

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

iv | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

List of Frequently Used Acronyms
TABLE OF CONTENTS | v

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

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
The President’s 

Trade Policy Agenda
I. Overview and the 2004 Agenda 

Free trade creates higher-paying jobs for

American workers, more choices and lower

prices for hardworking families, reduces the cost

of doing business in the global economy, creates

new markets and new opportunities for U.S.

products and services, helps cut poverty and

raise incomes through economic growth, and

helps to deepen the roots of democracy and

stability in parts of the world that have seen too

little of both. This is an important time to be

pursuing those objectives. 

Trade and open markets contribute to healthy,

growing economies—U.S. exports accounted for

25 percent of U.S. economic growth over the past

decade and supported an estimated 12 million

jobs. The Bush Administration will continue to

move forward in 2004 to tear down barriers, cut

import taxes and red tape, work for a level

playing field, reduce poverty through growth,

and build new markets that will support higherpaying U.S. jobs. 

Three years ago, the Bush Administration initiated a new trade strategy for America: to pursue

reinforcing trade initiatives globally, regionally,

and bilaterally. Through an ambitious trade

agenda, the United States is working to secure

the benefits of open markets for American families, farmers, workers, consumers, and

businesses. By pursuing multiple free trade

initiatives, the United States is creating a

“competition for liberalization” that provides

leverage for openness in all negotiations, establishes models of success that can be used on

many fronts, and develops a fresh political

dynamic that puts free trade on the offensive.

This strategy is producing impressive results.

Just a few years ago, efforts to launch a new

global trade round had collapsed in the chaos of

the 1999 Seattle ministerial. The United States

was stymied on trade liberalization because

Presidential negotiating authority had lapsed in

1994, and three attempts to renew it had failed. 

In this challenging environment, President Bush

worked to reverse these setbacks. With 

bipartisan support, the President secured

Congressional approval of the Trade Act of 2002.

The United States played a key role in defining

and launching a new round of global trade talks

at the World Trade Organization (WTO) at Doha

in late 2001, achieving what could not be accomplished in Seattle. That same year we completed

the unfinished business of China’s and Taiwan’s

entry to the WTO, establishing a vital legal

framework for expanding U.S. exports and integrating China’s economy into a system of global

rules. Also in 2001, the Administration worked

with Congress to pass a Free Trade Agreement

(FTA) with Jordan and a basic trade accord with

Vietnam. After the 2000 election, President

Clinton had announced an interest in FTAs with

Singapore and Chile, and this Administration

followed up by negotiating the accords in 2002

and gaining Congressional approval in 2003.

The most important aspect of the Trade Act of

2002 was the renewal of the President’s trade

negotiating authority. In 2003, the

Administration put that authority to good use,

promoting global negotiations in the 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 free trade negotiations with

twelve more nations (concluding talks with four

of them), announcing its intention to begin free

trade 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.

1
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 Act, the African

Growth and Opportunity Act, 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

available to U.S. workers to nearly six billion

dollars over a five-year period, which will help

train American workers to compete for the jobs

of the future.

In 2004, the United States will seek to expand on

this record of accomplishment, with a trade liberalizing agenda that will be active and

comprehensive. While working to further open

markets and level the playing field for U.S.

exports of goods and services, the

Administration will also 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. 

Pressing Forward in the WTO

On the global front, the United States is pressing

an initiative to regain momentum in 2004.

Having played a key role in launching the Doha

Development Agenda, the United States followed

up by proposing the elimination of all global

tariffs on consumer and industrial goods by

2015, substantial cuts in farm tariffs and tradedistorting subsidies, and broad opening of

services markets. Indeed, we are the only major

country in the negotiations to put forward ambitious proposals in all three areas of the market

access negotiations. These proposals reflect

extensive consultations with Congress and the

private sector. In addition to laying the groundwork for bold market opening, the United States

took the lead in resolving the contentious accessto-medicines issue in August 2003. But at the

Cancun WTO meeting in September, some

wanted to pocket our offers on agriculture,

goods, and services without opening their own

markets, a position we will not accept. 

Despite the deadlock at Cancun, the United

States continued its leadership role in the Doha

negotiations. Only a few weeks after Cancun,

more than twenty diverse APEC economies

joined the United States in calling for a resumption of WTO negotiations, using the last Cancun

text as a point of departure. In December, the

WTO General Council completed its work for

the year with an important report by its

Chairman on the key issues that need to be

addressed if the Doha Development Agenda is to

move forward. 

With signs that many countries concluded that

the Cancun impasse was a lost opportunity, the

Administration, in January, put forward a

number of “common sense” suggestions to move

the Doha negotiations forward in 2004. In a letter

to all WTO ministers responsible for trade, the

United States offered a realistic assessment that

progress this year will depend on the willingness

of Members to focus on the core agenda of

market access for agriculture, manufactured

goods, and services. In agriculture, the letter

suggested that WTO Members agree to eliminate

agricultural export subsidies by a date certain,

agree to substantially decrease and harmonize

levels of trade-distorting domestic support, and

seek a substantial increase in real market access

opportunities both in developed and major

developing economies. The letter noted that the

United States continues to stand by its 2002

proposal to set a goal of total elimination of

trade-distorting agricultural subsidies and

barriers to market access. 

For manufactured goods, the United States

proposed that WTO Members pursue an ambitious tariff-cutting formula that includes

sufficient flexibility so that the methodology will

work for all economies. In addition to the tariffcutting formula, sectoral zero-tariff initiatives

would be an integral part of the negotiations, and

the United States suggested use of a “critical

2 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
mass” approach to define participation in

sectoral initiatives. The United States also

emphasized the consensus for addressing nontariff trade barriers in the Doha negotiations. 

In the important area of services, the United

States suggested that Ministers press for meaningful services offers from a majority of WTO

members, as well as make available technical

assistance to help developing countries present

offers. With regard to the so-called “Singapore

Issues,” the United States now suggests

proceeding solely with negotiations on trade

facilitation. 

The initial response to this initiative has been

very positive both from overseas and among

domestic constituencies, suggesting that 2004

need not be a lost year for the Doha WTO negotiations. As a follow-up step, the Administration

has initiated a series of consultations in Geneva

and in capitals to meet with Ministers and senior

officials, listen to ideas, and work for progress. 

Advancing Negotiations in the Free

Trade Area of the Americas

Since taking office, the Administration has been

working to transform years of unfocused Free

Trade Area of the Americas (FTAA) talks into a

real market-opening initiative, with a concentration on first removing the barriers that most

affect trade. The FTAA would be the largest free

trade zone in the world, covering 800 million

people with a combined gross domestic product

of over $13 trillion. It would expand U.S. access

to Western Hemisphere markets, where tariff

barriers are currently much higher than the U.S.

average of 2 percent, and where non-tariff

barriers are abundant. It is estimated that an

average family of four would see an income gain,

through greater purchasing power and higher

income, of more than $800 per year from goods

and services liberalization in the FTAA. 

At the Summit of the Americas in Quebec City in

2001, the United States led the FTAA into a

period of concrete market access negotiations,

and in February 2003, the Administration put

forward—on schedule—its market access offers

to FTAA partners in the areas of agriculture,

industrial goods, services, investment, and

government procurement. The U.S. market

access proposal was comprehensive and bold:

about 65 percent of U.S. imports of manufactured goods from the Hemisphere (not already

covered by NAFTA) would be duty-free immediately upon entry into force of FTAA, with all

Hemispheric duties on such products eliminated

by 2015. The U.S. offer would provide for immediate elimination of tariffs—if others reciprocate

—in key sectors such as textiles and apparel,

chemicals, construction and mining equipment,

electrical equipment, energy products, environmental products, information technology,

medical equipment, paper, steel, and wood products.

The U.S. offers of February 2003 demonstrate a

strong commitment to the FTAA, and built

momentum for focusing the negotiations on the

core issues of market access. In November 2003,

at the FTAA Ministerial in Miami co-chaired by

the United States and Brazil, the 34 nations of the

hemisphere agreed: to establish a common set of

rights and obligations covering all nine areas

under negotiation; that those nations that are

prepared to go further could do so through plurilateral arrangements in some areas; and on a

schedule to seek to complete the FTAA.

Spanning the Globe With Bilateral

Free Trade Agreements

Miami also provided the venue for the announcement of several new U.S. bilateral free trade

initiatives, capping a busy year on the bilateral

trade front. In 2003, the United States signed free

trade agreements with Chile and Singapore, and

those agreements won strong bipartisan majorities in Congress. These comprehensive,

state-of-the-art FTAs set modern rules for 21st

Century commerce and broke new ground in

areas such as services, e-commerce, intellectual

property protection, transparency, and the effective enforcement of environmental and labor

laws to help ensure a level playing field for

America’s workers. They also built on the experiI. OVERVIEW AND THE 2004 AGENDA | 3
ence of prior free trade agreements and will serve

as useful models to advance other U.S. bilateral

free trade initiatives in 2004. 

In Latin America, for example, the long-sought

FTA with Chile took effect on the tenth anniversary of NAFTA, and only two weeks after the

Administration concluded a U.S.-Central

America Free Trade Agreement (CAFTA) with El

Salvador, Guatemala, Honduras, and Nicaragua.

In early 2004, the United States completed Costa

Rica’s participation in CAFTA, and is now negotiating to include the Dominican Republic,

creating what would be the second-largest U.S.

export market in Latin America, behind only

Mexico. This year the United States intends to

launch new FTA negotiations with Panama,

Colombia, and Peru, and will continue preparatory work for FTA negotiations with Bolivia and

Ecuador, launching negotiations with those

nations when they are ready. Taken together, the

United States is on track to gain the benefits of

free trade with more than two-thirds of the

Western Hemisphere through sub-regional and

bilateral FTAs. 

In Southeast Asia and the Middle East, the

President has announced initiatives to offer

countries a step-by-step pathway to deeper trade

and economic relationships with the United

States. The Enterprise for ASEAN Initiative (EAI)

and the plan for a Middle East Free Trade Area

(MEFTA) both start by helping non-member

countries to join the WTO, strengthening the

global rules-based system. For some countries

further along the path toward an open economy,

the United States will negotiate Trade and

Investment Framework Agreements (TIFAs) and

Bilateral Investment Treaties (BITs). These

customized arrangements can be employed to

resolve trade and investment issues, to improve

performance in areas such as intellectual property rights and customs enforcement, and to lay

the groundwork for a possible FTA. 

President Bush announced the Enterprise for

ASEAN Initiative in October 2002. Significant

progress was made in 2003, and the stage has

been set for further achievements in 2004. With

the newly enacted Singapore FTA to serve as a

guidepost for free trade with ASEAN nations, the

President announced that he would begin negotiations for a comprehensive free trade agreement

with Thailand in the second quarter of 2004. At

the Cancun WTO Ministerial last September,

Cambodia completed its accession to the World

Trade Organization, taking another step in

joining the global rules-based economy. Spurred

by the progress of its neighbors, Vietnam is also

working toward WTO membership, building on

the foundation of a basic bilateral trade agreement with the United States that was enacted by

Congress in 2001. And the United States is using

TIFAs with the Philippines, Indonesia, and

Brunei to solve practical trade problems and

build closer bilateral trade ties. 

The Middle East Free Trade Area initiative,

announced by the President in May 2003, offers

a similar pathway for the Maghreb, the Gulf

states, and the Levant. In addition to helping

reforming countries become WTO Members, the

initiative will build on the FTAs with Jordan and

Israel; provide assistance to build trade capacity

and expand trade so countries can benefit from

integration into the global trading system; and

will launch, in consultation with Congress, new

bilateral free trade agreements with governments

committed to high standards and comprehensive

trade liberalization.

The U.S.-Jordan FTA entered into force in

December 2001, after the Administration

worked with members of both parties in the

House and Senate to prepare the way. As a result,

trade between the United States and Jordan has

nearly tripled in only three years. In 2003, the

Administration launched free trade negotiations

with Morocco, which are close to completion. In

January 2004, the United States began free trade

negotiations with Bahrain. These two moderate

Arab states have been leaders in reforming their

economies as well as their political systems. In

2004, the United States will continue its efforts to

bring Saudi Arabia into the WTO and will

expand its network of TIFAs and BITs

4 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
throughout the region. The United States has 10

TIFAs in the region, most recently signing agreements with Saudi Arabia, Kuwait, and Yemen. As

more countries in the Middle East pursue free

trade initiatives with the United States, the

Administration will work to integrate these

arrangements with the goal of creating a regionwide free trade area by 2013. The MEFTA

complements the President’s broader foreign

policy goals by bringing economic hope and

opportunity to the citizens of the Middle East.

In Africa, the African Growth and Opportunity

Act (AGOA)—enacted in 2000 and expanded in

2002—has created tangible incentives for

commercial and economic reform by providing

enhanced access to the U.S. market for products

from 38 eligible sub-Saharan nations.

Enhancements made in 2002 to the African

Growth and Opportunity Act—known as

“AGOA II”—substantially improved access for

imports from beneficiary sub-Saharan African

countries. To build on this success as called for in

the AGOA legislation, in 2003, the United States

launched FTA negotiations with the five countries of the Southern African Customs Union

(SACU): Botswana, Lesotho, Namibia, South

Africa, and Swaziland. The U.S.-SACU FTA will

be a first-of-its-kind agreement on the continent,

building U.S. ties with sub-Saharan Africa even

as it strengthens regional integration among the

SACU nations.

The U.S. strategy is to seek bilateral free trade

agreements with both developing and developed

nations. Negotiations with Australia were

launched in spring 2003 and concluded in

February 2004. The U.S.-Australia FTA achieves

the most significant immediate reduction of

industrial tariffs of any U.S. free trade agreement.

Therefore, once Congress enacts the FTA, the

agreement will provide immediate benefits for

America’s manufacturing workers and companies. More than 99 percent of U.S. exports of

manufactured goods to Australia will become

duty-free immediately upon entry into force of

the agreement. Manufactured goods currently

account for 93 percent of total U.S. goods exports

to Australia. U.S. manufacturers estimate that the

elimination of tariffs could result in $2 billion per

year in increased U.S. exports of manufactured

goods.

Ensuring a Level Playing Field with

China

Since China joined the WTO, it has become

America’s sixth-largest export market. U.S.

exports to China grew 75 percent over the last

three years, even as U.S. exports to the rest of the

world declined. China has become a major

consumer of U.S. manufactured exports, such as

electrical machinery and numerous types of

components and equipment. The market share of

U.S. service providers in China has also been

increasing rapidly in many sectors. Meanwhile,

growth in exports to China of agricultural products has been robust; for example, U.S. exports of

soybeans reached an all-time high in 2003, and

cotton exports were up 423 percent over 2002. 

In 2003, China’s progress in implementing its

WTO market-opening commitments slowed. In

response, senior Administration officials met

frequently with Chinese counterparts in

Washington, Beijing, and at the WTO in Geneva

to address shortcomings in China’s WTO compliance. They delivered a clear and consistent

message: China must increase the openness of its

market and treat U.S. goods and services fairly if

support in the United States for an open market

with China is to be maintained. 

As a result, China has taken steps to correct

systemic problems in its administration of the

tariff-rate quota (TRQ) system for bulk agricultural commodities, and relaxed certain market

constraints in soybeans and cotton trade,

allowing U.S. exporters to achieve record prices

and sales. China has also reduced capitalization

requirements in specific financial services

sectors, including opening the motor vehicle

financing sector. 

China’s large installment purchases of billions of

dollars of U.S. products—including soybeans,

cotton, and manufactured goods—during recent

I. OVERVIEW AND THE 2004 AGENDA | 5
purchasing missions bode well for 2004.

However, we continue to stress the need for

structural change that ensures ongoing, open,

and fair access—not reliance on one-off sales. 

The Administration will also employ the special

safeguard provisions applicable to China, as

appropriate, to help ease our adjustment process

to China’s WTO accession. For example, late last

year, the Administration invoked safeguard relief

on three textile products imported into the

United States from China following petitions

filed by the U.S. textile industry. The United

States continues to stand ready to use all available mechanisms to ease market disruptions

when the facts of a particular case warrant.

In 2004, the Administration will continue to

work hard to ensure that American intellectual

property rights are protected, that U.S. firms are

not subject to discriminatory taxation, that

market access commitments in areas such as

agriculture and financial services are fully met,

that China’s trading regime operates transparently, and that promises to grant trading and

distribution rights are implemented fully and on

time. The Administration will consult closely

with Congress and interested U.S. stakeholders

in continuing to press China for full WTO

compliance, taking further action when appropriate.

Promoting a Cleaner Environment

and Better Working Conditions 

The Chile and Singapore FTAs, which Congress

approved in 2003, use innovative new mechanisms to meet the labor and environmental

objectives set out by Congress in the Trade Act of

2002. Both agreements envision cooperative

projects to promote respect for international core

labor standards and to support environmental

protection and sound management of natural

resources. Both agreements also require that

parties effectively enforce their own domestic

environmental laws—an obligation enforceable

through dispute settlement procedures. 

The dispute settlement procedures of the new

FTAs apply to all obligations of the agreements

and set high standards for openness and transparency, such as 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 trade-enhancing remedies. 

The FTAs with the Central American countries,

Morocco, and Australia adopt labor and environmental provisions used in the Singapore and

Chile FTAs. In each case, the United States is

working to tailor them to the particular circumstances of each FTA partner. In Central America,

for example, the Administration has emphasized

trade capacity building projects to enhance the

awareness and enforcement of labor laws, and

has encouraged countries to work with the

International Labor Organization to identify

areas for improvement in labor laws and enforcement. In 2004, the Administration will continue

to use the TPA model to advance labor and environmental protections in trade agreements. 

Building New Bridges: Trade

Capacity Building 

The United States is the largest single-country

donor of trade-related technical assistance in the

world, reflecting its commitment to helping

developing countries participate fully in the

global trading system. U.S. trade capacity

building efforts stem from the belief that trade is

critical to the economic growth of both developed and developing countries. With an

increased capacity to take part in trade negotiations and to implement trade rules, developing

countries can achieve win-win results for themselves and their trading partners.

As the largest single-country donor, the United

States devotes substantial resources from USAID

and a dozen other agencies, totaling more than

$2.5 billion in funding for trade capacity

building activities (FY2000 through FY2003).

The United States provided $752 million in trade

6 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
capacity building activities in FY2003, up 18

percent from FY2002. 

The United States recognizes the need to build

the capacity of developing countries with which

it is negotiating free trade agreements. In the

CAFTA, FTAA and SACU FTA negotiations, the

United States established separate cooperative

groups on trade capacity building to define and

identify priority needs for trade-related development assistance. The United States also seeks to

give eligible countries the capacity to take advantage of preference programs such as AGOA. For

example, U.S. technical assistance linked to

AGOA assists eligible countries to develop

AGOA export strategies, establish linkages with

American businesses, and meet U.S. food safety

and other standards. 

Moving forward, the Administration will

continue to assist the developing world integrate

trade into development strategies. This will

include working with multilateral institutions

and private sector donors to promote initiatives

such as the FTAA’s Hemispheric Cooperation

Program and the WTO Technical Assistance Plan

and the Integrated Framework. As bilateral trade

negotiations are concluded, the United States

will assist trading partners to implement their

commitments and to manage their transition to

free trade. The Administration will also continue

to work with qualifying countries to maximize

the benefits of preference programs such as

AGOA, the Andean Trade Preference Act, the

Caribbean Basin Partnership Act, and the

Generalized System of Preferences.

In addition, the Bush Administration is emphasizing the important contributions that small

businesses make to the U.S. and global

economies. Small businesses are a powerful

source of jobs and innovation at home and an

engine of economic development abroad. By

helping to build bridges between American small

businesses and potential new trading partners,

these enterprises can become an integral part of

our larger trade capacity building strategy. In our

continuing work with the U.S. Small Business

Administration, our Office of Small Business

Affairs at the Office of the United States Trade

Representative has improved the lines of

communication between U.S. small businesses

and U.S. trade policy. Insuring that American

small business concerns are addressed in our

trade policy pursuits results in stronger agreements that help to create jobs at home and

abroad.

Monitoring and Enforcing Trade

Agreements

To maximize opportunities for American

workers, businesses, and farmers and maintain

support for open trade at home, the United States

must effectively enforce its trade laws and trade

agreements and advance the rule of law in international trade. In 2003, the Administration

successfully resolved trade disputes and aggressively monitored and enforced U.S. rights under

international trade agreements in ways that

benefit American producers, exporters, and

consumers. These efforts have produced important results in areas such as agriculture, textiles,

telecommunications, and the protection of intellectual property rights. 

In 2004, we will seek to resolve favorably other

trade disputes in a way that ensures a level

playing field for America’s interests. Among the

most prominent cases are agricultural biotechnology products with the European Union; the

Continued Dumping and Subsidy Offset Act

(CDSOA) with 11 complaining parties; telecommunications with Mexico; geographical

indications with the European Union; rice

antidumping duties with Mexico; the Foreign

Sales Corporation (FSC) WTO case brought by

the EU; and apples with Japan. In the Foreign

Sales Corporation and Continued Dumping and

Subsidy Offset Act cases, the Administration will

consult and work closely with the Congress to

determine an approach that will meet our WTO

obligations and promote the competitiveness of

U.S. industry.

I. OVERVIEW AND THE 2004 AGENDA | 7
The Administration will continue to pursue policies that strengthen opportunities for American

workers, farmers, and firms while helping build

domestic support for trade. In addition to rigorously monitoring and enforcing our

international trade agreements, we will maintain

our commitment to effectively enforcing U.S.

trade laws against unfair foreign trading practices. Such laws are particularly important

because the U.S. economy is one of the most

open in the world.

Conclusion

America’s agenda in 2004 is broad yet simple: to

push firmly forward toward the vision set out by

President Bush of “a world that trades in

freedom.” It is a vision of a world in which a

working family can save money on everyday

household items because trade agreements have

cut hidden import taxes. It is a vision of a world

in which a New York stockbroker, an Ohio

autoworker, or a Mississippi chicken farmer can

access markets in Costa Rica or Australia as

easily as in California or Alabama. It is a vision of

a world in which free trade opens minds as it

opens markets, encouraging democracy and

greater tolerance. And it is a vision of a world in

which hundreds of millions of people are lifted

from poverty through economic growth fueled

by trade. It’s a vision worth working for. 

Robert B. Zoellick

United States Trade Representative

March 1, 2004

8 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
II. The World Trade Organization

A. Introduction 

This chapter outlines the progress in the work

program of the World Trade Organization

(WTO), the work ahead for 2004, and the multilateral trade negotiations launched at Doha,

Qatar in November 2001. The United States

remains steadfast in its support of the rules-based

multilateral trading system of the WTO. As a key

architect of the postwar trading system and a

leader in the pursuit of successive rounds of trade

liberalizations, the United States shares a

common purpose with our WTO partners: to

obtain the expansion of economic opportunities

for the world’s citizens by reducing trade barriers.

A recent statement by the Bretton Woods institutions reflects the energy that the WTO can bring

to the global economy: “.... collectively reducing

barriers is the single most powerful tool that

countries, working together, can deploy to reduce

poverty and raise living standards.” 

The multilateral trade negotiations and the implementation of WTO Agreements remained at the

forefront of U.S. trade policy in 2003. Despite the

impasse at the WTO’s 5th Ministerial Conference

in September 2003 in advancing the Doha

Development Agenda (DDA), the year closed on

a more upbeat note. On December 15, General

Council Chairman Perez del Castillo outlined the

overall direction required to reinvigorate the

negotiating process in 2004—expressing his hope

that the sense of urgency evident during his postCancun consultations would quickly enable

governments in 2004 to put the negotiations back

on track. 2003 closed with all WTO Members

carefully reflecting on next steps. 

The objectives agreed in Doha remain a priority

in U.S. liberalization efforts. The WTO’s mandate

to reduce barriers and to provide a stable trading

system in order to raise standards of living and

reduce poverty continues to be an essential

element of the broader international economic

landscape. Given its magnitude and scope, the

potential of the DDA to transform world trade

commands priority attention.

The WTO and multilateral trading system are

constantly evolving. Members need to continue

to take responsibility for important institutional

improvements. Pursuant to the Uruguay Round

Agreements Act, the United States will continue

to press for increased transparency in WTO operations, in WTO negotiations and in Members’

trade policies. The WTO needs to expand public

access to dispute settlement proceedings, to

circulate panel decisions promptly, to encourage

more exchange with outside organizations and

continue to encourage timely and accurate

reporting by Members. 

The Doha Development Agenda 

The DDA covers six broad areas: agriculture,

non-agricultural market access, services, the socalled “Singapore issues” (transparency in

government procurement, trade facilitation,

investment and competition) and rules (trade

remedies), TRIPS, and development-related

issues. In addition to reviewing progress in the

negotiations overall, Box 1 below identifies the

issues for Ministerial consideration at the WTO’s

5th Ministerial Conference in Cancun Mexico.

The DDA in 2003 had an extensive negotiating

agenda and deadlines, but lack of progress in agriculture early in the year determined the overall

pace of the negotiating agenda. Delays by the

European Union in adopting, then translating, its

reform of its Common Agricultural Policy (CAP)

into WTO negotiating positions led to slowed

negotiations overall, and hardened disagreements in areas including the extent to which the

negotiating agenda should be broadened to

include the Singapore Issues, and whether there

was sufficient attention to development-related

1
issues. The EU’s agricultural reforms were not

agreed until late July 2003. As a result of U.S.

efforts, in August of 2003 agreement was reached

on the question of TRIPS/health and compulsory

licensing for countries with little or insufficient

manufacturing capacity—the resolution of which

all hoped would provide new impetus to the

Cancun meeting. Despite great efforts, Ministers

arrived at Cancun with less progress than had

been envisioned in the Doha Declaration.

Since the launch of the Doha Development

Round in 2001, the United States has tabled

seventy formal 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 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. As the experience at

the Cancun Ministerial clearly showed, this is

work that requires the focus, flexibility and

political will of all Members. The United States

is prepared to meet these requirements in order

2 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

Box 1

5th Ministerial Conference, Cancun, Mexico—September 2003

Tasks for Cancun from the Doha Declaration

Ministers agreed at the launch of the Doha Round to use the 5th Ministerial Conference 

as a midterm review of progress in the negotiations and provide any necessary political 

guidance on, including:

• Singapore issues: Take decisions by explicit consensus on modalities of negotiations

on Singapore issues (investment, competition, transparency in Government

Procurement and trade facilitation). 

• Agriculture negotiations: Members were to submit their initial offers (draft schedules

no later than date of Fifth Session). 

• TRIPS: Conclude negotiations on the establishment of a multilateral system of 

notification and registration of geographical indications for wines and spirits.

Receive reports: 

• from the Committee on Trade & Environment on issues in para. 32 with recommendations, where appropriate, for future action, including the desirability of negotiations; 

• on technical assistance and capacity building in the field of trade and environment; 

from General Council on:

• progress on those elements of the Work Program, which do not involve negotiations;

• the continued e-commerce work program;

• recommendations for action on small economies;

• progress in trade, debt and finance examination;

• progress in trade and technology transfer examination; 

from Director General on: 

• implementation and the adequacy of technical cooperation and capacity-building

commitments;
to reach an ambitious outcome in the DDA

negotiations, along with contributions of other

WTO Members.

Given the emphasis on development in the DDA,

the United States has led the effort to provide

unprecedented contributions to strengthen technical assistance and capacity building to ensure

the participation of all Members in the negotiations. 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.

The General Council and The Trade

Negotiations Committee Pursue The Doha

Development Agenda Preparations for the

Cancun Ministerial Meeting.

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 met regularly

throughout 2003 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

Council. The WTO Director-General serves as

Chair of the TNC, and worked closely with the

Chairman of the General Council, Ambassador

Carlos Perez del Castillo of Uruguay. The

Chairman of the General Council played a central

role in preparations for Cancun. 

At Doha, Ministers agreed to review progress at

the mid-point of the DDA negotiations and to

convene a Ministerial Conference in line with

Article IV of the Marrakesh Agreement

Establishing the WTO. Under Article IV, the

WTO is required to hold a ministerial conference

at least once every two years. Given the WTO’s

ongoing responsibility to supervise and assist 

in the implementation of commitments for 

the further liberalization of trade, and for the 

resolution of disputes, the Members believed it

would be important for Ministers to meet on a

regular basis in order to provide necessary direction and political oversight to the organization’s

work. The regular cycle of ministerial meetings

was an important innovation for the WTO. 

The Doha Agenda is heavily oriented towards

market access issues, with agricultural reform at

the heart of the negotiations. The DDA, along

with the day-to-day implementation of the rules

governing world trade, are an important part of

the Bush Administration’s overall trade strategy in

ensuring global growth and economic prosperity.

In addition to work on the DDA at Cancun, Trade

Ministers approved the accession protocols of

Nepal and Cambodia, the first least-developed

countries to join the WTO since its establishment

in 1995. Each government now must complete its

respective domestic ratification process to

complete membership.

In addition to the meetings convened in Geneva,

a series of informal ministerial-level meetings

were held in 2003 to engage ministers on the

issues. Various regional meetings, from APEC

ACP and Africa where the Doha negotiations

were the focus of attention and concern. A series

of developed and developing country informal

“mini-ministerials” were held in Tokyo, Paris,

Sharm-El-Sheik and Montreal to help shape the

issues for Cancun, and obtain ministerial direction. The Doha negotiations were also a topic at

various regional meetings, including APEC and

the G-8 Summit.

In late July, at an informal meeting in Montreal,

Canada, Ministers asked the United States and EU

to try to bridge the wide divergences in positions

on agriculture to help avoid an impasse at

Cancun. As a result, a framework paper was

presented to Members in Geneva ten days later.

Brazil, leading South Africa and ultimately a large

number of Latin American Members as well as

India, and China, formed a coalition known as

the G20 in opposition to the U.S.-EU framework.

These countries feared that the framework would

diminish the level of ambition for agricultural

II. THE WORLD TRADE ORGANIZATION | 3
reform, particularly the elimination of export

subsidies. As a result, they questioned the extent

to which developing countries should reduce

barriers and open their markets to trade. 

Chairman Perez del Castillo held consultations in

a variety of formats to pursue progress in the

negotiations. Working with inputs from the

Chairs of the negotiating bodies, the Chairman in

July 2003 developed a draft text for ministerial

consideration. This text was the subject of intensive discussion at the level of Heads of Delegation

and with the Trade Negotiations Committee.

While there was not a consensus on the text in

Geneva, the Chairman, as has been the case for

previous ministerial meetings, sent to ministers a

draft text on his responsibility. This text was the

point of departure for the discussions in Cancun,

Mexico as the ministerial meeting opened. At the

Ministerial meeting in Cancun, the process

further evolved with a proposed text from 

the Chairman of the Ministerial, Minister 

Luis-Ernesto Derbez of Mexico. 

The Cancun meeting ended in impasse after it

became clear that countries were not ready to

seriously negotiate liberalization in the key areas

of agricultural reform and market access, and

substantial divergences could not be bridged on

the so-called Singapore issues. Finally, although

cotton was not a specific agenda point on the

DDA agenda, African cotton producers focused

attention on their concerns in this sector as an

issue separate and apart from the agriculture

negotiations. 

Before concluding the Ministerial Conference in

September, Ministers instructed the General

Council Chair to consult with Members on

moving the DDA forward, building on the

progress secured at Cancun. America played a key

role in launching the Doha negotiations and

advanced them with our ambitious proposals,

and solved the contentious access-to-medicines

issue before the Cancún ministerial. After

Cancún, America suggested a resumption based

on the draft Cancún text, an idea that has won

widespread support around the world

The progress achieved at Cancun has subsequently

been the subject of discussion by negotiators in

Geneva. Specifically, the General Council

Chairman’s consultations post-Cancun focused

on four issues: agriculture, non-agricultural

market access (NAMA), the Singapore issues and

the treatment of cotton. Chairman Perez-delCastilo reported to Members on December 15

that while no breakthroughs had been achieved,

there appeared to be a greater readiness of all

Members to find a way forward. 

Prospects for 2004

Consultations will begin in January with the aim

of restarting the talks early in the new year. If

negotiations move forward, WTO members will

provide further direction to negotiators on how to

proceed on specific issues. Cancun confirmed

that developing countries now play an increasingly important role in the WTO and with that

increased participation comes new responsibility,

particularly for the most active trading nations.

Developing countries, which now comprise more

than two-thirds of the WTO’s membership, are at

the center of the new negotiations. Key issues in

2004 will include:

• Agriculture: Following on the bold proposals

tabled in 2002, the United States will

continue its intensive campaign for agricultural reform addressing each of the three

pillars of the negotiations: market access,

export subsidies and domestic support.

Progress in all three areas, to reduce and

harmonize the level of trade domestic

support, eliminate export subsidies and

create new market access opportunities in

the markets of developed and developing

countries will be essential to putting the

negotiations back on track.

• Non-Agricultural Market Access: The United

States will continue to press partners to

ensure that new market access opportunities

in the manufacturing sector will keep pace

with the progress on agriculture. The United

States will continue to reach out to trading

partners to find a means to ensure an 

4 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
ambitious market access result. The United

States tabled a far-reaching proposal to eliminate in two steps all duties on industrial and

consumer goods by 2015, utilizing a formulabased approach, and to address non-tariff

measures concurrent with the negotiations.

While this goal was not shared in 2003 by

others, it provides the United States an excellent platform to continue to pursue a big

outcome for U.S. exporters. Past U.S. efforts

have been instrumental in bringing about 

the Information Technology Agreement,

Chemical Harmonization and a host of other

initiatives aimed at eliminating barriers to

trade in non-agricultural products. 

• Services: An aggressive agenda for market

opening in services, including audio-visual

services, financial services (including insurance), express delivery services, energy

services and telecommunication services, is

being pursued in the negotiations. 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. Services are a great economic

multiplier. Currently only 40 WTO

Members have tabled offers, we will work

with others to expand the offers and seek

their improvement.

• Dispute Settlement: The United States has

led efforts to strengthen the rules governing

the settlement of disputes because 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 into 2004.

• WTO Rules: Utilizing the solid mandate

achieved at Doha, negotiations will focus on

strengthening the system of trade rules and

addressing 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 there are no major deadlines

in 2004, negotiators will continue to identify,

and more precisely define, issues of concern.

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 over-fishing. 

• Trade Facilitation (Customs Procedures):

Increasingly, WTO Members are convinced

that the key to developing their economies

and combating corruption is in strengthening the trade rules governing customs

procedures to ensure the free flow of goods

and services in the new just-in-time

economy. Strengthening these rules is the

aim of work in the WTO. Progress is crucial,

for example, to the success of our express

delivery industry. In 2004, WTO Members

will have to decide whether this area of

work, so essential to market access, will be

pursued in the negotiations. 

• Environment: The United States will 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. Along

with our work in market access and rules,

we will continue to be vigilant to ensure

that these negotiations are not used to

introduce protection under the guise of

safeguarding the environment. The U.S.

agenda is aimed at promoting growth, trade

and the environment.

• Competition and Investment: In both of these

areas, decisions will need to be taken about

how to proceed in light of the lack of

II. THE WORLD TRADE ORGANIZATION | 5
consensus at the Cancun Ministerial

Conference. Substantial resistance to pursuing

work of any kind on these issues remains,

particularly from developing countries.

• Transparency in Government Procurement:

Members in 2004 will need to determine

whether a transparency agreement will be a

contribution to the fight against corruption

in government purchasing, long an issue and

the subject of initiatives in other fora. 

• Trade and Development: An essential ingredient in the DDA has been a more intensive

program of technical assistance and capacity

building to integrate developing countries

into the trading system. In the coming year,

the United States will pursue cooperation

with the Bretton Woods institutions, and

ensure the effectiveness of the approximately

$18 million targeted for the Global Trust

Fund in 2004 to which the United States is a

major contributor.

• Implementation: The majority of so-called

implementation issues have been resolved

through consultations. Nonetheless,

outstanding issues remain, including the

treatment of rules issues, particularly traderelated investment measures and whether to

expand the negotiations in the TRIPS agreement regarding geographical indications

beyond wines and spirits. A consensus has

not emerged on these issues to date.

1. Special Session of the Committee

on Agriculture 

Status

At the Fourth WTO Ministerial Conference in

Doha, Qatar WTO Members agreed to an ambitious mandate for agriculture, including

“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.”

WTO Members also established an ambitious

negotiating timeline, calling for reform 

modalities, such as tariff and subsidy reduction

formulas, to be established no later than March

31, 2003 and submission of draft schedules of

specific commitments by the Fifth WTO

Ministerial Conference. However, the March

2003 deadline was missed and the Cancun

Ministerial concluded without an agreement. 

The WTO provides multilateral disciplines 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 impose disciplines on the

entire broad range of agricultural producing and

consuming Members. For example, absent a WTO

Agreement on Agriculture, there would be no

limits on European Union subsidization nor firm

commitments for access to the Japanese market.

Negotiations in the WTO provide the best hope to

open important markets for U.S. farm products

and reduce subsidized competition.

Major Issues in 2003

In 2003, the United States continued to take the

lead in calling for substantial reform of agricultural trade policies, across all Members and all

products. The United States has proposed

comprehensive reform by reducing high levels of

allowed protection and trade-distorting support

through formulas that reduce tariff and subsidy

disparities across countries, as well as strengthening WTO rules on a range of trade-related

measures. In addition, the United States has

proposed that WTO Members agree to eliminate

all trade-distorting subsidies and all tariffs by a

date certain. Members with heavily-distorted

agricultural sectors, such as the European Union

and Japan, have resisted substantial reform and

instead have called for marginal reductions in

protection and trade-distorting support while

also calling for new WTO provisions to legitimize

6 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

__________

1 Current Cairns Group Members are: Argentina, Australia, Bolivia, Brazil, Canada, Chile, Colombia, Costa Rica, Guatemala,

Indonesia, Malaysia, New Zealand, Paraguay, Philippines, South Africa, Thailand, and Uruguay.
measures oriented toward addressing non-trade

concerns. Developing countries, particularly

within the Cairns Group1

, have traditionally

looked to the agriculture negotiations as a principal means for achieving more meaningful trade

participation in the global economy. A new developing country coalition formed in 2003, now

referred to as the G-20, has called for substantial

reform of developed countries’ agricultural

domestic support and export subsidy policies

while proposing far less ambitious reforms in

developing countries’ market access policies. The

G-20 coalition includes traditionally importsensitive countries like India as well as typically

export-oriented Cairns group members, such as

Brazil and South Africa.

The Uruguay Round Agreement on Agriculture

provided the framework for further negotiations

in 2003. Negotiations on agriculture began in the

year 2000 and in the first two years some 45

proposals were submitted on behalf of 121

Members. In 2002, Members focused attention

on specific proposals for establishing reform

modalities, consistent with the Doha mandate.

The United States submitted the first comprehensive set of proposed modalities for reform,

helping set the discussions in Geneva on an

ambitious reform track. A number of other

Members, including the Cairns Group and other

developing countries, also submitted specific

modality proposals oriented toward substantial

reform. The European Union, Japan, and other

Members with high tariff and subsidy levels did

not come forward with specific or forthcoming

modality proposals, instead making general

proposals for marginal reform.

According to the ambitious negotiating timeline

set in Doha, Members were to agree on specific

reform modalities by March 31, 2003. Little

progress was made toward that goal because many

countries refused to move off of their original

positions. The chairman of the WTO Agriculture

Committee, Stuart Harbinson, attempted to meet

the March 2003 deadline by drafting modalities

covering all three pillars of reform and addressing

issues of special and differential treatment for

developing countries. Many Members disagreed

with a number of the elements of the draft

Harbinson text, and it did not serve to facilitate

consensus on a way forward in the negotiations.

In the wake of disagreement over the Harbinson

text, many WTO Members requested that the

United States and the EU work together to bridge

their differences. These members recognized that

some common understanding on a framework for

negotiations between the United States and the EU

was a necessary condition for moving forward in

agriculture. There was hope that steps toward

CAP reform undertaken by the European Union

would help them move forward with negotiations.

The United States and European Union negotiated

a joint framework paper that they presented on

August 13. The paper addressed key outstanding

issues between the EU and U.S., and reaffirmed

the objectives identified in the Doha Declaration.

It identified a number of formulae for implementing reduction commitments for tariffs and

subsidies, leaving the coefficients in the formulae

to be the subject of future negotiations. The agreement included, among other things:

• A “blended formula” for tariff reductions

that would require a harmonizing Swiss

formula for a certain percentage of tariff

lines, a Uruguay-round type average cut for

another percentage of lines, and tariff elimination for the remainder of tariff lines;

• A harmonizing approach to reducing the

most trade-distorting domestic support

(amber box), with greater efforts by countries

with higher trade-distorting subsidies; and 

• A framework for “reductions of, with a view

to phasing out,” export subsidies in parallel

with disciplines on export credits.

Several countries charged that the EU-U.S.

framework lacked ambition. The G20, which

emerged in the run-up to Cancun, were particularly vocal in advocating larger reductions in

domestic support and export subsidies by develII. THE WORLD TRADE ORGANIZATION | 7
oped countries, together with strong special and

differential provisions that would result in

minimal reform and market access commitments

by developing countries.

Going into the 5th WTO Ministerial in Cancun,

Mexico (September 2003), there were multiple

conflicting texts. In preparation for Cancun, the

General Council Chairman Perez del Castillo

incorporated substantial parts of the U.S.-EU

framework into a draft modalities framework.

The G20 tabled its own draft modalities framework. Four West African cotton-producing

countries tabled a proposal that targeted the 

U.S. cotton support program and called for 

compensation for their producers.

At Cancun, Chairman Derbez developed a draft

modalities text that sought to find common

ground among the divergent positions.

However, after five days of negotiations,

Ministers were unable to agree on how to

proceed in meeting the objectives mandated in

the Doha Development Agenda. The ministerial

closed without a final result.

No special sessions in Agriculture were held

after the Cancun Ministerial. The Derbez text 

remains the most recent stage of development in

establishing modalities for agricultural reform.

After a period of reflection and consultations

between Chairman Perez del Castillo and

members, on December 15, 2003 a General

Council meeting was held to take stock and find

a way forward. Members expressed a willingness

to reinvigorate the trade talks, and will most

likely resume negotiations early in 2004.

Prospects for 2004

In 2004, negotiations will need to focus on

establishing specific modalities so that

members can conclude the round. As talks

move forward, the United States will work to

increase the level of ambition that all countries

bring to all three pillars.

2. Special Session of the Council for

Trade in Services

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.

The Special Session met 4 times during 2003, in

March, May, July, and October.

Major Issues in 2003

The GATS negotiations entered a new phase in

2003 as WTO Members submitted initial negotiating offers consistent with the deadlines

established in the Doha Declaration. The United

States submitted its offer on March 31 and at the

same time made the offer public. A copy of the

initial U.S. GATS offer is available at:

www.ustr.gov/sectors/services/2003_03-31-

consolidated _offer.PDF. As of December 2003,

in addition to the United States, the following 39

WTO Members had submitted initial offers:

Japan, New Zealand, Australia, Korea, Uruguay,

Chinese Taipei, Canada, Norway, Paraguay,

Bahrain, Iceland, Liechtenstein, Panama,

Argentina, Switzerland, Senegal, Israel, Hong

Kong, Poland, St. Christopher & Nevis, EU,

Czech Republic, Macao, China, Mexico, Fiji,

Slovenia, Chile, Singapore, Slovak Republic,

Turkey, Sri Lanka, Guatemala, Peru, Thailand,

Bolivia, Colombia, China, Bulgaria, and India.

Discussions continued in 2003 on three provisions contained in the GATS that relate to the

negotiations. The GATS calls for an “assessment

8 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
of trade in services in overall terms and on a

sectoral basis with reference to the objectives of

this Agreement, including those set out in paragraph 1 of Article IV, Increasing Participation of

Developing Countries.” A number of WTO

Members have made written and oral presentations discussing the effects of services

liberalization. The United States submitted a

paper on this topic in March. The GATS also calls

for establishment of two sets of procedures. The

first, the Modalities for the Special Treatment for

Least-Developed Country Members, was

adopted by the Special Session in September. In

connection with the Modalities, at the request of

a number of LDCs, the United States expanded

on its obligations under Article IV of the GATS by

establishing more contact points in the developing world and distributed a list of those

contact points to be used by private-sector businesses in developing countries, to enhance their

exports of services to the United States. The

second set of procedures, “The Modalities for the

Treatment of Autonomous Liberalization,”

addresses the treatment of liberalization undertaken autonomously by Members since previous

negotiations, and was adopted by consensus at

the March meeting of the Special Session.

Several other issues were discussed at Special

Session meetings during 2003, including Mode 4

(temporary entry), following the introduction of a

paper on the subject by India and 14 co-sponsors

at the July meeting, and provisions on Special and

Differential Treatment of developing-country

Members. At the July meeting, the Chairman of

the Special Session took on board views from

Members, including the United States, to seek

new dates and mileposts in the Cancun text in

order to heighten the momentum and move the

services negotiations to the next phase.

Prospects for 2004

Sessions in Geneva will continue to include a

general meeting of the Special Session, followed

by bilateral meetings which allow Members the

opportunity to present and discuss their initial

negotiating offers, and other topics of concern.

Discussions in the general meeting and in the

bilateral negotiating sessions are expected to

continue on the topics noted above.

3. Negotiating Group on 

Non-Agricultural Market Access

Status

At the fourth WTO Ministerial Conference held

in Doha in 2001, Ministers agreed to launch nonagricultural market access (NAMA) negotiations

to reduce or eliminate non-tariff measures and

tariffs, including the reduction or elimination of

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 full reciprocity, but that negotiations should be comprehensive and without a

priori exclusions.

Major Issues in 2003

Negotiations on non-agricultural market access

in 2003 moved into a more active phase of work

and focused intensively on discussion of a wide

range of developed and developing member

proposals on how tariff and non-tariff barriers

(NTBs) should be liberalized (the “modalities”

for tariff and NTB liberalization). Proposals

ranged from employing traditional request-offer

approaches, to various proposals for formula

reductions and to the use of sectoral initiatives

such as those proposed in the Uruguay Round for

zero-zero elimination of tariffs or harmonization

of tariff rates to lower levels by all, or a subset of

participants. Many proposals called for a mix of

modalities to achieve the Doha objectives set out

above. These proposals varied dramatically on

their level of ambition and the degree to which

bound tariffs (which exceed applied levels in

many developing countries) would be reduced to

below current applied tariff levels, a test of the

degree to which real new market access can be

achieved in the negotiations.

II. THE WORLD TRADE ORGANIZATION | 9
As a general matter, all Members support the use

of a formula as at least one key component of the

liberalization modalities. Developing countries

generally support use of a formula that would

require developed countries to reduce tariffs

substantially, while permitting developing countries to reduce tariffs, but retain relatively high

levels of protection. Many countries also support

an ambitious sectoral component that would also

help deliver on the mandate to eliminate tariffs, as

appropriate. However, most developing countries

do not support mandatory participation in a

sectoral component, nor the use of a sectoral

component as an integral part of the modalities. 

In the lead up to the Cancun Ministerial, the

Chairman of the Negotiating Group presented

members with a proposed “framework” on

modalities, which outlined a number of ideas for

how the negotiations could be conducted,

reflecting his views on where consensus might lie.

The Chairman’s text was hotly debated. While

most members have indicated support for the

structure of the Chairman’s text, the detailed

proposals contained in the text, which involved a

mix of modalities, were not broadly accepted.

Efforts at Cancun to bridge differences did not

succeed, in part due to lack of agreement on other

issues in the negotiations (agriculture and the

Singapore issues). However, wide differences of

view also remain between developing countries,

and between developing and developed countries, on the level of ambition and the means to

achieve it, including how to preserve all aspects of

the Doha mandate, for example those relating to

less than full reciprocity. Most developed

Members and a number of developing Members,

such as Hong Kong, Singapore, Chile and Costa

Rica, support significant liberalization of both

developed and developing country markets in

order to ensure that global growth and development can advance effectively. However, many

developing countries have expressed the concern

that they cannot sustain significant tariff reductions due to concerns about revenue losses and

that significant liberalization of developed

country markets would erode existing tariff preferences they wish to retain. A number of

developing countries are prepared to make

concessions, but at this stage are reluctant to

commit to reducing their bound rates to the level

of their current applied rates. 

Prospects for 2004

In 2004, it will be necessary to find ways to bridge

the significant differences that exist between

Members on the modalities, to develop a framework for modalities, and then finalize the details

on the type of formula that will be used, and the

degree to which sectoral approaches will complement the formula approach in the negotiations.

The United States continues to seek an ambitious

approach that will deliver real market access in

key developed and developing country markets.

However, the U.S. position also supports

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. In

the second half of 2004, it is anticipated that

Members would negotiate and agree on the

specifics of modalities as well as prepare market

access offers.

4. Negotiating Group on Rules 

Status

In paragraph 28 of the Doha Declaration, the

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,

10 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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, but does not specify any deadline with

respect to the transition from the first phase to the

second phase. WTO Members have submitted a

total of 143 papers to the Rules Group thus far,

with the vast majority of them identifying issues

for discussion rather than making specific

proposals, although several Members submitted

specific proposals on particular issues in 2003.

Major Issues in 2003

The Rules Group held five formal meetings in

2003 (in February, March, May, June, and July)

under the Chairmanship of Ambassador Tim

Groser from New Zealand, as well as several

meetings informal with respect to its consideration of issues relating to regional trade

agreements. 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 trade 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 that

would guide U.S. proposals for the Rules

Negotiating Group: 

• 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

refined as part of these negotiations;

• Third, disciplines must be enhanced to

address more effectively underlying tradedistorting practices. Work has already begun

along these lines with respect to the steel

sector in discussions among the major steel

producing nations at the OECD, based on

the general recognition that marketdistorting practices have contributed to

global excess capacity; 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 was very active in the discussions in the

Rules Group in 2003, both in identifying specific

issues for consideration, and in raising questions

with respect to the issues raised by other Members. 

• Pursuant to the first principle, we have

repeatedly emphasized 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

have raised a number of questions to evaluate whether issues raised by other Members

are consistent with that mandate. We have

also identified particular issues relevant to

ensuring that these trade remedies remain

effective, such as addressing the problem of

circumvention of antidumping and countervailing duty orders, and 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, we have

identified a number of respects in which

investigatory procedures in antidumping

II. THE WORLD TRADE ORGANIZATION | 11
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 a major target of

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, we have

stressed the need to address trade-distorting

practices that are often the root causes of

unfair trade, and have made a number of

submissions to the Rules Group with respect

to the strengthening of subsidies disciplines

generally and the work ongoing in the

OECD addressing trade-distorting practices

in the steel sector.

• Pursuant to the fourth principle, we have

emphasized the importance of ensuring that

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 Trade

Remedies: The United States has thus far in its

submissions to the Rules Group identified over 

30 issues for discussion related to antidumping

and countervailing duty trade remedies, in accordance with the principles listed above. A group

calling itself the “Friends of Antidumping” has

also presented a series of papers identifying over

30 antidumping issues for discussion by the Rules

Group, following up with more detailed proposals

in 2003 on six of these issues. The “Friends” group

consists of Brazil, Chile, Colombia, Costa Rica,

Hong Kong, Israel, Japan, Korea, Mexico, Norway,

Singapore, Switzerland, Chinese Taipei, Thailand,

and Turkey, although not all of its members have

joined in each paper. From the issues that this

group has raised thus far, and from the proposals

they have submitted, it is clear that their goal is to

impose additional restrictions on the use of

antidumping. In addition to the submissions by

this group and the United States, Argentina,

Australia, Brazil, Canada, China, Egypt, the

European Communities, Hong Kong China,

India, Japan, Korea, Morocco, New Zealand,

Venezuela, and by a group of 18 textile-exporting

Members also submitted papers on antidumping

issues in 2003. The United States has been

actively engaged in addressing the submissions

from this group and other Members, posing

written questions with respect to many of them,

and seeking to ensure that the Doha mandate for

the Rules Group is fulfilled.

Subsidies: In 2003, the United States submitted

its second subsidy-specific paper to the Rules

Group, advocating a number of ways in which the

existing rules should be strengthened, including

the prohibition of additional types of subsidies;

tougher rules on indirect subsidies and government investment in private sector companies; and

changes to the rules on government pricing of

natural resources. The United States also raised

the issue of the different treatment under the

Subsidies Agreement of indirect and direct taxes. 

Additional substantive papers on subsidies issues

were submitted in 2003 by India, Canada and

Australia, and by Venezuela and Cuba jointly.

India, in its second substantive subsidy paper,

raised several issues regarding duty drawback and

indirect tax programs and the definition of

“export competitive” under Article 27 of the

Subsidies Agreement. The Canadian and

Australian papers argued for the clarification of

several issues that have been subject to WTO

dispute settlement proceedings. Venezuela and

Cuba advocated making certain types of subsidies

non-actionable, in particular certain types of

subsidies provided by developing countries. 

Fisheries Subsidies: The United States played a

major role in advancing the discussion of fisheries

subsidies reform in the Rules Group in 2003,

working closely with a broad coalition of developed and developing countries, including

Australia, Chile, Ecuador, Iceland, New Zealand,

Peru and the Philippines. After submitting two

12 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
papers in 2002 reviewing the problems caused by

fisheries subsidies, the United States submitted a

paper in April 2003 seeking to move the discussion to consideration of possible solutions,

advocating stronger rules to remedy the

economic and environmental damage from overfishing. Among the ideas presented in the U.S.

paper were: possible expansion of the category of

subsidies prohibited under WTO rules to include

fisheries subsidies that directly promote overcapacity and overfishing, or have other

trade-distorting effects; improvements to the

quality of fisheries subsidy notifications under

WTO rules; and ways to draw upon relevant

expertise in other international organizations and

obtain the views of non-governmental groups.

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. 

Additional submissions in 2003 in support of

strengthening disciplines on fisheries subsidies

were made by the European Union and Chile, and

by Argentina, Chile, New Zealand, Norway and

Peru in a joint submission. However, Japan and

Korea have continued to dispute that disciplines

on fisheries subsidies should be strengthened,

arguing that it has not been demonstrated that

fisheries subsidies, rather than poor fishery

management, have led to the present poor state of

the world’s fisheries. Additional submissions

were made by China and by a group of eight small

coastal state Members, advocating special and

differential treatment with respect to fisheries

subsidies for 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

2003, the discussion on RTAs was divided into

“transparency” and “ systemic” issues. After

finding more common ground on the need for

improved transparency in the discussions, the

Rules Group focused on these issues with the

understanding that work on systemic issues

would be revisited at a future date.

The United States considers that the Group’s

work on transparency thus far has been of value,

given the need to improve the effectiveness of the

current WTO system for reviewing and analyzing

trade agreements. Some of the proposals contemplated in the Rules Group would put the

Secretariat to work systematically compiling

information from Member submissions on each

agreement. In 2003, Members focused on when,

how and to what extent Members should notify

the WTO of the provisions of an RTA, and how

the WTO can best review these provisions. Some

developing country Members, citing the GATT

“Enabling Clause” decision of 1979 (GATT

Decision on Differential and More Favorable

Treatment, Reciprocity and Fuller Participation of

Developing Countries), have opposed applying

strengthened reporting and review disciplines to

preferential agreements among them. Some

European Members have argued for “grandfathering” preexisting RTAs so as to exempt them

from some or all new disciplines on reporting and

review that may emerge from the negotiations.

On substantive or “systemic” issues, previous

work within the WTO Committee on Regional

Trade Agreements identified many of the issues

encompassed by the Doha mandate on RTAs. The

WTO Secretariat also prepared a synopsis of these

substantive issues. This work has informed the

discussions in the Rules Group on 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. 

Papers on RTA issues submitted to the Rules

Group by Australia, Chile, the European Union,

Hong Kong China, Korea, India, New Zealand

and Turkey have also contributed to the discusII. THE WORLD TRADE ORGANIZATION | 13
sions. The United States has been an active 

participant in the RTA discussions in the Group.

Special and Differential Treatment Proposals: A

list of proposals by certain developing and least

developed country Members for special and

differential treatment on issues pertaining to

antidumping, subsidies, and regional trade agreements was referred by the Chairman of the

General Council to the Rules Group in 2003. The

Group had very limited discussion of these

proposals at its meetings in 2003, largely because

the sponsors of the proposals were in most cases

unable to attend the meetings and present their

proposals. These proposals will remain on the

agenda for the Rules Group.

Prospects for 2004

It is expected that the process of issue-identification in the Rules Group will continue in 2004, as

well as consideration of specific proposals as they

are submitted. 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 in 2003

with respect to strengthening the existing subsidies rules, and improving WTO disciplines on

harmful fisheries subsidies. On RTAs, a more

focused discussion of possible procedural

improvements within the WTO to enhance transparency is likely in 2004.

5. Special Session of the Committee

on Trade and Environment 

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 2003

The CTE in Special Session met three times in

2003. All three formal meetings took place prior

to the Fifth Ministerial in Cancun. At each of

these meetings, the CTE in Special Session

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 set out in

MEAs (with specific reference to the applicability of such existing WTO rules as among

parties to such MEAs and without prejudice

to the WTO rights of Members that are not

parties to any MEA in question);

(ii) procedures for regular information exchange

between MEA secretariats and relevant WTO

committees, and the criteria for granting

observer status; and

(iii)the reduction or, as appropriate, elimination

of tariff and non-tariff barriers to environmental goods and services.

MEA Specific Trade Obligations and WTO Rules:

During the second year of negotiations under this

mandate, discussions generally settled into a

phased approach, with initial focus on the

specific parameters of the mandate and analysis of

provisions in MEAs that are covered by it. While

this did not preclude more conceptual discussions on the MEA-WTO relationship, the large

majority of delegations resisted any premature

consideration of potential results in the negotiations. Most delegations expressed readiness to

focus attention on provisions in six MEAs that the

United States had identified as containing

“specific trade obligations” covered under the

Doha mandate. These six MEAs are: (i) the

Convention on International Trade in

Endangered Species; (ii) the Montreal Protocol

on Ozone Depleting Substances; (iii) the Basel

Convention on Hazardous Wastes; (iv) the

Cartagena Protocol on Biosafety; (v) the

Rotterdam Convention on Prior Informed

Consent; and (vi) the Stockholm Convention on

Persistent Organic Pollutants. Additionally, there

was a high degree of support for a U.S. suggestion

that the CTE in Special Session afford Committee

Members the opportunity to provide information

on their experiences with respect to negotiation

14 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
and implementation of specific trade obligations

in these MEAs in light of WTO rules.

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

WTO parallel events at meetings of the conferences of the parties (COPs) of MEAs; organizing

joint WTO, UNEP and MEA technical assistance

and capacity building projects; promoting more

regular exchange of documents between secretariats; and otherwise 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 CTE Special

Session meetings. With respect to a more permanent status, a number of delegations expressed

the view that the issue of criteria for ownership is

dependent on an outcome in ongoing General

Council and TNC deliberations.

Environmental Goods and Services: Members

engaged in more detailed discussions in the CTE

in Special Session 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,

such as a proposal from Qatar to include clean

energy production technologies in the definition.

The United States submitted a paper on the practical considerations that affected development of

the APEC list and the lessons that could be drawn

from this earlier exercise. The United States

followed up with a proposal on modalities for

negotiations on environmental goods. This

proposal suggested that there could be a flexible

approach to the definition involving a core group

of goods for which all Members would make tariff

and non-tariff concessions and a complementary

list that would not require full participation.

Reactions from preliminary discussions of the

U.S. paper, held just before the Cancun

Ministerial, were quite positive. 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

Committee in Trade in Services in Special Session.

In addition to the three CTE Special Session meetings, the CTE also met in Regular Session four

times during 2003, 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.

Prospects for 2004

Following a resumption of Doha negotiations, the

CTE in Special Session is likely to pick up where it

left off. Under sub-paragraph 31(i), efforts may be

limited to obtaining a clearer picture of whether

there are specific problems that could be practically addressed on the basis of the approach set

forth in the U.S. paper. It is quite possible that

negotiations under sub-paragraph 31(ii) could

pick up, particularly if it becomes more clear that

eventual results under sub-paragraph 31(i) are

likely to be limited in scope. Increased information exchange between MEAs and the WTO and

more predictable observer status could go a long

ways in ensuring that the two systems of international obligations remain compatible and

mutually supportive. Finally, the CTE in Special

Session is likely to engage in further discussions of

ideas put forward by the United States regarding

modalities for environmental goods. The CTE will

remain the forum to highlight 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 and a cleaner environment.

II. THE WORLD TRADE ORGANIZATION | 15
6. Special Session of the Dispute

Settlement Body

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.”

Major Issues in 2003

The Special Session of the DSB met frequently

during 2003 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.

Discussions intensified in 2003 in order to

conclude discussions by May 2003. Members

conducted a review of 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. The Chair of the

Special Session offered a draft text for consideration by the Members. Notwithstanding these

efforts, Members were unable to conclude

discussions. In July, the General Council decided

that Members should seek to complete 

discussions by May 2004.

The United States 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 briefs and panel reports. In 

addition to open hearings, public briefs, 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 specific options

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 2004

In 2004, Members will continue to work with a

view to the May 2004 target date to complete the

review of the DSU. The Chairman of the DSU

review has requested that Members submit

revised draft legal text early in 2004. Members

will be meeting monthly in multi-day sessions

through the end of May in an effort to complete

their work.

7. Special Session of the Council for

Trade-Related Aspects of Intellectual

Property Rights (TRIPS) 

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. This is the

16 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
only issue before the Special Session of the

Council. As no consensus on the system or other

issues emerged at the Fifth Ministerial or in

2003, it is expected that negotiating groups 

will be reactivated early in 2004, and that this 

negotiating mandate will be extended.

Major Issues in 2003

During 2003, 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,

Taiwan, 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. 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

Union 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) 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

EU proposal. 

Prior to the April 2003 meeting, the Chairman of

the Special Session issued a note by the Chairman

containing a Draft Text of Multilateral System of

Notification and Registration of Geographical

Indications for Wines and Spirits (JOB(03)/75.

This text was criticized by supporters of the Joint

Proposal as going beyond the mandate of the

negotiations, especially with regard to participation in the system and legal effect. 

Prospects for 2004

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 several

delegations had raised comments and questions

on his draft text, and that positions continue to be

quite divided. He noted that profound differences

exist with respect to the legal effect of registrations, international mechanisms for settling

differences regarding geographical indications

and participation. 

The United States will aggressively pursue additional support for the Joint Proposal in the coming

year, so that the negotiations can be completed.

II. THE WORLD TRADE ORGANIZATION | 17
8. Special Session of the Committee

on Trade and Development 

Status

In February 2002, the Trade Negotiating

Committee convened a Special Session of the

Committee on Trade and Development (CTD) 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.” The

Special Session is responsible for reviewing all

existing special and differential treatment provisions available to developing-country Members.

Under 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 for

consideration at the Cancun Ministerial, where

no decisions were taken on S&D.

Major Issues in 2003

The CTD Special Session met in January and

February 2003 to continue work under its DDA

mandate to review the S&D provisions Debate

was lively, particularly with regard to consideration of more than 80 Agreement-specific

proposals by various developing-country

members which, in their originally-proposed

form, entailed reopening Agreements and revisiting the Uruguay Round’s overall balance of

obligations. By the February 2003 General

Council session, the CTD Special Session had not

completed its work. In lieu of tabling a final

package of recommendations, the CTD instead

submitted a progress report to the General

Council that included those recommendations

achieved to that point. The General Council

decided that work would continue through

deliberations by heads of delegations. United

States helped advanced this next phase of the

S&D review by submitting a proposal for an

improved process for such deliberations. The

renewed effort by heads of delegation in the

Spring and Summer of 2003 led to the completion of a set of recommendations that were later

submitted by the Chairman of the General

Council for adoption at the Cancun Ministerial,

although no decision was taken on these 

recommendations at the Cancun Ministerial.

Prospects for 2004

A resumption of Doha Round negotiations would

ultimately include efforts by Committee

Members to complete the S&D review under the

DDA mandate. Discussions to date have led to

crafting solutions reflecting convergence on a

number of agreement-specific issues put forward.

However, there remain a number of areas that will

require more in-depth discussion as the DDA

advances, in particular with regard to a more

broadly-based assessment of S&D as it pertains to

the fact that developing-country Members often

present unique individual situations that may not

be best addressed by a ‘one-size-fits-all’ approach.

The CTD Special Session has held only preliminary discussions on how S&D treatment and

differentiation among various levels of development should be incorporated into the architecture

of the WTO, and with regard to the nature of a

future mechanism for monitoring implementation and effectiveness of S&D treatment.

C. Work Programs established

under the Doha Development

Agenda 

1. Working Group on Transparency

in Government Procurement

Status

Leading up to the Cancun Ministerial, the

Working Group on Transparency in Government

Procurement (Working Group) continued work

on development of elements of an agreement on

transparency in government procurement.

However, at the close of 2003, it remained unclear

as to whether and how work will continue on this

important topic in the WTO. General Council

18 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Chairman Perez del Castillo, in his report of

December 15, 2003, suggested that work should

continue with the aim of reaching agreement on

modalities for negotiations of an agreement on

transparency in government procurement. 

Major Issues in 2003 

The Working Group held two formal meetings in

February and June 2003, in which it continued to

make progress on identifying the key substantive

elements of a potential agreement on transparency in government procurement. The

Working Group particularly focused on two

potential elements of an agreement that several

Members, in particular developing countries,

have singled out as an area of particular concern.

Both elements relate to the enforcement of an

agreement: domestic review procedures and the

application of WTO dispute settlement procedures. The United States made a written

submission to the Working Group in 2003 to

address these two potential elements.

The U.S. submission and the discussions of the

issue in the Working Group pointed out that an

agreement on transparency in government

procurement could accommodate different

Members existing independent administrative or

judicial tribunals and review procedures, and that

an agreement could be tailored to preclude the

challenge of individual contract awards under the

DSU. In addition, transition periods could be

used to phase-in application by developing countries of certain provisions of an agreement,

including application of the DSU.

The Working Group’s discussions confirmed that

many WTO Members consider these elements to

be fundamental to ensuring efficient and accountable procurement systems and have already

incorporated these elements, in their existing

procurement laws, regulations, and practices.

The draft ministerial text presented to Ministers at

the Cancun Ministerial reaffirmed that negotiations of a multilateral agreement on transparency

in government procurement would be limited to

the transparency aspects and would not restrict

the ability of countries to give preferences to

domestic supplies and suppliers. It also provided

that such an agreement would cover only procurements above certain value thresholds (to be

negotiated), and that coverage beyond goods and

central government entities was not prejudged. It

also stated that applicability of the DSU was not

prejudged, except that individual contract awards

would not be subject to the WTO dispute settlement system. In addition, the draft text reaffirmed

that negotiations would take into account participants’ development priorities and reiterated the

commitment to provide technical assistance.

Prospects for 2004

Regardless of how the Doha negotiations proceed,

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

bilateral FTAs. In addition, the United States will

continue to work to enhance the transparency

provisions of the plurilateral WTO Government

Procurement Agreement (GPA).

2. Trade Facilitation

Status

The Fourth Ministerial Conference at Doha

established an ambitious work program on Trade

Facilitation, including a mandate for the Council

on Trade in Goods to “review and as appropriate,

clarify and improve relevant aspects of Article V,

VIII, and X of GATT 1994 and identify the trade

facilitation needs and priorities of Members, in

particular developing and least developed countries.” At Doha, it was agreed that negotiations

on Trade Facilitation would take place after the

Fifth Ministerial Conference, based upon a decision to be taken at that Ministerial on the

modalities of negotiations.

II. THE WORLD TRADE ORGANIZATION | 19
Major Issues in 2003

In 2003, the Council for Trade in Goods (CTG)

held two formal sessions on Trade Facilitation

before the Cancun Ministerial in September.

There was a continuing consensus that systemic

reforms related to increased transparency and

efficiency in the conduct of border transactions

would increase trading opportunities and

diminish corruption, while providing the additional benefit of enhancing administrative

capabilities that ensure effective compliance with

various customs-related requirements, ranging

from the environment to security. Much of the

discussion was devoted to developing country

concerns, with key submissions by Canada, Japan

and the United States. In particular, a submission

by the United States on Special and Differential

Treatment fostered a robust exchange of views

and elicited a wide range of positive responses to

a proposed three point approach to (1) deal with

varied needs and abilities of Members to implement results of negotiations through

individualized transition periods; (2) create

workable partnerships among Members and

other institutions to support technical assistance

needs; and (3) ensure effective enforcement of

prospective Trade Facilitation commitments.

At the Cancun Ministerial Conference, no decision was taken on commencing negotiations on

Trade Facilitation. The United States joined many

others in supporting elements of the draft

Ministerial Declaration text put forward by the

Chairman of the Conference which would have

launched negotiations on Trade Facilitation,

leading to the clarification and improvement of

GATT Articles V, VIII and X.

Prospects for 2004

Notwithstanding the overall impasse at the

Cancun Ministerial Conference, there emerged

new broad-based support for commencing negotiations on Trade Facilitation. While the direction

and pace of moving forward on Trade Facilitation

will likely be contingent on the more general

advancement of the Doha Agenda, at Cancun a

number of previously-resisting developing

country Members began to openly acknowledge

the merit of a launch of negotiations. While the

Cancun Ministerial conference featured strident

opposition to commencing negotiations from a

number of developing countries, particularly

those from Africa, a number of such Members

have subsequently signaled informally that the

Cancun position was a generalized approach

driven by strong negative views relating specifically to several other so-called Singapore issues,

rather than Trade Facilitation.

Many developing countries have joined the

United States and other Members in the view that

achieving a negotiated agreement on Trade

Facilitation could be one of the most important

development-related achievements emerging

from the Doha Development Agenda. A broad

array of development levels can also be seen

among the members of the so-called “Colorado

Group,” which has worked together for several

years toward a launch of WTO negotiations on

Trade Facilitation. Members of the Colorado

Group include: 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.

India and a few other Members have suggested

that future WTO work on Trade Facilitation

should not lead to new and strengthened WTO

disciplines, but should only aim at non-binding

or voluntary results. The United States is joined

by many other Members in citing experience that

shows how a rules-based border environment is

an essential element for all Members in securing

market access gains, and how such improvements can serve in particular to maximize

opportunities for south-south trade. A number of

developing countries have also joined the United

States in recognizing that small and medium size

enterprises (SMEs) have become important

stakeholders in advancing WTO agenda in the

area of Trade Facilitation. SMEs are poised to

take advantage of opportunities provided by the

digital economy and ever-improving efficiencies

in the movement of goods, while at the same time

are particularly disadvantaged when border

procedures are opaque and overly burdensome. 

20 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
3. Working Group on Trade and

Competition Policy 

Status

In 2003, the WTO Working Group on the

Interaction between Trade and Competition

Policy (the “Working Group”) held its seventh

year of work under the oversight of the WTO

General Council. 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 anticompetitive 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. This framework

continued to serve as the basis of the Working

Group’s work until the Doha Ministerial

Conference in 2001.

In the November 2001 Doha Ministerial

Declaration, the Ministers agreed 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. The Ministerial Declaration

provided that work leading up to the Fifth Session

would focus on the clarification of: core principles, including transparency, non-discrimination

and procedural fairness; (2) provisions on hardcore cartels; modalities for voluntary

cooperation; and support for progressive reinforcement of competition institutions in

developing countries through capacity building.

The Ministers recognized the needs of developing

and least developed countries for technical assistance and capacity building in this area, and

pledged to work in cooperation with other intergovernmental organizations, including

UNCTAD, to provide assistance to respond to

these needs.

Ministers were unable to reach agreement on

trade and competition policy at the Cancun

Ministerial. As of year-end 2003 there has not

been agreement on a new mandate for further

work by the Working Group, and it is not clear

whether the Working Group will continue its

work in 2004, and, if so, what its mandate will be. 

Major Issues in 2003

The Working Group held two meetings in

February and May 2003. The Working Group

continued to organize its work on the basis of

written contributions from Members, supplemented by discussion and commentary offered by

delegations at the meetings and, where requested,

factual information and analysis from the WTO

Secretariat and observer organizations such as the

OECD and UNCTAD. As in 2002, the Working

Group’s discussions focused on the issues specified in paragraphs 24 and 25 of the Doha

Declaration—technical assistance and capacity

building; provisions on hardcore cartels and

modalities for voluntary cooperation; and core

principles, including transparency, non-discrimination and procedural fairness. 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. In 2003, seventeen written

submissions were contributed by twelve

Members (counting the European Union and its

15 Member States as one contributor): Australia,

Canada, China, Cuba, the European Union, Hong

Kong China, Japan, Kenya, Korea, Kuwait,

Malaysia, and the United States. 

Despite the extensive work conducted on these

issues, there remain major differences among

Members as to how to proceed on trade and

competition policy. The European Union’s

submissions to the Working Group advocated a

multilateral WTO agreement on 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

II. THE WORLD TRADE ORGANIZATION | 21
multilateral agreement, stating that they did not

want to be required to have a competition law and

authority until they were ready. The United States

played an active role in the Working Group,

submitting a paper in May on the benefits for all

Members of a possible WTO competition “peer

review” process. 

These divergent viewpoints expressed in the

Working Group were reiterated during preparations for the Cancun Ministerial. In light of these

differences in views, the revised draft Ministerial

text circulated in Cancun called for further clarification of the issues in the Working Group,

including consideration of possible modalities for

negotiations, with the Working Group to report

to the General Council by a specified date.

However, as noted above, Ministers were ultimately unable to reach agreement on trade and

competition policy. 

Prospects for 2004

Given the absence of Ministerial direction at

Cancun for further work on trade and competition policy, it is not clear whether the Working

Group will continue its work in 2004, and, if so,

what its mandate will be.

4. Working Group on Trade and

Investment

Status

The Working Group on Trade and Investment

(WGTI) was established at the Singapore

Ministerial in 1996. At the conclusion of the Doha

meeting, 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, U.S.

contributions to the work of the WGTI were

aimed at promoting understanding of the benefits

of open investment policies and of the contribution of investment to economic development.

WTO Members could not agree in Cancun on a

mandate for negotiating on investment and other

Singapore issues. As of early 2004, the status of the

WGTI and of any future WTO work plan on

investment were unclear.

Major Issues in 2003

The Doha Declaration tasked the WGTI with

examining seven issues, including the scope and

definition of investment; transparency; nondiscrimination; 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. The Doha Declaration also

stated that “negotiations will take place after the

Fifth Session of the Ministerial Conference on the

basis of a decision to be taken, be explicit

consensus, at that Session on modalities of negotiations.” WTO Members addressed the Doha

Declaration issues during several WGTI sessions

in 2002 and during two formal WGTI meetings

and several informal consultations in 2003. The

Working Group also discussed WTO activities

relating to technical assistance on trade and

investment issues. 

The EU and Japan continued in 2003 to be the

strongest advocates for the launch of WTO

investment negotiations. Korea, Switzerland, and

several developing countries, including Mexico,

Chile, Singapore, and Costa Rica also advocated

investment negotiations.

The EU and Japan argued in 2002 and 2003 that

multilateral investment disciplines would stimulate increased flows of investment as well as trade,

which increasingly follows investment. They

highlighted the fact, which they described as an

unfortunate anomaly, that investment to supply

services enjoyed substantial multilateral protections under the GATS while investment 

to manufacture benefited from only minimal

protections under WTO agreements. 

The United States made similar arguments about

the value of multilateral investment disciplines,

but chose not to be a demandeur for a 

WTO investment agreement. Some domestic

22 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
stakeholders expressed concern during 2002 and

2003 that WTO investment negotiations would

not produce a high-standards agreement. The

United States circulated one formal proposal to

the WGTI during the period between the Doha

and Cancun Ministerials, a 2002 paper arguing

that the disciplines of a multilateral investment

agreement should extend to portfolio as well as

direct investment.

Most developing country WTO Members 

consistently opposed all but the most limited

proposals for WTO investment negotiations

tabled either formally or informally during 2003.

Developing countries argued that multilateral

disciplines would restrict their ability to regulate

foreign investment in ways designed to promote

economic development objectives. They

contended that investment disciplines were

beyond both the mandate and the competence of

the WTO. Pointing to the international financial

crises of the 1990s, some developing countries

also argued that multilateral disciplines could

increase their vulnerability to increasingly rapid

and volatile cross-border flows of portfolio 

investment capital.

In the weeks before the Cancun Ministerial, the

EU and Japan, joined by Korea and Switzerland,

proposed the launch of negotiations on a multilateral framework that would include each of the

seven elements in the Doha Declaration, as well

as other issues or elements that WTO Members

might wish to propose. The EU/Japan proposal

also called for provisions that would extend

special and differential treatment to developing

countries, clarify the relationship between an

investment agreement and other WTO agreements, and clarify the relationship between a

WTO investment agreement and existing bilateral and regional investment agreements. 

Countries advocating WTO investment negotiations asserted that a decision had already been

taken at Doha to launch negotiations on the basis

of the issues identified in the Doha Declaration,

but most developing countries asserted 

that, because they opposed a negotiation, there

was no “explicit consensus” as required by the

Declaration to allow negotiations to commence.

Developing countries were substantially unified in

their opposition to the EU/Japan negotiating

proposal. In the days before the Cancun meeting,

many developing countries united around a

counter-proposal rejecting the launch of investment negotiations in favor of continuing working

group discussions under the Doha Declaration

mandates. The United States also opposed

elements of the EU/Japan proposal that appeared

to foreclose the possibility of achieving high standards in certain areas. For example, the EU/Japan

proposal failed to clearly endorse coverage of portfolio investment in a potential WTO agreement.

The WTO Secretariat sought to reconcile the

EU/Japan and developing country positions by

proposing an additional period for consideration

of possible negotiating modalities, but this

proposal failed to satisfy either side. The conflict

between the two positions gave rise to one of the

most difficult disputes in Cancun and

contributed significantly to the breakdown of

negotiations. A decision by the EU and Japan in

the final hours of the Ministerial to abandon their

effort to achieve the launch of investment negotiations came too late to have a positive effect on

the Cancun negotiating dynamic. 

Prospects for 2004

WTO members had yet to settle on a course of

action on investment and other Singapore issues

by the beginning of 2004. The EU shifted direction near the end of 2003, announcing that it

would be willing to negotiate plurilateral agreements on investment and other Singapore issues,

but a number of developing countries continued

to oppose the launch of investment negotiations,

whether on a multilateral or plurilateral basis.

WTO members also continue to differ on the

mission of the WGTI, with some arguing that it

should resume efforts at identifying possible

negotiating modalities, others arguing that it

should limit itself to the further clarification of

issues in the Doha Declaration, and a third group

arguing that it should be disbanded. 

II. THE WORLD TRADE ORGANIZATION | 23
5. Work Program on Electronic

Commerce

Status 

The Work Program on Electronic Commerce

continued to meet through a series of dedicated

discussions under the auspices of the General

Council. Three discussions were held during 2003.

Major Issues in 2003

As in previous years, most of the sessions focused

on the classification of certain electronically

downloadable products, and the trade implications that might result from a decision to classify

these products as goods or services, including the

fiscal implications of classifying something as a

good or service and how that might impact the

current practice of not imposing customs duties

on electronic transmissions. The United States

submitted a contribution to the Work Program

outlining key principles that could serve as a

useful guide in developing trade policies in the

area of electronic commerce.

Prospects for 2004

The United States supports active involvement in

the on-going negotiations that are important to

the development of electronic commerce. The

United States will continue to be an active participant in the depicated discussions. In addition,

the United States supports extending the current

practice of not imposing customs duties on electronic transmissions with a view to making that

permanent and binding in the future.

6. Working Group on Trade, Debt,

and Finance

Status

Ministers established the mandate for the

Working Group on Trade, Debt and Finance

(TDF) at the Doha ministerial. 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 2003

In 2003, the Working Group held two formal

meetings to prepare a report to the Fifth

Ministerial Conference. Members reached a

consensus on a list of themes for further discussion should Minsters agree to continue the

working group. This list of 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. 

Prospects for 2004

Following a resumptions of Doha negotiations,

Working Group Members may be asked to

continue discussions of the agreed themes and

related issues reported to the Fifth Ministerial

Conference.

7. Working Group on Trade and

Transfer of Technology

Status

At 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.” The TNC established the

Working Group on Trade and Technology

Transfer (WGTTT) under the auspices of the

General Council, asking it to report on its

progress to the Fifth Session of the Ministerial

24 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Conference (Cancun). The WGTTT was not able

to achieve consensus on any recommendations

for consideration by ministers in Cancun, nor

was any decision on the WGTTT’s future work

program taken in Cancun or during the

December 2003 meeting of the General Council.

The United States believes the WGTTT can play a

role in helping WTO Members identify ways to

promote the increased transfer and absorption of

technology through trade, investment, and the

provision of technical assistance, but the United

States opposes national or multilateral mandates

for the transfer of private or governmentcontrolled technology.

Major Issues in 2003

The WGTTT met formally three times in 2003,

considering inputs from the Secretariat, WTO

members, other WTO bodies, and other intergovernmental organizations. During its March

meeting, the WGTTT began its consideration of a

paper prepared by the Secretariat, entitled, “A

Taxonomy of Country Experiences on

International Technology Transfers,” which

suggested a framework for classifying the policies

that governments have adopted to promote technology transfer. The Secretariat paper also

included case studies of national experiences

with technology transfer policies. 

Several WTO members also circulated papers for

discussion in the WGTTT. A March submission

by the EU, “Reflection Paper on Transfer of

Technology to Developing and Least-Developed

Countries” highlighted the importance to technology transfer of commercial trade and

investment, effective IPR protection, and the

absorptive capacities of host countries. India,

Pakistan, and several other developing countries

submitted a paper in May 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 this paper during the WGTTT’s May and July

sessions, arguing that it appeared to endorse

mandates for the transfer of proprietary technology. The United States also objected to the

paper’s suggestion that some WTO agreements

were hindering the transfer of technology.

During 2003, the WGTTT continued to receive

written inputs from other WTO bodies on issues

relating to trade and technology transfer. Nine

WTO bodies reported having performed or

planned work in this area. The WGTTT also

received three case studies on technology transfer

that had been prepared by UNCTAD.

The United States and other developed countries

have argued that market-based trade and investment are the most efficient means of promoting

technology transfer and that governments should

resist mandates for the transfer of proprietary

technology. In the U.S. view, the contribution of

trade and investment to technology transfer reinforces the case for continued trade and

investment liberalization. The United States and

others also argued that developing countries need

to take steps to enhance their ability to absorb

foreign technologies, and that technical assistance from developed countries could promote

technology transfer and absorption.

Prospects for 2004

As of early 2004, the post-Cancun status of the

WGTTT had not yet been resolved. The United

States will support a continuation of the WGTTT’s

work under the Doha mandate. The United States

will work with other countries to examine the

relationship between trade and the transfer of

technology, but will continue to oppose proposals

for the mandated transfer of technology.

D. General Council Activities

Status

The WTO General Council is the highest 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 once every two years. (The Fifth

Ministerial Conference met most recently in

Cancun, Mexico). The General Council and

Ministerial Conference consist of representatives

of all WTO Members. Only the Ministerial

II. THE WORLD TRADE ORGANIZATION | 25
Conference and the General Council have the

authority to adopt authoritative interpretations of

the WTO Agreements, submit amendments to 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. 

Three major bodies report directly to the General

Council: the Council for Trade in Goods, the

Council for Trade in Services, and the Council

for Trade-Related Aspects of Intellectual

Property Rights. 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 to examine

investment, trade and competition policy, and

transparency in government procurement also

report directly to the General Council. A number

of subsidiary bodies report through the Council

for Trade in Goods or the Council for Trade in

Services to the General Council. The Doha

Ministerial Declaration formed 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 these were reviewed earlier

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, can play an important

role in consensus-building. In 2003, 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. In the latter half of the year, these

consultations were convened frequently with a

view to finding consensus on both substantive and

procedural elements that would enable forward

movement on the Doha Development Agenda.

Major Issues in 2003

Ambassador Carlos Perez del Castillo served as

Chairman of the General Council in 2003. The

major focus of Chairman Perez del Castillo and the

General Council were the preparations for the Fifth

Ministerial Conference in Cancun in September, as

well as the effort to bring all sides back to work in

line with the Cancun Ministerial mandate in the

months following the Conference. These substantive issues involved in these activities are reviewed

in the section on the Trade Negotiations

Committee and the Doha Development Agenda.

The following issues also figured prominently in

the General Council activities:

Coherence: 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 2003 session of the General Council,

both the IMF Managing Director Horst Kohler

and World Bank President James Wolfensohn

participated in exchange of views with WTO

Members. The discussion centered on the linkages among trade, finance and development

policies at both the national and international

level. Many WTO Members noted the importance

of a successful conclusion to the DDA in

promoting more coherent policymaking that

would advance the shared objectives of sustainable growth, development and poverty reduction.

Review of the U.S. Jones Act: Paragraph 3 of

GATT 1994 mandates the General Council to

conduct a review every two years to ascertain

whether the original conditions creating the need

for this exemption “still prevail.” The exemption

provided in Paragraph 3 applies to certain statutory provisions (collectively referred to as the

26 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
“Jones Act”) notified to the WTO that prohibit

foreign-built or repaired ships from engaging in

the coastwise trade (i.e., cabotage). The United

States would lose this exemption if the Jones Act

were amended to become less WTO-consistent.

The General Counsel conducted its third review

of Paragraph 3 in December 2003. During this

review, some WTO Members requested clarifications on data provided by the United States on

U.S. shipyard orders and deliveries. Other WTO

Members sought more information on the 2003

appropriations legislation (Pub. L. 108-7), which

provided the legal grounds for up to three cruise

ships constructed to completion in a shipyard

located outside of the United States to receive a

coastwise endorsement to operate in regular

service transporting passengers between or

among the islands of Hawaii. More generally, a

number of WTO Members expressed the view

that the review should have provided an opportunity to examine from a substantive point of view

whether the conditions giving rise to the invocation of this exemption still exist. The General

Council took note of the statements made during

this year’s review and agreed that the next review

would begin in 2005.

Trade in Textiles and Clothing: The General

Council considered communications from

several Members on changes in textiles quotas.

These involved submissions of textile-exporting

countries on (1) the reduction in potential

market (quota) access in 2004 due to the lack of

carry forward in the quota phase-out program

required by the Agreement on Textiles and

Clothing, and (2) the imposition of limitations

on future antidumping actions against textile

imports from developing countries that they

expect will be brought beginning in January

2005 after the Textiles sector is fully integrated

into the WTO and quotas currently in effect have

expired. No consensus emerged among Members

on these submissions. 

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

several other waivers, as described in the section

on the Council on Trade in Goods (CTG). Annex

II contains a detailed list of Article IX waivers

currently in force.

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). In Cancun, the United

States pledged an additional $1.2 million for

WTO TRTA. This contribution augmented $1

million given earlier in 2003, bringing total U.S.

support for WTO TRTA to more than $3 million

since the launch of Doha negotiations in

November 2001. This money was in direct

support of programs like the annual WTO

Technical Assistance Plan.

Venue for the Sixth Ministerial Conference: In

October 2003, the General Council accepted the

invitation extended by Hong Kong to host the

Sixth Ministerial Conference. The date of this

conference has not yet been determined.

S&D Review: At the February 2003 General

Council session, the Committee on Trade and

Development put forward a progress report on

the S&D review which noted that the Committee

had not concluded discussions on a final package

of recommendations, but took note of some

recommendations that had been agreed in principle. The General Council decided to take up

discussion of outstanding agreement-specific

proposals under the leadership of Chairman

Carlos Perez del Castillo, in the spring and

summer of 2003. The Chair focused on a set of

recommendations that might yield an early 

II. THE WORLD TRADE ORGANIZATION | 27
agreement and involved the expertise of other

WTO bodies in the consideration of relevant

proposals. Renewed efforts by heads of delegation

in the spring and summer helped advance a set of

recommendations that were later put forward 

by the Chair, although not adopted, at the

Cancun Ministerial.

Prospects for 2004

The General Council will continue its important

role in overseeing implementation of the WTO

Agreements and the forward movement of negotiations on the Doha Development Agenda.

Management of the WTO, especially with respect

to public outreach efforts, consultations with

Members, and its work with other institutions on

capacity building, will figure prominently in

Council discussions over the next year. The

Council will meet at least quarterly.

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. Ministerial

Conferences were convened in Singapore (1996),

Geneva (1998), Seattle (1999), Doha (2001) and

Cancun (2003). The General Council has the

authority to add issues to the WTO’s agenda,

whether for a work program or negotiation.

1. 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.

Major Issues in 2003

The DSB met 22 times in 2003 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 that

panelists may be drawn from either the public or

private sector and must be “well-qualified,” 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 nongovernmental 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 will 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 2003, 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.

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

28 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 2003.

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 Appellate Body members

would serve on a part-time 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 LacarteMuró 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

II. THE WORLD TRADE ORGANIZATION | 29
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. Abi-Saab 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 two-year

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’s

term as Chairperson runs from December 13,

2003 to December 12, 2004.

In 2003, the Appellate Body issued six reports, of

which four involved the United States as a party

and are discussed in detail below. The two other

reports concerned the European Union’s

antidumping measures on bed linens from India

and on pipe fittings from Brazil. The United States

participated in both of these proceedings as an

interested third party. 

Dispute Settlement Activity in 2003: During its

first nine years in operation, 305 requests for

consultations (22 in 1995, 42 in1996, 46 in 1997,

44 in 1998, 31 in 1999, 30 in 2000, 27 in 2001, 37

in 2002, and 26 in 2003) were filed with the

WTO. During that period, the United States filed

64 complaints against other Members’ measures

and received 77 complaints on U.S. measures. A

number of disputes commenced in earlier years

remained active in 2003. A description of those

disputes in which the United States was either a

complainant, defendant, or third party during the

past year follows below.

Prospects for 2004

In 2004, 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 2004. 

a. Disputes Brought by the United States 

One of the most important components of U.S.

trade policy is to ensure U.S. exporters receive

open access and fair treatment in foreign markets.

In 2003, 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 2003

where the United States was a complainant. As

demonstrated by these summaries, the WTO

dispute settlement process generally has proven

to be an effective tool in combating barriers to

U.S. exports and advancing our goal of ensuring a

level playing field for American goods and services. 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

30 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 continued to monitor the 

situation in 2003.

Canada—Export subsidies and tariff-rate

quotas on dairy products (DS103) 

The United States prevailed on its claim that

Canada is providing subsidies to exports of dairy

products in violation of its Uruguay Round

commitment to reduce the quantity of subsidized

exports of dairy products. The United States initiated this dispute in 1998, contending that Canada

was providing export subsidies on dairy products

in excess of its commitment levels and was maintaining a tariff-rate quota (TRQ) on fluid milk

under which it only permitted the entry of milk in

retail-sized containers by Canadian residents for

their personal use. On August 12, 1998, the

following panelists were selected, with the

consent of the parties, to review the U.S. claims:

Professor Tommy Koh, Chairman; Mr. Guillermo

Aguilar Alvarez and Professor Ernst-Ulrich

Petersmann, Members. On May 17, 1999, the

panel issued its report upholding U.S. arguments

by finding that Canada’s export subsidies are

inconsistent with the Agreement on Agriculture,

and that Canada’s practice of restricting the

import of milk to retail-sized containers imported

by Canadian residents is inconsistent with its

obligations under the GATT 1994. On October

13, 1999, the Appellate Body issued its report

upholding the panel’s finding that Canada’s

export subsidies are inconsistent with its GATT

obligations. The panel and Appellate Body reports

were adopted by the Dispute Settlement Body

(DSB) on October 27, 1999. On December 22,

1999, the parties reached agreement on the time

period for implementation by Canada. Under this

agreement, Canada was to complete full implementation of the DSB’s recommendations and

rulings no later than January 31, 2001. 

While Canada eliminated one of the export 

subsidies subject to the DSB findings, it introduced its “commercial export milk” scheme

II. THE WORLD TRADE ORGANIZATION | 31
under which exporters have access to milk at

prices that are below domestic market levels in

Canada. Therefore, on February 16, 2001, the

United States, along with New Zealand, requested

that the DSB reestablish the panel to review

Canada’s compliance measures. At the same time,

the United States requested authorization to 

withdraw concessions benefiting goods from

Canada if the panel agreed that Canada had failed

to comply with the rulings against it. The panel

was reestablished on March 1, 2001, with Mr.

Peter Paleka replacing Professor Koh, who was no

longer available to serve, and with Professor

Petersmann serving as Chairman. The panel

found that the steps Canada took to implement

the adverse rulings regarding its dairy export

practices were insufficient and that Canada

continued to subsidize its dairy exports at a level

that is inconsistent with its WTO commitments.

Canada appealed the panel’s findings. On

December 3, 2001, the Appellate Body concluded

that it did not have enough facts to make a ruling

against Canada. 

As a result, the United States, along with New

Zealand, requested on December 6, 2001 that the

panel be reconvened again to allow the

complaining parties to present additional factual

information. The panel was reestablished on

December 18, 2001, with Mr. Peter Pale?ka and

Mr. Guillermo Aguilar Alvarez serving as

panelists, and with Professor Petersmann serving

as Chairman. On July 26, 2002, the panel found

that the steps Canada took to implement the

adverse rulings regarding its dairy export practices were insufficient and that Canada continued

to subsidize its dairy exports at a level that is

inconsistent with its WTO commitments. Canada

appealed the panel’s findings. On December 20,

2002, the Appellate Body upheld the panel’s findings. The DSB adopted the panel and Appellate

Body reports on January 17, 2003. In order to

permit time for consultations, Canada and the

United States agreed to suspend further arbitration proceedings. A settlement of the dispute was

notified to the DSB on May 9, 2003.

Canada—Measures Relating to Exports of

Wheat And Treatment of Imported Grain

(DS276)

On December 17, 2002, the United States

requested consultations with Canada concerning

the export of wheat by the Canadian Wheat Board

and the treatment accorded by Canada to grain

imported into Canada. The Government of

Canada established the Canadian Wheat Board

and granted to this enterprise exclusive and

special privileges, including the exclusive rights

to purchase and sell Western Canadian wheat for

human consumption. The actions of the

Government of Canada and the Canadian Wheat

Board appear to be inconsistent with the obligations of the Government of Canada under Article

XVII of the GATT 1994. Furthermore, with regard

to the treatment of grain that is imported into

Canada, the United States considers that

Canadian measures discriminate against

imported grain, including grain that is the

product of the United States, in breach of the

GATT 1994. 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.

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 HS 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 applies, on a “per

article” basis, greatly exceed Egypt’s bound rates

of duty. Consultations are being scheduled.

32 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
European Union—Regime for the importation,

sale and distribution of bananas (DS27)

The United States, along with Ecuador,

Guatemala, Honduras, and Mexico, successfully

challenged the EU banana regime under WTO

dispute settlement procedures. The regime was

designed, among other things, to take away a

major part of the banana distribution business of

U.S. companies. On May 29, 1996, at the request

of the complaining parties, the Director-General

selected the following panelists to serve in this

dispute: Mr. Stuart Harbinson, Chairman; Mr.

Kym Anderson and Mr. Christian Häberli,

Members. On May 22, 1997, the panel found that

the EU banana regime violated WTO rules; the

Appellate Body upheld the panel’s decision on

September 9, 1997. At the request of the

complaining parties, the compliance period was

set by arbitration and expired on January 1, 1999.

However, on January 1, 1999, the European

Union adopted a regime that perpetuated the

WTO violations identified by the panel and the

Appellate Body. The United States sought WTO

authorization to suspend concessions with

respect to certain products of the European

Union, the value of which is equivalent to the

nullification or impairment sustained by the

United States. The European Union exercised its

right to request arbitration concerning the

amount of the suspension and on April 6, 1999,

the arbitrators determined the level of suspension

to be $191.4 million. On April 19, 1999, the DSB

authorized the United States to suspend such

concessions, and the United States imposed 100

percent ad valorem duties on a list of EU products

with an annual trade value of $191.4 million. 

On April 11, 2001, the United States and the

European Union agreed to an Understanding that

identified the means by which the dispute could be

resolved. Pursuant to the Understanding, the

European Union implemented a revised import

licensing regime for its banana tariff-rate quota on

July 1, 2001, and allocated a significantly increased

number of licenses to U.S. operators. The United

States thereupon suspended its increased duties.

The European Union implemented an additional

change to the tariff-rate quota by January 1, 2002,

which resulted in further increases of licenses allocated to US operators.

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

II. THE WORLD TRADE ORGANIZATION | 33
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.

European Union—Protection of trademarks

and geographical indications for agricultural

products and foodstuffs (DS174) 

EU Regulation 2081/92, as amended, does not

provide national treatment with respect to

geographical indications for agricultural products and foodstuffs; it also does not provide

sufficient protection to pre-existing trademarks

that are similar or identical to such geographical

indications. The United States considers this

measure inconsistent with the European Union’s

obligations under the TRIPS Agreement and the

GATT 1994. The United States requested consultations regarding this matter on June 1, 1999.

Consultations were first held July 9, 1999, and

continued through mid-2003. On April 4, 2003,

the United States requested consultations on the

additional issue of the EU’s national treatment

obligations under the GATT 1994. The United

States and Australia held joint consultations with

the EU on May 27, 2003. The United States

requested the establishment of a panel on August

18, 2003, and a panel was established on 

October 2, 2003.

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 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 EU-approved

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.

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

34 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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.

Mexico—Measures affecting trade in live

swine (DS203)

On July 10, 2000, the United States requested

consultations with Mexico regarding Mexico’s

October 20, 1999, definitive antidumping

measure involving live swine from the United

States as well as sanitary and other restrictions

imposed by Mexico on imports of live swine

weighing more than 110 kilograms. The United

States considers that Mexico made a determination of threat of material injury that appears

inconsistent with the Antidumping Agreement,

and that other actions by Mexico in the conduct

of its investigation are also in violation of the

Agreement. In addition, the United States

considers that, by maintaining restrictions on the

importation of live swine weighing 110 kilograms or more, Mexico was acting contrary to its

obligations under the Agreement on Agriculture,

the SPS Agreement, the Agreement on Technical

Barriers to Trade (“TBT Agreement”), and the

GATT 1994. Consultations were held September

7, 2000. Subsequent to the consultations, Mexico

issued a protocol which has allowed a resumption of U.S. shipments of live swine weighing 

110 kilograms or more into Mexico. At about the

same time, Mexico self-initiated a review of its

threat of injury determination based on information, including a shortage of slaughter hogs, that

suggests that market conditions have changed

substantially in Mexico. On May 23, 2003,

Mexico terminated the antidumping duty.

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 anticompetitive practices of Telmex (Mexico’s major

telecommunications supplier) and announced

significant reductions in long-distance 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

II. THE WORLD TRADE ORGANIZATION | 35
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.

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 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 July 31 and

August 1, 2003. The United States requested the

establishment of a panel on the measure on rice

on September 19, 2003, and the DSB established

a panel on November 7, 2003. Consultations on

the measure on beef continue. 

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.

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 2003 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

36 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 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 countermeasures beginning on March 1, 2004. 

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 Grçar and Mr.

II. THE WORLD TRADE ORGANIZATION | 37
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 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.

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 permits certain retail establishments to play radio or television music without

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 for in 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

38 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 covers the three-year period ending

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

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.

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 DirectorGeneral composed the panel as follows: Mr.

Harsha V. Singh, Chairman; Mr. Yanyong

II. THE WORLD TRADE ORGANIZATION | 39
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.

United States—Definitive safeguard measures

on imports of circular welded carbon quality

line pipe from Korea (DS202)

On June 13, 2000, Korea requested consultations

regarding safeguard measures imposed by the

United States on imports of circular welded

carbon quality line pipe. These measures were

proclaimed by the United States on February 18,

2000, and introduced on March 1, 2000. Korea

argued that such measures were inconsistent with

the Agreement on Safeguards and the GATT

1994. Consultations were held July 28, 2000. On

September 14, 2000, Korea requested the establishment of a panel. A panel was established on

October 23, 2000, and composed of the following

panelists: Mr. Dariusz Rosati, Chairman and

Robert Azevedo and Eduardo Bianchi, Members.

The panel report was circulated on October 29,

2001. The panel found that the U.S. measure

violates the Safeguards Agreement, but at the

same time rejected several of Korea’s claims

related to both the measure itself and the investigation. The U.S. notice of appeal was filed with

the WTO Appellate Body on November 19, 2001.

The Appellate Body issued its report on February

15, 2002. It rejected some of the panel’s findings

in favor of the United States, but also upheld

several of those findings. The DSB adopted the

panel report, as modified by the Appellate Body

report, on March 8, 2002. The United States and

Korea reached agreement in the dispute on July

29, 2002. Pursuant to that agreement, the United

States increased the quantity of Korean line pipe

exempt from the safeguard measure to 17,500

tons per quarter, effective September 1, 2002. The

safeguard measure remained unchanged with

regard to other import sources. On March 18,

2003, the United States notified the DSB that the

safeguard measure at issue was terminated on

March 1, 2003.

United States—Antidumping measures and

countervailing measures on steel plate from

India (DS206) 

India contended that the Department of

Commerce made several errors in its final determinations regarding certain cut-to-length carbon

quality steel plate products from India, dated

December 13, 1999 and amended on February

10, 2000. India also argued that the USITC made

errors with respect to the negligibility, cumulation, and material injury caused by such

products. India claimed that these errors were

based on deficient procedures contained in the

U.S. antidumping and countervailing duty laws,

and thus raised questions concerning the obligations of the United States under the Antidumping

Agreement, the GATT 1994, the Subsidies

Agreement, and the Agreement Establishing the

WTO. India requested consultations with the

United States regarding this matter on October 4,

2000. The United States and India held 

40 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
consultations in November 2000 and in July

2001. India then filed a panel request, which

focused on a subset of the claims it had raised

during consultations. On June 21, 2002, the

Panel issued its report in the dispute, rejecting

most of India’s claims. The Panel agreed with

India that one aspect of the challenged determination was not consistent with the Antidumping

Agreement. It found that the Department of

Commerce had failed to explain why it would

have been “unduly difficult” to use certain information that the Indian respondent submitted.

The DSB adopted the report on July 29, 2002. On

August 27, 2002, the United States announced it

intentions on implementing the DSB’s rulings and

recommendations arising from the report. The

United States and India subsequently reached

agreement on a reasonable period of time for

implementation, ending on December 29, 2002.

On February 7, 2003, the United States implemented the DSB’s recommendations and rulings

by issuing a new determination in the investigation at issue. The authorities examined and

considered all of the data on the record, and

provided a thorough explanation of their treatment of this data, thereby fully complying with

U.S. WTO obligations.

United States—Countervailing duty measures

concerning certain products from the

European Communities (DS212)

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 WTO-inconsistent 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, WTOconsistent 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

WTO-inconsistent. On October 24, 2003,

Commerce issued revised determinations under

section 129 of the Uruguay Round Agreements

II. THE WORLD TRADE ORGANIZATION | 41
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.

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.

United States—Safeguard measures on

imports of line pipe and wire rod from the

European Communities (DS214)

On December 1, 2000, the European Union

requested consultations with the United States

42 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
regarding U.S. safeguard measures on imports of

circular welded carbon quality line pipe and wire

rod. The European Union argued that these measures are inconsistent with the Agreement on

Safeguards and the GATT 1994. The European

Union also claimed that certain aspects of the

underlying U.S. safeguards legislation—Sections

201 and 202 of the Trade Act of 1974—and

Section 311 of the NAFTA Implementation Act

prevented the United States from respecting

certain provisions of the Agreement on

Safeguards and the GATT 1994. Consultations

were held on January 26, 2001, and informal

consultations continued thereafter. A panel was

established at the EU’s request on September 10,

2001, but it has not yet been composed.

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

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 Anti-dumping

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).

United States—Countervailing duties on

certain carbon steel products from Brazil

(DS218)

On December 21, 2000, Brazil requested 

consultations with the United States regarding

U.S. countervailing duties on certain carbon steel

II. THE WORLD TRADE ORGANIZATION | 43
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.

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.

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. The Appellate Body report

is expected to issue on January 19, 2004.

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.

United States—Definitive safeguard 

measures on imports of certain steel products

(DS248-49, 251-54, 258-59) 

By Presidential Proclamation 7529 of March 5,

2002, the United States imposed safeguard

measures on ten products: certain carbon flatrolled steel, hot-rolled bar, cold-finished bar,

rebar, certain welded pipe, carbon and alloy

fittings and flanges, stainless steel bar, stainless

steel rod, stainless steel wire, and tin mill steel.

The measures consisted for the most part of

supplemental tariffs, with one type of certain

carbon flat-rolled steel (steel slab) being subject

to a tariff-rate quota (“TRQ”). All measures are

scheduled to remain in effect until March 21,

2005, with the tariff rates being decreased by

one-fifth in the second and third years. (For the

44 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
slab TRQ, the in-quota quantity would increase

by 3 percent each year). Our FTA partners

(Canada, Mexico, Israel and Jordan), along with

developing country WTO Members that account

for less than three percent of total imports, are

not subject to these measures.

The EC, Japan, Korea, China, Switzerland, and

Norway requested consultations under the WTO

Dispute Settlement Understanding in March and

early April of 2002. Consultations were held on

11-12 April 2002 with these countries as

complaining parties, and Canada, Mexico, New

Zealand, and Venezuela as third parties. These

countries requested the formation of panels,

which were established and consolidated with

each other in June and July of 2002. New Zealand

requested consultations on the steel safeguard

measures on May 14, and Brazil on May 21.

Consultations were held simultaneously with

both on June 13. Panels were established in

response to the New Zealand and Brazil requests,

and consolidated with the panels in the other

disputes. The United States reached agreement

with the complaining parties to request that the

panel adopt an extended briefing schedule. The

Director-General appointed the panelists on July

25, 2002, as follows: Ambassador Stefan

Johannesson, Chairman, and Mr. Mohan Kumar,

and Ms. Margaret Liang, Members. 

In a report issued on July 11, 2003, the Panel

found that each of the ITC determinations was

inconsistent with WTO rules because the ITC did

not properly establish that imports caused injury

to domestic steel producers, or that any injury

was the result of “unforeseen developments.”

Having found against the ITC determination, the

Panel did not address the Administration’s decisions on what safeguard measures to apply in

response to the ITC determinations.

The United States appealed the report on August

11, 2003. The Appellate Body issued its report on

November 10, 2003, and upheld the Panel’s ultimate conclusion that each of the ten U.S.

safeguard measures imposed is inconsistent with

WTO rules. Specifically, it found with regard to all

of the safeguard measures that the United States:

(1) failed to demonstrate that the injurious

imports were the result of unforeseen developments and (2) failed to establish that, after

exclusion of our FTA partners, imports from the

remaining countries by themselves caused

serious injury to the relevant U.S. industries. The

Appellate Body also upheld the panel’s finding

that the ITC failed to provide an adequate explanation of its finding that imports of certain carbon

flat-rolled steel, stainless steel rod, and hot-rolled

bar increased. In light of these findings, the

Appellate Body did not address the U.S. appeal

regarding the panel’s conclusions on causation.

The DSB adopted the panel and Appellate Body

reports on December 10, 2003.

Chinese Taipei requested consultations on

November 1, 2002. Chinese Taipei alleged violations of Articles 2, 3, 4, and 5 of the Safeguards

Agreement, as well as Articles I:1 and XIX:1(a) of

the GATT 1994. Consultations were held

December 12, 2002. 

United States—Rules of origin for textiles and

apparel products (DS243)

Section 334 of the Uruguay Round Agreements

Act established statutory rules of origin for textile

and apparel products. Section 405 of the Trade

and Development Act of 2000 amended Section

334. On January 11, 2002, India requested

consultations regarding the rules set out in

Section 334 and Section 405, claiming that they

distorted textile trade and were protectionist in

violation of the Agreement on Rules of Origin.

Consultations with India took place on February

7, 2002, February 28, 2002 and March 26, 2002.

A panel on this matter was established on June

24, 2002, and composed by agreement of the

parties on October 10, 2002. The members were

as follows: Mr. Lars Anell, Chair; Mr. Donald

McRae and Ms. Elizabeth Chelliah. In a report

circulated on June 20, 2003, the panel found that

the U.S. rules of origin for textile and apparel

products are entirely consistent with the United

States’ WTO obligations. The DSB adopted the

report on July 21, 2003.

II. THE WORLD TRADE ORGANIZATION | 45
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 miminis 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 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, but is

not yet composed.

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 (“cutto-length steel”) from Germany (dealt with under

US case numbers A-428-816 and C-428-817).

Consultations were held on September 12, 2002.

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.

46 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Harsha V. Singh, Chairman, and Mr. Gerhard

Hannes Welge and Mr. Adrian Makuc, Members.

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. 

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 Director General

composed the panel as follows: Mr. Paul

O’Connor, Chairman, and Mr. Bruce Cullen and

Mr. Faizullah Khilji, Members.

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.

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 WTO-inconsistent methodology—the “change-in-ownership”

II. THE WORLD TRADE ORGANIZATION | 47
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.

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 casespecific 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.

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.

United States—Measures Affecting the 

Cross-Border 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. 

United States—Laws, regulations and

methodology for calculating dumping 

margins (“zeroing”) (WT/DS294)

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.

48 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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.

2. 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

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.”

Major Issues in 2003

During 2003, the TPRB conducted the following

17 reviews: Maldives, El Salvador, Canada,

Burundi, South African Custom’s Union

(comprised of Botswana, Lesotho, Namibia, South

Africa, and Swaziland), New Zealand, Morocco,

Indonesia, Niger/Senegal (reviewed together as

West-African Monetary Union members),

Honduras, Bulgaria, Guyana, Haiti, Thailand,

Chile, and Turkey. This group included six leastdeveloped country Members and seven Members

reviewed for the first time. As of the end of 2003,

the TPRM had conducted 182 reviews, covering

110 out of 146 Members (counting the European

Union as fifteen) and representing approximately

87 percent of world merchandise trade. 

Reviews have 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 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.

II. THE WORLD TRADE ORGANIZATION | 49
As of the end 2003, twenty of the WTO’s 30 leastdeveloped country 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 enhanced 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

2003 for the review process of Gambia and

Rwanda, a similar seminar has been held for

Guyana.. 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 2004

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 program for 2004 calls for conducting 

16 reviews, including the United States and the

European Union, as well as, Brazil, Belize,

Jamaica, Korea, Norway, Singapore, Sri Lanka,

Suriname, and the Custom’s territory of

Switzerland and Liechtenstein. In addition, five

LDC Members will be reviewed as well—Benin,

Burkina Faso, Gambia, Mali, and Rwanda.

E. 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 Traderelated Investment Measures (TRIMS)) in

addition to the Textiles Monitoring Body (TMB),

and the Working Party on State Trading.

Major Issues in 2003

In 2003, the CTG held five 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 2003: 

Waivers: The CTG approved several requests for

waivers, including those related to the implementation of the Harmonized Tariff System,

renegotiation of tariff schedules, and waivers for

the implementation of the Kimberly Process. A

list of waivers currently in force can be found 

in Annex II. 

50 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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. 

China Transitional Review: On November 26, 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).

Trade Facilitation: CTG met twice in 2003 in

sessions dedicated to this issue. The CTG

discussed how to improve and clarify Article X

(transparency), Article VIII on fees and formalities, and Article V (transit). Progress was made in

all of these areas.

Textiles: The CTG considered two proposals from

developing countries concerning textile trade.

Developing countries proposed that Members

maintaining textile restraints increase quota

growth rates for the remainder of the ATC.

However, Members maintaining textile restraints

argued that they had followed the provisions of

the ATC precisely when calculating the appropriate quota levels. Developing country Members

also proposed that Members maintaining textile

restraints grant carry forward for the year 2004.

However, these Members rejected this proposal

citing the fact that all quotas are eliminated beginning in January 2005 and the ATC does not

provide for carry forward in 2004.

Prospects for 2004

The CTG will continue to be the focal point for

discussing agreements in the WTO dealing with

trade in goods. Outstanding waiver requests will

also be further examined.

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 without needing

dispute settlement. The Committee also has

responsibility for monitoring the parties to the

Marrakesh Ministerial Decision on Measures

Concerning the Possible Negative Effects of the

Reform Program on Least Developed and Net

Food-Importing Developing Countries (or

“NFIDC Decision”). 

Major Issues in 2003

The Committee held four formal meetings in

March, June, September, and November 2003, 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, 171 notifications were subject to review

during 2003. The United States actively participated in the notification process and raised

specific issues concerning the operation of

Members’ agricultural policies. For example, the

United States raised questions concerning

elements of domestic support programs used by

the European Union, Canada, Norway, South

Africa, and India; identified restrictive import

licensing and tariff-rate quota administration

practices by China, the European Union, Norway,

New Zealand, South Africa, and Barbados; questioned Chinese Taipei’s use of the special

agricultural safeguard; and raised concerns with

India’s export policies. The Committee also

proved to be an effective forum for raising issues

relevant to the implementation of Members’

commitments. For example, the United States

II. THE WORLD TRADE ORGANIZATION | 51
identified concerns with India’s soybean oil

tariffs, the Dominican Republic’s import licensing

scheme, and China’s export subsidies, valueadded tax policies, and TRQ allocation processes.

In the framework of the follow-up to the Decision

by the Doha Ministerial Conference on

Implementation-Related Issues and Concerns,

the following agricultural implementationrelated issues were further considered by the

Committee: (1) the 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 foodimporting countries; (2) improving the

effectiveness of the implementation of the NFIDC

Decision; and (3) enhancing Members’ notifications on tariff-rate quotas (TRQs) in accordance

with the General Council’s decision regarding the

administration of TRQ regimes in a transparent,

equitable, and non-discriminatory manner. 

On the basis of its formal and informal discussions regarding short-term financing difficulties

by least-developed and net food-importing

developing countries, a number of recommendations were adopted by the Committee. These

recommendations were approved by the General

Council at its meeting on 24-25 July.

At its March meeting, the Committee decided to

accept the application by Namibia to be included

in the WTO list of net food-importing developing

countries. This list currently comprises the leastdeveloped countries as recognized by the United

Nations and the following 24 developing country

Members of the WTO: Barbados, Botswana, Côte

d’Ivoire, Cuba, Dominica, Dominican Republic,

Egypt, 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.

The annual monitoring exercise on the follow-up

to the NFIDC Decision as a whole 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 the observer organizations.

Prospects for 2004

The United States will continue to make full use

of the Committee on Agriculture 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 food-importing developing countries in

accordance with the Agreement on Agriculture.

2. 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, 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 is an active body which

focuses on practical issues and concerns relating

to implementation. Based on papers submitted by

Members on specific topics for discussion, the

activities of the Working Group permit Members

to develop a better understanding of the similarities and differences in their policies and practices

for implementing the provisions of the

Antidumping Agreement. Where possible, the

Working Group endeavors to develop draft

recommendations on the topics it discusses,

which it forwards to the Antidumping Committee

52 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
for 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

Ministerial Decision on Implementation-Related

Issues and Concerns. In 2003, the Committee

and a number of WTO Members, including the

United States, began implementing those recommendations. Many Members, including the

United States, 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 on that issue. In

addition, pursuant to the Committee’s recommendation under Article 18.6 designed to

improve transparency in the Committee’s annual

reviews, in 2003 a number of Members,

including the United States, provided additional

information in their semi-annual reports to the

Committee, and the Committee’s annual report

reflected this additional information.

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 2003 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.

Major Issues in 2003

The Antidumping Committee is an important

venue 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. 

In 2003, the Antidumping Committee held two

meetings, in May 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 2003 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, 75 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 2003, the Antidumping

Committee reviewed notifications of new or

amended antidumping legislation submitted by

Armenia, China, Costa Rica, Dominican

Republic, Estonia, the European Union (EU),

Latvia, Lithuania, Mexico, New Zealand,

Nicaragua, Pakistan, Peru and Zimbabwe.

Members, including the United States, were active

in formulating written questions and in making

follow-up inquiries at Committee meetings.

II. THE WORLD TRADE ORGANIZATION | 53
Notification and Review of Antidumping Actions:

In 2003, 32 WTO Members notified that they had

taken antidumping actions during the latter half

of 2002, whereas 27 Members did so with respect

to the first half of 2003. (By comparison, 35

Members notified that they had not taken any

antidumping actions during the latter half of

2002, and 26 Members notified that they had

taken no actions in the first half of 2003). 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 2003

meeting, the Committee undertook, pursuant to

the Protocol on the Accession of the People’s

Republic of China, its second 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 2003 meeting. The

United States also submitted several sets of questions to China with respect to its notifications to

the WTO of its antidumping regulations and

rules, as part of the regular Committee review of

notifications of antidumping legislation, and

submitted follow-up questions to China in late

2003 after receiving China’s initial responses. 

European Union Expansion: At both its May and

October 2003 meetings, the Committee discussed

issues pertaining to the status of outstanding

antidumping measures of the EU in light of the

future expansion of the EU from 15 members to

25 members in 2004. The United States filed

written questions to the EU on this issue, raising

concerns about whether the EU’s announced

intention to extend automatically, upon expansion, its antidumping measures now covering

imports into the territory of the 15 current

member-states of the EU to cover imports into the

territory of the 25 member-states after expansion

would be consistent with the Antidumping

Agreement, particularly in the absence of an additional determination of injury covering the

territory of the 25 member-states. At the

Committee’s October 2003 meeting, the EU

responded orally to the U.S. questions, and

several other Members raised additional 

questions and concerns on this issue. 

Working Group on Implementation: The Working

Group held two rounds of meetings in April and

October 2003. The Working Group’s principal

focus in 2003 was the selection of new topics for

discussion, and then the first discussion of those

topics. In April 2003, the Working Group considered various possible topics, and, upon its

recommendation, the Committee in May 2003

approved four topics for the Working Group to

discuss beginning at the fall meeting: (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. At its October 2003

meeting, the Working Group held its first discussion of these topics, with the United States

submitting papers on the topics of foreign

exchange fluctuations, conduct of verifications,

and judicial, arbitral or administrative review. In

addition to these topics, the Group also considered at the April and October 2003 meetings a

draft recommendation on conditions of competition relevant to cumulation under Article 3.3. No

agreement has been reached by the Group on this

draft recommendation, but it is expected that the

Group will consider this issue again in 2004.

The Working Group 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 partic54 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
ipation by Members and, in particular, by capitalbased experts 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. Implementation concerns and 

questions stemming both from one’s own administrative experience and from observing the

practices of others are equally addressed. 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.

Informal Group on Anticircumvention: 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. At its two meetings in

2003, 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?

Members 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, responded to inquiries

from other Members as to how such legislation

operates and the manner in which certain issues

may be treated. For the October 2003 meeting of

the Informal Group, the United States submitted

a paper summarizing its experience in two 

recent circumvention investigations that it 

had conducted.

Prospects for 2004

Work will proceed in 2004 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.

This ongoing review process in the Committee is

important to ensuring that antidumping laws

around the world are properly drafted and 

implemented, thereby contributing to a wellfunctioning, liberal trading system. As

notifications of antidumping legislation are not

restricted documents, U.S. exporters will

continue to enjoy access to information about the

antidumping laws of other countries that should

assist them in better understanding the operation

of such laws and in taking them into account in

commercial planning.

The preparation by Members and review in the

Committee of semi-annual reports and reports of

preliminary and final antidumping actions will

also continue in 2004. These reports are

becoming 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. 

Discussions in the Working Group on

Implementation will continue to play an important role as more and more Members enact 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 in

a serious manner will require the involvement of

the Working Group, which is the forum best

suited to provide the necessary technical and

administrative expertise. Indeed, it is only in the

Antidumping Committee and the Working

Group that Members can devote the considerable

II. THE WORLD TRADE ORGANIZATION | 55
time and resources needed to conduct a responsible examination of these questions. For these

reasons, 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.

Therefore, as Members continue to submit papers

on the topics being considered and participate

actively in the discussions, the Group’s utility

should continue to grow. In 2004, the Working

Group will continue its discussion of the four

topics that it began discussing at its October 2003

meeting: (1) export prices to third countries vs.

constructed value under Article 2.2 of the

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 work of the Informal Group on

Anticircumvention will also continue in 2004

according to the framework for discussion on

which Members agreed. 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.

3. 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 tariff reductions are not

negated by unwarranted and unreasonable

“uplifts” in the customs value of goods to which

tariffs are applied.

Major Issues in 2003

The Agreement is administered by the WTO

Committee on Customs Valuation, which held

three formal meetings in 2003. 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. In April

2003, the WTO Secretariat compiled information

indicating that 31 Members were using preshipment inspection regimes.

Experience continues to demonstrate that the

implementation of the Agreement on Customs

Valuation by developing countries often represents their first concrete and meaningful step

toward reforming their customs regimes, and 

ultimately moving to a rules-based border environment for conducting trade transactions.

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 trade facilitation, the United

States has taken an aggressive role at the WTO on

matters related to customs valuation.

U.S. exporters across all sectors—including 

agriculture, automotive, textile, steel, and information technology products—have experienced

difficulties related to the conduct of customs

valuation regimes outside of the disciplines set

forth under the WTO Agreement on Customs

Valuation. 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. The use of

56 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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. It is notable that 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.

Achieving universal adherence to the WTO

Agreement on Customs Valuation has been a

longstanding and 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 as a “code,” until mandated as part of

membership in the WTO. 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. 

While many developing country Members undertook timely implementation of the Agreement,

the Committee continued throughout 2003 to

address various individual Member requests for

either a transitional reservation for implementation methodology, or for a further extension of

time for overall implementation. Working with

key trading partners, the United States led the

consultations for most such requests, which

resulted in the development of a detailed decision

tailored to the situation of the requesting Member.

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, Madagascar, 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 2003, 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 Members did not

come to consensus on these issues in 2003. The

Committee also actively worked to meet another

Doha implementation-related 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.” The Committee’s work in

this area will continue in 2004.

An important part of the Committee’s work is the

examination of implementing legislation. As of

November 2003, 74 Members had notified their

national legislation on customs valuation. During

2003, the Committee concluded the examinations of amendments to Australia’s legislation,

and the legislation of Bolivia, Brunei Darussalam,

China, Côte d’Ivoire, Cuba, Morocco and

Slovakia. In November 2003, the Committee also

conducted a Transitional Review in accordance

with Paragraph 18 of the Protocol of China’s

accession to the WTO.

The Committee’s work throughout 2003

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 2004

The Committee’s work in 2004 will include a

review of the relevant implementing legislation

and regulations notified by Members, along with

addressing any further requests by other Members

concerning implementation deadlines. The

II. THE WORLD TRADE ORGANIZATION | 57
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. The Committee will also work

toward conclusion of its examination of the implementation-related proposals by India. 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.

4. Committee on Import Licensing 

Status

The Committee on Import Licensing was 

established to administer the Agreement on

Import Licensing Procedures and to monitor

compliance with the mutually agreed rules for the

application of these widely used measures. 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. While

not a substitute for dispute settlement procedures, these consultations on specific issues allow

Members to clarify problems and possibly to

resolve them before they become disputes. 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

provided for in the Protocol of Accession. 

Background

The Agreement on Import Licensing Procedures

establishes rules for all WTO Members that use

import licensing systems to regulate their trade.

Its obligations establish disciplines to protect the

importer against unreasonable requirements or

delays associated with the licensing regime. The

Agreement’s provisions are intended to ensure

that the use of such procedures by Members does

not create additional barriers to trade beyond

what was intended by the requirements themselves. The notification requirements and the

system of regular Committee reviews seek to

increase the transparency and predictability 

of Members’ licensing regimes. While the

Agreement’s provisions do not directly address

the WTO consistency of the underlying measures

that licensing systems regulate, they establish the

base line of what constitutes a fair and nondiscriminatory application of the procedures. The

Agreement covers both “automatic” licensing

systems, which are intended only to monitor

imports, not regulate them, and “non-automatic”

licensing systems where certain conditions must

be met before a license is issued. Governments

often use non-automatic licensing to administer

import restrictions, for 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. 

Major Issues in 2003

At its meetings in May and October 2003, the

Committee reviewed 64 initial or revised notifications, completed questionnaires on procedures,

and replies to questions from Committee

members from 59 WTO Members (including EU

Member States), a slight decline in the number of

notifications from 2002 but bringing the number

of Members notifying at least once to an all time

high. The United States notified its licensing

requirements for imports subject to the safeguard

measures on steel products. Written questions

were also submitted on Indonesia’s non-automatic licensing system for selected textile

products, first notified during 2002. The United

States sought information and explanations from

Indonesia on the operation of this licensing

58 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
system; the administration of the restrictions; the

number and nature of import licences granted

over a recent period; the distribution of such

licences among supplying countries; and available import statistics with respect to the products

subject to import licensing.

The Committee continued discussions on how

the number and frequency of notifications by

Members could be increased. The Chairman

reported that at the end of 2003, only 26 of 146

Members (counting EU member states individually), had never submitted a notification to the

Committee, bringing the percentage of WTO

members with at least an initial notification to 83

percent. Concern remained, however, that notifications were not being submitted with the

frequency required by the Agreement.

Since the September 2002 Committee meeting,

four WTO Members have submitted requests for

consultations initiating dispute settlement cases

concerning import licensing procedures. The

Philippines, the United States, and Nicaragua

requested consultations with Australia,

Venezuela, and Mexico respectively, concerning

licensing requirements on agricultural products.

The EU sought consultations addressing import

restrictions in India’s import and export trade

policy in the period 2002-2007.

At its October meeting, the Committee carried

out its second annual review of China’s implementation of its WTO commitments relating to

import licensing procedures as part of the

Transitional Review Mechanism (TRM) included

in the terms of China’s accession protocol. The

United States and other WTO Members,

including the EU, Japan and Chinese Taipei,

raised questions and concerns regarding China’s

implementation in several areas, including

trading rights, China’s administration of import

quotas for automobiles, China’s administration of

TRQs for bulk agricultural commodities and

fertilizer, and China’s use of import inspection

permits for a range of agricultural products. A

report on the meeting was transmitted for use by

the General Council conducting the overall

review in December.

Prospects for 2004

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, utilization of the Committee as a forum for

discussion and review will increase. 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 the notifications, including the

questionnaire, and 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.

5. 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 Non-Tariff

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.

II. THE WORLD TRADE ORGANIZATION | 59
Major Issues in 2003

During 2003, WTO Members continued implementing the tariff reductions agreed in the

Uruguay Round with the Committee having

responsibility for verifying that implementation is

proceeding on schedule. The Committee held

two formal meetings in 2003, resumed a

suspended formal meeting held over from

November 2002, and held five informal meetings

to discuss the following topics: (1) the ongoing

review of WTO tariff schedules to accommodate

updates to the Harmonized System (HS) tariff

nomenclature; (2) the WTO Integrated Data Base;

(3) finalizing consolidated schedules of WTO

tariff concessions in current HS 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 second annual

transitional review of China’s implementation of

its WTO accession commitments.

Updates to the Harmonized System (HS) of tariff

nomenclature: In 1993, the Customs Cooperation

Council—now known as the World Customs

Organization (WCO)—agreed to approximately

400 sets of amendments to the HS, which were to

enter into effect on January 1, 1996. These

amendments result in changes to the WTO schedules of tariff bindings. 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 and

can pursue unresolved objections under GATT

1994 Article XXVIII. 

Since 1996, successive waivers have been granted

by decisions of the General Council until implementation procedures can be finalized. The

majority of WTO Members have completed the

process, but a few Members continue to require

waivers. The Committee also examined issues

related to the transposition and renegotiation of

the schedules of certain Members which had

adopted the HS in the years following its introduction on January 1, 1988. 

Using the same procedures, the Committee also

began to review Members’ WTO amendments

which took effect on January 1, 2002 (HS2002).

Drawing from the experience of HS96, the

Committee, working with the Secretariat, has

developed electronic procedures that will facilitate

and expedite the process of reviewing and

approving the 373 proposed amendments under

HS2002. The United States submitted its proposed

changes to the Secretariat in December 2001.

Integrated Data Base (IAB): The Committee

addressed issues concerning the IAB, which is to

be 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. The U.S.

objectives are to achieve full participation in the

IAB by all WTO Members and, ultimately, to

develop a method to make the trade and tariff

information publicly available. 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. 

During 2003, the separate Negotiating Group on

Non-Agricultural Market Access also took up this

issue and developed procedures to facilitate the

transfer of applicable tariff and trade data from

other sources. As a result, participation has

continued to improve. As of December 2003, 95

Members and three acceding countries had

provided IAB submissions. 

Consolidated schedule of tariff concessions (CTS):

The Committee continued work to implement an

electronic structure for tariff and trade data. The

CTS includes: tariff bindings for each WTO

Member that reflects Uruguay Round tariff

concessions; HS96 updates to tariff nomenclature

and bindings; and any other modifications to the

WTO schedule (e.g., participation in the

60 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Information Technology Agreement). The data

base 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 October 2003, the

Committee conducted the second 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, tariff-rate quota

administration, management of industrial quotas,

and China’s application of value added and

consumption taxes. 

Implementation Issues: The Committee

continued a discussion from 2002 on two implementation issues referred by the General Council.

The first, a proposal by St. Lucia, dealt with the

definition of “substantial supplier” in the context

of quota allocations. Several developing countries

expressed concern that the proposal could undermine the rights and obligations of some

Members. The Secretariat undertook several

analyses of the substantial supplier issue. The

Committee also examined the issue of redistribution of negotiating rights. After lengthy

discussion on these topics, the Committee

reported back to the General Counsel that it

could not reach a consensus on either issue. 

Prospects for 2004

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. As

Members finalize HS96 updates, the Committee

will turn to reviewing Members’ amended

schedules based on the HS2002 revision. The

electronic verification process, which incorporates the CTS data, will facilitate the review

process and help developing countries to

generate their own HS2002 submissions.

6. 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 regimes. The harmonization work program

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 2003 and will continue

into 2004.

The Agreement is administered by the WTO

Committee on Rules of Origin, which met

formally and informally throughout 2003. The

Committee also served 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 harmonization work program.

As of the end of 2003, 84 WTO Members notified

the WTO concerning non-preferential rules of

origin, of which 43 Members notified that they

had non-preferential rules of origin and 41

Members notified that they did not have a nonpreferential rules of origin regime. 89 Members

notified the WTO concerning preferential rules of

origin, of which 86 notified about their preferential rules of origin and four notified that they did

not have preferential rules of origin.

II. THE WORLD TRADE ORGANIZATION | 61
Major Issues in 2003

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

harmonization work program 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 harmonization work

program, 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 2003 formal meeting,

the Committee conducted numerous informal

consultations and working party sessions related

to the harmonization work program negotiations.

The Committee proceeded in accordance with a

December 2001 mandate from the General

Council, which extended the harmonization

work program while specifically requesting that

the Committee on Rules of Origin focus during

the first half of 2002 on identifying core policy

issues arising under the harmonization work

program 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 harmonization work

program, and proceeding on a track toward

achieving consensus on product-specific rules of

origin for more than 5000 tariff lines. In 2003, the

Committee focused on approximately 90 unresolved issues identified as “core policy issues.”

Many of these issues are particularly significant

due to their broad application across important

product sectors, including steel, beef products,

sugar, automotive goods, and dairy products.

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 apparent absence of common understanding among Members concerning 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 2004

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. Attention will

continue to be given to the implementation of the

Agreement’s important disciplines related to transparency, which are recognized elements of what

are considered to be “best customs practices.”

Further progress in the harmonization work

program will remain contingent on achieving

appropriate resolution of the “core policy issues”

identified by the Committee. In accordance with

a decision taken by the General Council in July

2003, work will continue on addressing these

issues. The General Council, at its meeting in

July 2003, extended the deadline for completion

of the 94 core policy issues to July 2004. The

General Council also agreed that following resolution of these core policy issues, the CRO would

complete its remaining technical work by

December 31, 2004.

62 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
7. 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. 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 safeguard 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 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 mid-term 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. 

Major Issues in 2003

During its two regular meetings in April and

October 2003, 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 China, Costa Rica, Croatia, the

European Union, Indonesia, Japan, Latvia,

Mexico, and Chinese Taipei. 

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: Bulgaria on iron

and steel; Ecuador on fibreboard, smooth

ceramics and ceramics and porcelains; Estonia

on swine meat, the European Union on certain

prepared or preserved mandarins; Hungary on

ammonium nitrate and white sugar; India on

bisphenol A; Jordan on aerated water; Moldova

on sugar; the Philippines on glass mirrors,

figured glass and float glass; Poland on matches;

and Venezuela on footwear.

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: Bulgaria on ammonium

nitrate; China on certain steel products; the

Czech Republic on sugar, tubes & pipes, and

ammonium nitrate; Hungary on certain steel

products and ammonium nitrate; India on edible

vegetable oils; Jordan on sanitary ware products

and pasta; Latvia on swine meat; the Philippines

on glass mirrors, figured glass and float glass;

Poland on certain steel products, calcium 

carbide and water heaters; the Slovak Republic on 

ammonium nitrate.

The Committee reviewed Article 12.1(c) notifications, regarding a decision to apply or extend a

safeguard measure, from the following Members:

Bulgaria on crown corks and ammonium nitrate;

II. THE WORLD TRADE ORGANIZATION | 63
China on certain steel products; the Czech

Republic on sugar, tubes & pipes, and ammonium nitrate; Ecuador on fibreboard and

matches; Hungary on certain steel products and

ammonium nitrate; India on epichlorohydrin;

Jordan on sanitary ware products and pasta;

Latvia on live pigs and pork; the Philippines on

cement; Poland on certain steel products,

calcium carbide and water heaters; and the

Slovak Republic on ammonium nitrate.

The Committee received notifications from the

following Members of the termination of a safeguard investigation with no safeguard measure

imposed: Bulgaria on urea and steel; the Czech

Republic on wires, ropes and cables; certain steel

products, and citric acid, Hungary on certain steel

products and ammonium nitrate; and from Jordan

on ceramic tiles, electric accumulators and two

types of cooking appliances and aerated water. 

The Committee reviewed a notification from the

United States on the results of the mid-term

review of its safeguard measures on steel.

The Committee reviewed Article 12.4 notifications, regarding the application of a provisional

safeguard measure, from the following Members:

Chile on fructose; the Czech Republic on ammonium nitrate; Ecuador on smooth ceramics;

Hungary on ammonium nitrate and white sugar;

the Philippines on glass mirrors, figured glass and

float glass; and Venezuela on iron/steel “U”

sections and footwear.

China Transitional Review: At the October 2003

meeting, the Committee undertook, pursuant to

the Protocol on the Accession of the People’s

Republic of China, its second 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 safeguard measure with respect to

certain steel products. China’s representatives

provided oral responses at the October meeting.

In addition to its comments during the transitional review, the United States also submitted

several sets of written questions to China as part

of the regular Committee reviews of notifications

of safeguards legislation and notifications of safeguard actions, in order to obtain further

information on China’s safeguard rules and 

practices. China submitted written responses in

October 2003, and we expect to follow up in 2004

with respect to these issues.

Implementation: At both the April and October

2003 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. In addition,

pursuant to the direction of the General Council,

the Committee considered a proposal by the

Africa Group with respect to special and differential treatment for developing country Members

under paragraphs 1 and 2 of Article 9 of the

Agreement. The Committee adopted a report to

the General Council on this issue at a special

meeting in July 2003, stating that it was unable to

reach consensus with respect to the proposal. 

Prospects for 2004

The Committee’s work in 2004 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 notifications in late 2003

that the Committee will be reviewing in 2004 are

notifications by the EU of its provisional safeguard measure on certain prepared or preserved

mandarins, and by Brazil of its intention to extend

its safeguard measure on toys.

8. Committee on Sanitary and

Phytosanitary Measures 

Status

The WTO Agreement on the Application of

Sanitary and Phytosanitary (SPS) Measures establishes rules and procedures to ensure that sanitary

and phytosanitary measures address legitimate

64 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
human, animal and plant health concerns; do not

arbitrarily or unjustifiably discriminate between

Members’ agricultural and food products; and are

not disguised restrictions on international trade.

SPS measures protect against risks associated

with plant or animal borne pests and diseases,

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

feedstuffs. Fundamentally, the Agreement

requires that such measures be based on science

and developed through systematic risk assessment procedures. At the same time, the SPS

Agreement preserves every WTO Member’s right

to choose the level of protection it considers

appropriate with respect to SPS risks.

The SPS Committee is a forum for consultation on

Members’ existing or 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. It also includes discussions of the Agreement’s provisions related to

transparency in the development and application

of SPS measures, special and differential treatment, technical assistance, and equivalence.

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 of a number of international organizations are invited to attend meetings

of the Committee as observers on an ad hoc basis:

the Food and Agriculture Organization (FAO), the

World Health Organization (WHO), the

FAO/WHO Codex Alimentarius Commission, the

FAO International Plant Protection Convention

Secretariat (IPPC), the International Office of

Epizootics (OIE), the International Organization

for Standardization (ISO) and the International

Trade Center (ITC), and others. 

A number of documents relating to the work of

the SPS Committee are available to the public

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

The SPS Committee documents are indicated by

the symbols, “G/SPS/....” Beginning in 2000, notifications of proposed SPS measures are indicated

by G/SPS/N (“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). Parties in the United

States interested in submitting comments to

foreign governments on their proposals should

send them through the U.S. inquiry point shown

in the box below. Reports of Committee meetings

are issued as “G/SPS/R/...” (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/SPS/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 available

to the public on the WTO’s website.

Major Issues in 2003

In 2003, the Committee met three times and the

Secretariat convened a workshop on the operation of inquiry points immediately following the

November meeting. These 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 equivalence, transparency and regionalization. The United States

views this as a positive development as it demonstrates growing familiarity with and

implementation of the provisions of the SPS

Agreement and increasing recognition of the

value of the Committee as a venue to discuss SPSrelated trade issues among Members. 

With assistance from the United States and other

donors, the 34 countries participating in the Free

Trade Area of the Americas negotiations attended

each of the meetings of the Committee in 2003.

This significantly expanded capital-based, and

Geneva-based, participation in the Committee.

Plans are being made to secure funding sources

to continue this assistance for attendance at

future meetings.

II. THE WORLD TRADE ORGANIZATION | 65
BSE-TSE2

: The Committee also devoted considerable time to discussing Members activities

regarding BSE and TSE’s. Several Members have

proposed and introduced measures to protect

consumers and animals against BSE. The

Committee discussed the need for these measures

to be based on science and that international standards should be used as the basis of Members’

actions, unless Members have a scientific justification for a more protective measure than that

provided by the international standard. The

United States anticipates that BSE will continue to

be an issue of interest and concern of many

Members and the Committee will have extensive

discussions about the nature of the disease and

measures taken by Members to protect public

health and animal health. Several Members,

including the United States, raised concerns

about the non-science based categorization of

countries’ BSE-status and the use of this categorization to restrict trade.

Implementation of the Bioterrorism Act: At the

November 2002 meeting and at each 2003

meeting of the Committee, the United States

provided information on the implementation of

the Public Health Security and Bioterrorism

Preparedness Act of 2002, known simply as the

Bioterrorism Act (BTA). The primary requirements of the BTA which affect food imported into

the United States are: the requirement for all food

handling facilities (including foreign facilities if

they export to the United States), with some

exceptions such as farms and restaurants, to

register with the U.S. Food and Drug

Administration (FDA); and to provide prior

notice of all food consignments imported into the

United States. Under the leadership of FDA,

various U.S. agencies have conducted outreach

and education to other countries to ensure

exporters to the United States are aware of these

requirements and know how to comply. Part of

this effort included the presentation of information at each meeting of the SPS Committee and

special outreach sessions conducted on the

margins of the March and November Committee

meetings to provide Members with the opportunity to discuss these new requirements with FDA

experts. During the March Committee meeting,

Members were encouraged to submit comments

and concerns about the proposed rules on registration and prior notice before the close of the

comment period on April 4, 2003. The concerns

of Members were also noted by FDA and appropriate responses were provided. At the November

meeting, the major changes from the proposed

rules that were reflected in the interim final rules

and implementation requirements were

explained both in the Committee meeting and at

a special outreach meeting hosted by the United

States. Members were also informed that

although the implementation of the interim final

rules could not be delayed (due to the automatic

implementation provisions of the BTA on

December 12, 2003), the United States would

show flexibility regarding the enforcement of

these requirements. 

Equivalence: At the request of developingcountry Members, the Committee held several

informal meetings on the provisions of Article 4

of the Agreement—Equivalence. In 2001, the

United States submitted a paper (G/SPS/W/111)

outlining our views and the activities of regulatory agencies as they relate to equivalence. This

paper and submissions from other Members

enabled the Committee to develop and approve a

decision of the Committee (G/SPS/19) which

outlines steps designed to make it easier for

Members to make use of the provisions of Article

4 of the Agreement. In 2002, the Committee

began discussions on certain aspects of this decision which need clarification. The Committee

adopted a work plan for the next two years on the

clarification of this decision.

Notifications: During several discussions in the

Committee regarding specific trade concerns

among Members and equivalence, Members

indicated that a specific discussion on the 

66 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

__________

2 Bovine Spongiform Encephalopathy and Transmissible Spongiform Encephalopathy
notification requirements and process would be

helpful. The Committee decided to have

informal meetings on notifications and transparency in 2002. At the June meeting, the

Committee adopted a revision to the notification

form and added space for Members to describe

measure recognized to be equivalent.

Technical Assistance: In June 2000, the United

States submitted information (G/SPS/W/181) on

technical assistance which had been provided to

Members on SPS issues. This information is

updated on an annual basis to reflect assistance

provided since the previous report in July 2001

(G/SPS/W/181add.1), June 2002 (add.2) and 

in June 2003 (add.3). Committee meeting, 

the United States provided updated information((G/SPS/W/181add.2) describing the

technical assistance provided by U.S. agencies

since the last report. 

China’s Transitional Review Mechanism: The

United States participated in the Committee’s

second review of China’s implementation of its

WTO under paragraph 18 of the Protocol on the

Accession of the People’s Republic of China. The

United States submitted questions regarding

China’s notification procedures, scientific basis

for some of its SPS measures, national treatment

and import inspection and approval procedures

(G/SPS/W/139). This paper and those of other

Members formed the basis of the Committee’s

discussions at the November meeting. China

provided oral responses to the questions raised by

the United States and other Members and restated

its commitment to implement the provisions of

the SPS Agreement.

Transparency: The SPS Agreement provides a

process whereby WTO Members can obtain

information on other Members’ proposed SPS

regulations and control, inspection, and approval

procedures, and the opportunity to provide

comments on those proposals before implementing Members’ make their final decisions.

These transparency procedures have proved

extremely useful in preventing trade problems

associated with SPS measures. The United States

continued to press all WTO Members to establish

an official notification authority, as required by

the Agreement, and to ensure that the

Agreement’s notification requirements are fully

and effectively implemented. Each Member is

also required to establish a central contact point,

known as an inquiry point, to be responsible for

responding to requests for information or making

the appropriate referral. This inquiry point circulates notifications received under the Agreement

to interested parties for comment. The SPS

inquiry point for the United States is:

Prospects for 2004

The Committee will continue to monitor implementation of the Agreement by WTO Members.

As mentioned above, the number of specific trade

concerns raised in the Committee appears to be

increasing and the Committee has been a useful

forum for Members to raise concerns and then

work bilaterally to resolve specific trade

concerns. The number of concerns in this area is

evidence of the importance and usefulness

Members place on the effective operation of the

Agreement. The Committee will continue to be

an important forum for Members to provide

information about efforts to manage and control

food safety and animal health emergencies as well

as ongoing food safety, animal and plant health

activities that affect international trade. 

In addition, during 2004, the United States

expects the Committee to continue discussions

on technical assistance and notifications. To date,

developed countries have submitted most of the

II. THE WORLD TRADE ORGANIZATION | 67

U.S. Inquiry Point

Office of Food Safety and Technical Services

Attention: Carolyn F. Wilson

Foreign Agricultural Service

U.S. Department of Agriculture

AG Box 1027

Room 5545 South Agriculture Building

14th and Independence Avenue, S.W.

Washington, DC 20250-1027

Telephone: (202) 720-2239

Fax: (202) 690-0677

email: ofsts@fas.usda.gov
papers and the United States will be encouraging

developing-country Members to participate more

actively in both formal meetings and informal

consultations to identify improvements. At the

November meeting, Committee agreed to an

informal meeting in March 2004 on Article 6,

Regionalization. Members have been invited to

submit papers on their experiences with these

provisions of the Agreement. These discussions

are expected to continue throughout 2004. As a

result of implementation discussions in the

General Council, the Committee will need to

address plans for conducting a review of the

Agreement as agreed upon by the General

Council. The Committee will continue to

monitor the development of international standards, guidelines and recommendations by

standard-setting organizations. The Committee

will seek to identify areas where the development

of additional or new standards would facilitate

international trade and provide this information

to the appropriate standard-setting organization

for consideration. The Committee will also

prepare for and conduct a review of China’s

implementation of the SPS Agreement.

9. Committee on Subsidies and

Countervailing Measures3

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: prohibited (red light) subsidies; permitted yet actionable (yellow light)

subsidies; and permitted, non-actionable (green

light) subsidies.4 Export subsidies and import

substitution subsidies are prohibited. All other

subsidies are permitted, yet are also 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 WTO3 Member. With the expiration of

the Agreement’s provisions on green light subsidies, at present, the only non-actionable subsidies

are those which are not specific, as defined above.

Major Issues in 2003

The Committee held two regular meetings in

2003. 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 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. In this regard, the

Committee took action to address the poor and

declining state of compliance with subsidy notifications in an effort to find a long-term solution to

the problem. During the fall meeting, the

68 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

__________

3 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 2004.

4 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 so long as such assistance conformed to the applicable terms and conditions set forth in Article 8. In

addition, Article 6.1 of the Agreement provided that certain other subsidies, referred to as dark amber subsidies, could be

presumed to cause serious prejudice. These were: (i) subsidies to cover an industry’s operating losses; (ii) repeated subsidies to

cover a firm’s operating losses; (iii) the direct forgiveness of debt (including grants for debt repayment); and (iv) when the ad

valorem subsidization of a product exceeds five percent. 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 our1999 report, a mandatory review was

conducted in 1999 under Article 31 of the Agreement to determine whether to extend the application of these provisions

beyond December 31 of that year. They 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. 
Committee also undertook its second 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 methodology

for the calculation of the per capita GNP

threshold in Annex VII of the Agreement, the

ramifications of European Union enlargement on

existing trade remedy measures, and the election

of two persons 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 regular 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 35 Members have not yet notified

that they maintain such legislation. Among the

notifications of CVD laws and regulations

reviewed in 2003 were those of: Antigua and

Barbuda; Argentina; Brazil; China; Costa Rica;

Czech Republic; Dominican Republic; the

European Communities; Grenada; Japan;

Lithuania; Mexico; New Zealand; Nicaragua;

Pakistan; Turkey; and, Zimbabwe5

. The notifications of Armenia and Peru were scheduled to be

reviewed at the fall 2003 regular meeting but were

postponed until next year.

As for CVD measures, six WTO Members notified

CVD actions taken during the latter half of 2002,

and eleven Members notified actions taken in the

first half of 2003. Specifically, the Committee

reviewed actions taken by Argentina, Australia,

Brazil, Canada, Costa Rica, the European Union,

Latvia, Mexico, New Zealand, Peru, South Africa,

the United States and Venezuela. With respect to

subsidy notifications, 34 Members provided new

and full notifications for 2003. (Importantly, the

United States submitted its subsidy notification in

2003, continuing to be in compliance with its

subsidy notification obligations under the

Agreement.) Twenty-two of these notifications

were reviewed in the fall of 2003. The remainder

will be reviewed next year. In 2003, the

Committee continued its examination of new and

full notifications submitted for 1998 and 2001, as

well as updating notifications submitted for 1999

and 2000.

Although WTO Membership was 146 as of

December 2003, as noted above, only 34

Members provided new and full notifications for

2003. Only 59 Members submitted new and full

subsidy notifications for 2001, while 47 and 43

Members, respectively, submitted updating notifications for the 1999 and 2000 periods. Notably,

numerous Members have never made a subsidy

notification to the WTO, although many are

lesser developed countries.

In view of the ongoing difficulties experienced by

Members, in meeting the Agreement’s subsidy

notification obligations, a three-prong strategy

has been employed to address the problem. The

first prong was to examine alternative practical

approaches to the frequency and nature of

subsidy notifications, as well as their review. In

2001, Members decided to devote maximum

effort to submitting new and full notifications,

every two years, and to de-emphasize the review

of the annual updating notifications.

Examination of the format for a subsidy notification constituted the second prong of the strategy.

II. THE WORLD TRADE ORGANIZATION | 69

__________

5 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. 
Efforts in this regard were made in 2002 and

culminated in the adoption in 2003 of a revised,

simplified format. The third prong was the organization of a subsidy notification seminar, geared

to participation by capital-based officials responsible for notification which was held in 2002.

Pursuant to an informal U.S. initiative, several

developed country Members have offered technical assistance to neighboring developing

country Members experiencing difficulty in

assembling and submitting subsidy notifications.

Implementation of this initiative will hopefully

provide the needed impetus for those developing

countries in need to meet their obligations under

the Subsidies Agreement and thereby address, at

least in part, the relatively poor record of WTO

Members in submitting notifications of their

subsidy programs. 

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 second annual transitional review with

respect to China’s implementation of its WTO

obligations in the areas of subsidies, countervailing measures and pricing policies. A number

of Members, including the United States,

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. While China

orally described some of its subsidy programs in

response to Members’ inquiries during the transitional review, it has not submitted a subsidies

notification since becoming a WTO Member,

citing numerous practical difficulties in assembling and submitting the appropriate information.

During the transitional review, the United States

and others expressed concern that China had not

yet submitted a subsidies notification and urged it

to do so as soon as possible.

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,

2001. Article 27.4 of the Agreement allows for an

extension of this deadline provided consultations

were entered into with the Subsidies Committee

by December 31, 2002. The Committee has the

authority to decide whether an extension is justified. In making this determination, the

Committee must consider the “economic, financial and development needs” of the developing

country Member. If the Committee grants an

extension, annual consultations with the

Committee must be held to determine the necessity of maintaining the subsidies.6 If the

Committee does not affirmatively sanction a

continuation, the export subsidies must be

phased out within two years. 

In an attempt to try and address the concerns of

small exporter 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 are eligible for a five-year

extension of the transition period, in addition to

the two years referred to under Article 27.4.7

In 2002, Colombia, El Salvador, Panama and

Thailand made requests under the normal extension process provided for in the Agreement.

Antigua and Barbuda, Barbados, Belize, Bolivia,

Costa Rica, Dominica, Dominican Republic, El

Salvador, Grenada, Guatemala, Honduras,

70 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

__________

6 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. 

7 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 added at the request of Colombia.
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.8 Uruguay requested an extension for 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.

In 2003, no requests were made for extensions

under the normal Article 27.4 procedures.9

Requests were made however, by all the countries

which had received extensions under the special

procedures adopted at the Fourth Ministerial

Conference for small exporter developing countries. Colombia also requested an extension for

two of its export subsidies programs for which

extensions were granted under the procedure

agreed to at the Fourth Ministerial Conference.

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 46 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 lesser 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 under the dispute settlement

process. Secondly, a higher de minimis threshold

is provided for in countervailing duty investigations of imports from these countries, although

this standard expired at the end of 2002.10 The

countries identified in Annex VII include those

WTO 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).11 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 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 approach based on certain World Bank data

that were used by the Uruguay Round negotiators

in 1990 in developing Annex VII(b). While 

many Members expressed the view that they 

could accept this proposed methodology, other

II. THE WORLD TRADE ORGANIZATION | 71

__________

8 Bolivia, Guatemala, 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-year extension period contemplated by the special procedures.

Because these countries are only reserving their rights at this time, the Committee did need to make any decisions as to

whether their particular programs qualify under the special procedures. 

9 As a result, the export subsidy programs of Colombia, El Salvador, Panama and Thailand which had been granted normal

Article 27.4 extensions in 2002, must be phased out within two years (i.e., the end of 2005). 

10 This de minimis for Annex VII countries was 3 percent, compared with the 2 percent for other developing countries.

11 Annex VII(b) countries 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.
Members indicated that it was more appropriate

to rely on more recently available data. Thus, it

was not possible to reach a consensus on the

question of methodology.

At the Fourth Ministerial Conference, it was agreed:

... 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 U.S. $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 U.S. $1000 based

upon the most recent data from the

World Bank.12

No alternative methodology was proposed in

2002. Therefore, the Chairman’s methodology

proposed in 2001 has been in effect since January

1, 2003. The WTO Secretariat updated the calculations later in the year.13

European Union Expansion: At the fall meeting,

the Committee discussed issues pertaining to the

status of outstanding countervailing duty measures of the EU in light of the future expansion of

the EU from 15 members to 25 members in 2004.

The United States filed written questions to the

EU on this issue, raising concerns about whether

the EU’s announced intention to extend 

automatically, upon expansion, its countervailing duty measures now covering imports into

the territory of the 15 current member-states of

the EU to cover imports into the territory of the

25 member-states after expansion would be

consistent with the Agreement, particularly in

the absence of an additional determination of

injury covering the territory of the 25 memberstates. The EU responded orally to the U.S.

questions, and several other Members raised

additional questions and concerns on this issue.

Discussion will continue in 2004.

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 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. At of the beginning of

2002, the members of the Permanent Group of

Experts were: Professor Okan Aktan; Mr. Jorge

Castro Bernieri; Dr. Marco Bronckers; Professor

R.G. Flores Jr.; and Mr. Hyung-Jin Kim.

Professor Flores’ term as a member of the PGE

72 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

__________

12 The addition of the phrase “for three consecutive years” was added at the request of Honduras which was concerned that their

possible graduation from Annex VII in the near future might place them in a worse position than those Members which avail

themselves of the special procedures under Article 27.4 for small developing country exporters.

13 See G/SCM/110.
expired in the spring of 2003. In addition, Mr.

Castro-Bernieri, who was elected to the PGE for

the term 2001-2006, resigned upon his 

appointment to the WTO Secretariat. Mr.

Terence P. Stewart—a recognized international

trade law practitioner from the United States—

and Mr. Yuji Iwasawa were elected to replace Mr.

Castro-Bernieri and Professor Flores to the PGE,

assuming terms until spring 2006, and spring

2008, respectively.

Prospects for 2004

In 2004, the United States will continue to work

with others to try to identify ways to rationalize

the burdens of subsidy notification for all WTO

Members without diminishing transparency or

taking away from the other substantive benefits of

the notification obligation and to provide technical assistance when available and where

appropriate. Second, the United States will participate actively in the review of other WTO

Members’ CVD legislation and actions, as well as

China’s Transitional Review, and will bring to

Members’ and the Committee’s attention any

concerns which may arise about such laws or

actions, whether in general or in the context of

specific proceedings. 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 that the Subsidies

Committee may be asked to consider in the

context of issues that may arise within the Rules

Negotiating Group. 

10. Committee on Technical Barriers

to Trade 

Status

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. Its aim is to

prevent the use of technical requirements as

unnecessary barriers to trade. The Agreement

applies to a broad range of industrial and agricultural products, though sanitary and

phytosanitary (SPS) measures and specifications

for government procurement are covered under

separate agreements. It establishes rules that 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 non-discriminatory basis, developed

and applied transparently, and should be based on

relevant international standards and guidelines,

when appropriate. 

II. THE WORLD TRADE ORGANIZATION | 73

U.S. Inquiry Point 

National Center for Standards and

Certification Information

National Institute of Standards and

Technology (NIST)

100 Bureau Drive, Stop 2150

Gaithersburg, MD 20899-2150

Telephone: (301) 975-4040

Fax: (301) 926-1559

email: ncsci@NIST.GOV

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: 
The TBT Committee14 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 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 opportunity for the public

resulting from the TBT Agreement is the ability 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,

which is responsible for responding to requests

for information on technical requirements or

making the appropriate referral.

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 Member).15 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’s website.

Major Issues in 2003

The TBT Committee met three times in 2003. At

the meetings, the Committee 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 which

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 European Commission that could seriously

disrupt trade. 

74 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

__________

14 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.

15 Before 2000, the numbering of notifications of proposed technical regulations and conformity assessment procedures read:

“G/TBT/Notif./...” (followed by a number).
The Committee conducted its Eighth Annual

Review of the Implementation and Operation of

the Agreement based on background documentation contained in G/TBT/12, and its Eighth

Annual Review of the Code of Good Practice for

the Preparation, Adoption and Application of

Standards (Annex 3 of the Agreement) based on

background documentation contained in

G/TBT/CS/1/Add.7 and G/TBT/CS/2/Rev.9.

Decisions and recommendations adopted by the

Committee are contained in G/TBT/1/Rev.8.

Follow-up to the Second Triennial Review of 

the Agreement: Beyond bilateral trade 

concerns discussed under “Statements on

Implementation,” the work of the Committee has

focused on issues identified in the Second

Triennial Review of the Agreement (see

G/TBT/9). The review provided the opportunity

for WTO Members to review and discuss all of the

provisions of the Agreement, which facilitated a

common understanding of their rights and obligations under the Agreement. In follow-up to that

review, priority attention has been given to technical assistance and the implementation needs of

developing countries, as well as to trade effects

resulting from labeling requirements.

Technical Assistance: In the Second Triennial

Review, the Committee recognized the importance of ensuring that solutions to

implementation problems were targeted at the

specific priorities and needs identified by individual or groups of developing country Members.

This called for effective coordination at the

national level between authorities, agencies, and

other interested parties to identify and assess the

priority infrastructure needs of a specific

Member. The Committee recognized the need for

coordination and cooperation between donor

Members and organizations, as well as between

the Committee, other relevant WTO bodies, and

donor organizations. In order to enhance the

effectiveness of technical assistance and cooperation, the Committee agreed to develop a

demand-driven technical cooperation program

beginning with the identification and prioritization of needs by developing countries, and

working with other relevant international and

regional organizations. To this end, the

Committee developed and conducted a

Questionnaire for a Survey to Assist Developing

Country Members to Identify and Prioritize their

Specific Needs in the TBT Field (G/TBT/W/178).

To date, over 50 WTO Members responded to the

survey. The Secretariat prepared an un-restricted

summary of the survey responses received prior

to the October 17, 2002, meeting of the

Committee (G/TBT/W/186). On March 18, 2003

the Committee held a Workshop on Technical

Assistance which included presentations on assistance needs, case studies on successful

approaches, and a discussion of future strategies.

Labeling: The Committee intensified its exchange

of information on issues associated with labeling

requirements, noting the frequency with which

specific concerns regarding mandatory labeling

were raised at meetings of the Committee during

discussions on implementation, and stressing that

although such requirements can be legitimate

measures, they should not become disguised

restrictions on trade. Since the conclusion of the

Second Triennial Review, a number of Members

presented papers on their views, including

submission from the United States

(G/TBT/W/165). Although Switzerland and the

European Union suggested the need for clarification of TBT disciplines to better address labeling

concerns, their view gained little support, with

most WTO Members including the United States

emphasizing the need to comply with existing

obligations. In response to a request from the

Committee, the Secretariat prepared two background papers to inform the discussions: a

compilation of notifications made since 1995

(G/TBT/W/183), and a compilation of specific

trade concerns related to labeling raised at meetings of the TBT Committee (G/TBT/W/184). The

Secretariat estimates some 723 notifications have

been made between January 1, 1995 and August

31, 2002 which involved labeling proposals. The

Committee held a “Learning Event” on labeling

on October 21-22, 2003. The event was focused

on case studies, with a particular focus on developing countries’ concerns. 

II. THE WORLD TRADE ORGANIZATION | 75
Third Triennial Review: At its meeting on

November 7, 2003, the Committee concluded its

Third Triennial Review of the Agreement

(G/TBT/13). The review reflected discussions

undertaken by the Committee since the conclusion of the Second Triennial Review in 2000. The

Review focused on the following topics: (a) implementation and administration of the Agreement;

(b) good regulatory practice; (c) transparency

procedures; (d) conformity assessment procedures; (e) technical assistance and special and

differential treatment; and, (f) other elements.

Among other things, the Committee agreed to

intensify its exchange of information on

conformity assessment , including implementation

of supplier’s declaration of conformity and other

approaches to facilitate the acceptance of

conformity assessment results through future

workshops. It will also explore ways to facilitate

coordination within the WTO and with other

bodies technical assistance in response to identified needs. The United States submission for the

Triennial Review is contained in G/TBT/W/220.

The Triennial Review includes a listing of all the

submissions made by Members in the context of

the review and which are available at www.wto.org.

It also includes information, by Member, on

whether they have established an enquiry point

and provided a Statement regarding domestic steps

that have been taken to implement the Agreement.

Prospects for 2004

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 specific concerns. In 2004, the

Committee is expected to host at least one workshop on conformity assessment in follow-up to

the Third Triennial Review. Follow-up on issues

raised in past reviews, or discussion of new issues

in preparation for the Fourth Review, are driven

by Members statements and submissions. The

U.S. priorities are likely to continue to focus on

good regulatory practice, transparency and 

technical assistance.

11. Committee on Trade-Related

Investment Measures

Status

The Agreement on Trade-Related Investment

Measures (TRIMS) prohibits investment measures that violate the GATT Article III obligation to

treat imports no less favorably than domestically

produced products and the GATT Article XI obligation not to impose quantitative restrictions on

imports. The TRIMS Agreement thus requires the

elimination of certain measures imposing

requirements on, or linking advantages to, the

performance 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 violate its obligations.

The TRIMS Agreement required formal notification and eventual elimination of TRIMS measures

that existed at the time the agreement came into

force in January 1995. 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.

Developments relating to the TRIMS Agreement are

monitored and discussed both in the CTG and in

the CTG Committee on Trade-Related Investment

Measures (TRIMS Committee). The United States

focused its work on TRIMS issues in several areas

during 2003: the review of the operation of the

TRIMS Agreement mandated under Article 9;

monitoring compliance with the agreement;

proposals for the provision of special and differential treatment relating to the TRIMS Agreement;

and a review of China’s compliance efforts. 

76 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Major Issues in 2003

The TRIMS Committee held three formal meetings during 2003. TRIMS issues were also

discussed during several meetings of the CTG. 

The CTG continued its review of the operation of

the TRIMS Agreement mandated by Article 9 of

the Agreement. Members discussed proposals by

several developing countries—including a 2002

paper from Brazil and India submitted under the

Doha Ministerial Declaration mandate (paragraph

12(b)) to review the implementation of WTO

agreements—recommending that the TRIMS

Agreement be amended to allow developing countries to use TRIMS for development purposes. 

The United States and several other WTO

members opposed proposals to amend the TRIMS

Agreement, arguing that TRIMS had been shown

to distort trade flows and to discourage foreign

investment, harming developing countries. Given

the lack of consensus on proposals to amend the

TRIMS Agreement, the United States argued that

the Article 9 review should be concluded. The

United States also argued that individual WTO

Members experiencing difficulty complying with

the Agreement should seek relief under existing

WTO waiver mechanisms.

During meetings of the TRIMS Committee and of

the CTG in late 2002 and 2003, the United States

sought to verify whether the eight WTO Members

that received extensions of their TRIMS phaseout deadlines in 2001 had eliminated notified

measures and come into full compliance with the

Agreement. In November 2003, six of these countries (Argentina, Colombia, Mexico, Philippines,

Romania, and Thailand) reported that they had

eliminated outstanding measures or were on

track to do so by the end of the year. The

Malaysian delegation was not able to describe the

current status of its efforts to phase-out remaining

TRIMS. Pakistan reported that it would not eliminate certain auto-related TRIMS by the end of

2003. In December, Pakistan requested that its

deadline for eliminating certain measures in the

automotive sector be extended again, until the

end of 2006.

As part of the review of special and differential

treatment provisions, the Chairman of the

General Council considered several TRIMSrelated proposals submitted by a group of African

countries. One proposal stated that WTO

Members should interpret and apply the TRIMS

Agreement in a manner that supports WTOconsistent measures taken by developing and

least-developed countries to safeguard their

balance of payments. Under the second proposal,

least-developed or other low-income WTO

Members experiencing balance-of-payments

difficulties would be permitted to maintain measures inconsistent with the TRIMS Agreement for

periods of not less than six years. The final

African proposal would have required 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. 

The African S&D proposals were discussed

during several TRIMS Committee meetings in

June and July. The United States argued that any

TRIMS measures imposed for balance-of

payments purposes must follow existing WTO

rules on balance-of-payments safeguards. The

United States also said that it would not be appropriate to adopt fixed time periods for maintaining

TRIMS measures in response to balance-ofpayments crises and that, given the lack of

requests for TRIMS extensions from least-developed countries to date, it was not convinced that

a policy of automatically granting requests for

longer TRIMS transition periods was warranted.

Following extensive consultations, the Chairman

concluded that it would be possible to reach

agreement on the first African proposal, but that

compromise on the other proposals was not

attainable. The Chairman noted the absence of

consensus in a July report to the General Council.

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

second annual review in 2003 of China’s implementation of the TRIMS Agreement and related

II. THE WORLD TRADE ORGANIZATION | 77
provisions of the Protocol. The United States’

principal 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 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 2004

In early 2004, the United States will seek to verify

the elimination of TRIMS by the countries that

received extensions of the transition period until

the end of 2003. The United States will also

engage other WTO Members in efforts to

promote compliance with the TRIMS Agreement.

12. Textiles Monitoring Body 

Status

The Textiles Monitoring Body (TMB), established

in the Agreement on Textiles and Clothing (ATC),

supervises the implementation of all aspects of

the Agreement. Pursuant to the provisions of the

ATC, the 10-year period for phasing out textile

restraints ends on December 31, 2004. After that

date, all remaining textile restraints maintained

under the provisions of the ATC will be eliminated and the TMB will cease to exist. In 2003,

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 serves in a personal capacity. 

The ATC succeeded the Multifiber Arrangement

(MFA) as an interim arrangement establishing

special rules for trade in textile and apparel products on January 1, 1995. All Members of the WTO

are subject to the disciplines of the ATC, whether

or not they were signatories to the MFA, and only

Members of the WTO are entitled to the benefits

of the ATC. The ATC is a ten-year arrangement

which provides for the gradual integration of the

textile and clothing sector into the WTO and

provides 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. 

The United States has implemented the ATC in a

manner which ensures that the affected U.S.

industries and workers as well as U.S. importers

and retailers have a gradual, stable and

predictable regime under which to operate during

the quota phase-out period. At the same time, the

United States has aggressively sought to ensure

full compliance with market-opening commitments by U.S. trading partners, so that U.S.

exporters may enjoy growing opportunities in

foreign markets. 

Under the ATC, the United States is required to

“integrate” products which accounted for specified percentages of 1990 imports in volume over

three stages during the course of the transition

period—that is, to designate those textile and

apparel products for which it will henceforth

observe full GATT disciplines. Once a WTO

Member has “integrated” a product, the Member

may not impose or maintain import quotas on

that product other than under normal GATT

procedures, such as Article XIX. As required by

Section 331 of the Uruguay Round Agreements

Act, the United States selected the products for

early integration after seeking public comment,

and published the list of items at the outset of the

transition period, for purposes of certainty and

transparency. The integration commitments for

stages one and two were completed in 1995 and

1998. The United States notified the TMB in 2001

of the integration commitments for stage three

and implemented these commitments on January

1, 2002. The list for all three stages may be found

in the Federal Register, volume 60, number 83,

pages 21075-21130, May 1, 1995. 

78 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Also as part of the ATC, with each “stage” is a

requirement that the United States and other

importing Members increase the annual growth

rates applicable to each quota maintained under

the Agreement by designated factors. Under the

ATC, the weighted average annual growth rate for

WTO Members’ quotas increased from 

4.9 percent in 1994 to 9.3 percent in 2002. 

Major Issues in 2003

A considerable portion of the TMB’s time in 2003

was spent reviewing notifications made under

Article 2 of the ATC dealing with textile products

integrated into normal GATT rules and no longer

subject to the provisions of the ATC. WTO

Members wishing to retain the right to use the

Article 6 safeguard mechanism were required in

2001 to submit a list of products comprising at

least 18 percent (calculated by trade volume) of

the products included in the annex to the ATC. A

number of these notifications were defective for

various reasons and in a number of cases the

TMB’s review has carried into 2003. The TMB

expressed concern that a number of countries

which announced their intention to retain the

right to use Article 6 safeguards failed to make the

required integration notification. 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.” The TMB also reviewed

notifications from the United States, the European

Union, Canada and Turkey concerning their

textile restraints on China. These notifications

were made to the TMB following the accession of

China to the WTO in December 2001. 

Prospects for 2004

Although the TMB will dissolve at the end of 2004,

the United States will continue to monitor compliance by trading partners with market opening

commitments, and will raise concerns regarding

the implementation of these commitments

through 2004 in the TMB and in other WTO fora,

as appropriate. The United States will also pursue

further market openings, including in negotiations

with WTO applicants in the process of acceding to

the WTO. In addition, the United States will

continue to respond to surges in imports of textile

products which cause or threaten serious damage

to U.S. domestic producers. The United States will

also continue efforts to enhance cooperation with

U.S. trading partners and improve the effectiveness of customs measures to ensure that restraints

on textile products are not circumvented through

illegal transshipment or other means.

13. Working Party on State Trading 

Status

Article XVII of GATT 1994 requires Members to

place certain restrictions on the behavior of state

trading firms and on private firms to which they

accord special or exclusive privileges to engage in

importation and exportation. Among other

things, Article XVII requires Members to ensure

that “state trading enterprises” act in a manner

consistent with the general principle of nondiscriminatory treatment, make purchases or

sales solely in accordance with commercial

considerations, and abide by other GATT disciplines. To address the ambiguity regarding which

types of firms fall within the scope of “state

trading enterprises,” an agreement was reached in

the Uruguay Round referred to as “The

Understanding on the Interpretation of Article

XVII” (the “Understanding”). The 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 was established in 1995 to

review, inter alia, the 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 state trading enterprises and the kinds of

activities engaged in by these enterprises, which

may be relevant for the purposes of Article XVII

of GATT 1994. All Members are required under

Article XVII of GATT 1994 and paragraph 1 of

the Understanding to submit annual notifications

of their state trading activities. 

II. THE WORLD TRADE ORGANIZATION | 79
The WTO Agreement on Agriculture marked an

important step in bringing the activities of agricultural state trading entities under the same

disciplines that apply to non-agricultural products. Before the Uruguay Round, agricultural

products were effectively outside the disciplines

of GATT 1947. This also limited review of state

trading enterprise activities, since many state

trading enterprises directed trade in agricultural

products. The lack of tariff bindings on agricultural products in most countries also limited the

scope of GATT 1947 disciplines because without

tariff bindings governments could raise import

duties and state trading enterprises could impose

domestic mark-ups on imported products.

Under the Agreement on Agriculture, all agricultural tariffs (including tariff-rate quotas (TRQs))

are now bound. While further work is needed on

the administration of TRQs, bindings act to limit

the scope of state traders to manipulate imports.

Likewise, the disciplines on export competition,

including value and quantity ceilings on export

subsidies, apply fully to state trading enterprises.

U.S. agricultural producers and exporters have

expressed concerns about the operation of certain

state trading enterprises, particularly single-desk

importers or exporters of agricultural products,

and have called for more meaningful disciplines. 

Major Issues in 2003

New and full notifications were first required in

1995 and, subsequently, every third year thereafter.

updating notifications indicating any changes are

to be made in the intervening years. The notifications submitted by WTO Members as of November

11, 2003 were: 40 Updating Notifications for 2000;

49 New and Full Notifications for 2001; 31

Updating Notifications for 2002; and 12 Updating

Notifications for 2003. On November 24, 2003, the

United States submitted New and Full

Notifications of its state trading enterprises for

1998 and 2001 and Updating Notifications for

1999, 2000, 2002 and 2003.

The Working Party held one formal meeting in

November 2003 where it reviewed Member 

notifications. It also adopted a recommendation

to the Council for Trade in Goods to change the

periodicity of notifications from new and full

notifications every three years with updating

notifications in the intervening years, to new and

full notifications every two years with an elimination of the updating notifications. 

In October 2003, 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 GATT 1994.

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 GATT 1994. The

United States believes that its interests are being

adversely affected by the operations of the

(ALCOTEXCA) and its members.

Prospects for 2004

As part of the agricultural negotiations in the

WTO, the United States proposed specific disciplines on both import and export agricultural

state trading enterprises that would expand transparency and competition for these entities.

Specifically, the United States has proposed the

elimination of exclusive trading rights of single

desk exporters, stronger notification requirements, and the elimination of the use of

government funds or guarantees to finance

potential operational deficits or to otherwise

insulate export state trading enterprises from

market or pricing risk.

In 2004, the Working Party on state trading enterprises 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.

80 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
F. Council for Trade in Services 

Status

The General Agreement on Trade in Services

(GATS) is the first multilateral, legally enforceable agreement covering trade 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 (CTS) oversees implementation

of the GATS and reports to the General Council.

Ongoing negotiations take place in the CTS

meeting in Special Session, described earlier in

this chapter. The following section discusses

work of the CTS regular session.

Major Issues in 2003

The Fifth Protocol of the GATS (Financial

Services) was reopened for three new members

during 2003: the Dominican Republic, Uruguay,

and Poland.

India tabled a paper concerning implementation

of GATS Article VII, regarding Mutual

Recognition. Several developing country

Members argued that lack of mutual recognition

agreements regarding the qualifications of service

providers effectively limits market access. In

particular, India argued that Members must investigate whether some non-governmental entities

were delegated powers by the government to

conclude mutual recognition agreements and

therefore required notification pursuant to Article

VII. This issue is especially, but not exclusively

relevant to providers of professional services.

The United States, with the support of other WTO

Members, raised concerns regarding China’s

implementation of its GATS commitments in the

distribution, express delivery, and telecommunications sectors during regular CTS meetings and

as part of the Transitional Review of China’s implementation of its services commitments.

The CTS continued to discuss proposals by some

WTO Members for a technical review of Article

XX:2 of the GATS. At its July meeting, the

Council referred the matter for consideration by

the Committee on Specific Commitments, which

is due to report back to the Council at its first

informal meeting in 2004. Discussion has

continued on Members’ concerns that the scheduling provisions in Article XX:2 may produce

unintended confusion regarding the relationship

between commitments in the Market Access and

National Treatment columns of Member

Schedules.

The first air transport review, which is required

under the GATS Annex on Air Transport Services,

examined developments in the air transport

sector and the operation of the Annex with a view

to considering the possible further application of

the GATS in the air transport sector. The review

began in late 2000 and was concluded at the CTS

Regular Session meeting in October 2003. In

October 2001, the United States submitted a

written statement presenting its views that to

date, bilateral and plurilateral venues outside the

WTO have proven to be effective in promoting

liberalization in this important sector (available

at http://docsonline.wto.org. Documents are filed

in the WTO Document Distribution Facility

under the document symbol: S/C/W/198). The

Council decided to formally commence the

second review at its last regular meeting in 2005,

without prejudice to Members’ views on the interpretation of the Annex.

In April 2003, the European Union formally notified the Chair of the Special Session under Article

V of the GATS regarding the consolidation of the

European Union (15) to include Austria, Finland,

and Sweden. As a result of the consolidation,

several GATS commitments made by the three

countries were withdrawn or modified. The

Council addressed the issue of the EU Article V

II. THE WORLD TRADE ORGANIZATION | 81
notification at its July meeting. A number of

Members voiced concerns about the notification

process used by the EU, which constituted the

first use of GATS Article XXI. A large number of

Members also voiced concern about apparent EU

intent to introduce new most favored nation

(MFN) exemptions as a result of this enlargement. Concerns were generally raised about the

use of Article XXI, especially in light of EU intent

to enlarge further in 2004. To allow more time for

consultations and examination, the EU and

Members claiming an interest pursuant to Article

XXI mutually agreed to extend the period of

negotiations until June 1, 2004. 

Prospects for 2004

The CTS Regular Session will continue to discuss

work related to ongoing implementation of the

GATS, including with regard to Article VII and

Article XXI. Once the CSC reports on its discussions of Article XX.2, the CTS will decide whether

to continue discussion of the issue.

1. Comittee on Trade in Financial

Services 

Status 

The Committee on Trade in Financial Services

(CTFS) enables WTO Members to explore any

financial services market access or regulatory

issue deemed appropriate, including implementation of existing trade commitments.

Major Issues in 2003

The CTFS met five times in 2003. During the

reporting period, the Dominican Republic,

Poland and Uruguay ratified their commitments

under the 1997 Financial Services Agreement and

completed procedures at the WTO to make those

commitments binding under the GATS (accepted

the “Fifth Protocol”). Brazil, Jamaica and the

Philippines are now the only remaining participants from the 1997 negotiations that have not

yet accepted the Fifth Protocol. WTO Members

urged those three countries to accept the Fifth

Protocol as quickly as possible and, in the meantime, to provide detailed information on the

status of their domestic ratification efforts. 

Several WTO Members, including Hong Kong,

China, Switzerland, Peru, Malaysia and Turkey

reported on developments under their financial

services regimes, including issues such as efinance. The IMF and the World Bank made

special presentations on financial services issues,

the IMF focusing on issues connected with financial sector stability and the World Bank, on how

openness of the banking sector contributes to

overall economic growth. 

In December, 2003, the CTFS carried out a review

of China’s implementation of its WTO financial

services commitments as part of China’s

Transitional Review Mechanism. The United

States and other WTO members expressed

concerns with China’s implementation of certain

commitments in the insurance, motor vehicle

financing, and banking sectors.

2. Working Party on Domestic

Regulation 

Status

GATS Article VI, 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.

The WPPS developed Guidelines for the

Negotiation of Mutual Recognition Agreements

in the Accountancy Sector, adopted by the WTO

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

these or similar disciplines may be more generally applicable to other sectors. The Working

82 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Party shall report its recommendations to 

the CTS not later than the conclusion of the 

services negotiations. 

Major Issues in 2003

With respect to the development of generally

applicable regulatory disciplines, Members

discussed a possible Annex to the GATS, which

would consist of horizontal disciplines on

licensing procedures and requirements, technical

standards, qualification procedures and requirements, and transparency. Such regulatory

disciplines would be aimed at ensuring that regulations are not in themselves a restriction on the

supply of services. The United States has

supported negotiating horizontal transparency

disciplines, however it has signaled its interest in

pursuing a sector specific approach with respect

to the other elements. 

The United States has supported focusing the

Working Party’s discussion on examples of problems or restrictions for which new disciplines

would be appropriate, before defining the disciplines themselves. Some Members have

suggested that any regulatory disciplines should

only apply to sectors in which countries have

scheduled specific commitments. The Working

Party has also reviewed the relationship between

any future regulatory disciplines and existing

transitional mechanisms, recognition issues, and

licensing procedures based on submissions from

Singapore, India, and the EU. 

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 Secretariat has

also conducted similar consultations with

International Organizations. The results varied;

in some professions, the accountancy disciplines

could be applied, with perhaps a few modifications; in other professions, the accountancy

disciplines were not applicable. During these

consultations however, some Members found a

general lack of familiarity with the GATS and/or

the accountancy disciplines. The Working Party

agreed to hold a workshop on domestic 

regulations for trade policy experts and regulators; The workshop is scheduled to occur in 2004.

Prospects for 2004

The Working Party will continue discussion of

possible regulatory disciplines, both horizontal

and sector-specific, to promote the GATS objective of effective market access. A workshop on

domestic regulations for Member’s trade policy

and regulatory experts is planned for early 2004.

Some Members may want to pursue additional

negotiations, including extending the

“Guidelines for the Negotiation of Mutual

Recognition Agreements in the Accountancy

Sector” to other sectors. 

3. Working Party on GATS Rules 

Status

The Working Party on GATS Rules was 

established to determine whether the GATS

should include new disciplines on emergency

safeguards, government procurement, or subsidies. The Working Party held five formal

meetings in 2003. Of the three issues, the GATS

established a deadline only for safeguards which

has since then been extended to March 15, 2004.

Major Issues in 2003

Members provided a progress report on 

safeguards negotiations in March 2003 and

progress reports on government procurement and

subsidies in July 2003 in preparation for the Fifth

Ministerial Conference.

The Working Party continued its examination of

the desirability and feasibility of an emergency

safeguard for services, as well as the scope of

Article X’s mandate to negotiate on “the question

of” emergency safeguard measures. Members

evaluated different safeguard-type provisions

contained in economic integration agreements

and in statements made by Members in previous

meetings. The Working Party also discussed a

hypothetical example presented by ASEAN of a

situation justifying the use of an emergency safeguard. Discussions on these issues also reviewed

II. THE WORLD TRADE ORGANIZATION | 83
submissions made by Switzerland and the EU,

documents produced by the Chair and

Secretariat, and Members’ previous submissions.

On government procurement, the EU proposed

negotiating an annex which would lay out conditions under which certain GATS provisions

would apply to government procurement of services. Members continue to disagree on whether

the scope of Article XIII excludes negotiations on

market access, national treatment and most

favored nation. Members reviewed different

government procurement related provisions

included in economic integration agreements.

The United States continued to support commitments for transparency of government

procurement of services and goods, and building

on work conducted in the WTO Working Group

on Transparency in Government Procurement. 

With respect to subsidies, the Working Party

examined possible definitions of what could be

considered a subsidy, as well as what could be

considered “trade distortive.” Members sought to

obtain more information on subsidies in services

sectors, including from other international organizations. The Chair issued an updated “Checklist”

on Subsidies” for Members to submit additional

information. The Secretariat updated an earlier

compilation of subsidy disciplines included in

economic integration agreements.

Prospects for 2004

Discussion on all three issues will continue in

2004. Given the March 15, 2004 deadline, and

developing countries strong interest in emergency safeguards, these negotiations will be

poised either for another extension or suspension

of Article X’s mandate, or a political decision on

the scope of Article X’s mandate (i.e. definitive

decision on whether to an emergency safeguard

mechanism will be construed). We can expect

that developing countries will tie progress on

further services liberalization commitments to an

acceptable resolution on emergency safeguards.

Members will also continue to gather further

information for government procurement and

subsidies negotiations, and discuss proposals for

a possible Annex or set of disciplines. The United

States will need to ensure that any transparency

disciplines for government procurement or

commitments affecting services government

procurement, are in line with those applied to

government procurement of goods. Subsidies

discussions will likely focus on Member’s ability

to obtain information on different types of services subsidies, from different sources, and use

examples to examine “trade distortive” aspects.

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

application of the procedures for the modification

of schedules under Article XXI of the GATS. The

Committee also oversees implementation of

commitments in Member schedules in sectors for

which there is no sectoral body, currently all

sectors except financial services. The Committee

works to improve the classification of services so

that scheduled commitments reflect the services

activities, particularly to ensure coverage of

evolving services.

Major Issues in 2003

Before the submission of offers by June 30 as

mandated by the Doha Declaration, the Chair of

the CSC provided guidance on the parameters for

the submission of offers. 

At its July 2003 meeting, the Council for Trade in

Services referred consideration of issues relating

to Article XX:2 of the GATS to the CSC. The

primary issue of concern is the relationship

between Market Access and National Treatment

commitments, particularly the interpretation of a

Members’s Schedule where one column reads

“None” while the other reads “Unbound.” The

Committee held discussions on the topic at its

meetings in September and December, and is

scheduled to report back to the Council in 2004.

84 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
The Committee also continued work on

improving classification of services in individual

sectors for which problems have been identified.

In particular, the Committee addressed classification issues in legal services and energy services.

Prospects for 2004

Work will continue on technical issues and other

issues raised by Members.

G. 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 least-developed

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 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.

Major Issues in 2003

In 2003, 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 elsewhere in

Chapter IV and below). In addition to continuing

its work reviewing the implementation of the

Agreement by developing countries and newlyacceding Members, the Council’s work in 2003

focused on TRIPS issues addressed in the Doha

Ministerial Declaration and the Declaration on

the TRIPS Agreement and Public Health.

II. THE WORLD TRADE ORGANIZATION | 85
Review of Developing Country Members’ TRIPS

Implementation: As a result of the Agreement’s

staggered implementation provisions, the TRIPS

Council during 2003 devoted 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 called for 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. This article permits

Members to exclude from patentability plants,

animals, and essential biological processes for

producing plants and animals. The Council also

concentrated on institution building internally

and with the World Intellectual Property

Organization (WIPO). 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 of their obligations. 

During 2003, the TRIPS Council completed

reviews of the implementing legislation of China

(as part of China’s transitional review), Brazil,

Cameroon, Kenya and the Philippines, and noted

new responses received from and the outstanding

material required to complete the reviews of 15

other Members..

Intellectual Property and Access to Medicines: At

the Doha Ministerial Conference, 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. Ministers

agreed on the need for a balance between the

needs of poor countries without the resources to

pay for cutting-edge pharmaceuticals and the

need to ensure that the patent rights system

which promotes the continued development and

creation of new lifesaving drugs is promoted. 

The United States is pleased that the Declaration

reflects and confirms our profound conviction

that the exclusive rights provided by Members as

required under the TRIPS Agreement are a

powerful force supporting public health 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 to

the least developed and developing country

Members to assist them in addressing their public

health care problems.

One major part of the Doha Declaration was the

agreement to provide an additional ten-year tran86 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
sition period (until 2016) for least developed

countries, which was first proposed by the United

States. On June 27, 2002, the TRIPS Council

implemented this aspect of the Doha Declaration

by taking a decision 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

or to enforce rights provided for under these

Sections until January 1, 2016. This decision is

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.

In paragraph 6 of the Declaration on the TRIPS

Agreement and Public Health, 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. 

Throughout the ensuing negotiations to develop

such a solution, the United States remained

committed to the Doha Declaration and worked

intensively to find a solution that would provide

life-saving drugs to those truly in need. As the

negotiations drew to a close, however, it became

clear that some WTO Members and advocacy

organizations sought to expand the scope of

diseases beyond that intended at Doha to allow

countries to override drug patents to treat a wide

range of concerns, such as obesity. The United

States was seriously concerned that this approach

could substantially undermine the WTO rules on

patents which provide incentives for the development of new pharmaceutical products. 

While pledging to continue to work with other

WTO Members to try to find a solution within the

WTO, on December 20, the United States

announced an immediate practical solution to

allow African and other developing countries to

gain greater access to pharmaceuticals and

HIV/AIDS test kits when facing public health

crises. The United States pledged to permit these

countries to override patents on drugs produced

outside their countries in order to fight

HIV/AIDS, malaria, tuberculosis, and other types

of infectious epidemics, including those that may

arise in the future. Specifically, the United States

pledged not to challenge any WTO Member that

contravenes WTO rules to export drugs produced

under compulsory license to a country in need,

and called on others to join the United States in

this moratorium on dispute settlement.

The United States notified the WTO in early

January 2003 of the specific terms and conditions

of the moratorium. The key elements of this

moratorium include a commitment not to pursue

dispute settlement against a Member that notifies

the TRIPS Council of its intention to issue a

compulsory license to permit the production and

export of a patented pharmaceutical product or

HIV/AIDS test kit to eligible importing

economies. Eligible importing economies will be

those economies, other than those classified by

the world bank as “high income economies,” that:

(1) are facing a grave public health crisis associated with HIV/AIDS, malaria or tuberculosis or

other infectious epidemics of comparable scale

and gravity, including those that may arise in the

future; (2) have no or insufficient production

capacities in the pharmaceutical sector; and (3)

have so notified the TRIPS Council. The moratorium also included measures to guard against

product diversion, including steps to ensure that

the product can be easily identified and a 

II. THE WORLD TRADE ORGANIZATION | 87
requirement that all countries, to the extent of

their ability, act to ensure that the drugs are not

diverted from countries in need.

Following intensive consultations in 2003, 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

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 decision takes the form of an

interim waiver of Article 31(f), which allows

countries producing generic copies of patented

products under compulsory licenses to export the

products to eligible importing countries where

certain procedures are followed. The waiver will

last until the WTO’s intellectual property agreement is amended. At its meeting of November 18,

the Chairman of the TRIPS Council launched

informal consultations with Members to discuss

how best to amend the TRIPS Agreement. The

United States pledged its full support to the

Chairman in order to transform the Agreement in

August, including the Perez-Motta text and

Chairman’s Statement, into an amendment of the

TRIPS Agreement with a view to its adoption

within six months, if not sooner.

TRIPS-related WTO Dispute Settlement Cases:

During the year, the United States continued to

pursue consultations with the European Union

regarding its failure to provide TRIPS-consistent

protection of geographical indications of U.S.

nationals, and on 29 August 2003, the United

States and Australia each requested the establishment of a panel to examine EU rules on the

protection of trademarks and geographical 

indications for agricultural products and foodstuffs. At its meeting of 2 October 2003, the

United States and Australia presented their

second request, and the WTO Dispute Settlement

Body agreed to established the panel. The United

States and Australia mentioned their serious

concerns about the discriminatory nature of the

EU regulation. The United States complained that

the regulation did not allow the registration of

non-EU geographical indications unless the

geographical indication was from a country that

offered geographical indication protection that

was equivalent to that of the EU. Australia argued

that the EU regime was inconsistent with existing

WTO rules prohibiting discriminatory treatment,

did not give due protection to trademarks, and

was overly complex and prescriptive. The EU said

that its regulation was fully compatible with

WTO rules. The DSB established a single panel

and the following countries requested to be third

parties: Australia, United States, Mexico, New

Zealand, Guatemala, India, Chinese Taipei,

Turkey and Colombia.

There are a number of other WTO Members that

likewise 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

88 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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. Throughout 2003, the United States

and many like-minded Members continued to

argue 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 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. The draft

Declaration for the WTO 5th Ministerial

Conference in Cancun, Mexico, would have

extended the mandate to discuss “issues related

to extension” but not create a new mandate for GI

negotiations. While willing to continue the dialog

in 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. We view 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. At each of the 2003 TRIPS

Council meetings, the United States urged 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

continued to support a 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 2004. 

Review of Current Exceptions to Patentability for

Plants and Animals: TRIPS Article 27.3(b)

permits Members to except from patentability

plants and animals and biological processes for

the production of plants and animals. Members

may not, however, except from patentability

micro-organisms and non-biological and microbiological processes. As called for in the

Agreement, the TRIPS Council initiated a review

of this provision in 1999 and, because of the

interest expressed by some Members, the discussion continued through 2000 and 2001. In 1999,

in order to facilitate the review by enabling easy

comparisons, the Secretariat had prepared a

synoptic table of information provided by developed Members on their practices. This portion of

the review revealed that there was considerable

uniformity in the practices of the developed

Members. During the discussion, the United

States noted that the ability to patent 

micro-organisms and non-biological and microbiological processes, as well as plants and

animals, had given rise to a whole new industry

that has brought inestimable benefits in health

care, agriculture, and protection of the environment in those countries providing patent

protection in this area. In 2001, the United States

II. THE WORLD TRADE ORGANIZATION | 89
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), such as the

relationship between the TRIPS Agreement and

the Convention on Biological Diversity (CBD),

and traditional knowledge. 

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. The Council, at its March 2002

meeting, agreed to handle each of these topics as a

separate agenda item, in order to avoid confusion,

but the discussions have tended to overlap. Since

the review began in 1999, the United States has

introduced five separate papers discussing various

aspects of the subjects under discussion,

including a paper discussing in depth 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. 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. Updated information on organization

activities was submitted from the FAO, the CBD,

UNCTAD, UPOV, WIPO and the World Bank.

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. Throughout the year, the Council

continued to discuss the operation of non-violation nullification and impairment complaints in

the context of the TRIPS Agreement. Some

Members argued that the possibility of such

complaints created uncertainty. As in past years,

the United States continued to support the automatic expiration of the moratorium at the 5th

Ministerial meeting as no more uncertainty was

created by non-violation cases in the TRIPS

context than was the case with other WTO agreements, and that Article 26 of the Dispute

Settlement Understanding and GATT decisions

on non-violation provide sufficient guidance to

enable a panel or the Appellate Body to make

appropriate determinations in such cases. No

consensus on a recommendation to establish

scope and modalities or to extend the 

moratorium emerged by the time of the 5th

Ministerial meeting.

Electronic Commerce: The TRIPS Council

continued discussing the provisions of the TRIPS

Agreement most relevant to electronic commerce

and explored how these provisions apply in the

digital world. The United States specifically

suggested that the Secretariat might usefully

undertake a study of how Members are implementing TRIPS with respect to the Internet

environment. The United States will continue to

support discussion of the application of the

TRIPS Agreement in the digital environment, and

encourage countries to implement the “Internet”

Treaties of the World Intellectual Property

Organization (WIPO), i.e., the WIPO Copyright

Treaty and the WIPO Performances and

Phonograms Treaty.

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

90 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 given

detailed reports on specific U.S. Government

institutions (the African Development

Foundation and Agency for International

Development) and incentives as required. 

Prospects for 2004 

In 2004, the TRIPS Council will continue to focus

on transforming the August 30 agreement on

compulsory licensing for export into an amendment of the TRIPS Agreement, its built-in agenda

and the additional mandates established in Doha,

including on issues related to the extension of

Article 23-level protection for geographical indications for products other than wines and 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 2004 continue to be: 

• to transform the Chairman’s Statement and

the Perez-Motta text 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.

H. Other General Council

Bodies/Activities 

1. Committee on Trade and

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 2002, the CTE in regular

session continued discussion of many of the

issues under consideration in recent years with a

focus on issues identified in the Doha

Declaration, including market access for issues

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 in the Doha Declaration are separate from

those that are subject to specific negotiating

mandates in the Declaration and that are being

taken up by the CTE in Special Session.

Major Issues in 2003

In 2003, the CTE met in Regular Session four

times. The United States continued its active role

in discussions, as discussed below.

II. THE WORLD TRADE ORGANIZATION | 91
Market Access under Doha Sub-Paragraph 32(i):

The CTE in Regular Session continued to structure discussions on both a general and sectoral

basis. In general, however, discussions demonstrated a low level of interest in these issues

compared to those that took place in 2002. The

more limited discussions in 2003 related specifically to submissions by Japan regarding the

fisheries and forestry sectors. Most delegations

questioned assertions by Japan that these

sectors might be excluded from market access 

negotiations due to considerations of

sustainable development.

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. In this regard, the

European Communities presented its ideas

regarding access to, and benefit sharing associated with, genetic resources and traditional

knowledge. In general, Members reiterated that

the TRIPS Council was the most appropriate

forum to consider these issues.

Labeling for Environmental Purposes under Doha

Sub-Paragraph 32(iii): During 2003, there was

considerable discussion among Members

regarding proposals from the European

Communities for 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. As a

result, there was no consensus in the CTE prior to

the Cancun Ministerial for intensifying its

ongoing work on environmental labeling.

Capacity Building and Environmental Reviews

under Doha Paragraph 33: Many developing

country Members stressed the importance of

benefiting from technical assistance related to

negotiations in the WTO on trade and

environment, particularly given the complexity

of some of these issues. The United States

submitted a related paper that sought to highlight

some of the themes that had emerged from these

discussions, including the potential benefits associated with national environmental reviews of

trade negotiations. 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 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: During

the course of 2003, the CTE in Regular Session

received updates from key WTO Secretariat officials on developments in other areas of

negotiations, including agriculture, nonagricultural market access, services and rules.

Prospects for 2004

It is unlikely that discussion of these environmental issues identified in the Doha Declaration

that do not have a negotiating mandate will

increase in focus or intensity, although prospects

could increase for more concrete discussions on

how to enhance developing countries’ capacities

to increase coordination at national levels between

trade and environmental officials. Additionally,

the CTE in Regular Session may devote increasing

attention to the substance of the mandate in 

paragraph 51 of the Doha Declaration.

2. Committee on Trade and

Development 

Status

In 1965, the GATT established the Committee on

Trade and Development (CTD or the

“Committee”) to strengthen its role in the

economic development policies of less-developed

Contracting Parties. Today, the CTD is a

subsidiary body of the WTO General Council.

92 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
The Committee provides Members an opportunity to discuss trade issues from a development

perspective, in contrast to most other WTO

committees which are responsible for implementation of particular WTO Agreements. In 2002,

the General Council instructed the CTD, as part

of a DDA, to develop a work program to examine

the issues surrounding fuller integration of small

and vulnerable economies into the multilateral

trading system.

Following the First Ministerial Conference in

Singapore in 1996, the WTO formed a CTD

subcommittee on Least-Developed Countries

(LDCs) to implement a Ministerial initiative to

help integrate LDCs into the multilateral trading

system. The plan of action outlines an “Integrated

Framework” (IF) to better coordinate trade-related

technical assistance activities of donors to LDCs

from six core international organizations: the

International Monetary Fund, the International

Trade Center, the United Nations Conference on

Trade and Development, the United Nations

Development Program, the World Bank and the

WTO. The IF process also encourages the participation of the broader development community

through a consultative group of bilateral donors

and other multilateral organizations. The Doha

Declaration, in order to continue progress toward

this goal, instructed the subcommittee to design a

work plan to consider issues of importance to

LDCs including further coordination of technical

assistance through the IF and additional steps to

facilitate LDCs in joining the WTO.

Major Issues in 2003

In 2003, the Committee held four formal sessions

leading up to the Cancun Ministerial and an additional two sessions by year’s end. A continuing

focus of the CTD and LDC Subcommittee has

been monitoring the on-going efforts of the

WTO, the International Trade Center (ITC), and

the IF in providing trade-related technical assistance to developing-country Members. As

standing items on the Committee’s agenda,

Members considered the development aspects of

Doha negotiations and electronic commerce. The

United States also initiated discussion of WTO

reviews for regional trade agreements among

developing countries. The United States voiced

support for greater transparency through more

in-depth examination of these agreements.

In the summer of 2003, several Members

launched a renewed discussion of global trends in

commodity prices. Commodity dependant

producers submitted a paper outlining the difficulties posed by volatile and declining world

prices for many primary products. The United

States and other Members gave the view that price

trends are functions of markets. To address problems of commodity volatility, Members should

look to market-based strategies over efforts to

manage supply. The proper role for the WTO as

an institution in addressing this issue should be to

focus efforts on trade policy-related aspects that

play a role in commodity price trends and

volatility.

WTO Technical Assistance Plan: Working closely

with the newly created Institute for Training and

Technical Cooperation, the Committee

continued efforts to improve the WTO’s TradeRelated Technical Assistance (TRTA) programs.

The WTO received over 1045 requests from 120

countries (reflecting all levels of development) as

input into the 2003 Plan. The WTO was on track

to deliver the 441 activities in the 2003 Technical

Assistance despite the effects of SARS and war in

Iraq. Activities generally took the form of regional

or national seminars and workshops, trade policy

courses, or internships, and covered topics

ranging from accession and market access issues

to technical barriers to trade. 

The United States directly supports the WTO’s

TRTA. At the Cancun Ministerial, the United

States pledged an additional $1.2 million for

WTO TRTA. This contribution augmented $1

million given earlier in 2003, bringing total U.S.

support for WTO TRTA to more than $3 million

since the launch of Doha negotiations in

November 2001. This money was in direct

support of programs like the annual WTO

Technical Assistance Plan. In 2003, the WTO also

finished implementing two grants, totaling 

II. THE WORLD TRADE ORGANIZATION | 93
$1.02 million, under the Africa Trade and

Investment Policy Program (ATRIP), supporting

WTO training for Africans. The grants funded

dispute settlement courses, computer-based

training modules on WTO agreements, WTO

training for Africans in Ghana and two regional

seminars on agriculture and services.

The United States has worked out an agreement

with the International Trade Center (ITC) to

make the ITC’s Interactive TradeMap database

available to all countries where USAID has a

Mission or presence. The Interactive TradeMap

provides on-line access to the world’s largest trade

database. USAID will also work with the ITC to

ensure that developing and transition countries

have access to market analysis tools and training

courses on trade in services.

Small Economy Issues: The Doha Declaration

mandates an examination of small economy

trade-related issues. The Committee continued

this examination by discussing proposals

submitted by Members of the small economies

group and others. The United States has engaged

actively in this dialogue. Overall, Committee

Members recognized the potential benefits of

Doha negotiations for smaller economies, which

rely on an open trading system to foster growth.

The United States, in particular, encouraged small

economies to consider regional cooperation and

resource sharing as a way to address institutional

limitations due to size. The CTD recommended

that discussion of this topic in dedicated session

continue, and asked that Members of the small

economies group rework proposals in light of

recent exchanges.

Implementation: As part of the Doha work plan

on implementation, the Committee also considered a proposal to review GATT provisions that

allow Members in early stages of development

under certain circumstances to undertake restrictive trade measures. No consensus was reached to

undertake a formal review of these provisions. 

Sub-Committee on Least-Developed Countries:

In 2003, the Sub-Committee on Least-Developed

Countries focused discussions on enhancing the

participation of LDCs in the Multilateral Trading

System, the IF and WTO programs on traderelated technical assistance, accessions of LDCs

into the WTO, and market access for LDCs. 

LDC Accession: The LDC subcommittee initiated

regular reports from Chairs of working parties of

an LDC accession. These discussions focused on

progress toward meeting the requirements of

WTO Membership. Establishment of regular

Chair reports follows the adoption of guidelines

by the General Council in 2002 to streamline and

simplify the accession process for LDC applicants. The United States participated actively in

discussions with Working Party Chairs. The

United States urged continued support from

donors of those LDC applicants undertaking

reforms, and encouraged LDCs to use the accession process to improve its trading environment.

Efforts by Members to streamline the accession

process have yielded tangible results. The United

States and the WTO Membership welcomed the

first two LDCs–Nepal and Cambodia–as they

joined the WTO at the Cancun Ministerial.

The “Integrated Framework”(IF): The IF is the

mechanism for coordinating the work of six

multilateral agencies (IBRD, IMF, UNCTAD,

WTO, ITC and UNDP) in mainstreaming trade

into the development strategies of LDCs. The IF

process starts with a Diagnostic Trade Integration

Study (DTIS), which analyzes the technical assistance requirements for each country. The World

Bank has completed DTIS for Cambodia,

Lesotho, Madagascar, Mauritania, Malawi,

Senegal and Yemen. USAID has completed a

comparable diagnostic study for Mozambique,

and has contributed a series of in-depth sector

studies in support of the World Bank’s DTIS for

Mali. Additional DTISs are currently scheduled

for Burundi, Djibouti, Eritrea, Ethiopia, Guinea,

Mali and Nepal. Twelve other LDCs have

requested to participate in the IF process, and

their requests are being evaluated according to

criteria agreed by the IF Steering Committee. The

United States contributed funds for the past three

years to the Integrated Framework Trust Fund in

order to finance the DTIS. This includes $200,000

94 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
of the $1.2 million pledged at the Cancun

Ministerial specifically reserved for the Trust

Fund. The United States provided more than $31

million for trade capacity building activities in IF

countries in Fiscal Year 2003, through USAID’s

bilateral assistance programs. Most of this assistance addressed “supply side” capacity building

priorities identified by least developed countries

in the IF process.

Prospects for 2004

The CTD will continue its function as the forum

for trade-related development issues within the

WTO. Particular emphasis is likely to be placed on

efforts to improve the quality of WTO TRTA. As

part of this work, the CTD must insist on enhanced

mechanisms for monitoring, evaluating,

outsourcing, and delivering TRTA in a way that is

flexible and responsive to requests from Members.

More broadly, the Committee will seek to improve

the participation of developing-countries Members

in the Multilateral Trading System. Resumption of

Doha negotiations would reinvigorate work on

small-economy issues and discussion of the developmental aspects of the DDA. 

The Subcommittee will continue to take steps to

improve the opportunities available to LDCs to

further their integration into the trading system.

Resumption of Doha negotiations would renew

attention to efforts in technical cooperation,

market access, LDC accession, and the IF process.

3. Committee on Balance of Payments

Restrictions 

Status

The Uruguay Round Understanding on Balance

of Payments (BOP) substantially strengthened

GATT provisions 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. 

Major Issues in 2003

Following the establishment of the WTO in 1995,

the BOP Committee has demonstrated that the

Uruguay Round Understanding on BOP provides

Members with additional, effective tools to enforce

international obligations. During 2003, no Member

imposed new Balance of Payment restrictions. 

The BOP Committee held one meeting during the

year, in November, to conduct the second 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. Since China holds significant foreign reserves, it is not anticipated that

China could justify BOP restrictions. During the

first TRM in 2002, the United States and the EU

posed questions regarding China’s progress in

liberalizing controls on its capital account. At the

November 2003 TRM, Chinese Taipei asked additional questions on China’s use of capital

controls. In response, China noted that it does not

restrict converting currency for current account

transactions. However in regards to the outward

remittance of earnings or dividends of foreign

firms, these can only be converted if firms provide

relevant documents that meet the “bona fide test”

of earnings under China’s laws on Foreign

Invested Enterprises. According to China, this

policy is designed to reduce money laundering

and curb hot money. For purposes of transparency, China has committed to publish

information on Foreign Exchange measures on

the web and via the news media. China has

published all laws, regulations and measures on

the administration of foreign exchange through

the Foreign Trade and Economic Cooperation

Gazette and the website of the State

Administration of Foreign Exchange

(www.safe.gov.cn). The United States will

II. THE WORLD TRADE ORGANIZATION | 95
continue to monitor China’s compliance with its

WTO commitments under BOP Agreement and

its accession protocal. 

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 2003.

Prospects for 2004

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, price-based measures.

4. Committee on Budget, Finance,

and Administration 

Status

WTO Members are responsible for establishing

and presenting to the General Council for

approval the budget for the WTO Secretariat via

the Budget Committee. The Committee meets

throughout the year to address the financial

requirements of the organization. In 2003, the

Secretariat presented a biennial budget, setting

out budget proposals for both 2004 and 2005. As

is the practice in the WTO, decisions on budgetary issues are taken by consensus. 

The United States is an active participant in the

Budget Committee and the largest contributor to

the WTO budget. For the 2004 budget, the U.S.

assessment rate is 15.735 percent of the total

assessment, or Swiss Francs (CHF) 25,863,615

(about $19.9 million). The total assessments of

WTO Members are based on the share of WTO

Members’ trade in goods, services, and intellectual property. Details on the WTO’s budget

required by Section 124 of the Uruguay Round

Agreements Act are provided in Annex II.

Major Issues in 2003

New Salary Modalities: In May 2003, the General

Council adopted a recommendation by the

Committee to use a new salary methodology in

future salary adjustments. The Committee’s

recommendation was based on a review that was

provided for in the WTO’s Staff Regulations. The

review determined that the WTO salary scale

lagged behind those in comparable international

organizations. The salary commitments in the

2004 and 2004 WTO budget are based on this

new methodology.

Biennial Budgeting: In August 2003, the General

Council adopted a Committee recommendation

to move to a biennial budget cycle. In the view of

WTO Members, biennial budgeting will allow for

better planning and strategic thinking. It will also

provide both Members and the WTO Secretariat

with greater predictability with regard to the

financial requirements of the WTO. Members

also felt that a biennial budgeting process could

be a more efficient use of time resources for both

Members and the WTO Secretariat. 

Agreed Budget for 2004 and 2005: The demand

for budgetary resources created by (1) the statutory commitments with regard to salary,

contribution to the pension fund and other staff

costs; (2) the replenishment of the Appellate

Body Operating Fund; and (3) the need to allocate annually the costs of Ministerial Conferences

were the major issues facing the Budget

Committee and the WTO members in determining the appropriate level of increase. The

Committee proposed, and the General Council

approved, a budget for the WTO Secretariat and

Appellate Body of CHF 161,776,500 in 2004 and

CHF 166,804,200 in 2005.

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

96 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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.

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 of the General Agreement on

Trade in Services (GATS), which governs services

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.

Major Issues in 2003

During 2003, the Committee held two formal

meetings. The Committee has 147 agreements

under review, 119 referred by the Council on

Trade in Goods, 27 by the Council for Trade in

Services, and 1 by the Committee on Trade and

Development.16 The Committee has completed

its factual examination for over 82 agreements

but has a backlog of draft reports, as Members do

not agree on the nature of appropriate conclusions. In November 2003, the Committee held a

seminar for Geneva delegates and visiting

capital-based representatives to hear academic

and other views on the impact of RTAs on the

multilateral trading system.

Prospects for 2004

The Doha Declaration paragraph 29 calls for clarifying and improving rules for regional trade

agreements, a mandate that is being undertaken

by the Rules Negotiating Group. Accordingly, the

discussion of systemic issues and improving the

examination process in the CRTA has, in effect,

been delayed. In the interim, two meetings have

been scheduled for 2004, during which the

Committee will continue to review the new

regional trade agreements notified to the WTO

and referred to the Committee. The European

Union is expected to notify the WTO under

Article XXIV early in 2004 of its May 2004

enlargement to include ten additional countries

(Cyprus, the Czech Republic, Estonia, Hungary,

Latvia, Lithuania, Malta, Poland, the Slovak

Republic and Slovenia). Some CRTA Members are

likely to be interested in a prompt CRTA review of

the enlargement following notification. 

II. THE WORLD TRADE ORGANIZATION | 97

__________

16 A list of all regional trade agreements notified to the GATT/WTO and in force is included in Annex II to this report.
The biennial reporting requirement on the operation of agreements has been shifted by a year, to

2004. Nineteen reports are due on July 31, 2004,

including a report on the United States-Israel FTA.

6. Accessions to the World Trade

Organization 

Status

Armenia and Macedonia (officially known as the

Former Yugoslav Republic of Macedonia)

became the 145th and 146th WTO Members on

February 5 and April 4 respectively. In addition,

the Fifth Minister Conference at Cancun,

Mexico, approved the accession packages of

Cambodia and Nepal, both of which will become

members after their respective parliaments ratify

their accession commitments. Significant

progress towards completion of negotiations also

was recorded with a number of the other twentyfour applicants with established Working

Parties. Russia, Ukraine, and Saudi Arabia made

major progress towards completion of market

access negotiations and in terms of legislative

implementation of WTO provisions. This

progress provided support and momentum for

development of draft Working Party documents

and Protocol commitments. Substantial work

was also recorded on the accession packages of

Samoa and Tonga, Ethiopia and Afghanistan

requested accession.

By the end of 2003, of the accession applicants

with established Working Parties, only the

Bahamas and Ethiopia had not yet submitted

initial descriptions of their trade regimes. Bhutan,

Cape Verde, and Tajikistan provided this essential

comprehensive information in 2003. Initial

working parties convened for the accessions of

Sudan and Bosnia and Herzegovina for a first

review of the information submitted on their

foreign trade regimes. Working Party meetings

and/or bilateral market access negotiations were

also held during 2003 with Algeria, Belarus,

Cambodia, Kazakhstan, Lebanon, Nepal, Russia,

Samoa, Tonga, Ukraine, and Vietnam. 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 growth,

development, and investment. 

The accession process strengthens the international trading system by ensuring that new

Members understand and can implement WTO

rules from the outset, and it 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 negotiations for import market access.

Applicants need to be prepared to make legislative

changes to implement WTO institutional and

regulatory requirements, to eliminate existing

WTO-inconsistent measures, and to make trade

liberalizing specific commitments on market

access for goods, services, and agriculture.

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

98 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 short-term technical expertise focused on

specific issues, e.g., Customs, IPR, or TBT, and/or

a WTO expert in residence in the acceding

country. Current WTO Members that received

technical assistance in their accession process

from the United States include Albania, Armenia,

Bulgaria, Estonia, Georgia, Jordan, Kyrgyz

Republic, Latvia, Lithuania, Macedonia, and

Moldova. 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, Lebanon,

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 on an “as

requested” basis, and other forms of technical and

expert support on WTO accession issues to

Algeria, Bosnia and Herzegovia, Nepal, Russia,

and Vietnam

Major Issues in 2003

WTO Members sought to demonstrate that the

new guidelines approved in December 2002 for

streamlined and accelerated accession negotiations with least developed country (LDC)

accession applicants could work in practice.17 The

General Council had developed these guidelines

to address the unique challenges that the accession process posed for countries with extremely

low levels of income and economic development,

lack of human resources to conduct the negotiations, infra-structure deficiencies, and a general

lack of capacity to implement WTO provisions

without additional time and technical assistance.

By tying full implementation of WTO provisions

to transitional arrangements and technical assistance, and making full use of existing WTO

flexibilities and special provisions for LDCs,

current WTO Members sought to use the WTO

accession process to promote reform and build

trade capacity in the applicant economic regimes

while simplifying and streamlining the 

accession process. 

Cambodia and Nepal were the first accession

applicants to complete the accession process

under the new guidelines. Both countries will

complete implementation of WTO provisions

over transition periods with extensive technical

assistance. Market access commitments were

substantial and will, over time, provide for better

market access for imported goods and services on

a basis that supports economic development. The

Fifth Ministerial Conference at Cancun approved

the accession packages of Cambodia and Nepal in

September 2003. During 2003 there was also

intensive work on the accessions of Samoa

(another LDC) and Tonga. 

Continuing the accelerated pace initiated in

2002, the Working Party on Russia’s WTO

Accession met five times to revise the draft

Working Party report text, as well as to review

legislative implementation of WTO provisions

II. THE WORLD TRADE ORGANIZATION | 99

__________

17 Twenty-nine LDCs are already WTO members. The accession packages of Nepal and Cambodia were approved by the Fifth

Ministerial Conference at Cancun, and Vanuatu has completed negotiations but not submitted the results to the General

Council for approval. Negotiations with Samoa are advanced and moving forward. Bhutan, Cape Verde, Ethiopia, Laos, Sudan,

and Yemen have not yet commenced negotiations. All but Ethiopia have submitted initial documentation, and Sudan has had

a first WP meeting. Afghanistan has applied for accession, but no WP has been established. Of the nine remaining LDCs that

have not applied for WTO membership, two (Equatorial Guinea and Sao Tome and Principe) are WTO observers.
and progress in bilateral market access negotiations. Taking note of Russia’s commitment to

intensify its efforts to complete negotiations by

the end of 2004, Ukraine, Belarus, and

Kazakhstan also sought to intensify negotiations

during 2003, and work was initiated on their draft

Working Party reports. After a hiatus of almost

three years, work on Saudi Arabia’s accession

resumed at an accelerated pace in October. By the

end of the year, a revised draft Working Party

report was in circulation and Saudi Arabia was

making good progress in market access negotiations with WP members. Work on the Doha

Ministerial agenda and preparations for the Fifth

Ministerial Conference intensified after mid-year,

however, and work on other accessions 

slowed considerably. 

Prospects for 2004

Russia, Ukraine, and Saudi Arabia are deeply

engaged in legislative implementation of WTO

provisions and market access negotiations to

establish their schedules of concessions for

market access in goods and services. While much

work remains, they have all indicated that they

hope to complete their accession negotiations in

2004 and it is likely that Members’ efforts on

accession will be focused on these countries

during 2004. Other accession applicants,

including a number of LDCs, will continue to

press for additional meetings and negotiating

time with WTO Members in order to promote

progress in their accession negotiations. In addition to Tonga, Belarus, and Kazakhstan, whose

accession work is advanced, Algeria, Lebanon,

and Vietnam are likely to be active. Other active

accessions should include Samoa, Cape Verde,

and Bhutan (all LDCs), Bosnia and Herzegovian

and Tajikistan. U.S. representatives will remain

key players in all accession meetings, as the negotiations provide opportunities to expand market

access for U.S. exports, to encourage trade liberalization in developing and transforming

economies, to promote trade capacity building in

LDC applicants, and to support a high standard of

implementation of WTO provisions by both new

and current Members.

I. Plurilateral Agreements 

1. Committee on the Expansion of

Trade in Information Technology

Products 

Status

The Information Technology Agreement, or 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 61 participants

representing 95 percent of world trade in information technology products.18 The Agreement

covers computers and computer equipment, electronic components including semiconductors,

computer software products, set-top boxes,

telecommunications equipment, semiconductor

manufacturing equipment and computer-based

analytical instruments.

Major Issues in 2003

The WTO Committee of ITA Participants held

four formal meetings in 2003, 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.

Four new members (Egypt, China, Bahrain and

Morocco) joined the ITA in 2003, reflecting the

100 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

__________

18 ITA participants are: Albania, Australia, Bahrain, Bulgaria, Canada, China, Costa Rica, Croatia, Cyprus, Czech Republic,

Egypt, El Salvador, Estonia, European Union (on behalf of 15 Member States), Georgia, Hong Kong China, Iceland, India,

Indonesia, Israel, Japan, Jordan, Republic of Korea, Krygyz Republic, Latvia, Lithuania, Macau, Malaysia, Mauritius, Moldova,

Morocco, New Zealand, Norway, Oman, Panama, Philippines, Poland, Romania, Singapore, Slovak Republic, Slovenia,

Switzerland and Liechtenstein, Chinese Taipei, Thailand, Turkey, and the United States. Armenia and Macedonia have 

indicated their intention to join the ITA. 
growing interest of developing country Members

in trade in information technology products. In

addition, two international non-governmental

organizations, the International Trade Center

(ITC) and the Organization for Economic

Cooperation and Development (OECD) have

been granted observer status in the Committee, as

has the World Customs Organization (WCO), for

meetings where the issues of HS classification and

HS amendments are included in the agenda.

The Committee continued its work to reconcile

classifications by ITA participants of certain information technology products where Members

have applied divergent HS classification. The

Secretariat updated and categorized its compilation of the list of divergences. Customs experts

will continue to meet on these issues in 2004 and

discuss the treatment of each category of products. The Committee agreed that one item will be

sent to the WCO for a classification opinion.

Work on classification divergences is expected to

continue at the next Committee meeting in 2004. 

The Committee also made progress on the NonTariff Measures (NTMs) Work Program, affecting

trade in ITA products. As part of its work on one

of the key issues identified by Members, electromagnetic compatibility and electro-magnetic

interference (EMC/EMI), the Committee held a

workshop in April, which was well-attended by

Member Government’s trade and regulatory

authorities and included observers from the

private sector. More than 20 participants

responded to the survey on EMC/EMI, which the

Secretariat used to update a report describing the

nature of the problem. Further work on this issue

is expected to continue in 2004.

Prospects for 2004

The Committee’s work program on non-tariff

measures continues to proceed in step with tariff

implementation issues, but members have begun

an active consultation process to determine

whether there are other issues that should be

pursued and how work on non-tariff measures in

the ITA context relates to similar activities in the

context of Doha negotiations. Participants also

will continue to consult with each other informally on the possibility of expanding product

coverage for new technologies that have been

developed since the ITA was founded.

Throughout 2004, the Committee will continue

to undertake its mandated work, including

reviewing new applicants’ tariff schedules for ITA

participation, along with addressing further technical classification issues. In addition, the

Committee will continue to monitor implementation of the Agreement, including undertaking any

necessary clarifications. The next formal meeting

on the Committee will be in February 2004. A

number of additional WTO Members are actively

working on proposals to join the ITA in 2004.

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. The 28

current signatories are: the United States; the

European Union and its member states (Austria,

Belgium, Denmark, Finland, France, Germany,

Greece, Ireland, Italy, Luxembourg, the

Netherlands, Portugal, Spain, Sweden, United

Kingdom); the Netherlands with respect to Aruba;

Canada; Hong Kong China, China; Iceland; Israel;

Japan; Liechtenstein; Norway; the Republic of

Korea; Singapore; and Switzerland. Albania,

Bulgaria, Chinese Taipei, Estonia, Georgia,

Jordan, the Kyrgyz Republic, Latvia, Lithuania,

Moldova, Oman, Panama, and Slovenia are in the

process of negotiating GPA accession. 

Major Issues in 2003

GPA Article XXIV:7(b) and (c) calls for the Parties

to undertake further negotiations with a view to

improving both the text of the Agreement and

II. THE WORLD TRADE ORGANIZATION | 101
achieving the greatest possible extension of its

coverage among all Parties and eliminating

remaining discriminatory measures and practices. With regard to the text of the Agreement,

the United States has continued to take the lead in

advocating significant streamlining and clarification of the GPA’s procedural requirements, while

continuing to ensure full transparency and

predictable market access. 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 the current

review of the Agreement has proceeded, 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 it.

In August and February 2003, the Committee

held formal meetings and informal meetings in

February, May, June, August and November. The

Parties focused primarily on the simplification

and improvement of the GPA, with the overall

objective of promoting expanded membership of

the GPA by making it more accessible to nonParties. During 2003, 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. 

As provided for in the GPA, the Committee monitors participants’ implementing legislation. In

2003, the Committee completed its review of the

national implementing legislation of Iceland. 

Prospects for 2004

In February 2004, the Committee plans to reach

agreement on modalities for negotiations relating

to extension of coverage and elimination of

discriminatory measures and practices. It will

commence market access negotiations after work

on the text is completed. In 2004, the Committee

will also continue its review of the legislation of the

Netherlands with respect to Aruba, and its consideration of ways to improve accession procedures.

By spring of 2004, the Committee intends to

reach provisional agreement on a revised text of

the GPA. In the first half of 2004, the Committee

will hold three informal meetings with the aim of

completing work on the text. One of the important issues in the review of the text that will

require further work is the treatment that developing countries should be given upon accession

to the GPA, with the aim of facilitating additional

accessions by developing countries.

3. Committee on Trade in Civil

Aircraft Status

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 Members who 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 non-discriminatory or MFN basis to all

WTO Members. The Signatories have also provisionally agreed to duty-free treatment for ground

maintenance simulators, although not a covered

item under the current agreement. In areas other

than tariffs, the Aircraft Agreement establishes

international obligations concerning government

intervention in aircraft and aircraft component

development, manufacture and marketing.

As of January 1, 2004, there were 30 signatories to

the Aircraft Agreement: Austria, Belgium,

Bulgaria, Canada, Chinese Taipei, Egypt, Estonia,

the European Union, Denmark, France, Georgia,

Germany, Greece, Ireland, Italy, Japan, Latvia,

Lithuania, Luxembourg, Macau, Malta, the

Netherlands, Norway, Portugal, Romania, Spain,

Sweden, Switzerland, the United Kingdom, and

the United States. Albania and Croatia committed

to become parties upon accession to the WTO,

and Oman agreed to become a party within three

years of accession. 

102 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Major Issues in 2003 

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 2003, the full Aircraft

Committee met twice. 

The Aircraft Committee continued to consider

proposals to modernize the provisions of the

Aircraft Agreement to conform with the WTO

and to change the definition of “civil” vs. “military” aircraft to clarify the coverage of the

Aircraft Agreement, but was unable to reach

consensus on either proposal. The United States

requested that the Aircraft Committee consider

ways to improve the operation of the Aircraft

Agreement to avoid market distortions, specifically focusing on government actions related to

marketing in aircraft sales campaigns. The

United States suggested exploring mechanisms

to improve communication to address perceived

inconsistencies between Signatory actions and

the obligations of the Aircraft Agreement. 

Prospects for 2004 

The United States will continue to seek new

Signatories to the Aircraft Agreement, both from

countries having civil aircraft industries and from

other countries procuring civil aircraft products

but not currently significant civil aircraft product

manufacturers. The latter countries are being

encouraged to become Signatories to the Aircraft

Agreement in order to foster non-discriminatory

and efficient selection processes for aircraft products based solely upon commercial and

technological factors. 

II. THE WORLD TRADE ORGANIZATION | 103
V. Trade Enforcement Activities

A. Enforcing U.S. Trade

Agreements 

1. Overview 

Enforcement of existing trade agreements

remains a top priority for this Administration.

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 Department of

Commerce, and strong advocacy by the State,

Commerce and Agriculture Departments, 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. 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 the NAFTA

through NAFTA’s trilateral work program,

tariff acceleration, and use, or threat of 

use, of NAFTA’s dispute settlement mechanism, including using its labor and

environmental side agreements to promote

fairness for workers and effective enviromental 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 64 complaints at the WTO,

thus far successfully concluding 37 of them by

settling 20 cases favorably and prevailing on 17

others through litigation in WTO panels and the

Appellate Body. The United States has obtained

favorable settlements and favorable panel 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 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 we have sought to reach favorable

settlements that eliminate the foreign violation

209
without having to resort to panel proceedings. We

have been able to achieve this preferred result in

20 of the 37 cases concluded so far, involving:

Australia’s ban on salmon imports; Belgium’s

duties on rice imports; Brazil’s auto investment

measures; Brazil’s patent law; 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 shelf-life

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 our trading partners

have not been willing to negotiate settlements, we

have pursued our cases to conclusion, prevailing

in 17 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; and Mexico’s

antidumping duties on high-fructose corn syrup.

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 NAFTA. 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, Section 1377 of the Omnibus Trade

and Competitiveness Act of 1988 for telecommunications trade problems, and Title VII of the

1988 Act to address problems in foreign government procurement. The application of these trade

law tools is described further below.

2. WTO Dispute Settlement 

2003 Activities

In 2003, the United States filed four new

complaints under WTO dispute settlement

procedures involving Egypt’s tariffs on textile and

apparel products, the European Community’s

protection of trademarks and geographical indications, the European Community’s restrictions

on biotechnology products, and Mexico’s antidumping duties on rice and beef. The United

States also initiated panel proceedings on a case

begun earlier involving Canada’s unfair practices

with respect to wheat.

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 party is available on

the USTR website (http://www.ustr.gov/enforcement/index.shtml).

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 

210 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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.

The 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, SEO staff have handled

numerous inquiries and met with representatives

of U.S. industries concerned about the subsidization of foreign competitors. They have also

deepened their interaction and coordination with

Import Administration’s Trade Remedy

Compliance Staff (TRCS) to identify, track and,

where appropriate, address various foreign

government policies, business practices and trade

trends that may contribute to the development of

subsidy and other unfair trade problems. These

efforts have been facilitated by stationing TRCS

officers overseas (currently in China and Korea),

who help gather and verify the accuracy of information concerning foreign subsidy practices, and

can play a pivotal role in clarifying or resolving

problems that otherwise might lead to harm to

U.S. commercial interests and unnecessary 

frictions with our trading partners.

Meanwhile, the SEO’s electronic subsidies database continues to fulfill the goal of providing the

U.S. trading community 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 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

V. TRADE ENFORCEMENT ACTIVITIES | 211
Member country to another. The United States

carefully 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, the Department of Commerce, via the

TRCS, 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 the Department of

Commerce’s Import Administration website at

http://ia.ita.doc.gov/foradcvd/index.html, and at the

TRCS website, http://ia.ita.doc.gov/trcs/index.html.

The deployment 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 case against

Mexico’s anti-dumping measures 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 the European

Union’s investigation of certain cold-rolled stainless steel, Mexico’s antidumping measures on live

swine (rescinded in May 2003 as a result of WTO

consultations and following a changed circumstances review) and China’s investigations of art

paper, optical fiber, and several chemical products. 

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 semi-annual 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 Import Administration

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 the principal U.S. statute for

addressing 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.

The USTR has initiated 121 investigations

pursuant to Section 301 since the statute was first

enacted in 1974. 

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 selfinitiate 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. 

212 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 2003, there were new or ongoing actions

or other major developments in the following

Section 301 investigations. (For a description of

WTO dispute settlement procedures related to

Section 301 investigations, see Chapter II).

b. 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. 

The United States consulted repeatedly with the

Government of 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

V. TRADE ENFORCEMENT ACTIVITIES | 213
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 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 the Government of Ukraine

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 2003. 

c. 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. 

Pursuant to Section 307 of the Trade Act, in May

2003 USTR notified representatives of the

domestic beef industry that the increased duties

would terminate unless USTR received a written

request prior to July 29, 2003 for a continuation

of the increased duties. Beef industry representatives responded prior to July 29, 2003 by

requesting in writing that the increased duties

remain in place until the United States and the EC

reach a satisfactory solution to the dispute.

Accordingly, the increased duties were continued

under Section 307 of the Trade Act. 

The increased duties remained in place throughout

2003. While talks have continued with the aim of

reaching a mutually satisfactory solution to the

dispute, no resolution has been reached. 

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 of 1974, 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

214 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 their bilateral intellectual property agreements. USTR may apply

sanctions if a country fails to comply.

a. 2003 Special 301 Review

Announcements

On May 1, 2003, United States Trade

Representative Robert B. Zoellick announced the

results of the 2003 “Special 301” annual review,

which examined in detail the adequacy and effectiveness of intellectual property protection in

approximately 74 countries. Under the Special

301 provisions of the Trade Act of 1974, as

amended, USTR identified 49 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 also jeopardize

Ukraine’s efforts to join the World Trade

Organization (WTO) and seriously undermine its

efforts to attract trade and investment. The U.S.

Government continues to remain actively engaged

with Ukraine in encouraging the nation to combat

piracy and enact the necessary intellectual property

rights legislation and regulations.

Paraguay and China continued to be designated

for “Section 306 monitoring” to ensure both

countries comply with the commitments to the

United States under bilateral intellectual property

agreements. Paraguay’s agreement is also in the

process of being renegotiated in 2003-04.

Furthermore, 11 trading partners were placed on

the “Priority Watch List”: Argentina, Bahamas,

Brazil, the EU, India, Indonesia, Lebanon, the

Philippines, Poland, Russia, and Taiwan. An additional 36 trading partners were placed on the

“Watch List.” USTR also announced an “out-ofcycle” (OCR) review for the Republic of Korea. 

b. Ongoing Initiatives

i. Global Scourge of Counterfeiting and Piracy

One area of particular concern for the 2003

Special 301 report was counterfeiting and digital

piracy, which has increased dramatically in recent

years. Unfortunately, in the area of counterfeiting,

what was once a localized industry concentrated

on the copying of high-end designer goods has

now become a massive, sophisticated global business involving the manufacturing and sale of

V. TRADE ENFORCEMENT ACTIVITIES | 215
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 and counterfeiting of copyrighted products

in digital format, as well as counterfeiting of all

types of trademarked products, have grown to such

a scale because they offers 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 in many

countries are so low that they offer no deterrent.

This is why USTR seeks, through our free trade

agreements and our bilateral consultations, to

ensure that criminal penalties are high enough to

have a deterrent effect, 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 are

usually 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. Losses to U.S. industries alone are 

estimated at $200 to $250 billion per year. 

ii. Controlling Optical Media Production

Over the past year, some of our trading partners,

such as Malaysia and Taiwan, have taken important steps toward implementing, or have

committed to adopt, much needed controls on

optical media production. However, others that

are in urgent need of such controls, including

Ukraine, Thailand, Indonesia, Pakistan, the

Philippines, and Russia, have not made sufficient

progress in this regard. 

Governments such as those of China, Hong Kong,

and Macau that implemented optical media

controls in previous years have clearly demonstrated their commitment to continue to enforce

these measures, although continued effort is

necessary. The effectiveness of such measures is

underscored by the direct experience of these

governments in successfully reducing pirated

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. USTR is

concerned, moreover, about recent reports of

increased piracy and counterfeiting in Bulgaria,

which had been a model in its region for taking the

necessary steps to tackle optical media piracy by,

for example, enacting optical media controls.

Particularly troubling are reports that the CD

plant licensing laws may be revised in a manner

that would undermine, not improve, their effectiveness. We will be closely monitoring the

situation and look to the Government of Bulgaria

to maintain strong optical disc regulations. 

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

216 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
forms of intellectual property. The Agreement

also requires countries to provide effective

enforcement of these rights. 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’s

dispute settlement mechanism. 

Developed countries were required to fully 

implement 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 priorities with respect to intellectual

property rights. 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.

Progress continues to be made by developing

countries 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 U.S. Government 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. Customs Service,

and the Justice Department, 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 key implementation priority that we have

focused on in this review is the implementation of

Article 39.3, which requires WTO Members to

protect test data submitted by drug companies to

health authorities 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

10 years in the EC Member States. Other countries

that provide a period of exclusivity against

reliance on data include Australia, Canada, China,

Czech Republic, Estonia, Japan, Jordan, Korea,

Mexico, New Zealand, Slovenia, and Switzerland.

We commend Hungary and Colombia on their

recently implemented decrees that provide data

protection. We urge all WTO members to swiftly

V. TRADE ENFORCEMENT ACTIVITIES | 217
complete their implementation of Article 39.3,

including the rest of the countries in the Andean

Community, as well as Israel. 

iv. Internet Piracy and the WIPO Copyright

Treaties

Throughout the world, countries have begun to

recognize the importance of the Internet as a

vehicle for economic expansion. However, despite

the promise that the Internet holds for innovative

and creative industries, it also creates significant

challenges, as it serves as an extremely efficient

global distribution network for pirated products.

We are currently working with other governments, and consulting 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 the World

Intellectual Property Organization (WIPO) when

it concluded two copyright treaties in 1996: the

WIPO Copyright Treaty (WCT) and the WIPO

Performances and Phonograms Treaty (WPPT),

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 businesses and technologies. In the competition for foreign direct

investment, these countries now hold a decided

advantage. We urge other governments to ratify

and implement the two WIPO Internet Treaties.

v. Other Initiatives Regarding Internet Piracy

We are seeking to incorporate the highest standards of protection for intellectual property into

appropriate bilateral and regional trade agreements that we negotiate. We had our first success

in this effort by incorporating the standards of

the WIPO Internet Treaties as substantive obligations in our FTAs with Jordan, Chile, and

Singapore. Moreover, our 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 a

new 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 inappropriate

government use of illegal software. 

The United States has achieved considerable

progress under this initiative. Countries that have

issued decrees mandating the use of only authorized software by government ministries include

Bolivia, China, Chile, Colombia, Costa Rica, the

Czech Republic, France, Ireland, Israel, Jordan,

Paraguay, Thailand, the United Kingdom, Spain,

Peru, Greece, Turkey, Hungary, Korea, Hong

Kong, Macau, Lebanon, Taiwan, and the

Philippines. Ambassador 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.

218 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
3. Section 1377 Review of

Telecommunications Agreements

Section 1337 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 2003 Section 1377 review focused on the

following issues: (1) unjustifiably high prices for

the service of connecting U.S. networks with

both fixed and mobile networks in countries as

diverse as Argentina, the Dominican Republic,

Germany, Mexico and Switzerland; (2) lack of

reasonable access to leased lines, particularly in

Australia, France, Germany, Mexico and

Singapore; and (3) willingness of foreign authorities to tolerate breaches of domestic telecom

rules by favored companies.

USTR has urged national regulators to fulfill their

responsibility to address such problems, and

initial signs were promising. For example, some

foreign regulators (e.g., the United Kingdom)

have addressed the issue of high charges for

access to mobile networks, and some governments are developing tools for regulators to

combat anti-competitive practices. USTR remains

concerned, however, with the lack of clear regulatory independence in many countries and will

continue to monitor developments in this area.

Mexico 

A WTO dispute settlement panel held further

hearings on the case against Mexico requested by

the United States. The focus of the panel request

was: (1) Mexico’s failure to ensure that Telmex

(Mexico’s major supplier of telecommunications)

provides U.S. telecom companies interconnection

at “cost-oriented” rates and reasonable terms and

conditions; and (2) Mexico’s refusal to allow U.S.

companies to send their calls into and out of

Mexico over leased lines. A panel decision is

expected in early 2004.

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

minimum requirements for filing, 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 terminated; if it is affirmative, the case shifts back to

Commerce for preliminary and final inquiries

into 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 equal to the estimated

weighted average dumping margin.

V. TRADE ENFORCEMENT ACTIVITIES | 219
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 bonds 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 fiveyear “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, and 37

in 2003. 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; 24 in 1995; 9 in

1996; 7 in 1997; 9 in 1998; 19 in 1999; 20 in

2000; 30 in 2001; 27 in 2002, and 15 in 2003.

Under its sunset review procedures, Commerce

revoked 57 antidumping duty orders and

continued 72 orders in 2000; revoked 12

antidumping duty orders and continued 22

orders in 2001; revoked 9 antidumping duty

orders and continued 2 orders in 2002; and

revoked 2 antidumping duty orders and

continued 5 orders in 2003.

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

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 benefiting 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 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, and 5 in 2003. 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, and 2 in 2003. Under its sunset review

procedures, Commerce revoked 8 countervailing

duty orders and continued 22 orders in 2000;

revoked 1 countervailing duty order and

220 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
continued 5 orders in 2001; revoked no 

countervailing duty orders and continued no

orders in 2002; and revoked no countervailing

duty orders and continued no orders in 2003.

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, usually involving U.S. patents.

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 2003, the USITC instituted 18 new Section 337

investigations and one ancillary advisory opinion

proceeding relating to a previously issued USITC

remedial order. During the year, the USITC issued

three limited exclusion orders and four cease and

desist orders covering imports from foreign firms,

as follows: Inv. No. 337-TA-486, Certain

Agricultural Tractors, Lawn Tractors, Riding

Lawnmowers, and Components Thereof (limited

exclusion order); Inv. No. 337-TA-482, Certain

Compact Disc and DVD Holders (limited exclusion

order); Inv. No. 337-TA-460, Certain Sortation

Systems, Parts Thereof, and Products Containing

Same (limited exclusion order); Inv. No. 337-TA406, Certain Lens Fitted Film Packages (four cease

and desist orders). A limited exclusion order

covers only certain imports from particular named

sources (as contrasted with a general exclusion

order, which covers certain products from all

sources). The President permitted all the limited

exclusion orders and cease and desist orders to go

into effect during 2003.

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.

V. TRADE ENFORCEMENT ACTIVITIES | 221
For an industry to obtain relief under Section

201, the United States International Trade

Commission (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, 2003, the United States had 

safeguard measures in place on the following

imported steel products: (1) certain carbon flatrolled steel, including carbon and alloy steel slabs

(slabs), plate (including cut-to-length plate and

clad plate), hot-rolled steel (including plate in

coils), cold-rolled steel (other than grain-oriented

electrical steel), corrosion-resistant and other

coated steel (collectively, certain flat steel); (2)

carbon and alloy hot-rolled bar and light shapes

(hot-rolled bar); (3) carbon and alloy coldfinished bar (cold-finished bar); (4) carbon and

alloy rebar (rebar); (5) carbon and alloy welded

tubular products (other than oil country tubular

goods) (certain tubular products); (6) carbon and

alloy flanges, fittings, and tool joints (carbon and

alloy fittings); (7) stainless steel bar and light

shapes (stainless steel bar); (8) stainless steel rod;

(9) carbon and alloy tin mill products (tin mill

products); and (10) stainless steel wire; (11)

certain carbon steel wire rod; and (12) circular

welded carbon quality line pipe

The measures on certain steel wire rod and

circular welded carbon quality line pipe were

imposed on March 1, 2000. They expired on

March 1, 2003.

Effective March 20, 2002, the President imposed

a safeguard measure on certain flat steel in the

form of a TRQ on slabs and a tariff on other

certain flat steel. At the same time, the President

imposed tariffs on hot-rolled bar, cold-finished

bar, rebar, certain tubular products, carbon and

alloy fittings, stainless steel bar, stainless steel

rod, tin mill products, and stainless steel wire

(collectively, the “steel safeguard measures”).

Subsequent to the effective date of the measure,

USTR granted requests made by U.S. consumers,

U.S. importers, and foreign producers that certain

products that were not sufficiently available from

domestic producers be excluded from these 

safeguard measures.

In July, 2002, the WTO formed a dispute 

settlement panel to consider claims brought by

the European Communities, Japan, Korea, China,

Switzerland, Norway, New Zealand, and Brazil

that the steel safeguard measures taken on March

20, 2002 were inconsistent with WTO rules. On

November 10, 2003, the WTO Appellate Body

issued a report finding that the safeguard measures on steel products were inconsistent with the

Safeguards Agreement and GATT 1994 in that

they were based on a findings that did not comply

with the Safeguards Agreement prohibition on

attributing to imports injury caused by other

factors, did not demonstrate the existence of

unforeseen developments, and did not justify the

exclusion of U.S. FTA partners from application

of the measures. 

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 measures

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. 

222 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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.

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

United States International Trade Commission

(ITC) 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 ITC 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 2003, four petitions have been

filed under Section 421. On October 18, 2002, the

ITC found that pedestal actuators from China

were being imported in such increased quantities

or under such conditions as to cause market

disruption to domestic producers. On January 17,

2003, the President determined that providing

import relief was not in the national economic

interest of the United States. On April 9, 2003, the

petitioner, Motion Systems Corporation, filed suit

challenging this determination with the U.S.

Court of International Trade. 

On January 27, 2003, the ITC made a positive

determination of market disruption in its investigation regarding imports of certain steel wire

garment hangers from China. On April 25, 2003,

the President determined that providing import

relief was not in the national economic interest of

the United States.

On June 4, 2003, the Coalition for the Preservation

of American Brake Drum and Rotor Aftermarket

Manufacturers filed a petition regarding certain

brake drums and rotors from China. On August 3,

2003, the ITC issued a negative determination

regarding imports of those products.

On September 5, 2003, the ITC initiated an

investigation concerning imports of certain

ductile iron waterworks fittings from China,

pursuant to a petition filed by a domestic

producer and three of its subsidiaries. This petition was the first to allege “critical circumstances”

and to request provisional relief. Section 421(i)

requires that for such cases the ITC determine, on

an expedited basis, whether delay in taking action

would cause damage to the relevant domestic

industry which would be difficult to repair and, if

in the affirmative, whether imports of the product

subject of the investigation have caused or threatened to cause market disruption. On October 16,

2003, the ITC made a negative critical circumstances finding. On December 4, 2003, the ITC

made a positive market disruption determination.

The President’s determination regarding import

relief is due by March 3, 2004.

d. 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 to use until December 31, 2008. This

safeguard covers all products subject to the WTO

Agreement on Textiles and Clothing as of

January 1, 1995. 

V. TRADE ENFORCEMENT ACTIVITIES | 223
On November 17, 2003, the interagency

Committee for the Implementation of Textile

Agreements (CITA) determined that imports of

Chinese-origin knit fabric (Category 222), cotton

and man-made fiber brassieres and other body

supporting garments (Category 349/649), and

cotton and man-made fiber dressing gowns and

robes (Category 350/650) are, 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 play a significant role in the

existence and threat of market disruption. As a

result, on December 24, 2003, the United States

requested consultations with China with a view

to easing market disruption and avoiding the

threat of market disruption. 

Upon receipt of the request for consultations,

China agreed to hold its shipments of these products to the United States in 2004 to a level no

greater than 7.5 percent above the amount that

entered the United States during the twelvemonth period ending on September 30, 2003.

The United States stands ready to consult with

China, and to reach agreement on a mutually

satisfactory solution within the 90-day consultations period prescribed in the Accession

Agreement. If no such solution is reached, the

United States will maintain the limits on Chinese

shipments until December 23, 2004. 

7. Trade Adjustment Assistance 

a. Assistance for Workers

Assisting workers to obtain and maintain the

skills needed to compete in the 21st century is a

top priority of the Administration. 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 and

expanded 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 repealed 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 NAFTATAA petitions filed on or before November 3,

2002, will continue to be covered under the

provisions of the NAFTA-TAA program that were

in effect on September 30, 2001. Amendments to

the TAA program apply to petitions for adjustment assistance that are 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 of

like or directly competitive articles 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

by the workers’ firm 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

224 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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. 

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 tradeimpacted 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.

Fact-finding investigations were instituted for

3,547 TAA petitions in fiscal year (FY) 2003. In

FY 2003, 1,864 certifications were issued

covering an estimated 195,870 workers,

whereas 1,221 petitions covering an estimated

83,126 workers resulted in denials of eligibility

to apply. Fact-finding investigations were instituted for 69 NAFTA-TAA petitions in FY 2003.

In FY 2003, 180 NAFTA-TAA certifications were

issued covering an estimated 17,641 workers

whereas 339 NAFTA-TAA petitions covering an

estimated 14,629 workers resulted in denials of

eligibility to apply.

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 (7 CFR

1580). Primary requirements for eligibility are

that the price of the basic agricultural

commodity in the most recent year is less than 

80 percent of the average price of the previous

five years, and the imports contributed 

importantly to the price decline.

If a group 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. No cash benefits were expended under

this program in FY 2003. 

b. Assistance for Firms and Industries 

The Planning and Development Assistance

Division of the Department of Commerce’s

Economic Development Administration (EDA)

administers the TAA program for firms and

industries. This 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

V. TRADE ENFORCEMENT ACTIVITIES | 225
firms and industries TAA program, EDA funds a

network of 12 Trade Adjustment Assistance

Centers (TAACs). These TAACs are sponsored by

nonprofit organizations, institutions of higher

education, and a state agency. In FY 2003, EDA

provided $10.4 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 2003, EDA certified 207

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 2003, the

APRC approved 162 adjustment proposals from

certified firms. 

After the adjustment proposal is approved by the

APRC, 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, and the identification of appropriate

management information systems. 

The legislation authorizes EDA 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, however, 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 147

designated developing countries, territories, and

associations of countries. The program began in

1976, when the United States joined 19 other

industrialized nations in granting tariff preferences to promote the economic growth of

developing countries through trade expansion.

The GSP program, reauthorized under the Trade

Act of 2002, enables products within some 5,000

tariff categories (defined at the eight-digit level in

the Harmonized Tariff Schedule of the United States)

to be imported duty-free into the United States. Of

this total figure, approximately 1500 tariff categories have been exclusively dedicated to the

least-developed and African Growth and

Opportunity Act (AGOA) countries. In 2003, GSP

eligible countries were able to ship more than $20

billion to the United States duty-free under this

program, not including imports under AGOA.

The premise of the GSP program 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 trade liberalization.

In its current form, GSP is designed to assist in the

integration of developing countries into the international trading system in a manner

commensurate with 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 and

the Congress to be “import-sensitive.”

226 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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. Petitions may also be

submitted concerning the eligibility of countries

for the GSP program. For those petitions that are

accepted for full review, public hearings are held,

a U.S. International Trade Commission study of

the “probable economic impact” of granting

product petitions is prepared, and all relevant

materials are reviewed by the interagency GSP

Subcommittee of the Trade Policy Staff

Committee. Following completion of the review,

the President announces his decision on changes

to the GSP program.

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 and duty-free treatment made

retroactive to the previous expiration date, thus

maintaining the continuity of the program’s 

benefits. The program was most recently reauthorized on August 6, 2002, and is scheduled to

expire on December 31, 2006.

On January 14, 2003, the President issued a

proclamation making Afghanistan a GSP beneficiary country and some product eligibility

changes. In March 2003, a notice published in the

Federal Register announced the petitions accepted

for review in the combined 2001/2002 annual

product review and the schedule of remaining

events in that review. On June 30, the President

signed a Proclamation announcing changes to the

Harmonized Tariff Schedule resulting from the

2001 Special Three Country Review for Argentina,

the Philippines and Turkey and the 2001/2002

Annual Product Review. This action was followed

by a notice announcing the outcome of each petition concerning products published in the Federal

Register on July 3, 2003. In July 2003, notices were

published in the Federal Register announcing initiation of a review to consider the designation of the

People’s Democratic Republic of Algeria as a GSP

beneficiary country and extending the deadline

for submissions of petitions for the 2003 Annual

GSP Product and Country Eligibility Review until

September. A Federal Register notice published in

September 2003 announced the 2001, 2002, and

ongoing country practice petitions that had been

accepted for full review and the schedule of events

remaining in that review. 

V. TRADE ENFORCEMENT ACTIVITIES | 227
VI. Trade Policy Development

A. Trade Capacity Building

The United States is the largest single-country

donor of trade-related technical assistance in the

world, reflecting its commitment to helping

developing countries participate fully in the

global trading system. The President’s Trade

Policy Agenda for 2003 stated that the “United

States is committed to expanding the circle of

nations that benefit from global trade...[and] to

help[ing] developing economies build the

capacity to take part in trade negotiations, implement the rules, and seize opportunities.” The

details provided below show that we are living up

to that commitment.

U.S. trade capacity building (TCB) efforts stem

from the basic belief that trade is critical to the

growth of developing countries, and that

providing funds to these countries to enhance

their participation in global trade is a highly

leveraged form of development assistance. By

having increased capacity to take part in trade

negotiations, implement the rules, and seize

opportunities, developing countries can achieve

win-win results for themselves and their trading

partners. A key component of TCB assistance is

that it is demand driven and in support of trade

strategies designed by the recipients themselves. 

The United States devoted substantial resources to

TCB activities in FY2003 through the United

States Agency for International Development

(USAID) and a dozen or so other agencies, totaling

almost $752 million, up 18% from FY2002 (see

http://www.ustr.gov or http://www.usaid.gov for

the U.S. Government TCB Database). This

funding was allocated as follows:

• $174 million in the Middle East and North

Africa; 

• $150 million in Latin America and the

Caribbean; 

• $133 million in sub-Saharan Africa; 

• $92 million in Asia; 

• $84 million in the former Soviet Republics; 

• $65 million in Central and Eastern Europe;

and 

• $53 million for non-targeted global projects.

The United States was also the largest singlecountry contributor to the World Bank and other

multilateral development banks, which provide an

increasingly broad range of TCB assistance to the

Doha Development Agenda, the Free Trade Area of

the America’s Hemispheric Cooperation Program,

and other technical assistance frameworks.

The United States directly supports the WTO’s

trade-related technical assistance (TRTA) (see

Chapter II). For example, in Cancun, the United

States pledged an additional $1.2 million for

WTO TRTA. This contribution augmented $1

million given earlier in 2003, bringing total

United States support for WTO TRTA to more

than $3 million since the launch of Doha negotiations in November 2001. This money was in

direct support of programs such as the annual

WTO Technical Assistance Plan.

The United States is also a strong supporter of the

Integrated Framework (IF). For example, the

United States has contributed funds for the past

three years to the Integrated Framework Trust

Fund to finance Diagnostic Trade Integration

Studies (DTIS). This includes $200,000 of the

Cancun pledge being specifically reserved for the

Trust Fund. Further, USAID’s bilateral assistance

to the 13 Least Developed Countries currently

participating in the renewed IF exceeded $32

million in fiscal year 2003, more than double the

previous year’s expenditures. These funds

support initiatives both to integrate trade into

national economic and development strategies

and to address high priority “behind the border”

229
capacity building needs designed to accelerate

integration into the global trading system. 

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 at Cancun, and

Cape Verde. In addition, many countries in

Eastern Europe and the former Soviet Union have

also benefited from USAID support in this area.

Although the WTO and the Integrated

Framework are priorities, they are only part of the

U.S. TCB effort. The United States recognizes the

need to build the capacity of developing countries

with which it is negotiating free trade agreements.

To complement the on-going FTAA, CAFTA, and

SACU free trade negotiations, separate cooperative groups on trade capacity building were

established with the purpose of defining and

identifying priority needs.

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 developed in conjunction

with the World Bank.

The foundation of the HCP is the national or

regional TCB strategies, which identify traderelated technical assistance needs in three key

areas: participation in FTAA negotiations, implementation of FTAA commitments, and economic

adjustment relating to the FTAA and economic

integration. USAID, along with the InterAmerican Development Bank (IDB), Organization

of American States (OAS), and United Nations

Economic Commission for Latin America and the

Caribbean (ECLAC), provided support to those

countries choosing to prepare TCB strategies. The

strategies cover a range of areas including customs

facilitation, environmental assessments, animal

and plant health, public outreach, small business

development, and rural diversification.

On October 14-15, 2003, the first Hemispheric

Cooperation Program Donor-Country

Roundtable was held. At the roundtable, countries including Brazil, Canada, Chile, Mexico, and

the United States expressed their commitment to

provide assistance and were joined by many

donor institutions. Key highlights and outcomes

of the Donor-Country Roundtable included:

• Focusing the attention of the donor

community to the Hemispheric Cooperation

Program and how it aims to be driven by

TCB strategies prepared by the countries

themselves.

• Providing the recipient countries within the

various sub-regions an opportunity to begin

focusing on cross-cutting TCB needs. This

helps those countries identify the TCB needs

that are of highest priority within each 

sub-region.

• Helping the FTAA countries and the donor

community to begin to mainstream TCB into

the conceptualization and implementation

of the donor’s development assistance strategies and the countries’ national development

planning.

• Advancing the dialogue among countries on

how the Hemispheric Cooperation Program

can best be a useful vehicle in helping 

recipient countries mobilize TCB assistance.

The United States continues to demonstrate its

long-term commitment to its neighbors through

the efforts of over 10 U.S. government agencies in

both bilateral and regional activities. U.S. traderelated technical assistance in the hemisphere

reached $150 million in FY 2003, an increase of

$47 million from FY 2002 levels. 

230 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
2. Central America

Through the US-CAFTA TCB working group, the

United States and institutions like the IDB have

helped the Central American countries to

develop their own national trade capacity

building strategies. Through these strategies, the

governments identified their trade capacity

building needs, to which the U.S. Government,

international institutions, corporations, and

non-governmental organizations have begun 

to respond.

This year, in response to the needs identified by

the Central American countries, the U.S.

Government provided over $61 million in TCB

assistance, far greater than the $47 million

projected at the beginning of the negotiations.

Since the launch of negotiations, the IDB has

approved more than $320 million in CAFTArelated operations.

The TCB working group helped attract private

and non-governmental organizations to join in

the effort of trade capacity building. For example:

• The Humane Society of the United States

(HSUS) developed “The CAFTA Alliance”

partnership to promote environmentally

sustainable and humane agricultural

programs, as well as the protection of

wildlife and habitat.

• The City of New Orleans and the State of

Louisiana worked with local universities 

and entrepreneurs to establish “Idea 

Village International,” an institute to train 

entrepreneurs in Central America.

In a first for any free trade agreement, CAFTA

institutionalizes trade capacity building through

a Committee on Trade Capacity Building. This

recognizes the importance of such assistance in

promoting economic growth, reducing poverty,

and adjusting to liberalized trade.

The Committee on Trade Capacity Building will

build on work done during the negotiations 

to enhance partnerships with international 

institutions (Inter-American Development Bank,

World Bank, Organization of American States,

ECLAC, and the Central American Bank 

for Economic Integration), non-governmental

organizations, and the private sector.

3. Africa

a. Southern African Customs Union

(SACU)

The cooperative group supporting the U.S.-SACU

FTA underscores the Administration’s position

that empowering SACU by providing it assistance

will ultimately result in an agreement that is beneficial for all involved. This assistance needs to

account for the differing sizes of economies and

levels of development of the SACU members. As

an illustration of its commitment to make TCB a

fundamental element of the negotiations, the

United States has pledged an initial $2 million in

TCB assistance to SACU in relation to the FTA. At

the end of 2003, SACU was in the process of

developing an integrated strategy to help ensure

that the provision of FTA-related technical assistance is coordinated. In addition to providing

training, the United States has provided the trade

ministries of Botswana, Lesotho, Namibia and

Swaziland with computers to enhance intraSACU policy coordination and a TCB “facilitator”

who will be responsible for coordinating 

technical assistance activities.

The cooperative group intends to work actively

with the private sector and foundations to bring

additional resources and creativity to the USSACU FTA. For example, future cooperative

group meetings will bring together public and

private donors to identify the best possible

programs to meet the needs identified in SACU’s

integrated strategy.

In FY2003, the U.S. Government provided $6.6

million in trade-related technical assistance to

SACU, up from $5.6 million the year before.

SACU members also had access to part of the

$18.6 million assistance provided to the Southern

African Development Community.

VI. TRADE POLICY DEVELOPMENT | 231
b. African Growth and Opportunity Act

(AGOA)

Trade capacity building is an important element of

AGOA implementation. Several U.S. agencies—

including USAID, 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). In addition, over

the past few years, USTR has coordinated through

the USAID-funded Africa Trade and Investment

Policy Program (ATRIP) more than 20 regional and

national technical assistance seminars on AGOA

across sub-Saharan Africa. These seminars, in

which representatives of several U.S. agencies

participate, are designed to help ensure that the

sub-Saharan African public and private sectors are

equipped to fully utilize AGOA benefits.

In FY2003, the U.S. Government provided almost

$69 million in trade-related technical assistance

to AGOA-beneficiary countries, up from 

$61 million the year before. 

Other

For more details on TCB efforts for APEC,

Bahrain, Morocco and the WTO, please see 

corresponding sections of this report.

B. Congressional Affairs

In 2003, the Administration worked closely with

the 108th Congress to move forward and complete

action on critical trade legislation, including measures to implement key free trade agreements. The

Administration also consulted regularly with

Congress regarding ongoing bilateral, regional,

and global trade talks, the initiation of new trade

negotiations with several important trading 

partners, and several trade compliance matters.

In July, the Congress considered and passed 

legislation to implement the U.S.-Chile Free

Trade Agreement and the U.S.-Singapore 

Free Trade Agreement. The President signed this 

legislation into law in September.

USTR continued close consultations with

Congress regarding the U.S.-Central America

Free Trade Agreement, which was concluded in

mid-December. USTR also maintained discussions with Congress regarding negotiations on

the U.S.-Southern African Customs Union

(SACU) Free Trade Agreement, U.S.-Australia

Free Trade Agreement, and the U.S.-Morocco

Free Trade Agreement. 

USTR also consulted closely with Congress

regarding ongoing negotiations of the WTO Doha

Agenda, including hosting over 60 Members of

Congress and staff at the September WTO ministerial in Cancun, Mexico. In addition, USTR

worked with Congress regarding negotiations for

the Free Trade Area of the Americas, including

hosting Congressional staff at the November

mini-Ministerial meeting in Miami, Florida.

USTR also worked to keep Congress informed

regarding the Administration’s intent to initiate

negotiations on several new Free Trade

Agreements, including the U.S.-Dominican

Republic Free Trade Agreement, U.S.-Thailand

Free Trade Agreement, U.S.-Panama Free Trade

Agreement, and a U.S.-Andean Free Trade

Agreement that could include separate negotiations with Columbia, Peru, Bolivia and Ecuador.

USTR also worked with Congress regarding the

launch of the President’s Middle East Free Trade

Area initiative, which included announcing an

intent to initiate negotiations on a U.S.-Bahrain

Free Trade Agreement. 

USTR also worked in close partnership with

Congress on a number of other critical traderelated issues, including China’s compliance with

its WTO commitments, the section 201 investigation on steel, Canadian softwood lumber, Foreign

Sales Corporation/Extraterroritorial Income,

compliance with WTO rulings regarding the

1916 Act, section 211, Irish music licensing, and

intellectual property protection, among other

important matters. 

232 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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.

First, 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 31 advisory committees, with a total membership of up to 1,000

advisors. It is managed by IAPL, often in cooperation with other agencies including the Departments

of Agriculture, Commerce, Defense, and Labor, and

the Environmental Protection Agency.

Second, 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, 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, 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.

The system currently consists of 31 advisory

committees, with a total membership of up to

1,000 advisors. (Currently, there are approximately 700 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); five policy advisory

committees; and 26 technical, sectoral, and functional advisory committees. Additional

information can be found on the USTR website

(http://www.ustr.gov/outreach/advise.shtml). In

2004, the number of industry committees at the

technical level will be streamlined and consolidated to better reflect the composition of the 

U.S. economy.

The private sector is essential to job creation.

Therefore, private sector advice is both a critical

and integral part of the trade policy process.

USTR already 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.

In 2003, USTR 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 are now posted to the secure website on an

ongoing basis, to allow advisors to provide

comment to U.S. officials in a timely fashion

throughout the course of negotiations. This has

VI. TRADE POLICY DEVELOPMENT | 233
enhanced the quality and quantity of input from

cleared advisors, especially from those advisors

who reside outside of Washington, DC and had

difficulty accessing documents in the past.

a. President’s Advisory Committee on

Trade Policy and Negotiations 

The President’s Advisory Committee for Trade

Policy and Negotiations (ACTPN) consists of no

more than 45 members broadly representative of

key economic sectors affected by trade. The

President appoints ACTPN members for two-year

renewable terms. The 1974 Trade Act requires

that membership broadly represent key economic

sectors affected by trade. 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 five policy

advisory committees are appointed by the USTR

alone or in conjunction with other Cabinet officers. Those managed solely by USTR are the

Intergovernmental Policy Advisory Committee

(IGPAC) and the Trade Advisory Committee on

Africa (TACA). 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. Sectoral, Functional and Technical

Committees 

At the third tier, the 27 sectoral, functional, and

technical advisory committees are organized 

in 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 (such as textiles, or grains and

oilseeds) and provides specific technical advice

concerning the effect that trade policy decisions

may have on its sector. Presently, there are six

agricultural technical committees co-chaired by

USTR and Agriculture and twenty-one industry

committees co-chaired by USTR and Commerce.

In 2004, the industry trade advisory committee

system will be 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 current committees were put in

place more than twenty years ago. The new structure will reflect important changes in the U.S.

economy since then. As of spring 2004, sixteen

new Industry Trade Advisory Committees

(ITACs) will replace the existing twenty-one

committees. The restructuring is consistent with

recommendations in a recent U.S. General

Accounting Office Report, “International Trade:

Advisory Committee System Should be 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 have been invited to

continue their service within the new structure.

2. State and Local Government

Relations 

With the passage of the NAFTA in 1993, and the

Uruguay Round Agreements Act in 1994, which

implements WTO obligations in the United

States, 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. IAPL also serves as a liaison

point in the Executive Branch for state and local

governments and federal agencies to transmit

information to interested state and local governments, and relay advice and information from 

234 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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, 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 traderelated 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 five 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 Trade

Representative and the Administration on trade

policy matters. In 2003, USTR took important

steps to improve and reenergize the IGPAC and

USTR’s partnership with states and localities, by

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 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 2003, IGPAC was

briefed and consulted on trade priorities of interest

to states and localities, including government

procurement, services, 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 policy issues and

solicit their views. Associations include the

National Governors’ Association (NGA), Western

Governors’ Association (WGA), National

Conference of State Legislatures (NCSL), Council

of State Governments (CSG), National

Association of Counties (NACo), U.S. Conference

of Mayors (USCM), National League of Cities

(NLC), and other associations. 

d. Consultations Regarding Specific 

Trade Issues 

USTR initiates consultations with particular

states and localities on issues arising under the

WTO and NAFTA agreements, and frequently

responds to requests for information from state

and local governments. Topics of interest

included the WTO Government Procurement

Agreement; WTO services issues; Free Trade Area

of the Americas, bilateral FTA negotiations;

NAFTA investment issues, and others.

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

VI. TRADE POLICY DEVELOPMENT | 235
meets with a broad spectrum of private sector and

non-governmental groups.

a. 2003 Outreach Efforts 

The 2003 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 2002, IAPL worked on public

outreach related to multilateral trade negotiations

launched in 2001 at the WTO Ministerial in

Doha, Qatar. This included the solicitation of

comments from the public on important WTO

issues such as services, agriculture, and market

access negotiations. Throughout 2003, USTR

built on that work and solicited advice from

cleared advisors, other domestic stakeholders and

the general public regarding U.S. objectives for

the Doha Development Agenda. During the

course of the WTO Ministerial in Cancun,

Mexico in September 2003, USTR undertook an

unprecedented outreach effort to keep advisors

and the public fully informed of continuing

developments, via daily webcast briefings on

USTR’s website, Trade Fact sheets, and other press

releases and updates.

ii. Free Trade Area of the Americas

Throughout 2003, USTR briefed and facilitated

consultations with advisory committees, other

stakeholders and the general public on the FTAA

agenda leading up to the FTAA Ministerial in

Miami, Florida. As the host of the Miami

Ministerial, USTR worked closely throughout the

year with officials from the State of Florida,

county, and city representatives in Miami to

ensure the success of the meeting and to provide

ample opportunity for input from the private

sector and civil society during the FTAA negotiations. The 8th Americas Business Forum (ABF),

organized by private sector groups from

throughout the Hemisphere, and the 1st

Americas Trade and Sustainable Development

Forum (ATSDF), organized by the University of

Miami North-South Center in partnership with

NGOs from throughout the Hemisphere, were

open to anyone in the public who registered and

were convened within the security perimeter.

FTAA government delegates were strongly

encouraged by USTR to attend the fora and meet

directly with the private sector and civil society.

At the conclusion of the fora, representatives from

both the ABF and ATSDF met with the 34

Ministers in an unprecedented roundtable

dialogue discussion that was televised live and

webcast to the public. 

In 2003, the 34 FTAA governments also agreed to

convene a series of public issue meetings around

the Hemisphere, in order to hear the views of civil

society directly. The first was held in June 2003 in

Sao Paulo, Brazil on the topic of Agriculture, and

the second was held in September 2003 in

Santiago, Chile on the topic of Services. U.S.

government and civil society groups, such as the

American Farm Bureau Federation, Oxfam, and

the State of Georgia, attended. In 2004, public

meetings are planned in the Dominican Republic

on the topic of Intellectual Property Rights and in

the U.S. on market access and small business.

Members of the public are invited to attend.

iii. Bilateral Trade Agreements

In 2003, USTR briefed and facilitated consultations with advisory committees and other

stakeholders on negotiations to conclude free

trade agreements with Singapore and Chile. This

included frequent teleconference briefings on the

progress of bilateral negotiations with Chile,

issuing public fact sheets on the agreements with

Chile and Singapore, and making materials

widely available on the USTR website. Advisory

committee reports on the Chile and Singapore

FTAs, as required under the Trade Act of 2002,

were delivered to the President, USTR, and

Congress and made public on USTR’s website

months 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 or

236 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
pending, including the Central American Free

Trade Agreement (CAFTA), the South African

Customs Union (SACU); Morocco; Australia;

Bahrain; Panama; Dominican Republic; Thailand;

Andean countries.

iv. Monitoring and Compliance Activities

USTR briefed and facilitated consultations with

advisors and other stakeholders on disputes

including the WTO steel dispute; the case

brought by the EU against the U.S. Foreign Sales

Corporation; and other items. Other issues of

interest to advisors and domestic groups included

the protection of U.S. intellectual property rights;

agriculture and biotechnology issues.

v. Sectoral Initiatives

USTR, in coordination with other federal agencies, facilitated briefings and consultations with

advisors and other stakeholders on the Bush

Administration’s Multilateral Steel Initiative.

vi. 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 2003, 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 serves as a vehicle to communicate to

the public. USTR continued to use recorded

webcasts to update the public on a daily basis from

the WTO Cancun Ministerial, the FTAA Miami

Ministerial, and used teleconference briefings for

updates on other negotiations. During 2003, IAPL

assisted in efforts to revise the USTR website,

including improving the organization of the

website and adding 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 subcommittees responsible for

specialized areas. The TPSC regularly seeks

advice from the public on its policy decisions and

negotiations through Federal Register notices and

public hearings. In 2003, the TPSC held three

public hearings on the following proposals:

China’s Compliance with WTO Commitments

(October 3, 2003); U.S.-Dominican Republic

Free Trade Agreement (October 8, 2003); and

U.S.-Bahrain Free Trade Agreement (November

5, 2003). The transcripts of these hearings 

are available on http://www.ustr.gov/outreach/

transcripts/index.htm

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). 

VI. TRADE POLICY DEVELOPMENT | 237
Member agencies of the TPSC and the TPRG

consist of the Departments of Commerce,

Agriculture, State, Treasury, Labor, Justice,

Defense, Interior, Transportation, Energy, 

and 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 United States International Trade

Commission 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.

238 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
III. Bilateral and Regional Negotiations

A. Free Trade Agreements 

1. 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

real GDP grew at about a 2 percent rate in 2002

and at a 3.5 percent rate in 2003.

Two-way trade in goods (exports plus imports)

between the United States and Chile totaled $6.4

billion in 2002, with the United States in deficit

by $1.2 billion. Two-way trade in services in 2001

(latest year available) amounted to $2.2 billion,

with the United States in surplus by $472 million.

Since 1994, U.S. goods trade with Chile has

expanded by 39 percent (to 2002) and services

trade by 37 percent (to 2001).

The United States and Chile concluded negotiations on an historic Free Trade Agreement (FTA)

on December 11, 2002. The agreement, signed

on June 6, 2003 by U.S. Trade Representative

Robert B. Zoellick and Chilean Foreign Minister

Soledad Alvear, is the first comprehensive FTA

between the United States and a South American

country. The U.S.-Chile FTA, along with the

U.S.-Singapore FTA, entered into force on

January 1, 2004. The U.S. Congress implemented the agreement with strong bipartisan

majorities in the House and Senate.

The U.S.-Chile FTA eliminates tariffs and opens

markets, reduces barriers for services, protects

leading-edge intellectual property, keeps pace

with new technologies, ensures regulatory transparency, and provides explicit guarantees for

electronic commerce and digital products and

effective labor and environmental enforcement.

American workers, consumers, investors, manufacturers and farmers will 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

freely traded. After just ten years, all trade in nonagricultural goods will take place without tariffs

or quotas; for agriculture, the phase out will take

just 12 years. Key U.S. export sectors benefit,

such as agricultural and construction equipment,

autos and auto parts, computers and other information technology products, medical equipment,

and paper products. U.S. farmers’ access to

Chilean markets will be as good or better than the

European Union or Canada. 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.

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 non-discriminatory protections for digital products such as

U.S. software, music, text, and videos. Protection

for U.S. patents, trademarks, and trade secrets

exceeds past agreements in the region.

105
The agreement establishes a secure, predictable

legal framework for U.S. investors, and provides

for ground-breaking 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.

With respect to labor and the environment, both

governments commit to effectively enforce their

domestic labor and environmental laws. An 

innovative enforcement mechanism includes

monetary assessments to enforce commercial,

labor and environmental obligations of the trade

agreement. In addition, it establishes a framework

for cooperative environmental projects that will

help protect wildlife, reduce hazards and promote

internationally recognized labor laws.

The negotiations on the U.S.-Chile FTA were

conducted in a transparent manner to ensure that

businesses, labor organizations, non-governmental organizations, state and local governments,

and the public were kept informed and had ample

opportunity to provide input on the negotiations.

The Administration briefed Congress on the status

of negotiations through periodic meetings with the

House Committee on Ways and Means and the

Senate Committee on Finance, as well as other

committees with interests in the negotiations and

individual Members’ staffs. 

2. Singapore 

President Bush and Prime Minister Goh signed

the U.S.-Singapore FTA on May 6, 2003. H.R.

2739, the U.S.-Singapore FTA Implementation

Act, was passed by the House of Representatives

on July 24, and by the Senate on July 31 with

strong bipartisan support, and was signed by

President Bush on September 3. The FTA entered

into force on January 1, 2004.

This FTA is the first comprehensive U.S. FTA with

any Asia-Pacific nation. Singapore is our 12th

largest trading partner, with two-way trade of

goods and services exceeding $38 billion. The

provisions of the U.S.-Singapore FTA build on the

WTO and NAFTA and make important advances

in many key areas. Most tariffs will be eliminated

immediately upon entry into force of the

Agreement, with the remaining tariffs phased out

over a 3 to 10-year period. 

The FTA chapters cover 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. 

The FTA will provide strong disciplines in the

most competitive U.S. sectors. U.S. firms will

enjoy barrier-free market access, a transparent

regulatory environment and non-discriminatory

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, 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. For

example, this FTA will provide: a secure legal

environment for U.S. investors operating in

Singapore; explicit guarantees for electronic

commerce and digital products; enhanced, stateof-the art protection for intellectual property;

specific commitments regarding the conduct of

Singapore’s government enterprises; reinforced

commitments to strong and transparent disciplines on government procurement procedures;

strong, simple, and transparent rules of origin;

firm commitments to combat illegal transhipments of all traded goods and prevent

circumvention for textiles and apparel; mobility

for highly-trained personnel; and requirements to

106 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 trade agreement. 

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 agreement

will not only improve market opportunities for

U.S. goods and services exports, but it may also

serve as a model for the Asia-Pacific region,

encouraging trade liberalization, regulatory

reform, and transparency, including under the

Enterprise for ASEAN Initiative, which President

Bush announced at the Summit of Leaders’ of the

Asia-Pacific Economic Cooperation forum in

October 2002. The FTA will offer important benefits to U.S. workers, ranchers, farmers, and

businesses while reinforcing important American

values in the region.

These negotiations, which began in December

2000, recognized Singapore’s importance as a

trading partner and strategic role in the Asia

Pacific region. The negotiations on the U.S.-

Singapore FTA were conducted in a transparent

manner to ensure that businesses, labor organizations, non-governmental organizations, state

and local governments, and the public were kept

informed and had ample opportunity to provide

input on the negotiations. The Administration

briefed Congress on the status of negotiations

through periodic meetings with the House

Committee on Ways and Means and the Senate

Committee on Finance, as well as other committees with interests in the negotiations and

individual Members’ staffs. 

3. Jordan

The United States and Jordan continued their

efforts in 2003 to help take advantage of the

opportunities afforded by the U.S.-Jordan Free

Trade Agreement (FTA) which went into effect in

December 2001. These efforts included meetings

in June between senior USTR officials and the

Jordanian Minister of Trade, as well as with the

Jordanian-American Business Association. At

year’s end the United States and Jordan were

engaged in planning for the second U.S.-Jordan

Joint Committee meeting to be held under the

FTA. 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.

The FTA will eliminate nearly all tariffs on

industrial goods and farm products within 10

years, as well as commercial barriers to bilateral

trade in goods and services originating in the

United States and Jordan. The FTA includes, for

the first time ever in the text of a trade agreement, substantive provisions on electronic

commerce. Other provisions address intellectual

property rights protection, balance of payments,

rules of origin, safeguards, labor, environment,

and procedural matters such as consultations

and dispute settlement. Because the United

States already has an up-to-date Bilateral

Investment Treaty with Jordan, the FTA does not

include an investment chapter.

While the FTA is a key part of the U.S.-Jordan

economic relationship, it is just one component

of an extensive U.S.-Jordanian 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. The

United States’ efforts to support Jordan’s rapid and

successful WTO accession were followed on the

bilateral front by the conclusion of the U.S.-

Jordan Trade and Investment Framework

Agreement and a Bilateral Investment Treaty.

Qualifying Industrial Zones (QIZs) are another

important example of successful U.S.-Jordanian

efforts to boost Jordan’s economic growth and

promote peace in the Middle East.

These measures have played a significant role in

boosting U.S.-Jordanian economic ties. In 2002

U.S. goods imports were $412 million, an 80

percent increase ($183 million) from 2001. In

III. BILATERAL AND REGIONAL NEGOTIATIONS | 107
2002 U.S. goods exports to Jordan were $404

million, up 19 percent ($65 million) from 2001. 

4. Israel

The United States and Israel held two formal

rounds of negotiations in 2003 on a new bilateral

agreement on trade in agricultural products, in

addition to extensive informal discussions. This

new agreement would succeed the 1996

Agriculture Agreement which expired at the end

of 2001. The United States and Israel extended

the benefits provided by the Agriculture

Agreement through 2002 and 2003. At the time

this report went to press, the two sides were in the

final stages of concluding a new agreement,

which would provide duty free treatment of over

90 percent of bilateral agricultural trade. The

United States and Israel have undertaken negotiations on agricultural trade to address problems

arising from the two sides’ disagreement as to

whether or not the 1985 U.S.-Israel Free Trade

Agreement permits either party to apply 

restrictions on bilateral trade in this area.

5. U.S.-Central American Free Trade

Agreement (CAFTA) Negotiations

The five countries of the Central American

Common Market (CACM), as a whole, comprise

one of the largest trading partners in the

Hemisphere for the United States, with bilateral

trade expected to total about $25 billion in 2003.

From 1996 to 2002, U.S. exports to the region

increased 54 percent. To consolidate and

strengthen this relationship, in January 2003 the

United States launched negotiations for a free

trade agreement with the CACM member countries—Costa Rica, El Salvador, Guatemala,

Honduras, and Nicaragua. Negotiators for the

U.S.- Central America Free Trade Agreement

(CAFTA) held nine rounds of negotiations

throughout 2003, resulting in an agreement

among the United States, El Salvador, Guatemala,

Honduras, and Nicaragua in mid-December in

Washington, DC. Talks with Costa Rica

continued into January 2004 resulting in that

country being added to the FTA at the end of

January. This historic Free Trade Agreement is the

first between the United States and a group of

countries with small, developing economies. The

FTA will eliminate most barriers and facilitate

trade and investment among the countries, as

well as help further CACM’s integration efforts.

When the United States and the Dominican

Republic conclude market access negotiations, to

be held January through March 2004, the

Dominican Republic will be integrated into

CAFTA, which will stand to become the United

States’ second largest market in Latin America

after Mexico. Bilateral trade between the United

States and the Dominican Republic totaled over

$8.4 billion in 2002.

To date, the United States has only six FTA 

partners: Canada, Mexico, Israel, Jordan, Chile,

and Singapore, the last two of which entered

into force in January 2004. Like the U.S.-Chile

FTA, CAFTA is expected to spur progress on

negotiations of the Free Trade Area of the

Americas as well as ongoing global trade 

negotiations.

CAFTA will eliminate tariffs and open markets,

reduce barriers for services, protect leading-edge

intellectual property, keep pace with new technologies, ensure regulatory transparency, and

provide explicit guarantees for electronic

commerce and digital products and effective

labor and environmental enforcement. American

workers, consumers, investors, manufacturers

and farmers will enjoy access to one of the hemisphere’s most dynamic economic regions,

enabling products and services to flow between

the two economies with no tariffs and 

streamlined customs procedures.

Throughout the negotiation process, U.S. negotiators consulted closely with Congress, industry

representatives, and labor and environmental

groups to ensure the FTA advanced U.S. interests

and, in its final provisions, reflected the goals

contained in Trade Promotion Authority. Under

the Trade Act of 2002, the Administration must

notify Congress at least 90 days before signing an

FTA. President Bush notified Congress of his

intent to enter into an FTA with Central America

in early 2004. During the 90-day period, both the

108 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
United States and the countries of Central

America will undertake legal reviews of the texts

and continue to consult with their respective

legislatures and other interested groups regarding

the provisions negotiated. Also during this

period, the Dominican Republic, which will

accede to the overall obligations agreed between

the United States and Central America, will negotiate with the United States specific bilateral

market access issues.

Under the agreement, more than 80 percent of

U.S. commercial and industrial goods will enjoy

tariff-free access to Central America immediately

upon entry into force, and 85 percent will be duty

free within 5 years. Virtually 100 percent of

Central American nonagricultural goods will

receive immediate duty-free access to the U.S.

market. Most remaining tariffs will be eliminated

in five years and all tariffs will be eliminated in 10

years for nonagricultural goods. Key U.S.

exports, such as information technology products, agricultural and construction equipment,

paper products, chemicals, and medical and

scientific equipment will gain immediate dutyfree access to Central America. More than half of

current U.S. farm exports to Central America will

become duty-free immediately, including high

quality cuts of beef, cotton, wheat, soybeans, key

fruits and vegetables, processed food products,

and wine, among others. 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 the Agreement, the Central American

countries will accord substantial market access

across their entire services regime, subject to

very few exceptions. U.S. financial service

suppliers will have full 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 past trade agreements.

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 government entities.

With respect to labor and the environment, both

parties commit to effectively enforce their

domestic labor and environment laws. An innovative enforcement mechanism includes monetary

assessments to enforce commercial, labor and environmental obligations of the trade agreement. In

addition, it establishes a framework for cooperative

environmental projects and promotes internationally recognized labor standards. CAFTA includes

unprecedented provisions that commit member

countries to provide workers with improved access

to procedures that protect their rights. CAFTA goes

beyond Chile and Singapore FTAs through a 

3-part cooperative approach to improve working

conditions by: ensuring effective enforcement of

existing labor laws, working with ILO to improve

existing labor laws and enforcement, and building

local capacity to improve worker rights.

6. Australia FTA Negotiations

The United States and Australia held five rounds

of FTA negotiations in 2003, and concluded the

Agreement February 8, 2004. The FTA will

further boost trade in both goods and services,

enhancing employment opportunities in both

countries. Two-way annual trade already is more

than $25 billion, and Australia purchases more

goods from the United States than from any other

country. The FTA will provide U.S. firms free

access in all goods. More than 99 percent of U.S.

exports of manufactured goods to Australia will

become duty-free immediately upon entry into

force and all U.S. agricultural exports to Australia,

totaling more than $400 million, will receive

immediate duty-free access. The FTA also accords

substantial access to virtually all U.S. services

suppliers and will encourage additional foreign

investment flows between the United States and

Australia, adding to the many jobs that the

already significant investment flows between the

two countries currently support. The comprehenIII. BILATERAL AND REGIONAL NEGOTIATIONS | 109
sive FTA strengthens intellectual property protection, has provisions on electronic commerce

reflecting the principle of avoiding barriers that

impeded the use of e-commerce, and includes

transparency and other commitments on market

access issues related to pharmaceuticals.

Moreover, the FTA will bolster the WTO partnership between the United States and Australia,

deepen the broader ties between the two countries, and strengthen the foundation of our

security relationship. 

7. Morocco FTA Negotiations

In April of 2002 President Bush and King

Mohammed VI agreed to pursue a Free Trade

Agreement (FTA) between the United States and

Morocco. On October 1, 2002, USTR Zoellick

notified Congress and trade negotiations were

initiated with the Moroccans in January of 2003.

The FTA with Morocco will be 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. Negotiations have continued

through 2003 and are expected to conclude in

2004, which would make it the first FTA to be

completed under the President’s Middle East

Free Trade Area initiative.

8. Southern Africa FTA Negotiations

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, South

Africa and Swaziland—comprise the largest U.S.

export market in sub-Saharan Africa, with $2.5

billion in U.S. exports in 2002. The negotiations

began in Pretoria, South Africa in June 2003 and

subsequent rounds were held in August and

October 2003. The target completion date is

December 2004. This FTA—the first ever 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. The SACU countries are strong

economic reformers and leading AGOA beneficiaries. They have seen the positive role that trade

can play in promoting economic growth and

development and, through the FTA negotiations,

are taking an important step toward deeper

economic engagement with the United States.

Through an FTA with SACU, U.S. businesses will

gain preferential access to their largest export

market in sub-Saharan Africa. Other exporters

such as the European Union already receive preferential access to the South African market. By

building on the success of AGOA, the SACU

countries would secure the kind of guaranteed

access to the American market that supports

long-term investment and economic prosperity.

The FTA would also reinforce ongoing regional

economic reforms and lower the perceived risk of

doing business in Southern Africa. 

B. Regional Initiatives

1. Free Trade Area of the Americas

2003 was the first full year of negotiations with

the U.S. and Brazil as Co-Chairs of the process.

The 34 governments participating in the process

initiated market access negotiations and

continued to make progress on the draft text of

the Agreement. In addition, they made progress

on implementation of the Hemispheric

Cooperation Program, which is designed to assist

countries to participate in the negotiations,

prepare to implement the FTAA obligations and

adjust to hemispheric integration.

The U.S. participated actively in meetings of 

the nine negotiating groups (market access, 

agriculture, intellectual property rights, 

services, investment, government procurement,

competition policy, dispute settlement, and subsidies/antidumping/countervailing duties) and the

three committees and non-negotiating groups

(the Technical Committee on Institutional Issues

(TCI), the Consultative Group on Smaller

110 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Economies (SME), and the Committee of

Government Representatives on the Participation

of Civil Society (SOC)). The negotiating groups

and the TCI focused on eliminating brackets in

the existing text, while delegations to the market

access, agriculture, services, investment and

government procurement negotiating groups met

to negotiate market access commitments. Most

delegations exchanged initial offers and requests

for improvement to those initial offers in most of

the market access areas. Some delegations also

exchanged improved offers. In addition, the U.S.

participated actively in the Ad Hoc Group on

Rules of Origin, and an ad hoc group within the

Market Access Negotiating Group, which are

negotiating rules of origin for the FTAA. The

Ministers have instructed negotiators to continue

at a pace that will lead to conclusion of market

access negotiations by September 30, 2004.

The U.S. proposed additions to the TCI text,

similar to that in the Chile and Singapore FTAs,

on labor and environment. Under the proposal,

countries would reaffirm their obligations as

members of the International Labor Organization

(ILO) and pledge to strive to ensure that core

labor standards in the ILO Declaration of

Fundamental Principles and Rights at Work are

fully protected in domestic labor laws. Countries

would be obligated not to fail to effectively

enforce domestic labor laws through a sustained

or recurring course of action or inaction, in a

manner affecting trade. This obligation would be

subject to dispute settlement and could result in a

monetary assessment if a country was found not

to be meeting this obligation and failed to remedy

the situation. Failure to pay the assessment could

lead to suspension of trade benefits sufficient to

collect the assessment. Several countries believe

there is no mandate to include labor in the FTAA

and have blocked discussion of the U.S. proposal.

Recognizing the role trade plays in promoting

economic development in America and in other

countries and reducing poverty and that smaller

and less developed economies require financial

support to assist in adjusting to hemispheric integration, the U.S. has worked with CARICOM and

other smaller economies to implement the

Hemispheric Cooperation Program. The InterAmerican Development Bank (IDB) hosted a

meeting in October in Washington, D.C. with

relevant donor institutions and FTAA countries

to discuss preparation of trade capacity building

(TCB) strategies by governments seeking assistance. These strategies are critical to identifying

effective programs and appropriate funding

sources. They are the first steps in enhancing the

capacity of countries seeking assistance to

complete negotiation of the FTAA Agreement,

prepare to implement its obligations, enhance

their capacity to trade and successfully adjust to

hemispheric integration.

Despite this progress, negotiations were marked

by disagreement about the FTAA’s ultimate scope

and ambition. Since 1994, the negotiations have

been guided by principles and objectives

approved by the leaders of the 34 democraticallyelected FTAA countries. One of the most

important principles is that the FTAA should

improve upon World Trade Organization (WTO)

rules and disciplines wherever possible and

appropriate. Objectives include: progressive elimination of tariffs and non-tariff barriers, as well as

other measures with equivalent effects; elimination of agricultural export subsidies in the

hemisphere; liberalization of trade in services

under conditions of certainty and transparency;

adequate and effective protection of intellectual

property rights, taking into account changes in

technology; establishment of a fair and transparent legal framework for investment and

related capital flows; integration of trade 

and environmental policies and observance and

promotion of internationally-recognized core

labor standards. Some delegations questioned

these principles and objectives, proposing that

the FTAA negotiations focus exclusively on

market access, leaving additional rules and 

disciplines for discussion in the WTO. 

At the Miami Ministerial meeting in November,

the Trade Ministers considered the progress of

the negotiations in the past year. In light of the

WTO Cancun Ministerial, where global trade

III. BILATERAL AND REGIONAL NEGOTIATIONS | 111
liberalization (including agricultural trade

reform) was set back and in view of the increase

in political and economic uncertainty in the

region, Ministers agreed that the FTAA negotiations would move forward with the flexibility

necessary to handle differences in the economic

and political situations of countries in the hemisphere. The FTAA will be comprehensive and

include a common and balanced set of rights and

obligations, in each of the nine negotiating disciplines, that will be applicable to all countries.

Those countries that wish to may agree to additional obligations and benefits. This will allow

countries to go beyond the common rights and

obligations in areas were there has not been a

consensus to do so on a hemisphere-wide basis.

The Ministers directed Vice-Ministers to define

the comprehensive set of common rights and

obligations as well as procedures for negotiating

additional provisions. Negotiation of these additional provisions is very important to the U.S.,

which hopes that all countries will eventually

agree to them. Ministers reaffirmed that negotiations should be completed by January 2005. In

addition, several delegations supported establishment of a consultative group on labor and

environment within the FTAA process. This may

provide a forum for discussion of the U.S.

proposals on labor and environmental standards. 

The Ministers also continued efforts to improve

transparency in the FTAA process and build

broader public understanding of and support for

the FTAA. Ministers met with representatives of

the eighth Americas Business Forum (ABF) 

and the Americas Trade and Sustainable

Development Forum, organized with broad

representation from civil society and received

detailed recommendations from workshops

covering all areas of the negotiations. The

Ministers agreed to make public the third draft

consolidated texts of the FTAA agreement, 

which is available on the USTR website

(http://www.ustr.gov) and the official FTAA

website (http://www.ftaa-alca.org). They also

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

open meetings that focus on issues under discussion in the negotiations. In 2003 two such

meetings were held, one in Sao Paulo, Brazil on

agriculture and the other in Santiago, Chile on

services. Two more are 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.

In Miami, Ministers also received two reports from

the SOC: the Report on Best Practices and

Illustrative Examples of Consultations with Civil

Society at the National/Regional Level that highlights best practices for disseminating information

to civil society and increasing its participation in

the FTAA process and 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. Both

reports are available on the official FTAA website.

Finally, Ministers directed the SOC to coordinate

with the TCI to prepare recommendations for the

TNC on the possibility of creating a civil society

consultative committee within the institutional

framework of the FTAA upon entry into force. The

TNC will review these recommendations and

make a proposal to the Ministers.

Ministers agreed that their next meeting would be

hosted by Brazil in 2004.

2. Enterprise for ASEAN Initiative 

President Bush announced a major new initiative,

the Enterprise for ASEAN Initiative (EAI), in

October 2002 to strengthen U.S. trade and investment ties with ASEAN both as a region and

bilaterally. With two-way trade of nearly $120

billion annually, the ten-member ASEAN group

already is the United States’ fifth largest trading

partner collectively. The initiative is intended to

further enhance the already close U.S. relationship with this strategic and commercially

important region. With the ASEAN countries

anticipating solid future economic growth and

112 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
with their population of 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 offered the

prospect of bilateral free trade agreements 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 TIFA

with the United States. The United States now has

TIFAs with Indonesia, Philippines, Thailand, and

Brunei Darussalam and is near conclusion of one

with Malaysia. The U.S. Government sees

progress in addressing bilateral issues under these

TIFAs as important to laying the groundwork for

entering FTA negotiations with the confidence

that they can be concluded successfully. The U.S.

goal is to create a network of bilateral FTAs with

ASEAN countries.

Under the EAI, the United States also committed

to support the efforts of ASEAN members that do

not yet belong to the WTO to complete their

accessions successfully. With U.S. government

support, Cambodia successfully acceded to the

WTO in September 2003. 

U.S. and ASEAN officials met in August 2003 to

discuss progress under the EAI. The two sides

will work to advance the U.S.-ASEAN work

program established in 2002, including efforts on

intellectual property rights, customs and trade

facilitation, biotechnology, standards, agriculture,

human resource development and capacity

building, small and medium enterprises, and

information and communications technology. 

3. North American Free Trade

Agreement 

Overview

Ten years ago, on January 1, 1994, the North

American Free Trade Agreement between the

United States, Canada and Mexico entered into

force. NAFTA created the world’s largest free trade

area, which now links 427 million people

producing more than $11 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. NAFTA also includes significant labor and

environmental cooperation agreements. 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 2002, from $142 billion to

$258 billion, significantly higher than export

growth of 49 percent for the rest of the world over

the same period.

NAFTA’s record is clear: By lowering trade

barriers, the agreement has expanded trade in all

three countries. This has led to better jobs, more

choices for consumers at competitive prices, and

rising prosperity. From 1993 (the year preceding

the start of NAFTA implementation) to 2002,

trade among the NAFTA nations climbed 109

percent, from $297 billion to $621 billion. Each

day the NAFTA parties conduct nearly 

$1.7 billion in trilateral trade. Thanks in part to

NAFTA, North America is one of the most

competitive, prosperous and economically 

integrated regions in the world.

Elements of NAFTA

A. Operation of the Agreement

The NAFTA’s central oversight body is the

NAFTA Free Trade Commission, chaired jointly

by the U.S. Trade Representative, the Canadian

Minister for International Trade, and the

Mexican Secretary of Economy. The NAFTA

III. BILATERAL AND REGIONAL NEGOTIATIONS | 113
Commission is responsible for overseeing implementation and elaboration of the NAFTA and for

dispute settlement. The Commission held its

most recent meeting annual meeting in October

2003, in Montreal, Canada. Ministers launched

an initiative to study the Parties’ most-favorednation tariffs, in order to determine whether

harmonizing these tariffs could further promote

trade by reducing export-related transaction

costs. The FTC also agreed to pursue further

liberalization of the NAFTA rules of origin. Since

nearly all tariffs between the Parties have been

eliminated, reducing the costs associated with

trade, such as those associated with compliance

with the rules of origin, will generate additional

benefits for traders.

B. Investment

As part of the ongoing commitment to make the

NAFTA more responsive to the needs of the

public, the Commission at its October 2003

meeting produced two statements to enhance the

transparency and efficiency of NAFTA’s investorstate arbitration (Chapter 11 of the NAFTA

Agreement):

• an affirmation of the authority of investorstate 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.

These procedures will enhance the transparency

and efficiency of the investment chapter’s

investor-state dispute settlement process.

C. Dispute Settlement Mechanisms

NAFTA has several mechanisms available to

avoid and resolve disputes. Over the last year,

only those provisions related to investor-state

(see below) and reviews under Chapter 19 of

antidumping and countervailing duty determinations were used. In ten years of experience under

Chapter 19, the United States has generally done

well, and all three countries have demonstrated

the process functions as intended. Since the

NAFTA’s inception on January 1, 1994, panels

have been requested to review nearly ninety AD

and CVD determinations by the countries’

various trade agencies; nearly sixty of these

requests concerned the United States. Completed

decisions have been issued in over thirty cases,

thirteen of which concern the United States,

while another twenty-eight cases remain active,

most of which concern the United States. Most

notably, in the past several months, three panels

have reviewed and issued in timely fashion unanimous decisions concerning the United States’

antidumping and countervailing duty orders on

softwood lumber from Canada. While remands

are ongoing in all three of those cases—two

concerning Commerce and one involving the U.S.

International Trade Commission—the ability of

the Chapter 19 system to handle such massive

litigation has been noteworthy. Chapter 19 also

provides for an extraordinary challenge 

procedure. Following a panel decision, either of

the countries involved may request the establishment of a three-person extraordinary challenge

committee (“ECC”), comprised of judges or

former judges from those countries. If the ECC

determines that one of the grounds for the

extraordinary challenge has been met (such as a

violation of the standard of review which materially affects the panel’s decision and threatens the

integrity of the panel process), it will vacate the

original panel decision. Under the ten-year

history of the NAFTA, only two ECCs have been

requested: one concerning the Commerce

Department’s review of the U.S. antidumping

order on Mexican cement and, just recently, a

second concerning Commerce’s sunset review of

the antidumping order on pure magnesium from

Canada. The cement ECC affirmed the decision

of the lower panel, which affects the fifth annual

administrative review. 

D. NAFTA and Labor

The North American Agreement on Labor

Cooperation (NAALC), a supplemental agreement to the NAFTA, promotes effective

114 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 the expansive cooperative work

programs. In addition, the Agreement created a

trinational Commission for Labor Cooperation,

comprised of a Ministerial Council and an

administrative Secretariat.

The Ministerial Council held its most recent

meeting in Washington in November 2003.

Ministers discussed labor issues facing the three

countries, including the opportunities and challenges involved in developing the skills needed

for the 21st century workforce, the social and

labor components of hemispheric integration,

and migrant worker rights. The Council agreed to

continue its second review of the operation and

effectiveness of the NAALC. Regarding this

ongoing review, each country will solicit public

views on the process and efficiency of the labor

agreement. The countries will also share their

findings with each other. A final report will be

made available to the public in 2004.

In addition, the Council announced the release of

the second edition of its major report on North

American labor markets, “North American Labor

Markets: Main Changes Since NAFTA.” The

study provides data on labor market issues such

as unemployment, productivity, hours of work

and classes of employment. In 2003, the Trilateral

Working Group on Occupational Safety and

Health, established by the U.S., Mexico and

Canada, agreed to host a seminar on ergonomic

best practices in the automotive sector; undertake

additional training by the U.S. for Mexican labor

inspectors; and pursue strategies for involving

Hispanic workers in the development of safety

and health management systems. 

E. 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 countries; and c) the Secretariat made up of

professional staff, located in Montreal, Canada.

Specific information on the CEC’s activities can

be found in Section 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 NAFTA and the

NAAEC. The Border Environment Cooperation

Commission (BECC) and the North American

Development Bank (NADB) are working with

communities throughout the U.S.-Mexico 

border region to address their environmental

infrastructure needs. Since their creation, the

institutions have been instrumental in the development of over 65 projects, now complete or

under construction, with an aggregate cost of

approximately $2.1 billion. These projects, when

complete, will serve about 9 million residents of

the United States and Mexico, with new projects

being developed continually.

4. MEFTA

The United States Middle East Free Trade Area

initiative (MEFTA), 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 re-ignite economic

growth and expand opportunity in the Middle

East, the U.S. will build on free trade agreements

(FTAs) with Israel and Jordan and will take a

series of graduated steps with countries in the

region tailored to the level of development of

individual countries. These steps include helping

reforming countries with WTO Accession,

enhancing access to the Generalized System of

Preferences (GSP) program for eligible countries,

negotiating Trade and Investment Framework

III. BILATERAL AND REGIONAL NEGOTIATIONS | 115
Agreements, negotiating Bilateral Investment

Treaties, negotiating comprehensive Free Trade

Agreements, melding sub-regional FTAs into

MEFTA, and helping with Technical Assistance.

5. Asia Pacific Economic Cooperation

Overview

For the past decade the Asia Pacific Economic

Cooperation (APEC) forum has been instrumental in advancing regional and global trade and

investment liberalization. APEC, which was

founded in 1989, was largely a consultative body

until the United States invited Leaders from 18

Asia Pacific economies to Blake Island,

Washington in 1993. This event marked the first

ever meeting of Pacific Rim leaders, and was

precipitated by the realization that Asia Pacific

economies accounted for more than half of U.S.

exports to the world, and had steadily increased

in importance in recent years. APEC Leaders have

met annually since.

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 43 percent. In 2003, twoway trade with APEC members totaled $1.3

trillion, an increase of 5 percent from 2002 (2003

based on annualized 11 monthsí data).

2003 Activities

1. Leadership in the Multilateral

Trading System

APEC Leaders and Ministers meeting in Bangkok

in October committed to move the DDA forward.

They regretted the missed opportunity to advance

negotiations at the September WTO Cancun

Ministerial, but agreed that the WTO offers the

potential for real benefits for all APEC members.

To achieve further progress, they pledged to build

on Chairman Derbezís text in Cancun, calling for

flexibility and political will from all parties. 

Leaders discussed and agreed to work to abolish

all forms of agricultural export subsidies, unjustifiable export prohibitions and restrictions,

committed to working in the negotiating group

on rules in accordance with the Doha mandate.

Ministers noted that progress had been made in

some areas of the WTO negotiations, and they

welcomed the decision on TRIPS and access to

essential medicines. There was consensus that

increased focus should be applied to areas that

dominated discussions in Cancun, such as agriculture, industrial market access and the

Singapore Issues (trade facilitation, transparency

in government procurement, competition and

investment), noting that APEC’s valuable work

on trade facilitation would be helpful in the

context of the WTO negotiations.

APEC Ministers and Leaders also emphasized the

importance of continuing to build confidence in

the WTO through APEC’s Strategic Plan for

WTO Capacity Building, created in 2000 to help

developing APEC economies implement their

WTO obligations. In June APEC Trade Ministers

welcomed APEC’s capacity building workshops

on Trade and Environment, Geographical

Indications, and Investment. At their October

meeting, Ministers instructed senior officials to

review the lessons of Cancun and utilize APECís

experience in this area to help reinvigorate the

DDA negotiations. Furthering this work will

help developing economies participate fully in

the DDA negotiations and enjoy the benefits of

WTO membership.

2. Advancement of APEC’s Work on

Trade and Investment Liberalization

and Facilitation

APEC Leaders and Ministers reviewed APEC’s

trade policies and measures that contribute to

trade and investment expansion and economic

growth in the Asia-Pacific region. They agreed to

new commitments in key areas under the

Shanghai Accord, a U.S.-led blueprint for APEC’s

trade agenda agreed by APEC Leaders in 2001.

These commitments include: 

• an agreement on Transparency Standards in

specific areas (Services, Investment,

Competition Law and Policy and Regulatory

116 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Reform, Standards and Conformance,

Intellectual Property, Customs procedures,

Market Access, and Business Mobility.

Officials were also directed to complete work

on standards on government procurement

by the 2004 Trade Ministers meeting);

• an agreement to fight corruption;

• an agreement to carry forward APEC’s

“Pathfinder Statement to Implement APEC

Policies on Trade and the Digital Economy”

by, e.g., working to combat optical disc

piracy and ensuring best enforcement practices, ensuring technology choice for

business, and identifying additional information technology products on which tariffs

could be eliminated;

• the identification by individual economies of

trade facilitation reforms they intend to implement to achieve a significant reduction in

business transaction costs by 2006 (by

endeavoring to reduce them by 5 percent); and 

• an agreement to accelerate structural reform.

In 2003, APEC made progress on a number of

APEC “Pathfinder Initiatives”—cooperative

arrangements which enable a group of countries

to pilot initiatives, even though not all APEC

Members can initially participate. In addition to

the Statement on Trade and the Digital Economy,

Leaders and Ministers welcomed the launch of

the APEC Sectoral Food Mutual Recognition

Arrangement (MRA) to promote trade in

food/agricultural products. Ministers also noted

that progress had been made on other Pathfinder

Initiatives, including: Implementation of Unilateral

Advance Passenger Information Systems; Adoption

of the revised Kyoto Convention of the

Simplification and Harmonization of Customs

Procedures; Electronic Sanitary and

Phytosanitary (SPS) Certificates; Electronic

Certificates of Origin; Mutual Recognition

Arrangement of Conformity Assessment on

Electrical and Electronic Equipment Part II and

Part III; and Corporate Governance.

APEC Members report annually on their actions

to achieve free trade and investment by preparing

Individual Action Plans (IAPs). The Shanghai

Accord called for, and APEC Senior Officials

developed, a more meaningful process for

reviewing IAPs. The first of these enhanced

reviews were of Japan and Mexico in 2002. In

2003 APEC Members reviewed the trade regimes

of Canada, Hong Kong, Japan, Korea, Mexico,

New Zealand and Thailand. During each session

the economies being reviewed provided opening

statements, while officials from other economies,

as well as outside experts, submitted oral and

written questions. The participants engaged in a

productive exchange, bringing increased focus to

trade and investment liberalization in APEC. The

economies scheduled to be reviewed in 2004

include the United States, Chile, China, Peru,

Singapore, and Chinese Taipei. In Bangkok

Ministers reaffirmed their commitment to

complete all twenty-one IAP peer reviews by the

first APEC Senior Officials Meeting in early 2005,

and to conduct a mid-term review of progress

toward meeting the Bogor Goals by the

Ministerial Meeting in 2005. Reports of the IAP

Peer Review Meetings can be found on the APEC

website (www.apecsec.org.sg).

APEC’s work on trade and investment liberalization and facilitation is overseen by the Committee

on Trade and Investment (CTI) and its sub-fora.

The CTI and its sub-fora have well-developed,

specific work programs in the sixteen substantive

issue areas first defined in the 1995 Osaka Action

Agenda (OAA). These areas are: tariffs, non-tariff

measures, services, investment, government

procurement, standards and conformance,

customs, competition policy, deregulation, intellectual property rights, dispute mediation,

mobility of business people, rules of origin, information gathering/analysis, and implementation of

WTO obligations (including rules of origin), and

Strengthening Economic Legal Infrastructure.

The CTI’s 2003 Annual Report to Ministers details

all of the work on trade and investment undertaken in 2003 by the CTI and its sub-fora. This

III. BILATERAL AND REGIONAL NEGOTIATIONS | 117
Report and additional information can be found

on the APEC website (www.apecsec.org.sg).

3. Free Trade Agreements

Another important issue for APEC in 2003 was

the growing number of Regional Trade

Agreements (RTAs) and Free Trade Agreements

(FTAs) in the region. APEC held its first policy

dialogue on regional and bilateral trade agreements in May 2003, and agreed to convene a

second in 2004. Ministers agreed that such agreements can contribute to multilateral trade

liberalization, and reiterated Leaders’ emphasis

that RTAs and FTAs must be consistent with both

the WTOís rules and disciplines and APEC’s goals

and principles. They agreed that if RTAs and FTAs

are comprehensive they can promote competitive

liberalization in the region and help to build

momentum for global trade liberalization.

4. Private Sector Involvement

APEC works closely with the private sector in

many of its activities, and the United States has

been a driving force in fostering this interaction.

Live Sciences Innovation Forum

In 2002, the United States led an initiative to establish the APEC Life Sciences Innovation Forum

(LSIF), which held its initial meeting this year on

August 14-15 in Phuket Thailand. Over 200 participants drawn from academia, government and

industry discussed implementation of the APEC

Leaders instructions to develop a strategic plan for

Life Sciences innovation in the region. The LSIF

recommended key elements in four areas—

Research, Development, Manufacturing and

Marketing, and Health Services—for inclusion in

the framework for the Life Sciences Innovation

strategic plan. In addition, the LSIF recommended

an agreement in principle to harmonize quality

standards for life sciences products and services

according to international best practices; and

recommended that assessments be undertaken of

the strength of each APEC economy to identify

those areas where contributions to life sciences

innovation may be established quickly and effectively. In October, APEC Ministers endorsed the

LSIF recommendations, took note of the

progress in developing the draft “Strategic Plan

for Promoting Life Sciences Innovation” and

requested that the LSIF finalize the plan for

endorsement in 2004. APEC Leaders endorsed

the Ministerial conclusions.

Automotive and Chemical Dialogues

The Automotive Dialogue and the Chemical

Dialogue are public-private sector dialogues

recognized as important for improving the

mutual understanding of key imperatives for the

development of future policy and for enhancing

the competitiveness of each sector.

The Automotive Dialogue is organized into six

working groups—customs, technical regulatory

harmonization, environment, information technology, economic and technical cooperation and

market access. This year, the Dialogue, attended

by over 150 participants from industry and

government, recommended that APEC Ministers

reaffirm that they will endeavor to refrain from

using measures having the effect of increasing

levels of protection in the automotive sector.

APEC Ministers did reaffirm this undertaking at

their meeting in October. The Dialogue approved

a second letter expressing interest in the work of

the WTO Non-Agricultural Market Access

(NAMA) Negotiating Group, and offering its

resources to support this work. In this regard, the

Dialogue endorsed efforts to identify areas of

interest to the automotive sector that might be

useful in the context of the DDA to promote

greater awareness of opportunities for economies

to support the reduction or elimination of existing

barriers to automotive trade and investment.

The Chemical Dialogue was attended by approximately 50 participants from industry and

government this year. The Dialogue considered a

broad agenda, including continuing to express

strong concern over the EU’s chemical legislation,

building capacity for individual economies to

implement the Globally Harmonized System

(GHS) of hazard classification and labeling of

chemicals, and identifying goals for the chemical

sector in the WTO negotiations. APEC Ministers

118 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
noted the continuing concern of APEC

economies over the European Commissionís

proposed regulatory framework for chemicals

and downstream products. Ministers observed

that many APEC economies had submitted

detailed comments on the proposed system, and

urged the European Commission to carefully

consider the trade effects and trade policy implications of the proposed legislation. Chinese

Taipei hosted a capacity-building workshop on

the benefits of adopting the GHS and mechanisms

for doing so. The chemical industry is working to

identify priority non-tariff barriers that could be

addressed in APEC as part of a contribution to the

WTO Doha negotiations. 

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. The United States

and Canada share one of the world’s largest bilateral direct investment relationships. In 2002, the

stock of U.S. foreign direct investment in Canada

was $152 billion, an increase of 7.6 percent from

2001. In 2002, the stock of Canadian direct

foreign investment in the United States was

$92.0 billion, a decrease of 9.9 percent.1 The

United States’ trade deficit with Canada was

$54.5 billion in 2003, an increase of $6.3 billion

from $48.2 billion in 2002. U.S. goods exports in

2003 were $168.8 billion, up 4.7 percent from

the previous year. Corresponding U.S. imports

from Canada were $223.3 billion, up 6.8 percent.

Canada is currently the largest export market for

U.S. goods.

U.S. exports of private commercial services (i.e.,

excluding military and government) to Canada

were $24.3 billion in 2002 (latest data available),

and U.S. imports were $18.4 billion. Sales of services in Canada by majority U.S.-owned affiliates

were $51.2 billion in 2001 (latest data available),

while sales of services in the United States by

majority Canada-owned firms were $47.9 billion. 

a. Softwood Lumber 

Following the expiration of the 1996 U.S.-Canada

Softwood Lumber Agreement in 2001 [and the

filing of petitions on behalf of the U.S. softwood

lumber industry], the Commerce Department

announced amended final antidumping rates

ranging from 2.18 percent to 12.44 percent and

an amended final countervailing duty rate of

18.79 percent, effective May, 2002.

Negotiations to find a durable solution as an alternative to litigation have been ongoing. The

United States remains prepared to offer Canadian

lumber producers the market access they seek in

exchange for Canadian provinces implementing

market-based pricing for sales of timber from

public lands. The Department of Commerce,

industry, non-governmental organizations, the

Government of Canada and Canadian provinces

have been engaged since early 2003 in the

drafting of a Policy Bulletin which provides a

blueprint for provincial forestry reforms. In the

process, the provinces have offered commitments

to ensure that competitive timber markets would

operate in Canada. The Department of Commerce

has indicated its willingness to consider petitions

from individual provinces for a review of provincial market reforms, with the potential for

province-specific revocation of the countervailing duty order. Negotiations on an interim

agreement and the Policy Bulletin have been

closely linked. In the absence of an agreement on

basic reforms, the United States will effectively

enforce U.S. trade laws to address the U.S.

industry’s concerns about subsidies to, and

dumping of, Canadian softwood lumber. 

Canada is challenging the underlying Commerce

Department and ITC investigations in the WTO

and NAFTA. On November 1, 2002 the WTO

III. BILATERAL AND REGIONAL NEGOTIATIONS | 119

__________

1 2003 estimates are annualized based on 11 months data.
Dispute Settlement Body officially adopted a

panel report which addressed the Canadian challenge of the Commerce Department’s preliminary

countervailing duty determination. The report is

a victory for the U.S. on two key issues in the

ongoing dispute: Canadian provinces’ sale of

timber from public lands can constitute a subsidy

under the WTO Subsidies Agreement; and U.S.

laws governing reviews of countervailing duty

orders are consistent with the WTO Subsidies

Agreement. The ITC filed its injury remand to the

NAFTA panel on December 15, 2003.

On January 12, 2004, the Department filed a

remand determination in response to a NAFTA

Panel’s decision on the final determination in the

CVD investigation. In its decision, the Panel

upheld the Department’s key findings—that the

provincial governments’ sale of timber from

public lands constitutes a “financial contribution” by the government that can give rise to a

“specific” subsidy, which can be subject to countervailing duties. In addition, however, the Panel

remanded the benefit calculation methodology

for further consideration by the Department. In

the DOC’s redetermination on remand, a CVD

rate of 13.23 percent (lower than the 18.53

percent rate calculated in the investigation) was

calculated. If this rate becomes final, the average

combined AD/CV duties would be 21.66 percent.

We expect a decision regarding whether the

remand redetermination is acceptable to the

Panel in April, 2004.

With regard to the AD investigation, the

Department of Commerce filed a redetermination

with the NAFTA panel last October. The dumping

margin declined only slightly (from 8.43 percent

to 8.07 percent). The Panel’s decision on that

redetermination is expected in early 2004.

b. Agriculture 

Canada is the United States’ second largest

market for food and agricultural exports. For

fiscal year 2003 (October 2002-September 2003),

U.S. agricultural exports to Canada grew by 6.1

percent to $9.1 billion. As a result of the 1998

U.S.-Canada Record of Understanding on

Agricultural Matters (ROU), the U.S.-Canada

Consultative Committee (CCA) and the

Province/State Advisory Group (PSAG) were

formed to provide fora to strengthen bilateral

agricultural trade relations and to facilitate

discussion and cooperation on matters related to

agriculture. In 2003, the CCA and PSAG met

twice on issues including livestock, processed

food, plant, seed, fortified breakfast cereals and

horticultural trade, as well as pesticide and

animal drug regulations.

Wheat

USTR announced a four-prong approach to level

the playing field for American farmers that

included dispute settlement proceedings against

the Canadian Wheat Board and the Government

of Canada in the WTO, identification of impediments to U.S. wheat entering Canada, pursuing

reforms to state trading enterprises (STE) as part

of the WTO agricultural negotiations and countervailing and antidumping investigations in

response to petitions filed by the North Dakota

Wheat Commission. 

During the past year, the Department of

Commerce announced August 29 it had determined Canada subsidizes and dumps durum and

hard red spring wheat. An ITC panel on October

3, 2003 made a negative determination on

imports of durum wheat from Canada. ITC ruled

in October, 2003 that US wheat farmers are

injured by Canadian Wheat Board practices

opening the door for duties of 14.6 percent to be

imposed on imports of hard spring wheat from

Canada. In November 2003, the Canadian Wheat

Board working with the Government of Canada,

Manitoba and Saskatchewan filed a NAFTA

appeal. NAFTA has 13-16 months to review the

matter and issues its findings. The U.S.

Government maintains that Canada provides the

Canadian Wheat Board with exclusive and special

privileges, including monopoly rights. The U.S.

allegation is being pursued under art. XVII &

III:4 of GATT and a final panel report is due in

February, 2004.

120 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Dairy

In April 1999, the United States and New Zealand

successfully challenged Canada’s subsidized dairy

industry under WTO dispute settlement procedures. Canada committed to bring its export

regime into compliance with its WTO export

subsidy commitments on butter, skimmed milk

powder and an array of other dairy products by

January 31, 2001. However, the United States

believed that Canada instituted new measures

that largely duplicated the withdrawn subsidies

and continued to challenge Canada in the WTO.

After a series of panel reviews, in December 2002

the Appellate Body affirmed that Canada was not

in compliance. The WTO’s Dispute Settlement

Body formally adopted the Appellate Body’s

report on January 17, 2003. On May 9, 2003,

USTR and the U.S. Department of Agriculture

announced the settlement with Canada resulting

in major revisions to Canada’s subsidy programs

for its dairy exports. As a result of the settlement,

Canada agreed to eliminate its dairy subsidies and

consequently, Canada will no longer export subsidized dairy products to the United States and will

significantly limit subsidized dairy exports

destined to third countries.

Fortified Cereals

Canadian regulations concerning breakfast

cereals permit only the addition of niacin, vitamin

B6, folic acid, pantothenic acid and magnesium to

restore the amounts lost in processing, and of iron

and thiamin as fortificants to address public

health concerns identified for the Canadian

population. Nutrient addition to breakfast cereals

is optional, but the amounts that may be added

are specified in the regulation. While a wide

variety of cereals are marketed in Canada, the

level of fortification of breakfast cereal is lower

than in the United States for most nutrients, and

fewer nutrients, i.e. only those listed above, are

permitted to be added in Canada.

U.S. cereal manufacturers commonly fortify up to

15 vitamins and minerals in breakfast cereals.

While there are no specific federal rules in the

United States on the fortification of cereals, the

U.S. Food and Drug Administration (FDA) does

maintain guidelines on fortification.

USTR raised the matter of Canada’s cereal 

fortification regulations in bilateral, NAFTA and

CCA meetings in 2003. FDA and Health Canada

are working in the NAFTA Committee on Food

Labeling, Packaging and Standards to work

towards a harmonized approach on nutritionrelated policies, particularly as it relates to

labeling and standards, including fortification. In

addition, the U.S. Department of Agriculture and

FDA are working cooperatively with Health

Canada in sponsoring a study by the National

Academy of Sciences to determine principles for

discretionary fortification of nutrients to food

products and the suitability of using reference

values based on the Academy’s Dietary Reference

Intake values for discretionary nutrient additions.

The final report from the Academy is due at the

end of December 2003.

c. Intellectual Property Rights 

Canada continues to make progress in improving

its IPR regime. In December 2002, the

Government of Canada (GOC) revised its

Copyright Act (Bill C-11) so that Internet retransmission is, in effect, excluded from its

compulsory licensing regime—that is, unless

licensed by the Canadian Radio-television &

Telecommunications Commission (CRTC) and

the CRTC has determined not to so license

Internet retransmissions. This follows amendments made to Canada’s patent law in 2001 to

provide 20 year patents that were filed before

October 1, 1989. Despite these positive developments, several issues remain largely unresolved.

Canada has not resolved the outstanding issue of

national treatment of U.S. artists in the distribution of proceeds from Canada’s private copying

levy and its “neighboring rights” regime. In addition, Canada does not provide effective data

exclusivity protections, and systematic inadequacies in Canadian administrative and judicial

procedures allow entry of infringing generic

versions of patented medicines into the marketplace. Further, Canada’s border measures have

III. BILATERAL AND REGIONAL NEGOTIATIONS | 121
been the target of severe criticism by IP owners,

who consider Canada’s border enforcement measures to be inconsistent with its TRIPS obligations.

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 132 percent through

2003. 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 higher 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’ thirdlargest agricultural export market. For 2003, U.S.

agricultural exports to Mexico increased 8.8

percent from 2002, to $7.9 billion (based on

annualized 11 month data).

Current issues subject to negotiations include

Mexico’s limits on the importation and domestic

consumption of high fructose corn syrup (HFCS).

After the U.S. prevailed in the WTO, Mexico on

May 20, 2002 removed antidumping duties it had

put in place in 1998, but replaced this with a

NAFTA-inconsistent tariff rate quota. In addition,

on December 31, 2001, the Mexican Congress

imposed a tax on soft drinks produced using

HFCS. Although temporarily suspended by the

Fox Administration, the tax was reimposed in July

2002, and remains in place. The tax effectively

eliminated the use of HFCS in the Mexican

beverage industry, reduced sales of HFCS by U.S.

firms, lowered U.S. corn exports used to produce

HFCS, and affected U.S. beverage exports. USTR

continues to work to achieve a long-term solution.

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 duties laws. The United

States and Mexico held consultations in July

2003 on Mexico’s antidumping investigations

related to beef and rice. In November 2003, the

WTO established a dispute settlement panel with

regard to Mexico’s antidumping order on white

long grain rice. In December 2003, the United

States formally requested that a WTO panel on

beef be formed, and there are separate proceedings under the NAFTA.

Mexico conducted two safeguard reviews over the

last year with significant potential impact on U.S.

exports. An investigation on certain plywood

concluded in December 2003 excluded all

plywood from the United States from its scope. In

the case of poultry, Mexico imposed a provisional

safeguard measure on imports of U.S. chicken leg

quarters in January 2003 and a final safeguard on

July 24, 2003. Through an exchange of letters on

July 24 and 25, Mexico agreed to provide

compensation to the United States for Mexico’s

safeguard measure and the United States provided

its consent to the application of the safeguard

measure past December 31, 2003—the expiration

of the phase-out period for Mexican tariffs on U.S.

chicken leg quarters. In particular, Mexico

committed not to impose any additional import

restrictions on U.S. poultry products, to eliminate

certain sanitary restrictions on U.S. poultry products, and to consult with the United States in

advance regarding new sanitary measures. As a

result, U.S. exporters will continue to receive

unlimited duty-free access to the Mexican market

for most poultry products, as well as assured

access for a growing volume of chicken leg-quarters and the further assurance that U.S. exporters

will not be subject to any unjustified import

restrictions. U.S. exports of poultry meat to

Mexico totaled $173.8 million in 2002.

b. Telecommunications

Market barriers in Mexico’s telecommunications

sector remain a serious source of concern. In

particular, through a series of rules and other

122 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
measures, Mexico does not permit effective

competition and otherwise discriminates against

U.S. suppliers of basic telecommunications services. As a result, wholesale telecommunications

rates for U.S.-Mexico calls are still roughly four

times their cost. These high rates cost U.S.

companies and consumers hundreds of million of

dollars in excess payments a year. 

The United States initially requested WTO

consultations with Mexico on telecommunications issues in August 2000 and first requested

the establishment of a WTO panel in November

2000. At that time, Mexico took steps to address

several important barriers to telecommunications

trade. However, relevant Mexican agencies have

not yet addressed trade barriers affecting international telecommunications services. A WTO

panel was formed in April 2002 to specifically

address this issue. 

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 will 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. Ordinary tequila

can be sold and exported in bulk form under the

current official standard. If the draft standard is

formally proposed and adopted, it will require

that all tequila be bottled within the territory of

the Mexican appellation of origin, and bulk

exports will be prohibited. If implemented, the

measure would have an adverse impact on U.S.

companies that import bulk tequila from Mexico

and bottle tequila in the United States.

The Secretariat of Economy originally intended to

sign a formal proposal to amend the standard on

August 18, 2003. Following a formal comment

period, it was to have been adopted later in 2003

and then enter into effect on January 1, 2004,

with a one-year grace period to allow for the

establishment of new procedures and the

unwinding of existing contracts. Following

consultations with the U.S. Government, Mexico

agreed to create a defined period of time to receive

comments from interested stakeholders. The

United States and Canada have held further meetings with Mexico in an ongoing effort to establish

a framework for resolving this issue. The United

States will continue to work to ensure that any

action taken by Mexico is consistent with its

international obligations.

d. Intellectual Property Rights

Piracy and counterfeiting of U.S. intellectual

property as well as lax and ineffective enforcement of intellectual property rights in Mexico

remain persistent problems. As a result, Mexico

was placed on the 2003 Special 301 Watch List for

the first time since 1999.

Progress was made in 2003 regarding concerns

expressed by U.S. pharmaceutical and agricultural chemical companies about the lack of

coordination between the Mexican Intellectual

Property Institute (IMPI) and Mexican health

officials with regard to the granting of marketing

approval for their products. As part of the process

to obtain approval to sell their products in

Mexico, pharmaceutical and agricultural chemical companies must submit data on the safety

and efficacy of their products. This data is very

valuable and is the result of substantial 

investments in research by U.S. companies. In

September 2003, the Mexican Health Ministry

developed new regulations to require a determination from IMPI attesting that the drug in

question does not already have a Mexican patent

before the issuance of a health and safety certificate. The United States will continue to monitor

the implementation of the new regulation.

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 (FTA) that

applies a common external tariff (CET) to prodIII. BILATERAL AND REGIONAL NEGOTIATIONS | 123
ucts of nonmembers. Its members, Argentina,

Brazil, Paraguay, and Uruguay, make up over onehalf of Latin America’s gross domestic product.

Bolivia, Chile, and Peru are associate members

and participate in the Mercosur FTA, but not in

the CET. Mercosur became operative on January

1, 1995, and covers some 85 percent of intraMercosur trade, with each member allowed to

maintain a list of sensitive products outside the

FTA regime. Members aim to converge their individual tariff schedules to the CET by January 1,

2006. The four Mercosur countries are acting as a

group in the context of the FTAA negotiations. 

Four Plus One: In September 2001, the United

States and the four Mercosur countries resumed

meeting under the auspices of the 1991 Rose

Garden Agreement. This agreement created a

framework, known as the Four Plus One, for the

United States and the Mercosur countries to

discuss means to deepen their trade relationship. 

b. Argentina

U.S. goods exports to Argentina were $2.4 billion

in 2003, up 52 percent from 2002. Overall bilateral trade was $5.6 billion, and the U.S. deficit of

$1.6 billion in 2002 decreased to $0.8 billion in

2003. A key factor in the Argentine economy is

its trade with Brazil, Argentina’s number one

trading partner. 

On July 1, 2003 President Bush signed a

Proclamation expanding the product coverage of

the Generalized System of Preferences (GSP)

program, under which 140 beneficiary developing countries and territories, including

Argentina, import products duty-free into the

United States. The President’s Proclamation

extends GSP benefits to approximately $900

million in imports from these countries through

the addition of new products, the restoration of

previously lost benefits, and the continuation of

benefits that would otherwise expire. The

Proclamation underscores the Administration’s

commitment to providing trade opportunities to

developing countries as a way to encourage

broad-based economic development. The

President’s action resulted in additional GSP

benefits valued at more than $96 million 

for Argentina.

DUSTR Allgeier met with his Argentinian counterpart October 22-23, 2003 in a meeting of the

U.S.-Argentina Bilateral Council on Trade and

Investment (BCTI). Among the issues discussed

were the problems of U.S. investors and

Argentina’s need to honor the commitments made

in its Bilateral Investment Treaty (BIT).

Intellectual Property Rights (IPR): Argentina’s

intellectual property rights regime does not yet

appear to meet TRIPS standards and fails to fulfill

long-standing commitments to the United States.

Failure to provide adequate protection for copyright and patents has led to Argentina’s placement

on the Special 301 Priority Watch List through

2003. In 1997, the United States withdrew 50

percent of Argentina’s benefits under GSP over

this same issue, 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 added 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 United States

engaged in a series of consultations with

Argentina in Geneva throughout 2001, however,

the problem remained unresolved. The establishment of the 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 U.S. and Argentina finalized the

elements of a joint notification to the World Trade

Organization (WTO) regarding the dispute on

intellectual property matters. In the joint notification, Argentina clarified how certain aspects of its

intellectual property system, such as those related

to its import restriction regime, operate so as to

conform with the TRIPS Agreement. In addition,

124 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

__________

2 2003 estimates are annualized based on 11 months’ data.
Argentina agreed to amend its patent law to

provide protection for products obtained from a

process patent 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. Argentina and the United

States notified a settlement of these issues to the

WTO on May 31, 2002. Consultations continue

on the unresolved issues.

c. Brazil 

The United States exported goods valued at an

estimated $10.9 billion to Brazil in 2003. Brazil’s

market accounts for 21 percent of U.S. annual

exports to Latin America and the Caribbean

excluding Mexico, and 77 percent of U.S. goods

exports to Mercosur.2

Intellectual Property Rights (IPR): In 1997, Brazil

enacted laws providing protection for computer

software, copyrights, patents, and trademarks.

The United States has identified certain problems

with parts of this legislation, including a local

working requirement and extensive exceptions in

the patent law to a prohibition on parallel

imports. U.S. industry has also voiced concerns

about the high levels of piracy and counterfeiting

in Brazil, the lack of effective enforcement of

copyright (especially for sound recordings and

video cassettes), and trademark legislation. In

2001, the International Intellectual Property

Association (IIPA) filed a petition to remove

Brazil’s GSP benefits due to its failure to offer

adequate protection to copyrighted materials, in

particular sound recordings. There was a GSP

hearing regarding Brazil’s failure to protect copyrighted material in 2003. The GSP Committee

will make recommendations regarding the 

petition to the USTR.

d. Paraguay 

With a population of just over five million,

Paraguay is one of the smaller markets in Latin

America. In 2003, the United States exported an

estimated $499 million worth of goods to

Paraguay.3 However, 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. As required

under the Trade Act of 1974 as amended, the

USTR initiated an investigation of Paraguay in

February 1998. 

During negotiations under Special 301, the

Government of Paraguay indicated that it had

undertaken a number of actions to improve IPR

protection. In November 1998, in light of

commitments made by the Government of

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. 

U.S.-Paraguay Bilateral Council on Trade and

Investments

On September 26, 2003, following his meeting

with President Bush, Paraguayan President

Duarte witnessed the signing of the Agreement

on the U.S.-Paraguay Bilateral Council on Trade

and Investments. AUSTR Vargo signed for the

United States and Foreign Minister Rachid

signed for Paraguay.

e. Uruguay 

With the smallest population of Mercosur (just

over three million people), Uruguay nonetheless

imported an estimated $336 million of goods

from the United States in 2003. The United States

has been meeting with Uruguay under the

auspices of the U.S.-Uruguay Joint Commission

on Trade and Investment (JCTI) since AUSTR

Regina Vargo and Uruguayan Vice Minister

Valles signed the agreement in April 2002. The

III. BILATERAL AND REGIONAL NEGOTIATIONS | 125

__________

3 2003 estimates are annualized based on 11 months’ data.
JCTI has been a forum to discuss deepening trade

relations as well as to work toward resolution of

bilateral irritants. 

The last meeting of the JCTI in 2003 was held on

the occasion of a visit to Uruguay by DUSTR

Allgeier in October. At that meeting DUSTR

Allgeier discussed the possibility of negotiating a

BIT as well as other sectoral bilateral agreements.

During the November 2003 Miami FTAA

Ministerial USTR Zoellick and Uruguayan

Foreign Minister Opertti announced the decision

to initiate negotiations of a BIT in early 2004.

f. Chile 

U.S.-Chile bilateral trade relations in 2003 were

dominated by the negotiation 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

On November 18, 2003, U.S. Trade

Representative Robert B. Zoellick formally notified Congress, on behalf of President Bush, of the

Administration’s intent to initiate negotiations for

a free trade agreement with Colombia, Peru,

Ecuador, and Bolivia. The Administration plans

to structure the negotiations to begin in the

second quarter of 2004, initially with Colombia

and Peru. The United States is prepared to work

intensively with Ecuador and Bolivia in order to

include them in the agreement as well. As a destination for U.S. exports, the Andeans collectively

represented a market of $7 billion in 2002, while

the U.S. imported $9.8 billion from the region.

The stock of U.S. foreign direct investment in the

four countries was $4.5 billion in 2002. 

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: for 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.

Apparel imports under ATPA accounted for nearly 

13 percent of U.S. imports under ATPA in JanuaryAugust 2003 and for 67 percent of all apparel

imports from the region during the 2003 period.

New products benefitting 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, and 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. 

126 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
USTR initiated the 2003 ATPA Annual Review in

a Federal Register notice dated August 14, 2003,

and announced a deadline of September 15, 2003

for the filing of petitions. USTR received petitions

to review certain practices in certain beneficiary

developing countries to determine whether such

countries were in compliance with the ATPA

eligibility criteria. In a Federal Register notice

dated November 13, 2003 a list was published of

the September 2003 petitions that were filed.

Ecuador, Peru, and Colombia had petitions filed

against them for reasons such as worker rights,

contract nullification, intellectual property

rights, expropriation, and tax disputes. In

December 2003 USTR indicated that it would

announce the results of the preliminary review of

the petitions by March 31, 2004.

5. Central America and the Caribbean

a. U.S.-Central America Free Trade

Agreement (CAFTA)Negotiations

On January 8, 2003, the United States Trade

Representative and Ministers from Costa Rica, El

Salvador, Guatemala, Honduras and Nicaragua

announced the launch of negotiations on an

agreement to eliminate tariffs and other barriers

to trade in goods, agriculture, services, and

investment between the United States and those

Central American nations. Negotiations on the

U.S.-Central American Free Trade Agreement, or

CAFTA, began in San José, Costa Rica, on January

27. Negotiators have met in a total of nine rounds,

once in each Central American capital, as well as

in Cincinnati, New Orleans, Houston, and finally

in Washington, DC, where the United States, El

Salvador, Guatemala, Honduras and Nicaragua

completed work on the FTA in mid-December

2003. Negotiations with Costa Rica continued

into January 2004.

The United States and Central America enjoy an

increasingly productive trade partnership. U.S.

exports to the region have grown 54 percent since

1996 and totaled an estimated $9.8 billion in 2002.

Imports totaled almost $11.9 billion. Bilateral

trade in 2003 is on target to reach $25 billion.

USTR has continued to hold periodic trade and

investment meetings with the Dominican

Republic throughout 2003. On August 4, 2003,

the President notified Congress of his intention to

enter into negotiations for an FTA with the

Dominican Republic. The intention of the

Administration is to hold bilateral market access

negotiations from January through March in

order to integrate the Dominican Republic into

the CAFTA agreement, which would be

submitted to Congress as a single agreement

among the United States and six partners. The

CAFTA countries including the Dominican

Republic have the potential to form the United

States’ second largest market in Latin America

after Mexico.

b. Central America 

CACM: The United States is Central America’s

principal trading partner. The Central American

Common Market (CACM) consists of Costa Rica,

El Salvador, Guatemala, Honduras, and

Nicaragua, and provides duty-free 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 continued during 2003 to pursue a

range of bilateral and regional trade agreements.

Negotiations between Canada and El Salvador,

Guatemala, Honduras and Nicaragua made

substantial progress and they intend to conclude

an agreement with Canada soon after the 

completion of CAFTA. Negotiations for a

Panama-CACM free trade agreement have

resulted in agreement on common disciplines;

negotiations of related market access provisions

continued throughout 2003. 

All of the countries are active participants in the

FTAA negotiations.

The President announced on November 18 his

intention to enter into negotiations with Panama

for a bilateral free trade agreement in the second

quarter of 2004. Throughout 2003, the United

States continued to meet with Panama under our

III. BILATERAL AND REGIONAL NEGOTIATIONS | 127
existing Trade and Investment Council (TIC)

mechanism. In 2003, the countries continued to

meet and maintain an ongoing work program that

includes investment issues. These meetings have

served to prepare the bilateral relationship for the

launch of FTA negotiations by helping to resolve

a range of outstanding bilateral issues.

In 2002, bilateral trade between the United States

and Panama totaled $1.7 billion, of which U.S.

exports accounted for $1.4 billion. JanuaryOctober 2003 figures showed a remarkable 35

percent increase in U.S. exports to Panama over

the same period in 2002, with projected 2003

exports totaling about $2 billion. Panama receives

about fifty percent of its imports from the United

States. In addition, the U.S. holds approximately

$25 billion in foreign direct investment in

Panama, with investments in sectors ranging

from finance, to maritime, to energy.

Panama was active in the FTAA and worked

closely with the United States. In 2003, Panama

chaired the Negotiating Group on Investment.

c. Caribbean Basin Initiative 

The trade programs collectively known as the

Caribbean Basin Initiative (CBI) remain a vital

element in the United States’ 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 U.S.-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 of clothing made from regional inputs

that regional producers can ship duty-free to the

United States annually.

In 2003, 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. Beginning

in January 2003, USTR negotiated a free trade

agreement with several CBI beneficiaries, as called

for in the legislation. Negotiation of the U.S.-

Central America Free Trade Agreement (CAFTA)

concluded in mid-December 2003 with El

Salvador, Guatemala, Honduras, and Nicaragua,

while talks continued with Costa Rica into

January 2004. Market access negotiations between

the United States and the Dominican Republic

from January through March 2004 are intended to

lead to that country’s integration into CAFTA. The

agreement will lock in and expand the countries’

CBI benefits while simultaneously opening

member countries’ markets to U.S. products. In

the second quarter of 2004, USTR will launch 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 resulted in a reduction in 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 nonpetroleum 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 45 percent in 2002, valued at over US$9.5

billion. (Apparel constituted almost 59 percent

of all imports from the five Central American

countries with which the United States negotiated the CAFTA agreement.) Apparel has ranked

as the leading category of U.S. imports from the

region since 1988. The CAFTA provisions for

textiles and apparel were specifically crafted to

128 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
encourage integration of the North and Central

American industries to prepare for an increasingly competitive global market. 

CBI currently provides 24 beneficiary countries

and territories with duty-free 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

CAFTA enters into force, Costa Rica, the

Dominican Republic, El Salvador, Guatemala,

Honduras, and Nicaragua will graduate from the

CBI program, although the FTA will lock in their

market access at better than its current levels.

d. The Caribbean

The Dominican Republic: The Dominican

Republic is the United States’ largest single

trading partner in the CBI region, with bilateral

trade exceeding $8.4 billion in 2002.

Annualized projections from January through

October 2003 figures show a projected 3.6

percent increase in bilateral trade versus 2002.

Reflecting the importance of this trade relationship, the President announced on August 4,

2003, his intention to negotiate a free trade

agreement with the Dominican Republic. 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, covering both bilateral issues and cooperation in the FTAA and

WTO negotiations. The TIC continued to meet

throughout 2003, 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 28 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. After the Dominican

Republic and the United States conclude market

access negotiations in March 2004, the

Dominican Republic will be integrated into

CAFTA along with its Central American partners. 

The Dominican Republic’s relatively open trade

and investment regime, augmented by recent

fiscal reforms, has made it one of the world’s

fastest growing economies over the last decade

and an economic engine in the Caribbean Basin. It

maintains strong trade relations within the

Caribbean, including with its neighbor, Puerto

Rico, and with Central America, thus serving as an

economic bridge within the region. Adding the

Dominican Republic as an FTA partner will build

on the progress we have made through our bilateral TIC meetings over the last year, where the

Dominican Republic has made important efforts

to resolve bilateral trade and investment issues.

Through this process, the Dominican Republic

has become a reliable trade partner in the region

and also has worked closely with us to advance

common objectives in the World Trade

Organization (WTO) and FTAA negotiations. The

Dominican Republic chaired the Negotiating

Group on Intellectual Property and served as vicechair for the Negotiating Group on Market Access.

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 remains limited. 

CARICOM countries are active in the FTAA

negotiations, which provide opportunity for

frequent bilateral dialogue between U.S. and

Caribbean officials. CARICOM serves as chair

for the FTAA Negotiating Group on Services and

the Consultative Group on Small Economies and

as vice-chair on the Negotiating Group on

III. BILATERAL AND REGIONAL NEGOTIATIONS | 129
Competition Policy. In addition, the United

States Trade Representative met with CARICOM

trade ministers in Jamaica in July, 2003, to

discuss ways to further enhance our trade 

relations both bilaterally and in multilateral 

trade negotiations.

D. Western Europe 

Overview

The U.S. economic relationship (measured as

trade plus investment) with Western Europe is

the largest and most complex in the world. Due to

the size and nature of the transatlantic economic

relationship, serious trade issues inevitably arise

on occasion. Sometimes small in dollar terms,

especially compared with the overall value of

transatlantic commerce, these issues can take on

significance for their precedential impact on U.S.

trade policies.

The United States’ trade relations with Western

Europe are dominated by its relations with the

European Union (EU). From its origins in the

1950s, the EU has grown from six to fifteen

Member States, with Austria, Finland, and

Sweden becoming the newest EU member states

on January 1, 1995. These fifteen countries

together comprise a market of some 370 million

consumers with a total gross domestic product of

more than $8 trillion. U.S. goods exported to the

EU totaled an estimated $143.5 billion in 2002.

On May 1, 2004, the EU will expand again, to

incorporate ten new member states from Central

and Eastern Europe (Poland, Hungary, Czech

Republic, Slovakia, Slovenia, Estonia, Latvia and

Lithuania), as well as Cyprus and Malta. The

combined EU of 25 will represent a market of

more than 450 million consumers.

The other major trade group within Western

Europe is the European Free Trade Association

(EFTA), which includes Switzerland, Norway,

Iceland, and Liechtenstein (Austria, Finland, and

Sweden had also been members prior to their

accession to the EU in 1995). Formed in 1960,

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

(Switzerland rejected the EEA in a referendum at

the end of 1992). In practice, the EEA involves

the adoption by non-EU signatories of approximately 70 percent of EU legislation.

2003 Activities

1. European Union 

In 2003, the EU began to prepare in earnest for

the historic step of integrating eight Central and

Eastern European countries into the Union. The

planned May 1, 2004, accession of these countries, plus Cyprus and Malta, will bring the EU a

considerable distance closer to a single market

encompassing the entire European continent.

The EU has also committed to enter into accession negotiations with Romania and Bulgaria

(Turkey remains an accession candidate, with no

EU commitment to commence formal negotiations). Important EU institutional questions

associated with enlargement still need to be

resolved as the enlargement process proceeds.

In 2003, 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.

a. Geographical Indications 

The EU’s system for the protection of geographical indications, namely Council Regulations

1493/99 for wines and spirits and 2081/92 for

other agricultural products, is not available to

other WTO Members on a national treatment

basis. In order to receive protection, all non-EU

WTO members are required instead to establish

a GI registration system that the EU considers to

be equivalent to its own system or negotiate a

specific bilateral agreement with the EU. Under

130 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
the terms of the WTO TRIPS Agreement as well

as the GATT, the EU is obligated to make such

special protection available to all WTO

Members, without the requirement for

concluding special agreements or establishing

special systems. In addition, both EU regulations

appear to deprive non-EU trademark owners of

TRIPS-level ownership rights in the event of a

conflict with later-in-time geographical indications. U.S. industry has been vocal in 

raising concerns about the impact of these EU 

regulations on U.S.-owned trademarks.

For these reasons, in 1999 the United States initiated formal WTO consultations with the EU on

Regulation 2081/92. A number of subsequent

bilateral discussions have taken place; however,

to date the EU has not adequately addressed the

United States’ concerns. In August, 2003, after

requests made by the United States and Australia,

the WTO established a panel to hear the dispute.

The panel is in the process of being composed.

b. Agricultural Biotechnology 

The EU’s five-year moratorium on the approval of

new products of modern agricultural biotechnology continues to hinder U.S. exports of corn,

and threatens exports of soya. Restarting the EU

approvals process remains a high priority for the

United States in order to restore these exports.

Despite implementation of EU Directive 01/18 in

October 2002 (which governs the approval of

biotechnology products, including seeds and

grains, for environmental release and commercialization), a number of EU Member States have

continued to refuse lifting the approvals moratorium. In May 2003, the U.S. Government initiated

a dispute settlement process in the WTO to

underscore its concerns regarding the failure of

the EU to have a functioning approval process. 

Several Member States have insisted that new EU

regulations governing traceability and labeling and

biotechnology food and feed authorizations must

first enter into force before they will consent to

renewed approvals. The traceability/labeling and

food/feed regulations are now scheduled to come

into effect in April 2004. USTR is consulting with

other agencies and the private sector regarding the

likely trade impact of these regulations. 

c. Transatlantic Economic

Partnership/Positive Economic Agenda 

At the May 1998 U.S.-EU Summit in London, the

President and EU Leaders announced the

Transatlantic Economic Partnership (TEP) 

initiative, designed to deepen and systematize

cooperation in the trade field. Under the TEP, the

two sides identified a number of broad areas in

which they committed to work together in order

to increase trade, avoid disputes, address

disagreements, remove barriers, and achieve

mutual interests. These areas included: technical

barriers to trade, agriculture, intellectual property, government procurement, services,

electronic commerce, environment and labor. 

Building upon work begun under the TEP, U.S.

and EU Leaders at the May 2002 U.S.-EU Summit

in Washington agreed on a list of priority subject

areas in which the United States and the EU

committed to initiate, or give new impetus to

existing, cooperative efforts. Labeled as the

“Positive Economic Agenda,” both sides have

indicated their interest in using this list as a first

step in an open-ended process of enhancing

transatlantic cooperation, both for its own sake

and as a means to put headline-grabbing trade

disputes in their proper context. The agenda

initially covers activities with respect to financial

markets, regulatory cooperation, electronic

procurement and customs, regulation of organic

foods, and sanitary and phytosanitary measures.

Work on these issues continued through 2003,

leading in particular to a number of projects

launched under the TEP Guidelines for

Regulatory Cooperation and Transparency and

completion of a bilateral mutual recognition

agreement (MRA) covering marine safety. (See

section on Regulatory Cooperation below.) In

addition, the two sides made substantial progress

toward resuming U.S. exports to the EU of

poultry meat, suspended since 1997 due to EU

sanitary and phytosanitary concerns. (See section

on Poultry Meat below.)

III. BILATERAL AND REGIONAL NEGOTIATIONS | 131
d. Public Dialogues 

Important companions to the official exchanges

between governments in the United States and

the EU are the various private dialogues among

European and American businesses, labor organizations, and consumer groups. The first of these

to be established, the Transatlantic Business

Dialogue (TABD), is a forum in which American

and European business leaders can meet to

discuss ways to reduce barriers to U.S.-European

trade and investment. Other dialogues—such as

the Transatlantic Consumer Dialogue (TACD)—

stem from a similar premise, i.e., that

corresponding organizations on both sides of the

Atlantic should share views and, where possible,

present joint recommendations to governments

in both the United States and the EU on how to

improve transatlantic relations and to elevate the

debate among countries in multilateral fora. In

2003, the TABD pursued a process of reconfiguration aimed at more sharply focusing the issues

it discusses with governments. The TACD

continued to engage in dialogue with governments

on a number of trade and economic questions.

e. Regulatory Cooperation 

As traditional barriers affecting transatlantic trade

and investment have declined in recent years,

specific trade obstacles arising from unnecessary

divergences in U.S. and EU regulations and the

lack of transparency in the EU rulemaking and

standardization processes have loomed relatively

larger in importance. During 2003, the United

States continued efforts to enhance U.S.-EU regulatory cooperation and reduce unnecessary

technical barriers to transatlantic trade. 

In April 2002, under the auspices of the

Transatlantic Economic Partnership (TEP)

initiative, the United States and the European

Commission concluded “Guidelines for

Regulatory Cooperation and Transparency.” The

TEP Guidelines outline specific cooperative

steps that U.S. and European regulators are

encouraged to follow in bilateral dialogues,

including early and regular consultations, extensive data and information exchanges, and

sharing of contemplated regulatory approaches.

The Guidelines also stress improved transparency and public participation as necessary

elements to promote more effective regulatory

cooperation, better quality regulation, and to

help minimize possible regulatory-based trade

disputes. During 2003, the United States and

European Commission advanced regulatory

cooperation projects under the Guidelines in

such areas as cosmetics, auto safety, food 

additives, nutritional labeling and metrology—

including the conclusion of formal arrangements

for extensive information exchanges on 

pharmaceuticals and auto safety. 

In 2003, the United States and the EU finalized 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 is to enter into

force during 2004. The United States also

continues to pursue implementation of the 1998

U.S.-EU Mutual Recognition Agreement (MRA),

which includes sectoral annexes on telecommunications equipment; electromagnetic compatibility

(EMC) for electrical products; electrical safety for

electrical and electronic products; good manufacturing practices (GMP) for pharmaceutical

products; product evaluation for certain medical

devices; and safety of recreational craft. The

annexes on telecommunications equipment,

EMC, and recreational craft are fully operational.

We are working to bring the medical device annex

into operation during 2004.

f. Foreign Sales Corporation Tax Rules 

Potentially the most damaging of the trade

disputes currently involving the United States

and the EU is the EU’s complaint to the WTO that

the U.S. Foreign Sales Corporation (FSC) tax

rules are an illegal export subsidy. The United

States lost this case on February 24, 2000,

repealed the FSC law, and enacted new legislation

(the Extraterritorial Income Exclusion Act—ETI)

in November 2000 to correct the shortcomings

identified in the dispute. On January 14, 2002,

the WTO review of the new legislation was

completed, resulting in a finding that the ETI act

132 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
is also WTO-inconsistent. Subsequently, a WTO

arbitration process determined that the EU was

within its rights to retaliate against up to 

$4.043 billion of U.S. products if the United

States fails to bring its law into conformity with

the WTO ruling. In 2003, legislation was introduced in both houses of Congress that would,

inter alia, repeal the November 2000 law. In

December 2003 the European Council approved

a regulation providing for EU retaliation against

U.S. exports beginning March 1, 2004 if the

United States fails to comply with the WTO

ruling. The Administration will be working with

the Congress in 2004 as Congress considers a

legislative solution that would bring the United

States into compliance with its WTO obligations

in this area. (For more information on this

dispute, see Chapter II.)

g. Chemicals 

The EU is developing a comprehensive new regulatory regime for chemicals which will impose

extensive new testing and reporting requirements

on over 30,000 chemicals, and extend data

requirements to downstream users of chemicals.

The proposal could affect the majority of U.S.

goods exported to the EU ($143 billion in 2002). 

During 2003, while supportive of the EU’s 

objectives to protect human health and the environment, the United States stressed that this draft

regulation appears to adopt a particularly costly,

burdensome, and complex approach, which

could prove unworkable in its implementation,

adversely impact innovation and disrupt global

trade. The proposal also departs from ongoing

international regulatory cooperation efforts. We

will continue to monitor closely revisions to this

draft regulation, and remain engaged constructively with the European Union to ensure that

U.S. interests are protected. 

h. 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 the EU ban on imports of U.S. beef in

the WTO. In June 1997, a WTO panel found 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.

In January 1998, the WTO Appellate Body

upheld the panel’s finding that, absent a risk

assessment, the EU’s ban on imported meat from

animals treated with certain growth-promoting

hormones is inconsistent with obligations under

the WTO SPS Agreement. In 1999, the WTO

authorized U.S. trade retaliation because the EU

failed to comply with the WTO rulings by the

May 13, 1999 deadline. Subsequent to receiving

WTO authorization, in July 1999 the United

States applied 100 percent duties on $116.8

million of U.S. imports from the EU. 

In October 2003, the EU amended its original

hormone directive based on what it claimed were

new studies that support the EU claim that

growth hormones in beef production are unsafe.

Later, during a WTO Dispute Settlement Body

meeting, the EU announced that it was now in

compliance with the earlier WTO ruling based on

its new directive. The United States, supported by

other member states, rejected the EU’s assertion

and maintains its retaliation on EU products as a

result of the earlier WTO ruling. 

The United States remains open to exploring

possible ways to resolve this dispute.

i. Poultry Meat 

The EU continues to maintain its 1997 ban on

imports of U.S. poultry because many U.S.

producers use washes of low-concentration chlorine as an antimicrobial treatment (AMT) to

reduce the level of pathogens in poultry meat

production, a practice not permitted by the EU’s

sanitary regime. During 2003, the United States

gained EU approval for the use of alternative

AMTs and approval of its residue program and

water standards. The U.S. continues to provide

the EU with information regarding U.S. food

safety rules for poultry to address outstanding EU

III. BILATERAL AND REGIONAL NEGOTIATIONS | 133
concerns with a view to reestablishing poultry

exports to the EU. The issue remains a key one in

the Positive Economic Agenda. (See section on

Positive Economic Agenda above).

j. Wine

U.S.-EU negotiations on a bilateral wine 

agreement were launched in 1999 and accelerated

in 2003. Key U.S. industry concerns are EU 

recognition and acceptance of U.S. wine making

practices, removal of EU import certification

requirements and reductions in the EU’s export

subsidies and subsidies to its grape growers and

wine producers. A major EU concern is restriction

of the use of semi-generic wine names exclusively

to wines of EU origin. Other U.S. issues include

tariffs and trade restrictive requirements under the

April 29, 2002 EU wine labeling regulation

(Commission Regulation No. 753/2002). The

United States will continue to press the EU to

provide U.S. wine makers equitable access to the

EU market.

k. Margin of Preference

In mid-2003, the European Commission (EC)

notified the United States of its intentions to

withdraw from market access concessions on

rice made during the Uruguay Round. These

concessions, known as the Margin of Preference

(MOP), were meant to replace the EU’s pre-1995

variable levy system for rice, so as to ensure

maintenance of market access opportunities for

rice imports into the EU. The EC proposes

replacing the MOP with global Tariff-Rate

Quotas (TRQs) for rice imports.

The United States is one of the leading suppliers

of rice to the EU market. Since the MOP scheme

went into effect, EU duties on rice have

decreased by half and will decline significantly

more under the MOP, as a result of recent EU

reforms to its Common Agriculture Policy

(CAP). Consequently, although under GATT

Article XXVIII the EU has the right to modify its

rice regime, the United States will continue to

oppose any action that would impair market

access for U.S. rice. 

In 2002, the EC attempted to negotiate similar

changes to MOP concessions for grains. In the

end, the United States and the EC reached an

agreement that maintained these concessions for

almost all wheat and feed grain imports. 

2. EFTA 

Although USTR activity in 2003 with the EFTA

countries as a group was modest, the United

States made substantial progress on negotiation of

a mutual recognition agreement (MRA) with the

EFTA EEA countries (i.e., Norway, Iceland, and

Liechtenstein) which will cover telecommunications equipment, electro-magnetic compatibility

(EMC), and recreational craft. We aim to

conclude this MRA in early 2004. We are also

looking to increase U.S. engagement with the

EFTA countries and explore ways to foster closer

U.S.-EFTA trade and economic relations.

3. Turkey 

General: As a result of its 1996 customs union

with the European Union, Turkey applies the EU’s

common external customs tariff for third country

(including U.S.) imports and imposes no duty on

non-agricultural imports from EU and EFTA

countries. Turkey’s harmonization of its trade and

customs regulations with those of the EU,

coupled with a decline in most of its MFN tariff

rates, benefits third country exporters as well.

Nevertheless, Turkey continues to maintain high

tariff rates on many agricultural and food products to protect domestic producers. The Turkish

Government 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 imports.

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.

134 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
The Turkish government is considering legal and

other changes to reduce red tape and dismantle

other barriers to investment. 

Intellectual Property: While maintaining that it is

in full compliance with its obligations under the

WTO TRIPS agreement, Turkey provides neither

patent protection nor adequate data exclusivity

for pharmaceutical products, both of which are

required under TRIPS. Turkey has passed a patent

law, but it will only protect drugs coming on the

market in another 3-4 years. Local producers still

rely on data submitted by drug inventors in registering their generic copies. The U.S. Government

continues to urge Turkey to adopt data exclusivity

retroactive to January 2000, when Turkey’s TRIPS

obligations came into effect.

Qualifying Industrial Zones (QIZs): Legislation

introduced in both the Senate and the House of

Representatives to make Turkey eligible for the

Qualifying Industrial Zone (QIZ) program was

not enacted by Congress prior to adjournment.

The Administration had submitted draft legislation to the Congress in 2002 to amend current

QIZ legislation to permit Turkish participation in

the program.

E. Central, Eastern 

and Southeast Europe 

Overview

The United States has developed strong trade and

investment links and actively supported political

and economic reforms in the countries of Central

and Eastern Europe (Poland, Hungary, Slovenia,

the Czech Republic, Slovakia, Estonia, Latvia and

Lithuania) and Southeast Europe (Romania,

Bulgaria Croatia, Albania, Bosnia-Herzegovina,

the Former Yugoslav Republic of Macedonia, and

Serbia and Montenegro). On April 4, 2003, the

Former Yugoslav Republic of Macedonia joined

most of the countries in this region in becoming a

formal member of the WTO. Other WTO

members include: Poland, Hungary, the Czech

Republic, Slovakia, Romania, Albania, Slovenia,

Croatia, Latvia, Lithuania, and Estonia.

During 2003, the United States also restored a

trade agreement to extend Normal Trade

Relations (formerly referred to as most-favored

nation or MFN) to Serbia and Montenegro and

maintained Generalized System of Preferences

(GSP) benefits to eligible countries in the region. 

With a strong trade framework in place, USTR

and its interagency colleagues worked during

2003 to ensure that Central and Eastern Europe

and Southeast European countries satisfy their

bilateral and multilateral trade obligations and

comply with U.S. trade laws and regulations, such

as those governing eligibility for participation in

the GSP program. 

2003 Activities

1. EU Accession 

A key emerging area of activity in 2003 was

working with the countries slated to enter the

European Union in May 2004 (Estonia, Latvia,

Lithuania, Poland, Slovakia, Czech Republic,

Hungary and Slovenia, as well as Cyprus and

Malta) to ensure that the accession process does

not adversely affect U.S. commercial interests in

the region. USTR and other U.S. agencies engaged

these countries on a wide range of trade policy

issues related to EU accession, including: their

adoption of the EU’s standards, regulations and

conformity assessment procedures, including

sanitary and phytosanitary requirements, testing,

certification, and labeling requirements; and their

eventual entry into multilateral and bilateral

agreements to which the European Union and/or

individual EU member states are parties. 

USTR and other U.S. agencies also concluded

discussions with these countries and the

European Commission to amend several bilateral

investment treaties (BITs) to ensure that countries entering the European Union retained

guarantees related to compensation for expropriation, transfers in convertible currency, and the

use of appropriate dispute settlement procedures.

The United States also is working with several

accession countries to preserve protections and

rights negotiated as part of our Bilateral Trade

Agreements with them. 

III. BILATERAL AND REGIONAL NEGOTIATIONS | 135
2. Tariff Differentials 

The United States has been strongly supportive of

the integration of the Central and East European

countries into the European Union. Ten Central

European countries (Poland, Hungary, Slovenia,

the Czech Republic, Slovakia, Romania, Bulgaria,

Estonia, Latvia, and Lithuania) have concluded

Europe Agreements with the EU that set the stage

for their EU membership. These agreements

provide for the 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. 

Later agricultural agreements (the “Zero-Zero

Agreements”) further reduced tariffs on the

majority of agriculture goods. U.S. goods

continue to face generally higher MFN 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 EU’s 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 several

key countries to minimize the tariff differential

problem in the interim before accession. In

September 2002, Poland lowered tariffs on key

U.S. exports to Poland. In April 2002, Hungary

implemented a similar agreement. From 2001 to

2003, the Czech Republic and Slovakia agreed to

waive tariffs on large civil aircraft and key parts.

As a result, the United States continued its

support for these countries’ participation in the

Generalized System of Preferences program until

their accession to the EU in May 2004. In October

2003, USTR and other U.S. agencies launched

similar negotiations with Bulgaria and continued

tariff reduction talks with Romania, which were

launched in October 2002. 

3. Generalized System of Preferences

Most of the countries in this region participate in

the Generalized System of Preferences program

(except Serbia and Montenegro and Slovenia; the

latter graduated in 2003 because of its increased

income levels). As required by the GSP statute,

countries entering the EU in 2004 will no longer

receive GSP benefits after accession to the

European Union. 

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 U.S. Government has consulted with several

countries concerning those countries’ granting,

pursuant to their Europe Agreements with the

EU, of preferential tariffs to EU exporters vis-a-vis

U.S. exporters.

4. Intellectual Property Rights 

The United States has concluded bilateral 

agreements covering intellectual property rights

(IPR) protection with many of the countries in

Central and Eastern and Southeast Europe. USTR’s

focus in the region is to closely monitor WTO

Members’ compliance with the TRIPS Agreement,

improve enforcement of IPR legislation, and

counter trends such as copyright and trademark

piracy. The U.S. Government has provided technical assistance to the countries in the region to

help improve the level of IPR protection. 

a. Poland—Piracy

In 2003, USTR placed Poland on the Special 301

Priority Watch List because of strong concerns

about an open air market inside the Governmentowned Warsaw Stadium, which is awash in

pirated optical media products and counterfeit

goods. In addition, optical disc piracy is on the

rise. There are concerns that pirated products

may be produced in Poland itself as well as

entering via its porous borders. Finally, despite a

new pharmaceutical law that came into effect in

October 2002, there are still significant shortcomings with the protection of confidential test data

submitted for marketing approval. 

b. Croatia and Romania: Data Exclusivity 

Protecting the confidential data submitted by

pharmaceutical firms to health authorities in

order to obtain marketing approval remained a

top USTR priority in 2003. On January 1, 2003,

136 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Hungary put into effect a ministerial decree

providing for data exclusivity protection. The

decree, however, remains problematic because it

links protection to the existence of a patent and

provides an inappropriate starting point for the

period of protection. During 2003, USTR and

other U.S. agencies pressed Croatia to provide

adequate protections for confidential test data,

ratify a 1998 Memorandum of Understanding

Concerning Intellectual Property Rights, and

provide sufficient enforcement of its IPR laws,

especially those regarding copyrights and patents. 

c. Latvia, Lithuania, Romania: Copyright

Piracy

USTR retained Latvia, Lithuania, and Romania on

the Special 301 Watch List in 2003. Latvia has

improved its intellectual property rights regime to

meet its TRIPs obligations, but important

enforcement concerns remain. Large volumes of

pirated products, including pirate optical media

products are transshipped through Latvia from

Russia and Ukraine. Lithuania faces similar IPR

enforcement challenges and appears to remain a

major transshipment country, as well. In 2003,

the U.S. government urged the Romanian

Government to strengthen its efforts against

piracy by encouraging more anti-piracy raids

with clear basis for civil ex parte searches, more

piracy cases launched by prosecutors, and

increased border enforcement.

5. Bilateral Trade Agreements and

Bilateral Investment Treaties 

The United States has some form of bilateral trade

agreement with all of the Central European countries. In addition to these general trade

agreements, the United States has concluded a

variety of trade agreements concerning specific

product areas with various Central European

countries, such as those regarding textiles with

Romania and Macedonia, customs valuation with

Romania, and poultry with Poland.

The United States has Bilateral Investment

Treaties (BITs) in force with Albania, Bulgaria, the

Czech Republic, Estonia, Latvia, Lithuania,

Poland, Romania, Slovakia, and Croatia.

F. Russia and the Newly

Independent States 

Overview

Over the past decade, the United States has been

actively supporting political and economic

reforms in the Newly Independent States (NIS)

(Russia, Ukraine, Armenia, Azerbaijan, Belarus,

Georgia, Kazakhstan, Kyrgyzstan, Moldova,

Tajikistan, Turkmenistan, and Uzbekistan). The

U.S. Government has been striving to construct a

framework for the development of strong trade

and investment links between the United States

and this region. This approach has been pressed

on both bilateral and multilateral fronts.

Bilaterally, the United States has negotiated trade

agreements to extend Normal Trade Relations

(formerly referred to as “most-favored nation” or

“MFN”) tariff treatment to these countries and to

enhance intellectual property rights (IPR) protection. The United States also has extended

Generalized System of Preferences (GSP) benefits

to eligible developing countries and has negotiated bilateral 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, as well as comply with U.S. trade laws

and regulations. 

2003 Activities

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 the President

III. BILATERAL AND REGIONAL NEGOTIATIONS | 137
determines or seriously restricts or burdens its

citizens’ right to emigrate. This provision is

subject to waiver, if the President determines that

such a waiver will substantially promote the

legislation’s objectives. Alternatively, the

President can determine that an affected country

complies fully with the legislation’s emigration

requirements and report on this status semiannually. 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 emigration requirements. Belarus and Turkmenistan receive NTR

tariff treatment under an annual waiver, as

Congress must enact a law to terminate application of Title IV to a country. 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 full NTR treatment. The

Administration is currently consulting with the

Congress and interested stakeholders with regard

to removing Russia and other NIS republics from

the coverage of Title IV 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.)

2. Intellectual Property Rights 

Since the United States has concluded bilateral

agreements covering IPR protection throughout

the NIS, USTR concentrates principally on

ensuring 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 Agreement. The U.S.

Government has cooperated with and provided

technical assistance to the countries in the region

to help improve the level of IPR protection. Much

of USTR’s focus in the region is on improving

enforcement of existing IPR legislation. 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 IPR issues in the region merit special

mention:

a. The Russian Federation—Widespread

Optical Media Piracy

Piracy of U.S. films, videos, sound recordings,

and computer software is a growing problem in

Russia. In April 2003, Russia was again placed on

the Special 301 “Priority Watch List” because of

deficiencies in both the protection and enforcement of IPR. In 2003, USTR conducted hearings

on a review of country eligibility for GSP

including a review of Russia’s continued eligibility to receive GSP benefits due to deficiencies

in Russia’s IPR regime resulting from a petition

filed by the U.S. copyright industry. While Russia

has revised several IPR laws, including those on

the protection of trademarks, patents, integrated

circuits and plant varieties, amendments to other

IPR laws, including the copyright law, remain

under consideration in the Duma. Notably,

enforcement of IPR remains a pervasive problem.

The prosecution and adjudication of intellectual

property cases remains weak and sporadic; there

is a lack of transparency and a failure to impose

138 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
deterrent penalties. Russia’s customs administration also needs significant strengthening. In

October 2002, as a result of U.S. efforts to work

with the Government of Russia to address the

growing optical media piracy problem, the

Government of Russia established an inter-ministerial task force, headed by Russian Prime

Minister Kasyanov, to combat optical media

piracy. Since the creation of the inter-ministerial

commission, 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 are necessary,

including vigorous implementation of a concrete

plan to close illegal optical media plants and the

adoption of an optical media law.

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,

which represented over $200 million in lost

revenues. 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. 

3. Generalized System of Preferences 

Most of the NIS (Armenia, Georgia, Moldova,

Kazakhstan, Kyrgyzstan, Russia and Uzbekistan)

participate in the GSP program. Azerbaijan,

Tajikistan and Turkmenistan have not applied to be

designated as eligible to receive the benefits of the

GSP program. Belarus’s GSP benefits were

suspended in 2000 due to worker rights violations. 

During annual GSP product reviews, the U.S.

Government has reviewed several petitions

requesting changes in the products imported from

the NIS which are eligible for GSP benefits. In

2003, the U.S. Government reviewed the

continued GSP eligibility of wrought titanium,

which has been included in the GSP program since

1997. This review remains ongoing (68 FR 40012).

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

III. BILATERAL AND REGIONAL NEGOTIATIONS | 139
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 a new

Member’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 the WTO

accession process. (See Chapter II for further

information on accessions.)

Russia’s WTO accession was particularly active in

2003. Russia indicated an interest in accelerating

the negotiations and has taken steps to put in

place new and amended laws and regulations to

bring it into conformity with WTO provisions.

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 on how to move

Russia’s trade regime into conformity with WTO

rules. In a series of Working Party meetings

through December 2003, Russia continued to

describe its trade regime, with WTO delegations

noting specific aspects of the trade regime that

require further legislative action to become

compatible with the WTO. The United States and

Russia also continued bilateral discussions on

Russia’s offers on goods and services market

access throughout 2003. 

WTO-based reforms to Russia’s trade regime will

strengthen its ongoing efforts for broader-based

market-oriented economic reform and can help

Russia integrate more smoothly into the global

economy. Adopting WTO provisions will give

Russia a world-class framework for IPR protection, customs duties and procedures, and

application of 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 moves to conclude

negotiations on goods and services with current

WTO members.

5. Bilateral Trade Agreements and

Bilateral Investment Treaties 

The United States has some form of bilateral trade

agreement with all of the NIS countries. In addition to these general trade agreements, the United

States has concluded a variety of trade agreements

concerning specific product areas with various

NIS countries, such as those regarding firearms

and poultry with Russia.

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) for

which the formal process of ratification has not

been completed. 

6. Country Specific Issues 

The United States continued to encounter a

number of country specific trade issues in the

region, which were not described above. 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 2003 to ensure

that U.S. producers of poultry, pork and beef

continue to maintain access to the Russian

market. Following intense discussions, in

September 2003 the United States signed an

agreement in principle with the Russian government that establishes market access parameters

for U.S. exports of poultry, pork and beef. This

agreement will be finalized through an exchange

of letters with the Russian Government.

Technical discussions also continue to resolve

issues concerning poultry plant certification.

140 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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

align 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 self-certification 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 

The United States and Russia concluded a joint

Memorandum of Understanding (MOU) in 1996

which was designed to address U.S. concerns

about access to the Russian civil aircraft market

and the application of international trade rules to

the Russian aircraft sector. Under the MOU, the

Russian Federation confirmed that it intends to

become a signatory to the WTO Agreement on

Trade in Civil Aircraft at some point in the future.

The MOU also commits the Russian Federation

to provide fair and reasonable access for foreign

aircraft to its market. Russia agreed to take

specific steps, such as the granting of tariff

waivers and the reduction of tariffs, to enable its

airlines to meet their needs for U.S. and other

non-Russian aircraft on a non-discriminatory

basis. New tariff waivers have not been provided

in recent years to keep up with demand for

foreign aircraft, adversely affecting market access

to Russia.

G. Mediterranean/Middle East 

Overview

U.S. trade relations with the countries of

Northern Africa and the Middle East have

considerable potential value in terms of 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.-Jordan Free Trade Agreement (FTA),

the U.S.-Israel Free Trade Agreement, the U.S.-

Morocco Free Trade Agreement, and the U.S.

commitment to negotiate a Free Trade

Agreement with Bahrain, together with the Trade

and Investment Framework Agreements (TIFAs)

established with several 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 

intra-regional trade.

2003 Activities

1. Morocco Free Trade Agreement

The FTA with Morocco, which is discussed earlier

in this chapter in the Free Trade Agreements

(section A), will support support the significant

economic and political reforms underway in

Morocco, and create improved commercial and

market opportunities for U.S. exports.

2. Egypt

In 2003 the United States and Egypt continued

efforts to expand bilateral trade and investment

ties and to strengthen Egypt’s economic reform

III. BILATERAL AND REGIONAL NEGOTIATIONS | 141
program. In recognition of Egypt’s 2002 passage

of a comprehensive new law on intellectual property rights (IPR), an effort in which the United

States provided extensive technical assistance,

Egypt was moved from the Priority Watch List to

the Watch List in the 2003 Special 301 Review.

Four video conferences were held by the working

groups formed in 2002 under the U.S.-Egypt

Trade and Investment Framework Agreement

(TIFA) to facilitate progress in the areas of

Customs Administration and Reform and

Sanitary and Phytosanitary Issues Related to

Agricultural Trade, achieving modest movement

in addressing barriers to some U.S. agricultural

exports. The U.S. and Egypt also sought to

expand cooperation in the multilateral sphere on

issues related to the Doha Development Agenda.

Resolution of problems affecting U.S. firms and

investors in Egypt continued to be a key focus of

U.S. efforts in the TIFA process in such areas as

corporate taxation, barriers to U.S. apparel

exports, and IPR enforcement. To assure fair

access for U.S. textile and apparel producers to

Egypt’s market, the United States in December

initiated a request for WTO consultations with

Egypt on Egyptian apparel tariffs which the

United States views as far in excess of Egypt’s

WTO tariff bindings. At year’s end Egypt’s IPR

enforcement is a point of renewed concern, as the

Egyptian Government departed from its recent

positive IPR efforts by approving unauthorized

copies of U.S. pharmaceuticals based on confidential test data provided by U.S. firms, contrary

to Egypt’s WTO commitments. 

3. Israel

U.S. negotiations with Israel on a new bilateral

agreement on trade in agricultural products is

discussed earlier in this chapter in the Free Trade

Agreements section. 

4. Jordan 

Qualifying Industrial Zones

Qualifying Industrial Zones (QIZs) continue to

be a bright spot in Jordanian economic performance. Eleven Qualifying Industrial Zones (QIZ)

have been established in Jordan since 1998. They

played an important role in helping to boost

Jordan’s exports to the United States from $16

million in 1998 to $412 million in 2002. Jordan

estimates that QIZs have created up to 30,000

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 to

$200 million when all projects are completed. 

In 2001, USTR designated the eleventh QIZ in

Jordan, the Zarqa Industrial Zone. 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 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.

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. To date all QIZs have been

established in Jordan. 

The steady growth of QIZs testifies to 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 U.S.-Jordan Free Trade Agreement, see

section A on Free Trade Agreements earlier in

this chapter.) 

142 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
5. Trade and Investment Framework

Agreements

In 2003, the United States concluded a Trade and

Investment Framework Agreement (TIFA) with

Saudi Arabia and started negotiations on TIFAs

with Kuwait, Qatar, the United Arab Emirates,

and Oman. TIFAs have been previously negotiated with Tunisia, Algeria, Morocco, Bahrain,

Egypt, Jordan, and Turkey. Each TIFA establishes

a bilateral Trade and Investment Council that

enables USTR-chaired 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.

6. WTO Accession

Negotiations on the accession to the WTO of

Saudi Arabia, Algeria, and Lebanon continued in

2003. The United States supports accession to the

WTO on the basis of 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. 

7. Intellectual Property Rights

Protection of intellectual property rights remains

a leading priority in the Middle East region.

Lebanon is on the Special 301 Priority Watch List,

while Egypt, Israel, Kuwait, Saudi Arabia, and

Turkey are on the Watch List.

8. Bahrain Free Trade Agreement

On May 21, 2003, the United States and Bahrain

announced their intention to seek to negotiate a

Free Trade Agreement (FTA). On August 4, 2003,

USTR Zoellick formally notified Congress that

negotiations would be launched in January 2004.

An FTA with Bahrain will also 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 Bahrain’s economic and political

reforms and enhancing commercial relations with

an economic leader in the Gulf. USTR Zoellick

had consultations with Congress on the FTA in

July 2003, and public hearings were held in

November 2003. USTR is pursuing an aggressive

negotiation schedule, and negotiations are

expected to be finished by the summer of 2004.

H. Asia and the Pacific 

Overview

The Southeast Asia and Pacific region continues

to enjoy rapid trade and economic growth. This

growth is largely the result of a commitment by

many of the regional governments to economic

reform and liberalization. While there is additional work to be done in opening markets in

Southeast Asia and the Pacific, significant

progress has been made. The commitment of

regional leaders in the Asia Pacific Economic

Cooperation (APEC) forum to move forward

toward free and open regional trade and investment has been an important factor in spurring

this regional trend (see Chapter III for information on APEC). In addition, the Administration is

committed to using the Enterprise for ASEAN

Initiative (EAI) to further open markets of

interest to American farmers, ranchers, manufacturers, and services providers. It also will

continue to work 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 2003 include:

• Signing of the U.S.-Singapore FTA. In May

2003, the United States and Singapore signed

an FTA, the first comprehensive agreement

between the United States and an Asian

nation. The FTA’s provisions cover not only

goods and services, but customs procedures

and cooperation, investment, competition

policy, intellectual property rights, electronic

III. BILATERAL AND REGIONAL NEGOTIATIONS | 143
commerce, transparency, labor and environment. The agreement with the United States’

13th largest trading partner is expected to

eliminate trade barriers between the two

countries and spur bilateral trade and investment. The agreement also will serve as a

benchmark for possible free trade agreements

with other countries in Southeast Asia.

• Conclusion of the U.S.-Australia FTA. The

United States and Australia concluded FTA

negotiations on February 8, 2004. The

United States expects the FTA with Australia

to boost trade in both goods and services and

enhance employment opportunities in both

countries. In addition to provisions on goods

and services, the FTA covers a range of other

issues, including investment, intellectual

property rights, customs procedures, competition policy, government procurement,

labor and environment. The United States

believes that this FTA will further deepen its

relationship with Australia and cooperation

between the two countries in the WTO.

• Announcement of intent to enter into FTA negotiations with Thailand. In October 2003,

President Bush announced his intent to enter

into FTA negotiations with Thailand in

accordance with legislative procedures 

specified by Congress. This action reaffirms

the President’s commitment under his

Enterprise for ASEAN Initiative (EAI) to

strengthen trade ties with countries in the

ASEAN region that are actively pursuing

economic reforms and follows the historic

FTA with Singapore.

2003 Activities

The United States advanced both regional and

bilateral trade initiatives in the Southeast Asia and

Pacific region in 2003 to expand opportunities for

U.S. industry, farmers, and ranchers. The United

States pursued bilateral 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 global trade liberalization and the

successful conclusion of the Doha Development

Agenda, as well as to implement the Shanghai

Accord, a series of specific commitments 

to ensure APEC reaches its free trade and 

investment goals. 

1. Australia 

In parallel with the FTA negotiations, which are

discussed earlier in this chapter in Section A on

Free Trade Agreements, 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

related to U.S. imports of beef and pet food. The

two sides agreed that SPS measures must be

based on science and be fully transparent. The

Australian government implemented a new

administrative framework in early 2002 to

enhance the transparency of its SPS regime.

Nonetheless, the United States continues to have

concerns about the stringency of Australia’s 

SPS regime. 

2. New Zealand 

The U.S. and New Zealand officials met several

times in 2003 to discuss outstanding bilateral

trade issues. New Zealand’s two-year moratorium

on applications for the release of geneticallymodified organisms, about which the United

States had raised concerns, expired and was

replaced by new legislation setting out strict rules

for release. The New Zealand government also

passed legislation banning parallel imports of new

films. The new legislation is a positive step, but

additional action is needed to address longstanding U.S. concerns on this issue. In addition,

U.S. concerns on other intellectual property

issues, including trademarks and pharmaceutical

issues remain. U.S. manufacturers’ representatives

have recently expressed concern that plans to

extend Australia’s regulatory regime for medical

devices and complementary goods to New

Zealand could impede the price competitiveness

of many U.S. products in the New Zealand market.

144 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
The United States will continue working with

New Zealand under the TIFA to address bilateral

trade issues, as well as in APEC and the WTO to

advance our common trade interests.

3. The Association of Southeast Asian

Nations (ASEAN) 

The Enterprise for ASEAN Initiative (EAI) is

discussed in Chapter B on Regional Initiatives.

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. Senior U.S. and Indonesian

trade officials, including at the ministerial level,

met several of times in 2003 to discuss the range

of outstanding issues affecting the U.S.-

Indonesian economic relationship and other

issues covered under our bilateral TIFA. The two

sides also discussed ways to enhance Indonesia’s

investment climate and facilitate trade, including

through improved governance and capacity

building. They discussed the need to address

outstanding 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 the launch of a private

study on the impact of an FTA on the two

economies, which now is underway and expected

to be completed by summer, 2004. Indonesia is

the United States’ 27th largest trading partner,

with $12.2 billion in two-way trade in 2002.

ii. Intellectual Property Rights

The U.S. Government has continued to urge

Indonesia to take steps to strengthen its IPR

regime. USTR placed Indonesia on the Special 301

Priority Watch List in 2003 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. The

Indonesian government enacted an extensive revision of its copyright law in July 2002 that came

into effect in July 2003 and addressed a number of

the United States’ concerns. Over the last year it

initiated public awareness campaigns and began

addressing problems of interagency coordination.

In addition, in November 2003 it submitted new

draft regulations governing optical media production for Presidential approval. However, these

proposed regulations, if signed, still would not

firmly commit Indonesia to seize and destroy

machinery and materials used in piracy. 

Overall, protection of intellectual property rights

remains weak and U.S. industry continues to

report increases in illegal optical media production lines for both domestic consumption and

export. U.S. industry also has raised serious

concerns about counterfeiting and trademark

violations of a wide range of products. 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 established by the new 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 urge Indonesia to implement

the specific recommendations in the IPR action

plan, including steps to improve the legal 

framework and enforcement mechanisms to

protect IPR.

iii. Poultry Imports 

Appropriate authorities in the United States and

Indonesia have worked together to ensure that

U.S. poultry exports meet Indonesian requirements for Halal certification, but Indonesia

continues to ban imports of U.S. poultry parts.

The U.S. government continued to raise this issue

with the Indonesian government in 2003 and will

work with Indonesia to eliminate the ban.

III. BILATERAL AND REGIONAL NEGOTIATIONS | 145
iv. Textiles 

The United States continued to raise concerns

about the Indonesia government’s Textiles

Decree, passed in November 2002. This Decree

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 its

concerns on this issue.

b. Malaysia 

i. General 

During 2003, the United States and Malaysia

consulted on ways to enhance their trade relationship and strengthen their cooperation in

regional and multilateral fora. The two sides

agreed to negotiate a TIFA, which is nearly

completed. The United States will continue to

encourage Malaysia to further open and liberalize

its economy, which is heavily trade-dependent. In

2002, Malaysia was the United States’ 10th largest

trading partner with $34 billion in two-way trade.

ii. Intellectual Property Rights 

Malaysia has made strides in strengthening its IPR

regime over the past several years,, including

determined efforts to eliminate optical media

piracy. (Copyright legislation was passed a few

years ago.) 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 inability to establish a

climate of deterrence by prosecuting IPR offenders

and imposing sufficiently deterrent penalties. In

the summer of 2003, Malaysia announced plans to

implement price controls on optical disks, a

proposal about which the United States voiced

significant concern. In December, Malaysia

announced that implementation would be

delayed until April 2004. The U.S. Government

will continue to urge Malaysia to drop its price

control proposal and to take additional steps to

further strengthen its IPR environment.

c. Philippines

i. General 

The United States sought to further enhance its

trade and investment relationship with the

Philippines in 2003, holding two rounds of

consultations under the bilateral TIFA. The two

sides have used these meetings to make progress

in addressing outstanding concerns. In addition,

the U.S. government used these meetings to urge

the Philippine government to continue liberalizing its trade regime and to reaffirm its support

for global trade liberalization concluding the

Doha Development Agenda. The Philippines was

the United States’ 22nd largest trading partner in

2002, with $13 billion in two-way trade.

ii. Intellectual Property Rights 

To support the Philippines’ efforts to strengthen

its IPR regime, the U.S. Government in August

2002 provided the Government of the

Philippines with an IPR Action Plan that

included specific steps on judicial, legislative,

and enforcement issues. 

In December, it nearly passed an optical media

law. This law, passage of which was a top U.S.

priority, is intended to curb the unbridled pirate

production of optical media. In addition, the

Philippines Bureau of Customs passed regulations aimed at improved enforcement against

trade in pirated products.

However, the Philippines government has yet to

pass copyright amendments pending in its

Congress, which would update the Philippines’

law to address electronic commerce piracy. In

addition, while the Philippines government

stepped up the number of raids, it has been slow

to prosecute IPR offenders and reluctant to

impose sufficiently deterrent penalties. U.S.

industry estimates that the weak IPR environment in the Philippines resulted in $121 million

in losses in 2002. 

146 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
iii. Telecommunications

The U.S. and Philippine governments 

successfully worked together to begin reopening

U.S. access to Philippine telecommunications

networks. In February 2003, Philippine 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. Senior U.S. government officials,

including the U.S. Trade Representative and the

FCC Chairman, raised concerns over this action

with the appropriate Philippine officials. In

November, some telecommunications connections between the two countries were restored

and ongoing negotiations appear positive. The

U.S. government is continuing to monitor this

issue closely to ensure that competitive access to

these networks is fully restored. 

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 and undue and costly processing

delays as well as the role of the Philippine private

sector in the valuation process. At consultations

in September 2003, the Philippines government

outlined steps it has taken to strengthen enforcement and consistency of its customs rules and

step up enforcement of IPR piracy at the border.

The U.S. Government will continue to closely

monitor this issue. 

v. Sanitary and Phytosanitary (SPS) Issues 

Throughout 2003, the U.S. Government

continued to urge the Philippines to abandon a

proposal to require quarterly mandatory thirdparty inspections of meat and dairy production

facilities overseas. The measure, as initially

proposed in 2002, would disrupt U.S. meat and

dairy exports to the Philippines, estimated at $56

million. The Philippines had announced in

December 2002 that implementation of the

requirement, which was to take effect January 1,

2003, would be delayed. Implementation of this

proposal remained indefinitely delayed

throughout 2003. 

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. Discussion of U.S.-Singapore

trade issues had been handled in the context of

these negotiations (see U.S.-Singapore FTA). 

e. Thailand 

i. General 

The United States continued to bolster its trade

ties with Thailand in 2002, with President Bush

announcing in October his intent to enter into

FTA negotiations with Thailand, in accordance

with the legislative procedures specified by

Congress. The announcement followed three

Trade and Investment Council (TIC) meetings

under the bilateral TIFA and a number of sub-TIC

meetings. These meetings were intended to identify and make progress on outstanding bilateral

trade issues and take other steps to help lay the

groundwork for a free trade agreement, as envisioned by the EAI. Thailand was the United

States’ 18th largest trading partner in 2002 with

$20 billion in two-way trade.

ii. Intellectual Property Rights 

The United States has continued to strongly urge

Thailand to strengthen its IPR regime. To support

Thai efforts, the U.S. Government provided it

with an IPR Action Plan that included specific

steps on judicial, legislative and regulatory, and

enforcement issues. The Thai government has

made some progress in implementing these

recommendations, but significant and sustained

progress is still needed.

The Thai government has not yet passed the

Optical Disk Plant Control Act, which is intended

to enhance the authority and capabilities of

enforcement authorities to take action against

pirate optical disk producers. It is drafting implementing regulations to accompany the law once it

III. BILATERAL AND REGIONAL NEGOTIATIONS | 147
is passed, and the U.S. government has strongly

urged Thailand to ensure that these regulations

address some of the weaknesses in the current

draft law. The Thai government also failed to

introduce an amendment to its copyright law to

provide more effective copyright protection and

to be consistent with the WIPO Copyright Treaty

and the WIPO Performance and Phonogram

Treaty, despite indications earlier in the year that

it would do so. 

The Thai government stepped up enforcement

efforts in mid-2003, leading to a noticeable

short-term decline in retail piracy prior to the

APEC Ministerial meeting in Bangkok in

October 2003. However, street-level piracy again

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

sustained basis, which is critical to any serious

effort to address intellectual property piracy. U.S.

industry estimates losses due to piracy at over

$189 million last year. 

iii. Customs 

Thailand made noteworthy progress in the past

year addressing longstanding U.S. concerns

regarding its customs rules and procedures. The

U.S. Government has supported these reforms,

providing Thailand in August with a proposed

Customs Action Plan that includes specific

proposals for steps to improve the consistency,

efficiency, timeliness and transparency of

Thailand’s customs procedures and regulatory

process, and improvement in enforcement at the

border. The Thai government has implemented

many of these recommendations, including some

steps to implement its customs valuation legislation, which is intended to address concerns about

Thailand’s uneven, arbitrary, discretionary, and

slow application of customs rules. It also has

increased seizures of imports of infringing goods.

The U.S. Government will continue to monitor

Thailand’s implementation of its customs valuation law and urge it to build on the improvements

it has made this year.

iv. Market Access 

Thailand maintains relatively high tariffs and a

complicated tariff regime, which serve to protect

Thailand’s agricultural, automotive, alcoholic

beverage, textile, and electronics industries.

While it continues to reduce selected duties in

line with its WTO and ASEAN FTA commitments, its average tariffs remain relatively high.

Tariff-rate quotas and arbitrarily applied

phytosanitary standards serve as constraints to

the import of certain agricultural products. In

addition, Thailand has implemented non-transparent price controls on some products and has

significant quantitative restrictions, which

impede market access. 

f. Cambodia 

In September 2003, WTO Members voted to

approve Cambodia’s accession to the WTO.

Cambodia is in the process of completing

domestic ratification procedures and hopes to

become a member of the WTO in early 2004.

The Bilateral Textile Agreement the United States

and Cambodia concluded in 1998 and renewed in

2001 is scheduled to expire on December 31,

2004. Once Cambodia accedes to the WTO, the

United States will notify the agreement to the

WTO under the Agreement on Textile and

Clothing. The Agreement will remain in force

until its expiration.

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 implementation,

the BTA granted Vietnam Normal Trade Relations

(NTR) status, that is, the same low tariffs that the

United States applies to imports from nearly every

other country. The BTA also committed Vietnam

to sweeping economic reforms, which created

trade and investment opportunities for both U.S.

148 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
and Vietnamese companies, and will lay the foundation for a new U.S. relationship with Vietnam.

Vietnam remains subject to the Jackson-Vanik

provision, however, which links continued eligibility for NTR treatment to sufficient progress by

designated countries on the issue of free emigration. Each year since 1998, the President has

granted a Jackson-Vanik waiver for Vietnam, thus

clearing the way for Vietnam to receive annually

renewed (as opposed to permanent) NTR 

treatment from the United States. 

The second meeting of the Joint Committee

established by the BTA was convened at the viceministerial level in March 2003 in Hanoi, during

which the two sides assessed progress toward

implementation 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. The next meeting of the Joint

Committee will be held in the first quarter of

2004 and will review the first two years of implementation of the BTA. 

In April 2003, the United States concluded a

textile trade agreement with Vietnam. The U.S.-

Vietnam BTA, concluded in December 2001, did

not include textile quotas. Indeed, Vietnam is not

a WTO member and therefore is not a participant

in the WTO Agreement on Textiles and Clothing

(ATC), which provides for the phaseout of textile

and apparel quotas for WTO members that

continue to face textile and apparel quotas. The

BTA envisioned that such quotas would be put in

place as Vietnam’s economy progressed, striking a

balance by allowing Vietnam to foster an apparel

industry while eventually integrating Vietnam

into the global textile and apparel quota system.

The textile agreement assists U.S. domestic manufacturers by including Vietnam within the global

textile quota regime, and it helps our importers by

providing certainty and avoiding the unpredictability of frequent, random, unilateral limits.

In the 12 months prior to the introduction of

Vietnamese textile quotas, Vietnamese textile

exports grew by 1,400 percent. The U.S.-Vietnam

textile agreement covers virtually all imports and

allows for, on average, 7 percent annual growth.

The agreement also allows for the retention of

quotas until Vietnam joins the WTO.

The agreement provides increased market access

for U.S. suppliers. As part of the agreement,

Vietnam lowered its yarn, fabric and apparel

tariffs to 7 percent, 12 percent, and 20 percent

respectively, and Vietnam agreed to refrain from

using non-tariff barriers.

Finally, the textile agreement includes stringent

enforcement provisions, including a provision

allowing the United States to adjust Vietnam’s

quotas after an investigation of pre-agreement

transshipment, as well as a provision allowing

U.S. Customs to visit Vietnamese facilities to

control post-agreement wrongdoing.

As part of the BTA, Vietnam committed to make

its IPR regime TRIPS-consistent by December 10,

2003. Although Vietnam has improved its legal

and enforcement framework for IPR protections,

wholesale piracy and counterfeiting continue and

enforcement remains inadequate. 

ii. Laos 

On September 21, 2003, the United States and

Laos signed a comprehensive bilateral trade

agreement, which was originally negotiated and

initialed in 1997, 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 enabling

the President to grant normal trade relations

status to Laos in order to bring into effect the

bilateral trade agreement.

The BTA contains IPR provisions that would

assist Laos in its IPR enforcement efforts. While

Laos’ small economy does not yet support a large

retail market in pirated or counterfeit goods,

III. BILATERAL AND REGIONAL NEGOTIATIONS | 149
small outlets are spreading. While enforcement is

weak, some elements of the Government of Laos

are interested in creating strong domestic IPR

legislation, especially in light of Laos’ desire to

protect the intellectual property created through

Lao handicrafts and native music. 

4. Republic of Korea

a. Macroeconomics and Trade

Since experiencing a financial crisis in 1997,

Korea has undertaken significant restructuring

of its economy. While the Korean Government

still maintains a majority ownership in a few of

the largest commercial banks that were nationalized during the crisis such as Woori Bank (100

percent) and Korea Exchange Bank (36 percent)

and a significant stake in three others (Korea

First Bank, 48.5 percent; Hana Bank, 

21.7 percent; and Kookmin Bank, 9.3 percent),

Korea has made progress on implementing some

of its reform commitments during the past five

years. Consolidation has reduced the Korean

banking sector to 12 commercial banks, less than

half the pre-crisis number. Restructuring has

largely been a success: NPLs have been reduced

from 13 percent in 1999 to 3 percent in 2003;

return on equity has increased from 3.5 percent

prior to the crisis to 11 percent in 2002. However,

the financial sector bailout and restructuring did

not come cheaply: as of 2002 Korea has spent

KRW155 trillion ($139 billion or 30 percent of

GDP), including funds recycled through the

support packages, on various support measures. 

Korea entered into its first recession in five years

during the first half of 2003. Seasonally adjusted

real GDP contracted 0.7 percent quarter-onquarter in the second quarter of 2003, extending

from the 0.4 percent drop in the first quarter. The

slowdown was brought on by contracting

domestic demand combined with slowing

external sales. In response, both fiscal policy (a

supplementary budget and tax cuts) and monetary policy have been eased somewhat. For the

year, the Korean Government anticipates GDP

growth may reach 3 percent.

On the trade front, the United States and Korea

continued to consult regularly on a variety of

issues. Meetings held on a quarterly basis serve as

the primary forum for bilateral discussion. During

quarterly trade meetings held in 2003, the United

States and Korea focused on addressing U.S.

concerns in the following areas: automotive,

telecommunications, pharmaceuticals, intellectual

property rights, and agriculture.

Despite their differences on a number of bilateral

trade issues, the United States and Korea continue

to cooperate effectively in regional and multilateral fora, including in the context of the Doha

Development Agenda and the Asia Pacific

Economic Cooperation forum.

b. Telecommunications

Standard-Setting: Increasing Korean Government

intervention in the workings of the telecom

sector, including in the selection of technologies,

continued to be of significant concern to the U.S.

Government in 2003. Korean Governmental

influence on the choice of sources of equipment

and technologies is often apparent in the

licensing process for operators and in localization

policies for procurement. The Korean

Government sometime uses its influence directly

but often works indirectly through industry associations and quasi-governmental commissions or

other entities. Some U.S. firms with leading-edge

technologies have continued to encounter resistance to their efforts to introduce new software

and technologies to the market, and some U.S.

firms that formerly had a dominant market share

have lost significant market share to Korean firms

in the past few years. By limiting competition in

the Korean telecommunications market, the

Korean Government is hampering the ability of

Korean firms to develop state-of-the-art, globally

competitive products as well as Korea’s goal of

becoming an economic hub in Northeast Asia. 

An increasing priority for the U.S. Government

and U.S. industry that has been the focus of a

number of bilateral meetings in 2003 relates to

Korea’s pursuit of domestically created telecom

150 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
standards which the Korean Government appears

inclined to make mandatory. Specifically, the U.S.

Government has focused on three key areas, in

which developments over the past years have

been troubling. The first relates to the wireless

broadband Internet platform for interoperability

(WIPI) for cellular phones. The U.S.

Government’s concerns related to WIPI include:

inappropriate government involvement in the

creation, standardization and deployment of

WIPI; continued actions taken by the Korean

Government to discourage Korean telecommunications service providers from subscribing to

competing foreign standards; and overlyrestrictive WIPI specifications which appear to be

designed to keep competing foreign systems out

of the market. 

The second specific area of concern to the United

States relates to the Korean Government’s

announcement that it will reallocate the 2.3 gigahertz spectrum to a new wireless broadband

Internet service. Korea has announced that it will

allow only one technology to be deployed in this

spectrum, but has not yet made a strong case

justifying its position. Furthermore, the United

States has questions regarding the fairness and

transparency of the procedures being used by the

relevant Korean standards-setting body. 

The final issue relates to location-based services

(LBS). The Korean Government has not yet

announced its intentions related to LBS. The U.S.

Government will continue to monitor developments in this area closely.

Based on actions to date, it strongly appears that

Korea is using telecom standards as a protectionist industrial policy. The U.S. Government

has used every opportunity to raise its concerns

at all levels of the Korean Government. The

United States will continue to urge Korea, in its

standards-setting processes, to fulfill all of its

bilateral and multilateral obligations. In 

particular, Korea must avoid creating unnecessary obstacles to international trade in the

telecommunications sector. 

Korea Telecom (KT) Privatization: On April 23,

2002, the Korean Government officially

requested that Korea Telecom (KT) be removed

from coverage under the 1997 U.S.-Korea bilateral procurement agreement following the

complete divestiture of Korean Government

shares in the company, which took place in June

2002. Korea has made a similar request to WTO

Members to remove KT from coverage under the

WTO General Procurement Agreement (GPA). In

response, the U.S. Government has expressed

serious concerns, regarding whether all government control and influence over the company

have ceased (one GPA standard for removal from

coverage). Consultations on the matter continue.

c. Motor Vehicles

On October 20, 1998, the United States and Korea

concluded a Memorandum of Understanding

(MOU) to improve market access for foreign

motor vehicles. This MOU followed USTR identification of Korean barriers to motor vehicles as a

priority foreign country practice under Section

301. Under this MOU, Korea agreed to: (1) bind

in the WTO its 80 percent applied tariff rate at 8

percent; (2) lower some of its motor-vehiclerelated taxes and to eliminate others, thereby

substantially reducing the tax burden on motor

vehicle owners; (3) streamline its standards and

certification procedures and adopt a manufacturer-driven self-certification system by 2002; (4)

establish a new mortgage mechanism to make it

easier to purchase motor vehicles in Korea; and

(5) continue to actively and expeditiously address

instances of anti-import activity and to proactively educate Korean citizens on the benefits of

free trade and competition. As a result of the

measures the Korean Government committed to

in the 1998 MOU, the USTR terminated a Section

301 investigation and began monitoring the

Korean Government’s implementation of these

measures through formal reviews. 

During the 2003 MOU reviews, held in June and

October, the United States and Korea assessed

progress under the agreement and discussed additional steps Korea will take to implement this

III. BILATERAL AND REGIONAL NEGOTIATIONS | 151
agreement. The Korean Government has implemented many of the specific provisions of the

MOU. In 2003, Korea established a self-certification system for automotive safety standards. This

is a key MOU commitment, and its completion

should help alleviate some standards barriers.

Korea also simplified and reduced one important

automotive tax, made a second purchase of 50

U.S.-produced vehicles for its Police Agency fleet,

and endorsed and helped support the 2003

Import Motor Show. However, the U.S.

Government remains seriously concerned about

the lack of more substantial import penetration in

the Korean automotive market. Despite a notable

increase in U.S. vehicle sales in Korea in 2003, the

total share of foreign vehicles in the Korean

market is only slightly above one percent as a

result of continued high taxes and tariffs, antiimport sentiments among many Korean

consumers, and Korean Government positions

vis-à-vis several important standards and certification issues. A key example of problems U.S.

manufacturers continue to face in the Korean

auto market was DaimlerChrysler’s effort to introduce its Dodge Dakota vehicle in Korea. Despite

their strong efforts to meet all applicable Korean

rules and regulations, the company’s attempted

launch of the Dakota was repeatedly hindered by

the continued use of new interpretations of

Korean law imposed in a non-transparent

manner. The U.S. Government expects that these

kinds of barriers will not arise again in the Korean

auto market.

Over the last year, the United States has made

specific proposals for addressing these concerns

and achieving further progress under the agreement. At the most recent MOU review, held in

October 2003, U.S. proposals focused on Korea’s

fulfillment of the MOU commitment to “steadily

reduce the tax burden on motor vehicle owner in

the ROK in a way that advances the objectives of

this MOU.” This is a long-term, but critical objective of the MOU. The U.S. Government stressed

that, given the continued complex nature of the

Korean automotive tax system, Korea should

develop a comprehensive plan as soon as possible

to meet this commitment. This would not only

help Korea meet its MOU obligation, but would

also offer transparency and predictability to auto

manufacturers. The U.S. Government and U.S.

industry have made specific suggestions on ways

to reform the tax system, and also reduce the tariff

burden, which the United States intends to

discuss in more detail during reviews of the MOU

in 2004. The U.S. Government also sought to

address specific outstanding standards and certification issues, and the overly high automotive

tariff and stressed the need to continue efforts to

improve the generally negative perception of

foreign vehicles among Korean citizens.

d. Steel

Steel issues are detailed in Chapter V, “Other

Multilateral Issues.”

e. Pharmaceuticals

Over the past year, U.S. concerns regarding pharmaceuticals trade related mainly to the pricing of

innovative pharmaceuticals under Korea’s

national health insurance reimbursement system

and to the lack of transparency in the Korean

system. While positive steps were taken in 1999

and 2000 to address U.S. concerns in this sector,

the Korean Government began to back away from

its previous actions and commitments in 2002.

Throughout 2003, a series of government-togovernment and government-industry

consultations took place in order to address U.S.

concerns. While some progress was made, more

needs to be done. The U.S. Government looks

forward to resolving outstanding issues in 2004. 

The U.S. Government’s two main areas of concern

related to pharmaceuticals are:

Pricing Policy: The change back to an Actual

Transaction Price system (ATP) from a Lowest

Transaction Price (LTP) system. In August 2002,

in a unilateral move away from a negotiated resolution to a long-standing problem, Korea adopted

a ministerial ordinance establishing LTP. During

discussions prior to this move, the United States

had urged Korea to take steps to ensure the full

implementation and enforcement of the ATP

system whereby both imported and domestically

152 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
manufactured pharmaceuticals are reimbursed

without hospital margins. However, in 2002

Korea announced plans to discard the ATP system

and adopt on a one-year trial basis an LTP system

in which the reimbursement price of a drug was

based on the lowest transaction price from the

previous quarter rather than the actual transaction price. There was great concern that this

change to LTP would unfairly lower the reimbursement prices for U.S.-made drugs. After a

year of consultations with the U.S. Government

and U.S. industry (and domestic court cases that

went against LTP), Korea decided to discard the

LTP system and return to the ATP system as of

September 1, 2003. The U.S. Government will be

closely monitoring the implementation of the

ATP system in order to ensure that it is done in a

manner that does not lead to a distortion of the

incentives needed to promote innovation and 

the availability of innovative pharmaceutical

products in the Korean market. 

Triennial Re-Pricing: The movement on January

1, 2003, to subject patented and bio-equivalent

generic drugs to price changes—cuts, in seemingly all cases—while non-bio-equivalent

generics were not subject to the price cuts. The

proposed scheme appears even more discriminatory in that it will force proportionally larger

price cuts on innovative, patented drugs (the

specialty of U.S. and other foreign pharmaceutical companies) than on generic drugs (the

specialty of Korean companies). The U.S.

Government is closely examining these cuts and

is continuing to press Korea to examine closely it

WTO obligations and consult fully with all relevant stakeholders before taking any further steps.

Transparency: The creation of a transparent

science-based reimbursement guideline setting

process. The Health Insurance Reimbursement

Agency (HIRA) has imposed unduly restrictive

reimbursement guidelines on many innovative

foreign drugs. (HIRA was established in 2000 to

audit medical claims and assess the appropriateness and the economy of health services delivered

to insurees). The guidelines establish the indications for which a product can be reimbursed.

These guidelines are initially set by the Korea

Food and Drug Administration, but can later be

modified by guidelines established by HIRA. The

process for establishing these modified guidelines

is non-transparent and a more independent

appeals process should be established. U.S.

Government has urged Korea to develop a transparent process for revising reimbursement

guidelines as well as adopting an appeals process.

Numerous discussions between the Korean

Government and industry took place in 2003 on

this issue and discussions are ongoing.

The U.S. Government believes that developing

policies that improve health care for all Koreans

is best pursued by consulting with all domestic

and foreign stakeholders, including foreign

industry and governments. The U.S.

Government will continue to encourage the

Korean Government to conduct increased

consultations with industry, increase the use of

public comment procedures, and increase the

use of the Internet to disseminate information.

For 2004, the U.S. Government plans to continue

to work with the Korean Government to bring

about a more transparent, unbiased, rational,

science based health care system that provides

predictability for our companies regarding pharmaceutical pricing and reimbursement guidelines.

f. Intellectual Property Rights

The United States continues to have serious

concerns regarding adequate protection and

enforcement of intellectual property in Korea. In

the 2003 Special 301 Report, USTR announced

that Korea would be the subject of a Special 301

Out-of-Cycle Review. Under the 2003 Special 301

Out-of-Cycle Review, the United States’ decision

on whether Korea would remain on the Watch

List or be moved to Priority Watch List was based

on Korea’s taking action in all of the following

areas: 1) taking all actions necessary to ensure

that the Standing Inspection Team (SIT), responsible for investigating and reporting end user

software piracy, is granted police powers at the

earliest opportunity; 2) drafting and submitting

legislation to the National Assembly that estabIII. BILATERAL AND REGIONAL NEGOTIATIONS | 153
lishes the exclusive right of transmission for

sound recordings, including both the full right of

making available and the full right of communication to the public; 3) providing additional, new

data on Korea’s enforcement efforts that is sufficient to more fully evaluate the full range of its

enforcement activities. In addition, in order to

resolve the film distribution issues, the Korean

Government should: 4) Draft and submit legislation to the National Assembly to grant the Korea

Media Review Board (KMRB) all authority necessary to stop film piracy; and 5) fully and faithfully

implement its agreement on the “WIPI” intellectual property issue.

During 2003, Korea took some steps toward

fulfilling its spring 2002 commitments, including

facilitating the passage of legislation to provide

the Standing Inspection Team with police powers

and increasing cooperation between the prosecutor’s officers and U.S. right holders to curb

software infringement. Although recent legislation drafted by MOCT provided for the right of

making available to phonogram producers, the

United States was disappointed that the legislation did not include a provision for the right of

communication to the public. The U.S.

Government will continue to urge Korea to be

more forthcoming on this and other IPR issues.

In addition, other significant IPR issues emerged

over the last year that required concerted efforts

by the U.S. Government. One issue involved

alleged infringement of a U.S. industry’s intellectual property in the creation/promulgation of a

new telecommunications standard (WIPI).

Another was related to pirates’ ability to illegally

register and distribute U.S. videos and DVDs in

the Korean market in violation of U.S. companies’

copyrights. Also of concern to the United States

was the fact that Korea has not taken sufficient

new steps to address additional U.S. concerns as

outlined in the 2002 Special 301 Report, related

to the protection of temporary copies, reciprocity

provisions regarding database protection, ex parte

relief and the lack of full retroactive protection for

pre-existing copyrighted works.

In early 2004, the United States, after conducting

the Out-of-Cycle Review, decided to elevate Korea

to Priority Watch List. (More details at

http://www.ustr.gov/releases/2004/01/04?01.pdf)

g. Financial Services

As a condition in the IMF stabilization package,

Korea agreed to bind its OECD commitments on

financial services market access in the WTO. In

January 1999, Korea provided WTO Members

with a revised and somewhat improved schedule

of financial services commitments that entered

into force as of September 1999. The U.S.

Government will continue to work with Korea to

bring about more liberal treatment of foreign

financial services providers.

h. Government Support for Korean

Industry

Semiconductor Production and Export: During the

past few years, the U.S. Government has

expressed strong concerns about instances of

possible Korean subsidization of semiconductor

production and export that could adversely affect

U.S. trade interests. In particular, the U.S.

Government sought redress by the Korean

Government for its support of Hynix

Semiconductor, Inc., Korea’s second largest 

semiconductor manufacturer. The Korean

Government did not address the concerns

expressed by the U.S. Government and continued

to provide financial assistance to Hynix, 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 the Korean Government, have been put

in place with respect to certain U.S. imports of

semiconductors from Hynix. 

In 2003, while the CVD investigation was

ongoing, a new Hynix bailout package 

was provided by Hynix creditors which included:

a substantial debt forgiveness package in the form

154 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
of a three-year-plus payback moratorium on 3

trillion Korean won of debt; a significant reduction in interest on the 3 trillion Korean won

principal (from 6.7 percent to 3.2 percent); and a

new 1.9 trillion Korean won debt-to-equity swap.

This new bailout package was approved in

December 2002; however, the actual assistance to

Hynix was provided in 2003. This new bailout

assistance was not included in the CVD investigation but will be examined by the Commerce

Department in its first annual review of Hynix

subsidies, scheduled to begin in 2004.

In addition, as this report was going to press, the

Korean Government announced that it planned to

invest one trillion won ($831 million) in research

and development of next-generation semiconductors over the next five years. With this investment,

the Korean Government stated that it hoped to

expand semiconductor export revenue. 

The U.S. Government continues to raise its

concerns on the issue of subsidization of the

Korean semiconductor industry in a number of

fora and has noted Korea’s obligations under the

Subsidies Agreement not to provide subsidies that

may cause adverse effects to other WTO

Members. The U.S. Government will continue to

press Korea to fulfill its international obligations

and to move forward with genuine structural

reform of its financial sector.

Paper Subsidies: The U.S. paper industry has

raised increased concerns regarding targeted

Korean Government aid to the Korean coated

paper sector. Specifically, U.S. industry alleges

that government subsidies 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 serve to

keep troubled companies afloat and distort international competition. The U.S. Government

raised concerns regarding paper subsidies in

numerous bilateral and multilateral fora in 2003

and will continue to pursue this issue with the

Koreans in the coming year.

i. Cinema Screen Quotas 

Korean Law requires that domestic films be

shown in each cinema for a minimum number of

days per year. Current law requires that Korean

films be shown 146 days of the year, with a potential discretionary reduction to 106 days. The

Korean National Assembly adopted a resolution

on December 8, 2000, stating that the screen

quota system must not be abolished until the

domestic market share for Korean films maintains

a 40 percent level. Although domestic films have

“maintained” a market share close to 50 percent

in 2001, 2002, and 2003, there has been very little

progress on the issue. Lack of resolution of this

“screen quota” issue was one of the primary

reasons that U.S.-Korea discussions of a Bilateral

Investment Treaty (BIT) stalled in 2001. (See

Bilateral Investment Treaty) This issue remains

unresolved because of a lack of flexibility on the

part of various Korean stakeholders. Efforts by

the Roh Moo-hyun Administration to encourage

Korean filmmakers to find a compromise solution

with the U.S. film industry have yet to bear fruit.

j. Bilateral Investment Treaty

In 1998, former Korean President Kim Dae Jung

proposed the negotiation of a bilateral investment

treaty (BIT) with the United States. The U.S. side

aimed to secure Korean commitments on a

balanced and open investment regime and

provide protections for U.S. investors in Korea.

Negotiations held in 1999 made progress related

to Korean liberalization of investment restrictions

in a number of sectors, but several issues

remained unresolved, primary of which was liberalization of the screen quota system. In addition,

further progress needed to be made with regard to

granting greater access for U.S. investors in

telecommunication services and resolving IPR

issues, specifically, with respect to retroactive

copyright protection for preexisting works and

sound recordings. By 2001, both sides agreed that

further BIT negotiations would not be productive

without resolution of the screen quota issue. (See

Screen Quotas.)

III. BILATERAL AND REGIONAL NEGOTIATIONS | 155
k. Cosmeceuticals

The Korean Cosmetic Products Act, which

became effective in July 2000, separates cosmetic

products from cosmeceuticals or cosmetics by

function, such as sunscreen, wrinkle cream or

skin whiteners. The Act governs the sale and

promotion of cosmeceuticals and requires that

these products be labeled as cosmeceuticals and

not include claims that are beyond proven efficacy. In 2003, the Korean Government took some

steps toward reforming the Cosmetic Act,

however, the United States continues to have

serious concerns (related to the Act). The U.S.

Government and U.S. industry fear that the Act,

as it currently stands, will continue to slow the

pace of product approvals and fails to adequately

protect proprietary information. The United

States believes that Korea should both simplify its

cosmetics regulations and harmonize them with

other major cosmetics markets.

l. Agriculture

Implementation of the Biosafety Protocol: On

March 28, 2001, the Ministry of Commerce,

Industry, and Energy (MOCIE) issued legislation

(the so-called “LMO Act”) to implement Korea’s

interpretation of the Cartagena Biosafety protocol.

On June 25, 2002, MOCIE released a proposed

Presidential Decree and Ministerial Ordinance to

the LMO Act. These proposed regulations were

notified to the WTO. In May 2003, the U.S.

Government and U.S. industry submitted

comments and questions to Korea generally

requesting clarification of a variety of vague

requirements outlined in the proposed regulations. To date, however, MOCIE has not

responded to the U.S. Government. Lack of clarity

and transparency of the LMO Act regulations

could disrupt trade when the regulations 

become effective.

Environmental Risk Assessment: Environmental

risk assessments (ERA) for biotech crops will

become mandatory when MOCIE’s LMO Act goes

into effect (expected sometime in early 2004). On

January 9, 2002, the Ministry of Agriculture and

Forestry (MAF) issued guidelines for voluntary

ERAs of biotech crops used for food, feed, and

seed. However, the voluntary ERA program is

hampered by lack of clear guidelines and insufficient resources. To date, only ten ERA

applications have been submitted for assessments

and no ERA’s have been completed. The U.S.

Government has continued to request that a sufficient grace period with adequate lead-time and

minimally restrictive implementation requirements are adopted to avoid major disruptions of

trade. However, there has been growing concern

that the lack of clear guidance and shortage of

resources for conducting ERA’s may cause MAF to

fail to complete assessments of applications

submitted in a timely manner when the LMO Act

goes into effect. The Korean Government should

address these concerns.

Mandatory Food Safety Assessment: Under the

Food Safety Act, issued by Korea’s Ministry of

Health and Welfare (MHW), the Korea Food and

Drug Administration (KFDA) was given the

authority to conduct mandatory safety assessments to evaluate biotechnology applications

intended for human consumption. Since April 20,

1999, the KFDA has been operating a voluntary

safety assessment program of biotech crops for

human consumption. In accordance with the

revision of the Food Sanitation Act issued in

August 2002, safety assessments of biotech crops

were to become mandatory on February 26, 2004.

The U.S. Government and U.S. industry

expressed concerns that the requirement to have

completed the mandatory safety assessment prior

to February 26, 2004, could result in trade

disruptions if resource constraints made it impossible for KFDA to process all applications prior to

the deadline. 

Recognizing the potential problem, KFDA

revised its safety assessment guidelines to

provide an additional year for assessments of all

biotech crops except soybeans, corn, and potatoes. Safety assessments for soybeans, corn, and

potatoes will still have to be completed by

February 26, 2004. Assessments for all other

biotech crops may be completed by February 26,

2005. To date, ten biotech crops and six biotech

additives have undergone and received positive

KFDA safety assessments.

156 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Rice: The exception to tariffication that Korea

received for rice during the Uruguay Round

expires at the end of 2004. Under the minimum

market access (MMA) quota for rice in place

since the end of the Uruguay Round, the United

States has sold 30,000 MT out of the 142,520

MMA available in CY2001, 40,000 MT out of the

171,023 MT MMA available in CY 2002, and

55,000 MT out of the 199,528 MT MMA available in CY 2003. Such sales were only possible

after Korea agreed to hold tenders for U.S. #1

grade medium rice. Korea’s administration of the

MMA quota severely restricts how imported rice

may be marketed. The United States has pressed

Korea to eliminate restrictions on how the rice

MMA quota is administered. 

Surging world rice prices in 2003 prompted

Korea to implement a “price ceiling” mechanism

for rice import tenders. Under the “price ceiling”

system, the Agricultural and Fisheries Marketing

Corporation (AFMC), the state trading enterprise

for purchasing rice, set an internal price ceiling

and turned down bidders that offered prices that

were higher than the AFMC’s internal target price.

As a result, completion of several tenders and

subsequent deliveries of MMA rice were delayed.

Consequently, some of the deliveries to fulfill the

2003 quota will occur in 2004. 

Tariffs and Tarriff Classification: U.S. officials

have continued to express concern regarding a

number of products subject to exceedingly high

tariffs and possible inappropriate tariff classifications, including high tariff rates on croaker and

Korea’s customs classification of citrus pulp

pellets. U.S. officials have also urged the Korean

Customs Service to reconsider its policy of classifying beef bones with minimal amounts of meat

attached as pure muscle meat subject to a tariff of

40.5 percent. If beef bones were classified as offal

the applicable tariff would be 18.2 percent.

m. Import Clearance Procedures, Food

Standards, and Labeling

After WTO dispute settlement consultations with

the United States between 1995 and 1999, the

Korean Government revised its import clearance

procedures to harmonize them with international

practice including: (1) expediting clearance for

fresh fruits and vegetables; (2) instituting a new

sampling, testing, and inspection regime; (3)

eliminating some nonscience-based phytosanitary requirements; and (4) beginning revisions of

food related regulations.

In 2003, a new import inspection program implemented by the MHW and the KFDA undermined

Korea’s earlier efforts to harmonize its import

clearance programs with international norms,

including WTO national treatment provisions.

On January 27, 2003, the new import inspection

program was notified to the WTO in

G/SPS/N/KOR/123. In comments on the notification, the U.S. Government and other countries

expressed concern about a new requirement

mandating annual maximum residue limit

(MRL) testing of agricultural products on a

packing-house basis and the associated testing

fee of roughly $1,960. Since domestic agricultural products are only subject to random tests

and the Korean Government bears all test costs

associated with random tests, national treatment

is a serious concern. 

No changes were made to address U.S. concerns

and the new requirements became effective on

August 18, 2003. KFDA, the implementing

agency of this new import inspection program,

proposed to reduce the MRL testing fees to

278,400 Korean won (approximately $242) from

2,256,000 Korean won (approximately $1,960).

However, reduction in the testing fee still does not

fully address the underlying national treatment

issue. The U.S. Government will continue to

press Korea to resolve fully these issues in bilateral and multilateral fora.

Additional work will be needed to bring Korea’s

food related regulations into conformity with

international standards, specifically those related

to limited classification of food categories and

burdensome testing requirements.

On June 28, 2003, KFDA announced new

“Proposed Standards and Specifications for

Health Functional Foods.” The objective of the

III. BILATERAL AND REGIONAL NEGOTIATIONS | 157
so-called “Functional Food Code” is to regulate

health foods and nutritional supplements by

listing products that can be classified as functional foods and setting standards and

specifications for functional foods. Products classified as functional foods can carry “efficacy

claims” on their labels. In the proposed

Functional Food Code, however, limited categories of functional foods and nonscience-based

upper limits on vitamin and mineral content

restrict entry of U.S. health foods and supplements into the Korean market. The U.S.

Government and U.S. industry submitted

comments detailing concern about restrictions on

health foods and nutritional supplements that are

freely traded in foreign countries. To date,

however, KFDA has not addressed U.S. concerns.

The U.S. Government will continue to press

Korea on this issue.

5. India 

a. General 

Trade between the United States and India totaled

$18 billion in 2003, well below potential because

widespread barriers to market access in India,

including high taxes and tariffs, differential treatment of imports, and reference prices.

The United States continued its efforts to open

India’s markets and develop a constructive, longterm trade relationship. We sought to identify

areas for cooperation. Discussions focused on

WTO matters as well as bilateral trade issues

including India’s tariff and tax regime, biotechnology, intellectual property rights, and subsidies. 

b. Trade Dialogue 

USTR Zoellick and Indian Minister of Trade and

Industry Arun Jaitley held several meetings this

year. USTR also appointed the first-ever Assistant

United States Trade Representative for South

Asia who is responsible for India as well as other

countries in the region. At the specific request of

USTR Zoellick, the new AUSTR for South Asia

devoted most of his efforts to working to open

India’s markets, historically among the most civilized in the world. With a consumer class of over

200 million people, India presents enormous

export opportunities for the United States. The

new AUSTR visited India twice and frequently

met with Indian diplomatic and trade officials

based in Washington quite frequently in the

second half of 2003. He focused especially on

reducing India’s very high agricultural tariffs and

its high tariffs on industrial goods, on resolving

several trade disputes—particularly one

involving an Indian policy that unreasonably

restricts the market for American fertilizer—and

on protecting American intellectual property. As

part of the United States-India Economic

Dialogue, the United States-India Trade Policy

Working Group (TPWG), led by USTR and

India’s Ministry of Commerce, met regularly at

the technical and Ministerial levels. To that end,

TPSC agencies met with their Indian counterparts twice by digital video conference (DVC)

and face-to-face on numerous occasions during

2003. Participants covered the full range of bilateral trade issues during these discussions. A

further DVC was devoted to a thorough discussion of intellectual property rights protection and

enforcement. Another was devoted to an exchange

of information on biotechnology regulations.

c. Intellectual Property Rights

Enforcement of intellectual property rights in

India remains problematic, and the country

remains on the Special 301 “Priority Watch List.”

As a signatory to the Uruguay Round of GATT

trade negotiations, India was required to comply

with most of the obligations of the WTO

Agreement on Trade-Related Aspects of

Intellectual Property Rights (TRIPS) by January 1,

2000, and must introduce and enact a comprehensive patent system for pharmaceuticals and

agricultural chemicals no later than 2005. The

Indian Government has announced its intention

to conform fully to the WTO TRIPS requirements

of the Uruguay Round and has stated that it will be

fully TRIPS compliant by January 1, 2005. 

In June 2002, Parliament passed legislation

amending the Patents Act. While the new legislation corrects some of the shortcomings of the

1970 Patents Act, the legislation contains

158 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
numerous deficiencies and appears to fail to

comply with both the letter and spirit of the

TRIPS Agreement. Most notably, the following

problems pose significant concerns: numerous

categories of inventions are not patentable; lack

of protection for product-by-process inventions;

failure to address the abusive government use and

revocation provisions present in the 1970 Act;

and failure to recognize importation as satisfying

the “working” requirement. Moreover, the law

adds a new requirement to patentability, i.e.,

disclosure of the source and geographical origin

of biological material used in an invention. To the

extent that these types of requirements are unrelated to obtaining patent protection, they serve no

legitimate purpose in a patent system and impose

unnecessary burdens on patent applicants. We

await the Indian Government’s implementation of

TRIPS-compliant legislation in time to meet its

WTO January 1, 2005 commitment. 

The Indian Government has made encouraging

statements concerning the implementation of

TRIPS-compliant data exclusivity regulations

(protection for undisclosed test data). We await

Indian Government issuance of such regulations. 

While the copyright law generally complies with

the TRIPS Agreement, the 1999 amendments

undermine TRIPS requirements concerning

protection for computer programs. Unfortunately,

Indian copyright enforcement efforts are characterized by long delays and low penalties.

The Government of India, along with a “core

group” of local industry representatives,

academics and IP lawyers has been discussing

amendments to the Indian Copyright Act to

implement the WIPO Copyright Treaty and

WIPO Performances and Phonograms Treaty. The

United States has asked India for further information about the schedule for implementation of 

the WIPO Treaties and the draft Copyright 

Law amendments.

The United States has continuing concerns over

the environment for intellectual property enforcement in India. These concerns include lack of

deterrent penalties for counterfeiting and piracy,

and unnecessary delays in civil and criminal

cases. High piracy rates (particularly for popular

fiction and certain textbooks), increasing problems with exports, nascent problems with optical

disk piracy, extensive use of expensive civil remedies to address social problems better addressed

through socially deterrent criminal measures, are

among the IPR enforcement problems U.S.

industry is facing in India. CD-R seizures also

continue to rise—over 100 percent from 2001 to

2002. Internet piracy is a growing problem. In the

trademark area, fast moving consumer goods and

other sectors have also complained about high

levels of counterfeiting and difficulties in

bringing effective enforcement. Counterfeiting in

the auto, pharmaceutical, entertainment,

consumer goods and apparel industries are examples. Particularly troubling are extensive public

health and safety risks posed by counterfeit medicines and auto parts. This major problem is

complicated by India’s export of counterfeit goods

to the Middle East, southern Africa and Europe. 

d. Diammonium Phosphate (DAP)

Changes in India’s fertilizer price control and

subsidy regime have driven U.S. and other foreign

phosphate fertilizer exports out of the Indian

market. Recently, the Indian Government

increased domestic subsidies while offering

import subsidies set so low that U.S. producers

cannot profitably sell in the Indian market. U.S.

phosphate fertilizer exports fell from a peak of 

2.3 million tons in 1999 to virtually zero this year. 

The United States continues to press the Indian

Government to end distorting policies that

impede U.S. producers of DAP from competing in

the Indian market.

e. Reference Pricing 

In August 2001, following allegations of under

invoicing by vegetable oil importers, the

Government of India imposed reference prices on

imports of palm oil and palm products. In

September 2002, India added soybean oil to its

fixed reference price regime and in December

2002, raised the reference price to a level that

substantially exceeds world prices for vegetable

III. BILATERAL AND REGIONAL NEGOTIATIONS | 159
oils. The applied tariff for crude soybean oil was

already at the WTO bound rate of 45 percent.

Given fluctuations of world market prices and

India’s relaxed norms for revision of reference

prices, the effective tariff for crude soybean oil

(CSBO) is likely to exceed India’s tariff bindings

on CSBO. From September 2002 until May 2003,

India’s effective tariff for CSBO was above 

45 percent, since its CSBO reference prices were

well above world market prices.

f. Export Subsidies

Since October 2000, faced with massive grain

stocks and shortage problems, the Government of

India started allocating large quantities of wheat

for export at highly subsidized prices. In April

2001, following the success of its wheat exports

program, India began subsidizing exports of rice.

India did not notify any grain export subsidy

programs under its Uruguay Round commitments. In late 2003, record offtake for domestic

consumption and heavy exports lowered government-held stocks of wheat and rice, easing

domestic pressures on the Indian Government to

continue the export of grains at highly subsidized

prices. By the end of January 2004, the 

Indian Food Ministry may consider new export

allocations after reviewing grain stock levels.

6. Pakistan

In 2003, the United States strengthened its trade

dialogue with Pakistan on issues affecting our

trade and investment relationship. Minister of

Commerce Humayun Akhtar Khan visited

Washington in June and met with Commerce

Secretary Evans and Ambassador Zoellick. USTR

agreed to negotiate a Trade and Investment

Framework Agreement (TIFA). The negotiations

were completed expeditiously, and the TIFA was

signed during President Musharraf’s visit at the

end of June.

In preparation for the first TIFA meeting, AUSTR

Ashley Wills visited Islamabad in October and

was hosted by Minister Khan. Ambassador Wills

discussed a number of bilateral trade and investment issues while in Pakistan. During his

consultations, Ambassador Wills requested that

additional attention be given to Pakistan’s significant problems in enforcing intellectual property

rights. Just prior to Commerce Assistant

Secretary William Lash’s visit to Pakistan in

August, a U.S. roadmap was presented to the

Pakistanis in the summer outlining the improvements we are seeking. The Government of

Pakistan has begun to address the intellectual

property problems, particularly in the optical

disk sector, by planning the creation of an interagency task force.

Throughout the year Pakistan and the United States

consulted frequently on the Doha Development

Agenda negotiations. Closer collaboration 

developed between our missions in Geneva.

7. Afghanistan

An interagency working group worked

throughout the year to further development of

the Afghan Trade Initiative. Further, a U.S.-

Afghanistan Commercial Working Group was

created. The bi-national group is co-chaired by

USTR and the Department of Commerce for the

United States, and by the Ministry of Commerce

for Afghanistan. The inaugural meeting of the

Working Group was held in Chicago on June 9.

Trade issues also were discussed between

Ambassador Zoellick and Afghan Finance

Minister Ghani and between Commerce Secretary

Evans and Commerce Minister Kazemi. 

In order to stimulate greater Afghan utilization of

the U.S. Generalized System of Preferences (GSP)

program, a capacity building seminar was held by

DVC with Afghan participants. In addition,

Afghanistan and the United States will soon

conclude an arrangement that grants duty-free

treatment under the GSP program to certain

textile handicrafts. Finally, the Administration

continued its efforts to obtain legislation to

permit hand-made carpets to be eligible for dutyfree treatment under the GSP.

Afghanistan has requested initiation of the accession process for its membership in the World

Trade Organization, and USTR is assisting

Afghanistan on what WTO membership entails.

160 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
The United States continued to work with

Afghanistan and its neighboring governments to

remove transit barriers to trade. The interagency

task force also focused on providing assistance to

Afghanistan to build a strong customs administration in order to better track and increase incoming

domestic revenue and to facilitate trade. 

8. People’s Republic of China

Much has changed in the U.S.- China economic and

trade relationship since China began negotiations to

join the predecessor to the World Trade

Organization (WTO), the General Agreement on

Tariffs and Trade (GATT), 17 years ago. In 1986,

total U.S.-China trade was only $7.9 billion, and

imports from China outpaced U.S. exports to China

by $1.7 billion. In contrast, in 2003, total U.S.-China

trade is projected to top $170 billion, with imports

from China exceeding U.S. exports to China by

more than $125 billion. The Administration is

focused on increasing U.S. exports as a means to

reduce the growth in the deficit.

Two years after acceding to the WTO, China has

become the United States’ third largest trading

partner and the sixth largest market for U.S.

exports. Indeed, over the last three years, while

U.S. exports to the rest of the world have

decreased by 10 percent, U.S. exports to China

have increased by 66 percent. China has become

a major consumer of U.S. manufactured exports,

such as electrical machinery and numerous types

of components and equipment, among other

goods. Growth in U.S. exports to China of agricultural products has also been robust, and the

market share of U.S. service providers in China

has been increasing rapidly in many sectors. 

U.S. business success in China, however, is not

necessarily a demonstration of WTO implementation progress, nor does it necessarily signal that

expectations are being fully met. Rather, China’s

WTO implementation progress must be measured by the degree to which China has begun to

institutionalize market mechanisms and to make

its trade regime more predictable and transparent. By that score, the shortcomings in

China’s WTO implementation are noteworthy.

Unlike last year, China’s uneven and incomplete

WTO compliance record can no longer be

attributed to start-up problems. 

China acceded to the WTO on December 11,

2001, after 15 years of negotiations with the

United States and other WTO members. Under

the terms of its accession, China committed to

implement a set of sweeping reforms designed to

implement the WTO’s market access, national

treatment and transparency standards, to protect

intellectual property rights (IPR), to limit the use

of trade-distorting domestic subsidies and to

make other changes to bring its legal and regulatory system in line with those of other WTO

members. For China’s leadership, these commitments were primarily intended to consolidate and

accelerate the market-oriented reforms responsible for lifting 300 million Chinese citizens out

of poverty over the past 25 years. China also

viewed joining the WTO as a means to ensure its

continued access to export markets. In turn,

other WTO members envisioned that faithful

WTO implementation by China would reduce the

ability of non-market forces, including government policies and officials, to intervene in the

market to direct or restrain trade flows. 

In its WTO accession agreement, China also

agreed to two separate safeguard mechanisms

designed to allow WTO members to cope with

market disruptions caused by increasing

economic integration with China. The first mechanism permits a China-specific safeguard and can

be applied to any product being imported from

China. The second mechanism applies specifically to textiles and apparel products. At the end

of 2003, the Administration took action under

the textile safeguard mechanism for three categories of products being imported from China.

The Administration will continue to be ready to

use all available mechanisms, including the

China-specific safeguards when the facts of a

particular case warrant.

Meanwhile, as China continued to pursue the

implementation of its WTO commitments in

2003, China’s second year of WTO membership,

a number of positive developments occurred.

III. BILATERAL AND REGIONAL NEGOTIATIONS | 161
China began to take steps to correct systemic

problems in its administration of the tariff-rate

quota (TRQ) system for bulk agricultural

commodities, largely in response to high-level

engagement by the Administration. It relaxed

certain barriers to soybean trade that allowed

U.S. exporters to achieve record sales. It reduced

capitalization requirements in certain financial

services sectors. It opened up the motor vehicle

financing sector. It solved outstanding concerns

that had prevented China’s membership in 

the WTO’s Committee of Participants in 

the Expansion of Trade in Information 

Technology Products.

Despite these gains, 2003 also proved to be a year

in which China’s WTO implementation efforts

lost a significant amount of momentum. In a

number of different sectors, including some key

sectors of economic importance to the United

States, China fell far short of implementing its

WTO commitments, offsetting many of the gains

made in other areas. Indeed, institutionalization

of market mechanisms still remains incomplete,

and intervention by Chinese government officials

in the market is common. In many instances,

China has sought to deflect attention from its

inadequate implementation of required systemic

changes by managing trade in such a way as to

temporarily increase affected imports from vocal

trading partners, such as the United States.

China’s WTO implementation efforts, it should

be noted, have taken place against a challenging

political and social backdrop. In 2003, China

underwent a major leadership change, passed

through a harrowing national SARS epidemic,

undertook a sizeable restructuring of the government’s economic and trade functions, and

confronted a host of dislocations inherent in its

transition from a planned economy to a more

market-oriented economy. These factors may

have presented substantial challenges, but China

still needs to fulfill its WTO commitments. 

As highlighted in the 2002 Report, which covered

China’s first year of WTO membership, China’s

efforts were most problematic in the areas of agriculture, services, enforcement of intellectual

property rights and transparency. Although we

have seen progress in some of these areas in 2003

as a result of high-level engagement, they still

remain areas of serious concern. 

At the same time, other areas of concern have

developed, such as China’s questionable use of

certain tax policies to favor domestic production.

This year has also seen an increasing use of industrial policies to encourage domestic industries at

the expense of imports from abroad or foreign

businesses operating in China. This latter

phenomenon is particularly apparent in the automotive sector, where a proposed industrial policy

threatens to undercut many U.S. industry gains in

China’s market. In addition, there are a number of

important commitments that will face implementation deadlines in 2004, with those involving

trading rights and distribution services being the

most critical. It will require vigilance by the

United States and other WTO members to ensure

China fulfills these commitments. 

As the slowdown in China’s WTO implementation efforts became evident in 2003, the

Administration stepped up its efforts to engage

senior Chinese leaders. Over the course of the

past year, President Bush emphasized the importance of China’s WTO obligations in meetings

with his counterpart, Hu Jintao, and with

China’s Premier, Wen Jiabao. United States Trade

Representative Zoellick made two separate visits

to China for talks on WTO implementation

matters with Premier Wen and with Vice

Premier Wu Yi. He also raised U.S. concerns

throughout the year with his Ministry of

Commerce (MOFCOM) counterpart, including

most recently at the October 2003 APEC meetings in Thailand. The Secretaries of Commerce

and Treasury made their own trips to China,

again carrying the message that China’s WTO

implementation was a matter of the highest

priority. Sub-cabinet officials from various U.S.

economic and trade agencies also met with their

Chinese counterparts in China, Washington and

Geneva to work through areas of concern,

including WTO implementation issues, on

numerous other occasions. 

162 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
In 2003, the Administration also utilized the

newly established sub-cabinet dialogue on WTO

compliance and other trade matters (the Trade

Dialogue), which brings together U.S. economic

and trade agencies and various Chinese ministries

and agencies with a role in China’s WTO implementation. Trade Dialogue meetings were

convened twice in 2003, once in February, led by

then Deputy United States Trade Representative

Huntsman, and later in November, led by Deputy

United States Trade Representative Shiner. The

Trade Dialogue meetings have proven to be effective in communicating specific trade concerns

and in serving as an early warning mechanism for

emerging trade disputes. 

A summary of the WTO compliance issues of the

most concern to the United States follows. For a

more detailed discussion, see USTR’s 2003 Report

to Congress on China’s WTO Compliance, dated

December 11, 2003.

Agriculture 

China’s potential as a market for U.S. agricultural

exports was a key factor in U.S. support for

China’s WTO accession and the grant of permanent normal trade relations status to China.

While China’s attempts to restrict certain agricultural imports have been an ongoing theme of the

first two years of China’s WTO membership,

high-level interventions by Administration officials have been able to contain much of the

commercial impact of these barriers, particularly

in 2003. Indeed, from January through September

2003, U.S. exports of soybeans climbed above

$1.2 billion—a record—and cotton exports, at

$337 million, were 478 percent greater than

during the same period in 2002. Many other agricultural products also fared well, as U.S. exports

to China totaled $2.9 billion from January

through September 2003, representing a 102

percent increase over the same period in 2002.

Again, however, increased sales alone are not

indicative of full WTO implementation. China

committed to make systemic changes designed to

create fairness, predictability and transparency in

agricultural trade. 

In 2003, China’s actual and threatened use of

unreasonable rules on biotechnology, most

notably in the case of soybeans, and questionable

sanitary and phytosanitary (SPS) measures have

continued to frustrate efforts of U.S. agricultural

traders to develop a consistent market for their

exports to China. While many affected U.S.

exports increased this year, in part because of

high-level interventions by Administration officials, systemic problems with the biotechnology

rules and China’s SPS administration continue to

cloud market access. These and other emerging

concerns, such as China’s apparent use of subsidies to promote certain agricultural exports, will

require continued engagement by the

Administration in order to prevent trade disruptions and ensure that China plays by the rules. 

China’s administration of TRQs for bulk agricultural commodities is another area that has caused

serious concern. Since China’s WTO accession,

the setting of sub-quotas, use of Catch_22 import

licensing procedures, allocation of TRQs in

commercially unviable quantities and lack of

transparency in TRQ allocation and management

have combined to limit what should be an

expanding market for U.S. exporters, particularly

in the case of cotton. In June 2003, however,

China agreed to address the United States’ most

pressing systemic concerns with China’s TRQ

system. Although the results of this settlement

will not be clear until shipments begin to flow in

early 2004, China has since taken steps to eliminate separate allocations for general trade and

processing trade, eliminate certain unnecessary

licensing requirements, and create a new mechanism for identifying allocation recipients. Due to

these developments, the United States decided

not to initiate WTO dispute resolution on this

issue in 2003.

Intellectual Property Rights 

In the year leading up to its WTO accession,

China did make significant improvements to its

framework of laws and regulations covering intellectual property rights. However, the lack of

effective IPR enforcement in China is a major

obstacle toward a meaningful system of IPR

III. BILATERAL AND REGIONAL NEGOTIATIONS | 163
protection. IPR problems are pervasive, covering

the widespread production, distribution and enduse of counterfeit and pirated products, brands

and technologies. Violations include the rampant

piracy of film, music, publishing and software

products, infringement of pharmaceutical, chemical, information technology and other patents,

and counterfeiting of consumer goods, electrical

equipment, automotive parts and industrial products. IPR infringements not only have an

economic toll, but also present a direct challenge

to China’s ability to regulate products that could

have health and safety implications for China’s

population and international consumers. While a

domestic Chinese business constituency is

increasingly active in promoting IPR enforcement, piracy and counterfeiting remain pervasive.

If significant improvements are to be achieved on

this front, China will have to close legal and

enforcement loopholes and devote considerable

resources, political will and high-level attention

to this problem. 

The United States has had an ongoing dialogue

with China on IPR matters for a number of years.

In the Administration’s view, keys to achieving

effective IPR enforcement will be for China to

lower thresholds for criminal prosecution,

increase criminal penalties for IPR violators to

deterrent levels, demonstrate a willingness to

increase prosecution and punishment of IPR

offenders, increase resources and devote more

training for enforcement throughout China, and

establish more effective communication procedures among relevant officials of China’s courts

and investigative units, the Supreme People’s

Procuratorate and China’s lawmaking bodies. 

In recent months, the Chinese leadership has

signaled a new resolve to address IPR enforcement issues. In October 2003, Vice Premier Wu

was appointed to head a Leading Group on IPR

issues, which should help to reduce bureaucratic

resistance and confusion on IPR enforcement

among the numerous Chinese government entities with responsibilities in this area. In remarks

following her appointment, she acknowledged

China’s IPR enforcement problem and explained

that China was paying increasing attention to IPR

enforcement, not just to implement its WTO

commitments but also to attract more foreign

investment as it opened up its market and to

accelerate China’s economic and social progress.

She pledged that China would intensify its IPR

enforcement efforts and penalize those who

commit IPR infringement. 

Services 

Concerns continued to arise in many service

sectors, principally due to transparency problems

and China’s use of capitalization and other

requirements that exceed international norms.

The United States and China have cooperated to

resolve some of these concerns, but progress has

been slow and uneven. Following bilateral

discussions, China did begin to take steps to

substantially reduce capitalization requirements

in the insurance sector. In some cases, such as

express delivery services, much progress was

made toward resolving regulatory concerns in

2002, but problematic measures have re-surfaced

in 2003 and remain under consideration. In other

cases, such as China’s implementation of its

commitments on branching by insurance companies, the United States and China remain at odds

despite a longstanding cooperative and otherwise

productive dialogue with China’s regulators. 

Value-Added Tax Policies 

China uses value-added tax (VAT) policies to

encourage domestic production in a number of

industrial and agricultural sectors. In the case of

semiconductors, China’s policy of providing VAT

rebates to domestic semiconductor producers

disadvantages U.S. exports and raises serious

WTO concerns. In the case of fertilizer, China

exempts from the VAT fertilizer that is primarily

produced domestically and that competes

directly with the principal U.S. fertilizer export,

another practice that raises serious WTO

concerns. The Administration will continue to

press China on these issues and will take further

appropriate actions seeking elimination of

China’s differential tax treatment, including

dispute resolution at the WTO, if necessary.

164 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Transparency

An area of cross-cutting concern continues to be

transparency. While some Chinese ministries and

agencies have taken steps to improve opportunities for public comment on draft laws and

regulations, and to provide appropriate WTO

enquiry points, China’s overall effort is plagued

by uncertainty and a lack of uniformity. Some of

China’s ministries and agencies seek selective

comment on proposed regulations and implementing rules from domestic Chinese interests,

while excluding participation from foreign businesses active in the China market. The

Administration is committed to seeking improvements in this area.

Trading Rights and Distribution Services

Ensuring the unrestricted rights of all Chinese

and foreign businesses to engage in importing

and exporting was a key WTO accession commitment obtained by the United States and other

WTO members, as was China’s commitment to

fully liberalize the distribution services sector. To

date, however, China has fallen behind in its

implementation of these commitments, which are

required to be phased in over the first three years

of China’s WTO membership. Foreign businesses, in particular, continue to be beset by a

variety of restrictions, which are undercutting

market access for the entire range of U.S. businesses active in the China market. With full

liberalization in these important areas required by

December 11, 2004, Administration officials are

actively engaged with their Chinese counterparts

in an effort to obtain China’s full compliance.

Conclusion

While the U.S.-China economic and trade relationship is growing rapidly, there are a number of

systemic concerns that remain, making further

improvements in that relationship problematic.

The Administration remains committed to

resolving the United States’ concerns through all

available means. The Administration’s preference

is to resolve those concerns through bilateral

consultations in a timely and effective manner. If

bilateral efforts are not successful, however, the

Administration is fully prepared to enforce U.S.

rights through other means, including dispute

resolution at the WTO.

9. Japan

The United States redoubled its efforts to promote

structural and regulatory reform in Japan,

improve market access for U.S. goods and 

services, and support the adoption and successful

implementation of pro-competitive policies

throughout the Japanese economy. The United

States has been encouraged by positive trends in

corporate and financial restructuring and

welcomes Prime Minister Junichiro Koizumi’s

continuing commitment to structural and regulatory reform. While the Japanese economy has

been showing encouraging signs of life, it remains

weighed down by non-performing loans and

deflation and is in need of additional reforms that

will address persistent structural rigidities, excessive regulation, and market access barriers.

Throughout 2003, the U.S. Government has been

working with the Government of Japan to

develop and implement concrete steps for Japan

to take to further open and deregulate its markets.

These measures are designed to help Japan revitalize its economy and generate sustainable

economic growth. 

In additional to bilateral approaches, the United

States relied on a wide range of regional and

multilateral fora in 2003, 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, including on agriculture and services, are well coordinated with our

bilateral agenda so that the various initiatives are

complementary and mutually reinforcing.

Overview of Accomplishments in 2003

U.S.-Japan Economic Partnership for

Growth

In 2003, the United States continued to place a

high premium on promoting much-needed regulatory reforms and obtained improved access for

U.S. goods and services in a number of areas.

Under the U.S.-Japan Economic Partnership for

III. BILATERAL AND REGIONAL NEGOTIATIONS | 165
Growth (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. While regulatory and

structural reform remains of paramount 

importance, the United States and Japan also

addressed new and lingering trade issues in a

variety of sectors. 

The following provides brief updates of each

component of the Partnership along with 

accomplishments achieved in 2003.

Subcabinet Economic Dialogue: Co-chaired by the

NSC/NEC and Japan’s Ministry of Foreign Affairs

(MOFA), the “Subcabinet” sets the tone and

direction of the Partnership, with Deputy/Vice

Ministerial level officials meeting on an 

annual basis to discuss a broad range of 

bilateral, regional, and multilateral issues.

Recommendations from these meetings are given

to the respective Governments for use in developing policy. At the third meeting of the

Subcabinet in April 2003 in Washington, participants covered a range of issues, including

deflation in Japan, establishment of Japan’s

Industrial Revitalization Corporation, the launch

of the Special Zones for Structural Reform, and

various regional and global issues. The next

meeting of the Subcabinet is expected to convene

mid-2004, coinciding with the 2004 annual

meeting of the Private Sector/Government

Commission, which is described below.

Private Sector/Government Commission: The

“Commission” is designed to better integrate the

U.S. and Japanese private sectors more fully into

the economic work of the two governments.

Private sector delegates from Japan and the

United States meet annually with the Subcabinet

to discuss issues of key importance to both countries. The 2003 Commission meeting was held in

Washington in April 2003 to address the topic

“Successfully Meeting Economic Challenges in

the 21st Century.” The private sector provided

recommendations for consideration by both

governments in four key areas: (1) corporate and

financial restructuring; (2) healthcare innovation; (3) corporate governance; and (4) trade and

investment. The Commission convened a 

follow-up meeting in October 2003, where the

two governments responded to the April 

recommendations.

Regulatory Reform and Competition Policy

Initiative: Co-chaired by USTR and MOFA, the

“Regulatory Reform Initiative” seeks to promote

economic growth and open markets by focusing

on sectoral and cross-sectoral issues related to

regulatory reform and competition policy. Under

this Initiative, the United States has made

concerted efforts to focus on issues the Koizumi

Administration has identified as important areas

for reform, such as telecommunications, information technologies, medical devices and

pharmaceuticals, energy, and competition policy.

Throughout 2003, Working Groups and a HighLevel Officials Group met to discuss reform

proposals that culminated in the Second Report

to the Leaders, which was conveyed to President

Bush and Prime Minister Koizumi on May 23,

2003. That report detailed numerous regulatory

reform measures that Japan had implemented or

would implement.

Investment Initiative: The Investment Initiative

addresses laws, regulations, policies, and other

measures intended to improve the climate for

foreign direct investment (FDI). Led by the U.S.

Department of State and Japan’s Ministry of

Economy, Trade, and Industry (METI), the

Investment Initiative meets regularly to resolve

investment issues and prepare a joint report for

the Leaders’ summit. Key topics discussed at the

most recent meeting in November 2003 in Tokyo

included mergers and acquisitions, and tax, labor,

and land policy. The 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. During the talks, the U.S.

private sector is given an opportunity to actively

participate and directly present their investment

concerns to the Government of Japan.

166 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Financial Dialogue: The Financial Dialogue

serves as a forum for the U.S. Department of

Treasury, and Japan’s Ministry of Finance (MOF)

and Financial Services Agency (FSA) to exchange

information on key macroeconomic and financial

sector issues, including non-performing loans. As

appropriate, the Report to the Leaders under the

Regulatory Reform Initiative includes progress in

financial sector liberalization achieved under this

Dialogue. The third meeting of this group was

convened in November 2003 in Washington.

Trade Forum: The Trade Forum, which is led by

USTR and MOFA, was created to foster focused

and substantive discussion on a wide-range of

sectoral trade issues of interest and concern to

both governments. It also serves as an “early

warning” mechanism to facilitate resolution of

emerging trade problems. Issues raised at the

second meeting of the Trade Forum in July 2003,

included agriculture, public works, and new U.S.

visa and passport regulations. The Trade Forum

meets at least once a year.

a. Regulatory Reform

The United States and Japan issued a Second

Report to the Leaders under the Regulatory

Reform Initiative in May 2003. In that report,

Japan agreed to undertake many important regulatory reform measures. 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 two

years of the Regulatory Reform Initiative, the

United States presented Japan on October 24,

2003, with 54 pages of recommendations calling

on Japan to adopt a wide range of regulatory

reforms. Consistent with the overall objective of

the Partnership, these recommendations include

reform measures intended to help Japan return to

sustainable growth and open markets.

Furthermore, the United States placed a special

emphasis on issues that Japan has identified as

priorities for reform.

The October 2003 recommendations presented to

Japan 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 an annual report to the President and

Prime Minister in mid-2004 detailing the progress

made under this Initiative, including specific

measures to be taken by each Government.

Highlights of the Second Report to the Leaders

and key reform recommendations submitted in

October are as follows: 

i. Sectoral Regulatory Reform

Telecommunications: The establishment of a procompetitive telecommunications services market

in Japan is the primary focus of the United States

in pursuing regulatory reform for this sector.

However, Japan’s telecommunications regulator,

the Ministry of Public Management, Home

Affairs, Posts and Telecommunications

(MPHPT), 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.

In this environment, the inability of competitive

telecommunications carriers to make inroads into

NTT’s control of 98 percent of subscriber 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 $145 billion telecommunications market,

one of the world’s largest.

The May 2003 Second Report to the Leaders highlighted measures taken by Japan to promote

further competition in this sector. These measures included proposed revision of the

Telecommunications Business Law (TBL) to

abolish the Type I (facility-based) and Type II

(others) business categories and streamline

III. BILATERAL AND REGIONAL NEGOTIATIONS | 167
various requirements for competitive carriers.

(The revised TBL was eventually passed by the

Diet in July 2003.) The report also clarified that

NTT East and West will be required to file reports

documenting their compliance with conditions

attached to the approval of new business offerings, such as interprefectural Internet Protocol

(IP)-based services. In the area of mobile communications, the report indicated slow and steady

progress towards resolving the issue of whether

fixed carriers should have the right to set user

rates for termination of their calls on mobile

networks. Furthermore, the report noted that

NTT DoCoMo, designated since 2002 as a “dominant carrier,” reduced its interconnection rates by

5 percent compared to the previous year. During

talks in the Telecommunications Working Group,

the two governments explored emerging issues by

inviting experts from the government and private

sector to share their views about the developing

IP telephony market, which is expected to have a

significant impact on competition.

However, competitive carriers in Japan suffered a

setback when in April 2003 MPHPT announced

its approval for a 12 percent increase in the rates

charged to wireline carriers by NTT East and

West for calls transferred at regional switches.

This increase was based on a revision of the

methodology for calculating the cost of interconnection. The same formula allowed a 3 percent

decrease for local switches, resulting in an

average increase of 5 percent. These rates will be

in effect for two years. MPHPT maintained that

the increase was necessary due to NTT’s declining

traffic and hence, their declining revenues. In

meetings of the Telecommunications Working

Group, as well as the public comments submitted

to Japan throughout the revision process, the

United States pressed Japan to rectify the flaws in

the methodology, such as the inclusion of nontraffic-sensitive (NTS) costs and the uniform rate

for both regional carriers despite widely varying

costs for the East and West regions. In the second

Report to the Leaders, Japan promised to address

these issues as it reviews the methodology for

rates which will be applied from 2005.

In the October 2003 Regulatory Reform submission, the United States urged Japan to take bold

steps to improve competition in this sector,

including: follow through on deregulation of

competitive carriers under the new TBL;

strengthen regulatory independence, transparency, and accountability; reinforce dominant

carrier safeguards; conduct an objective and

transparent review of interconnection rates; and

investigate mobile termination rates to ensure

reasonable rates and competitive neutrality. In

addition, the U.S. proposed to continue inviting

experts to the Telecommunications Working

Group to provide information about emerging

communications technologies. The United States

recommendations were discussed at the first

meeting of the Telecommunications Working

Group, which took place in November 2003 in

Tokyo. Under the auspices of the Working

Group, guest speakers provided information

about recent developments in RFID (Radio

Frequency Identification) and its implications

for spectrum policy.

Information Technologies: The primary objective

of the Information Technologies (IT) Working

Group under the Regulatory Reform Initiative is

to work with Japan to establish a vibrant and

competitive IT sector that can benefit both our

economies, as well as provide global leadership in

this area. Although Japan’s electronic commerce

(e-commerce) market is one of the largest in the

world, its tremendous potential for growth

remains unfulfilled because the IT sector is

burdened by regulatory and other barriers. Japan

has taken significant steps toward, and continues

to make progress on, realizing its ambitious plan

to become a global IT leader. In 2003, recognizing

that IT infrastructure had developed significantly

as a result of its efforts, the Japanese Government

drafted and released an update of its “e-Japan

Strategy,” which marked a shift toward more

heavily promoting the utilization of IT. Even so,

the Japanese Government itself acknowledged

through the measures proposed in the “2003 eJapan Priority Policy Program” that legal and

other barriers that hinder growth in the IT sector

persist. As Japan responds to the challenges that

168 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
lie ahead in this pivotal sector, the U.S.

Government is working with Japan to establish a

regulatory framework that ensures competition,

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 IT-related businesses and ecommerce, and thus provide significant

opportunities for U.S. firms and their leading

technology products and services in a market that

is expected to reach nearly $125 billion by 2005.

Having entered its third year in fall 2003, the IT

Working Group has been a very cooperative and

constructive dialogue for advancing these goals. 

Throughout 2003, discussions in the IT Working

Group focused on protecting intellectual property; removing regulatory and non-regulatory

barriers to e-commerce; promoting e-commerce

via private-sector self-regulatory mechanisms

and technology-neutral, market-driven solutions; and expanding IT procurement

opportunities. The recommendations also

included a proposal for a cooperative effort in the

area of IT-based education. Japan has in turn

agreed to take significant steps to promote

growth in the IT sector. The specific measures

Japan has taken are summarized in the May 2003

Second Report to the Leaders under the

Regulatory Reform Initiative. 

With regard to strengthening the protection of

intellectual property, Japan passed legislation

amending the Copyright Law to extend the term

of copyright protection for cinematographic

works from 50 to 70 years, which will go into

effect in early 2004. In addition, Japan passed

legislation which strengthens the enforcement of

copyright protection by alleviating the burden of

proof on rightholders to establish infringement

and the amount of damages in copyright infringement cases. Japan also established the Intellectual

Property Strategy Headquarters to implement

Japan’s “IP Strategic Program” that will include

measures designed to meet the challenges of

strengthening the protection and enforcement of

intellectual property rights in the digital age.

Japan also took steps to increase user confidence

in e-commerce by confirming that current and

future revisions to the regulations allowing the

use of electronic signatures will always maintain

technological neutrality. 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.

Japan also enhanced opportunities for e-education technology providers by holding two forums

with the United States that promoted IT solutions

in primary education. 

In addition, Japan recognized the important role

of e-government in promoting growth in the IT

sector by ensuring that all ministries will adopt

concrete measures to ensure non-discriminatory,

transparent, and fair procurement of information

systems, and by expanding the use and availability of interactive online procurement systems.

Japan also agreed to jointly hold with the U.S.

Government a high-level U.S.-Japan government/private sector network security forum to

raise awareness of key issues, highlight best practices, and strengthen public-private partnerships

in promoting network security. This forum took

place in September 2003, at which time the

governments issued the “U.S.-Japan Joint

Statement on Promoting Global Cyber Security,”

which emphasized the important roles the U.S.

and Japan play as global leaders in this area. 

Building on these accomplishments and the

progress achieved over the past year, the United

States made several recommendations in the

October 2003 Regulatory Reform submission to

reinvigorate Japan’s IT sector. These recommendations included removing regulatory and other

barriers, strengthening the protection of digital

content, promoting the use of e-commerce in the

public and private sectors, promoting network

security, and facilitating IT procurement reforms.

An overarching objective of this year’s IT Working

Group, incorporated throughout the specific

recommendations, is to promote and expand

private-sector input and the use of public

comment opportunities in the Japanese policyIII. BILATERAL AND REGIONAL NEGOTIATIONS | 169
making and regulatory processes. Specific recommendations include removing existing barriers

that impede business-to-business and businessto-consumer e-commerce, such as allowing

non-attorneys to provide online mediation and

arbitration services for profit (Alternative Dispute

Resolution). The U.S. submission also stressed the

importance of transparency and coordination

among ministries in implementing the Law on the

Protection of Personal Information (“Privacy

Law”), and sought assurance that companies,

particularly those in e-commerce, would not be

overly burdened in complying with the law

(privacy protection). 

With regard to strengthening the protection of

intellectual property, the United States made

several recommendations to strengthen the

protection of digital content and the enforcement

system against infringement. These recommendations include adopting a statutory damages system

and extending Japan’s terms of copyright protection for sound recordings and all other works

protected by Japan’s Copyright Law. To promote ecommerce use, the United States has urged Japan

to support private sector self-regulatory mechanisms for privacy and Alternative Dispute

Resolution, as well as to ensure that laws

governing electronic transactions are technologyneutral. The United States has also called on Japan

to support fair and open procedures for e-government procurement by ensuring transparency,

efficiency, security, and private sector-led innovation. The United States conveyed and discussed

these recommendations in detail during the first

round of talks of the IT Working Group, which

took place in November 2003.

Energy: Japan took a major step forward in 2003

towards liberalizing its energy sector. In June of

this year, the Japanese Diet passed sweeping legislation that will lead to a further liberalization of

Japan’s energy sector (the third largest in the

world after the United States and China) and

should bring the government’s regulation of utilities substantially closer to practices in other

developed countries. This legislation paves the

way for expanding liberalization in the retail electricity sector from 26 percent to 63 percent of the

market by 2005 and expanding liberalization in

the retail gas sector from 40 percent to 50 percent

of the market by 2007. Importantly, as Japan

developed this legislation, it provided several

opportunities for public comment, fostering the

kind of investor confidence that is so important to

maintaining a stable, competitive energy market.

A truly competitive Japanese energy sector will

spur domestic economic growth and increase

opportunities for U.S. firms to produce, sell, and

trade energy products and services in Japan’s electricity and gas markets. It will also provide

opportunities for increasing U.S. exports to

Japan’s electrical generation equipment market.

The energy section of the Second Report to the

Leaders concluded in May previewed many of key

elements contained in the energy reform legislation that won Diet approval a month later. For

example, to foster reliability and transparency in

the transmission/distribution electricity sector,

vertically integrated electric utilities are prohibited from using transmission information to

disadvantage third-party generators. In addition,

to prevent cross-subsidization of other utility

operations, transmission/distribution accounts

must be separate from generation and sales

accounts. Players in the transmission/distribution

sector are also prohibited from discriminating

against other electricity sector participants.

Furthermore, Japan will establish a neutral transmission system organization intended to create

fair and non-discriminatory rules for the transmission and distribution of electric power.

Important reform legislation measures to improve

the natural gas supply were also previewed in the

Second Report to the Leaders, such as: providing

non-utilities with eminent domain to construct

gas supply pipelines; giving third parties access to

non-utility as well as utility gas supply pipelines;

ensuring fair and transparent gas transportation

service through accounting separation of transmission from sales, information firewalls, and

prohibition of discrimination against third

parties. To facilitate fair negotiations between

owners and users of LNG facilities, Japan will also

170 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
be issuing joint METI/JFTC guidelines on acceptable practices.

Furthermore, in the Second Report to the

Leaders, Japan recognized: (1) that the effectiveness of the new reform legislation in ensuring a

fair, efficient, and stable energy market depends

on vigilant market oversight; and (2) the importance of an enforcement mechanism equipped

with the number of staff, expertise, and independence necessary to perform this task.

With passage of the energy reform legislation,

Japan has established an important framework for

future liberalization. The focus in Japan is now on

creating detailed implementing ordinances and

regulations that should lead to a genuinely

competitive market, increase efficiency, and

improve the environment for investment in line

with the aims of Japan’s energy reform law.

Accordingly, the United States made numerous

recommendations regarding implementation

measures in its October 2003 Regulatory Reform

and Competition submission to Japan.

The United States, for example, recommended

that Japan take concrete measures to ensure that

the Electricity and Gas Market Divisions of METI,

which regulate the energy sector, are free from

undue political and industry influences. In addition, to ensure adequacy of infrastructure in both

the electricity and gas sectors, the United States

recommended that Japan undertake studies to

evaluate whether there is enough interconnection

capability needed to support a competitive power

market and to establish incentives for investment

in new gas pipeline construction in regions where

the network is not sufficiently developed.

Specifically in regard to the electricity sector, the

United States recommended that if the

accounting separation and information firewalls

Japan plans to establish to prevent competitive

abuses prove inadequate, METI should adopt

operational unbundling to ensure a fair and transparent market. Meaningful government oversight

of the neutral transmission system organization is

also crucial, and transmission rules should be

revised to facilitate greater access to transmission

lines for all market participants.

As for the gas sector, the United States urged

Japan to establish and strengthen a mechanism 

to conduct more rigorous rate approval 

examinations and audits and conduct neutral and

fair ex-post facto monitoring. The United States

also recommends that Japan promote construction and improvement of pipelines for gas supply

use by parties other than general gas utilities and

to establish detailed rules to ensure non-discriminatory negotiations between LNG terminal

owners and third-party users of LNG terminals.

The United States commends Japan for its recent

efforts to further liberalize its electricity and gas

sectors. Much still needs to be done, however, as

energy prices in Japan are still the highest among

OECD members. 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. With this in mind, the United States

considers the above reform recommendations as

conducive to foster Japan’s economic recovery,

help U.S. firms compete in the Japanese electricity and gas markets, and create new

opportunities for competitively priced, highquality exports to the Japanese market for

electrical generation equipment. Based on these

recommendations, further discussions on energy

issues took place in November 2003 in the Energy

Working Group.

Medical Devices and Pharmaceuticals: Japan’s

regulatory and reimbursement pricing systems

slow the introduction of innovative U.S. medical

devices and pharmaceuticals in Japan. Japan has

recently decided to carry out major reform of

these systems that will become fully effective in

April 2005. The United States has advocated such

reform to speed the introduction of new devices

and drugs and to create incentives for the development of innovative products. Although Japan

recognizes the importance of reform, its government has in recent years discouraged innovation

by significantly cutting the reimbursement prices

III. BILATERAL AND REGIONAL NEGOTIATIONS | 171
for devices and drugs. The price cuts are part of

Japan’s response to the strain on its health care

budget arising from an aging society where the

number of workers supporting each retiree is

declining steadily. 

The U.S. Government believes that the Japanese

Government’s proposed health care reform is a

first step toward confronting underlying problems, although Japan must move expeditiously to

implement its plans. Japan’s proposed reform

focuses on transformation of the insurance

system, creation of a new health insurance

program for the elderly, and a review of the

medical fee system. 

The U.S. Government has welcomed the Japanese

Government’s comprehensive approach to

pricing reform, as outlined in Japan’s “Industry

Vision” proposals to improve the competitiveness

of its medical device and pharmaceutical sectors.

Japan pledges in the Industry Visions to discuss

with industry the health insurance coverage of

devices and drugs and to implement pricing policies that recognize the value of innovation. The

United States was further encouraged by Japan’s

statement in the May 2003 U.S.-Japan Second

Report to the Leaders that it will encourage innovation by implementing the Industry Visions so

that better devices and drugs are made available

faster. The U.S. Government hopes to make

further progress on these issues through the

Regulatory Reform Initiative, which is part of the

U.S.-Japan Economic Partnership for Growth. In

October 2003, the U.S. Government presented its

device and drug proposals to Japan under the

Initiative and discussed them at a meeting of the

Medical Devices and Pharmaceuticals Working

Group in Tokyo. The Working Group meets

under the framework of both the Initiative and

the 1986 U.S.-Japan Market-Oriented, SectorSelective (MOSS) Agreement. The U.S. proposals

encouraged Japan to make full use of pricing

rules, including premium-pricing rules, to reward

and stimulate advances in drug research and

medical technology. The United States also urged

Japan to abolish rules that penalize or fail to

recognize the value of innovation. In addition, the

United States requested that Japan provide U.S.

industry with opportunities to provide input and

with access to consultations before any change in

reimbursement policy such as proposed changes

in the Foreign Price Adjustment rule. 

The Japanese Government has also taken recent

steps that could lead to faster deregulation of

medical devices and pharmaceuticals, which

would speed the introduction of innovative

products in Japan. Japan has revised its

Pharmaceutical Affairs Law to create a new

agency to oversee premarketing and approval 

of drugs and devices. The U.S. Government 

has welcomed the creation of the new

Pharmaceuticals and Medical Devices

Organization (PMDO), as it is expected to make

approvals of drugs and devices faster. However,

the United States has urged Japan to implement

performance measures to ensure that steady

progress is made toward faster approvals. In the

Second Report to the Leaders, Japan said it would

undertake major regulatory reform and continue

discussing its plans with major stakeholders,

including U.S. industry. More recently, in the

October 2003 Regulatory Reform Initiative

submission, the U.S. Government encouraged

Japan to speed approvals and maintain a dialogue

with industry. The United States also requested

that Japan establish a user fee system that is

based on performance and transparency, which

should lead to faster and better systems for

approvals and postmarketing safety.

Financial Services: The Government of Japan has

implemented most of its “Big Bang” financial

deregulation initiative. Those reforms aimed to

make Tokyo’s financial markets “free, fair and

global” by 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.

172 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
There was additional progress in financial sector

deregulation in 2003. The requirement for physical certificates for Japanese Government Bonds

(JGBs) and corporate debentures was eliminated

on January 6, 2003. This followed the elimination

of the requirement for physical certificates for

commercial paper on April 1, 2002. 

In addition, on May 23, 2003 the Diet passed new

securities market legislation to diversify corporate stock and bond distribution channels and

increase the number of intermediaries. This legislation reduces minimum capital requirements for

securities companies, investment trust management companies and investment advisory

companies. On the same day, the Diet also passed

major shareholder rule revisions designed to

prevent abuse by brokers. The new rules

authorize the Financial Services Agency (FSA) to

inspect major shareholders of brokerage houses,

including non-financial corporations and individuals. Finally, on May 30, 2003, the Diet passed

legislation introducing a new sales agent system

to permit CPAs, licensed tax accountants, and

financial planners to sell corporate stocks to

investors as agents of security brokerage houses.

The entire securities market reform package will

take effect on April 1, 2004. 

Japan also amended the Postal Services

Corporation Law in July 2003 to allow private

investment advisory companies to provide fund

management services for Postal Savings (Yucho)

and Postal Life Insurance (Kampo). This is a significant breakthrough for foreign investment firms

doing business in Japan, who now have the opportunity to manage funds that constitute a significant

percentage of individual savings in Japan. 

The United States welcomes Japan’s progress in

increasing the efficiency and competitiveness of

its financial markets. In its October 2003 recommendations for regulatory reform regarding

financial services, 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 include: (1) strengthening disclosure rules for investment trust

performance by setting standards based on global

best practices; (2) taking the measures necessary

to make the No-Action Letter process an effective

means for promoting regulatory transparency in

the financial services sector; (3) increasing the

defined contribution (DC) pension plan 

contribution limits; (4) granting regulatory

approval to prototype plans for DC pensions; (5)

further improving rules governing Money

Management Funds (MMFs); (6) revising the ENotification Law to include lenders subject to the

Moneylending Business Law; (7) working closely

with the private financial services community to

review current reporting and record-keeping

requirements; and (8) subjecting any legislative

action for the financial services activities

proposed for the Postal Public Corporation to full

public notice and comment.

These issues were discussed on November 

5, 2003, at the third annual meeting of the U.S.-

Japan Financial Services Working Group, a

component of the Financial Dialogue of the 

U.S.-Japan Economic Partnership for Growth.

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 2003

aimed at strengthening its antitrust enforcement

regime. The independence and neutrality of the

Japan Fair Trade Commission (JFTC), for

example, was protected by changing its organizational status to an independent agency under the

Cabinet Office. The JFTC also began reviewing the

III. BILATERAL AND REGIONAL NEGOTIATIONS | 173
possible overhaul of the Antimonopoly Act (AMA)

to strengthen the JFTC’s enforcement effectiveness,

examining such issues as an increase in the level

and scope of administrative fines (surcharges), the

introduction of a corporate leniency policy,

bolstered JFTC search and investigative powers,

lengthened statute of limitations, and revised criminal accusation procedures. In addition, a number

of major steps were taken to address Japan’s bid

rigging problem. The Bid Rigging Involvement

Prevention Act, a law aimed at preventing the

complicity of government officials in bid rigging,

came into effect in January 2003, and the JFTC

immediately used its new powers to prevent a

recurrence of bureaucrat-led bid rigging on public

works projects in Hokkaido. The Ministry of Land,

Infrastructure and Transport (MLIT) supported

this new law by publishing on its website a bid

rigging countermeasures booklet for use by central

government, local government, and quasi-governmental commissioning entities, and by

introducing a new contract clause specifying preestablished damages that must be paid by

contractors that commit bid rigging.

In its October 2003 Regulatory Reform submission, the United States recommended that Japan

enhance deterrence of AMA violations by

increasing the level of administrative fines

substantially, bringing more criminal prosecutions, and encouraging judges to impose tougher

sentences on AMA violators. The United States

also urged Japan to strengthen the JFTC’s enforcement capabilities, including by introducing a

corporate leniency program, giving the JFTC

enhanced investigation powers for criminal

matters, expanding the staff and budget of the

JFTC, extending the statute of limitations for

AMA violations, and improving the JFTC’s

economic analysis capabilities. The United States

also recommended that Japan take further measures to address prolific bid rigging, including by

prohibiting bid rigging companies from participating in new government contracts for at least

nine months, and publicizing the full results of

investigations into bureaucrat-led bid rigging at

the central or local government level.

Furthermore, the submission urged that Japan

implement measures to permit the JFTC to

enforce the AMA against incumbent dominant

firms that engage in anticompetitive exclusion of

new entrants in deregulated industries. These

recommendations were discussed in detail at a

meeting of the Cross-Sectoral Working Group in

November 2003.

Transparency and Other Government Practices:

The United States continues to press Japan to

make its regulatory system more transparent and

accessible. While some progress has been

achieved in this regard, the system continues to

lack the transparency and accountability necessary to ensure that all players have equal access

to government information and to the policymaking process. Reforms that increase the

transparency of the regulatory process and make

the bureaucracy more accountable work to shift

greater control to the general public and help

curb burdensome discretionary powers of the

bureaucracy. Such reforms also help level the

playing field for foreign firms, reducing the

special advantages traditionally enjoyed by

Japan’s domestic firms. 

Japan took several steps in 2003 to increase the

transparency and accountability of its regulatory

system. As specified in the Second Report to the

Leaders, Japan made a number of pledges to

improve its Public Comment Procedure (PCP) in

an effort to make it more effective and to

encourage more widespread use of this potentially important mechanism. The Ministry of

Public Management, Home Affairs, Posts and

Telecommunications (MPHPT), for example,

requested that all ministries and agencies work

to gather a broader range of opinions and information through the PCP when formulating,

amending, or repealing a regulation by allowing

for sufficiently long public comment periods.

Japan is also working to enhance its e-government portal (http://www.e_gov.go.jp/) to, in part,

provide greater information on the PCP. In a

related development, some ministries and agencies have recently begun to solicit public

comments for draft plans that act as the basis 

for legislation.

174 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
In addition, the Second Report to the Leaders

included a lengthy section on the new initiative in

Japan to encourage deregulation at the local level

within Special Zones for Structural Reform. To

date, Prime Minister Junichiro Koizumi has

approved more than 250 of these zones since the

first zones were established in April 2003. This

new, innovative approach to deregulation and

structural reform can provide important opportunities for Japan to return to sustainable growth. In

the Second Report to the Leaders, Japan pledged

to continue to take steps to ensure transparency

in the development of the zones, in the zone

application process, and in establishing procedures to implement the zones. Japan also said that

it would encourage foreign firms, including U.S.

companies, to submit zones ideas and would

assist them in the process.

Building on these measures, the United States

recommended in its October 2003 Regulatory

Reform and Competition Policy submission that

Japan undertake additional improvements in its

regulatory system to support its reform overall

efforts and ensure that all actors have the same

access to government information and the policymaking process. The United States urged Japan

to: (1) improve the effectiveness of the Public

Comment Procedure (PCP) by requiring a

minimum 30-day comment period (repeated

MPHPT surveys show that just half of the solicitations for comments provide for less than 30

days); (2) take additional steps to facilitate public

input into draft legislation while it is being developed by the government before it is submitted to

the Diet; (3) ensure that the process to restructure

and privatize public corporations is transparent

and that the private sector has opportunities to

provide input; (4) implement measures and practices to strengthen the No-Action Letter system,

which was established two years ago and has been

woefully underutilized; and (5) continue to select

and establish the Special Zones for Structural

Reform in a transparent manner and place a focus

on expanding market-entry opportunities. Based

on these recommendations, further discussions

on transparency issues took place in November

2003 during the inaugural meeting this year of

the Cross-Sectoral Working Group.

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.

Japan took some major steps in 2003 toward

modernizing its legal system. Most significant was

amendment of the law regulating foreign lawyers

to substantially eliminate restrictions on the

freedom of association between foreign lawyers

and Japanese lawyers. Once those amendments

come into effect in late 2004 or 2005, foreign

lawyers will be able to enter into partnership

arrangements with Japanese lawyers and will be

able to hire Japanese lawyers as associates. Law

firms composed of U.S. and Japanese lawyers will

be able to operate under a single name, and the

members will be able to determine the profit allocation among themselves freely. Japan also made

progress in the area of judicial system reform,

including implementation of measures to reduce

by 50 percent the time required to complete court

trials, and examining concrete and wide-ranging

issues aimed at strengthening judicial oversight of

administrative agencies.

In its October 2003 submission, the United

States urged Japan to ensure that the amendments allowing freedom of association between

foreign and Japanese lawyers come into effect by

September 2004. The United States also called on

Japan to allow foreign lawyers to form professional corporations and to establish branch

offices throughout Japan, just as Japanese

lawyers are currently permitted to do, and to

allow foreign lawyers to count all of the time they

practice in Japan toward the three-year experience requirement to qualify as a licensed foreign

III. BILATERAL AND REGIONAL NEGOTIATIONS | 175
legal consultant. The United States also urged

Japan to modify standing requirements for judicial review of administrative acts so that all

persons who suffer injury as a result of a regulatory action may file an appeal with the courts.

These recommendations were discussed in more

detail at a meeting of the Cross-Sectoral Working

Group in November 2003.

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

will also benefit from additional measures to

improve corporate governance, since good corporate governance systems will 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 whistleblower protections.

Japan took initial steps in 2003 to introduce

modern merger techniques into Japanese law by

revising the Industrial Revitalization Law to

permit triangular mergers and cash mergers in

restructuring plans authorized by the government (see Investment section). Japan also took

steps to increase corporate transparency by

requiring disclosure of the name, career summary,

corporate share-holdings, and nature of their relationship with the company of each member of the

board, including executive committee members.

In its October 2003 Regulatory Reform submission, the United States encouraged Japan to build

on these initial steps by taking further measures

to improve commercial law and corporate governance in Japan. Specifically, the United States

recommended that Japan introduce modern

merger techniques into its commercial law for

general use and that it improve corporate governance by requiring pension fund and mutual fund

managers to vote proxies for the benefit of fund

beneficiaries and to disclose voting policies and

actual voting records. The United States also

urged Japan to introduce legislation to protect

whistleblowing employees who report violations

of securities laws or regulations from retaliation.

Further, in order to promote the efficient and

economical resolution of commercial disputes,

the United States recommended that Japan create

an alternative dispute resolution (ADR) regime

that permits non-lawyers to act as arbitrators or

other neutral roles in ADR proceedings and that

allows ADR rules, processes, and standards to be

flexibly tailored by the parties to the proceedings.

These recommendations were discussed in more

detail at a meeting of the Cross-Sectoral Working

Group in November 2002.

Distribution: Japan’s 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 continues to

urge Japan to modernize 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 in the

context of 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. 

In the Second Report to the Leaders, the Japanese

Government noted the creation of 12 “international physical distribution special zones” in

which overtime charges are reduced and the

customs framework for overtime clearance is

improved. In addition, on April 1, 2003, the

Japanese Customs and Tariff Bureau (CTB)

launched a system that enables non-residents to

176 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
file import duty declarations, etc., and control

inventory. Additionally, the CTB committed to

examining the feasibility of expanding the 

U-Clearance system.

U.S. reform recommendations to the Japanese

Government in October 2003 recognized that

Japan has implemented, and plans to implement,

additional positive measures to simplify and 

automate customs processing, but contained

several further recommendations dealing with

customs clearance. The submission again recommended that Japan lower landing fees at Narita

and Kansai international airports by formulating

the level of landing fees in an open and transparent manner, using internationally accepted

accounting standards, and basing those fees on

the actual cost of providing services. In an effort

to improve consumer convenience and expand

consumer choice, the United States made a

number of recommendations aimed at increasing

the acceptance of credit and debit cards in Japan,

and enhancing the security of transactions made

with those cards. The U.S. Government continues

to monitor progress on customs processing

procedures and the fair and uniform implementation of the Large Store Location Law. In

November 2003, the Cross-Sectoral Working

Group met to discuss these and other issues. 

b. Bilateral Consultations

i. Insurance

Under the 1994 and 1996 bilateral insurance

agreements, Japan took significant steps to deregulate its insurance market. These steps included

sweeping measures that resulted in 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. Issues of serious concern to U.S.

insurers remain that remain include competitive

concerns related to Kampo (Japan’s postal insurance entity), the review and reform of the Life

Insurance Policyholder Protection Corporation

(PPC), and unregulated and regulated insurance

cooperative (kyosai).

Bilateral consultations under the two insurance

agreements were held in Tokyo in November

2003. The talks, which included the participation

of the National Association of Insurance

Commissioners, covered a broad range of issues

that had been highlighted by U.S. industry as key

areas of concern. 

Under Japan Post, the new public corporation

established in April 2003, Kampo continues to

provide a range of life insurance products that

compete directly with the private sector. In

November, Kampo’s regulatory body, the Ministry

of Public Management, Home Affairs, Posts and

Telecommunications (MPHPT) regrettably

approved Kampo’s request to begin offering a

hybrid fixed-term/whole life product in the face

of opposition by the insurance industry and

Japan’s trading partners. The United States has

called for MPHPT to revoke its approval or for

Japan Post to refrain from introducing the

product until a level playing field is established in

Japan’s insurance market. The United States has

urged Japan to ensure that the process of determining the future of Kampo is conducted in a

fully open and transparent manner. The United

States has also urged Japan to consult and work

closely with both domestic and foreign insurers in

determining the appropriate approach to

reforming Kampo. 

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 to promptly convene the Financial

System Council to 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.

The United States views the FSA’s commitment to

conduct the review as essential and stressed that

the deliberations should be transparent and

should involve representatives of interested

parties, including foreign insurance companies.

III. BILATERAL AND REGIONAL NEGOTIATIONS | 177
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 and occupy substantial market share in

the Japanese insurance market. In order to create

a level playing field between kyosai and their

private sector competitors, the United States has

urged Japan to subject all kyosai to the same

laws, level of taxation, safety net contribution

requirements, reserve requirements, standards,

and regulatory oversight as their private 

sector counterparts.

The United States and Japan also discussed the

FSA’s implementation of recommendations to

streamline Japan’s product approval process and

increase needed personnel and technical

resources. In addition, the United States emphasized its concerns about the case agent system and

transparency, particularly “No-Action Letter”

procedures. The two countries also addressed a

number of new issues that have arisen as Japan

continues to restructure its financial system, such

as the expansion of sales of insurance by banks.

In addition to the annual consultations, the

United States utilizes the U.S.-Japan Regulatory

Reform Initiative to put forward several recommendations to promote further reform in Japan’s

insurance market. The United States made

specific recommendations to address the

concerns identified above for Kampo, the Life

PPC, Kyosai, and transparency in its 2003

Regulatory Reform submission to Japan. 

ii. Autos and Auto Parts

Improving access to the Japanese auto and auto

parts markets remains an important objective of

the United States. While there has been a trend

toward closer integration as well as important

technological advancements in the global automotive industry over the past several years, the

effect of these changes on market access and

competition in this sector remains unclear.

Unfortunately, Japan’s limited market access and

weak competitive environment have continued to

disproportionately hurt foreign vehicle and auto

parts manufacturers in Japan. The United States

remains disappointed that, after rising steadily in

1995 and 1996, sales of North American- made

vehicles have fallen for the last seven years, with

sales in 2003 expected to be substantially less

than in 1994. In an effort to contend with these

economic conditions and position themselves to

better compete in the future, U.S. auto companies

have continued to consolidate distribution

networks and rethink corporate strategies. The

auto parts sector also remains problematic: the

U.S. auto parts trade deficit with Japan increased

from a record level of $9.5 billion in 1997 to an

estimated $11.4 billion in 2003. 

In order to address barriers in and improve U.S.

companies’ access to the domestic Japanese automotive market and Japanese auto plants in the

United States, the United States and Japan established the Automotive Consultative Group

(ACG) in October 2001. The ACG serves as the

focal point for addressing lingering as well as

emerging issues in this key sector of both countries’ economies. More specifically, the group is

designed to assess trends in the industry based on

a series of trade and economic data on autos and

automotive parts to be provided by both countries and work to identify areas in which specific

action can be taken by Japan to address U.S.

concerns. The ACG met in January 2003 to

discuss deregulation (particularly with respect to

the automotive parts aftermarket), increasing

transparency in rules and regulations governing

the auto sector, and more rigorous application of

Japanese competition laws. Future ACG meetings

will be held annually in principle.

In addition to meetings under the ACG, the

United States is continuing to address broad

crosscutting issues impacting the automotive

sector under the Economic Partnership for

Growth, announced by President Bush and Prime

Minister Koizumi in June 2001. This includes

expanding opportunities for foreign investment,

increasing transparency, and promoting corporate restructuring in the Japanese economy.

178 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
iii. Government Procurement

Construction/Public Works: U.S. firms remain

largely excluded from Japan’s massive ($210

billion) public works market, obtaining far less

than one percent of projects awarded.

Discriminatory 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.

The discriminatory 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,

unreasonable restrictions on the formation of

joint ventures, and the structuring of individual

procurements so they fall below thresholds established in international agreements. The United

States is concerned about these practices, which

seriously impede the ability of U.S. companies to

participate in Japan’s public works sector. 

During the Trade Forum in July 2003, 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 and Japan agreed to hold expert-level meetings on construction issues parallel to the Trade

Forum, so bilateral sectoral concerns could be

addressed in greater detail. The United States

welcomed the Japanese Government’s announcement of the “implementation of the mixed-type

procurement,” which allows companies to decide

whether to bid solo or as a joint venture. The

United States urged the Japanese Government to

use this practice for all projects. The United States

also encouraged Japan to increase the use of

Construction Management and Project

Management technology for all public works

projects and urged all commissioning entities to

use the fair, open, and non-discriminatory

procurement procedures of the Action Plan for

Urban Renewal and Private Finance Initiative

projects. In addition, the United States urged the

Japanese Government to ensure that the procurement procedures set forth in the 1991 U.S.-Japan

Major Projects Arrangement (MPA) are used for

all outstanding MPA projects. In October 2003,

Japanese private sector organizations hosted the

fifth 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 Private Finance Initiative projects.

iv. Investment

Prime Minister Koizumi’s January 2003 pledge to

double Japan’s cumulative FDI in the next five

years has led Japan to build on its earlier reforms

to encourage FDI. Changing Japanese attitudes

toward inward foreign direct investment (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. Although FDI

in Japan remains the lowest among OECD countries, investment has been rising in recent years,

especially in the banking/insurance, telecommunications, and machinery sectors. However, FDI

flows overall and in these sectors slowed in

JFY2002 (ending March 2003) and remained low

in early CY2003. FDI in JFY2002 was 2.19 trillion

yen ($20 billion at the current exchange rate of

$1= 107.6 yen), up slightly from JFY2001 but

down almost one third in yen terms from the

JFY2000 peak. U.S. direct investment into Japan

mirrored overall trends, declining in JFY2002 to

590 billion yen ($5.5 billion), almost 40 percent

from JFY2000 levels. Despite these declines,

current FDI flows into Japan are still far higher

than historical levels (pre-1999).

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

III. BILATERAL AND REGIONAL NEGOTIATIONS | 179
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, mergers and acquisitions.

Amendments to the Commercial Law now allow,

since April 2003, 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.

Despite the progress achieved over recent years,

government and business observers from both

countries recognize that much more remains to

be done to increase FDI in Japan, and the U.S. and

Japanese Governments have agreed to continue

to consult on investment issues. The U.S.-Japan

Investment Initiative, under the Economic

Partnership for Growth, sets forth a framework

for bilateral discussions on investment that highlights and resolves possible impediments. The

Initiative meets regularly throughout the year and

presents an annual report to the President and

Prime Minister on the year’s accomplishments.

During the talks, the U.S. and Japanese private

sectors are given an opportunity to actively

participate and directly present their investment

concerns to the Governments of Japan and the

United States. Businesses in both Japan and the

United States agree that two new bilateral agreements—an income tax treaty and a social security

totalization agreement—concluded in 2003 will

benefit investors in both countries.

v. Housing/Wood Products

Discussions with Japan in the housing/wood

products area are ongoing. The Building Experts

Committee and the Japan Agricultural Standards

(JAS) Technical Committees, which were set up

under the terms of the 1990 U.S.-Japan Wood

Products Agreement, met in Nagoya in October

2003 to discuss a number of housing/wood products-related issues, notably the new regulations

pertaining to indoor air quality that took effect

on July 1, 2003. Foreign manufacturers,

including many in the United States, have been

hard-pressed to meet the new requirements.

Although Japan announced the amendment to

the Building Standard Law in March 2002, 

information on the process to demonstrate

compliance was not made available until 

May 2003, which left manufacturers with less

than two months to have their products tested

and gain the necessary approval to allow their

continued use. Approval of the first U.S. testing

body is still pending. The United States put forth

several recommendations at the meeting in

October 2003 to facilitate recognition of overseas

test data. This will be extremely important in the

future as additional chemicals are regulated,

thereby potentially impacting more products.

The United States will be following up with Japan

in the coming months on this issue.

Restrictions on building size and designs, and

products still constrain the use of some U.S.

building products and systems in Japan that are

commonly used in the United States and elsewhere around the world, thereby limiting choice

for consumers and artificially inflating housing

costs. The United States continues to have

serious reservations about the transparency 

and basis of certain testing methodologies for

evaluating fire resistance.

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. 

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 small

percentage of U.S. rice ever reaches Japanese

180 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
consumers as an identifiable product of the

United States. Imports of U.S. rice under government-supervised tenders, for example, are

destined almost exclusively for government

stocks or re-exported as food aid. 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, however, sometimes 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 it would be subject to

a duty of 341 yen per kilogram, equivalent to

about 790 percent ad valorem.

Beef Safeguard Measure: On August 1, 2003,

Japan imposed an emergency tariff measure—a

safeguard duty, increasing the duty on imports of

chilled beef to 50 percent from the previously

applied rate of 38.5 percent. Japan is the United

States’ largest beef export market, purchasing an

average of nearly $1.2 billion worth of fresh,

chilled, and frozen beef from 2000 to 2002. The

average value of U.S. exports of chilled beef for

2000-2002 was $720 million. While acknowledging existence of the technical trigger for

imposing this measure, the United States

considers its use under the existing circumstances to be improper. The U.S. position is that

such measures were intended to aid domestic

producers confronted with import surges. This is

not the case in Japan, however, where 2003 beef

imports are recovering from severely depressed

2002 levels following the discovery of several

animals infected with Bovine Spongiform

Encephalopathy (BSE) in 2001. Imposition of

this safeguard threatens this recovery and harms

not only U.S. beef producers, but also a full range

of Japanese beef consumers, including the food

service, grocery, and restaurant industries.

The higher tariff is scheduled to be in effect until

March 31, 2004 (the end of the Japanese fiscal

year). The safeguard could be triggered again in

JFY2004 (for frozen or chilled beef) unless the

Government of Japan takes action to change the

safeguard provision in its annual tariff legislation.

Since the imposition of the tariff increase, the U.S.

Government has raised this issue repeatedly in

bilateral government-to-government meetings as

well as public fora in Japan. While the safeguard

measure remains in place, the United States will

continue to urge Japan to remove the safeguard

measure and return the tariff to its previous level.

Sanitary and Phytosanitary 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 these measures are

being imposed despite their inconsistency with

international standards and in the absence of

supportive science. 

This was the 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 found that these

requirements, ostensibly to protect Japanese

orchards against fire blight disease, did not have

a scientific basis and were not based on a valid

risk assessment. 

Another prime example is Japan’s fumigation

requirement on U.S. fruits and vegetables for

cosmopolitan pests, which are imposed despite

the fact that these are pests that 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 sometimes 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 this and other SPS concerns in appropriate

bilateral and multilateral meetings. 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 trade

commitments and promotes WTO consistent

policies that are based on sound science.

III. BILATERAL AND REGIONAL NEGOTIATIONS | 181
ii. Steel

Steel Issues are detailed in Chapter V.

iii. Flat Glass

Barriers to U.S. flat glass sales in Japan persist, in

contrast to the high market shares U.S. flat glass

manufacturers have gained in other industrialized

economies. Japan’s three domestic producers

constitute an oligopoly that exerts tight control

over distribution channels by, for example, maintaining extensive equity and financial ties to

distributors. In addition, Japanese flat glass manufacturers adjust prices, capacity and product mix

at virtually the same time, contributing to a lack of

competition in the market.

The United States has engaged Japan in 

discussions of these concerns in various bilateral

fora over the past decade, most recently in the

2003 Trade Forum held in July under the U.S.-

Japan Partnership for Economic Growth. During

the Trade Forum discussion, the U.S.

Government highlighted the continuing problems that prevent market entry, including the

need for tighter enforcement of rules against

anticompetitive behavior. 

The United States continues to urge Japan to

take steps to promote competition in and access

to its glass market. The United States also

continues to work with U.S. industry on ways 

to improve market access and enhance competition in this sector.

10. Taiwan

In 2003, 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.

a. Rice

The Taiwan government’s management of its rice

import system was particularly troublesome this

past year and required a number of substantive

consultations to achieve access for U.S. rice. In

late 2002, Taiwan announced modifications to its

rice import system without prior consultation

with the United States and other interested WTO

members. The United States consulted with

Taiwan as 2002 came to a close, but Taiwan’s

responses did not resolve concerns that the new

system would be more trade restrictive.

Subsequently, the United States, Australia, and

Thailand formally submitted an objection to the

WTO in January 2003. In addition, several rice

tenders were cancelled by Taiwan in 2003 due to

use of a ceiling price, which resulted in delayed

market entry. The United States engaged the

Taiwan government on numerous occasions in

2003 in an effort to resolve concerns related to the

existing rice import system and will continue to

do so in 2004. Taiwan is a leading Asian market

for U.S. rice exports and, despite problems associated with the rice tender process, U.S. suppliers

won a majority of the tenders conducted in 2003.

We look forward to continuing to work with the

Taiwan government to address remaining

concerns with its rice import system. 

b. Intellectual Property Rights

The level of intellectual property rights (IPR)

piracy in Taiwan remains at a very high level. U.S.

concerns were serious enough to warrant

continued placement of Taiwan on the Special 301

Priority Watch List for the third year in a row. After

the Taiwan authorities declared 2002 to be the

“Action Year for IPR Protection,” they implemented a “Comprehensive Three Year Action Plan

for IPR Protection” to cover the years 2003-2005.

While these were welcome steps, the United States

continued in 2003 to urge the Taiwan government

to further improve its enforcement and legal

framework for IPR protection. 

In June, Taiwan amended its copyright law which

addressed some U.S. concerns. However, several

important proposed revisions to the law were

modified or deleted by legislators before the

amendments were enacted. As a result, the United

States continued to request that the Taiwan

government submit for legislative approval these

182 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
outstanding revisions to the copyright law,

including Internet-related provisions such as

technological protection measures. 

As 2003 came to a close, there appeared to be

initial signs that Taiwan’s efforts to control piracy

are leading to a decrease in the incidence of end

user piracy of business software and an increase

in the number of raids and seizures. However,

infringement in other areas, especially of optical

media, continues to remain unacceptably high.

Further, there is increasing concern with the use

of the Internet to distribute infringing product

and that Taiwan’s overall enforcement and prosecutory efforts need to be implemented quickly,

and improved and broadened for the long term. 

We will continue to monitor Taiwan’s progress in

addressing its high piracy rates, focusing in

particular on whether the Taiwan government

aggressively enforces its laws, actively combats

piracy, and takes other concrete actions to reduce

all types of IPR violations. We also look forward

to working with the Taiwan government on

further amendments to its copyright law to

conform with international IPR norms.

c. Telecommunications

Two years after WTO accession, Taiwan has yet to

establish an independent telecommunications

regulatory authority. Furthermore, despite

repeated requests from the United States, Taiwan

has yet to implement a licensing regime consistent

with its WTO commitments to permit foreign

carriers to apply for authorization to supply local,

long-distance, and international services. 

Taiwan’s telecommunications regulatory authority,

the Directorate General of Telecommunications,

and formerly wholly state-owned monopoly

ChungHwa Telecom are under the purview of the

Ministry of Transportation and Communications.

As 2003 came to a close, Taiwan’s legislature had

approved only one of two bills necessary to 

establish a new National Communications

Commission, an independent regulatory authority.

Taiwan is developing criteria regarding the

issuance of telecommunications licenses for local,

domestic long distance, and international services but continues to delay implementation.

Further, capital requirements for comprehensive

network services (NTD 16 billion), city-call services (NTD 12 billion), and long-distance/or

international services (NTD 2 billion) continue to

be excessively high. Comprehensive fixed-line

and local network licensees will require a buildup of 400,000 lines but 60,000 lines will be

sufficient for initiating basic services. We will

continue to monitor whether such requirements

are hindering Taiwan’s progress toward full

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 other industrial

countries. Taiwan’s Department of Health implemented a new 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 the Taiwan government in 2003 to

achieve market access for pharmaceutical products and will continue to do so in 2004.

The United States will also continue to work with

Taiwan to ensure that registration data pertaining to

pharmaceutical and agricultural chemical products

that are submitted to the government for marketing

approval are protected from unfair commercial use.

This protection, known as “data exclusivity,” is a

requirement of the WTO TRIPS Agreement and is

intended to ensure that registration data is not used

by third parties without the original owner’s

consent for an effective period of time. 

Another area of concern in this sector involves

pricing, whereby hospitals and doctors in Taiwan

buy drugs at discounted prices and are then reimbursed at higher rates, contrary to regulations that

reimbursements be made at the purchase price.

The U.S. government will continue to work with

III. BILATERAL AND REGIONAL NEGOTIATIONS | 183
Taiwan officials and industry to develop ways in

which this systemic problem can be addressed. 

11. Hong Kong (Special

Administrative Region)

a. Intellectual Property Rights

Hong Kong has made good progress in

addressing IPR concerns over the past several

years. In 2003, Hong Kong continued to

strengthen its IPR enforcement regime, especially in the area of education, to combat

copyright and trademark infringement. Due to

these efforts, the Hong Kong people are increasingly aware of the importance of the IPR regime

to their own industries, notably movies and

toys. As 2003 came to a close, the Hong Kong

government continued to work on an amendment to refine the “fair use” rules for copyright

publications in response to concerns regarding

the temporary suspension of criminal provisions. The unauthorized copying of computer

programs, movies, music, television programs,

and music remains illegal; but in June 2001,

Hong Kong’s Legislative Council (LegCo)

temporarily suspended these provisions for

copyright publications. The LegCo liberalized

the parallel importation of computer software

this year, while maintaining criminal penalties

for such imports of “entertainment” copyrighted

products like movies and music. The U.S.

industry has expressed some concern about the

adequacy of new legislation and continues to

push for even stronger enforcement. We will

continue to monitor this situation and other

anti-piracy efforts closely.

b. Telecommunications

Hong Kong completed its liberalization of local

fixed telecommunications network services

(FTNS) on January 1, 2003. Some U.S. companies are considering applying for licenses, but

remain concerned about how interaction with

the incumbent service provider (PCCW/HKT)

will be regulated. Potential new entrants are also

concerned that they would be disadvantaged in

comparison with the incumbent. We will

continue to closely monitor developments in

this sector.

12. Sri Lanka

The United States and Sri Lanka strengthened

their already close trade relations in 2003, during

which the second and third meetings under the

Trade and Investment Framework Agreement

(TIFA) were held. A Sri Lankan delegation led by

Commerce Minister Ravi Karunanayake and G.L.

Peiris, Minister of Enterprise Development,

Industrial Policy and Investment Promotion,

visited Washington in March. This TIFA meeting

focused on the diversification of the Sri Lankan

economy and the exchange of views on the Doha

Development Agenda. 

Deputy USTR Shiner visited Sri Lanka in October

for the third TIFA session. Sri Lankan Prime

Minister Ranil Wickremesinghe emphasized the

importance of trade relations with the United

State by leading the Sri Lankan delegation. Sri

Lanka used this meeting to express its strong

interest in negotiating a comprehensive and

ambitious free trade agreement with the United

States. In November, the Prime Minister was

invited to the United States by President Bush, a

meeting at which trade was an important topic.

Through the TIFA process, most outstanding

bilateral trade issues have been resolved. At the

Cancun WTO Ministerial, Sri Lanka publicly

advocated a pragmatic approach for developing

countries and urged WTO Members to focus on

negotiations rather than rhetoric.

I. Africa

1. SACU FTA

The Southern Africa FTA Negotiations are

discussed in Chapter A on Free Trade Agreements. 

2. Implementing AGOA 

The African Growth and Opportunity Act

(AGOA), passed in May 2000 as part of the Trade

and Development Act of 2000, is the centerpiece

184 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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 sub-Saharan Africa. The Act also

institutionalizes a process for strengthening U.S.

trade relations with sub-Saharan African countries by establishing an annual ministerial-level

forum with AGOA-eligible countries. 

AGOA offers beneficiary sub-Saharan African

countries duty-free access to the U.S. market for

essentially all products. It extended the existing

Generalized System of Preferences (GSP)

program for beneficiary countries through

September 30, 2008 and added 1,835 products to

the 4,650 products already eligible for duty-free

treatment under GSP. It eliminated the GSP

competitive need limitation for beneficiary subSaharan African countries, lifted all existing

quotas on apparel products from eligible countries that are determined to have effective

measures in place to prevent illegal transshipment, and allows less developed country

beneficiary countries to use regional or thirdparty fabric in apparel imported into the United

States under the program. The third-country

fabric provision is set to expire on September 20,

2004. In late 2003, legislation was introduced in

Congress to authorize the extension of AGOA for

a number of years beyond its current expiration

date of 2008 and to extend its third-country fabric

provision beyond 2004.

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 marketbased 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, NGOs,

the private sector, and the prospective beneficiary

governments. Following the last eligibility review

in December 2003, and based on the recommendation of the U.S. Trade Representative, the

President signed the Proclamation on AGOA on

December 30, 2003 stating that 374 sub-Saharan

African countries met the Act’s requirements for

eligibility in 2004. Angola was designated as a

new AGOA beneficiary, while the Central African

Republic and Eritrea, previously AGOA-eligible,

had their AGOA beneficiary status terminated.

As of December 2003, 22 AGOA-eligible countries had instituted acceptable customs measures

to prevent illegal trans-shipment and, accordingly, had been certified for AGOA’s textile and

apparel benefits.

AGOA also provides for the establishment of a

U.S.-Sub-Saharan Africa Trade and Economic

Cooperation Forum, informally known as

“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. As with earlier forums,

including the January 2003 Forum in Mauritius,

the private sector and the NGO community

organized parallel events during the governmentto-government meetings.

III. BILATERAL AND REGIONAL NEGOTIATIONS | 185

__________

4 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.
Since its passage in 2000, AGOA has had a significant impact on growth and economic

development in several beneficiary countries.

AGOA-related trade and investment has created

over 190,000 African jobs and over $340 million

in investments. In the first nine months of 2003,

AGOA imports exceeded $10 billion, up 

59 percent over the same period in 2002, largely

due to an increase in oil imports. Over 92 percent

of U.S. imports from AGOA-eligible countries

now enter the United States duty-free, under

AGOA, GSP, or zero-duty MFN rates. While most

U.S. imports from the region continue to be in the

energy sector, AGOA has begun to diversify U.S.-

African trade. For example, in the first nine

months of 2003 non-fuel AGOA imports

exceeded $2.0 billion, with apparel imports

totaling $870 million, a 42 percent increase over

the same period in 2001. AGOA transportation

equipment imports were up 24 percent, to $520

million, and AGOA agricultural imports

increased 17 percent, to $160 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 the region increased

eight percent in the first nine months of 2003,

with especially notable gains in agricultural

goods, machinery, and transportation equipment.

See Section VI.A.3 for information on trade

capacity building activities related to AGOA. 

3. Promoting Economic Reform,

Growth and Development

AGOA has prompted important economic and

social reforms across sub-Saharan Africa and

delivered new jobs and opportunities for

economic growth and development to the region.

AGOA’s eligibility criteria create incentives for

countries to reform their economies and create an

environment conducive to increased trade and

investment. The criteria represent global best

practices to attract and maintain trade and investment, which are essential for the transfer of

technology, and help promote competition and

increase exports. 

In 2003, the United States again consulted extensively with sub-Saharan African countries on

AGOA eligibility requirements. As a result of

these consultations, many eligible countries are

implementing needed reforms, including measures to combat corruption, accelerate

privatization, deregulate key industries, promote

more open trade, and strengthen intellectual

property and labor law protections. Many countries have ratified ILO Convention 182 on the

elimination of the worst forms of child labor, and

several are working to change, or have changed,

laws on child trafficking and/or worker rights. By

bringing increased investment to, and creating

new jobs in, sub-Saharan African countries,

AGOA is also demonstrating how trade can

benefit developing countries. 

4. Expanding Bilateral and Regional

Trade and Investment Relationships 

AGOA successes are helping to strengthen and

expand U.S. bilateral and regional trade and

investment ties with sub-Saharan Africa. One of

the mechanisms for building on and improving

U.S. trade and investment relationships in Africa

is discussions arising out of Trade and Investment

Framework Agreements (TIFAs). The U.S. has

TIFAs with three African countries—South

Africa, Nigeria, and Ghana—and two regional

organizations—the West African Economic and

Monetary Union (known by its French acronym,

UEMOA), and the Common Market for Eastern

and Southern Africa (COMESA). 

a. South Africa 

The United States and South Africa enjoy a broad

and mutually beneficial trade and investment

relationship. Two-way trade increased 11.5

percent in the first nine months of 2003, to $5.4

billion. During the same period, U.S. imports

from South Africa under AGOA and related GSP

provisions increased by 24 percent, led by

increases in motor vehicles, chemicals, and

apparel. South Africa is the largest U.S. supplier of

non-fuel AGOA-eligible products (including GSP

items), with sales worth more than $1.2 billion in

the first nine months of 2003. Leading imports

186 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
include platinum group metals, diamonds, motor

vehicles, chemicals and apparel. Leading U.S.

exports to South Africa include motor vehicles,

aircraft, machinery, and medical equipment.

Primary agricultural imports from South Africa

are fresh fruits, which increased by approximately

50 percent in the first nine months of 2003; the

primary U.S. agricultural export is wheat. South

Africa and the United States continue to consult

closely on issues related to the Doha

Development Agenda, despite differences in

many areas. South Africa is a member of the G-X

coalition of countries that presented a hardcore

stance toward the Doha Round at the September

2003 WTO Ministerial in Cancun.

As with many diverse and vibrant bilateral

trading relationships, 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 continued to discuss these issues with

South Africa in 2003, including in the context of

the U.S.-SACU FTA negotiations. The United

States is the largest single-country source of new

foreign investment in South Africa since the

country’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.

b. Nigeria 

Nigeria is the United States’ largest trading

partner in sub-Saharan Africa, based primarily on

the high level of U.S. petroleum imports from

Nigeria. Total two-way trade was valued at 

$8.4 billion in the first nine months of 2003, a 

72 percent increase over the same period in 2002,

due mainly to a surge in oil imports. Nigeria was

the United States’ fifth largest supplier of petroleum and the third largest purchaser of U.S. wheat

in 2002. Primary agricultural imports from

Nigeria are cocoa beans, which increased by over

160 percent in the first nine months of 2003.

Nigeria is seeking to utilize AGOA to diversify its

export base, especially in the area of manufactured goods. Nigerian exports to the United States

under AGOA, including its GSP provisions, were

valued at $7.0 billion during the first nine months

of 2003, an 87 percent increase over the same

period in 2002, due almost entirely to the increase

in oil exports. The United States is the largest

foreign investor in Nigeria. 

The United States is working closely with the

Government of Nigeria, through the U.S.-

Nigeria TIFA and other initiatives, to promote

expanded trade and investment and a more

diversified economy. At the last U.S.-Nigeria

TIFA Council meeting in June 2002, the United

States and Nigeria pledged to work together on

critical issues such as the Doha Development

Agenda, AGOA implementation, and trade

capacity building. The United States is

concerned about the government of Nigeria’s

use of protective import bans on certain products, including sorghum, millet, wheat flour,

bulk vegetable oil, and some printed fabrics. The

United States is also concerned about significant

recent tariff increases on various products,

including rice and meats. 

c. Ghana 

Total two-way trade between Ghana and the

United States was valued at $223 million in the

first nine months of 2003, a 2 percent decrease

over the same period in 2002. Ghana is the

seventh largest sub-Saharan African market for

U.S. goods. The leading U.S. exports to Ghana are

rice, machinery, wheat, and motor vehicles. U.S.

imports from Ghana are primarily oil, timber,

aluminum, and cocoa. In the first three quarters

of 2003, U.S. imports from Ghana under AGOA,

including its GSP provisions, were valued at

$36.5 million, up 17 percent from the same

period in 2002. 

Ghana and the United States enjoy a longstanding commercial relationship despite

occasional commercial disputes involving U.S.

III. BILATERAL AND REGIONAL NEGOTIATIONS | 187
companies. A number of commercial issues have

been resolved or addressed within the U.S.-

Ghana TIFA. At the last U.S.-Ghana TIFA

Council meeting, in July 2002, discussions

focused on outstanding commercial disputes,

WTO issues, AGOA implementation, and trade

capacity building. 

d. COMESA 

The United States signed the TIFA with Common

Market for Eastern and Southern Africa

(COMESA) in October 2001 and has subsequently held two U.S.-COMESA TIFA Council

meetings, most recently in June 2003. COMESA

is the largest regional economic organization in

Africa, with twenty member states and a population of 385 million. It is making great strides in

advancing economic integration in the subregion, including via implementation of the

COMESA Free Trade Area, in which nine

COMESA members participated in 2003.

Fourteen COMESA members are AGOA-eligible

and ten qualify for textile and apparel benefits. At

the June 2003 TIFA meeting, Ambassador

Zoellick and COMESA Secretary General

Mwencha discussed implementation of AGOA,

measures to enhance agricultural trade, WTO

issues, and trade capacity building activities.

e. UEMOA

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. UEMOA has only recently begun to

realize benefits under AGOA. UEMOA’s largest

economy—Cote d’Ivoire, which accounts for

over 40 percent of the region’s GDP—became

eligible for AGOA only in May 2002 and, until

late 2003, only one UEMOA country—Senegal—

had qualified for AGOA’s textile and apparel

benefits. Mali, Cote d’Ivoire and Niger qualified

for such benefits in December 2003. 

UEMOA entered into a TIFA with the United

States in April 2002. At the most recent TIFA

Council meeting in Washington in December

2003, UEMOA Commission President Toure and

Deputy U.S. Trade Representative Shiner

discussed AGOA implementation, means to

increase trade and investment flows, issues

related to the Doha Development Agenda, and

trade capacity building. 

5. Facilitating Sub-Saharan Africa’s

Integration Into the Multilateral

Trading System 

AGOA has also helped to promote sub-Saharan

Africa’s integration into the multilateral trading

system and to encourage support for the new

round of global trade negotiations in a region that

accounts for more than a quarter of WTO

membership. U.S. consultation and collaboration

with African Members of the WTO played an

important part in the successful launch of the

Doha Development Agenda in November 2001.

The United States and African WTO Members

continued to consult closely in 2003 on issues

related to the Doha Development Agenda.

Although the United States and the Africa Group

in the WTO differed in their views on some areas,

including agriculture, non-agricultural market

access, and the Singapore Issues, they also worked

together to resolve one of the most difficult

outstanding issues—TRIPS and Public Health—

thereby facilitating developing country access to

essential drugs, consistent with WTO rules. The

December 2003 AGOA Forum provided an

opportunity for U.S. and African trade officials to

discuss practical ways to put the Doha

Development Agenda back on track following the

disappointment of the Cancun Ministerial.

188 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
IV. Other Multilateral Activities

The United States pursues its trade and 

trade-related 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.”

Understanding that advancing trade and environmental objectives are mutually supportive, the

U.S. Government 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 2003,

as part of its ongoing review policy, USTR and the

White House Council on Environmental Quality

(CEQ) continued their work on the environmental reviews of FTAs under negotiation with

Morocco, five Central American countries,

Australia, and the members of the Southern

African Customs Union. Interim reviews of the

Morocco and Central American agreements have

now been issued. USTR and CEQ also completed

environmental reviews of the final texts of the

FTAs with Chile and Singapore. The review

process for each of these agreements made important contributions to the negotiations and to the

content of the final agreements. USTR and CEQ

also continued their 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). 

The U.S. Government continues to take an active

role in the WTO Committee on Trade and

Environment (CTE) to put into effect the WTO’s

commitment to the simultaneous promotion of

trade, expanded environmental improvement,

and economic growth and development.

The U.S. 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. 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.

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 papers in

the CTE in Special Session outlining its approach

to increase communication and coordination

between WTO bodies and secretariats of 

189
multilateral environmental agreements (MEAs)

and on the relationship between specific trade

obligations in MEAs and existing WTO rules. The

United States coordinated effectively with other

interested WTO Members in seeking new disciplines on fisheries subsidies through negotiations

in the Rules Negotiating Group. 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 proposed

innovative ideas for developing modalities in

negotiations on environmental goods. 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 U.S. participation in the OECD

Joint Working Party on Trade and Environment

(JWPTE), which met twice in 2003. Work has

focused on trade, environment and development

issues with an emphasis on the role of environmental goods and services liberalization and

eco-labeling schemes in promoting “win-winwin” 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.

USTR participated in international negotiations

to develop a Framework Convention on Tobacco

Control, under the auspices of the World Health

Organization, and continues to advise on traderelated tobacco issues. 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 American

Development Bank develop and finance needed

environmental infrastructure projects along the

U.S.-Mexico border. 

The Commission for Environmental Cooperation

(CEC), governed by the trilateral Ministeriallevel Council that implements the NAAEC,

continues its efforts on numerous fronts and

devotes a significant portion of its annual work

program to trade and environment issues. The

Environmental Protection Agency (EPA) takes

the lead role, through the interagency process, at

190 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
the CEC on behalf of the U.S. Government. The

CEC work program encompasses four broad

areas: environment, economy, and trade; conservation of biodiversity; pollutants and health; and

law and policy. The projects in the annual work

program are designed to deepen cooperation

among the Parties by furthering environmental

sustainability in open markets and stewardship of

the North American environment. For example,

at its 2003 meeting, the CEC Council adopted a

strategic plan for North American cooperation in

the conservation of biodiversity, supporting a

biodiversity strategic plan developed by officials

in all three NAFTA countries. The CEC

continued its work in the area of children’s health,

and aims to develop a set of environment and

health indicators by 2004. In 2003, the CEC also

kicked off a ten-year review of the NAFTA and the

NAAEC. The review will assess the implementation of the NAAEC and the environmental effects

of the NAFTA. 

USTR also participated in the NAFTA 10(6)

group (named after the provision of the NAAEC

addressing CEC cooperation with the NAFTA

itself). The 10(6) group is composed of senior

trade and environment officials from all three

NAFTA governments, that meets to discuss issues

of common concern. At its 2003 meeting, the

CEC Council requested the 10(6) group to report

back to the Council regarding its work on crosscutting trade and environment issues, and a

proposed agenda for a possible future trade and

environment ministers meeting.

In June 2002, the Council agreed to work with

their trade counterparts to arrange a forum where

interested parties could express their views on the

implementation and operation of NAFTA

Chapter 11 (Investment). USTR worked with its

Canadian and Mexican counterparts to arrange a

meeting with interested stakeholders in Montreal

in May 2003. The input received at this meeting

helped inform the transparency measures developed by the NAFTA Investment Experts Group,

and adopted by the Free Trade Commission in

October 2003.

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 adopted the policy

of using the deepened economic relationship that

comes from new trade agreements to enhance

environmental policy cooperation with our new

FTA partners. These negotiations are led by the

Department of State with full interagency cooperation. As a complement to the Morocco FTA

negotiations, the United States and Morocco

negotiated a Joint Statement on Environmental

Cooperation that will establish a Working Group

on Environmental Cooperation, develop a plan of

action and set priorities for future environmentrelated projects. Areas for environmental

cooperation already identified include: environmental law and infrastructure development;

economic incentives and voluntary programs;

coastal protection and preservation of fisheries;

conservation of natural resources and protected

areas; and environment-related technology. In

addition to the Joint Statement, USAID and EPA

have developed a project that will focus on

building Morocco’s capacity to develop its environmental laws, institutions and enforcement

mechanisms—consistent with the commitments

that Morocco will take on as part of the FTA.

An Environmental Cooperation Agreement with

Central America will also be linked to the Central

America Free Trade Agreement (CAFTA).

Similar to the Joint Statement with Morocco, 

IV. OTHER MULTILATERAL ACTIVITIES | 191
this Agreement will identify priorities for 

environmental cooperation and establish a Joint

Commission on Cooperation to administer 

the Agreement.

USTR has just completed FTA negotiations with

Australia, and has initiated negotiations with 

the five countries of the Southern African

Customs Union. USTR is seeking provisions in

these agreements that similarly incorporate the

Trade Act guidance and U.S. trade and environment priorities.

USTR worked with other agencies to address the

environmental cooperation aspects of the Chile

and Singapore FTAs. USTR and the agencies have

begun implementing the eight environmental

cooperation projects outlined in the Chile FTA.

These projects will address environmental issues

identified during the FTA negotiations and the

environmental review of the FTA, such as

promoting cleaner fuels in Chile, and improving

environmental enforcement and compliance.

USTR also participated in the State Departmentled negotiation of an Environmental Cooperation

Agreement (ECA) with Chile, and a

Memorandum of Understanding (MOU) on environmental cooperation with Singapore. The

MOU and ECA will guide future cooperative

efforts, including environmental capacity

building that addresses the linkages between

trade and the environment. 

The United States also announced its plans to

negotiate an FTA with Bahrain and the Dominican

Republic. In preparation for the negotiations with

Bahrain, USTR initiated a trade capacity building

project in Bahrain, which included training on

environmental law enforcement.

B. Trade and Labor 

The trade policy agenda of the United States

includes a strong commitment to protecting labor

rights and protecting the rights of workers, both

in America and in our trading partners. 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. In pursuing these objectives,

we use the bipartisan congressional guidance

contained in the Trade Act of 2002 to bring the

benefits of trade and open markets to America

and the rest of the world. USTR worked cooperatively with other USG 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. 

During 2003 the United States conducted trade

negotiations with five Central American countries,

(Honduras, Nicaragua, Guatemala, El Salvador,

and Costa Rica), as well as with Morocco, and

Australia. We also tabled labor text for the Free

Trade Area of the Americas (FTAA) this past year

and expect to engage in negotiations during 2004.

Trade negotiations were also launched on an FTA

with the South African Customs Union (SACU);

negotiations on the labor chapter of the FTA with

SACU will begin in 2004. The President has also

notified Congress of his intent to negotiate in 2004

with the Dominican Republic, Bahrain, the

Andean countries and Panama. In keeping with

TPA guidance, all of these proposed FTAs will

include substantial labor provisions.

1. Trade Act of 2002 (TPA) Guidance

on Trade and Labor 

The importance of the linkages between trade and

labor is underscored by the fact that the

Bipartisan Trade Promotion Authority Act of

2002 (TPA) has 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. First, to promote respect

for worker rights and the rights of children

consistent with the core labor standards of the

International Labor Organization (ILO). TPA

192 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
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. Second, 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. And third, to promote the

universal ratification and full compliance with

ILO Convention 182—which 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.

The work on the social dimensions of globalization underway at the ILO is being done by the

Working Party on the Social Dimensions of

Globalization of the ILO’s Governing Body. The

ILO is unique among international organizations

in that it has a tripartite (Government, employer

and worker representatives) membership in all of

its committees and constituent bodies. Thus, the

IV. OTHER MULTILATERAL ACTIVITIES | 193
Working Party on the Social Dimensions of

Globalization has a representative not only of the

U.S. Government, but also the U.S. Council for

International Business and the AFL-CIO. As a

further extension of this work, the ILO created a

“World Commission on the Social Dimension of

Globalization.” During 2003 the United States

Trade Representative met twice with the DirectorGeneral of the ILO to discuss the work of the

World Commission and to encourage greater

policy coherence and cooperation between the

WTO and the ILO. We look forward to the report

of the World Commission in 2004.

The United States remains the largest donor to the

work of the ILO. The United States has been

particularly supportive of two ILO initiatives: the

International Program on the Elimination of

Child Labor (IPEC), and work to implement the

1998 ILO Declaration on Fundamental Principles

and Rights at Work. 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. 

3. Regional Activities 

The Thirteenth 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 in its emphasis on

the importance of considering labor in the FTAA

negotiation process, and the need for greater 

integration of economic and labor policies. 

The Salvador Plan of Action provides for the

continued examination of the impacts of trade and

integration on labor within 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 will involve the ILO, the

Organization of American States, the InterAmerican 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. 

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. 

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 

The signing and Congressional approval of the

Chile and Singapore FTAs, which include texts

that fully incorporated Congressional guidance

on trade and labor contained in TPA, establishes

a firm basis for future bilateral agreements linking

trade and labor. President Bush signed the

Singapore FTA on May 6, 2003 and Ambassador

Zoellick signed the Chile FTA in Miami on June

6, 2003. 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 on Fundamental

Principles and Rights at Work and ILO Convention

182 concerning the worst forms of child labor, are

recognized and protected by domestic labor laws.

Each Party is also obligated to effectively enforce

194 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
its labor laws, subject to the discretionary

authority spelled out in TPA.

Cooperation and consultations are the preferred

means to achieve the labor objectives and assure

compliance with all obligations. However, if a

dispute settlement panel were to find that a party

had failed to enforce its labor laws in a manner

affecting trade, and if the countries cannot agree

on a settlement, the panel would establish a

monetary assessment, based on criteria such as

the trade effect and pervasiveness of the violation.

In commercial trade disputes, the assessment is

supposed to be calculated solely on “trade effects.”

Since the quantifiable trade effect of a labor violation is likely to be very small, the agreements

include other criteria for the panel to use in determining the assessment. The assessment may not

exceed $15 million per violation per year. The

proceeds of the assessment would go into a fund,

established under the agreement, and expended

only upon the direction of a joint commission.

The intention is for the funds to be used to address

the underlying labor problem. The assessment

must be paid each year until the country comes

into compliance with its obligations.

If a party fails to pay the 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. 

The United States has negotiated the same TPAconsistent, means of dispute settlement for labor

clause violations in the Central America,

Morocco, and Australia FTAs. The SACU FTA

will also follow this guidance. 

In approaching labor issues in the context of

negotiations with Central America, the United

States adopted a three-pronged strategy. The first

element is labor text that fully incorporates TPA

guidance as well as the guidance received in

consultations with the House and Senate

Committees. The language in the labor chapter is

stronger and more comprehensive than in earlier

FTAs, such as the Chile FTA, requiring that

tribunals for the enforcement of labor laws be fair,

equitable, transparent, and that such proceedings

not entail unwarranted delays. In addition, the

Labor Cooperation and Capacity Building

Mechanism in the CAFTA 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 the CAFTA negotiations

were ongoing, the five CAFTA countries 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 five

countries have laws giving effect to all of the ILO’s

fundamental principles and rights at work, but

the report also pointed out gaps in the law where

improvements could be made to better protect

worker rights. 

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 in Central America to

better protect worker rights once the agreement

takes effect. These initiatives include a regional

project in Central America funded through a

grant of $6.75 million from the U.S. Department

of Labor to increase workers’ and employers’

knowledge of their national labor laws,

strengthen labor inspections systems, and create

and bolster alternative dispute resolution mechanisms. Several such programs are also being

carried out in Morocco aiming to train workers

on worker rights issues, to enhance the Labor

Ministry’s capacity to increase compliance with

labor laws, and to help eradicate the worst forms

of child labor. 

Our bilateral textile agreement with Cambodia

has a unique aspect in that import quotas may be

IV. OTHER MULTILATERAL ACTIVITIES | 195
increased dependent upon the efforts of the

government to effectively enforce its domestic

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 monitors working conditions in

Cambodian enterprises and reports on the results

of that monitoring. Based upon the government’s

efforts to effectively enforce its labor laws—and

according to findings supported by ILO monitoring reports and two field visits—at the end of

2003 the U.S. Government approved a 14 percent

increase in quota levels for next year.

The U. S. bilateral textile agreement with

Vietnam, concluded early in 2003, also includes a

labor provision. Both parties reaffirm their

commitments as members of the ILO, and also

indicate their support for implementation of

codes of corporate social responsibility as one

way of improving working conditions in the

textile sector. The agreement also calls 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 to review the implementation of the Memorandum of Understanding

between the two ministries signed in November

2000. The topic of working conditions in the

textile sector was discussed in the November

2003 consultations held in Hanoi. 

A final aspect of trade and labor bilateral activities relates to the worker rights provisions of U.S.

trade preference programs, such as the Andean

Trade Preference Act (ATPA), as amended, and

the Generalized System of Preferences (GSP).

The 2003 Annual ATPA Review is the first such

review to be conducted pursuant to the ATPA

regulations on the eligibility of countries for the

benefits of the ATPA. As part of this process, petitions were filed requesting the review of certain

practices in several countries regarding compliance with the eligibility criteria set forth in the

ATPA. A number of petitions were filed regarding

Ecuador on matters related to worker rights. 

The Trade Policy Staff Committee (TPSC) is

conducting a preliminary review of these petitions. The results of the preliminary review,

including any proposed modifications to the

application of the ATPA, will be published in the

Federal Register on or about March 31, and

public comment will be sought.

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 2003, USTR also reviewed a number of

petitions requesting that GSP trade preferences be

withdrawn from countries for not taking steps to

afford internationally recognized worker rights.

In September 2003, USTR announced the 2001

and 2002 country practice petitions that were

accepted for review, namely those on Swaziland

and Guatemala. Public comments were solicited

and hearings were held on the worker rights practices in these countries in October 2003.

Acceptance of a petition for review does not indicate any opinion with respect to disposition on

the merits. Acceptance indicates only that the

TPSC has found the petitions eligible for merit

review through the interagency process. As the

year ended, the Guatemala and Swaziland reviews

were still in progress. The Bangladesh country

practice review on worker rights, originally

accepted in 1999, also continues. GSP petitions

were filed in 2003 against Costa Rica and El

Salvador. A decision on whether to accept these

cases for review is pending.

C. Organization for Economic

Cooperation and Development 

Thirty market 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-power-parity terms), 76 percent of

world trade, 95 percent of world official development assistance, and 19 percent of the world’s

196 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
population. The OECD is not just a grouping of

these economically significant nations, however,

but also a policy forum covering a broad spectrum

of economic, social, and scientific areas, from

macroeconomic analysis to education to biotechnology. The OECD helps countries by promoting

economic growth and free markets. 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

World Trade Organization (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. Non-members

may also apply to participate as observers of

committees for which they meet “major player”

and “mutual benefit” criteria. 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 2003, 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-todate information on published analytical work

and other trade-related activities. Major analytical

pieces completed under the Trade Committee

during 2003 included studies on “Quantifying

the Benefits of Liberalization of Trade in Services”

and on “Regionalism and the Multilateral Trading

System.” Reflecting the needs of WTO negotiators in Geneva, additional work addressed the

benefits of trade facilitation measures, welfare

gains resulting from further liberalization in

tariffs, liberalizing trade in environmental goods,

and the impact on government revenues of tariff

cuts. In a joint project with the United Nations

Conference on Trade and Development, the

OECD produced a series of papers on managing

request-offer negotiations under the General

Agreement on Trade in Services in two specific

sectors. Other analytical work covered the use

and impact of different types of non-tariff

barriers, structural adjustment in textiles and

clothing, and the impact on economic performance of trade reforms undertaken by countries

benefiting from debt relief under the HIPC

[Heavily Indebted Poor Country] Initiative. 

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 as well

as in other fora, particularly the WTO. 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 twice in 2003 and approved

Secretariat papers on the potential application of

the principles of transparency, non-discrimination, and procedural fairness to competition law

concerns, on the possible use of peer review and

other compliance mechanisms in a multilateral

framework on competition policy, and on the “role

of special and differential treatment at the trade,

competition, and development interface.” These

papers were the subject of a Joint Global Forum on

Trade and Competition held at the OECD on May

15-16, which was intended to assist countries, in

IV. OTHER MULTILATERAL ACTIVITIES | 197
the run-up to the WTO Ministerial Meeting in

Cancun, to better evaluate the implications of

closer multilateral cooperation in the competition

field for their development policies and objectives.

Representatives of over 60 countries, including

trade and competition experts from both OECD

member and non-member countries, as well 

as NGOs and international organizations, 

participated in this event.

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 29 members

of the OECD and five non-members in 1997. The

non-members were Argentina, Brazil, Chile,

Bulgaria, and Slovakia (now an OECD member).

In 2001, Slovenia, also a nonmember, became the

thirty-fifth country to sign the Convention. The

Convention requires the parties to criminalize

bribery of foreign public officials in executive,

legislative, and judicial branches, levy dissuasive

penalties on those who offer, promise or pay

bribes, and implement adequate accounting

procedures to make it harder to hide illegal

payments. All 35 signatories 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 

estimated in the 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. 

By the end of 2003, all signatories except Turkey

had undergone a review of their respective

national legislation implementing the Convention.

The signatories to the Convention commenced

the second phase (i.e., Phase II) of peer 

monitoring—the evaluation of enforcement—in

November 2001. By the end of 2003, eight countries had been so reviewed: Finland, the United

States, Iceland, Germany, Bulgaria, Canada,

France and Norway. The United States has

successfully pressed for an accelerated Phase 2

monitoring schedule and OECD budget funds to

support it. The Working Group on Bribery will

undertake seven of these country reviews in 2004

with the goal of completing the first 35 country

review cycle in 2007. The OECD Convention

Parties will also continue to study whether the

Convention’s coverage should be expanded to

include several related issues, including 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 transitional economies, such as the countries

of Eastern Europe and Central Asia, leading

developing economies in South America and

Asia, and sub-Saharan African countries.

The April 2003 Ministerial Council Meeting

(MCM) focused on a global agenda for growth and

development. The OECD invited ten non-member

countries from Africa, Asia, Eastern Europe, Latin

America, and the Middle East to its trade-related

discussions. Other non-members participated in

the OECD Forum held concurrently with the

MCM, which looked at growth and development

and included sessions on export credits, agricultural policy reform in an international context,

and intellectual property rights, as well as a trade

ministers’ panel on the Doha Round. Argentina,

Brazil, Chile, Hong Kong, and Singapore remain

active non-member observers of the Trade

Committee and its Working Party. As part of its

series of Global Forum on Trade events, the OECD

organized a conference on the “Market Access

Challenge in the Doha Development Agenda” in

May 2003, for which 60 countries, including 

34 non-members, registered. 

The OECD organized three events in 2003

connected to its ongoing trade policy dialogue

198 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
with transition economies. Two focused on trade

in services: a forum in late June on trade in services in South Eastern Europe that was held in

Bucharest, and an informal Working Party

meeting in December on strategies for developing

regional and multilateral trade in services in transition economies. Both events attracted

attendance from Members, the Baltic states, and

Russia as well as the countries of South Eastern

Europe. The third event, a meeting of experts

from OECD countries with Russian government

officials, took place in Moscow in early June, and

was aimed at developing government analytical

capacity in the trade policy area. 

The Trade Committee’s fifth informal consultation

with civil society organizations took place in

October 2003. Discussion centered on assessments of the WTO Ministerial Meeting in Cancun

and on a way forward. U.S. members of the

OECD’s Business and Industry Advisory

Committee and of the U.S. Government’s

Technical Advisory Committees participated in

the consultation.

5. Environment and Trade 

The OECD Joint Working Party on Trade and

Environment (JWPTE) met twice in 2003 to

continue its analysis of the effects of environmental policies on trade and the effects of trade

policies on the environment. During the year, the

JWPTE contributed important work on environmental goods and services to support the Doha

negotiating agenda. The JWPTE developed a

series of cases studies involving eight developing

countries, which identify complementary measures that can ensure the maximum realization of

benefits from the liberalization of environmental

goods and services markets. The JWPTE’s work on

environmental goods also focused on the practical

considerations relating to defining environmental

goods and services for the purposes of market

access negotiations. The United States proposed

additional new work in this area as well which

would explore the synergies between 

liberalization of environmental goods and 

environmental services. The JWPTE undertook

work on the development dimension of trade and

environment, building upon the development

initiatives agreed upon at Doha. The work

involved identifying lessons learned from the case

studies developed in 2002. The JWPTE also

undertook work on labeling for environmental

purposes, focusing on developing country access

to developed country markets under select ecolabeling programs. The JWPTE began work in

2003 to support the trade and environmentrelated elements of the September 2002 World

Summit for Sustainable Development plan 

of implementation.

6. Export Credits 

The OECD Arrangement on Guidelines for

Officially Supported Export Credits 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, a stand-alone policy-level body of

the OECD, are responsible for implementing the

25-year-old Arrangement and for negotiating

further disciplines to reduce subsidies in official

export credit support.

Under the Arrangement, 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. In addition, the “level playing field” created by the

Arrangement’s tied aid disciplines has allowed

U.S. exporters to increase their exports by about

$1 billion a year. These exports would have cost

taxpayers about $300 million in annual appropriations to Ex-Im Bank if the United States had to

create its own tied aid program in order to

compete. 

A major success was achieved in 2003. Members

of the OECD Working Party on Export Credits

IV. OTHER MULTILATERAL ACTIVITIES | 199
and Credit Guarantees (ECG) reached consensus

on a landmark agreement that requires export

credit agencies to evaluate the environmental

impact of the projects that they are considering,

lays out the procedures to be followed when

performing an evaluation, and sets minimum

standards to be used. The agreement marks the

conclusion of several years of intensive negotiations. In 2001, the United States rejected a draft

agreement for its failure to ensure that appropriate

environmental standards would be used, and its

failure to provide basic transparency. Other ECG

members chose to implement the agreement

voluntarily. After two years of implementation

experience, other ECG members were willing to

strengthen the OECD agreement during the

mandated review in 2003. At this point, the

United States was able to join the agreement,

which was then formalized by the OECD Council.

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 

$2.5 billion in 2002 (from $3.5 billion in 2001)—

its lowest level on record. Data for the first half of

2003 indicate that a further decline is expected, to

perhaps as low as $1.5 billion. 

On January 1, 2003, an agreement took effect that

banned tied aid in Central and Eastern Europe

and key countries of the former Soviet Union

(FSU), and formally incorporated the agreement

into the Arrangement. The agreement keeps these

newly opened markets free from the tradedistorting effects of tied aid until such time as

their per capita income levels increase and render

them ineligible for tied aid. Prior to January 1,

2003, Central and Eastern Europe and the former

Soviet Union were the subject of two separate

agreements that had taken effect at different

points in time. The new agreement merged and

updated these two agreements. Inclusion of the

new agreement into the Arrangement eliminates

the temporary nature of the FSU agreement,

which had to be renewed annually by consensus.

In November 2003, the United States submitted

to participants a revision of its 2002 proposal to

apply the tied aid disciplines to untied aid. Untied

aid is a form of aid financing that is not currently

subject to multilateral disciplines but can have

trade-distorting effects. Furthermore, because

untied aid is not governed in any way, other

participants can circumvent existing anti-trade

distortion disciplines by simply declaring their

aid to be untied. Japan is the largest provider of

untied aid, and its levels of untied aid are

increasing. In addition, other governments are

beginning to offer untied aid and at increasing

rates. The United States had hoped that its revised

proposal would facilitate acceptance, but Japan

continued to block provisions for basic transparency with respect to untied aid. As a result, the

Treasury Department is pursuing this issue in the

G-7 Finance Minister forum.

Participants are addressing a number of other

issues, including a review of market window

behavior. Market windows are quasi-governmental financial institutions that support

national exports and yet are unbound by multilateral rules. In 2002, Congress requested that the

Administration negotiate disciplines for market

windows and report on the status of those 

negotiations in 2004.

One of the biggest challenges to face participants

in recent years is how to address certain issues

raised by some developing countries.1 In 2002,

participants began a concerted effort to assure that

the Arrangement rules equitably address the trade

finance needs of both developing countries and

OECD members. The major portion of this work

was achieved in 2003 with the redrafting of the

Arrangement to address specific issues and princi200 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT

__________

1 As noted above, the negotiation of the export credit rules at the OECD has led to substantial subsidy reductions pursuant to the

Arrangement—a result that may not have been possible if the rules had been negotiated in a consensus forum that included

those countries that benefit from such subsidies.
ples that have been 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 Agreement on Subsidies and Countervailing

Measures), to enhance the clarity and user-friendliness of the Arrangement (i.e., to draft it for all

export official credit providers and not just the

OECD countries), and to increase transparency

vis-à-vis non-participants. The new Arrangement

text is to be implemented January 1, 2004. The

participants will continue to work with nonOECD members in 2004 and beyond to improve

and refine the Arrangement rules to ensure and

maintain a level playing field for all governments

providing official export credit support.

7. Investment 

International investment issues are studied and

discussed in several OECD bodies, and the

United States places a high priority on this work.

The United States believes that discussions within

the OECD can help build international consensus

on the meaning and importance of certain investment protection standards, 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

continues to play a major role in shaping the

work of investment-related bodies and initiatives

within the OECD.

The Committee on International Investment and

Multinational Enterprises (CIME) plays the

leading role in the analysis of international investment issues within the OECD. It is also

responsible for the implementation of the OECD

Declaration on International Investment and

Multinational Enterprises. CIME examined

several investment protection issues in 2003.

Member countries considered a study, prepared

by the OECD Secretariat, entitled “Bilateral

Investment Treaties, Regional Agreements and

Multilateral Investment Disciplines,” which

reviewed the compatibility of most-favored

nation (MFN) clauses in an array of international

investment agreements. CIME is considering

additional analysis of international jurisprudence

relating to the interaction of MFN provisions

across investment agreements. CIME also examined two other Secretariat papers, on the “Fair

and Equitable Treatment Standard in

International Investment Law” and “Indirect

Expropriation and the Right to Regulate in

International Investment Law.” Legal experts

from Member countries discussed these two

papers during a December meeting. The United

States believes the OECD can play a useful role in

shaping global norms in areas like these, and has

sought to exercise leadership within CIME on

investment protection issues.

The OECD continued in 2003 to expand its

outreach on investment issues to non-members.

These efforts included follow-up work with

Russia on implementation of the policy recommendations in the OECD Russia Investment

Survey; the publishing of a comprehensive study

of foreign direct investment (FDI) policy in

China, entitled “OECD Investment Policy Review

of China: Progress and Reform Challenges;” and

the 2003 Global Forum on International

Investment, which focused on “Modern

Governance and Transparency for Investment.”

CIME, in close association with the OECD

Committee on Non-Members, has also proposed

a Middle East and North Africa (MENA) investment initiative and supports an OECD

Investment Initiative for Growth and

Development in Africa. This work is part of an

overall OECD strategy aimed at promoting the

coherence of development policies and increased

investment for development. As part of this

strategy, CIME is also studying the relationship

between Official Development Assistance (ODA)

and FDI. Additional outreach initiatives for nonmembers included an invitation to Argentina to

make a presentation to CIME on the impact on

FDI and Argentina’s international obligations of

measures imposed by the government in response

to the country’s economic crisis, and consideration of a request by Romania to become an

adherent to the Declaration on International

Investment and Multinational Enterprises. 

IV. OTHER MULTILATERAL ACTIVITIES | 201
CIME plays an active role in promoting corporate

social responsibility through its oversight of the

voluntary OECD Guidelines for Multinational

Enterprises. In September 2003, CIME hosted the

third 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 third year of implementation

activity under the revised guidelines. The

meeting confirmed that the visibility and use of

the guidelines have increased, with governments,

business entities, labor unions, non-governmental organizations, and other civil society

leaders referring to or relying on the guidelines as

an instrument for the promotion of appropriate

business conduct.

The 2003 OECD Roundtable on Corporate

Responsibility, held in conjunction with the

annual meeting of the NCPs, focused on how the

OECD guidelines could be used with other anticorruption instruments to enhance the

anti-corruption practices and policies of business.

The United Nations Expert Panel on Illegal

Exploitation of Natural Resources and Other

Forms of Wealth in the Democratic Republic of

the Congo discussed the OECD guidelines in its

October 2002 report. This prompted a number of

NCPs to seek to resolve issues related to the applicability of the guidelines to the activities of OECD

Member country firms doing business in the

Congo. The October 2003 Final Report of the UN

Expert Panel noted the cooperation of the NCP in

implementing the guidelines. 

8. Labor and Trade 

The Trade Union Advisory Committee (TUAC) to

the OECD, made up of 56 national trade union

centers from OECD member countries, has played

a consultative role to the OECD since 1962. There

were three joint consultations in 2003 between

TUAC and BIAC (the Business and Industry

Advisory Committee). TUAC and BIAC held joint

consultations on lifelong learning, and 

participated actively in the OECD Meeting of the

Employment, Labor and Social Affairs Committee

at the Ministerial Level in September 2003.

TUAC’s statement from the Ministerial concluded

that: “Ministers must mandate the OECD to

contribute to building the Social Dimension of

globalization through joint work with other international organizations, in particular the ILO...”

The OECD liaison committee with International

Non-governmental Organizations met with

TUAC representatives on “Post-Cancun—

Challenges and Opportunities for Global

Governance” in December 2003.

9. Regulatory Reform 

Since 1998, the OECD Trade Committee has

contributed to OECD work on domestic regulatory governance on the basis of 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 reviews of

France and Germany in 2003, bringing to a total

of twenty the country studies it has reviewed (for

all G7 countries, plus thirteen other OECD

Members). The Secretariat commenced work on a

review of (non-member) Russia. In addition, the

OECD organized a Global Forum on Governance

in March that looked at how appropriate 

regulatory policy could advance the objectives of

the Doha Development Agenda. Finally, the APECOECD Cooperative Initiative on Regulatory

202 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
Reform held two workshops in 2003 aimed at

developing an integrated checklist to help countries assess their progress in implementing the

common principles on regulatory reform.

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. The Secretariat, in cooperation with

UNCTAD, produced papers on energy and insurance services to aid developing countries in the

request-offer process of the negotiations. In

September, the OECD presented a paper in the

Council for Trade in Services in Special Session in

the WTO, which paper provided examples and

case studies of services exported by developing

countries. In November 2003, the OECD held its

fourth “services experts” meeting, which was

organized jointly with the World Bank. The

meeting, attended by representatives of developing

countries, focused on the roles of individuals as

service suppliers (called “mode four” in the GATS)

and their treatment in trade agreements. 

11. Steel

As noted in the “Steel Trade Policy” section of this

report, the Administration continues to work

hard to achieve the goals set out in the President’s

Initiative on Steel in order to reach more lasting

solutions to the structural problems of the global

steel industry. These problems have contributed

to a decades-long, cyclical proliferation of unfair

trade and trade remedy responses. As a result, the

United States and other major steel-producing

countries launched talks in the OECD —via the

creation of a “High-Level Group”of government

officials—to address the inter-related problems of

global excess, inefficient steel capacity and the

market distorting practices which help to sustain

such capacity. U.S. government officials have

helped to spearhead these OECD efforts to urge

the market-driven rationalization of the world’s

excess, inefficient steelmaking capacity, while

also formulating better disciplines over practices

that can distort markets and trade—beginning

with and focusing on government subsidies.

In the summer of 2003, the High-Level Group

met at the OECD to take stock of the progress

being made to advance the agenda relating to

uneconomic steel capacity and market distorting

practices, and to provide further political-level

guidance for the work being done since its

previous meeting in December 2002. Much of

this work has occurred in technical subsidiary

bodies—the Capacity Working Group and the

Disciplines Study Group—set up in 2002 to

explore more deeply the relevant issues.

In the Capacity Working Group, the participating

governments have agreed upon a number of

improvements in the notification and review of

information concerning global steel capacity

developments so that such developments are

subject to a more transparent and rigorous

reporting standard. Global steel capacity trends

are now examined in accordance with a structured “peer review” procedure which was

established with the active involvement of the

United States. In this process, governments are

expected to supply detailed information as to

capacity trends in their steel industries and are

called upon to answer questions from other

governments regarding the accuracy of capacity

estimates or the appropriateness of government

policies that may help to sustain uneconomic

capacity. Based on the most recent information

submitted, the latest estimates of closure of

excess, inefficient steelmaking capacity indicate

that there was closure of 105 million metric tons

of capacity worldwide during the period from

1998-2002, with another 29-35 million tons

projected to be closed between 2003-2005. 

Reported new installations bring the net worldwide closure numbers to a lower, but still

significant, amount: 72-78 million tons in the

1998-2005 period. However, closures appear to

be leveling off, and there is much new capacity

being created in response to a surge in demand,

particularly in China. The United States will

continue to press other countries to pursue only

IV. OTHER MULTILATERAL ACTIVITIES | 203
market-driven restructuring and investment

through the work of the Capacity Working Group.

With respect to market-distorting practices,

nearly 40 governments have been working intensively to develop an agreement that would reduce

or eliminate trade-distorting government subsidies to the steel sector, establishing stronger rules

and going well beyond current international

disciplines. Significant progress has been made in

elaborating upon its core elements (e.g., the

nature and extent of the subsidy prohibition) and

identifying options for resolving difficult issues.

However, major points of contention remain,

such as: (1) whether subsidies beyond limited

plant closure aid should be exempted from the

envisaged blanket prohibition of all subsidies; (2)

the kind and level of special and differential treatment, if any, that should be accorded to

developing countries; and (3) whether and to

what extent the agreement should address trade

remedies. We have worked well with the other

participants to promote progress in these talks,

but significant differences of view remain on

some of these key issues. The goal remains to

produce an “advanced negotiating text” for political level review by the spring of 2004 and to

conclude negotiations by the end of 2004.

12. Developing Countries

During 2003, the Trade Committee and its

Working Party discussed a number of issues of

particular concern to developing countries on

which the OECD had undertaken analysis. These

included revenue losses associated with the

lowering of tariffs, structural adjustment in

textiles and clothing, and the impact of preference erosion. In October 2003, the Trade

Committee discussed in joint session with the

Chair of the OECD Development Assistance

Committee (DAC) enhancing coherence between

trade policy and development strategies.

Members noted the Trade Committee’s ongoing

efforts to take account of policy impacts on 

developing nations in its work.

The Trade Committee built on its previous work

with the DAC to make available current OECD

work helpful to trade negotiators, particularly

from developing countries. In 2003, twenty-three

recent OECD analytical papers on topics relevant

to the Doha Development Agenda were put

together as a CD-ROM “Tool Kit II.” The OECD

distributed copies of the Tool Kit II free of charge

to all WTO Member governments at the WTO

Ministerial Meeting in Cancun in September; free

updates are available through a link on the OECD

website. The Tool Kit II also contains interviews

with Trade Directorate staff members and video

presentations from the June 2003 OECD Global

Forum on Trade. 

In addition to that Global Forum, which focused

on the “market access challenge in the DDA”

(Doha Development Agenda), the OECD organized other trade-related outreach events for

developing countries in 2003. These included a

regional workshop on “promoting merchandise

trade” for African business, government, and

non-governmental organization representatives,

held in December in Nairobi; a regional workshop on “trade capacity building and private

sector development in Asia,” held in Phnom Penh

also in December; and a conference on trade and

investment for African and international private

and public sector leaders, held in Dakar in April. 

With support from the United States, the OECD

in 2003 continued working with the WTO on

their joint trade capacity building database. The

database identifies trade-related technical assistance and capacity building efforts of multilateral

agencies and national governments within the

context of the DDA. This information is critical to

improving knowledge of available assistance and

assessing responsiveness to developing country

needs. All multilateral and bilateral donors

contributed to the compilation of information.

The database indicates that the United States was

the largest bilateral donor, accounting alone for

over half of bilateral trade capacity building assistance in 2002. The information from the database

is being widely distributed among donors and

204 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
developing country trade officials to coordinate

more effectively trade-related technical assistance

activities worldwide. 

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 fifth party. The 1999 Joint

Statement on Semiconductors reflects 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). Moreover,

whereas activities in the 1990’s were focused on

the Japanese market, today the agenda under this

unique forum covers a broad range of public

policy issues aimed at promoting the health

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 2003, industry CEOs representing all five

parties held their fourth World Semiconductor

Council (WSC) meeting under the 1999 Joint

Statement. The WSC was created under a previous

Joint Statement (1996) 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. Membership in the

WSC requires governments of national/regional

industry associations to have eliminated semiconductor tariffs, or committed to eliminate these

tariffs expeditiously. 

The 1999 Joint Statement also requires that

governments and other authorities meet 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 fourth such meeting was held in November

2003, hosted by the United States. At that meeting,

the WSC recommended that government authorities pursue the following policies: promotion of

open and competitive markets around the world;

protection of intellectual property rights; nondiscrimination for foreign products in all markets,

including a lowering of China’s VAT rate to 

3 percent on all semiconductors, regardless of

origin; promotion of fair and effective

antidumping rules; discouraging the use of copyright levies on digital equipment; expanding

participation in the Information Technology

Agreement (ITA); re-affirmation of the principle

that in all markets, the competitiveness of semiconductor producers—and not trade-distorting

measures—should be the principle determinant of

success; full protection of intellectual property;

adoption of policies that promote the growth of ecommerce, including a permanent customs duty

moratorium on electronic commerce transactions;

and adoption of environmental regulations that

are both the least trade restrictive possible and

based on scientific assessments of the risks posed

by the targeted materials and their likely substitutes. The WSC has invited China to become a

party to the Joint Statement, reflecting China’s

increasing importance as a producer and

consumer of semiconductors. China is expected

to become the second-largest market for semiconductors, behind the United States, by 2010. 

E. Steel Trade Policy 

In 2003, the Administration continued to implement the President’s comprehensive strategy to

respond to the challenges facing the United States

steel industry. This strategy, announced on June

5, 2001, is designed to restore market forces to

world steel markets and to eliminate practices

that harm the U.S. steel industry and its workers.

IV. OTHER MULTILATERAL ACTIVITIES | 205
The Administration’s initiative contains three

elements. First, the President directed the United

States Trade Representative to request that the

International Trade Commission 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.

Second, the President directed the United States

Trade Representative, in cooperation with the

Secretaries of Commerce and Treasury, to initiate

negotiations with our trading partners to eliminate inefficient excess capacity in the steel

industry worldwide. Finally, the President

directed the United States Trade Representative,

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 underlying market-distorting subsidies

that led to the current conditions of the global

steel industry.

The President, in March 2002, imposed temporary safeguard measures after a comprehensive

investigation by the U.S. International Trade

Commission (ITC), which found that imports of

certain steel products were a substantial cause of

serious injury to domestic steel industries. These

safeguard measures, which were intended to give

our domestic industry an opportunity to adjust to

import competition, took the form of tariffs,

ranging from 8 percent to 30 percent on imports

of ten steel product groups, and a tariff-rate quota

(TRQ) on steel slab. In order to minimize the

impact of these tariffs on U.S. consumers, imports

of more than 1,000 niche steel products not sufficiently available from domestic producers were

excluded from the relief. In addition, imports

from our free trade partners and most imports

from developing countries were excluded. 

After the safeguards were implemented, several

WTO Members requested consultations under

the WTO Dispute Settlement Understanding.

When consultations failed to resolve the dispute,

a panel was established to consider the

complaints. The WTO panel issued a report in

July 2003 finding that the United States did not

establish a sufficient basis for imposing the safeguard measures. The United States appealed the

panel report, and the Appellate Body report was

released on November 10, 2003. The WTO

Appellate Body upheld the Panel’s ultimate

conclusion that each of the ten U.S. safeguard

measures was inconsistent with WTO rules. 

On September 19, 2003, the ITC issued its

midterm report regarding the steel safeguard

measures. The ITC midterm report documented a

number of changes that occurred in domestic and

global steel markets. The ITC reported that “since

the imposition of the safeguard measures, the

industries producing steel products (subject to the

safeguard) have undergone major restructuring

and consolidation.” The ITC report also indicated

that steel producers and workers “negotiated

groundbreaking collective bargaining agreements

since the imposition of the safeguard measures.”

On December 4, 2003, President Bush signed a

proclamation terminating the steel tariffs and the

TRQ. The proclamation stated: “The U.S. steel

industry wisely used the 21 months of breathing

space we provided to consolidate and restructure.

The industry made progress increasing productivity, lowering production costs, and making

America more competitive with foreign steel

producers.” As indicated in the proclamation, the

President concluded that the safeguard measures

have achieved their purpose, and as a result of

changed economic circumstances, maintaining

the measures was no longer warranted.

In his proclamation, the President indicated that

the Administration will continue its steel import

licensing and monitoring program which was

established concurrently with the safeguards so it

can respond to future import surges that could

unfairly damage the industry. 

Significant progress was made in implementing

the other elements of the Administration’s steel

strategy. In December 2002, the world’s major

steel-producing countries began negotiations in

the OECD to eliminate market-distorting

government practices in steel trade, focusing first

on the substantial reduction and elimination of

206 | 2004 TRADE POLICY AGENDA AND 2003 ANNUAL REPORT
market-distorting steel subsidies. The agreement

by all of the world’s major steel producers to

begin these negotiations was a historic achievement in a sector of the world economy that has

defied previous reform efforts. Participants also

reached consensus on a work schedule that aims

to produce an advanced working text by the

spring of 2004. The participants in the OECD

discussions of excess inefficient steel capacity

have forecasted significant closure of such

capacity, and have commenced a robust peer

review process in which governments report

information and answer questions about

capacity developments within their territories.

Projections by participants in this process show

that excess inefficient capacity will fall by 72 to

78 million metric tons from 1998 through 2005.

The ongoing work on steel 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.

IV. OTHER MULTILATERAL ACTIVITIES | 207
ANNEX I
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, 2003 is estimated based on partial year data (January-October).

3

 Goods trade excluding intra-EU trade.

4

 Trade in goods and services alone has increased 23-fold since 1970 and 71 percent since 1994. 

5

 Thirteen percent of the value of GDP in 1970 and 27 percent in 1994. 

6

 Eleven percent of the value of GDP in 1970 and 22 percent in 1994.

1

U.S. Trade in 2003

I. 2003 Overview

U.S. trade (exports and imports of goods and services, and the receipt and payment of earnings on foreign

investment)1 increased by 6.5 percent in 2003 to a value of approximately $3.2 trillion.2 This was the

first yearly increase in trade since 2000. The increase in trade in 2003 largely reflected the continued

recovery of the U.S. economy as well as improved economic conditions in a number of U.S. trade

partners. U.S. trade of goods and services, U.S. trade of goods alone, and U.S. trade of services alone, all

exhibited similar increases, each up over 7 percent. Exports of goods and services, and earnings on

investment increased by 3.6 percent, and imports of goods and services, and payments on investment

increased by 8.8 percent in 2003. 

In 2002, the latest year for which international data is available, the United States was the largest trading

nation in the world for both exports and imports of goods and services. The United States accounts for

roughly 19 percent of world goods trade and for roughly 15 percent of world services trade.3

 Through

2003, the value of U.S. trade has increased 24-fold since 1970, and 70 percent since 1994, the year before

the start of the Uruguay Round implementation (figure 1).4 U.S. trade expansion was more rapid in the

1970-2003 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, 6.1

percent versus 3.1 percent. 

The value of trade in goods and services, including earnings and payments on investment, was 29.5

percent of the value of U.S. GDP in 2003 (figure 2). This represented an increase from the

corresponding figure in 2002 (28.9 percent), but down from its high point in 2000 (34 percent).5 For

goods and services, excluding investment earnings and payments, U.S. trade represented 24.1 percent of

the value of GDP in 2003, up from 23.5 percent in 2002, but down from its high of 26 percent in 2000.6
2

 Total exports + imports

 Source: U.S. Department of Commerce.

 Total exports + imports as a percentage of the value of U.S. GDP

 Source: U.S. Department of Commerce.

 
3

This growth in trade has occurred in both U.S. exports and imports. U.S. exports of goods and services

(including investment earnings) in 2003 are 19-fold greater than 1970 and 47 percent greater than 1994. 

U.S. imports of goods and services are 30-fold greater than 1970 and 92 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 $88 billion

from $418 billion in 2002 (4.0 percent of GDP) to $506 billion in 2003 (4.6 percent of GDP). The U.S.

deficit in goods trade alone increased by $81 billion from $483 billion in 2002 (4.6 percent of GDP) to

$564 billion in 2003 (5.2% of GDP). The services trade surplus declined from $65 billion in 2002 (0.6

percent of GDP) to $58 billion in 2003 (0.5 percent of GDP). 

II. Goods Trade

A. Export Growth

U.S. goods exports increased by 6 percent in 2003, as compared to the 6 percent decrease in the

preceding year (table 1). Manufacturing exports, which accounts for 87 percent of total goods exports,

was up only two percent, while agriculture exports, which accounts for 8 percent of total goods exports,

were up by 10 percent. High technology exports, a subset of manufacturing exports, accounted for 25

percent of total goods exports and were down 2 percent in 2003. U.S. goods exports increased for nearly

every major end-use category in 2003, with the largest increase for industrial supplies and materials, up

10 percent. Only the capital goods category showed a decline in exports in 2003, of slightly over one

percent. 

Since 1994, U.S. goods exports are up 40 percent. Manufacturing exports increased 43 percent while

high technology exports increased 45 percent and agriculture exports increased 31 percent. Exports of

consumer goods and industrial supplies have each risen more than 40 percent, while capital goods and

autos and auto parts have increased nearly 40 percent. Of the $202 billion increase in goods exports

since 1994, capital goods accounted for 40 percent of the increase, industrial supplies and materials

accounted for 26 percent and consumer goods accounted for 14 percent.

U.S. goods exports increased to nearly all major markets in 2003 (table 2), led by a growth rate of over

20 percent to China, and down only to Mexico (1 percent). U.S. exports increased 4 percent to high

income countries and 2 percent to middle and low income countries. Since 1994, U.S. goods exports to

low and middle income countries exhibited higher growth than that to high income countries, 47 percent

compared to 34 percent. 
4

* Annualized based on January-October 2003 data

Source: U.S. Department of Commerce, Census Basis.

Table 1:

U.S. Goods Exports

Exports:

2000 2001 2002 2003* 02-03* 94-03*

Billions of Dollars Percent Change

Total (BOP basis) 772.0 718.7 681.9 703.9 3.2 40.0

 Food, feeds, and beverages 47.9 49.4 49.6 53.5 7.8 27.5

 Industrial supplies and materials 172.6 160.1 156.8 173.2 10.4 42.7

 Capital goods, except autos 356.9 321.7 290.4 286.4 -1.4 39.7

 Autos and auto parts 80.4 75.4 78.9 79.6 0.8 37.7

 Consumer goods 89.4 88.3 84.4 88.8 5.3 48.1

 Other 34.8 34.1 32.9 33.0 0.5 24.6

 Addendum: Agriculture 52.1 55.2 54.8 60.4 10.1 30.5

 Addendum: Manufacturing 689.5 640.2 606.3 617.7 1.9 43.3

 Addendum: High technology 227.4 199.6 178.6 174.5 -2.3 44.5

* Annualized based on January-October 2003 data.

Source: U.S. Department of Commerce, Balance of Payments Basis for Total, Census Basis for Sectors.
5

Table 2:

U.S. Goods Exports to Selected Countries/Regions

Exports to:

2000 2001 2002 2003* 02-03* 94-03*

Billions of Dollars Percent Change

Canada 178.9 163.4 160.9 168.6 4.7 47.3

European Union 165.1 158.8 143.7 149.3 3.9 38.5

Japan 64.9 57.5 51.4 51.6 0.3 -3.5

Mexico 111.3 101.3 97.5 96.3 -1.2 89.3

China 16.2 19.2 22.1 26.9 21.5 189.7

Pacific Rim, except Japan and China 121.5 104.8 105.0 106.0 1.0 24.7

Latin America, except Mexico 59.3 58.2 51.6 51.6 0.2 23.8

Addendum: High Income Countries 442.9 411.6 386.8 401.5 3.8 34.0

Addendum: Low to Middle Income

 Countries

338.7 317.3 306.5 313.4 2.3 47.3

* Annualized based on January-October 2003 data.

Source: U.S. Department of Commerce, Census Basis.

Goods exports to China continued to increase in 2003, up nearly 22 percent, over $4 billion. Most of the

U.S. export growth to China was in industrial supplies and materials, which were up 41 percent. U.S.

exports of agriculture products to China doubled in the last year, rising to roughly $4 billion. Exports of

capital goods and industrial supplies accounted for 81 percent of U.S. exports to China in 2003, while

agriculture exports accounted for 14 percent. U.S. exports to China have nearly tripled since 1994 (up

190 percent through 2003).

Exports to our NAFTA partners increased nearly 3 percent in 2003, and have increased 87 percent since

1993, the year before the start of NAFTA’s implementation. Over 37 percent of aggregate U.S. goods

exports went to NAFTA countries in 2003 ($265 billion), up from nearly 33 percent in 1993 ($142

billion). 

U.S. exports to Canada, the largest U.S. export market, accounting for 24 percent of U.S. exports,

increased by 5 percent in 2003. Growth areas of U.S. exports to Canada include consumer goods (up 10

percent), industrial supplies (up 8 percent) and agriculture products (up 7 percent). Overall, U.S. exports

to Canada are up by 47 percent since 1994.

U.S. exports to Mexico, the second largest single country export market, accounting for 14 percent of

U.S. exports, declined by one percent in 2003. The decline in U.S. exports to Mexico marked the third

straight year of declining exports (down 4 percent in 2002 and 9 percent in 2001). This decline was in

the auto and auto parts category (down 12 percent) and the consumer goods category (down 10 percent). 

U.S. exports were up significantly in agriculture goods (up 9 percent). Since 1994, however, U.S.
6

exports to Mexico have increased nearly 90 percent.

U.S. exports to the European Union were up 4 percent in 2003. Exports grew in autos and auto parts (up

17 percent), consumer goods (up 11 percent), and industrial supplies (up 11 percent). In 2003, the EU

accounted for 21 percent of aggregate U.S. exports. Since 1994, U.S. exports to the EU have increased

by 39 percent.

U.S. exports to Japan, the Pacific Rim (excluding China and Japan), and Latin America (excluding

Mexico) were all up one percent or less in 2003. U.S. exports to Japan have declined in 5 of the last 7

years, and are down 3 percent since 1994. U.S. exports to the Pacific Rim and Latin America have

increased 25 percent and 24 percent, respectively, since 1994.

B. Import Growth

U.S. goods imports increased 9 percent in 2003 (table 3 and figure 4), easily surpassing the 2 percent

growth rate in 2002. Manufacturing imports, accounting for 81 percent of total goods imports, increased

5 percent in 2003. High technology imports, accounting for 16 percent of total goods imports, increased

by 5 percent as well, while agriculture imports, accounting for 4 percent of total goods imports, increased

by 13 percent in 2003. U.S. goods imports increased for nearly every major end-use category in 2003,

with the largest increases in industrial supplies (up 20 percent), food, feeds, and beverages (up 13

percent) and consumer goods (up 9 percent). Only the “other imports” category showed a decline in

2003 (down 3 percent). Consumer goods, industrial supplies, and capital goods accounted for 75 percent

of U.S. imports in 2003.

Since 1994, U.S. goods imports are up nearly 90 percent, more than double the growth by U.S. exports. 

U.S. imports of manufactured products and agriculture products have both grown by over 80 percent. 

Imports of advanced technology products have more than doubled. For the major end-use categories,

U.S. imports of consumer goods have grown by 129 percent, while industrial supplies, foods, feeds and

beverages, and autos and auto parts grew by 99 percent, 81 percent, and 77 percent, respectively. Of the

$600 billion increase in goods imports since 1994, consumer goods accounted for 31 percent of the

increase, industrial supplies and materials accounted for 27 percent, capital goods for 18 percent, and

autos and auto parts for 15 percent. 
7

 * Annualized based on January-October 2003 data.

Source: U.S. Department of Commerce, Census Basis.

Table 3:

U.S. Goods Imports

Imports:

2000 2001 2002 2003* 02-03* 94-03*

Billions of Dollars Percent Change

Total (BOP Basis) 1,224.4 1,145.9 1164.7 1,267.8 8.9 89.6

 Food, feeds, and beverages 46.0 46.6 49.7 56.1 12.8 81.1

 Industrial supplies and materials 299.0 273.9 267.7 322.3 20.4 98.8

 Capital goods, except autos 347.0 298.0 283.3 294.1 3.8 59.5

 Autos and auto parts 195.9 189.8 203.7 209.7 2.9 77.3

 Consumer goods 281.8 284.3 307.9 335.0 8.8 129.0

 Other 48.3 48.4 49.1 47.5 -3.2 123.2

 Addendum: Agriculture 39.2 39.5 42.1 47.4 12.9 82.7

 Addendum: Manufacturing 1,013.5 950.7 974.6 1,026.9 5.4 84.3

 Addendum: High technology 222.1 195.2 195.2 204.5 4.8 108.4

* Annualized based on January-October 2003 data.

Source: U.S. Department of Commerce, Balance of Payments Basis for Total, Census Basis for Sectors.
8

Table 4:

U.S. Goods Imports from Selected Countries/Regions

Imports from:

2000 2001 2002 2003* 02-03* 94-03*

Billions of Dollars Percent Change

Canada 230.8 216.3 209.1 223.3 6.8 73.9

European Union 220.0 220.1 225.8 244.7 8.4 104.8

Japan 146.5 126.5 121.4 119.2 -1.9 0.0

Mexico 135.9 131.3 134.6 137.0 1.7 176.7

China 100.0 102.3 125.2 155.0 23.8 299.6

Pacific Rim, except Japan and China 171.5 147.3 146.9 148.3 1.0 43.6

Latin America, except Mexico 73.3 67.4 69.5 78.7 13.2 104.6

Addendum: High Income Countries 630.7 595.3 591.2 624.1 5.6 62.1

Addendum: Low to Middle Income

 Countries

587.3 545.7 572.5 642.0 12.1 130.7

* Annualized based on January-October 2003 data.

Source: U.S. Department of Commerce, Census Basis.

On a regional basis, U.S. goods imports increased from nearly all the major markets in 2003, led by a

growth rate of nearly 24 percent from China, and down only from Japan, by 2 percent (table 4). U.S.

imports increased by 12 percent from low and middle income countries, and by 6 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, 131 percent compared to 62

percent. Accordingly, the share of U.S. imports from low and middle income countries has increased

from 42 percent in 1994 to 51 percent in 2003. This marked the first year that the United States imported

more from low and middle income countries than from high income countries.

U.S. goods imports continued its strong growth from China in 2003, even surpassing significant growth

rate of 2002 (24 percent as compared to 22 percent). U.S. imports from China have nearly quadrupled

since 1994. As such, China became the second largest single country supplier of goods to the United

States in 2003 (surpassing Mexico). Twelve percent of total U.S. imports were sourced from China in

2003, up from 6 percent in 1994. Imports from China accounted for 19 percent of the overall increase in

U.S. imports from the world since 1994 (third to NAFTA’s 30 percent and the European Union’s 21

percent). U.S. imports from China are primarily low value-added consumer goods, such as toys,

footwear, apparel and some areas of consumer electronics. Consumer goods made up 60 percent of U.S.

imports from China in 2003. 

Imports from Latin America (excluding Mexico) increased by 13 percent in 2003, and have more than

doubled since 1994. Roughly half of the increase in imports from Latin America was in the mineral fuel
9

category. U.S. import prices for crude oil through the first 10 months of 2003 was up 21 percent over the

same period of 2002. U.S. imports from Latin America accounted for 6 percent of total U.S. imports in

2003.

U.S. goods imports from the European Union, accounting for 19 percent of total U.S. imports, increased

by 8 percent in 2003, tripling the growth rate from 2002 (up 2.6 percent). More than half of U.S. imports

from the European Union are consumer goods and capital goods. Increasing import categories included

foods, feed and beverages (up 22 percent), autos and auto parts (up 16 percent), industrial supplies (up 13

percent), and consumer goods (up 10 percent). Imports of capital goods declined less than 1 percent. 

U.S. Imports from the EU have doubled since 1994.

Imports from our NAFTA partners increased 5 percent in 2003 and are up 138 percent since NAFTA

started implementation. NAFTA imports accounted for 29 percent of aggregate U.S. goods imports in

2003, down slightly from 30 percent in 2002, 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 7 percent in 2003 (the first import growth increase since

2000). Nearly all of the increase was in the mineral fuel category. Accordingly, U.S. imports of

industrial supplies from Canada were up 18 percent in 2003. U.S. imports from Canada have grown by

74 percent since 1994.

U.S. imports from Mexico, the third largest single country supplier of goods to the United States,

increased by 2 percent in 2002. U.S. imports of industrial supplies and foods, feeds, and beverages

increased 15 percent and 13 percent, respectively. Imports of consumer goods and autos and auto parts

both declined by 5 percent and 1 percent, respectively. U.S. imports from Mexico have grown 177

percent since 1994.

 

Imports from the Pacific Rim (excluding Japan and China) increased 1 percent in 2003, and were up 43

percent since 1994. Imports from Japan declined 2 percent in 2003, and were basically the same as in

1994. Purchases from Japan in 2003 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 4 percent in 2003 to over $300 billion, and since 1994, U.S.

services exports have increased by approximately 52 percent. U.S. services exports accounted for 30

percent of the level of U.S. goods and services exports in 2003, compared to 29 percent in 1994. 
10

* Annualized based on January-October 2003 data

 Source: U.S. Department of Commerce, Balance of Payments Basis.

Table 5:

U.S. Services Exports

Exports:

2000 2001 2002 2003* 02-03* 94-03*

Billions of Dollars Percent Change

Total (BOP basis) 298.1 288.9 292.2 303.0 3.7 51.7

 Travel 82.4 71.9 66.5 65.0 -2.4 11.2

 Passenger Fares 20.7 17.9 17.0 15.3 -10.5 -10.2

 Other Transportation 29.8 28.4 29.2 31.8 9.1 34.0

 Royalties and Licensing Fees 43.2 41.1 44.1 47.9 8.6 79.4

 Other Private Services 107.4 116.1 122.6 129.7 5.8 115.4

 Transfers under U.S. Military

 Sales Contracts

13.8 12.5 11.9 12.5 4.3 -2.6

 U.S. Government Miscellaneous

 Services

0.8 0.8 0.8 0.8 2.0 -8.6

* Annualized based on January-October 2003 data.

Source: U.S. Department of Commerce, Balance of Payments Basis.
11

The growth in U.S. services exports in 2003 was largely driven by the other private services category,

which accounted for 43 percent of total U.S. services exports and increased 6 percent ($7 billion) from

the previous year. The royalties and licensing fees category and the other transportation categories also

exhibited growth in 2003, each up roughly 9 percent ($4 billion and $3 billion, respectively). The

tourism categories (travel and passenger fares) both declined in 2003. 

Since 1994, nearly all of the major services export categories have grown. Export growth has been led

by the other private services category, up 115 percent, and the royalties and licensing fees category, up

79 percent. The other transportation and travel categories also were up 34 percent and 11 percent,

respectively. Of the $103 billion increase in U.S. services exports between 1994 and 2003, the other

private services category accounted for 67 percent of the increase and the royalties and licensing fees

category accounted for 21 percent. 

Detailed sectoral breakdowns for exports of the other private services category are available only through

2002. In 2002, other private services exports totaled $123 billion. Of this, U.S. exports to business

related parties (to a foreign parent or affiliate) accounted for $44 billion, or 35 percent of total other

private services exports. For the remaining exports of other private services to unaffiliated parties, the

values of exports in 2002 were: business, professional and technical services, $29 billion; financial

services, $16 billion; education, $13 billion; insurance premiums, $12 billion; and telecommunications,

$4 billion. Business, professional and technical services were led by the installation, maintenance, and

repair of equipment category ($5 billion), operational leasing ($3.6 billion), legal services ($3.3 billion),

and computer and data processing services ($3.0 billion). 

The United Kingdom was the largest purchaser of U.S. private services exports in 2002, accounting for

11 percent of total U.S. private services exports. The top 5 purchasers of U.S. private services exports in

2002 were: the United Kingdom ($32 billion), Japan ($30 billion), Canada ($24 billion), Germany ($16

billion), and Mexico ($16 billion).

Regionally, in 2002, the United States exported $96 billion to the EU, $75 billion to the Asia/Pacific

Region ($39 billion excluding Japan and China), $40 billion to NAFTA countries, and $23 billion to

Latin America (excluding Mexico).

B. Import Growth

Services imports by the United States increased in 2002 by nearly 8 percent to $245 billion (table 6,

figure 6). While import growth was greater than export growth in 2003 (8 percent compared to 4

percent) the United States remained a net exporter of services. Growth in U.S. imports of services in

2003 were led by three services import categories: other private services, other transportation, and direct

defense expenditures. These three categories accounted for roughly 60 percent of total services imports

in 2003. The two of the six major services import categories that declined in 2003 were travel, and

royalties and licensing fees (down 3 percent and 2 percent, respectively).
12

*Annualized based on January-October 2003 data

Source: U.S. Department of Commerce, Balance of Payments Basis.

Table 6:

U.S. Services Imports

Imports:

2000 2001 2002 2003* 02-03* 94-03*

Billions of Dollars Percent Change

Total (BOP basis) 221.0 219.5 227.4 244.7 7.6 86.6

 Travel 64.7 60.2 58.0 56.4 -2.9 28.8

 Passenger Fares 24.3 22.6 20.0 20.4 2.0 55.9

 Other Transportation 41.4 38.7 38.5 45.5 18.1 74.9

 Royalties and Licensing Fees 16.5 16.7 19.3 18.9 -1.8 223.1

 Other Private Services 57.8 63.4 69.4 76.6 10.3 158.4

 Direct Defense Expenditures 13.5 15.0 19.2 24.0 24.9 135.2

 U.S. Government Miscellaneous

 Services

2.9 2.9 2.9 3.0 2.5 17.0

* Annualized based on January-October 2003 data.

Source: U.S. Department of Commerce, Balance of Payments Basis.
7

 Miscellaneous disbursements include transactions such as outlays to fund news-gathering costs of broadcasters

and disbursements to fund production costs of motion pictures companies.

13

Since 1994, services imports grew almost 87 percent or $114 billion. This growth was driven by the

other private services category (accounting for 41 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 tripled, while imports of other private services and

direct defense expenditures have increased 158 percent and 135 percent respectively.

As with exports, detailed sectoral breakdowns for imports of other private services are available only

through 2002. In 2002, other private services imports totaled $69 billion. Of this, U.S. imports from

business related parties (from a foreign parent or affiliate) accounted for $32 billion or 47 percent of total

other private service imports. For the remaining imports of other private services from unaffiliated

parties, the values of import in 2002 were: insurance premiums, $47 billion; business professional and

technical services, $10.7 billion; telecommunications, $4.2 billion; financial services, $3.7 billion; and

education, $2.5 billion. Business, professional and technical services were led by the miscellaneous

disbursements category ($1.5 billion),7 management, consulting, and public relations services ($1.2

billion), computer and data processing services ($1.1 billion), and research, development, and testing

services ($1.0 billion). 

In the import sector, the United Kingdom remained our largest supplier of private services, providing $27

billion to the United States in 2002. This accounted for 13% of total U.S. imports of private services in

2002. The United States imported $18 billion from Canada, our second largest supplier, and $17 billion

from Japan, our third largest supplier. Germany and Mexico were our fourth and fifth largest import

suppliers, exporting $15 billion and $11 billion worth of services to the U.S., respectively, in 2002.

Regionally, the U.S. imported $77 billion of services from the EU, $48 billion from the Asia/Pacific

region ($27 billion excluding Japan and China), $29 billion from NAFTA, and $10 billion from Latin

America (excluding Mexico).

IV. The U.S. Trade Deficit

The U.S. goods and services deficit increased by $88 billion in 2003 to a level of $506 billion (table 7). 

The U.S. goods trade deficit alone increased by $81 billion to $564 billion in 2003. However, the

services trade surplus decreased by $6 billion to $58 billion in 2003.

As a share of U.S. GDP, the goods and services trade deficit was 4.6 percent of GDP in 2003, an increase

of 0.6 percentage points from the level in 2002 (table 8). The goods trade deficit was 5.2 percent of GDP

in 2003, up from 4.6 percent in 2002. The services trade surplus was 0.5 percent of GDP in 2003, down

from 0.6 percent in 2002. 

The regional distribution of the goods trade deficit for the past 4 years is shown in table 9.
14

Table 7

U.S. Trade Balances with the World

Balance:

2000 2001 2002 2003*

Billions of Dollars

Goods and Services (BOP Basis) -375.4 -357.8 -418.0 -505.6

Goods (BOP Basis) -452.4 -427.2 -482.9 -564.0

Services (BOP Basis) 77.0 69.4 64.8 58.3

* Annualized based on January-October 2003 data.

Source: U.S. Department of Commerce, Balance of Payments Basis for World.

Table 8

U.S. Trade Balances as a share of GDP

Share of GDP:

2000 2001 2002 2003*

Percent

Goods and Services (BOP Basis) -3.8 –3.5 -4.0 -4.6

Goods (BOP Basis) -4.6 -4.2 -4.6 -5.2

Services (BOP Basis) 0.8 0.7 0.6 0.5

* Annualized based on January-October 2003 data.

Source: U.S. Department of Commerce.
15

Table 9

U.S. Goods Trade Balances with Selected Countries/Regions

Balance:

2000 2001 2002 2003*

Billions of Dollars

Canada -51.9 -52.8 -48.2 -54.7

European Union -55.0 -61.3 -82.1 -95.4

Japan -81.6 -69.0 -70.0 -67.6

Mexico -24.6 -30.0 -37.1 -40.7

China -83.6 -83.1 -103.1 -128.1

Pacific Rim, except Japan and China -50.0 -42.6 -41.9 -42.2

Latin America, except Mexico -14.1 -9.2 -18.0 -27.1

Addendum: High Income Countries -187.8 -183.7 -204.4 -222.7

Addendum: Low to Middle Income

 Countries

-248.6 -228.5 -266.0 -328.6

* Annualized based on January-October 2003 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 ................. .............

U.S. Submissions in Support of the Doha Development Agenda ................. ...............

Institutional Issues

Membership of the WTO. ................. ................. ................. ............

2004 WTO Budget Contributions ................. ................. ................. .....

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 Panelists ................. ..............

Appellate Body Membership ................. ................. ................. .........

Where to Find More Information on the WTO ................. ................. ............
1

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.
2

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 marketaccess 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.
3

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
4

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.
5

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
6

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.
7

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

non-discriminatory 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
8

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 leastdeveloped 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
9

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 TradeRelated 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 DirectorGeneral 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.
10

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 Director-General, 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.
11

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.

_________
12

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 leastdeveloped 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:

(a) 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.
13

(b) Each Member has the right to grant compulsory licences and the freedom to determine the

grounds upon which such licences are granted.

(c) 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.

(d) 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.
14

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
15

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
16

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:
17

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-on-growth 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 
18

(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 leastdeveloped 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.
19

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 AntiDumping 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
20

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 re-included in it when

its GNP per capita falls back below US$ 1,000.
21

10.5 Subject to the provisions of Articles 27.5 and 27.6, it is reaffirmed that least-developed

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.
1

 BISD 26S/203.

2A list of these issues is compiled in document Job(01)/152/Rev.1.

22

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. 
23

U.S. SUBMISSIONS TO THE WTO IN SUPPORT 

OF THE DOHA DEVELOPMENT AGENDA 

Committee on Agriculture, Special Session

• Export Competition, Market Access & Domestic Support (JOB(02)/122)

Council on Trade in Services, Special Session

• 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)

Negotiating Group on Market Access

• Tariffs & Trade Data Needs Assessment (TN/MA/W/2)

• Environmental Goods (TN/MA/W/3)

• 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-Agricultural Market Access: Modalities (TN/MA/W/44)

Joint communication from the United States, Canada, and the EU 

Negotiating Group on Rules

• Fisheries Subsidies (TN/RL/W/3)

Joint communication from the United States, Australia, Chile, Ecuador, Iceland, New Zealand,

Peru, and the Philippines 

• 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)
24

• 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)

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 (G/SCM/W/521)

Joint communication from the United States, Australia, Canada, the EU, Japan and

Switzerland 

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)

Joint communication from United States and Chile

• Further Contribution of The United States to The Improvement of The Dispute Settlement

Understanding of the WTO Related to Transparency – suggested text (TN/DS/W/46)

• Negotiations on Improvements and Clarifications of the Dispute Settlement Understanding on

Improving Flexibility and Member Control in WTO Dispute Settlement – suggested text

(TN/DS/W/52)

Joint communication from United States and Chile

Committee on Trade and Environment, Regular and Special Session

• Para. 31 (ii) WTO - Multilateral Environmental Agreements (MEAs) Co-operation (TN/TE/W/5)

• Para. 31 (iii) Environmental Goods (TN/TE/W/8)

• Para. 31 (i) Multilateral Environmental Agreements (MEAs) (TN/TE/W/20)

• Paragraph 33 of the Doha Declaration (WT/CTE/W/227)
25

(Dual submissions on Environmental Goods are listed under the Negotiating Group on Market Access)

Council on TRIPS, Regular & Special Session

• Proposal on GIs for Wine & Spirits (TN/IP/W/6) 

• Questions and Answers: Comparison of Proposals (TN/IP/W/1)

• Issues for Discussion, Article 23.4 (TN/IP/W/2)

• Second submission on TRIPS & Public Health, Paragraph.6 (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)

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)

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)

Work Program on Electronic Com merce

• 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)
26

MEMBERSHIP OF THE WORLD TRADE ORGANIZATION

as of January 1, 2004 (146 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

Armenia February 5, 2003 Estonia November 13, 1999

Australia January 1, 1995 European Union January 1, 1995

Austria January 1, 1995 Fiji January 14, 1996

Bahrain January 1, 1995 Finland January 1, 1995

Bangladesh January 1, 1995 Former Yugoslav

Republic of Macedonia

April 4, 2003

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

Côôte 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
27

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 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

*During 2003, Cambodia and Nepal completed their accession process, but domestic ratification

requirements have not yet been completed. Membership will occur 30 days after the instrument of

acceptance is deposited with the WTO.
28

PROPOSED REVISED SCALE OF CONTRIBUTIONS FOR 2004

(Minimum contribution of 0.015 per cent)

MEMBERS 2003

Contribution

2004

Contribution

Interest

Earned1

2004 net

Contribution

CHF % CHF CHFCHF

Albania 23,070 0.015 24,084 3424,050 

Angola 106,122 0.080 128,448 103128,345 

Antigua and Barbuda 23,070 0.015 24,084 24,084 

Argentina 713,632 0.462 741,787 741,787 

Armenia 0.015 24,084 24,084 

Australia 1,757,934 1.154 1,852,862 3,6311,849,231 

Austria 2,111,674 1.376 2,209,306 4,2272,205,079 

Bahrain 106,122 0.073 117,209 160117,049 

Bangladesh 163,028 0.105 168,588 43168,545 

Barbados 30,760 0.019 30,506 3930,467 

Belgium 4,107,998 2.682 4,306,219 5,3414,300,878 

Belize 23,070 0.015 24,084 24,084 

Benin 23,070 0.015 24,084 24,084 

Bolivia 38,450 0.025 40,140 6940,071 

Botswana 58,444 0.035 56,196 8456,112 

Brazil 1,424,188 0.950 1,525,320 8421,524,478 

Brunei Darussalam 63,058 0.041 65,830 11065,720 

Bulgaria 144,572 0.097 155,743 45155,698 

Burkina Faso 23,070 0.015 24,084 24,084 

Burundi 23,070 0.015 24,084 24,084 

Cameroon 38,450 0.026 41,746 8441,662 

Canada 6,067,410 3.940 6,326,064 10,8066,315,258 

Central African Republic 23,070 0.015 24,084 24,084 

Chad 23,070 0.015 24,084 24,084 

Chile 446,020 0.311 499,342 384498,958 

China, People's Republic of 4,852,390 3.261 5,235,862 7,6875,228,175 

Colombia 324,518 0.219 351,626 6351,620 

Congo 35,374 0.024 38,534 38,534 

Costa Rica 149,186 0.101 162,166 270161,896 

Côte d'Ivoire 96,894 0.063 101,153 101,153 

Croatia 204,554 0.138 221,573 276221,297 

Cuba 107,660 0.064 102,758 200102,558 

Cyprus 93,818 0.061 97,942 15097,792 

Czech Republic 767,462 0.510 818,856 1,598817,258 

Democratic Republic of the

Congo 24,608 0.019 30,506 30,506 

Denmark 1,462,638 0.954 1,531,742 2,6231,529,119 

Djibouti 23,070 0.015 24,084 24,084 

Dominica 23,070 0.015 24,084 24,084 

Dominican Republic 196,864 0.125 200,700 200,700 
29

Ecuador 118,426 0.082 131,659 201131,458 

Egypt 398,342 0.258 414,245 784413,461 

El Salvador 90,742 0.060 96,336 10596,231 

Estonia 98,432 0.064 102,758 192102,566 

European Communities 0 0.000 0 0 

Fiji 23,070 0.016 25,690 4125,649 

Finland 987,396 0.635 1,019,556 1,9821,017,574 

Former Yugosalve Republic of

Macedonia 0.025 40,140 40,140 

France 8,108,336 5.212 8,368,387 14,0408,354,347 

Gabon 52,292 0.035 56,196 56,196 

Gambia 23,070 0.015 24,084 24,084 

Georgia 23,070 0.015 24,084 24,084 

Germany 13,718,960 8.885 14,265,756 14,96114,250,795 

Ghana 66,134 0.038 61,013 61,013 

Greece 632,118 0.409 656,690 502656,188 

Grenada 23,070 0.015 24,084 4224,042 

Guatemala 96,894 0.063 101,153 152101,001 

Guinea 23,070 0.015 24,084 24,084 

Guinea-Bissau 23,070 0.015 24,084 24,084 

Guyana 23,070 0.015 24,084 24,084 

Haiti 23,070 0.015 24,084 224,082 

Honduras 59,982 0.038 61,013 9760,916 

Hong Kong, China 4,869,308 3.196 5,131,498 10,0835,121,415 

Hungary 641,346 0.427 685,591 528685,063 

Iceland 69,210 0.043 69,041 13868,903 

India 1,307,300 0.799 1,282,874 7861,282,088 

Indonesia 1,190,412 0.811 1,302,142 1,3141,300,828 

Ireland 1,847,138 1.149 1,844,834 3,5711,841,263 

Israel 873,584 0.563 903,953 1,185902,768 

Italy 6,361,168 4.156 6,672,874 9,6766,663,198 

Jamaica 83,052 0.055 88,308 6688,242 

Japan 9,780,142 6.394 10,266,206 4,34010,261,866 

Jordan 93,818 0.064 102,758 98102,660 

Kenya 67,672 0.045 72,252 10972,143 

Korea, Republic of 3,640,446 2.415 3,877,524 6,5823,870,942 

Kuwait 292,220 0.196 314,698 314,698 

Kyrgyz Republic 23,070 0.015 24,084 24,084 

Latvia 75,362 0.050 80,280 14780,133 

Lesotho 23,070 0.015 24,084 24,084 

Liechtenstein 38,450 0.025 40,140 8340,057 

Lithuania 116,888 0.081 130,054 206129,848 

Luxembourg 530,610 0.343 550,721 856549,865 

Macao, China 95,356 0.064 102,758 178102,580 
30

Madagascar 23,070 0.015 24,084 4424,040 

Malawi 23,070 0.015 24,084 24,084 

Malaysia 1,948,646 1.302 2,090,491 3,7072,086,784 

Maldives 23,070 0.015 24,084 1524,069 

Mali 23,070 0.015 24,084 24,084 

Malta 75,362 0.047 75,463 14075,323 

Mauritania 23,070 0.015 24,084 24,084 

Mauritius 58,444 0.039 62,618 12162,497 

Mexico 3,486,646 2.231 3,582,094 1,7603,580,334 

Moldova 23,070 0.015 24,084 4,86419,220 

Mongolia 23,070 0.015 24,084 2924,055 

Morocco 239,928 0.155 248,868 253248,615 

Mozambique 23,070 0.015 24,084 424,080 

Myanmar, Union of 49,216 0.033 52,985 6952,916 

Namibia 41,526 0.027 43,351 4743,304 

Netherlands, Kingdom of the 5,353,778 3.422 5,494,363 6,5895,487,774 

New Zealand 373,734 0.250 401,400 736400,664 

Nicaragua 30,760 0.019 30,506 6330,443 

Niger 23,070 0.015 24,084 24,084 

Nigeria 292,220 0.191 306,670 306,670 

Norway 1,261,160 0.855 1,372,788 2,3691,370,419 

Oman 161,490 0.111 178,222 239177,983 

Pakistan 235,314 0.157 252,079 212251,867 

Panama 175,332 0.115 184,644 228184,416 

Papua New Guinea 47,678 0.030 48,168 6348,105 

Paraguay 79,976 0.051 81,886 81,886 

Peru 193,788 0.130 208,728 208,728 

Philippines 850,514 0.562 902,347 4902,343 

Poland 1,068,910 0.701 1,125,526 1,8201,123,706 

Portugal 879,736 0.567 910,375 472909,903 

Qatar 127,654 0.070 112,392 112,392 

Romania 256,846 0.176 282,586 492282,094 

Rwanda 23,070 0.015 24,084 24,084 

Saint Lucia 23,070 0.015 24,084 2624,058 

Senegal 33,836 0.022 35,323 7235,251 

Sierra Leone 23,070 0.015 24,084 24,084 

Singapore 3,034,474 2.022 3,246,523 3,5873,242,936 

Slovak Republic 304,524 0.191 306,670 504306,166 

Slovenia 246,080 0.159 255,290 467254,823 

Solomon Islands 23,070 0.015 24,084 24,084 

South Africa 739,778 0.488 783,533 279783,254 

Spain 3,740,416 2.411 3,871,102 3,2183,867,884 
31

Sri Lanka 144,572 0.093 149,321 100149,221 

St. Kitts and Nevis 23,070 0.015 24,084 4124,043 

St. Vincent and the Grenadines 23,070 0.015 24,084 2624,058 

Suriname 23,070 0.015 24,084 24,084 

Swaziland 24,608 0.016 25,690 5425,636 

Sweden 2,208,568 1.397 2,243,023 4,5022,238,521 

Switzerland 2,251,632 1.463 2,348,993 4,3142,344,679 

Chinese Taipei 3,123,678 2.000 3,211,200 6353,210,565 

Tanzania 36,912 0.024 38,534 38,534 

Thailand 1,461,100 0.991 1,591,150 2,9191,588,231 

Togo 23,070 0.015 24,084 24,084 

Trinidad and Tobago 63,058 0.040 64,224 4764,177 

Tunisia 195,326 0.129 207,122 353206,769 

Turkey 1,150,424 0.740 1,188,144 7701,187,374 

Uganda 27,684 0.017 27,295 827,287 

United Arab Emirates 855,128 0.523 839,729 678839,051 

United Kingdom of Great Britain

 and Northern Ireland 8,800,436 5.689 9,134,258 17,6309,116,628 

United States of America 24,452,662 15.735 25,264,116 4,72525,259,391 

Uruguay 89,204 0.057 91,519 191,518 

Venezuela 486,008 0.326 523,426 523,426 

Zambia 23,070 0.016 25,690 25,690 

Zimbabwe 69,210 0.044 70,646 6970,577 

TOTAL 153,800,000 100.000 160,560,000 181,224160,378,77

6 
32

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 
33

2004 PROPOSED REVISED BUDGET FOR 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 1,684,900 0 1,684,900 

(b)Pension 350,100 0 350,100 

(c)Common Staff Costs 290,500 0 290,500 

Sect 2 Temporary Assistance 36,000 0 36,000 

B Sect 3 Communications (a) Telecommunications 6,500 0 6,500 

Sect 4 Building Facilities (b) Utilities 13,000 0 13,000 

(c) Maintenance and Insurance 5,000 0 5,000 

Sect 5 Permanent Equipt 23,000 0 23,000 

Sect 6 Expendable 20,000 0 20,000 

Sect 7 Contractual Serv. (a) Reproduction 15,000 0 15,000 

C Sect 8 Staff Overheads (a) Training 25,000 0 25,000 

(b) Insurance 9,000 0 9,000 

(d) Miscellaneous 2,000 0 2,000 

Sect 9 Missions (a)Missions Official 10,000 0 10,000 

Sect 11 Various (a) Representation and Hospitality 1,000 0 1,000 

(d) Appellate Body Members 620,000 0 620,000 

(e) Library 8,000 0 8,000 

(l) Appellate Body Operating Fund 1,696,800 (100,000) 1,596,800 

G r a n d

Total 4,815,800 (100,000) 4,715,800 
34

2005 PROPOSED BUDGET FOR THE WTO SECRETARIAT

(in Swiss francs)

2005 Budget

Part Section Item

Original Proposal

2005 Reductions

Revised Proposal

2005

A Sect 1 Work Years (a)Salary 77,117,100 (1,690,300) 75,426,800 

(b)Pension 15,569,000 (356,200) 15,212,800 

(c)Common Staff Costs 14,449,700 (970,300) 13,479,400 

Sect 2 Temporary

Assistance 17,417,950 (2,170,800) 15,247,150 

B Sect 3 Communications (a) Telecommunications 798,000 (50,000) 748,000 

(b) Postal Charges 1,605,000 (150,000) 1,455,000 

Sect 4 Building Facilities(a) Rental 312,400 (10,000) 302,400 

(b) Utilities 1,651,500 (32,000) 1,619,500 

(c) Maintenance and Insurance 1,170,000 23,000 1,193,000 

Sect 5 Permanent Equipt 3,185,850 (38,000) 3,147,850 

Sect 6 Expendable 1,430,000 (77,000) 1,353,000 

Sect 7 Contractual Serv. (a) Reproduction 1,430,000 (50,000) 1,380,000 

(b) Office Automation 2,395,300 (210,500) 2,184,800 

(c)Other 277,000 (10,000) 267,000 

C Sect 8 Staff Overheads (a) Training 710,000 (220,000) 490,000 

(b) Insurance 1,988,900 (45,200) 1,943,700 

(c) Joint Services 647,000 (15,000) 632,000 

(d) Miscellaneous 94,000 (47,500) 46,500 

Sect 9 Missions (a)Missions Official 1,217,100 (36,000) 1,181,100 

(b)Missions Technical 1,424,200 (41,000) 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 1,316,000 (99,000) 1,217,000 

(e) Library 642,000 (63,100) 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 95,000 (5,000) 90,000 

Sect 12 Unforeseen 100,000 0 100,000 

D Sect 13 ITC 16,306,450 (297,150) 16,009,300 

Grand Total 168,815,450 (6,781,050) 162,034,400 
35

2005 PROPOSED BUDGET FOR THE APPELLATE BODY AND ITS SECRETARIAT

(in Swiss francs)

2005 Budget

Part Section Item

Original

Proposal 2005 Reductions

Revised

Proposal 2005

A Sect 1 Work Years (a)Salary 1,725,200 0 1,725,200 

(b)Pension 357,900 0 357,900 

(c)Common Staff Costs 296,400 0 296,400 

Sect 2 Temporary Assistance 36,000 0 36,000 

B Sect 3 Communications (a) Telecommunications 6,500 0 6,500 

Sect 4 Building Facilities (b) Utilities 13,000 0 13,000 

(c) Maintenance and Insurance 5,000 0 5,000 

Sect 5 Permanent Equipt 23,000 0 23,000 

Sect 6 Expendable 20,000 0 20,000 

Sect 7 Contractual Serv. (a) Reproduction 15,000 0 15,000 

C Sect 8 Staff Overheads (a) Training 30,000 (5,000) 25,000 

(b) Insurance 9,000 0 9,000 

(d) Miscellaneous 2,000 0 2,000 

Sect 9 Missions (a)Missions Official 10,000 0 10,000 

Sect 11 Various (a) Representation and Hospitality 1,000 0 1,000 

(d) Appellate Body Members 620,000 0 620,000 

(e) Library 8,000 0 8,000 

(l) Appellate Body Operating Fund 1,696,800 (100,000) 1,596,800 

Grand Total 4,874,800 (105,000) 4,769,800 
36

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.

WAIVERS IN FORCE AS OF JANUARY 1, 2003 GRANTED EXPIRES

Introduction of the Harmonized System 2002 changes into WTO

Schedules of Tariff Concessions: Argentina, Australia, Bulgaria,

Canada, China, Croatia, Czech Republic, Estonia, European

Communities, Hungary, Iceland, India, Korea, Latvia, Lithuania,

Mexico, Nicaragua, Norway, Romania, Singapore, Slovak

Republic, Slovenia, Switzerland, Thailand, United States,

Uruguay and Hong Kong, China and Macao, China 

December 12, 2002 December 31, 2003

Switzerland –– Preferences for Albania and Bosnia-Herzegovina July 18, 2001 March 31, 2004

Argentina –– Introduction of the Harmonized System 1996

changes into WTO Schedules of Tariff Concessions

July 24, 2003 April 30, 2004

Israel –– Introduction of the Harmonized System 1996 changes

into WTO Schedules of Tariff Concessions

December 16, 2003 April 30, 2004

Thailand - Introduction of the Harmonized System 1996 changes

into WTO Schedules of Tariff Concessions 

December 16, 2003 April 30, 2004

Sri Lanka –– Establishment of a new Schedule VI December 16, 2003 April 30, 2004

El Salvador –– Agreement on the Implementation of Article VII of

the GATT 1994

July 8, 2002 March 7, 2005

United States –– Caribbean Basin Economic Recovery Act November 15, 1995 December 31, 2005

EC –– Transitional Regim e for the EC Autonomous Tariff Rate

Quotas on Imports of Bananas

November 14, 2001 December 31, 2005

United States –– Former Trust Territory of the Pacific Islands October 14, 1996 December 31, 2006

Canada - CARIBCAN October 14, 1996 December 31, 2006

Turkey –– Preferential Treatment for Bosnia-Herzegovina December 8, 2000 December 31, 2006

EC –– Autonomous Preferential Treatment to the Countries of

the Western Balkans

December 8, 2000 December 31, 2006

Cuba –– Article XV:6 of the GATT 1994 December 20, 2001 December 31, 2006

Kimberley Process Certification Scheme for rough diamonds:

Australia, Brazil, Canada, Czech Republic, European

Communities, Israel, Japan, Korea, Philippines, Sierra Leone,

Switzerland, Thailand, United Arab Emirates and the United

States. Countries covered by Paragraph 3 of the Decision:

Bulgaria, Croatia, Czech Republic, European Communities,

Hungary, Mauritius, Romania; Separate Customs Territory of

Taiwan, Penghu, Kinmen and Matsu; Slovenia, Switzerland,

Venezuela

May 15, 2003 December 31, 2006

EC –– The ACP-EC Partnership Agreement November 14, 2001 December 31, 2007

Preferential Tariff Treatment for Least-Developed Countries June 15, 1999 June 30, 2009

LDCs –– Article 70.9 of the TRIPS Agreement with respect to

pharmaceutical products

July 8, 2002 January 1, 2016

Introduction of the Harmonized System 2002 changes into WTO

Schedules of Tariff Concessions: Argentina, Australia, Bulgaria,

Canada, China, Colombia, Croatia, Czech Republic, Estonia,

May 13, 2002 Expires 1 year after

the date of

implementation of
37

European Comm unities, Hungary, Iceland, India, Korea, Latvia,

Lithuania, Malaysia, Mexico, New Zealand, Norway, Romania,

Singapore, Slovak Republic, Slovenia, Switzerland, Thailand,

Turkey, United States, Uruguay and Hong Kong, China

HS2002 changes.
38

WTO SECRETARIAT PERSONNEL STATISTICS

Number of Staff M embers by Job Category

Country Senior Professional Support Total

Argentina 4 3 7

Australia 8 3 11

Austria 4 2 6

Belgium 3 1 4

Benin 1 1

Bolivia 2 1 3

Brazil 1 3 2 6

Cameroon 1 1

Canada 24 3 27

Chile 2 4 6

China 5 5

Colombia 5 1 6

Congo, RDC 1 1

Costa Rica 1 1

Cote d'Ivoire 1 1

Cuba 1 1

Denm ark 1 1 2

Ecuador 1 1

Egypt 5 5

Estonia 1 1

Ethiopia 1 1

Finland 2 2 4

France 46 107 153

Germany 13 3 16

Ghana 3 3

Greece 4 4

Honduras 1 1

Hong Kong 1 1

Hungary 1 2 3

India 9 4 13

Ireland 3 8 11

Italy 10 3 13

Japan 4 4

Kenya 1 1

Korea, Republic of 1 1

Lebanon 1 1

Malawi 1 1

Malaysia 1 1 2

Mauritius 1 1 2

Mexico 6 6

Morocco 2 2
39

Netherlands 6 1 7

New Zealand 4 1 5

Nigeria 1 1

Norway 2 1 3

Country Senior Professional Support Total

Paraguay 1 1

Peru 6 6

Philippines 9 9

Poland 3 2 5

Portugal 1 1 2

Rom ania 1 1 2

Rwanda 1 1

Senegal 1 1

South Africa 1 1

Spain 23 18 41

Sri Lanka 2 2 4

Sweden 4 2 6

Switzerland 21 15 36

Thailand 1 3 4

Tunisia 3 2 5

Turkey 3 3

United Kingdom 1 24 56 81

United States 1 20 3 24

Uruguay 5 4 9

Venezuela 4 4

Zimbabwe 1 1

Total 6 322 273 601

Note: Senior Management includes the Director-General, Deputies Director-General and the Chairman

of the Textiles Monitoring Body.

Annual Average Net Salary

Senior Management CHF 233,739

Professional Staff CHF 135,839

Support CHF 90,005

Source: W TO Secretariat as of 31 December 2003.
* Designates “least developed country” applicant.

1

 “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.

40

WTO ACCESSION APPLICATIONS AND STATUS (as of 12-31-03)1

Applicant Status of Multilateral and Bilateral Work 

Afghanistan* Application for accession to the WTO circulated in April 2003.

Algeria 

(1987)

Working Party (WP) meeting was held December 28, 2003. Factual Summary circulated.

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.

Armenia

(1993)

Armenia became the 145th Member of the WTO on February 5, 2003.

Azerbaijan

(1997)

First WP meeting held June 2002 to review initial 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)

Fourth WP meeting held January 24, 2003 to review outstanding issues from March 2001

meeting and status of bilateral negotiations on goods and services market access. Revised

offers circulated March 2003. Next meeting likely in early 2004. Factual Summary in

development.

Bosnia

Herzegovina

(1999)

First WP meeting held November 4. No market access offers to date.

Bhutan *

(1999)

Application accepted at October 1999 General Council meeting. Initial documentation

circulated in February 2003. Responses to initial questions in development.

Cambodia *

(1995)

Final formal WP meeting adopted the protocol package on July 22, 2003. Package

approved by Fifth Ministerial Conference September 11, 2003.

Cape Verde *

(2000)

Application accepted at July 2000 General Council meeting. Initial documentation

circulated July 2003. First WP meeting likely in early 2004.

Ethiopia*

(2003)

Application accepted at February 2003 General Council meeting. No documentation or

market access offers to date.

Iran Application for accession to the WTO circulated in September 1996; under consideration

in the General Council since July 2001.

Kazakhstan

(1996)

Last WP meeting held December 13, 2002 to review legislative implementation and plans

for removal of WTO-inconsistent measures. Revised goods and services market access

offers circulated March and April 2003. Next WP meeting likely in first part of 2004.

Laos *

(1998)

Initial documentation submitted in March 2001. No WP meetings or market access offers

to date.

Lebanon

(1999)

Second WP meeting scheduled for December 4, 2003 to continue review initial

documentation. Initial goods and services offers tabled in October and December,

respectively. 

Libya Application for accession to the WTO circulated in December 2001. No General Council

review to date.
Applicant Status of Multilateral and Bilateral Work 

41

Former

Yugoslav

Republic of

Macedonia

(1995)

Macedonia became the 146th Member of the WTO on April 4, 2003.

Nepal *

(1989)

Final formal WP meeting adopted the protocol package on August 15, 2003. Package

approved by Fifth Ministerial Conference September 11, 2003. requests.

Russia 

(1993)

Revised draft WP report text undergoing section by section review to establish the factual

basis for commitments. Intensive bilateral and multilateral work on protocol, agriculture,

and goods and services market access continues. Legislative implementation ongoing. 

Next meeting likely in February 2004.

Samoa *

(1998)

Informal WP meeting wee held July and November 2003 to review initial draft WP report

and continue negotiations on market access offers on goods and services. Revised draft

WP report in development. 

Saudi Arabia

(1993)

Last WP meeting and bilateral negotiations held October 23-24, 2003. Revised draft WP

report in development. Saudi Arabia providing additional information on the status of

legislative implementation. Based on intensive bilateral work, significant progress

achieved in goods and services market access negotiations. Next WP meeting scheduled

for late February.

Serbia and

Montenegro

(2001)

Initial documentation submitted in June 2002. Responses to initial questions in

development. No market access offers to date. First WP meeting anticipated in first part

of 2004. Responses to initial questions and comments delayed by development of a

Constitution and domestic governing structure.

Seychelles

(1995)

WP meeting held in March 1998 continued review of the foreign trade regime. Next WP

meeting to review status of legislative implementation. Further negotiations on goods and

services market access awaiting revised offers.

Sudan *

(1995)

First WP meeting held on July 11, 2003. 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)

Application accepted at July 2001 General Council meeting. Initial documentation

circulated in March 2003. Responses to initial questions in development.

Tonga 

(1995)

Informal WP meeting held July 17, 2003 to review comments provided on draft WP report

and Tongan inputs. Meeting November 11, 2003 reviewed revised WP report and action

plans for WTO implementation and revised market access offers. Tongan responses

outstanding.

Ukraine

(1993)

Last WP meeting held on October 27-28, 2003. Review based on elements of a draft WP

report text and information on legislative implementation. Bilateral work on elimination

of nontariff barriers to trade in goods. Work on goods and services market access

schedules well advanced. Next WP meeting likely in first quarter 2004.

Uzbekistan

(1995)

First WP meeting held July 17, 2002 to review initial 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.

Vietnam

(1995)

Last WP meeting held on December 10-11, 2003. Review initiated of action plans for

legislative implementing of WTO provisions. Goods and services market access

negotiations continue.
Applicant Status of Multilateral and Bilateral Work 

42

Yemen *

(2000)

Initial documentation submitted in November 2002. No market access offers to date. First

WP meeting to be scheduled after circulation of written responses to initial questions and

comments.
2

 Curricula vitae containing more detailed information are available on request from the WTO Secretariat

(Council Division – Room 2025). The curricula vitae which have been submitted on diskette are also available

on the Document Dissemination Facility.

43

WORLD TRADE

ORGANIZATION

WT/DSB/19

29 March 2000

(00-1284)

INDICATIVE LIST OF GOVERNMENTAL AND

NON-GOVERNMENTAL PANELISTS

1. 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.

2. 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.

3. The attached is an updated consolidated list of governmental and non-governmental panelists.2

The list contains the names included in the previous indicative list (WT/DSB/17) circulated by the

Secretariat on 3 November 1999 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 28 October 1999 and 20 March 2000 are also included in the

attached list.
44

COUNTRY

NAME SECTORAL EXPERIENCE

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

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

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
45

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 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

LEAL ANGARITA, Mr. M. Trade in Goods and Services

OROZCO JARAMILLO, Ms. C.Y. Trade in Goods

CUBA CABALLERO RODRÍGUEZ, Mr. E. Trade in Goods and Services

CZECH REP. JUNG, Mr. Z. Trade in Goods and Services

PALEKA, Mr. P. Trade in Goods and Services

PRAVDA, Mr. M. Trade in Goods

ŠRON-K, Mr. I. TRIPS

EGYPT ABOUL-ENEIN, Mr. M.I.M. Trade in Goods and Services

HATEM, Mr. S.A. Trade in Goods and Services

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

WEISS, Mr. J.F. Trade in Goods and Services; TRIPS

ZEHETNER, Mr. F. Trade in Goods
46

EUROPEAN

COMMUNITIES (cont'd)

BELGIUM DASSESSE, Mr. M.P.A. Trade in Goods and Services

DIDIER, Mr. P. Trade in Goods

VANDER SCHUEREN, Ms. P. Trade in Goods and Services

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

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

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

EUROPEAN

COMMUNITIES (cont'd)

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
47

SACERDOTI, Mr. G. Trade in Goods and Services

SCHIRATTI, Mr. G. Trade in Goods

NETHERLANDS BLOKKER, Mr. N.M. Trade in Goods

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

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

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

EUROPEAN

COMMUNITIES (cont'd)

UNITED KINGDOM (cont'd) 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

FOOTMAN, Mr. R. Trade in Goods and Services

LO, Mr. P.Y.F. Trade in Goods

MILLER, Mr. J.A. Trade in Goods and Services

SZE, Mr. M.C.C. Trade in Goods

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
48

JÓHANNSSON, Mr. E.M. Trade in Goods

SANDHOLT, Mr. B. Trade in Goods

INDIA AGARWAL, Mr. V.K. Trade in Goods; TRIPS

BHATTACHARYA, Mr. G.C. Trade in Goods

CHANDRASEKHAR, Mr. K.M Trade in Goods and Services; TRIPS

DAS, Mr. B.L. Trade in Goods

DASGUPTA, Mr. J. Trade in Goods

GANESAN, Mr. A.V. Trade in Goods, Services; TRIPS

GOYAL, Mr. A. Trade in Services

KUMAR, Mr. M. Trade in Goods and Services

MOHANTY, Mr. P.K. Trade in Goods

MUKERJI, Mr. A. Trade in Goods and Services; 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

INDIA (cont'd) 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

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

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
49

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 BHUGLAH, Mr. A. Trade in Goods and Services

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

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

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

PANAMA GONZALEZ, Mr. C.E. Trade in Goods and Services

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 BALDI, Mr. M. Trade in Services
50

BLATTNER, Mr. N. 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

SWITZERLAND (cont'd) HÄBERLI, Mr. C Trade in Goods

INEICHEN-FLEISCH, Ms. M.-G. Trade in Goods and Services

KRAFFT, Mr. —C. Trade in Goods

TRAN, Ms. T.T.-L. TRIPS

WASESCHA, Mr. L. Trade in Goods and Services; TRIPS

WEBER, Mr. R. Trade in Services

UNITED STATES BIRENBAUM, Mr. D.E. Trade in Goods

GORDON, Mr. M.W. Trade in Goods

GREENWALD, Mr. J.A. Trade in Goods; TRIPS

HUDEC, Mr. R.E. Trade in Goods and Services

KASSINGER, Mr. T.W. Trade in Goods and Services

KIRK, Mr. M.K. TRIPS

LICHTENSTEIN, Ms. C.C. Trade in Services

PARTAN, Mr. D.G. Trade in Goods

REYNA, Mr. J.V. Trade in Goods and Services

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

VENEZUELA ESCOBAR, Mr. J.B. Trade in Services

MARQUEZ, Mr. G. Trade in Services
51

ANNEX

Administration of the Indicative List

4. 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 nongovernmental 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 nongovernmental 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
52

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.
53

Summ ary 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)

__________
1

 WT/DSB/19.

54

WORLD TRADE

ORGANIZATION

WT/DSB/19/Add.1

26 June 2001

(01-3178)

INDICATIVE LIST OF GOVERNMENTAL AND

NON-GOVERNMENTAL PANELISTS

Addendum

5. At its meetings on 18 May, 26 September, 23 October, 12 December 2000 and 1 February,

16 May and 20 June 2001, the Dispute Settlement Body approved the following names for inclusion on the

Indicative List of Governmental and Non-Governmental Panelists.1

COUNTRY

NAME SECTORAL EXPERIENCE

CÔTE D'IVOIRE GOSSET, Mme. M. Trade in Goods; TRIPS

EGYPT RIAD, Mr. T.F. Trade in Goods and Services; TRIPS

EUROPEAN COMMUNITIES

AUSTRIA WAAS, Mr. G. Trade in Goods and Services; TRIPS

BELGIUM VAN DER BORGHT, Mr. K. Trade in Goods

FRANCE PHAN VAN PHI, Mr. R. Trade in Goods

NETHERLANDS BRONCKERS, Mr. M. Trade in Goods and Services; TRIPS

ENGERING, Mr. F.A. Trade in Goods and Services

INDIA CHAUDHURI, Mr. S. Trade in Goods and Services

KAUSHIK, Mr. A. Trade in Goods; TRIPS

PRABHU, Mr. P.P. Trade in Goods; TRIPS

MAURITIUS BEEKARRY, Mr. N. Trade in Goods and Services

PERU DIEZ LIZARDO, Mr. J. Trade in Goods
COUNTRY

NAME SECTORAL EXPERIENCE

55

TURKEY KAÇAR, Mr. B. Trade in Goods
2

 WT/DSB/19 and Add.1.

56

WORLD TRADE

ORGANIZATION

WT/DSB/19/Add.2

21 January 2002

(02-0280)

INDICATIVE LIST OF GOVERNMENTAL AND

NON-GOVERNMENTAL PANELISTS

Addendum

1. At its meetings on 15 October, 5 November and 18 December 2001, the Dispute Settlement Body

approved the following names for inclusion on the Indicative List of Governmental and NonGovernmental Panelists.2

COUNTRY

NAME SECTORAL EXPERIENCE

AUSTRALIA KENYON, Mr. D. Trade in Goods and Services

ARGENTINA 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

E U R OPEA N

COMMUNITIES

FRANCE STERN, Mme. B. Trade in Goods and Services

INDIA NARAYANAN, Mr. S. Trade in Goods; TRIPS

ISRAEL HOROVITZ, Mr. D. Trade in Goods and Services
57 ./.

POLINER, Mr. H.Z. TRIPS

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

MEXICO (cont'd) 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

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

NIGER TANKOANO, Mr. A. Trade in Goods and Services; TRIPS

__________
3

 WT/DSB/19 and Add.1 and Add.2.

58

WORLD TRADE

ORGANIZATION

WT/DSB/19/Add.3

3 April 2002

(02-1654)

INDICATIVE LIST OF GOVERNMENTAL AND

NON-GOVERNMENTAL PANELISTS

Addendum

At its meeting on 8 March 2002, the Dispute Settlement Body approved the following names for

inclusion on the Indicative List of Governmental and Non-Governmental Panelists.3

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

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

THORSTENSEN, Ms. V.H. Trade in Goods
59 ./.

EUROPEAN

COMMUNITIES

SPAIN DÍAZ MIER, Mr. M.Á. Trade in Services

LÓPEZ DE SILANES MARTÍNEZ Mr. J.P. Trade in Goods and Services

INDIA AGRAWAL, Mr. R.P. Trade in Goods and Services; TRIPS

__________
4

 WT/DSB/19 and Add.1, Add.2 and Add.3.

60

WORLD TRADE

ORGANIZATION

WT/DSB/19/Add.4

3 July 2002

(02-3726)

INDICATIVE LIST OF GOVERNMENTAL AND

NON-GOVERNMENTAL PANELISTS

Addendum

At its meetings on 22 May and 24 June 2002, the Dispute Settlement Body approved the

following names for inclusion on the Indicative List of Governmental and Non-Governmental Panelists.4

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

ARGENTINA NISCOVOLOS, Mr. L.P. Trade in Services

CUBA HERNÁNDEZ, Mr. A. Trade in Goods and Services

MARZIOTA DELGADO, Mr. E.A Trade in Goods and Services

PAKISTAN NAYYAR, Mr. S.I.M. Trade in Goods; TRIPS

PANAMA FRANCIS LANUZA, Ms. Y. Trade in Goods and Services

HARRIS ROTKIN, Mr. N. Trade in Goods and Services

SALAZAR FONG, Ms. D. Trade in Goods

UNITED STATES BROWN-WEISS, Ms. E. Trade in Goods and Services

GANTZ, Mr. D. Trade in Goods

HELFER, Ms. R.T. Trade in Services
61 ./.

LAYTON, Mr. D. Trade in Goods

McGINNIS, Mr. J. Trade in Goods; TRIPS

SHERMAN, Mr. S. Trade in Goods

__________
5WT/DSB/19 and Add.1, Add.2, Add.3 and Add.4.

62

WORLD TRADE

ORGANIZATION

WT/DSB/19/Add.5

2 December 2002

(02-6614)

INDICATIVE LIST OF GOVERNMENTAL

AND NON-GOVERNMENTAL PANELISTS

Addendum

At its meetings on 11 and 28 November 2002, the Dispute Settlement Body approved the

following names for inclusion on the Indicative List of Governmental and Non-Governmental Panelists.5

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

CROATIA ŠAREVI, Mr. P Trade in Goods and Services

EUROPEAN

COMMUNITIES

BELGIUM ZONNEKEYN, Mr. G.A. Trade in Goods

UNITED KINGDOM QURESHI, Mr. A.H. Trade in Goods

HONG KONG, CHINA CHEUNG, Mr. P.K.F. TRIPS

LEUNG, Ms. A.K.L. TRIPS

LITTLE, Mr. D. Trade in Goods and Services

SELBY, Mr. S.R. TRIPS

URUGUAY WHITELAW, Mr. J.A. Trade in Goods

__________
6Curricula Vitae containing more detailed information are available on request from the WTO

Secretariat (Council and Trade Negotiations Division – Room 3105).

63 ./.

WORLD TRADE

ORGANIZATION

WT/DSB/W/215

9 December 2002

(02-6789)

Dispute Settlement Body

19 December 2002

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.6

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

COLOMBIA OROZCO, Ms. A.M. Trade in Goods

BARBERI, Mr. F. Trade in Goods

ECUADOR CEVALLOS, Mr. A.P. Trade in Goods

NEW ZEALAND FARRELL, Mr. R. Trade in Goods

__________
64

WORLD TRADE ORGANIZATION

ORGANISATION MONDIALE DU COMMERCE

ORGANIZACIÓN MUNDIAL DEL COMERCIO

WT/DSB/W/215/Corr.1

12 December 2002

(02-6878)

Dispute Settlement Body

19 December 2002

PROPOSED NOMINATIONS FOR THE INDICATIVE LIST OF

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS

Corrigendum

In the proposed nominations for the Indicative List of Governmental and Non-Governmental

Panelists (WT/DSB/W/215), the name under Ecuador should read as follows:

COUNTRY N AM E SECTORAL EXPERIENCE

ECUADOR PINOARGOTE CEVALLOS, Mr. A. Trade in Goods

Organe de règlement des différends

19 décembre 2002

LISTE INDICATIVE DE PERSONNES AYANT OU NON DES ATTACHES

AVEC DES ADMINISTRATIONS NATIONALES APPELÉES À FAIRE

PARTIE DE GROUPES SPÉCIAUX - DÉSIGNATIONS PROPOSÉES

Corrigendum

Dans les désignations proposées pour la liste indicative de personnes ayant ou non des attaches

avec des administrations nationales appelées à faire partie de groupes spéciaux (WT/DSB/W/215), le nom

indiqué pour l'Équateur doit se lire comme suit:

PAYS NOM EXPÉRIENCE SECTORIELLE

ÉQUATEUR M. A. PINOARGOTE CEVALLOS Commerce des marchandises

Órgano de Solución de Diferencias

19 de diciembre de 2002

CANDIDATURAS PROPUESTAS PARA SU INCLUSIÓN EN LA LISTA INDICATIVA 

DE EXPERTOS GUBERNAMENTALES Y NO GUBERNAMENTALES 

QUE PUEDEN SER INTEGRANTES DE GRUPOS ESPECIALES

Corrigendum

En las candidaturas propuestas para su inclusión en la lista indicativa de expertos

gubernamentales y no gubernamentales que pueden ser integrantes de grupos especiales

(WT/DSB/W/215), el nombre correspondiente al epígrafe "Ecuador" debe ser el siguiente:
7Curricula Vitae containing more detailed information are available on request from the WTO

Secretariat (Council and Trade Negotiations Committee Division – Room 3105).

65 ./.

PAÍS NOMBRE EXPERIENCIA SECTORIAL

ECUADOR PINOARGOTE CEVALLOS, Sr. A. Comercio de Mercancías

WORLD TRADE

ORGANIZATION

WT/DSB/W/220

7 February 2003

(03-0833)

Dispute Settlement Body

19 February 2003

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.7

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

SWITZERLAND ADDOR, Mr. F. TRIPS

BREINING, Ms. Ch. Trade in Services

TSCHÄNI, Mr. H. Trade in Goods

__________
8Curriculum Vitae containing more detailed information is available on request from the WTO

Secretariat (Council and Trade Negotiations Division – Room 3105).

66

WORLD TRADE

ORGANIZATION

WT/DSB/W/223

7 March 2003

(03-1330)

Dispute Settlement Body

18 March 2003

PROPOSED NOMINATION FOR THE INDICATIVE LIST OF

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS

The following 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.8

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

BRAZIL BARTHEL-ROSA, Mr. P. Trade in Goods

__________
9Curriculum Vitae containing more detailed information is available on request from the WTO

Secretariat (Council and Trade Negotiations Committee Division – Room 3105).

67 ./.

WORLD TRADE

ORGANIZATION

WT/DSB/W/226

4 April 2003

(03-1877)

Dispute Settlement Body

15 April 2003

PROPOSED NOMINATION FOR THE INDICATIVE LIST OF

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS

The following 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.9

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

BOLIVIA ZELADA CASTEDO, Mr. A. Trade in Goods

__________
10Curriculum Vitae containing more detailed information is available on request from the WTO

Secretariat (Council and Trade Negotiations Committee Division – Room 3105).

68

WORLD TRADE

ORGANIZATION

WT/DSB/W/231

13 June 2003

(03-3087)

Dispute Settlement Body

24 June 2003

PROPOSED NOMINATION FOR THE INDICATIVE LIST OF

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS

The following 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.10

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

E URO PEA N

COMMUNITIES

UNITED KINGDOM ROBERTS, Mr. D.F. Trade in Goods

__________
11Curriculum Vitae containing more detailed information is available on request from the WTO

Secretariat (Council and Trade Negotiations Committee Division – Room 3105).

69 ./.

WORLD TRADE

ORGANIZATION

WT/DSB/W/235

11 July 2003

(03-3729)

Dispute Settlement Body

21 July 2003

PROPOSED NOMINATION FOR THE INDICATIVE LIST OF

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS

The following 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.11

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

PERU Belaúnde G., Mr. V.A. TRIPS

__________
12Curriculum Vitae containing more detailed information is available on request from the WTO

Secretariat (Council and Trade Negotiations Committee Division – Room 3105).

70

WORLD TRADE

ORGANIZATION

WT/DSB/W/235

11 July 2003

(03-3729)

Dispute Settlement Body

21 July 2003

PROPOSED NOMINATION FOR THE INDICATIVE LIST OF

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS

The following 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.12

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

PERU Belaúnde G., Mr. V.A. TRIPS

__________
13Curriculum Vitae containing more detailed information is available on request from the WTO

Secretariat (Council and Trade Negotiations Committee Division – Room 3105).

71 ./.

WORLD TRADE

ORGANIZATION

WT/DSB/W/239

19 August 2003

(03-4318)

Dispute Settlement Body

29 August 2003

PROPOSED NOMINATION FOR THE INDICATIVE LIST OF

GOVERNMENTAL AND NON-GOVERNMENTAL PANELISTS

The following 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.13

_______________

COUNTRY N AM E SECTORAL EXPERIENCE

LIECHTENSTEIN Ziegler., Mr. A.R. Trade in Services; TRIPS

__________

s
72

MEMBERSHIP OF THE WTO APPELLATE BODY

The membership of the WTO Appellate Body is as follows:

Mr. G M Abi-Saab (Egypt), Mr. James Bacchus (United States),

Professor Luiz Olavo Baptisa, (Brazil) Mr. A V Ganesan (India), 

Merit E. Janow , (United States) Mr. John S. Lockhart,(Australia)

Mr. Yasuhei Taniguchi (Japan), Professor Giorgio Sacerdoti, (EU)

BIOGRAPHICAL NOTES:

Georges Michel Abi-Saab

Born in Egypt on 3 June 1933, Georges Michel Abi-Saab is Professor of International Law at the

Graduate Institute of International Studies in Geneva, Honorary Professor at Cairo University’s Faculty of

Law, and a Member of the Institute of International Law. 

Mr 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 has also served as a Judge on the Appeals Chamber of the International

Criminal Tribunals for the former Yugoslavia and for Rwanda, and as a Member of the Administrative

Tribunal of the International Monetary Fund and of various international arbitral tribunals.

Mr Abi-Saab is the author of two courses at the Hague Academy of International Law, and of several

books and articles, including "International Crises and the Role of Law: The United Nations Operation in

the Congo 1960-1964" (Oxford University Press 1978).

James Bacchus

James Bacchus of the United States, born 1949, is an attorney who has been closely involved with

international trade matters in both his public and professional careers for more than twenty years.

During his tenure in the US Congress, where he served two terms of office in the House of

Representatives from 1991-1994, he was appointed to the ad hoc Trade Policy Coordinating Committee.

From 1979-1981, he had served as Special Assistant to the United States Trade Representative Reubin

Askew. Since leaving Congress in January 1995, Mr. Bacchus has returned to the Florida-based private

law firm of Greenberg Traurig where he began his legal career before he joined the USTR in 1979. He has

practiced widely in the areas of corporate banking and international law.

Mr. Bacchus' educational distinctions include Bachelor of Arts with High Honours in History, Vanderbilt

University, 1971; Master of Arts in History, Yale University, 1973 and Woodrow Wilson Fellow; and

Juris Doctor, Florida State University College of Law, 1978. He has been the Thomas P. Johnson

Distinguished Visiting Scholar at Rollins College in Florida, and remains an Adjunct Professor in the

Department of Politics at Rollins, where he teaches political philosophy and public policy on a variety of

issues including international trade.

Luiz Olavo Baptista

Born in Brazil on 24 July 1938, Luiz Olavo Baptista is Professor of Law at the Department of

International Law, University of Sao Paulo Law School. He has been practising law for more than thirty
73

years as lawyer, counsel and arbitrator in Brazil and abroad, advising corporations, governments and individuals.

Professor Baptista obtained Full Professorship of International Law in Sao Paulo University Law School

in 1993, and has written many books and articles concerning new and complex legal issues, particularly

those related to international business, trade and foreign investments.

Professor Baptista was one of the pioneers in studying international arbitration in Brazil, and has a long

experience in arbitration procedures in different jurisdictions. He participates as a member of the arbitral

corps of several associations, and has acted as advisor for Brazilian and international organizations. He

also has extensive experience in the issuance of legal opinions, structuring and preparation of merger and

acquisition and joint ventures agreements.

Arumugamangalam Venkatachalam Ganesan

Born in India on 7 June 1935, Arumugamangalam Venkatachalam Ganesan served in the Government of

India for 34 years until his retirement on 30 June 1993. During his long career, he held various positions

in his Government and at the United Nations Headquarters in New York, including: Commerce Secretary

(1991-1993) in charge of India’s foreign trade policy and chief negotiator of India in the Uruguay Round;

Civil Aviation Secretary (1990-1991); Additional Secretary at the Ministry of Industry (1986-1989) in

charge of industrial policies, foreign investment in India, administration of India’s laws on patents,

designs and trade marks, closely associated with the TRIPS agenda in the Uruguay Round; and

Inter-Regional Adviser (1980-1985) at the United Nations Centre on Transnational Corporations in New

York.

Since his retirement from government service, Mr Ganesan has been active as a consultant for the UNDP

and for the private and public sectors in India. He was, until recently, a member of the Permanent Group

of Experts under the WTO Agreement on Subsidies and Countervailing Measures; a member of the Indian

Government's Trade Advisory Committee on multilateral trade negotiations; and a member of a WTO

dispute settlement panel examining the European Communities’ complaint against Section 110(5) of the

US Copyright Act.

Mr Ganesan has written numerous newspaper articles and monographs dealing with the Uruguay Round,

the WTO and the Seattle Ministerial Conference. He is the author of several papers on trade and

investment issues published by various UN agencies such as UNCTAD and UNIDO, and has contributed

to many books published in India concerning the Uruguay Round and intellectual property rights.

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
74

Born in Australia on 2 October 1935, John S Lockhart has been Executive Director at the Asian

Development Bank in the Philippines since July 1999, working closely with developing member countries

on the development of programmes directed at poverty alleviation through the promotion of economic

growth. His other duties at the ADB include the development of law reform programmes and provision of

advice on legal questions, notably the interpretation of the ADB's Charter, international treaties and UN

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 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).

Yasuhei Taniguchi

Born in Japan on 26 December 1934, Yasuhei Taniguchi is Professor of Law at Tokyo Keizai University,

and an Attorney at Law in Tokyo. He has been a Visiting Professor at several universities, including:

University of Hong Kong; Georgetown University Law Center, Washington DC; Stanford Law School,

University of California; Murdoch University, Perth; University of Melbourne; Harvard Law School;

University of Paris XII; and New York University School of Law.

 Mr Taniguchi is affiliated to several legal institutions including the Japan Commercial Arbitration

Association; International Council for Commercial Arbitration; the American Law Institute; and the

Chartered Institute of Arbitrators. He has handled many international arbitration cases and is listed in the

arbitrators’ panel of the Japan Commercial Arbitration Association; the American Arbitration

Association; the Hong Kong International Arbitration Centre; the China International Economic and 

Trade Arbitration Commission; and the Cairo Regional Centre of Commercial Arbitration.

He has written numerous books and articles in the fields of civil procedure, arbitration, judicial

system/legal profession, and comparative/international law. His publications have appeared in Japanese,

Chinese, English, French, Italian and German.

Giorgio Sacerdoti

Born in France on 2 March 1943, Giorgio Sacerdoti has been 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 OECD

Working Group on Bribery in International Business Transactions (since 1999); Panellist at the

International Centre for Settlement of Investment Disputes (since 1981); and Consultant to the Council of

Europe (1996), UNCTAD (1998-2000), World Bank (1999-2000) in matters related to international

investments, trade, bribery, development and good governance. In the private sector, he has often served

as arbitrator and chairman of arbitration tribunals and in ad hoc arbitration proceedings for the settlement

of international commercial disputes.

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.

Source: WTO Secretariat
75

0

 Interest earned in 2002 under the Early Payment Encouragement Scheme (L/6384) and to be deducted

from the 2004 contribution.

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 Internet sites:

 The USTR hom e page : http://www .ustr.gov

 The WTO hom e page : http://www .wto.org

U.S. submissions are available electronically on the WTO w ebsite using the Document Dissemination Facility (DDF), which can retrieve

an electronic copy by the “docum ent symb ol”. Electronic copies of U.S. submissions are also available at the USTR web site.

Examp les of information available on the WTO hom e page include:

Descriptions of the Structure and Operations of the WTO, such as:

WTO Organizational Chart

Biographic backgrounds

Member ship

General Council activities

WTO New s, such as:

Status of dispute settlement cases

Press Releases on Appointments to WTO Bodies, Appellate Body

Reports an d Pan el Reports, and others

Schedules of future WTO m eetings 

Summ aries of Trade Policy Review M echanism reports on

individual Members’ trade practices

Resources including Official Docum ents, such as:

Notifications required by th e Uru guay Rou nd A greements

Working Procedures for A ppellate Review

Special Studies on key W TO issues

On-line document database where one can find and dow nload

official docum ents

Lega l Texts of the W TO agreem ents

WTO Annua l Repo rts

Com mun ity/Forums, such as:

Media

NGO’s

General public news and chat rooms

Trade Topics, such as:

Briefing Papers on W TO activities in individual sectors,

including goods, services, intellectual property, and other topics

Disputes and Dispute R eports

WTO publications may be ordered directly from the following

sources:

The World Trade Organization

 Pub lications Services

Centre W illiam Rappard

Rue de Lau sanne 154

CH - 1211 Geneva 21

Switzerland

tel:

 (41 22) 739-5208 

fax:

 (41 22) 739-5792

e-mail: publications@wto.org

Berman Associates

4611-F Assembly Drive

Lanham , Md. 20706-4391

tel:

800/274-4888

301/459-7666

fax:

301/459-0056
ANNEX III
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.

1

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

d. Plurilateral Trade Agreements

i. Agreement on Trade in Civil Aircraft (April 12, 1979; amended in 1986)
2

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)

< 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)
3

Australia

< Settlement on Leather Products Trade (November 25, 1996)

< Understanding on Automotive Leather Subsidies (June 20, 2000)

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)
4

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)

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
5

(June 17, 1996)

< Interim Agreement on Market Access for Foreign Financial Information Companies (Xinhua)

(October 24, 1997)

< Agreement to Strengthen Space Launch Trade Terms (October 27, 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)
6

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)
7

< 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)

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)
8

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)
9

< 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)
10

< 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)
11

< 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)
12

< 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)
13

Mongolia

< Agreement on Bilateral Trade Relations (January 23, 1991)

< Bilateral Investment Treaty (January 1, 1997)

Morocco

< Bilateral Investment Treaty (May 29, 1991)

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 (November 17, 1998)

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)
14

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)
15

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)
16

< 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)
17

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

Belarus

< Bilateral Investment Treaty (signed January 15, 1994; pending exchange of instruments)

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)

Mozambique

< Bilateral Investment Treaty (signed December 1, 1998; pending ratification by Mozambique and

exchange of instruments of ratification.)

Nicaragua

< Bilateral Investment Treaty (signed July 1, 1995; pending ratification by United States and

exchange of instruments of ratification.)
18

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)
19

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

< Summit of the Americas Declaration and Action Plan (December 11, 1994)

< Joint Declaration of the Trade Ministers (June 30, 1995)

< Joint Declaration of the Trade Ministers (March 21, 1996)

< Joint Ministerial Declaration of Belo Horizonte (May 16, 1997)

< Joint Ministerial Declaration of San Jose (March 19, 1998)

< Summit of the Americas Declaration and Action Plan (April 19, 1998)

< Joint Declaration of Toronto (November 4, 1999)

< Joint Ministerial Declaration of Buenos Aires (April 7, 2001)

< 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)
20

< 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)

Chile

< U.S.-Chile Joint Commission on Trade and Investment (May 19, 1998)

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)
21

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)

Morocco

< U.S.-Morocco Trade and Investment Framework Agreement (March 16, 1995)

Nigeria

< U.S.-Nigeria Trade and Investment Framework Agreement (February 16, 2000)

Philippines

< Trade and Investment Framework Agreement (1989)

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)
22

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)