THE YEAR IN TRADE: 

OPERATION OF THE TRADE 

AGREEMENTS PROGRAM 

45th REPORT 

1993 

AliAMA■ 

111111117■11 

11 

UNITED STATES 

INTERNATIONAL 

TRADE COMMISSION 

USITC PUBLICATION 2769 

JUNE 1994 

Prepared in Conformity With 

Section 163(b) of the 

Trade Act of 1974 
U.S. International Trade Commission 

COMMISSIONERS 

Peter S. Watson, Chairman 

Janet A. Nuzum, Vice Chairman 

David B. Rohr 

Don E. Newquist 

Carol T. Crawford 

Lynn M. Bragg 

Address all communications to 

Secretary to the Commission 

United States International Trade Commission 

Washington, DC 20436 
This report was principally prepared by 

Office of Operations 

Robert A. Rogowsky, Director 

Office of Economics 

Peter Morici, Director 

Acting Chief Trade Reports Division 

Constance Hamilton 

Chief Major Trading Nations Branch 

Kim S. Frankena 

Project Leader 

Diane L. Manifold 

Paul R. Gibson James E. Stamps 

Joanne E. Guth Janet Whisler 

Magdolna B. Kornis Edward C. Wilson 

Thomas F Jennings Michael S. Youssef 

Office of the General Counsel 

Kathryn Gilchrist 

Office of Tariff Affairs and Trade Agreements 

Janis L Summers 

Office of Industries 

Jackie Jones 

Office of Unfair Import Investigations 

Jeffrey Whieldon 

With the assistance of 

Dean Moore, Information Specialist 

Cindy Cohen, Applied Economics Division 

Rebecca Hardy, Christopher Hatscher, 

Marie Noble and Geoffrey Willison, Student Interns 

Supporting assistance was provided by: 

Paula Wells, Linda Cooper, Secretarial services 

Helen Troupos, Editorial services 

Keven Blake, Cover design 

Pamela Dyson, Joyce Bookman, and Paulette Henderson, Designers 

PREFACE 

The annual Year in Trade, Operation of the Trade Agreements Program report is one of the 

principal means by which the U.S. International Trade Commission (USITC) provides the U.S. 

Congress with factual information on trade policy and its administration. The report also serves as an 

historical record of the major trade-related activities of the United States, for use as a general reference 

by Government officials and others with an interest in U.S. trade relations. This report is the 45th in a 

series submitted under section 163(b) of the Trade Act of 1974 and its predecessor legislation. 1The 

trade agreements program includes "all activities consisting of, or related to, the administration of 

international agreements which primarily concern trade and which are concluded pursuant to the 

authority vested in the President by the Constitution" and congressional legislation. 2 

The report consists of an introduction, five chapters, a statistical appendix, and an index. The 

introduction provides an overview of international trade activities and economic conditions in major 

areas of the world. Chapter 1 focuses on activities in the General Agreement on Tariffs and Trade, the 

main forum of multilateral trade agreement activities. In this year's edition of The Year in Trade, the 

conclusion of the Uruguay Round of trade negotiations is reviewed. The North American Free Trade 

Agreement (NAFTA) and economic developments in the Asian-Pacific region are discussed in 

Chapter 2. Activities related to trade in other multilateral and regional fora are reported in Chapter 3. 

Chapter 4 discusses bilateral relations between the United States and its major trading partners. 

Administrative actions taken under U.S. laws, including decisions taken on remedial actions available 

to U.S. industry and labor, are discussed in chapter 5. Although the report primarily covers those 

events that occurred during calendar year 1993, a discussion of some 1994 developments is included 

when such coverage is essential to providing a full understanding of the topic. 

1Section 163(b) of the Trade Act of 1974 (Public Law 93-168, 88 Stat. 1978) directs that "the International 

Trade Commission shall submit to the Congress, at least once a year, a factual report on the operations of the trade 

agreements program." 

2Executive Order No. 11846, Mar. 27, 1975. 

TABLE OF CONTENTS 

Page 

Introduction 

Trade policy in 1993 xv 

Multilateral xv 

Regional xix 

North America xix 

Asia xix 

Europe xx 

Latin America and the Caribbean xx 

Central and Eastern Europe xx 

Bilateral xxi 

EU xxi 

Canada xxi 

Japan xxi 

Mexico xxi 

China xxii 

Taiwan xxii 

Republic of Korea xxii 

The international economic environment and world trade in 1993 xxii 

North America xxiii 

European Union xxvi 

Asia xxviii 

Latin America xxx 

Central and Eastern Europe/Former Soviet Union xxx 

Chapter 1. The Uruguay Round Concludes 

Introduction 1 

Scope of the package 1 

Structure of the package 1 

Organization of this chapter 4 

Multilateral agreements on goods, services and intellectual property 5 

Market access 5 

Agriculture 6 

Sanitary and phytosanitary measures (SPS) 9 

Textiles and clothing 9 

Technical barriers to trade (TBT) 11 

Trade-related investment measures 12 

Antidumping 12 

Customs valuation 14 

Preshipment inspection 15 

Rules of origin 15 

Import licensing 16 

Subsidies 16 

Safeguards 18 

Services 19 

Intellectual property 24 

vii 
TABLE OF CONTENTS-Continued 

Page 

Chapter 1. The Uruguay Round Concludes—Continued 

Plurilateral agreements 28 

Government procurement 28 

Civil aircraft 30 

Bovine meat arrangement 30 

Dairy arrangement 30 

World Trade Organization (WTO) 31 

Introduction 31 

Functions of the WTO 31 

Structure of the WTO 31 

Operational domain of the WTO 32 

Resolving conflicts and overlap 32 

Decisionmaking in the WTO 32 

WTO membership and accession 34 

Entry into force 34 

Dispute settlement 34 

Introduction 34 

Dispute panels 35 

Appeal, adoption, retaliation 35 

Nonviolation complaints 35 

Other provisions 36 

Marrakesh Ministerial conference 37 

Regular GATT activities in 1993 37 

GATT council 37 

Trade policy review mechanism 38 

Dispute settlement 38 

GATT committees 39 

Regional trade arrangements (art. XXIV) 40 

Accessions and observers 40 

Tokyo Round codes 40 

Chapter 2. Regional Trade Activities 

The North American Free-Trade Agreement 55 

Introduction 55 

The implementing bill 56 

Supplemental agreements 57 

"Paying" for NAFTA 61 

Accompanying report on environmental issues 61 

"Side" agreements with Mexico 61 

Presidential determination: Canadian and Mexican Implementation 62 

U.S. implementation 63 

Next steps 63 

Economic Cooperation in the Asian Pacific Region 64 

Introduction 64 

APEC 64 

ASEAN and AFTA 67 

viii 
TABLE OF CONTENTS-Continued 

Page 

Chapter 3. Other multilateral trade agreement activities 

Organization for Economic Cooperation and Development 73 

Introduction 73 

Communique focus 73 

Trade issues of the 1990s 73 

United Nations Conference on Trade and Development 75 

Negotiation and operation of international commodity arrangements 75 

Chapter 4. U.S. relations with major trading partners 

The European Union 81 

Public procurement 81 

EU integration and enlargement 82 

Other issues 86 

Canada 87 

Wheat 87 

Lumber 89 

Steel 90 

Japan 92 

U.S.-Japan Framework agreement 92 

Major projects 93 

Automobiles and parts 94 

Supercomputers 95 

Semiconductors 95 

Mexico 96 

Intellectual property rights 96 

Reference prices 97 

Agriculture standards 97 

Tax treaty 98 

Legislative reforms 98 

China 101 

MFN status 101 

Textiles and apparel 102 

Export sanctions on satellites 103 

Other bilateral trade issues 104 

GATT application 106 

Taiwan 107 

GATT application 107 

Protection of intellectual property rights 108 

Republic of Korea 110 

Intellectual property rights 110 

Rice 110 

Beef 111 

Chapter 5. Administration of U.S. trade laws and regulations 

Import relief laws 123 

Safeguard actions 123 

Market disruption 123 

Adjustment assistance 123 

ix 
TABLE OF CONTENTS-Continued 

Page 

Chapter 5. Administration of U.S. trade laws and regulations—Continued 

Laws against unfair trade practices 124 

Antidumping investigations 128 

Countervailing-duty investigations 128 

Reviews of outstanding antidumping and countervailing-duty orders 129 

Section 337 investigations 129 

Other import administration laws and programs 130 

Tariff preference programs 130 

Agriculture adjustment act 133 

Arrangement regarding international trade in textiles 134 

Figures 

A Selected trade events, 1993 xvi 

B U.S. merchandise trade with the world, by product sectors, 1993 xxiv 

C U.S. exports, imports, and trade balances with major trading partners, 1993 xxv 

D Final Act Embodying the Results of the Uruguay Round 2 

E Outline of Uruguay Round Protocol to GATT 1994 4 

F Summary of tariff elimination sectors (zero-for-zero initiatives) in market access negotiations 6 

G Summary of agriculture agreement 7 

H Summary of textile agreement 10 

I Select services sectors under discussion in the GATS 22 

J Summary of TRIPS agreement 25 

K World Trade Organization 33 

L Summary of dispute settlement stages 36 

M NAFTA-related developments in 1993 58 

N Regional Institutions and Arrangements 68 

O U.S. imports of textiles and apparel by major suppliers, 1989 and 1993 137 

Tables 

1-1 Contracting Parties to the GATT: Status as of Dec. 31, 1993 41 

1-2 Signatories to the Tokyo Round agreements: Status as of Dec. 31, 1993 43 

3-1 Summary of international commodity agreements, 1993 77 

5-1 Summary of activity on section 301 investigation during 1993 125 

5-2 U.S. imports for consumption from GSP beneficiaries and the world, 1993 131 

5-3 U.S. imports for consumption under the GSP from leading beneficiaries, and total, 1993 131 

5-4 U.S. imports for consumption under CBERA, by duty treatments, 1991-93 133 

5-5 U.S. imports for consumption under ATPA Act, by duty treatments, 1992-93 134 

5-6 Countries with which the United States has textile and apparel agreements or quotas: U.S. 

general imports under the MFA, in 1993, and expiration dates of agreements or quotas in 

place during 1993 136 

Appendix 

Statistical tables 

A-1 U.S. merchandise trade with Canada, by SITC Nos. (revision 3), 1991-93 142 

A-2 Leading U.S. exports to Canada, by Schedule B number, 1991-93 143 

A-3 Leading U.S. imports from Canada, by Schedule B number, 1991-93 144 
TABLE OF CONTENTS-Continued 

Page 

Appendix—Continued 

Statistical tables—Continued 

A-4 U.S. merchandise trade with Mexico, by SITC Nos. (revision 3), 1991-93 145 

A-5 Leading U.S. exports to Mexico, by Schedule B number, 1991-93 146 

A-6 Leading U.S. imports from Mexico, by HTS number, 1991-93 147 

A-7 U.S. merchandise trade with the European Union, by SITC Nos. (revision 3), 

1991-93 148 

A-8 Leading exports to the European Union, by Schedule B number, 1991-93 149 

A-9 Leading U.S. imports from the European Union, by HTS number, 1991-93 150 

A-10 U.S. merchandise trade with Japan, by SITC Nos. (revision 3), 1991-93 151 

A-11 Leading U.S. exports to Japan, by Schedule B number, 1991-93 152 

A-12 Leading U.S. imports from Japan, by HTS number, 1991-93 153 

A-13 U.S. merchandise trade with Korea, by SITC Nos. (revision 3), 1991-93 154 

A-14 Leading U.S. exports to Korea, by Schedule B number, 1991-93 155 

A-15 Leading U.S. imports from Korea, by HTS number, 1991-93 156 

A-16 U.S. merchandise trade with Taiwan, by SITC Nos. (revision 3), 1991-93 157 

A-17 Leading U.S. exports to Taiwan, by Schedule B number, 1991-93 158 

A-18 Leading U.S. imports from Taiwan, by HTS number, 1991-93 159 

A-19 U.S. merchandise trade with China, by SITC Nos. (revision 3), 1991-93 160 

A-20 Leading exports to China, by Schedule B number, 1991-93 161 

A-21 Leading U.S. imports from China, by HTS number, 1991-93 162 

A-22 Antidumping actions reported by signatories to the GATT Committee 

on Anti-Dumping Practices during 1993 163 

A-23 Countervailing duty actions reported by signatories to the GATT 

Committee on Subsidies and Countervailing Measures, during 1993 170 

A-24 Antidumping cases active in 1993, filed under authority of title 

VII of the Tariff Act of 1930, by final outcomes and by USITC 

investigation number 171 

A-25 Antidumping orders and findings in effect as of Dec. 31, 1993 175 

A-26 Countervailing cases active in 1992, filed under authority of sec. 303 or 

title VII of the Tariff Act of 1930, by final outcomes and by 

USITC investigation number 181 

A-27 Countervailing duty orders and findings in effect as of Dec. 31, 1993 183 

A-28 Section 337 investigations completed by the U.S. International Trade Commission 

during 1993 and those pending on Dec. 31,1993. 186 

A-29 Outstanding sec. 337 exclusion orders as of Dec. 31, 1993 189 

A-30 U.S. imports for consumption of leading GSP-duty free goods, 1993 191 

A-31 U.S. imports for consumption and imports eligible for GSP treatment, by 

import categories under the Harmonized Tariff Schedule (HTS), 1993 192 

A-32 U.S. imports for consumption of leading CBERA duty-free imports, 1992-1993 193 

A-33 U.S. imports for consumption from CBERA countries, customs value of duty-free 

imports by designated countries, 1989-93 194 

A-34 U.S. imports for consumption from Andean countries, customs value of duty 

free imports under APTA by designated country, 1992-93 195 

A-35 U.S. imports for consumption of leading Andean Trade Preference Act (APTA) 

duty-free imports, 1993 196 

Index 197 

xi 

List of Frequently Used Abbreviations 

and Acronyms 

AD Antidumping 

APEC Asia-Pacific Economic Cooperation 

ASEAN Association of Southeast Asian Nations 

ATPA Andean Trade Preference Act 

CAP Common Agricultural Policy 

CBERA Caribbean Basin Economic Recovery Act 

CBI Caribbean Basin Initiative 

CFTA United States Canada Free Trade Agreement 

CVD Countervailing Duty 

EU European Union 

FTA Free-Trade Agreement 

GATT General Agreement on Tariffs and Trade 

GDP Gross Domestic Product 

GNP Gross National Product 

GSP Generalized System of Preferences 

HS Harmonized System 

MFA Multifiber Arrangement 

MOSS Market-Oriented, Sector-Selective 

MTN Multilateral Trade Negotiations 

NAFTA North American Free Trade Agreement 

NICs Newly Industrializing Economies 

NTMs Nontariff Measures 

OECD Organization for Economic Cooperation and Development 

SITC Standard International Trade Classification 

SDRs Special Drawing Rights 

TAA Trade Adjustment Assistance 

TNC Trade Negotiations Committee 

TRIPs Trade-Related Aspects of Intellectual Property Rights 

TRIMs Trade-Related Investment Measures 

UNCTAD United Nations Conference for Trade and Development 

USITC U.S. International Trade Commission 

USTR United States Trade Representative 

VRA Voluntary Restraint Agreement 

INTRODUCTION 

Trade Policy in 1993 

The year 1993 marked the successful conclusion of 

major multilateral and regional trade initiatives — the 

Uruguay Round of trade negotiations and passage of 

implementing legislation for the North American 

Free-Trade Agreement (NAFTA). Bilateral disputes 

over agricultural issues, intellectual property rights, 

GATT membership and other sectoral issues continued 

between the United States and its major trading 

partners. 

In a speech at American University in February 

1993, President Clinton laid down his five economic 

goals: increase investment and reduce the budget 

deficit; make trade a priority element of national 

security; improve coordination with other major 

economies to promote global economic growth; 

promote the steady expansion of growth in the 

developing world; and encourage market reform in 

Russia and the former Soviet Union. 1These goals 

were intended to complement the President's domestic 

strategy of creating high-wage jobs and improving 

productivity. 2Based on these goals, the stage was set 

for numerous domestic and foreign policy initiatives. 

On international trade and economic matters, Congress 

voted aid to Russia and lifted sanctions on exports to 

South Africa. Congressional committees considered 

the National Competitiveness Act and the Fair Trade in 

Financial Services Act. 

Multilateral and bilateral trade activities took place 

within the context of slow, but improving economic 

growth in the United States and of sluggish growth in 

the other G-7 (seven major industrialized) countries. 

Japan and Germany, the world's second and third 

largest economies, both experienced recessions Latin 

America exhibited sluggish growth while output 

declined in Eastern Europe and the former Soviet 

Union. The Asian countries, especially the newly 

industrialized economies (N1Es) and China, however, 

experienced strong economic growth. 

World merchandise trade volume increased by 2.6 

percent compared with 4.5 percent in 1992, and trade 

in services also showed an increase. The United States 

was the largest merchandise exporter, with Germany 

and Japan following. The United States merchandise 

trade deficit increased to $136 billion in 1993, from 

$100 billion in 1992. U.S. trade performance with 

China, the European Union (EU), Canada, Germany, 

the NIEs, and Japan declined. 

Political developments in several countries, 

involving the displacement of ruling parties in, most 

notably, Canada, Japan, Italy, and France had 

implications for international trade relations. Some 

countries loosened their export control regimes, 

following the end of the Cold War. Meanwhile, the 

United Nations faced new challenges, some involving 

decisionmaking on such trade-related issues as the 

imposition of a ban on oil and arms shipments to Haiti 

in June 1993. Amidst these economic and political 

developments, major multilateral, regional and bilateral 

trade activities were taking place, as described below. 

Multilateral 

The capstone for international trade in 1993 was 

the successful conclusion of the 7-year Uruguay Round 

negotiations under the GATT on December 15. The 

negotiations involved representatives from 117 

countries accounting for 85 percent of world trade. The 

Uruguay Round spanned the terms of three U.S. Trade 

Representatives — Clayton Yeutter, Carla Hills, and 

Mickey Kantor. In addition to merchandise trade, the 

negotiations extended GATT disciplines to a number of 

areas not previously covered, including textiles, trade 

in services, investment, and intellectual property rights. 

The major achievements of the Uruguay Round are 

described in chapter 1 of this report. 

The negotiations had been launched in September 

1986 in Punta Del Este, Uruguay and were originally 

scheduled for completion in 1990. However, by 

December 1988, the time of the midterm review in 

Montreal, Canada, disagreements remained in 

agriculture and in 3 other important areas, while broad 

agreements to continue talking were reached in 

11 areas. At the December 1990 Ministerial in 

Brussels, Belgium, GATT Director General Arthur 

Dunkel outlined a draft text of the agreement that 

xv 
Figure A 

Selected Trade Events, 1993 

JANUARY 

Jan. 1 

Jan. 21 

Jan. 27 

European Union (EU) formally establishes a single frontier-free internal market. 

The Senate confirms Mickey Kantor as the new United States Trade Representative. 

The Commerce Department's International Trade Administration imposes provisional 

dumping duties on steel imports from 19 countries. 

FEBRUARY 

Feb. 5 

Feb. 17 

President Clinton reiterates his support for the North American Free Trade 

Agreement, but calls for strengthening labor and environmental provisions. 

In a speech at American University, President Clinton expresses his intention to focus 

on "fair trade" in international markets as part of a national economic strategy to 

expand trade and improve American competitiveness. 

Mar. 31 

APRIL 

Apr. 4 

Apr. 14 

Apr. 15 

Apr. 16 

Apr. 23 

Apr. 26 

Apr. 27 

Apr. 30 

Thirty-seven nations representing both developed and third world economies appeal 

in writing to the U.S, EU and Japan to bring Uruguay Round to an early conclusion. 

Talks on China's accession to the GATT end without decision—membership predicted 

to be at least a year away. 

The European Union and the European Free Trade Area countries sign an additional 

protocol, paving the way for the implementation of the treaty that would establish the 

European Economic Area on Jan. 1, 1994. 

The Office of U.S. Trade Representative releases its eighth annual inventory of 

foreign barriers to U.S. trade and investment. 

President Clinton promises $1.6 billion package of U.S. aid to support Russian 

reform, pledges to push for Russian GATT membership. 

G-7 finance and foreign affairs leaders meet in Tokyo to discuss, inter alia, aid to 

Russia. 

President Clinton designates Ecuador for benefits under the Andean Trade 

Preference Act (ATPA). 

GATT members meet to discuss possible membership for Taiwan, the world's 16th 

largest exporter. 

President Clinton and Japanese Prime Minister Miyazawa agree in principle on the 

need to create a "new framework" to address economic tensions between the two 

countries. 

The United States and China conclude talks on implementation of bilateral market 

access pact. 

U.S. imposes tighter trade sanctions on Yugoslavia in an effort to stop the fighting 

there. 

The Clinton administration submits legislation to Congress to extend for 15 months 

the GSP program and extends fast track negotiating authority for 120 days. 

USTR identifies Japan and the EU as countries discriminating against U.S. products 

and services in public procurement under Title VII of the Omnibus Trade, and 

Competitiveness Act of 1988, beginning a 60-day consultation process. 

MARCH 

Mar. 11 

Mar. 17 

Mar. 27 

xvi 
Figure A—Continued 

Selected Trade Events, 1993 

MAY 

May 13 French Prime Minister Balladur announces that France will seek to reopen 

negotiations in the Uruguay Round on agriculture and services. 

May 14 Quad ministers meet in Canada to discuss Uruguay Round; progress announced. 

May 27 The Canadian House of Commons passes NAFTA legislation. 

May 28 Clinton extends MFN status to China for 1 year; 1994 renewal is linked to human 

rights progress. 

JUNE 

June 4 U.S. and Russia sign agreement for $700 million in U.S. farm aid. 

GATT sets up panel to investigate EC charges that the U.S. erred in imposing 

countervailing duties on steel imports. 

June 8 EU council approves oilseed accord with United States after France lifts its 

opposition. 

EU foreign ministers agree to impose counter-sanctions against U.S. in dispute over 

public procurement in telecommunications. 

June 9 MERCOSUR members change policy, announce free trade zone (not common 

market) to be established by Jan. 1, 1995; negotiations on Mexican membership 

scheduled. 

June 16 The UN Security Council votes to impose a worldwide ban on oil and arms shipments 

to Haiti. 

June 22 The U.S. House of Representatives votes to extend fast track negotiating authority 

until December 15, the target for conclusion of the Uruguay Round. 

JULY 

July 4 The United States GSP program expires. 

July 10 The United States and Japan announce a framework agreement for future trade and 

economic negotiations. 

July 15 Uruguay Round talks resume following Quad agreement on market access. 

July 16 Producers and consumers reach agreement on a global cocoa pact. 

July 27 The USITC votes on the final antidumping and countervailing duty cases involving 

flat-rolled steel. 

AUGUST 

Aug. 1-2 

Aug. 5 

Aug. 10 

Aug. 12 

Aug. 13 

Aug. 27 

EU finance ministers and central bankers expand bands of the European Exchange 

Rate Mechanism to 15 percent in the face of intense market pressures. 

The United States and Canada reach agreement on access for U.S. beer sold in 

Ontario market. 

President Clinton signs into law a budget reconciliation bill that extends the U.S. GSP 

program (retroactively from July 4, 1993) to Sept. 30, 1994. 

President Clinton designates Peru for ATPA benefits. 

The United States, Canada and Mexico announce agreement on labor and 

environmental side pacts to NAFTA. 

The United Nations Security Council votes unanimously to lift economic sanctions 

against Haiti. 

xvii 
Figure A—Continued 

Selected Trade Events, 1993 

SEPTEMBER 

Sept. 24 Nine members of the Commonwealth of Independent States agree to form new 

economic union. 

OCTOBER 

Oct. 22 Canada applies for a binational dispute settlement panel under the U.S.-Canada FTA 

on the issue of subsidized wheat sales to Mexico by the United States under the 

export enhancement program. 

Oct. 29 USTR calls on Arab countries to end their long-standing boycott of Israel and U.S. 

firms there. 

NOVEMBER 

Nov. 1 With the entry into force of the Treaty on European Union, also known as the 

Maastricht Treaty, the EC is renamed the "European Union." 

Nov. 5 The United States and its Cocom allies agree to speed up the licensing process for 

high-tech exports to Russia and Kazakhastan. 

Nov. 17 U.S. House of Representatives passes the NAFTA implementation legislation after a 

lengthy debate. 

Nov. 17-19 The Asia-Pacific Economic Cooperation (APEC) ministerial meeting is held in Seattle, 

Washington; ministers adopt a strong statement in favor of successfully concluding 

the Uruguay Round. 

Nov. 20 The U.S. Senate passes the NAFTA implementation legislation; Senate also passes 

legislation to repeal remaining U.S. sanctions against South Africa and promote 

bilateral investment and trade there. 

DECEMBER 

Dec. 1 President Clinton meets with the leaders of 7 Central American countries and 

promises to launch an investigation shortly thereafter on the possibility of expanding 

NAFTA elsewhere in the hemisphere. 

Dec. 8 President Clinton signs the NAFTA Implementing Act into law, effective January 1, 

1994. 

Dec. 10 European Council endorses the recommendations presented in the EU Commission's 

White Paper on growth, competitiveness, and employment. 

Dec. 14 Japan announces it will lift its 30-year ban on rice imports. 

Dec. 15 The 117 members of GATT approve text of trade agreement, concluding seven years 

of talks under the Uruguay Round. 

became the basis for negotiations during the final 

stretch of the talks. Progress in the negotiations moved 

relatively slowly until the United States and the EU 

reached an agreement on agriculture known as the 

Blair House accord. This action set the stage for the 

Clinton administration to take over negotiations in 

1993. 

Prospects for success in the Uruguay Round 

negotiations appeared dim until the middle of the year, 

when differences among EU members over agriculture 

were finally settled. In July, the leading industrialized 

countries announced an agreement on a broad package 

that eliminated or sharply reduced tariffs in a number 

of key sectors. One of the key events that may have 

provided a spur to the negotiations was the passage of 

the NAFTA implementing legislation by the U.S. 

Congress in November. During the same week that 

Congress passed the NAFTA legislation, countries 

participating in the Asia-Pacific Economic Cooperation 

(APEC) Ministerial announced additional Uruguay 

xviii 
Round market access commitments. Intensive 

negotiations and the intervention of world leaders at 

critical points during the year helped to bring the 

negotiations to a close by yearend. In December, after 

almost constant negotiations, an agreement was finally 

reached on December 14, only hours before the 

deadline on U.S. fast-track negotiating authority was 

set to expire. The last-minute negotiations were aimed 

at addressing U.S. concerns over antidumping and 

subsidy provisions and gaining the EU and Asian 

countries' clear commitment to agricultural 

liberalization. Differences over maritime, financial 

services, and film and television rights remained 

unresolved and were left for future negotiations. 

The final text of the Uruguay Round agreement 

calls for the establishment of the World Trade 

Organization (WTO). The WTO is expected to go into 

operation in 1995 as a successor to the GATT 

Secretariat and to facilitate implementation of new or 

more effective rules in several areas, including dispute 

settlement, antidumping, safeguards, standards, and 

agriculture. With the completion of the round, 

suggestions for another multilateral round of 

negotiations began circulating. Regarding future GATT 

work, President Clinton indicated that he hoped that 

the trading system would address the issues of 

competition policy, labor standards, and environmental 

protection. 

Not all of the GATT's attention was focused on the 

Uruguay Round in 1993. The GATT Council continued 

to meet (eight times in 1993) to consider such issues 

such as applications for accession or observer status. A 

number of working parties were established to review 

accession applications and free-trade agreements, 

including NAFTA, and to consider procedural issues. 

Regional 

The highlight of regional trade activities during 

1993 was the passage of NAFTA implementing 

legislation. Other important regional events included 

the first meeting of APEC leaders, further integration 

and moves toward enlargement in the EU, and the 

initiation of the Central European Free-Trade 

Agreement (CEFTA), in Central Europe. These and 

other regional trade activities are summarized below. 

North America 

Second only in importance to the completion of the 

Uruguay Round negotiations was the signing of the 

NAFTA implementing legislation by President Clinton 

on December 8, 1993. Following a year of intense 

public debate, NAFTA implementing legislation was 

approved by both Houses of the U.S. Congress in 

November. The Mexican and Canadian legislatures 

also enacted implementation measures in the fall, and 

the NAFTA entered into force on January 1, 1994. The 

agreement provides for the elimination of most tariffs 

and nontariff barriers to qualifying goods during a 

transition period, the liberalization of trade in services 

and rules for investment, and the strengthened 

protection of intellectual property rights. It also 

provides for a dispute settlement mechanism, including 

independent binational panels that are modeled after 

those of the U.S.-Canada Free-Trade Agreement 

(CFTA) to review final antidumping and 

countervailing duty determinations. 

As promised by President Clinton in the course of 

the 1992 U.S. Presidential campaign, the United States 

sought the negotiation of supplemental accords to 

address environmental and labor concerns. These 

supplemental agreements were concluded in August. 

Trilateral negotiations on the environmental and 

supplemental agreements to NAFTA began in March 

and concluded in mid-August. The side agreement on 

environment commits the three NAFTA signatories to 

ensuring environmental protection and promoting 

sustainable development in implementing NAFTA. The 

agreement on labor requires the parties to pursue 

cooperation on labor issues, including worker safety 

and health, child labor, labor law and workers rights. 

Each agreement will be overseen by a commission to 

encourage compliance and evaluate the effectiveness of 

enforcement in each country. NAFTA's implementation 

will be overseen by the NAFTA Trade Commission, 

which will have oversight of a variety of committees 

and working groups. 

Asia 

During 1993, the United States also focused its 

attention on Asia and the Pacific Rim — not only 

because of the growing attractiveness of markets in the 

region to U.S. exporters, but also in an effort to give 

the Uruguay Round negotiations a push toward 

conclusion. In a July speech, President Clinton 

described his vision for U.S. relations with the region. 

He invited leaders of APEC to meet, for the first time 

ever, at the November Ministerial to be hosted by the 

United States. At the Ministerial, the APEC leaders 

improved upon earlier market access offers and 

endorsed a strong statement of support for concluding 

the Uruguay Round negotiations by the December 15 

deadline. APEC members hoped to provide impetus for 

other countries, especially for the EU, to improve their 

offers at the table in Geneva. Membership in APEC 

xix 
was broadened to include Mexico and Papua New 

Guinea; Chile was slated to join the organization at the 

1994 Ministerial. 

membership applications and forged closer ties with its 

neighbors to the North and to the East. 

While the Asian Pacific countries were taking 

actions within APEC; the members of the Association 

of Southeast Asian Nations (ASEAN) were attempting 

to move forward their year-old ASEAN Free Trade 

Area (AFTA) agreement. The organization agreed to 

increase the number of items subject to tariff 

reductions beginning on January 1, 1994. Until that 

time, tariff-cutting actions by members had been 

occurring very slowly, and ASEAN countries had 

exempted many product categories. Economic issues in 

ASEAN were somewhat overshadowed by efforts to 

establish a new regional security mechanism. In 

response to the end of the Cold War and to shifts in 

security concerns, ASEAN initiated a formal ASEAN 

Regional Forum to discuss political and security issues. 

This group, an expanded version of the existing 

ASEAN Post-Ministerial Conference, includes the 

United States and six other major trading partners of 

ASEAN. The group is expected to address such issues 

as nonproliferation, regional conflicts, and the role of 

major powers in Asia. 

Europe 

The EU continued to take steps toward completing 

the integration of its 12-member states, both politically 

and economically. The so-called single market, or 1992 

program, became formally operational on January 1, 

1993. Implementation of the required legislation to 

effect this integration, although still incomplete, 

continued to progress. As of mid-December 1993, the 

EU Council had adopted nearly 94 percent of the 

measures originally identified as necessary to create a 

single market, and member states had implemented 

approximately 87 percent of the measures requiring 

transposition into national law. In a reversal of its 1992 

referendum, Denmark approved the Maastricht Treaty 

on European Union, with specified exemptions, in May 

1993. The treaty strengthens political, economic, and 

monetary union among EU member states. Other 

members followed suit, setting the stage for the 

Treaty's ratification and entry into force on November 

1, when the European Union formally came into being. 

However, despite such positive steps, economic 

recession, high unemployment, and instability in the 

currency markets threatened to delay monetary union 

and the establishment of a single currency. With regard 

to its external relations, the EU actively considered 

Latin America and the 

Caribbean 

During 1993, the United States pursued its trade 

and investment objectives in Latin America and the 

Caribbean in the context of the NAFTA and the 

Uruguay Round. Countries of the region hoped to 

become candidates for future free-trade agreements 

with the United States under provisions of the NAFTA. 

The United States planned to pursue a "building bloc" 

approach to expanding the agreement to other 

countries, with Chile receiving the highest priority. In 

the meantime, the United States has entered into trade 

and investment framework agreements with several 

countries of the region. 

During 1993, four Andean Pact members (Bolivia, 

Colombia, Ecuador, and Venezuela) enhanced their 

common market accord to further liberalize their trade 

and investment regimes on a regional basis; Peru 

committed to join its Andean partners during 1994. 

However, in general, progress toward economic 

integration within Latin America was slow during 1993 

as the leaders focused their attention on domestic 

economic stabilization efforts. In 1993, the United 

States designated Ecuador and Peru as beneficiaries 

under the Andean Trade Preference Act (ATPA), 

providing duty-free treatment for certain of their 

exports. 

Central and Eastern Europe 

The United States has supported economic reforms 

in Central and Eastern Europe by providing financial, 

administrative, and technical assistance to countries of 

the region. In 1993, further progress was made toward 

improving commercial relations with this area. The 

U.S. negotiating agenda included the extension of 

MFN tariff treatment and GSP benefits to eligible 

countries and the negotiation of bilateral investment 

treaties. In September 1993, the U.S. and Hungarian 

Governments signed a comprehensive intellectual 

property agreement, removing the most difficult 

stumbling block to the conclusion of a business and 

economic treaty. In November 1993, after a break of 5 

years, the United States and Romania reinstated MFN 

treatment to their trade. The United States, in 

coordination with its 16 partners on the Coordinating 

Committee on Multilateral Export Controls (Cocom), 

significantly reduced controls on its high-technology 

exports to Central and Eastern Europe. 

xx 
Bilateral 

EU 

Discussions between the United States and the EU 

centered primarily on Uruguay Round issues during 

1993, especially as the December 15 deadline for the 

conclusion of the negotiations approached. Following a 

July meeting of the so-called "quadrilateral" group, 

consisting of Canada, the EU, Japan and the United 

States, the United States conducted discussions with 

the EU on market access concerns. The United States 

sought to consolidate and extend pledges made 

regarding "zero-for-zero" offers (see Chapter 1), tariff 

reductions and tariff harmonization. Tensions arose in 

October over agricultural issues when France insisted 

that the 1992 Blair House accord between the United 

States and the EU needed to be reopened. The dispute 

cast a pall over prospects for concluding the Uruguay 

Round negotiations. However, eventually the United 

States and the EU reached an understanding. 

The most important bilateral trade issue between 

the United States and the EU was the implementation 

of public procurement rules laid out in the EU's 

utilities directive. The directive establishes 

procurement procedures for public utilities deemed by 

the U.S. Government to be discriminatory. A key 

aspect of the issue was resolved with the signing of a 

Memorandum of Understanding regarding power 

companies on May 25. The United States and the EU 

negotiated on other remaining procurement issues 

(notably telecommunications and services) under the 

GATT Government Procurement Code during the 

remainder of 1993. 

Canada 

As noted above, the focal point for U.S.-Canada 

trade relations during 1993 was working with the 

newly elected Canadian Government in concluding the 

NAFTA side agreements on environment and labor. 

The NAFTA incorporates and clarifies certain 

provisions of the CFTA which was suspended when 

NAFTA entered into force on January 1, 1994. 

Provisions of the CFTA relating to bilateral tariff 

phaseouts, market access for agriculture, and energy 

were carried over to the NAFTA. As the NAFTA 

negotiations were occurring, other disputes including 

durum wheat and lumber were acted on by CFTA 

dispute-settlement panels. The U.S. International Trade 

Commission voted on the final antidumping and 

countervailing duty cases involving flat-rolled steel on 

July 27 (see chapter 4 for further information on the 

USITC's vote). 

Japan 

Early in the year, the Clinton administration 

conducted an interagency review of U.S.-Japan trade 

relations. The assessment led to a shift in the U.S. 

approach: instead of seeking increased access to 

Japan's markets by changing rules or procedures, 

future agreements with Japan would focus on 

achieving results. On July 9, the two countries reached 

an agreement for conducting future negotiations on 

both structural and sectoral issues. The U.S.-Japan 

Economic Framework for a New Economic 

Partnership (Framework) included a provision calling 

for regular assessments of progress to be made on the 

basis of "objective criteria, qualitative or quantitative 

or both." This phrase became the subject of debate 

during bilateral negotiations throughout the remainder 

of the year (see chapter 4). By the end of December, 

the two countries were "very far apart" in their 

negotiating positions in the key sectors of automobiles 

and parts, insurance, and government procurement. 

In addition to the Framework discussions, several 

other sectoral issues drew the attention of U.S. and 

Japanese negotiators during 1993, including 

construction services, supercomputers, and 

semiconductors. While negotiators were headed for an 

agreement on major construction projects by the end of 

the year, disagreements over implementation of 

previous commitments in the latter two sectors 

remained at yearend. 

Mexico 

NAFTA dominated U.S. relations with Mexico in 

1993, including the successful negotiations of the side 

agreements on labor and the environment and the 

passage of NAFTA implementation legislation by the 

U.S. Congress. U.S. concerns over Mexico's 

enforcement of intellectual property rights, the 

institution of new regulations regarding customs 

valuation, and nontariff barriers in the form of sanitary 

and phytosanitary standards were the topic of bilateral 

discussion during 1993. 

Mexico initiated numerous legislative reforms in 

1993 to consolidate its domestic economic reform 

efforts and to advance implementation of its 

commitments under the NAFTA. The most important 

new laws covered economic competition, foreign trade, 

and foreign investment. These laws are intended to 

expand the scope and effectiveness of Mexico's 

antitrust laws and to liberalize restrictions on trade and 

xxi 
investment. Other legislative measures that were 

adopted addressed a wide range of areas, such as 

government procurement, customs procedures, 

phytosanitary standards, the maquiladoras, mining, 

forestry, and financial services. 

China 

The annual renewal of China's MFN status was a 

major bilateral issue during 1993. In May, President 

Clinton decided to extend MFN to China for another 

year beginning July 3. U.S. trade discussions with 

China continued to center on market access issues, 

trade in services and transshipment of textiles. In the 

area of protection of intellectual property rights, the 

United States monitored China's implementation of an 

agreement to provide patent protection and to uphold 

the international convention on the protection of 

copyrights. 

Taiwan 

U.S.-Taiwan relations started the year with the 

signing of a Trade and Investment Framework 

Agreement (TIFA) on January 15. The TWA provides a 

mechanism for conducting bilateral discussions on 

trade and investment issues. However, such other 

issues as Taiwan's protection of intellectual property 

rights and its application to join the General 

Agreement on Tariffs and Trade (GATT) occupied 

most of the bilateral agenda. By yearend, the United 

States put forth an extensive tariff request list and other 

requests to be considered during bilateral negotiations 

in 1994. 

Republic of Korea 

U.S.-Korean trade negotiations took place as 

Korea's President Kim Young Sam launched a wide 

range of initiatives in 1993 designed to reform Korea's 

political and economic affairs. The economic plan, 

called the "New Economy," is designed to shift 

emphasis in economic activity from policy directives 

and government influence to individual participation in 

economic affairs. 

Bilateral discussions with Korea in 1993 centered 

primarily on the protection of intellectual property 

rights and the improvement of foreign access to 

Korea's beef market, the third largest in the world. In 

April, Korea was put on USTR's priority watch list 

under special 301 provisions of the Trade Act of 1974 

because of its inadequate enforcement of trademark 

and copyright laws. However, by late 1993, following 

stepped-up enforcement efforts by Korea, the United 

States decided not to designate it as a priority foreign 

country. Despite strong domestic opposition, Korea's 

President lifted the country's ban on imported rice, 

following an agreement with the United States in 

conjunction with the Uruguay Round negotiations. 

The International Economic 

Environment and World 

Trade in 1993 

World real output grew at an annual rate of 2.2 

percent in 1993, higher than the growth rate of 1.7 

percent in 1992 but lower than the growth rates 

recorded in previous years. 3The relatively lackluster 

performance reflected the continued sluggish growth or 

output contraction in major industrial countries, in 

countries of Eastern Europe and in the former Soviet 

Union. Much of Asia, meanwhile, recorded strong 

economic growth, although Japan experienced a 

decline in output. 

World trade grew at a faster rate than output in 

1993. GATT estimates4show that world merchandise 

trade volume grew by 2.5 percent in 1993, a slowdown 

from 4.5 percent in 1992. The nominal value of world 

merchandise trade fell by 3.6 percent to $3.6 trillion in 

1993, after increasing by 5.5 percent to $3.7 trillion in 

1992. The decline in world trade value reflects slow 

growth in Western Europe and Japan, declining prices 

for fuels and other materials, and gains in the value of 

the dollar against European currencies. However, 

world trade in commercial services was robust, 

growing an estimated 3 percent in 1993 to a value of 

$1.03 trillion, from $1.00 trillion in 1992. 

Trade grew fastest in North America, Asia, and 

Latin America in 1993. Aggregated exports from Latin 

America, Taiwan, Hong Kong, South Korea, Malaysia, 

Singapore, and Thailand jumped by 9.5 percent in 

volume, boosted by the rising demand in North 

America. The United States, Germany, and Japan were 

the three leading merchandise exporters. In commercial 

services, the United States ranked first followed by 

France, Italy, Germany, the United Kingdom, and 

Japan. 

In the 24 industrialized countries of the 

Organization of Economic Cooperation and 

Development (OECD), 5output grew at an estimated 

rate of 1.1 percent in 1993, following a growth rate of 

1.7 percent in 1992. 6In the European economies of the 

OECD, output contracted by a rate of 0.2 percent. 

Continuing balance sheet adjustments, relatively high 

interest rates in some countries, and declining 
consumer and business confidence weakened overall 

European demand 

Policies adopted by the major industrial countries 

of the OECD to suppress inflation showed some 

success. Consumer price inflation in the OECD 

reached its lowest level in many years and was 

estimated at 3.3 percent in 1993, down from 4.0 

percent in 1992. However, these deflationary stances 

restricted price increases and diminished profits, 

discouraging new investment spending and hiring. 

OECD unemployment rose to 8.2 percent in 1993, its 

highest level in many years, compared with a rate of 

7.9 percent in 1992. 

Because of the decline in aggregate demand in 

major OECD countries, real OECD exports increased 

by only 1.6 percent in 1993, down from a 5.1 percent 

increase in 1992. Imports increased by 2.3 percent in 

1993 compared with a 5.2 percent rise in 1992. 7 

In developing countries, 8prospects for growth 

continued to improve as a result of the adoption of 

more market-oriented policies and trade liberalization 

measures. Real output of developing countries grew by 

an estimated average rate of 6.1 percent in 1993 

compared to 6.2 percent in 1992. Debt remained a 

major concern for several developing nations, 

particularly for the least developed ones. International 

Monetary Fund (IMF) statistics show that the external 

debt of all developing countries increased to an 

estimated $1,476.4 billion in 1993, from $1,389.6 

billion in 1992. Some indebted countries experienced a 

faster growth in output and in exports than in debt, 

improving their credit worthiness. However, arrears of 

the severely indebted countries grew rapidly. 

North America 

Output and productivity in North America rose 

substantially in 1993 compared with the previous year. 

Regional economic integration is expected to further 

enhance productivity and increase regional output and 

trade. 

United States 

In the United States, real output grew by 2.9 

percent in 1993, following a 2.6-percent growth rate in 

1992. 9Total industrial output grew by 4.3 percent, and 

manufacturing output rose by 5.0 percent. 10Real 

personal consumption spending, the major component 

of aggregate demand, increased by 3.3 percent in 1993, 

following a 2.6-percent increase in 1992. Consumer 

spending on durable goods rose briskly at a rate of 7.4 

percent, encouraged by declining short-term interest 

rates and rising incomes. Real nonresidential fixed 

investment, bolstered by declining long-term interest 

rates, lower unit labor costs, improved labor 

productivity, and higher capital returns, rose by a 

strong 11.7 percent in 1993 after rising by only 2.9 

percent in 1992. Investment in producers' durable 

equipment particularly escalated, surging by 16.2 

percent following an increase of 6.9 percent in 1992. 

The rise in spending on consumer durables and on 

producers durable equipment, together with a partial 

recovery in housing, combined to spark an economic 

recovery in the second half of 1993, despite a decline 

in government spending. 

Real Federal Government spending decreased by 

0.7 percent in 1993, reflecting a large decline (7.1 

percent) in defense spending. The Federal budget 

deficit declined in 1993 to $255 billion, from $290 

billion in 1992. The decline in the budget deficit 

shifted funds toward the private sector and increased 

the sector's liquidity. The strengthening of economic 

activity led to a decline in the unemployment rate to 

6.4 percent by the end of 1993, from 7.3 percent in 

1992. 11Inflation (measured by the GDP price 

deflator) was 3.3 percent. However, the strengthening 

of domestic demand led to increased imports and to the 

widening of the 1993 trade deficit of goods to $135.6 

billion, from $100.1 billion in 1992. 12Although 

exports rose to an all-time high of $439.3 billion, 

imports increased to $574.9 billion. 

Exports of goods grew in almost every end-use 

category in 1993: capital goods gained $6.2 billion, 

automotive vehicles and parts and engines rose $4.6 

billion, and consumer goods increased $3.0 billion. 

Exports of manufactures grew by 3.9 percent to $296.2 

billion, from $285.2 billion, and constituted 67.3 

percent of total U.S. exports (figure B). Within the 

manufactured goods category, exports of 

advanced-technology products rose, and the United 

States ran a trade surplus in these products of $27.2 

billion in 1993. Airplanes and parts, scientific 

instruments, specialized industrial machinery, and 

general industrial machinery recorded the most 

positive contributions to the U.S. trade balance in 

1993. 13 

U.S. trade performance improved in 1993 with a 

few trading partners but worsened with most, including 

Canada, Germany, the Newly Industrialized Economies 

(NIEs), 14and Japan. Figure C shows U.S. merchandise 

exports, imports, and trade balances with major trading 

partners. Leading U.S. exports and imports to U.S. 

major trading partners are highlighted in appendix A. 
Fuel/raw 

material 

$70.0 

12.2% 

All other goods 

$24.5 

5.6% 

Chemicals and 

related products 

$45.1 

10.3% 

All other goods 

$21.1 

3.7% 

Chemicals and 

related products 

$28.5 

5.0% 

U.S. Exports U.S. Imports 

(billion dollars and percent) (billion dollars and percent) 

Figure B 

U.S. merchandise trade with the world, by product sectors, 1993 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

The U.S. current account deficit grew to $109.2 

billion in 1993, from $66.4 billion in 1992, reflecting 

the increased merchandise trade deficit and a decline in 

the surplus on investment income. The U.S. surplus on 

services trade declined slightly to $55.7 billion, from 

$56.4 billion in 1992. 15Services receipts were $186.8 

billion compared with $179.7 billion in 1992; services 

payments were $131.1 billion compared with $123.3 

billion. The U.S. surplus on income from foreign 

investment declined to $66 million in 1993, down from 

$6.2 billion in 1992. Receipts of income on U.S. assets 

abroad decreased slightly to $110.3 billion, and 

payments were slightly below $110.3 billion. Net 

inflows of foreign capital into the United States 

increased to $82.5 billion, from $78.6 billion in 1992. 

U.S. purchases of foreign portfolio assets and 

purchases by foreigners of U.S. assets and securities 

both increased. 

U.S. trade in services grew in almost every 

category and increased with major trading partners, 

including the EU, Canada, Japan and other Asian 

countries, and Latin America. Exports of travel reached 

$56.5 billion, followed by the "other private services" 

category 16($56.4 billion), other transportation ($23.5 

billion), royalties and license fees ($20.4 billion), and 

passenger fares ($17.8 billion). U.S. imports of 

services grew in several categories, with travel leading 

the way ($42.3 billion), followed by "other private 

services" ($33.6 billion), other transportation ($24.5 

billion), passenger fares ($11.3 billion), and royalties 

and licence fees ($4.8 billion). 

Canada 

Canada's real output grew by 2.4 percent in 1993, 

well above its 1992 growth rate of 0.7 percent. 17The 

upturn was generated by a marked increase in exports 

to the United States. Moreover, low inflation, increased 

government and consumer spending, and productivity 

gains aided the turnaround. Public investment climbed 

by 4.1 percent in 1993. Gross fixed investment rose by 

2.7 percent after a precipitous decline of 5.4 percent in 

1992. Consumer demand continued to revive, 

increasing by 1.6 percent, following a 1.0-percent 

increase in 1992. Canada's industrial production rose 

by 4.6 percent in 1993, following an increase of 0.4 

percent in 1992. Canada's unemployment eased a little, 

xxiv 
Figure C 

U.S. merchandise exports, imports, and trade balances with major trading partners, 1993 

Major trading partners 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

but fluctuated around 11.2 percent. The consumer price 

index rose by 1.7 percent in 1993, following a 

1.1-percent increase in 1992. The rise in consumer 

prices reflected a growing budget deficit, which, by 

crowding out investment funds, exerted upward 

pressures on long-term interest rates. In addition, the 

depreciation of the Canadian dollar increased Canada's 

import prices and the general price level. 

Canada's merchandise trade surplus stood at $9.1 

billion in 1993, up from a surplus of $7.4 billion in 

1992. Merchandise exports increased to $140.4 billion, 

and imports increased to $131.3 billion. The deficit on 

invisible trade increased slightly to $28.7 billion, from 

$28.5 billion in 1992. Canada's deficit on the current 

account declined to $19.5 billion, from $22.9 billion in 

1992. 18Excess payments of investment income over 

receipts, particularly to U.S. investors, accounted for 

the bulk of the deficit. Canada's current account deficit 

as a percent of GDP reached 3.6 percent in 1993. 

Canada is the largest U.S. trading partner. In 1993, 

the value of U.S. trade with Canada (exports plus 

imports) totaled $202.4 billion, higher than the value of 

U.S. trade with Japan ($152.2 billion) or with the 

12-nation EU ($187.7 billion). In 1993, the United 

States recorded a $18.6 billion merchandise trade 

deficit with Canada, higher than the merchandise trade 

deficit in 1992 of $15.0 billion, and roughly 13.7 

percent of the total U.S. trade deficit. U.S. exports to 

Canada rose to $91.9 billion Imports from Canada 

rose to $110.5 billion. U.S. exports to Canada rose in 8 

of 10 SITC sections (table A-1). Regarding U.S. 

exports to Canada, 77 percent consisted of 

manufactured goods, and the remainder consisted of 

food, fuel, and raw materials. Manufactured goods 

accounted for 65 percent of total imports from Canada. 

U.S. exports of services to Canada increased to $18.7 

billion, from $17.7 billion in 1992. Imports increased 

to $9.0 billion, from $8.5 billion. 

xxv 
Mexico 

The Mexican economy suffered slow growth, an 

increasing current account deficit, pressures on 

exchange rates, and high interest rates. Real GNP grew 

in 1993 by an estimated 1.9 percent, following a 2.7 

percent growth in 1992. 19Consumer price inflation 

declined to 8 percent in 1993, from a rate of 12 percent 

in 1992. The improvement reflected changed 

expectations in light of Mexico's continued fiscal and 

monetary restraint. Increased imports and declining 

exports, because of the appreciation of the exchange 

rate, led to a merchandise trade deficit of 

approximately $15 billion. Exports totaled $50.5 

billion, and imports increased to $65.5 billion. Foreign 

direct investment inflows increased by $6 billion, and 

portfolio investment inflows increased by $16.6 

billion. These helped to finance Mexico's current 

account deficit, which was estimated at $20 billion in 

1993. Investment inflows produced a capital account 

surplus of $23 billion and an increase in Mexico's 

foreign reserves of around $19.3 billion. 

Mexico's total trade with the United States grew to 

$78.9 billion in 1993, from $73.5 billion in 1992. The 

United States recorded a trade surplus of $1.6 billion 

with Mexico in 1993, down from a surplus of $5.7 

billion in 1992. U.S. exports to Mexico rose in 6 of the 

10 SITC sections (table A-4). Approximately 73 

percent of U.S. exports to Mexico was of manufactured 

goods, and the remainder consisted of food, fuel, and 

raw materials. 

European Union 

In 1993, the EU confronted a severe recession and 

double digit unemployment. Real output declined by 

0.3 percent in 1993, following a growth rate averaging 

only 1.1 percent in 1992. The 1993 decline in real GDP 

was only the second time that a decline has been 

recorded in the 35-year history of the EU. 

The costs of German unification generated ripple 

effects in the European Monetary System and acted as 

a drag on EU economic growth. Germany's borrowing 

to pay for unification prompted the Bundesbank to 

keep key interest rates higher than in other EU 

countries in an effort to curb inflation. In addition, the 

deflationary stance adopted by Germany and other 

members continued to push down inflation rates in the 

EU to levels not experienced in several decades. 

Unable to raise prices, producers in the EU 

experienced dwindling profits and had to trim payrolls 

to maintain profitability. Unemployment in the EU 

increased to 11.9 percent in 1993, from 9.8 percent in 

the previous year. Industrial production fell by 3.5 

percent, its biggest drop since a fall of 6.8 percent in 

1975. 

Uncertainty lingered among consumers and 

investors because of the inability of individual 

governments to spur aggregate domestic demand either 

through monetary or fiscal policies. The monetary 

policies of individual countries are constrained by 

Exchange Rate Mechanism (ERM) rules, the system 

which was devised by the Union to stabilize EU 

exchange rates and which effectively anchors EU 

currencies to the German mark and German interest 

rates. The narrow exchange-rate band of the ERM 

proved to be flawed because bands were too rigid, 

obliging governments to maintain parities and 

corresponding interest rates that financial markets 

decided were unsustainable. As pressures to continue 

devaluing some currencies beyond a certain point 

mounted and as the associated costs of accommodating 

such devaluations (selling central banks reserves) 

became prohibitive, several countries opted out of the 

ERM. This uncertainty, in addition to other factors, led 

to the shattering of the ERM. Some stability and calm 

were restored in the foreign exchange markets after 

instituting wider exchange rate bands. However, 

Britain and Italy chose to stay out of the system to 

retain freedom in managing their economies. 

Several EU countries view wider bands as a return 

to the flexible exchange rate system with its inherent 

exchange rate instability. Other factors contributing to 

the breakdown of the ERM included divergent 

domestic monetary policies, high fiscal deficits, and 

large public debts in individual EU countries. Those 

governments that opted to stay in the ERM had to keep 

interest rates in line with German rates, which were 

above the levels warranted by their domestic needs. 

Similarly, fiscal policy was constrained by high budget 

deficits in 1993. EU countries' aggregate budget 

deficits reached 7.1 percent of their GDP, and gross 

government debt reached 63.4 percent of GDP. More 

government spending would thus require raising taxes, 

a highly untenable proposal in a period of falling 

demand, dwindling incomes, and rising 

unemployment. 

EU real exports of goods and services increased by 

0.4 percent in 1993, whereas real imports declined by 

5.6 percent. The EU recorded a merchandise trade 

surplus of $38.9 billion compared with a deficit of 

$12.5 billion in 1992, a surplus on services and 

investment of $10.4 billion, a deficit on investment 

income of $35.1 billion, and a current account deficit 

of $19.9 billion. 

xxvi 
Total U.S. trade with the EU fell to $187.7 billion 

in 1993, from $189.2 billion in 1992. The United 

States incurred a trade deficit with the EU of $5.3 

billion in 1993, compared with a surplus of $5.5 billion 

in 1992. U.S. exports declined to $91.2 billion in 1993, 

from $97.3 billion, whereas imports rose to $96.5 

billion, from $91.8 billion (table A-7). Sixty-five 

percent of U.S. exports to the EU markets consisted of 

manufactured goods, and the remainder consisted of 

food, fuel, and raw materials. Seventy-three percent of 

U.S. imports consisted of manufactured goods, and the 

remainder consisted of food, fuel and raw materials. 

U.S. exports of services to the EU increased to 

$56.7 billion in 1993, from $54.4 billion. Imports of 

services from the EU increased to $48.9 billion, from 

$46.5 billion. The United States recorded a services 

trade surplus of $7.8 billion. 

Germany 

During 1993, the German economy continued to 

adjust to unification. As in the previous year, 

Germany's tight monetary policy, weak foreign 

demand, rising labor costs, high interest and exchange 

rates, and a hesitant recovery in eastern Germany led to 

a decline in overall economic activity. Real GDP 

contracted by 1.2 percent in 1993 in the whole of 

Germany compared with a positive growth rate of 2.1 

percent in 1992. The western German economy went 

into recession in mid-1992, and western Germany's 

GDP fell 1.9 percent in 1993. Investment in plant and 

equipment declined by 15.0 percent, business 

expectations deteriorated, and exports declined. 

In eastern Germany, economic growth was mainly 

led by the expansion in the construction sector, which 

received huge transfer payments from western 

Germany to improve the region's infrastructure. 

Expansion in the construction sector did appear to be 

spreading to other sectors particularly to 

manufacturing. East German products gradually 

enjoyed increased domestic and foreign demand, 

although East German enterprises had yet to gain a 

foothold in western export markets. East German real 

GDP grew by 6.5 percent in 1993 after growth of 10 

percent in 1992. 20 

In Germany, consumer price inflation declined to 

4.1 percent, from 4.7 percent in 1992. The national 

unemployment rate rose to 8.3 percent, from 6.4 

percent in 1992. Germany's merchandise exports 

declined to $363 billion in 1993, from $406 billion in 

1992, but imports decreased to $324 billion, from $374 

billion. As a result, Germany's 1993 merchandise trade 

surplus increased to $39.0 billion, from $32.2 billion in 

1992. Germany's deficit in invisible trade increased to 

$59.0 billion, from $57.5 billion, and the deficit in the 

current account declined to $20.0 billion, from $25.3 

billion in 1992. As had occurred in the previous year, 

short-term capital inflows financed the current account 

deficit. 

Total U.S. trade with Germany declined to $46.0 

billion in 1993, from $47.5 billion in 1992. The United 

States registered a trade deficit with Germany of $10.2 

billion in 1993, compared with a deficit of $7.6 billion 

in 1992. U.S. exports to Germany in 1993 increased in 

3 of 10 SITC sections, and imports from Germany 

increased in 7 sections. Approximately 75 percent of 

U.S. exports to Germany consisted of manufactured 

goods, 4.3 percent of food, 5.4 percent of fuel and raw 

material, and 15.3 percent of other. In contrast, 81 

percent of U.S. imports from Germany was 

manufactured goods. 

United Kingdom 

The United Kingdom's economic recovery seems 

to have gathered momentum in 1993, following six 

consecutive quarters of recession and steep output 

decline. Overall, output increased in 1993 by 1.8 

percent after a negative growth of 0.6 percent in 1992. 

Consumer and business confidence improved. 

Consumer spending recovered, growing by 2.2 percent 

compared with 0.2 percent in 1992. Gross investment 

rebounded by 1.6 percent after a decline of 0.6 percent 

in 1992. Private residential investment led the 

recovery, surging by 7.1 percent after a large decline in 

1992. Public investment in infrastructure and 

transportation likewise increased by 3.7 percent. 

Consumer prices moderated, increasing by 3.4 percent 

in 1993, down from a 5.0-percent increase in 1992. 

However, the unemployment rate continued to climb, 

reaching 10.7 percent from 10.1 percent a year earlier. 

Although the United Kingdom abandoned the ERM 

monetary system, the British monetary policy 

continued to focus on lowering the inflation rate to 

levels prevailing in other ERM member countries. 

The United Kingdom's merchandise exports 

reached $181 billion in 1993, slightly lower than in 

1992. Imports declined to $201 billion, from $211.4 

billion in 1992. The trade deficit of around $20 billion 

was slightly lower than the $23.5 billion deficit in 

1992. The United Kingdom's surplus on invisible trade 

declined from $8.4 billion in 1992 to $3 billion in 

1993. It's current account registered a deficit of $17 

billion, following a deficit of $21.0 billion in 1992. 

Since U.S. exports to the United Kingdom reached 

$24.5 billion and imports reached $21.3 billion, U.S. 

trade marked a surplus of $3.2 billion in 1993. U.S. 

xxvii 
exports of services to the United Kingdom increased to 

$18.8 billion from $17.5 billion in 1992. Imports of 

services from the United Kingdom increased to $17.3 

billion, from $14.3 billion in 1992, resulting in a U.S. 

services trade surplus of $1.5 billion. 

Asia 

In Japan, economic activity continued to slowly 

expand. In other Asian countries, export-led growth 

and the introduction of market oriented policies and 

reforms improved the prospects for continued 

economic expansion. Economic growth was 

particularly strong in China, Hong Kong, Indonesia, 

Korea, Malaysia, Singapore, Taiwan, and Thailand. 

Output in these countries is estimated to have grown on 

average by 6.5 percent in 1993. U.S. total trade in 

goods with major Asian trading partners reached $350 

billion. While exports increased to $123 billion, 

imports increased to $226 billion, resulting in a trade 

deficit of about $103 billion. U.S. trade in services 

with the region totaled $100.7 billion. U.S. exports of 

services rose to $64 billion, and imports rose to $36.7 

billion, resulting in a services trade surplus of $27.3 

billion. 

Japan 

In Japan, economic activity continued to slow in 

1993, largely because of the weakness of the financial 

sector and the ensuing cutbacks in business and 

consumer spending. GDP growth was flat (zero 

percent) in 1993, following 1.3 percent growth in 

1992. Japan's industrial production fell by 4.2 percent 

in 1993 after dropping by 8.0 percent in 1992. Gross 

fixed investment declined by 2.3 percent, and private 

nonresidential investment fell by 8.5 percent in 1993. 

Private consumption spending increased by only 0.4 

percent. The effects of falling asset prices on the 

financial system and on personal income continued to 

be felt despite the Japanese Government's progressive 

easing of monetary policy and increasing public 

spending. Official discount rates were lowered during 

the year to 2.5 percent, from 6.0 percent. Public 

investment increased by 12.7 percent in 1993, 

following a rise of 12.2 percent in 1992. 

Despite the increase in public investment, private 

consumption flattened and aggregate final demand 

stagnated, resulting in a downward spiral in output, 

incomes, and profits. Personal consumption spending 

on consumer durables and clothing decelerated, 

reflecting declining income growth, particularly in 

wages and bonuses. 

Corporate investment in plant and equipment 

continued to decline because of capital stock 

adjustments and debt repayments. Japan's Ministry of 

Finance estimated that investment in plant and 

equipment would decrease by 13.9 percent in 

manufacturing and by 0.5 percent in nonmanufacturing 

in 1993. 

Inflation in Japan was only 1.0 percent, reflecting 

the deflationary impact of the recession. Unemployment rose to 2.5 percent, from 2.2 percent in 1992. 

Japan's exports of goods increased to $361 billion 

in 1993, from $340 billion in 1992; imports increased 

to $241 billion, from $233 billion in 1992. Japan's 

merchandise trade surplus grew to $120.4 billion, from 

$107.0 billion in 1992, because of weak import 

demand. The current account surplus was estimated to 

have reached $131.3 billion, from $117.6 billion in 

1992. 

The U.S. merchandise trade deficit with Japan rose 

in 1993 to $60.2 billion, from $49.7 billion in 1992. 

U.S. exports to Japan in 1993 totaled $46.0 billion, or 

the same level as in 1991-92. Imports increased to 

$106.2 billion, from $95.5 billion in 1992. U.S. exports 

increased in 5 of 10 SITC sections, and imports 

increased in 8 sections (table A-10). Forty-nine percent 

of U.S. exports to Japan consisted of manufactured 

goods; 38 percent of food, fuel and raw material; and 

13 percent of other. In contrast, over 94 percent of U.S. 

imports from Japan consisted of manufactured goods. 

U.S. trade in services with Japan totaled $42.2 

billion. U.S. exports of services to Japan rose to $27.1 

billion in 1993, from $26.1 billion in 1992, and imports 

rose to $15.1 billion, from $13.5 billion, resulting in a 

trade surplus on services of $12 billion. 

Korea 

In the Republic of Korea, output growth slowed 

somewhat to 4.3 percent in 1993, from 4.7 percent in 

1992. Tight monetary policy lowered consumer price 

inflation to 5.5 percent, from 9 percent in 1992. 

Korea's trade balance shifted from a $2.2 billion deficit 

in 1992 to a surplus of $1.0 billion in 1993. The 

current account deficit declined sharply to $1.0 billion 

in 1993, from $4.5 billion in 1992. The increasing 

demand in Europe and South East Asia, as well as the 

opening of new markets in the former socialist 

countries, increased Korea's exports. Because Korea's 

exports in 1993 totaled $78 billion and imports totaled 

$77 billion, the trade surplus totaled $1 billion. 

U.S. trade with Korea totaled $31.3 billion 

compared with $30.7 billion in 1992. U.S. exports to 

Korea increased slightly to $14.4 billion, from $14.2 
billion in 1992; imports increased to $17.0 billion, 

from $16.5 billion in 1992. The United States 

registered a trade deficit with Korea of $2.6 billion, up 

from $2.3 billion in 1992. In 1993, U.S. exports to 

Korea increased in 5 of 10 SITC sections, and imports 

increased in 7 sections (table A-13). Fifty-eight percent 

of U.S. exports to Korea in 1993 consisted of 

manufactured goods, and the remainder consisted of 

food, fuel and raw materials, and other goods. In 

contrast, 94 percent of U.S. imports from Korea 

consisted of manufactured goods. 

Taiwan 

In Taiwan, output grew by 6.0 percent in 1993 

despite a sharp deceleration in private sector 

investment. Exports declined as a result of a large 

increase in wages and of the appreciation of the New 

Taiwan Dollar (NTD). Subsequent easing of Taiwan 

monetary policy resulted in a weakening of the NTD 

and improved the prospects of increased exports. The 

inflation rate declined to 3.5 percent in 1993. Taiwan's 

total exports were approximately $82 billion; its 

imports, approximately $72 billion. Taiwan's 

merchandise trade surplus declined to $10 billion, from 

$12.8 billion in 1992. 

Taiwan's total trade with the United States rose to 

$40.6 billion in 1993, from $39.1 billion in 1992. U.S. 

exports to Taiwan grew a little, increasing to $15.6 

billion, from $14.5 billion in 1992; U.S. imports 

increased to $25.0 billion, from $24.5 billion. The U.S. 

bilateral trade deficit narrowed slightly to $9.4 billion, 

from $10.0 billion. In 1993, U.S. exports to Taiwan 

increased in 8 of 10 SITC sections, and imports 

increased in 7 (table A-16). Sixty-two percent of U.S. 

exports to Taiwan consisted of manufactured goods, 

and the remainder of food, fuel and raw materials and 

other. In contrast, 95 percent of U.S. imports from 

Taiwan consisted of manufactured goods, and the 

remainder consisted of food, fuel and raw materials 

and other. 

China 

Several policy initiatives, such as the removal of 

price controls and increasing openness to foreign 

investment, accelerated China's rate of economic 

growth. Data released by China's State Statistical 

Bureau on the performance of the Chinese economy in 

1993 showed that GDP grew in 1993 by 13.4 percent, 

following a growth rate of 12.8 percent in 1992. The 

total value of industrial output grew by 21.1 percent, 

and the total value of agricultural output rose by 4.0 

percent. Output of foreign-funded enterprises grew by 

48.8 percent; output of collective enterprises by 28.5 

percent; and output of State-owned enterprises, by 14.4 

percent. China's data showed that the actual amount of 

foreign investment realized in 1993 was $25.8 billion, 

a 134-percent increase over 1992. The cumulative 

figure of foreign investment in China since 1979 was 

$56.9 billion. 

The Chinese economy faced several major 

economic problems in 1993, including excessive 

investment in fixed assets, overgrowth of money 

supply, and high inflation. Foreign investment financed 

an estimated 30-percent rise in fixed investment. The 

accelerated growth boosted inflation rates to 23 

percent. China has adopted several austerity measures 

to cut inflation. Government expenditures were cut by 

20 percent, and some infrastructure projects were 

scaled back; interest rates were raised, and bank 

lending was placed under controls. 

China's foreign trade is expected to grow more if 

unimpeded by political pressures or by a decline in 

foreign investment. China's total merchandise trade 

reached $195.7 billion in 1993. China's merchandise 

exports slowed down in 1993, and imports increased 

because of the growth in domestic demand. Exports 

increased 8 percent to $91.7 billion, and imports 

increased by 29 percent to $104 billion. Much of the 

$12.3 billion trade deficit, the first one for China since 

1989, can be attributed to trade carried on by the 

foreign-funded sector. Trade in this sector amounted to 

$67.1 billion, one-third of the nation's total, with 

exports of $25.3 billion and imports of $41.8 billion. 

Imports of equipment and raw materials by this sector 

increased sharply in 1993, reflecting a surge in the 

growth of foreign investment in China. Exports of 

more sophisticated consumer durables seemed to be 

expanding. China's foreign reserves dwindled to $20 

billion. 

China's total trade with the United States increased 

to $40.0 billion in 1993, from $32.8 billion in 1992. 

U.S. exports to China increased to $8.6 billion, from 

$7.3 billion; however, imports also increased to $31.4 

billion, from $25.5 billion. As a result, the U.S. trade 

deficit with China widened to $22.8 billion, from $18.2 

billion in 1993. In 1993, U.S. exports to China 

increased in 6 of 10 SITC sections, and imports 

increased in 7 (table A-19). Seventy-six percent of U.S. 

exports to China consisted of manufactured goods, and 

the remainder of food, fuel and raw material, and other 

goods; 94 percent of U.S. imports consisted of 

manufactured goods. 
Latin America 

Growth continued to recover in Latin America, 

following the implementation of growth-oriented 

structural economic changes that earned the region a 

new confidence in world financial markets. Although 

marked differences remained in performance among 

individual countries, aggregate output of Latin 

America as a whole is estimated to have grown at a 

3.5-percent rate in 1993, from 3.0 percent in 1992. 

Output, growth, and investment were particularly 

buoyant in such countries as Argentina, Chile, and 

Colombia that have introduced market-oriented 

policies. Latin America's current account deficit is 

estimated at $40 billion in 1993. However, net capital 

inflows of $50 billion financed the deficit and 

increased foreign exchange reserves by $10 billion. 

Latin America's total merchandise trade with the 

United States increased to $69.0 billion, from $66.1 

billion. U.S. exports to Latin America increased to $35 

billion, from $33.6 billion in 1992, and imports 

increased to $34.0 billion, from $32.6 billion. The 

United States posted a $1.0 billion trade surplus with 

Latin America in 1993. The largest U.S. trading 

partners in Latin America during 1993 were Brazil 

(whose total trade with the United States was $13.5 

billion), Venezuela ($12.1 billion), Colombia ($6.1 

billion), the Dominican Republic ($5.0 billion), and 

Chile ($4.0 billion). Manufactured goods accounted for 

66 percent of U.S. exports to Latin America in 1993, 

and energy and chemical products accounted for nearly 

one-third of imports. U.S. exports of services to Latin 

America (including Mexico) rose to $28.5 billion, from 

$26.7 billion in 1992, and imports rose to $23.8 billion, 

from $22.6 billion. Imports increased to $23.8 billion, 

from $22.5 billion in 1992. The United States recorded 

a surplus on services trade with Latin America of $4.7 

billion. 

Central and Eastern 

Europe/Former Soviet Union 

Tightened financial policies in Eastern European 

countries led to some stabilization in growth and 

output recovery in Poland and slightly improved 

expectations for recovery in a few other countries. 

Poland's GDP grew at an annual rate of 4 percent in 

1993. In other countries, expectations of output 

recovery were hampered by high rates of inflation and 

the breakdown of the distribution system. The private 

sector expanded, but at a slower pace than anticipated. 

Negative growth and rampant inflation were still 

recorded to varying degrees in several Central and 

Eastern European countries (CEEC) 21and the former 

Soviet Union in 1993. According to the OECD, CEEC, 

as a group, recorded a zero output growth in 1993, 

following a 4.9-percent loss of output in 1992. In the 

former Soviet Union, output declined by 11 percent in 

Russia and by 20 percent in Ukraine. Inflation ranged 

from 21 to 25 percent in the Czech Republic and 

Slovakia to 275 percent in Romania, to 900 percent in 

Russia, and to 4,000 percent in Ukraine. Although 

stabilization policies were instituted in several 

countries, production bottlenecks, reduction of 

industrial inputs and spare parts, the breakdown of 

traditional distribution channels, and hyperinflation 

contributed to the decline in the region's economy. 

Central and Eastern Europe and Commonwealth of 

Independent States' (CIS) world trade declined in 1993 

but at a lower rate than in 1992. CEEC's exports 

totaled $38.6 billion in 1993 and $43.1 billion in 1992, 

whereas imports totaled $46.4 billion in 1993 and 

$45.5 billion in 1992. Consequently, the CEEC 

suffered a trade deficit of $7.8 billion. Increased trade 

with Western Europe made up for part of the decline in 

trade with the former Soviet Union. Since exports 

totaled $65.6 billion and imports totaled $58.3 billion, 

the former Soviet Union marked a merchandise trade 

surplus of $7.3 billion. 

U.S. trade with the CEEC totaled $9.6 billion. The 

former Soviet Union's trade with the United States 

totaled $5.7 billion in 1993. U.S. exports to the region 

increased to $3.7 billion in 1993, from $3.6 billion in 

1992. The United States sustained a merchandise trade 

surplus with the former Soviet Union of $1.7 billion. 22 

 U.S. trade in services with eastern Europe increased to 

$3.1 billion in 1993, from $2.52 billion in 1992. 

Services exports grew to $1.8 billion, and imports grew 

to $1.3 billion. 

xxx 
ENDNOTES 

1President Bill Clinton, "Remarks on the Global 

Economy at American University," Feb. 26, 1993, 

Weekly Compilation of Presidential Documents, Mar. 

1, 1993, pp. 319-328. 

2"The Annual Report of the Council of Economic 

Advisors," The Economic Report of the President 

Transmitted to the Congress, Washington, DC, 1994, 

pp. 205-206. 

3 Economic Report of the President, Feb., 1994, 

p. 395. This section of the report was compiled using 

data from the U.S. Department of Commerce; World 

Economic Outlook, International Monetary Fund 

(IMF), May 1993 and Jan. 1994; GATT Annual 

Report on International Trade, 1993; OECD, World 

Economic Outlook, vol. 54, Dec. 1993; U.S. 

Department of Commerce News, BEA 94-02 Jan. 28, 

1994; Economic Report of the President, Feb. 1994; 

International Economic Review, USITC, Mar. 1994; 

U.S. Bureau of the Census, Foreign Trade Division, 

Report FT 900, Dec., 1993; IMF, International 

Financial Statistics, Mar. 1994; Monthly Economic 

Review of Japan (several issues); Japan Economic 

Journal (several issues); The Economist, Mar. 6, 

1993, and Oct. 22, 1993; and Trade Between the 

United States and China, the Former Soviet Union, 

Central and Eastern Europe, the Baltic Nations and 

Other Selected Countries during 1993, USITC 

publication 2770, Apr. 1994. 

4 GATT Press Release, GATT/1570, Mar. 22, 

1994. 

5OECD includes 24 countries: the United 

States, Japan, Germany, France, Italy, The United 

Kingdom, Canada, Australia, Austria, Belgium, 

Denmark, Finland, Greece, Iceland, Ireland, 

Luxembourg, the Netherlands, New Zealand, Norway, 

Portugal, Spain, Sweden, Switzerland, and Turkey. 

6 OECD Economic Outlook, Vol. 54, Dec. 1993, 

p. 8. 

7Ibid., p. 9. 

8This group of countries excludes the major 

industrialized countries of the OECD, some Eastern 

European countries, and the former Soviet Union. 

9"Gross Domestic Product: Fourth Quarter 1993 

(Advance)," U.S. Department of Commerce News, 

BEA 94-02, Jan. 28, 1994. 

10 Federal Reserve Statistical Release, G.17 

(419), Feb. 15, 1994. 

11U.S. Department of Labor, Bureau of Labor 

Statistics. 

12U.S. Department of Commerce, U.S. 

Department of Commerce News, CB-94-30, FT-900 

(93-12), U.S. Merchandise Trade, Dec. 1993. 

13USITC, International Economic Review, 

Feb. 1994. 

14The NIEs include Taiwan, Hong Kong, 

Singapore and Korea. 

15 OECD Economic Outlook, p. 52. 

16"Other private services" category consists of 

transactions with affiliated and unaffiliated foreigners. 

These services include education, financial, 

insurance, telecommunications, advertising, computer, 

data processing, research and development, 

management consulting, public relations, and 

engineering. 

17 OECD Economic Outlook, op.cit., p. 81 

18Ibid., p. 84. 

19 OECD Economic Outlook, op. cit., and Mexico 

Economic and Financial Report, prepared by the U.S. 

Embassy, Mexico City, Apr. 1994. 

20 Deutsche Bundesbank Monthly Report 

February 1994 Overview, vol. 46 no. 2. 

21The CEEC consists of Poland, the Czech 

Republic, Slovakia, Hungary, Romania, Bulgaria, and 

Albania. 

22For further information, see USITC, Trade 

Between the United States and China, the Former 

Soviet Union, Central and Eastern Europe, the Baltic 

Nations, and Other Selected Countries During 1993, 

Apr. 1994, USITC publication 2774. 

CHAPTER 1 

Uruguay Round Concludes 

Introduction 

Seven years of talks in the Uruguay Round of 

multilateral trade negotiations were formally concluded 

on December 15, 1993, after intensive bilateral 

bargaining between the two principal participants in 

the talks—the United States and the European Union 

(EU)—finally produced a basis for wider agreement. 

The Round's results, forged by participants totalling 

117 by the closing day, represent the most 

comprehensive trade agreement in history.' 

Implementation of the resulting package of market 

access and of other commitments is now targeted for 

January 1, 1995. 2 

Scope of the Package 

Negotiations to reduce tariff and nontariff barriers 

to goods remained a central focus of the Round. 

Indeed, the final result—including an overall reduction 

of tariffs by 40 percent—exceeded the goal of a 

one-third reduction established at the outset of the 

negotiations. In addition, the Uruguay Round resulted 

in the most extensive change to the multilateral trade 

system since its establishment following World War 

11. 3In 1947, the world-trading community created a 

set of rules and disciplines to govern world trade 

known as the General Agreement on Tariffs and Trade 

(GATT). But because an agreement to establish an 

institution to oversee these rules was never 

implemented, the GATT Secretariat filled some of the 

resulting structural void. As a result of the Round, a 

more solid institutional basis for the multilateral 

trading system was created. In addition, coverage in 

terms of issues and countries was expanded, and rules 

and disciplines over a variety of administrative aspects 

of trade were strengthened. 

The Uruguay Round trade agreement is in fact a 

series of agreements negotiated since the talks opened 

in September 1986 in Punta del Este, Uruguay. A 

number of the Uruguay Round agreements were 

reached provisionally in earlier years, notably in 

negotiations leading up to the Brussels ministerial 

meeting in December 1990. The agreements enhance 

previous GATT disciplines by further reducing tariff 

and nontariff barriers to trade in industrial and 

agricultural goods, strengthening discipline over 

domestic and export-related government subsidies for 

agriculture, and reintegrating textiles trade into the 

multilateral trading system. In addition, the 

increasingly important areas of services, intellectual 

property, and trade-related investment measures are 

brought within the scope of the multilateral trading 

system for the first time. 

These agreements—collectively entitled the Final 

Act Embodying the Results of the Uruguay Round of 

Multilateral Trade Negotiations (Final Act)4—are 

treated as a single package for purposes of acceptance 

and application. Their implementation will be overseen 

by a to-be-created World Trade Organization (WTO). 

The WTO is to provide a more solid institutional basis 

to the multilateral trading system. Unlike such 

multilateral institutions as the International Monetary 

Fund (IMF), the World Bank, and the GATT 

Secretariat established following the Second World 

War, the WTO will not be part of the United Nations 

system.5However, it is expected to be commensurate 

in stature with these economic institutions. The WTO 

is to administer the agreements in an integrated and 

consistent fashion, notably through an improved 

dispute-settlement mechanism and an appellate 

procedure. 

Structure of the Package 

The Final Act has three major parts. In the first 

part, participants agree to adopt a number of decisions 

and declarations negotiated during the Uruguay Round. 

Signatory governments also agree to submit to their 

legislature or other competent authority the corollary 

Agreement Establishing the World Trade Organization. 

The second part of the Final Act is the Agreement 

Establishing the World Trade Organization that will 

legally embody and operate the Uruguay Round 

package of agreements. Four annexes encompass the 

substance of the Uruguay Round agreements and 

sketch out the operational domain of the WTO 

1 
Figure D 

Final Act Embodying the Results of the Uruguay Round (December 1993) 

Part I Final act 

Part ll Agreement establishing the world trade organization 

(Agreement 

Numbers) 

Annex 1A: Agreements on trade in goods 

1 General agreement on tariffs and trade 1994 

a. Understanding on the interpretation of article 11:1(b) 

b. Understanding on the interpretation of article XVII 

c. Understanding on balance-of-payments provisions 

d. Understanding on the interpretation of article XXIV 

e. Understanding on the interpretation of article XXV 

f. Understanding on the interpretation of article XXVIII 

g. Understanding on the interpretation of article XXXV 

2 Uruguay Round protocol to GATT 1994 

3 Agreement on agriculture 

4 Agreement on sanitary and phytosanitary measures 

5 Agreement on textiles and clothing 

6 Agreement on technical barriers to trade [standards] 

7 Agreement on trade-related investment measures [TRIMS] 

8 Agreement on implementation of article VI [antidumping] 

9 Agreement on implementation of article VII [customs valuation] 

10 Agreement on preshipment inspection 

11 Agreement on rules of origin 

12 Agreement on import licensing procedures 

13 Agreement on subsidies and countervailing measures 

14 Agreement on safeguards 

Annex 1B General agreement on trade in services [GATS] and annexes 

Annex 1C Agreement on trade-related aspects of intellectual property rights, [TRIPS] including 

trade in counterfeit goods 

Annex 2 Understanding on rules and procedures governing the settlement of disputes 

Annex 3 Trade policy review mechanism 

Annex 4: Plurilateral trade agreements 

a. Agreement on trade in civil aircraft 

b. Agreement on government procurement 

c. International dairy arrangement 

d. Arrangement regarding bovine meat 

*Brackets indicate a more familiar form, name or abbreviation. 

2 
Figure D—Continued 

Final Act Embodying the Results of the Uruguay . Round (December 1993) 

Part Ill Ministerial decisions and declarations 

(Agreement 

Numbers) 

1 Decision on measures in favor of least-developed countries 

2 Declaration on the contribution of the WTO to achieving greater coherence in global 

economic policymaking 

3 Decision on notification procedures 

4 Customs valuation 

a. Decision regarding cases where customs administration have reasons to doubt 

the truth or accuracy of the declared value 

b. Texts relating to minimum values and imports by sole agents, sole distributors, 

and sole concessionaires 

5 Technical barriers to trade 

a. Proposed understanding on WTO-ISO standards information system 

b. Decision on review of the ISO/IEC information center publication 

6 Decision on measures concerning the possible negative effects on the reform program 

on least-developed and net food-importing developing countries 

7 General Agreement on Trade in Services 

a. Decision on institutional arrangements for the general agreement on trade in 

services 

b. Decision on certain dispute settlement procedures for the general agreement 

on trade in services 

c. Decision concerning paragraph (b) of article XIV 

d. Decision on negotiations on basic telecommunications 

e. Understanding on commitments in financial services 

f. Decision on financial services 

g. Decision concerning professional services 

h. Decision on movement of natural persons 

8 Decision on implementation of article XXIV:2 of the agreement on government procurement 

9 Decision on the application and review of the understanding on rules and procedures 

governing the settlement of disputes 

10 Decision on improvements to the GATT dispute settlement rules and procedures 

11 Agreement on implementation of article VI of GATT 1994 

a. Decision of anti-circumvention 

b. Decision on standard of review for dispute settlement panels 

12 Decision on dispute settlement pursuant to the agreement on implementation of article VI of 

GATT 1994 or part V of the agreement on subsidies and countervailing measures 1994 

Source: Compiled by USITC staff from the Final Act. 

(figure D). They cover the (1) multilateral trade 

agreements for goods (A), services (B), and intellectual 

property rights (C); (2) dispute-settlement 

understanding; (3) trade policy review mechanism; and 

(4) plurilateral trade agreements first negotiated during 

the Tokyo Round, which, although administered by the 

WTO, will continue to operate under a limited 

membership. A provision in the WTO agreement 

requires that "Each Member shall ensure the 

conformity of its laws, regulations and administrative 

procedures with its obligations as provided in the 

annexed Agreements." 6 

Several of the multilateral agreements contained in 

annex 1 bear further elaboration here. The multilateral 

Agreements on Trade in Goods found in annex 1A 

3 
include 14 different agreements on goods, such as on 

agriculture, investment measures, rules of origin, 

subsidies, and so on. Two of the 14 agreements, the 

General Agreement on Tariffs and Trade 1994 and the 

Uruguay Round Protocol to GATT 1994, play a 

structural role in helping to carry out the results of the 

Round. The first, the Agreement on GATT 1994, 

incorporates the text of the 1947 GATT ("GATT 

1947") as well as various legal instruments (such as 

waivers and accession protocols) that have since been 

adopted7plus several understandings explaining how 

particular articles from GATT 1947 will be treated or 

interpreted under the WTO. 8The second, the Uruguay 

Round Protocol to GATT 1994, provides the vehicle by 

which national schedules of concessions are 

incorporated into the Final Act. Each member will 

annex its national schedule to the Protocol (figure E), 

indicating its concessions under four general 

categories: most-favored-nation (MFN) tariffs; 

preferential tariffs; nontariff concessions; and subsidy 

limits on agricultural goods (figure E). 

The multilateral General Agreement on Trade in 

Services (GATS) found in Annex 1B is also included in 

the final Uruguay Round package of agreements. 

However, as further explained in the section on 

services, negotiations on national schedules of 

market-access commitments and sectoral exemptions 

are to continue through June 30, 1995. 

The third part of the Final Act contains a number 

of decisions reached by participants on how certain 

subjects should be treated under the WTO. They 

primarily center around issues such as according due 

concern to developing countries' interests; technical 

matters, such as customs valuation or notification 

procedures; decisions pertaining to ongoing 

negotiations in certain services sectors, such as 

financial, telecommunications, or professional 

services; and dispute-settlement issues, especially 

antidumping and subsidies. 

Organization of this Chapter 

The following sections describe the 1993 

developments in each of the principal subjects under 

negotiation in the Uruguay Round, the agreements 

reached, key issues remaining to be resolved, and any 

necessary background information. The multilateral 

agreements included in annex 1A on trade in goods, in 

annex 1B on trade in services, and in annex 1C on 

intellectual property rights are discussed first, generally 

in the order found in the Final Act. Following the 

multilateral agreements, the plurilateral agreements are 

described. The World Trade Organization and the 

Understanding on Dispute Settlement are then 

explained, along with a brief summary of the 

Marrakesh ministerial meeting in April 1994 that 

officially concluded the Uruguay Round and began the 

preparatory process for the establishment of the World 

Trade Organization. Finally, regular GATT activities in 

1993, including accession negotiations, are reviewed. 

Figure E 

Outline of Uruguay Round Protocol to GATT 1994 

Part I Most—Favored—Nation Tariffs 

Sec. I 

A. Agricultural products 

B. Agricultural products 

Sec. II 

Other products 

Part ll Preferential Tariffs 

Preferential tariffs 

Part Ill Non—Tariff Concessions 

Non—tariff concessions 

Part IV Agricultural Products 

Agricultural products 

Sec. I. Domestic support 

Sec. II. Export subsidies 

Sec. Ill. Export subsidies 

— tariffs on a most—favored—nation basis 

— tariff quotas on a most—favored—nation basis 

— tariffs on a most—favored—nation basis 

(if applicable) 

— commitments limiting subsidization 

— total AMS commitments 

— budgetary outlay and quantity reduction commitments 

— commitments limiting the scope of export subsidies 

Source: Compiled by USITC staff from the Final Act 

4 
Multilateral Agreements on 

Goods, Services, and 

Intellectual Property 

Market Access 

With the issue of agriculture resolved in principle 

the previous year with the U.S.-EU Blair House 

agreement, 9Uruguay Round negotiations in the first 

half of 1993 were able to move forward to focus on the 

key outstanding issues—notably market access. By the 

Tokyo summit meeting of the world's seven major 

industrialized governments (G-7) in July 1993, the 

"quadrilateral" or "quad" countries had agreed on a 

market-access package that would eliminate tariffs in 

some industrial sectors, substantially reduce tariff 

barriers in others, and harmonize tariffs in yet another 

area. 1 ° As announced on July 7, the quad countries 

agreed to the following market-access provisions for 

industrial goods: 11 

• Tariff and nontariff elimination in eight 

sectors: (1) pharmaceuticals, (2) 

construction equipment, (3) medical 

equipment, (4) steel—subject to a 

multilateral steel agreement (MSA), (5) 

and beer and products subject to certain 

agreed exceptions: (1) furniture, (2) farm 

equipment, and (3) spirits; 12 

• Tariff harmonization at low rates for 

chemical products; 13 

• Tariff reduction negotiations, aimed 

particularly at tariffs of 15 percent and 

above, with a goal of reducing such "tariff 

peaks"; and 

• Tariff reduction negotiations for other 

products that will lower overall tariff rates 

by an average of at least one-third. 

The announcement listed the industrial sectors 

slated for mutual tariff elimination ("zero-for-zero" 

offers) by the quad countries. By this package the 

world's major traders aimed at providing a minimum 

market-access framework for the other participants in 

the Round to consider while they were preparing their 

final "best offers" for the approaching conclusion of 

the Round. 

With the fundamentals of a market-access package 

worked out at the July summit, key participants in the 

Round sought to add to the zero-for-zero sectors and to 

reduce tariffs for other product areas. Textiles and 

electronics were among the most difficult areas tackled 

by negotiators. 

The November 1993 ministerial meeting of the 

Asia-Pacific Economic Cooperation (APEC) forum 

provided a vehicle for building momentum in the 

closing days of the Round. An improved market-access 

package was the result. 14By the December 15 

conclusion of the Round, toys and paper had been 

added to the sectors whose tariffs would be eliminated 

by the major industrial countries and significantly 

reduced or eliminated by many developing country 

markets as well. 15Deep tariff cuts of 50 to 100 

percent on electronics items (for instance, 

semiconductors, semiconductor manufacturing 

equipment, computer parts) were also tentatively 

agreed upon. Market-access talks continued into 1994, 

in an effort to add wood, certain nonferrous metals 

(such as copper), and distilled "white" spirits to the 

duty elimination list (figure F). 16 

Submission of draft commitment schedules to the 

GATT Secretariat was scheduled for February 15, 

1994, with a 6-week verification period to follow. 

However, in an effort to reach a maximum package of 

tariff reductions, negotiations continued through 

February, with the due date for final commitment 

schedules extended to March 31, 1994. 17Controversy 

over contingent market-access offers made in the 

closing days of negotiations in December 1993, 

particularly the U.S. offer to reduce electronic tariffs in 

exchange for further concessions from Japan regarding 

wood, leather goods, white spirits, and nonferrous 

metals, re-emerged in February 1994, threatening 

previously agreed upon offers. 

By April 1994, these disagreements had been 

worked out, resulting in an overall tariff reduction in 

the Round of approximately 40 percent. Japan agreed 

to reduce the duty on refined copper from a specific 

rate of 15 yen per kilogram 18(equivalent to about 8 

percent ad valorem based on the exchange rate and the 

price of copper at the time of agreement) to 3 percent 

ad valorem over 5 years. Japan also agreed to eliminate 

duties on a range of bromine chemicals. These 

concessions ensure that U.S. import duties on certain 

items of interest both to Japan and to Korea will be 

eliminated as part of the market-access offers. 19 

Tariff reductions under the market-access 

agreement are to be phased in beginning January 1, 

1995, with equal annual tariff reductions scheduled in 

5 
Figure F 

Summary of Tariff Elimination Sectors (Zero-for-Zero Initiatives) in Market Access Negotiations 

Tariff Elimination 

Agricultural equipment 

Construction equipment 

Medical equipment 

Beer 

Furniture 

Paper 

Pharmaceuticals 

Steel 

Toys 

Whiskey and brandy 

Tariff Reduction 

Semiconductors 

Semiconductor manufacturing equipment 

Computer parts 

Tariff Harmonization 

Chemicals 

Different classes at 0, 5.5, and 6.5 percent harmonized tariff rate. 

Source: The White House, "Executive Summary Results of the GATT Uruguay Round of Multilateral Trade Negotiations," Dec. 15, 1993, Washington DC, pp. 2-8. 

general over 5 years. Tariffs are to be eliminated on 

that date for the zero-for-zero sectors, whereas tariff 

reductions for certain sensitive sectors, such as textiles, 

will be phased in over 10 years. 

Agriculture 

Primary products—agriculture—have always been 

covered under the General Agreement. However, 

GATT rules have been essentially ineffective in 

disciplining the host of border measures that have 

arisen largely as a result of internal agricultural 

policies. Because of distortions in world agricultural 

trade emanating from such domestic policies, the 

subject of agriculture received prominent attention in 

the 1986 Punta del Este declaration launching the 

Uruguay Round. Agriculture proved to be probably the 

most contentious issue over the entire 7-year span of 

the Round, although playing a somewhat more muted 

role in the final year of negotiations. The Blair House 

agreement of November 1992 resolved the main 

outstanding issues, which, with further adjustment in 

1993, allowed a final agriculture accord based on the 

"Dunkel text" to be put in place by December 15, 

1993 .20 

France voiced considerable opposition to the Blair 

House agreement from its announcement on November 

20, 1992, saying that the agreement exceeded the terms 

of the internal reform of the common agricultural 

policy that was finally agreed to by member states of 

the European Union in May 1992. The new 

conservative government that resulted from the March 

1993 parliamentary elections, although adopting a less 

vocal approach than the previous Socialist government, 

continued to tell the EU Commission that France might 

veto the EU acceptance of the agriculture agreement 

for reasons of "national interest" if additional 

improvements were not forthcoming. To this end, 

France pressed EU negotiators in 1993 to seek 

"interpretation and clarification" of the Blair House 

agreement from the United States. 

In September 1993, Ambassador Kantor issued a 

statement intended to end speculation that the 

agreement might be reopened. 21Nonetheless, in 

working toward a conclusion to the Uruguay Round, 

U.S. and EU negotiators ultimately arrived at a 

compromise that, when submitted to other participants 

in the Round, provided the basis for a multilateral 

agreement on agriculture. 

6 
The three main areas of the agreement on 

agriculture are: (1) market access, (2) domestic 

support, and (3) export subsidies. In addition, 

participants agreed to regular consultations and to 

review the agreement before the end of its 

implementation period. Participants worked out an 

approach designed to reduce trade-distorting domestic 

and export subsidies, both on a volume and value basis. 

They also agreed to convert all nontariff measures 

affecting agricultural imports into tariffs and to bind all 

tariffs, thereby improving transparency and 

predictability. Developed countries are then to reduce 

both subsidies and tariff rates over 6 years (from 1995 

through 2000). During that period, support measures 

that are consistent with the agriculture agreement may 

not be challenged in the GATT/WTO under an agreed 

"peace clause," although countervailing duty action is 

not precluded (figure G). 

Agricultural Market-Access 

Using a process known as "tariffication," 

quantitative restrictions and other nontariff border 

measures are, with a few exceptions, to be converted 

into ordinary customs duties. 22All tariffs are then to 

be bound in the individual country schedules of 

concessions. 23Tariffs on agricultural goods in 

developed countries will then be reduced by 36 percent 

on average over 6 years, from 1995 to 2000, with a 

15-percent minimum reduction required for each tariff 

line.24Developing countries will receive preferential 

treatment, having to reduce their tariffs only 24 percent 

over 10 years, from 1995 to 2004. Least developed 

countries will not be required to reduce their tariffs, but 

will be required to bind them. 

Figure G 

Summary of Agriculture Agreement 

Reduction Base Implementation Period 

Market Access 

DC —36% average 1986-90 1995-2000 

LDC —24% average 1995-2004 

LLDC Tariff bindings/no reduction 

Current Access Maintained 

Minimum access 

+3% of domestic consumption starting 1995 

+5% of domestic consumption by 2000/2004 

Domestic Support 

DC —20% 1986-90 1995-2000 

LDC —13.3% 1995-2004 

LLDC Support bindings/no reduction 

Excluding payments not affecting production, for production limitation, and for certain generalized 

government programs. 

Export Subsidies 

DC —36% volume 1986-90/1991-92* 1995-2000 

—21% value 

LDC —24% 1995-2004 

—14% 

LLDC Export subsidy bindings/no reduction 

* More recent 1991-92 base year permitted as starting point if 1986-90 end point is achieved. 

Source: Compiled by USITC staff from the Final Act. 

7 
A special safeguard clause will be available for 

newly "tariffied" agricultural products, allowing 

countries to impose a tariff-rate quota in the case of a 

surge in imports or of a fall in the price of shipments in 

domestic currency below a certain reference leve1. 25 

 Provisions incorporated into national schedules 

establish base levels for access to import markets. 

These levels are set at either a minimum of 3 percent of 

domestic consumption (with increases over the 

implementation period to bring this figure to 5 percent) 

or the current level of import access, whichever is 

higher. 

In lieu of tariffication, special import-access rules 

were negotiated in certain cases. Two forms of special 

treatment are provided for in the agreement. One is for 

designated agricultural products, where minimum 

access begins in 1995 at 4 percent of 1986-88 domestic 

consumption and expands by 0.8 percent annually until 

reaching 8 percent by the end of the 6th year in 2000. 

The other is for a product that is the predominant 

dietary staple of a developing country member. By this 

method, a developing country may accord minimum 

access of 1 percent of domestic consumption initially, 

expanding that access annually by 0.25 percent 

thereafter. Minimum access will thus reach 2 percent 

by the end of the 4th year (1998) and 4 percent by the 

end of the 10th year (2004). Japan and Korea have 

availed themselves of these special rules with regard to 

rice imports. Israel has availed itself of these 

provisions for sheep, goats, and dairy products of 

sheep and goats. 

Domestic Support 

Developed country participants agreed to reduce 

domestic subsidies to agricultural producers by 20 

percent over the 6-year period 1995-2000 from levels 

prevailing during the base period 1986-88. 26These 

reductions are to be made at the sector-by-sector rather 

than commodity-by-commodity level and will be based 

on Aggregate Measure of Support (AMS) calculations 

of support payments in each sector. 

Two exceptions to this support reduction were 

agreed. Certain support programs are to be excluded 

from this AMS calculation, while other support 

programs will be considered permissible but subject 

nonetheless to countervailing duty action. Domestic 

agricultural policies that have a minimal impact on 

trade are to be excluded from the AMS calculation. 

These policies include support for general government 

services,27certain direct payments to producers for 

so-called "decoupled" programs that do not directly 

affect production, 28and programs where support 

makes up a low percentage 29of the value of 

production. 30 Payments to limit production are 

generally permitted, although goods produced with the 

help of this support may be challenged through 

countervailing duty action. In addition, developing 

countries may support their producers with certain aid 

that encourages agricultural and rural development. 

Export Subsidies 

For developed countries, export subsidies are to be 

reduced by 36 percent in terms of budgetary outlay 

(value) and by 21 percent in terms of quantities 

benefiting from such subsidies (volume) by the year 

2000 compared with levels prevailing during the base 

period 1986-90. Developing countries will reduce their 

export subsidies by 23 and 14 percent, respectively, 

over a period of up to 10 years, from 1995 to 2004. 

The least developed countries are exempt from these 

reductions. Subsidy reductions are to be applied to 

each specific commodity product or product 

categories. 31In other words, countries will not be 

permitted to average together subsidy reductions on 

various products whose reductions are greater with 

those whose reductions are less to yield the required 

overall reduction. 32This "specific" subsidy 

commitment is expected to provide greater discipline 

on export subsidies than the alternative "aggregate" 

subsidy commitment previously under consideration in 

the negotiations. However, because subsidized exports 

in some countries had increased since the base period, 

negotiators agreed that a more recent 1991-92 

timeframe could be used as the starting point for 

reductions, provided that the end-point remained the 

same as if the 1986-90 period had been used. 33 

During the negotiations, the EU sought a "peace 

clause" that would exempt agriculture from further 

challenges under GATT dispute-settlement procedures. 

As a result, negotiators developed provisions that 

would have members show "due restraint" in the use of 

certain remedies that are available under the GATT 

where specified types of subsidies or commitments 

under the agriculture agreement are involved. The 

due-restraint provisions were extended because of a 

last-minute compromise between U.S. and EU 

negotiators, from the 6 year implementation period 

(1995-2000) to a period of 9 years, that is, from 1995 

through 2004. 

During this period, internal support measures and 

export subsidies that fully conform to reduction 

commitments contained in the agriculture agreement 

and to other criteria will not be subject to challenge on 

such grounds as serious prejudice of exports in 

third-country markets or nonviolation that leads to 

nullification or impairment. 34Subsidized imports will 

8 
continue to be subject to countervailing duty 

procedures, unless the subsidies are in the form of 

domestic support payments that meet the specified 

criteria. 

Consultation and Review 

Negotiations to continue the reform process in 

agriculture are to begin 1 year before the end of the 

implementation period in the agreement (1999). These 

negotiations are to take into account the effect to date 

of the reductions implemented on world agricultural 

trade, nontrade concerns, special and differential 

treatment for developing countries, and the goal of 

working toward a fair and market-oriented agricultural 

trading system. During the life of the agreement, 

members agree to consult annually in the Committee 

on Agriculture, to be established under the agreement, 

regarding world economic growth and its impact on 

agricultural imports and exports, as well as regarding 

other related topics. 

Sanitary and Phytosanitary 

Measures 

The Agreement on Sanitary and Phytosanitary 

(SPS) Measures was a fourth, but separate, 

agriculture-related topic of discussion in the Round. 35 

 The resulting SPS agreement aims to liberalize trade in 

agricultural goods and processed food and beverages 

by reducing nontariff trade barriers in the form of 

arbitrary regulations on such topics as pest and disease 

control and food safety. The principle reflected in the 

agreement is that members' efforts to protect human, 

animal, or plant life and health within their territories 

shall not discriminate arbitrarily or unjustifiably 

against another member's goods. Technical regulations 

covering agricultural products were previously subject 

to the Tokyo Round Agreement on Technical Barriers 

to Trade. 

The SPS Agreement recognizes the right of 

members to take SPS measures necessary for the 

protection of human, animal, or plant life and health. 

Such measures cover, for example, quarantine 

procedure, food processing and production methods 

(PPMs), meat slaughter and inspection rules, approval 

procedures for food additives, and the setting of 

pesticide tolerance levels. Members are to ensure that 

such measures are applied only to the extent necessary 

to achieve the desired end, and that they are based on 

scientific principles, and are not maintained without 

sufficient scientific evidence. 36 

The agreement aims to make national regulation in 

this area more transparent to other members through 

such requirements as the publication of regulations, 

advance notification procedures, and the establishment 

of national enquiry points. Procedural provisions on 

control, inspection, and approval procedures annexed 

to the agreement serve the same purpose. 

Under the agreement, members are to base their 

SPS measures on existing and appropriate international 

standards, guidelines, and recommendations. However, 

the agreement allows members to keep or to introduce 

measures that result in a higher or stricter standard of 

safety, if there is a scientific justification or, 

alternatively, if they reflect a country's stricter 

tolerance or assessment of risk concerning agricultural 

health matters. 

The agreement does require that members ensure 

that any such measure is "not more trade restrictive 

than required" to achieve the level of protection they 

have established, taking into account technical and 

economic feasibility. A footnote clarifies that a 

measure is not considered more trade restrictive than 

required "unless there is another measure reasonably 

available" that achieves the level of protection 

established and is "significantly less restrictive to 

trade." The agreement also urges members to accept 

the equivalence of other members' measures, although 

different, if an exporter can demonstrate that its 

measures achieve the importer's established level of 

health protection. 

The agreement provides for the establishment of a 

Committee on Sanitary and Phytosanitary Measures. 

The Committee is to provide a focal point for 

consultations among members, for cooperation with 

other relevant organizations in the field, and for 

monitoring the process of international harmonization. 

Textiles and Clothing 

World trade in textiles and apparel during the past 

20 years has been largely governed by quotas 

negotiated under the Arrangement Regarding 

International Trade in Textiles, known as the Multifiber 

Arrangement (MFA). 

The negotiating objective in the Uruguay Round 

for this sector was to phase out the MFA and, thus, to 

integrate the sector into the GATT on the basis of 

strengthened rules and disciplines. The Uruguay Round 

Agreement on Textiles and Clothing will integrate 

sector trade into the GATT over 10 years, with the 

primary objective of eliminating the quotas. All 

members of the WTO will be subject to the agreement 

whether or not they are signatories to the MFA. 

9 
However, not all signatories to the MFA are members 

of the GATT. 

The GATT-sanctioned MFA was established in 

1974 to deal with problems of market disruption in the 

textile and apparel sector while allowing developing 

nations exporting these goods to expand their share of 

world trade in these products. On December 9, 1993, 

the GATT Textile Committee agreed to extend the 

MFA, for a sixth time, to December 31, 1994, to bridge 

the expiration of the pact with the anticipated adoption 

of a Uruguay Round agreement on textiles and apparel. 

Under the present MFA, developed countries negotiate 

bilateral agreements separately with individual 

exporters for the purpose of setting quotas and quota 

growth rates. The quotas are a departure from the 

GATT as they are applied on a country-specific basis in 

contradiction to the nondiscrimination principle, which 

requires that all GATT member nations be treated 

equally when quotas or other trade restrictions are 

applied. 

The integration of textile and apparel trade into the 

GATT will occur in three stages over a 10-year period 

(figure H). At the beginning of each stage, importing 

countries must integrate into the GATT products that 

are listed in the annex to the agreement and that 

account for a specified minimum portion of their 

textile sector imports, based on their 1990 trade 

volume. As products are integrated into the GATT, 

they immediately become subject to normal GATT 

rules. At the same time, importing countries must 

increase annual growth rates by a specified minimum 

percentage for quotas left in place during the 

transitional period. 

During the three stages, importing countries must 

integrate products that account for at least 51 percent 

of their sector imports. At the end of the 10-year 

transition period, the remaining 49 percent of the trade 

must be immediately integrated into the GATT. 

For products remaining under quota during the 

transition period, the acceleration of annual quota 

growth will be based on growth rates in place on the 

day before the transition period begins. Because under 

the present MFA quota levels and their growth rates are 

negotiated separately with each supplier country, they 

may differ by country and/or by product. Generally, the 

MFA calls for annual quota growth of 1 percent for 

wool products and 6 percent for all other goods. For 

the major Asian suppliers, however, quota growth is 

considerably less. 

Figure H 

Summary of Textile Agreement 

Year Share of imports Increase in quota 

Stage/Period number to be integrated growth rate 

1. *January 1, 1995— 1-3 

December 31, 1997 

2. January 1, 1998— 4-7 

December 31, 2001 

3. January 1, 2002— 8-10 

December 31, 2004 

January 1, 2005 

Percent 

16 

17 

18 

49 

16 

25 

27 

Quota Phaseout 

Textile products will be integrated into GATT and removed from quota eligibility in these three stages. 

During each stage, products will be chosen from all 4 categories of textiles: (1) Tops and yarns, (2) Fabrics, (3) Made—up textiles, (4) Clothing. 

Accelerated Quota Growth 

Quotas remaining during the transition period will be subject to annual growth rates greater than 

those prescribed in current bilateral textile agreements. 

*The textile agreement is keyed to the start of the World Trade Organization (WTO), that was initially scheduled 

to begin July 1, 1995, but whose deadline was advanced to January 1, 1995 in preparatory talks setting up the 

WTO. 

Source: Compiled by USITC staff from the Final Act 

10 
The following illustrates the new accelerated quota 

growth rates: at the beginning of stage 1, annual quota 

growth now set at 6 percent must be increased by at 

least 16 percent or to a 6.96-percent annual growth; at 

the beginning of stage 2, by at least an additional 25 

percent or to an 8.7- percent annual growth; and at the 

beginning of stage 3, by at least another 27 percent to 

an 11.07-percent annual growth. 

The agreement also requires both developed and 

developing member countries to improve access to 

their domestic markets for imported textiles and 

apparel through such measures as cutting and binding 

tariffs, reducing or eliminating nontariff barriers, and 

facilitating customs, administrative, and licensing 

procedures. For countries that do not achieve improved 

market access, the accelerated quota growth rates may 

be adjusted accordingly. 37 

The agreement contains a transitional safeguard 

mechanism to protect against any import surges that 

might occur during the phaseout period for products 

not yet integrated into the GATT. The transitional 

safeguards allow importing countries to set quotas on 

uncontrolled products that enter in such increased 

quantities as to cause or threaten serious damage to the 

domestic industry. Safeguards can be set either by 

mutual agreement or by unilateral action, but are 

subject to review by the Textiles Monitoring Body, a 

body which is to be created under the agreement to 

replace the MFA Textiles Surveillance Body and to 

supervise implementation of the agreement. 38 

 Safeguards are limited to no more than a 3-year 

duration or until the product is integrated into the 

GATT. The agreement also contains provisions for 

member countries to deal with circumvention of quotas 

by transshipment, rerouting, false declarations of 

country of origin, and falsification of official 

documents. 

The United States has quotas on MFA products 

from some 40 MFA and non-MFA signatory countries 

that together supplied almost 80 percent of these 

imported goods in 1993. Some of these countries are 

not members of the GATT and, therefore, will not 

automatically receive the benefits of the agreement. 

President Clinton has already announced that China, an 

MFA signatory but not a GATT member, will not 

receive the benefit of the MFA phaseout until it 

becomes a GAIT member. Taiwan, the second largest 

supplier after China, is neither an MFA signatory nor a 

GATT member. Other smaller non-GATT member 

suppliers with which the United States has bilaterals 

are Bulgaria, Laos, Lebanon, Nepal, Oman, and 

Panama. 

Technical Barriers to Trade 

The Agreement on Technical Barriers to Trade 

(TBT) is the successor to the 1979 Tokyo Round "code 

of conduct" by the same name, more commonly known 

as the Standards Code. It aims to prevent technical 

standards and their application from becoming 

unnecessary obstacles to trade. The Uruguay Round 

standards agreement supersedes the 1979 Standards 

Code; coverage has been broadened from technical 

regulations and product standards to a range of 

conformity assessment procedures. 39The definition of 

the term "technical regulation" is expanded to include 

processes and production methods, so-called because 

they do not define required characteristics of end 

products but rather prescribe the means by which they 

must be produced. 40The TBT agreement under the 

WTO is to encompass all members, as opposed to the 

previous TBT code membership of nearly 40 

signatories 41 

The preamble to the agreement formally recognizes 

that "no country should be prevented from taking 

measures necessary to ensure the quality of its exports, 

or for the protection of human, animal or plant life or 

health, of the environment, or for the prevention of 

deceptive practices, at levels it considered 

appropriate." The new agreement requires that such 

measures be applied in a nondiscriminatory fashion 

and not in such a way as to constitute a disguised 

barrier to international trade. Members must use 

international standards and conformity assessment 

guides unless such measures are ineffective or 

inappropriate, for instance, for climactic or geographic 

reasons, to fulfill the desired objective. Members must 

justify deviations from international norms upon 

request. 

Several new guidelines pertain to such 

requirements. Technical regulations must neither be 

more restrictive than necessary to fulfill a legitimate 

objective nor be maintained if the circumstances that 

gave rise to their adoption no longer exist or if the 

changed circumstances can be addressed in a less 

trade-restrictive manner. Conformity assessment 

procedures are not to be stricter than necessary to give 

the importing member adequate confidence that 

products conform with the applicable technical 

regulation or standard. 

As did the 1979 Code, the agreement continues to 

aim at more transparent procedures in creating and 

enforcing standards overall by requiring a published 

notice of new standards and conformity assessment 

procedures at an early stage, and the provision of an 

opportunity to comment on them. Coverage of 

conformity assessment procedures has been expanded, 

11 
and disciplines made more precise. Conformity 

assessment procedures are those required by 

governments to determine conformance of a product 

with required technical standards or regulations, such 

as by registration, inspection, laboratory accreditation, 

and so forth. 42A number of administrative guarantees 

are added in an effort to prevent discrimination, ensure 

predictable, timely, and confidential operation, and 

provide redress. The agreement also encourages 

acceptance of conformity assessment procedures by 

other members. 

Requirements for members to take reasonable 

measures to ensure that regional and local governments 

and nongovernmental bodies comply with the 

fundamental principles of the agreement are more 

extensive than in the 1979 Code. Members are required 

to formulate and implement positive measures to 

support their observance. They must also take 

reasonable measures to ensure that regional, local, and 

nongovernmental bodies comply with an annex to the 

agreement entitled a Code of Good Practice for the 

Preparation, Adoption and Application of Standards. 

Trade-Related Investment 

Measures 

The Agreement on Trade-Related Aspects of 

Investment Measures (TRIMS) is one of the new areas 

addressed under the Uruguay Round agreements. The 

agreement would minimize the trade restrictions and 

distortions caused by certain investment measures. 

The agreement prohibits investment measures that 

run counter to the letter or spirit of the GATT, whether 

those measures are in fact mandatory or are effectively 

required to take advantage of investment incentives. 

The principal TRIMS covered under the agreement are 

local-content requirements, trade-balancing 

requirements, foreign-exchange limitations, domestic 

sales requirements, and export performance 

requirements. 

While all members of the GATT are now bound by 

these new investment rules, the TRIMs agreement 

arose largely because certain countries used 

trade-distorting, restrictive investment measures as part 

of their national economic development plans. 

Performance requirements in such countries as 

Australia, India, Pakistan, the Philippines, and 

Venezuela tended to be a serious burden on doing 

business abroad—raising input costs, increasing 

uncertainty for suppliers, and hindering the 

competitiveness of final products, such as cars, 

chemicals, pharmaceuticals, and high technology 

goods. Countries with large overseas investments, such 

as the United States, undertook to bring investment 

requirements and conditions under multilateral 

discipline to keep them from proliferating and further 

distorting international trade and investment flows. 

The agreement provides that no GATT member 

will apply a trade-related investment measure that is 

inconsistent with obligations under article III of the 

GATT on national treatment or under article XI that 

prohibits quantitative restrictions. An annex, appended 

to the agreement, gives examples of TRIMS that would 

violate these principles, and underscores examples of 

some of the most obvious banned measures, such as 

local-content and trade-balancing 43requirements" or 

foreign-exchange limits. 45 

All TRIMs that are inconsistent with the agreement 

must be notified and eliminated within a transition 

period of 2 years, 5 years, or 7 years for developed, 

developing, and least developed countries, 

respectively. Each measure that a country wishes to 

maintain during this transition period must be notified 

to the GATT. A provision regarding "competitive 

disadvantage" allows a country to apply an investment 

measure to a new firm for the duration of the 

transitional period, if necessary, to avoid inflicting a 

disadvantage on an existing investment, an essential 

point for U.S. firms that have already invested abroad 

under the previous restrictive investment rules. A 

GATT Committee on TRIMS is to be created to receive 

these notifications and monitor their elimination 

Within 5 years of the agreement's entry into force, 

the WTO Council for Trade in Goods will review the 

operation of the agreement and will consider 

expanding the scope of the TRIMS committee into the 

area of competition (antitrust) policy. 

Antidumping 

The antidumping agreement proved to be one of 

the more difficult agreements to reach during the 

Uruguay Round. The agreement concerns duties levied 

on "dumped" imports—imports alleged to be sold at 

less-than-normal-value. 46Illustrative of these 

difficulties was the inability of participants in 

December 1991 to reach agreement on a draft text on 

the matter for inclusion in the first comprehensive 

compendium of Uruguay Round agreements, the 

so-called "Dunkel text." This compendium, which 

provided the basis for the final negotiations during 

1992 and 1993, would have been incomplete if the 

GATT Secretariat had not inserted draft agreements on 

antidumping and subsidies based on its own authority 

and judgement. 

12 
The final agreement supersedes a code addressing 

similar issues negotiated in the 1979 Tokyo Round. 

Formally known as the Agreement on Implementation 

of Article VI, it sets forth rules and procedures for 

dumping actions relating to (1) constructed price, (2) 

cumulation, (3) injury, (4) industry representation, (5) 

de minimis dumping margins and negligible import 

volumes, (6) duration and review of orders ("sunset" 

provisions), and (7) independent panel review. Many of 

the provisions in the agreement parallel provisions in 

the GATT Agreement on Subsidies and Countervailing 

Measures. 

Industry Representation 

The agreement sets standards on who is entitled to 

petition for relief under antidumping provisions. This 

status is conferred to applicants filing by or on behalf 

of the domestic industry. The agreement refines the 

term "domestic industry"47and details a "bright line" 

test to be used by authorities in determining whether an 

application has been filed on behalf of it. Specifically, 

the agreement provides that investigative authorities 

may not initiate an investigation unless the application 

is supported by domestic producers whose collective 

output constitutes specified proportions of the total 

production of the like product in question. 48 

Constructed Price 

The new agreement clarifies the methodology for 

determining whether a product is being sold in a 

foreign market at a less-than-normal-value price. New 

provisions address the situation of when an export 

price cannot be compared with the exporter's domestic 

price, but instead must be compared with a 

"constructed" price. A constructed price is typically 

derived by adding together estimates of the reasonable 

cost of a good at different stages, such as the cost of 

production, an appropriate profit margin, and shipping 

and service costs. The agreement addresses the criteria 

used in allocating costs in these situations so as to 

ensure that the comparison of an export price with the 

benchmark price chosen or constructed is more 

accurate and does not result in arbitrary or inflated 

dumping margins. 

Injury 

The agreement requires that national authorities 

invoking antidumping measures show a causal 

relationship between dumped imports and injury to the 

domestic industry producing like products. This 

determination of injury from imports must take into 

account all relevant economic factors that contribute to 

the state of the industry being examined. 

Cumulation 

The agreement allows authorities to take into 

account the cumulative effect on the domestic industry 

of all imports at less-than-normal-value simultaneously 

subject to investigation, rather than considering only 

the narrower perspective of imports from one or more 

clearly offending sources. U.S. law already provides 

for cumulation in antidumping cases; the prior Code 

was silent on this issue. 

De Minimis Dumping Margins 

A new rule calls for termination of antidumping 

investigations as soon as it is determined that dumping 

margins are de minimis, or that the volume of dumped 

goods or the injury is negligible. De minimis margins 

are defined as less than 2 percent of the export product 

price; import volume is considered negligible when 

imports from a country equal less than 3 percent of 

total imports or when individual countries with less 

than a 3-percent share collectively amount to no more 

than 7 percent of total imports. 49 

Duration And Review Of Orders 

A new provision in the agreement provides for the 

automatic expiration of antidumping measures after 5 

years, unless national authorities determine that injury 

is likely to continue or recur if the order is revoked. 5° 

Notification And Consultation 

The new antidumping agreement continues the 

requirement that countries which impose antidumping 

measures regularly notify all antidumping action to a 

Committee on Anti-Dumping Practices. The committee 

provides a forum for consultation and discussion of 

trade matters relating to dumping and countermeasures 

taken. 

Independent Panel Review 

A key U.S. concern was the scope for independent 

review by GATT dispute-settlement panels of 

antidumping actions taken by national authorities. 

Because the U.S. Congress has long considered strong 

and effective antidumping and subsidy rules a priority 

of the United States, U.S. negotiators were keenly 

interested in preventing any weakening of the U.S. 

trade laws Similar to the present Antidumping Code, 

the final antidumping text allows a WTO 

13 
dispute-settlement panel to find an injury decision or 

margin finding by national authorities inconsistent with 

obligations under the antidumping agreement if it is 

not satisfied that these national findings are based on a 

proper establishment and an objective evaluation of the 

facts. However, the agreement clarifies that panels 

should defer to national authorities' judgement if the 

establishment of facts was proper and the evaluation 

thereof unbiased and objective. Panels may also review 

legal standards applied by national authorities to 

determine, in accordance with customary rules of 

interpretation of public international law, their 

conformity with the antidumping agreement. Panels are 

to find such measures to conform so long as they rest 

upon one, or more than one, permissible interpretation 

of the agreement's provisions. 51 

Circumvention 

A major issue under discussion in the Round 

pertains to the circumvention of antidumping law by 

producers able to move minimal production facilities to 

other locations to avoid the imposition of antidumping 

duties. Participants, unable to agree on sufficiently 

effective anticircumvention rules, ultimately left the 

issue out of the antidumping agreement so that national 

legislation could address such "diversionary dumping." 

However, a ministerial declaration in the last section of 

the Final Act does mark this subject as one in need of 

further work with the goal of developing uniform 

anticircumvention disciplines. 52 

U.S. Concerns 

The antidumping agreement was a prime concern 

for U.S. negotiators during the Round and particularly 

during the final weeks of negotiation. The United 

States sought to retain the effectiveness of the system it 

applies to imports, for example, ensuring that 

antidumping investigations—like countervailing duty 

investigations under the subsidies agreement—are to 

be concluded within 12 months, and in no case, even 

under exceptional circumstances, can take more than 

18 months. In addition, U.S. negotiators sought to 

improve the effectiveness of the GATT antidumping 

disciplines for U.S. exporters facing dumping 

allegations by foreign countries. U.S. negotiators 

largely succeeded in incorporating into the multilateral 

agreement many standards that the United States either 

proposed or already uses in its own domestic 

antidumping legislation. 

The addition of transparency and due process 

requirements—calling for public notice of antidumping 

action and public documentation of antidumping 

decisions—was considered important because it injects 

some predictability into the often-vague antidumping 

procedures used abroad against U.S. exporters. The 

adoption into a multilateral agreement of the 

cumulation of imports and the exclusion of below-cost 

sales in normal export-value calculations—procedures 

already used in U.S. antidumping investigations—were 

considered important because they insulate the U.S. 

use of these techniques from future challenges. The 

clarification of such concepts as de minimis dumping 

margins and negligible imports, used to trigger 

termination of antidumping investigations, is again 

seen as providing greater certainty of procedure for all 

parties, such as for U.S. exporters. The binding nature 

of the WTO's new dispute-settlement procedure made 

the scope of review by international panels of 

antidumping cases crucial. The agreement somewhat 

circumscribes dispute settlement panels by requiring 

deference to national authorities if differences of 

interpretation arise from properly gathered and 

objectively evaluated facts. 

Customs Valuation 

The Agreement on Customs Valuation was 

negotiated and concluded on a provisional basis earlier 

in the Round.53Like its Tokyo Round predecessor 

accord, the agreement sets out a number of successive 

methods by which to determine the customs value of 

imports in a consistent and transparent manner. The 

same principles and structure created in the earlier 

accord are used in expanded form to underpin this 

agreement. 

Two decisions, one on customs valuation and the 

other on the status of declared value, were made part of 

the agreement. The latter aims at clarifying how 

countries might proceed in cases where fraud is 

suspected. 54The decision allows customs officials to 

request additional information from importers when 

there is a basis for doubting the accuracy of an import's 

declared value. If reasonable doubt continues to exist 

following this procedure, the customs administration 

may proceed to void the declared value as a basis for 

determining the customs value and instead determine 

the value following the alternative valuation provisions 

of the agreement, giving written reasons and an 

opportunity for further response as necessary. 

Another text accompanying the agreement clarifies 

certain provisions pertinent to developing countries 

and the minimum values that may be charged for 

imports through sole or exclusive agents, sole 

distributors, and sole concessionaires. 55The GATT 

Committee on Customs Valuation is called on to give a 

sympathetic consideration to requests by developing 

14 
countries to maintain official minimum values. 

Developing countries may also delay application of the 

new Valuation Code for up to 5 years, as a form of 

special and differential treatment, during which time 

they can receive technical assistance concerning the 

code and questions of valuation of goods imported by 

exclusive agents, distributors, and concessionaires. 

The agreement sets up a method of appeal by 

which exporters' grievances may be heard and decided. 

If a dispute cannot be settled through this appeals 

process, the agreement sets up a review procedure 

whereby an independent entity—made up of 

representatives of PSI firms and exporters—would 

form panels to review disputes. 56Panel decisions will 

be binding on the parties to the dispute. 

Preshipment Inspection 

The Agreement on Preshipment Inspection (PSI) 

was reached earlier in the Round (1990) on a 

provisional basis. PSI is used by a number of 

developing countries. Under PSI, purchased goods are 

checked at the point of export rather than at the point 

of entry—generally by a firm specializing in such 

inspections that is under contract with the government 

of the importing country—to help prevent fraud, 

evasion of customs duties, or foreign exchange 

restrictions. PSI can create import barriers by forcing 

exporters to renegotiate terms of sales, causing delays 

in shipments, or producing other problems. 

The agreement states that general GATT principles, 

such as nondiscrimination and transparency, and more 

specific rules to ensure open trade will apply to private 

agencies that provide PSI services for importing 

countries. The aim of increasing transparency, although 

directed primarily at PSI firms employed by importers, 

applies equally to exporter members who must apply 

domestic laws and regulations related to PSI in a 

nondiscriminatory manner, publish these rules 

promptly, and provide technical assistance when 

required. 

Under the agreement, PSI agencies are required to 

perform their duties in a nondiscriminatory, objective, 

and transparent manner. Their inspections, in both 

quantity and quality terms, must be in accord with the 

purchase agreement or with internationally recognized 

standards. PSI firms are also required to follow price 

verification guidelines that allow exporters the 

opportunity to explain their price and to provide 

exporters in a timely fashion all necessary procedural 

information on how to obtain a clear report. PSI firms 

must also follow procedures that ensure the 

confidentiality of proprietary business information and 

that prevent conflict of interest. The agreement 

requires that unreasonable delays be avoided and sets a 

limit of 5 working days as a guide for when PSI firms 

should clear shipment or provide a detailed explanation 

of why not. PSI firms are also required to verify price 

provisionally on the basis of a contract and pro forma 

invoice, if requested by the exporter. 

Rules of Origin 

The Agreement on Rules of Origin was settled on a 

provisional basis in 1990. Its aim is to harmonize 

nonpreferential rules of origin among all members over 

the long term, thus facilitating trade. 

Members agreed to develop a harmonization 

program that would make rules of origin and their 

administration objective, understandable, and 

predictable. The program will begin as soon as possible 

following entry into force of the WTO and will be 

completed within 3 years. The GATT Committee on 

Rules of Origin and the Technical Committee on Rules 

of Origin of the Brussels-based Customs Cooperation 

Council (CCC) are to begin work on the program 

shortly. 57The resulting harmonization would bring 

into effect rules of origin that apply such disciplines as 

the following: 

• origin rules that are administered in a 

consistent, uniform, impartial, and 

reasonable manner; 

• assessments of origin issued within 150 

days of being requested and remaining 

valid for at least 3 years; 

• no retroactive application of changes in 

origin rules or in new rules of origin; and 

• strict confidentiality for proprietary 

information provided for purposes of rules 

of origin determination. 58 

Until the joint effort is completed, members' rules 

of origin are required to be transparent and not trade 

disruptive, distorting, or restrictive. Their rules must be 

administered on a consistent, impartial, reasonable, and 

uniform basis. The standard for a "rule of origin" must 

be defined by a positive statement, clearly saying what 

constitutes "origin" rather than what does not. Any 

changes in rules of origin must be published at least 60 

days in advance before becoming effective. The 

agreement does not cover rules of origin used for 

purposes of administering preferential tariffs. However, 

an annex to the agreement sets out a model "Common 

15 
Declaration With Regard to Preferential Rules of 

Origin" for goods entering under preferential tariff 

treatment programs. 

Import Licensing 

Although import licensing systems are now less 

frequently encountered in world trade than in the past, 

they are still a common feature in many countries. The 

Agreement on Import Licensing Procedures seeks to 

discipline and standardize these licensing procedures 

so that the administrative discretion and uncertainty 

often associated with them can be reduced. It also 

creates legal presumptions that licensing not done in 

accordance with the agreement has trade-restricting or 

-distorting effects. 

The agreement defines more precisely the two 

types of existing licensing schemes, automatic and 

nonautomatic, and aims to increase the transparency 

and predictability of each of these systems. It requires 

that sufficient information be published in order to 

educate traders on how such licenses are granted. It 

also strengthens the notification requirements for the 

licensing agency and provides guidelines on how to 

assess licensing application procedures. Changes in 

procedure are to be published at least 21 days in 

advance of implementing a change. For automatic 

licensing systems—where approval is always 

granted—application periods must be at least 21 days, 

after which governments may reject other applications. 

The agreement also provides that applications may be 

filed up to the time of customs clearance, and requires 

decisions thereon within 10 working days. 

For licensing systems that are not automatic, the 

agreement sets a maximum of 30 days for considering 

individual applications, and of 60 days for considering 

applications simultaneously. For automatic licensing 

systems, the agreement also indicates when such 

systems are presumed nonrestrictive, whereas for 

nonautomatic systems, it is generally the opposite. 

For new licensing procedures or for changes to 

existing systems, members must notify the GATT 

Committee on Import Licensing within 60 days of the 

action, with information covering- 

• products subject to licensing; 

• contact point for licensing information; 

• the administrative body to receive 

submission of license applications; 

• name of place and date when licensing 

procedures are to be published; 

• the type of license, automatic or 

nonautomatic; 

• the administrative purpose of automatic 

licensing; 

• the measure covered by nonautomatic 

licensing; and 

• the expected duration of the procedure, if 

possible. 

If a signatory fails to notify a new or changed 

licensing procedure, other members may notify it. 

Subsidies 

Introduction 

The Agreement on Subsidies and Countervailing 

Measures aims to broaden the effectiveness of previous 

GATT disciplines on subsidies, seeking through greater 

definition and classification a more fail-safe treatment 

of the subject. For the first time under GATT rules, the 

agreement defines "subsidy," using as a basis a concept 

used in U.S. countervailing duty legislation of a 

financial contribution that confers a benefit to a firm or 

to an industry. 

In addition, the agreement classifies subsidies into 

categories, in an attempt to provide increased 

discipline over subsidy use. This prominent feature of 

the agreement divides subsidies into prohibited 

(so-called "red light"), actionable ("yellow light"), or 

nonactionable ("green light") ones. 59It also sets out 

rules and procedures that are similar in many respects 

to those in the antidumping agreement for actions that 

can be taken to offset actionable subsidies. 

Prohibited Subsidies 

Except as provided for in the Agreement on 

Agriculture, the Agreement on Subsidies and 

Countervailing Measures prohibits two major types of 

subsidies: export subsidies and subsidies subject to 

so-called "local-content" requirements. Export 

subsidies are those contingent on export performance, 

whether solely or as part of other conditions. 

Local-content subsidies are those contingent on the use 

of domestic instead of imported goods. 

The Dispute Settlement Body (DSB), designed to 

carry out the dispute-settlement procedures of the 

World Trade Organization, is to be able to authorize 

countermeasures in cases where an offender has not 

withdrawn subsidies shown to be in the prohibited 

16 
category, without any further requirement of proof of 

injury. The DSB will have a Permanent Group of 

Experts on subsidies at its disposal to help it determine 

if a measure in question comes under the prohibited 

category. 

Actionable Subsidies 

A nonprohibited subsidy that negatively affects the 

interests of another member is "actionable" 

multilaterally and countervailable 60unilaterally to 

offset these adverse trade effects. Adverse effects to the 

trade interests of another member must be proven 

through proof of injury to the domestic industry by 

way of price or volume (market share) effects, 

demonstration of nullification or impairment of 

benefits expected to accrue from such concessions as 

tariff bindings, or through demonstration of some other 

form of "serious prejudice" to the interests of another 

member. 

The concept of "presumptive serious prejudice" is 

newly introduced by the agreement. A subsidy by one 

member is presumed to be damaging to the trade 

interests of another member, unless the subsidizing 

member can prove that the subsidy in question does not 

cause harm. If harmful, the agreement requires the 

subsidy or its harmful effects to be withdrawn. A 

subsidy is presumed to cause serious prejudice when- 

• the total ad valorem subsidy exceeds 5 

percent of the cost of the product in 

question;61 

• subsidies cover operating losses of an 

industry; or 

subsidies cover operating losses of an 

enterprise other than one-time, 

nonrecurrent infusions aimed at avoiding 

acute social problems and at providing time 

for longer term solutions to be developed. 

Serious prejudice also exists when it is established 

that- 

• a subsidy is displacing imports of like 

products in the subsidizing country market; 

• a subsidy is displacing imports of like 

products in third-country markets; or 

• the world market share of a particular 

subsidized commodity is increasing, 

compared with the 3 years before subsidies 

were first granted. 

Nonactionable Subsidies 

"Nonactionable" subsidies are permitted subsidies 

either because they are nonspecific—that is, they are 

available generally—or because they fall under one of 

three categories mutually agreed upon as acceptable 

specific subsidies: (1) aid to industrial research and 

development (R&D) prior to commercial development, 

(2) aid to disadvantaged regions, and (3) aid to adapt 

existing facilities to a new environmental law or 

regulation. 

Government assistance for industrial R&D is 

considered nonactionable if subsidies are limited to 

75 percent of industrial research costs and subsidies for 

"precompetitive development activity" are limited to 

50 percent of eligible costs. Precompetitive 

development activity starts with applied R&D and ends 

with the creation of the first noncommercial prototype. 

Government aid for regional development is 

nonactionable when provided to regions that are clearly 

disadvantaged according to objective and neutral 

criteria, on the condition that the assistance is available 

generally and not targeted on any specific industry or 

group of recipients within eligible regions. 

Environmental subsidies are nonactionable 

provided they are a one-time measure limited to 20 

percent of the cost of adapting an existing facility to a 

new environmental standard imposed by law or 

regulation. Such assistance must be directly linked and 

proportionate to planned pollution reduction; the aid 

cannot cover any manufacturing cost savings that may 

be achieved. 

Members believing that nonactionable subsidies, 

notwithstanding their status, are having serious adverse 

effects on a domestic industry may seek a 

determination and recommendation on the matter. 

These nonactionable subsidy provisions, as well as the 

actionable subsidy provisions that presume serious 

prejudice, will automatically expire 5 years after the 

agreement's entry into force, unless members are 

willing to continue or to modify them. 

Application of Countervailing 

Measures 

For actionable subsidies, the agreement sets out 

rules and procedures for applying countervailing 

measures. These rules and procedures parallel similar 

measures set out in the antidumping agreement 

concerning standing, cumulation, injury 

determinations, negligible imports and de minimis 

margins, duration and review of orders, and 

independent panel review. 

Under the subsidies agreement, countervailing duty 

investigations are to take no more than 12 months to 

17 
complete, save for exceptional circumstances; 

investigations can take no more than 18 months in any 

case. As under the antidumping agreement, 

countervailing duty measures are to terminate after 5 

years unless a review by national authorities 

determines that the end of such duties is likely to lead 

to a continuation or recurrence of the injury because of 

subsidization. 

Developing Countries 

The agreement imposes less rigorous subsidy 

discipline on developing countries, although, unlike the 

present situation, such countries will be subject to 

increasing subsidy discipline after various transitional 

periods. Subsidies are recognized as a legitimate tool 

of economic development in developing countries as 

well as in those that are in the process of transforming 

themselves from centrally planned to market-oriented 

economies. Least developed developing countries as 

well as developing countries with less than $1,000 

GNP per capita income62are exempt from the 

prohibition on export subsidies and may also continue 

to use subsidies under the prohibited category for 8 and 

5 years, respectively. 63Countervailing duty 

investigations concerning goods from developing 

countries are to be terminated if the overall subsidy 

level involved is no more than 2 percent (3 percent for 

developing countries with under $1,000 GNP per 

capita) of the value of the product under investigation 

or if the subsidy level is less than 4 percent in volume 

terms of total imports of the like product in the overall 

importer's market. For countries moving from centrally 

planned to market economies, prohibited subsidies will 

be phased out within 7 years of the agreement entering 

into force. 

Safeguards 

Introduction 

The Agreement on Safeguards seeks to clarify and 

reinforce the disciplines of GATT article XIX (the 

so-called GATT "escape clause") in order to reestablish 

multilateral control over safeguard measures and to 

eliminate measures that escape such control. It also 

seeks to encourage structural adjustment in industries 

benefiting from safeguard measures during the period 

that such measures are in effect. Article XIX of the 

GATT permits countries to "escape" from their 

international obligations when increased imports cause 

or threaten serious injury to domestic producers. The 

current article XIX imposes few procedural 

requirements and no time limit on such measures, other 

than stating that they are to be "temporary." 

Because countries taking actions under article XIX 

are required to provide compensation to trading 

partners that are adversely affected—or face possible 

retaliation, many countries have resorted in recent 

years to safeguard-like "grey-area" measures that are 

not consistent with article XIX disciplines. 

Among other things, the new agreement will 

require greater transparency in safeguard proceedings, 

provide for time limits on new safeguard measures, 

permit countries to take safeguard measures for up to 3 

years without having to pay compensation, and require 

the elimination of most existing grey-area measures 

within 4 years. 

Transparency and Duration 

To improve transparency, the agreement defines 

terms and sets out procedures for the conduct of 

investigations and the taking of safeguard actions. The 

agreement requires, among other things, that the 

competent authorities overseeing safeguard 

investigations publish a notice of the proceedings and 

hold a hearing or provide similar opportunity for 

interested parties to make their views known. They 

must also publish a detailed statement setting forth 

their decision and their reasons. 

The agreement defines the terms "serious injury," 

"threat" of serious injury, and "industry," used in 

safeguard proceedings. The agreement also sets out 

certain economic factors to be considered in 

determining whether increased imports cause or 

threaten to cause serious injury to the domestic 

industry. Safeguard actions are not to exceed that 

which is necessary to offset the injury caused. 

The agreement imposes limits on the duration of 

safeguard measures. These measures are to be applied 

only for the period of time that is necessary to prevent 

or remedy serious injury to an industry and to facilitate 

industry adjustment, but in no case for more than an 

initial period of 4 years and, with extensions, a total of 

8 years. A provisional safeguard measure imposed, 

pending the completion of an investigation, may 

remain in effect for no more than 200 days. In addition, 

a new measure may not be imposed in general on a 

good that has been the subject of a previous action 

unless a period of 2 years or a period of time equal to 

that of the previous measure has passed, whichever is 

longer. 

18 
Grey-Area Measures 

Countries have often found the "escape" clause 

discipline of article XIX a prohibitively costly means 

of securing import relief because compensation must 

be paid to all affected members on a nondiscriminatory 

basis. As a result, countries have at times employed a 

safeguard-like mechanism, "voluntary export restraints 

(VERs)," which are outside of GATT disciplines. 64 

 VERs typically commit an exporting country to restrict 

the export of an offending product for a certain period 

of time during which the domestic industry can 

restructure. 

Under the new safeguards agreement, all future 

"grey-area" measures are prohibited, and outstanding 

safeguard actions—including grey-area measures—are 

to be eliminated within 4 years of the agreement's 

entry into force. However, each member will be 

allowed to maintain a single nonconforming import 

measure until December 31, 1999, if the involved 

exporting member agrees. 65All new safeguard actions 

must be taken under article XIX and will be ended 

within 8 years after their first application. 

Compensation 

The agreement envisages consultations on 

compensation for safeguard measures. When 

consultations are not successful, members may 

withdraw equivalent concessions or obligations. 

However, the new agreement alters current article XIX 

standards by revoking for 3 years the right to 

compensation for other members' safeguard measures 

taken in strict conformance with the new agreement. 

Another article XIX procedure altered under the 

new agreement that bears on compensation is the 

selective application of safeguard measures. In 

consultations with a Safeguards Committee to be 

established under the new agreement, a member may 

be able to depart from the standard safeguard 

procedure that requires measures be applied in a 

nondiscriminatory manner if it can demonstrate that 

imports from certain member countries have increased 

disproportionately compared with the total increase in 

imports in question. 

If such departure can be justified as equitable to all 

suppliers, the committee will be able to authorize the 

application of more "selective" safeguard measures 

rather than requiring the injured member to adhere to 

strict apportionment of import quota shares on the 

traditional MFN-basis. The duration of these so-called 

"selective safeguards" may not exceed 4 years. 

Developing Countries 

Members are required to apply safeguard measures 

on imports from developing country members more 

leniently. No safeguard actions are permitted on 

products from a developing country whose import 

share is no greater than 3 percent or from developing 

countries who collectively account for 9 percent or less 

of total imports in this product. Developing countries 

may apply safeguard measures 2 years longer than the 

normal maximum of 8 years and may also more readily 

re-apply them. 

Services 

Introduction 

The General Agreement on Trade in Services 

(GATS) represents a great advance in world trade 

coverage over the present-day GATT. World trade in 

services has burgeoned in recent years to comprise 

roughly one-quarter of world exports, or $890 billion 

of the $3,774 billion in world trade estimated for 1992. 

Services, moreover, represent one of the fastest 

growing sectors among the major economies, 

providing many of the high-technology, high-wage 

jobs created in recent years. Thus, the inclusion of 

services within the trading system represents a major 

step forward in expanding the world trade covered by 

multilateral disciplines. 

However, partly because of the groundbreaking 

nature of the endeavor and its economic importance, 

progress on negotiations regarding services has been 

slower than those concerning goods. By the close of 

the Round on December 15, 1993, agreement had been 

reached only on the services framework or GATS; 

negotiations on specific market-opening commitments 

were to continue, particularly for the service sectors 

important enough to be dealt with in separate annexes. 

Framework Agreement 

The GATS is composed of six parts. The articles of 

the framework agreement incorporate many ideas from 

the GATT covering trade in goods, such as MFN 

treatment, national treatment, market access, and 

transparency. Nonetheless, concepts that are sound 

when used regarding trade in goods fit less well when 

applied to trade in services, and the resultant adaptation 

of these concepts to services has slowed progress. 

Part I—Scope and Definition 

The agreement covers trade in services between 

members, defined as19 
• services supplied across national borders, 

that is, from one member's territory into 

another's territory (e.g. U.S. television 

broadcasts to Canada); 

• services supplied from one territory to a 

consumer of another territory (e.g. U.S. 

telephone services supplied to M. Jean 

Daine, citizen of France); 

• services supplied from one territory 

through its established entity that provides 

these services from another territory (e.g. 

Citicorp USA supplying financial services 

through its Citicorp branch in Paris, 

France); 

• services supplied by natural persons of one 

territory within the territory of another (e.g. 

Mr. John Doe, U.S. citizen, providing 

financial consulting services in Paris, 

France). 

Government procurement of services is not 

covered by the GATS with respect to provisions on 

MFN, national treatment, and the generalized 

market-access commitments set out in part III of the 

GATS. However, the GATS stipulates that multilateral 

negotiations on government procurement of services 

under the GATS will start within 2 years (by 1997) of 

the WTO's entry into force. These talks on government 

procurement of services under the GATS will also need 

to take into account the plurilateral GATT Agreement 

on Government Procurement, whose limited 

membership recently extended its contract coverage to 

government procurement of services—including 

construction services—in negotiations paralleling the 

Uruguay Round. 

Part II—General Obligations and 

Disciplines 

The rules and obligations under the GATS are 

presented in the specific articles to the agreement. 

Brief comments on the major articles are set out below. 

Most-favored-nation (MFN) treatment in the GATS 

requires members to "accord immediately and 

unconditionally to services and services providers of 

any other Party, treatment no less favorable than that it 

accords to like services and services providers of any 

other country." Although MFN is one of the most 

fundamental tenets of the GATT system, 

negotiators—from the United States in 

particular—realized that granting "unconditional" 

MFN treatment in services would tend to fix access to 

national markets for foreign service suppliers and 

freeze it in its current stage of liberalization. Thus, 

open services markets would remain open and closed 

services markets would remain closed. As a result, a 

form of "conditional" MFN treatment was devised by 

negotiators whereby MFN treatment would not be 

conferred on a country until agreement was reached on 

a national schedule of market-opening commitments 

for services. This "conditional" MFN came into play 

particularly during the financial services negotiations, 

described below. Specific exemptions from MFN 

treatment under the GATS will be recorded in an 

annex. Each exemption is to be reviewed after 5 years 

and is limited in principle to 10 years. These 

exemptions to MFN treatment will be, in any case, 

subject to future liberalizing negotiations. 

GATS members are to publish all pertinent laws 

and regulations so that foreign service suppliers will be 

on an equal footing with domestic ones. Members will 

also establish "enquiry points" to provide specific 

information and respond promptly to questions on 

laws, regulations, administrative guidelines, decisions, 

rulings, application of measures, or international 

agreements that might affect a service industry. 

The agreement sets out provisions aimed at 

ensuring that domestic regulation of services is 

administered in a reasonable, objective, and impartial 

manner. Prompt review of administrative decisions is 

also required. 

Developing countries will be encouraged to join 

the GATS to negotiate commitments to (1) strengthen 

the competitiveness of their own service economies 

through access to technology on a commercial basis, 

(2) improve access to distribution channels and 

information networks, and (3) liberalize market access 

in sectors and supply channels of export interest to 

other members. 

The GATS provisions on economic integration, 

like GATT article XXIV, expect substantially all 

sectors to be covered in any integration scheme, with 

no sector, subsector, or industry excluded 

automatically. 

The agreement requires that all parties provide the 

means to recognize service providers, such as 

education, experience, licenses, certifications, or other 

requirements, by using internationally recognized 

criteria or another appropriate approach. 

Monopolies and service suppliers with exclusive 

rights are neither condemned nor condoned, but are to 

refrain from abusing their market-power position in 

their own territory. Restrictive business practices in 

20 
services will be subject to consultations between 

members. 

Negotiations on safeguard measures will be 

completed within 3 years of the WTO's entry into 

force. In the interim, members may withdraw or 

change their schedules of commitments for up to 1 year 

after the commitment enters into force. 

Members may not place restrictions on 

international current-account transactions except for 

exchange rate actions in conformity with IMF 

obligations. Restrictions on current-account 

transactions taken for balance-of-payments reasons 

must be nondiscriminatory and temporary and avoid 

unnecessary commercial damage. 

Similar to GATT articles XX and XXI, exceptions 

under the GATS are allowed to protect public morals; 

human, animal, or plant life; services contracts against 

deceptive practices or default; the privacy of 

individuals and confidentiality of records; safety; and 

national security. Treatment may differ between 

domestic and foreign suppliers of services if the 

measures are aimed at making direct taxation of 

foreign services firms more equitable, such as avoiding 

double taxation. 

The GATS calls for future negotiations to develop 

rules aimed at avoiding the trade-distorting effects of 

subsidies on trade in services. These talks will also 

address countervailing procedures and take into 

account the role of subsidies in developing countries. 

Part III—Specific Commitments 

Specific framework commitments on market 

access and national treatment for different services 

sectors are found in members' national schedules of 

commitments, lodged under part III. These schedules 

include- 

• terms, limits, and conditions on market 

access; 

• conditions and qualifications on national 

treatment; 

• any additional commitments; 

• timeframe for implementation of 

commitments, when appropriate; and 

• effective date of such commitments. 

Coverage of services sectors in national schedules 

are listed in figure I. Members may withdraw or 

modify existing commitments in their national 

schedules after the GATS has been in effect for 3 years, 

contingent on compensation on an MFN basis. 

Compensation may be decided by arbitration in the 

absence of a negotiated settlement. 

The market-access commitments aim to 

progressively lift barriers to or limits on foreign service 

suppliers. These disciplines address barriers, such as 

limits on the number of services suppliers, people 

employed, and total value or quantity of service 

transactions allowed in the market and limits because 

of economic "needs tests," to local incorporation rules, 

or restricted participation of foreign capital. 

The national-treatment commitments require that 

parties treat foreign services and service suppliers in 

essentially the same way as domestic ones. Members 

may provide formally identical or formally different 

treatment in carrying out this commitment, but they 

may only choose treatment of foreign suppliers that is 

not identical to that received by domestic suppliers if it 

does not skew the terms of competition in favor of 

domestic service providers. 

The section providing for additional specific 

commitments, beyond those in the preceding 

market-access or national-treatment sections, allows 

negotiation of commitments regarding qualifications, 

standards, or licensing matters. This could include 

agreements for prompt publication of relevant 

measures to provide transparency, free-trade 

arrangements or mutual recognition agreements, and 

guarantees of the free flow of current-account 

payments and transfers for services firms benefiting 

from sectoral commitments. 66 

Part IV—Progressive Liberalization 

The GATS includes provisions for successive 

Rounds of services negotiations to help expand 

national schedules of commitments to begin within 5 

years of entry into force of the WTO. Due respect is to 

be accorded to national policy objectives, both overall 

and in specific sectors, and to the particular needs of 

developing countries to liberalize in accordance with 

their development situation. 

Part V—Institutional Provisions 

The institutional provisions of the GATS call for 

members to consult one another and to utilize 

dispute-settlement and enforcement measures. 

Additional institutional measures provide for joint 

action among members (such as waivers) and clarify 

the roles of the General Council to arrange for 

consultation and cooperation with other international 

organizations and of the Council on Trade in Services 

to oversee the operation of the agreement. 

21 
Figure I 

Select Services Sectors under Discussion in the GATS 

BUSINESS SERVICES 

— advertising, computer services, consulting, market research, rental and leasing services, 

security services 

COMMUNICATION SERVICES 

— basic communications services 

— long—distance telephone service and couriers 

— enhanced communications services 

— cable, fiber optic, microwave, and satellite 

— audiovisual services 

— cinema, television, video, cable and satellite pay—per—view TV 

CONSTRUCTION SERVICES 

DISTRIBUTION SERVICES 

— wholesale and retail trade and franchising 

EDUCATIONAL SERVICES 

ENVIRONMENTAL SERVICES 

FINANCIAL SERVICES 

— banking, insurance, securities 

HEALTH SERVICES 

PROFESSIONAL SERVICES 

— accounting, architecture, engineering, law, medicine 

TOURISM SERVICES 

TRANSPORTATION SERVICES 

— air transport 

— landing/takeoff rights, and related services 

— maritime transport 

— open—water shipping, port services, and related port services 

Source: The White House, "Executive Summary of the GATT Uruguay Round of Multilateral Trade Negotiations," 

Dec. 15, 1993, Washington, DC, p. 20. 

Part VI—Final Provisions 

The final provisions sets out definitions of terms in 

the agreement and also covers how to approach denial 

of benefits to non-WTO members. "Nonapplication" 

against another member is also allowed, whereby any 

member may notify the parties to the agreement that it 

will not apply the agreement to another member. 

Services Annexes 

While the framework agreement provides rules and 

disciplines applicable to all services covered under the 

General Agreement on Trade in Services, negotiators 

considered that certain services sectors would need 

additional provisions to make the agreement effective. 

The sectoral annexes in the Final Act cover (1) 

movement of labor, (2) financial services, (3) 

telecommunications, and (4) air-transport services. 

Limited success in fleshing out acceptable sectoral 

disciplines means that continued negotiations on 

services will focus first on the annexes and on future 

additions to schedules of commitments. 

Labor Mobility 

The Annex on Movement of Natural Persons 

Supplying Services commits members to negotiate 

particular obligations regarding personnel providing 

covered services. 

Financial Services 

The Annex on Financial Services covers primarily 

banking and insurance. It allows national authorities to 

take prudential measures to protect investors, deposit 

holders, or policy holders so as to preserve the integrity 

and stability of the financial system. A separate 

understanding provides for liberalization commitments 

through an alternative approach that members taking 

prudential measures can nonetheless undertake.67 

22 
Negotiators on financial services could not reach a 

consensus by the conclusion of the Uruguay Round. 

The primary issue at stake was whether MFN treatment 

should be extended to foreign suppliers of financial 

services on an "unconditional" basis. By the closing 

weeks of negotiations, it was evident that a number of 

participants were not prepared to put forward offers 

that were extensive enough to satisfy the United States 

or the EU by the Round's December 15th deadline. As 

a consequence, negotiators agreed formally to postpone 

concluding the financial services negotiations, since 

doing so would have triggered the United States and 

the EU to withdraw access to their financial services 

markets by taking a sectoral exemption. 

Instead, negotiators decided to apply 

across-the-board MFN treatment in financial services 

for the first 6 months of the Uruguay Round 

agreement, after which countries would be free to 

withdraw their financial services markets by taking a 

sectoral exemption. In effect, this decision means that 

negotiations can continue until July 1, 1995, given a 

January 1, 1995, entry into force date for the WTO. 

Telecommunications 

Members recognize that the telecommunications 

sector is both a distinct economic sector and the 

underlying means of "transport" for other economic 

activities. The primary focus of the annex on 

telecommunications is to ensure reasonable and 

nondiscriminatory access to and use of public 

telecommunications networks and services for all 

service suppliers, whether foreign or domestic. The 

annex stipulates that measures imposed on access to 

these public networks or services should be only those 

necessary to safeguard the responsibility of 

public-service suppliers to the general public to 

provide such networks and to protect the technical 

integrity of such systems. Members may also ensure 

that other members do not supply services unless 

specifically permitted according to commitments stated 

in their national schedules. The annex also recognizes 

the desirability of providing technical cooperation to 

developing countries to promote their own domestic 

telecommunication sectors. 

Negotiations on specific access commitments dealt 

separately with (1) basic telecommunications and (2) 

value-added telecommunications. The Final Act 

includes an "Annex on Telecommunications," but 

negotiations on basic telecommunications are 

scheduled to continue. 68At the Round's end, ministers 

established a Negotiating Group on Basic 

Telecommunications within the GATS framework to 

enter into negotiations to liberalize basic 

telecommunications. The group is to begin its work 

following the entry into force of the WTO (Jan. 1, 

1995) and to conclude its negotiations with a final 

report no later than April 30, 1996. The group is open 

to governments that signed the Final Act and that wish 

to participate. 69 

Air Transport 

The annex on air-transport services explicitly 

excludes both air-traffic rights and directly related 

activities. This exclusion results largely from the view 

of key participants, like the United States and 

European Union, that the extensive system of 

negotiated bilateral treaties conveying air-traffic rights 

currently in place functions well and would be difficult 

to disentangle. Auxiliary services—composed of 

aircraft repair, marketing of air-transport services, and 

computer reservation services—are included under the 

agreement. The operation of the annex will be 

reviewed every 5 years. 

Maritime Transport 

Discussions during the Round centered around 3 

areas of maritime services: (1) open-water shipping, 

(2) port services, and (3) auxiliary services at ports. No 

agreement could be reached concerning open-water 

shipping, where the influence of European cartels that 

set their own prices within a territory, known as 

"shipping conferences", could not be overcome. Thus, 

no text was agreed for maritime services by the 

December 15, 1993, conclusion of the Round. 

Ministers did agree to establish a Negotiating Group on 

Maritime Transport Services (NGMTS) to enter into 

negotiations "aiming at commitments in international 

shipping, auxiliary services, and access to and use of 

port facilities, leading to elimination of restrictions 

within a fixed timescale." 70The NGMTS, which will 

begin upon the 1995 commencement of the WTO, will 

conclude its negotiations and make a final report no 

later than June 1996. 

An explanatory note in the Agreement Establishing 

the WTO also affects maritime transport services. 71 

 The note exempts from provisions under the WTO any 

measures taken by a member under specific mandatory 

legislation enacted before 1947 that "prohibits the use, 

sale or lease of foreign-built or foreign-reconstructed 

vessels in commercial applications between points in 

national waters or the waters of an exclusive economic 

zone." This "grandfather" clause, exempting from 

GATT disciplines the restrictions on foreign access to 

national maritime cabotage, is to be reviewed within 

the first 5 years of the WTO going into effect, and 

every 2 years thereafter. The United States Merchant 

23 
Marine Act of 1920 (the "Jones Act") is thus the only 

legislation currently grandfathered into the Uruguay 

Round agreements. 

Audiovisual Services 

The audiovisual sector was probably the most hotly 

debated issue between the U.S. and EU trade ministers 

in the closing days of the Round. USTR Kantor and 

EU External Affairs Commissioner Leon Brittan spent 

several days in virtually nonstop discussions 

attempting to come to some compromise over four 

separate facets regarding the audiovisual sector: (1) 

the EU Broadcast Directive and its television quota 

restrictions, (2) future broadcast technologies (such as 

cable, satellite, and fiber optic transmission), (3) taxes 

levied on blank audio and video cassettes, and (4) taxes 

levied on cinema tickets. During their negotiations on 

audiovisual services—at times overlapping with those 

on intellectual property issues—the EU was unwilling 

to yield ground concerning either of the first two topics 

but was willing to discuss the second two, subject to 

the caveat that tax matters are ultimately the 

prerogative of national legislatures. 

The EU Broadcast Directive of 1989 requires 

member state governments to reserve the majority of 

national broadcast time for productions originating in 

the Union "where practicable." Given the widely 

acknowledged fact that U.S. television and video 

productions typically capture over 70 to 80 percent of 

European programming, the directive amounts, in the 

U.S. view,72to a significant trade barrier against the 

United States' second largest export industry. 73The 

EU was unwilling to compromise over the issue, 

claiming that the right reserved by the directive to 

retain most of the available broadcast time for EU 

member-state programs seems an unlikely hindrance to 

a U.S. industry that already captures three-quarters of 

the EU market for television programming. 74 

Discussions on programming broadcast through 

advanced technologies also failed to achieve results. 

Advanced technologies include pay-per-view cable 

television and video programs, satellite transmission of 

programming, and others, such as fiber-optic 

transmission of program broadcasts. Although the U.S. 

side offered numerous choices during negotiations, 

such as essentially accepting the Broadcast Directive in 

its present form provided it was not extended to 

broadcast transmission via more advanced 

technologies, the EU side sought to retain the right to 

regulate program broadcasting regardless of 

transmission mode. 

The member states of the EU levy a tax on the sale 

of blank audio and video cassettes to generate revenue 

from which compensation for illegal copying may be 

paid to singers and artists who hold the intellectual 

property right to their recorded performances. These 

revenues are shared among the European governments 

but not with the United States. Given the sizeable share 

of the European market for such radio, TV, and video 

broadcast performances, the U.S. industry considers 

that it should receive some portion of these tax 

revenues. 

One stumbling block to this revenue sharing, 

however, is the difference in ownership of the 

intellectual property rights generated by such 

performances. Under the Rome Treaty, the artist, 

singer, or performer is granted an inalienable right to 

her or his work, whereas in the United States the 

performer typically transfers this ownership right to the 

producer (production studio, house, or firm). One 

European objection against sharing revenues generated 

by the cassette tax with the United States is that the 

U.S. industry rather than the individual performer 

would typically be the beneficiary. 

In France, an 11-percent tax levied on cinema 

tickets is used to help promote and subsidize national 

film producers. The U.S. film industry objects to 

supporting the French film industry through this tax. 

This particular situation, however, reflects a 

broader issue operating as an undercurrent to the 

audiovisual negotiations—the issue of national cultural 

exemptions. A number of member states asked EU 

negotiators to push for a national culture clause that 

would exempt from the audiovisual negotiations 

domestic makers, that is European producers, of films, 

television, radio programs. Such exemption would in 

effect insulate those producers whose programs fell 

under the designated rubric of "national culture" from 

competition with foreign-made productions, typically 

films, videos, programs, and the rest emanating from 

Hollywood. The United States has steadfastly rejected 

any sort of cultural exemption, arguing that the 

definition of a vague concept, such as "national 

culture", is open to protectionist abuse as a trade 

barrier. 

Intellectual Property 

Introduction 

Intellectual property, which derives its intrinsic 

value from creative ideas, is one of two nontraditional 

subjects covered for the first time by the new GATT 

rules and disciplines. 75The Agreement on 

24 
Trade-Related Aspects of Intellectual Property Rights 

(TRIPS), including Trade in Counterfeit Goods, aims 

to apply basic GATT principles, as well as relevant 

principles of international agreements on intellectual 

property, to the field of intellectual property, where 

national standards of protection differ greatly 

worldwide, some governments effectively having none 

at al1.76The agreement seeks to provide fundamental 

intellectual property rights, effective enforcement 

measures, and a multilateral dispute-settlement 

mechanism, in addition to transitional arrangements. 

With certain exceptions, the agreement is intended to 

apply to existing as well as new intellectual property 

rights (figure J). The TRIPS agreement contains seven 

parts: (I) general provisions and basic principles, (II) 

standards regarding the scope and use of particular 

intellectual property rights, (III) enforcement 

provisions, (IV) acquisition and maintenance of such 

rights, (V) dispute settlement, (VI) transition 

arrangements, and (VII) institutional and final 

provisions. 

The principles in part I involve national treatment 

and most-favored-nation (MFN) treatment. The 

national treatment concept holds that other members 

must be accorded treatment no different than that given 

to domestic producers and holders of intellectual 

property rights. The MFN provision is unusual 

regarding intellectual property in that any advantage 

given by one government to another government's 

nationals must by extended immediately and 

unconditionally to all other member governments, even 

if such treatment is more favorable than that given to 

the government's own nationals. 77 

Specific commitments regarding the various types 

of intellectual property are cited under part II of the 

agreement, covering the following: (1) copyright and 

related rights, (2) trademarks, (3) geographical 

indications, (4) industrial designs, (5) patents, (6) 

integrated circuits, (7) protection of undisclosed 

(propriety business) information, and (8) control of 

anticompetitive practices in contractual licenses. 

Figure J 

Summary of TRIPS Agreement 

Years 

protection Subject 

Copyrights 

50 Computer programs 

50 Sound recordings 

20 Broadcast signals 

Trademarks 

7 7—year term renewable indefinitely 

Additional protection for well—known marks 

Geographical Indications 

Prevent consumer confusion 

Stricter protection for wines and spirits 

Industrial Designs 

10 Protection for design or products embodying the design 

Patents 

20 Inventions (product or process) 

Not patentable: 

(1) diagnostic, therapeutic, and surgical methods 

(2) plant and animal biological process* 

(3) products prohibited for public order or morality 

(*except micro—organisms or —biological process) 

Integrated Circuits 

10 Minimum protection for semiconductors according to the Treaty on Intellectual Property 

in Respect of Integrated Circuits. 

Source: Compiled by USITC staff from the Final Act. 

25 
Copyrights 

Participants in the Uruguay Round agreement are 

expected to apply all of the substantive economic 

provisions of the Berne Convention except its "moral 

rights" provision, which aims to protect individual 

authors and artists by giving them inalienable rights 

over the reproduction of their works. 78Copyright 

protection is to be extended for a minimum of 50 years, 

if not based on the lifespan of a natural person. 

The agreement expands worldwide copyright 

protection to computer programs (that is, software), 

which are to be treated as literary works with the 

50-year minimum protection under the Berne 

Convention, to databases, and to mathematical 

algorithms The agreement also covers rental rights, 

whereby producers of sound recordings and authors of 

computer software are to be given the right to authorize 

or prohibit commercial rental of their works. 

The agreement gives protection to performers from 

unauthorized recording and broadcasting of live 

performances. For sound recordings, performers and 

producers will receive protection for a minimum of 50 

years and protection for existing sound recordings as 

required. Broadcast organizations or the subjects of a 

broadcast are to have control over the right to 

rebroadcast these products for at least 20 years. 

Trademarks 

The agreement defines the types of signs 

(trademarks) that may be eligible for protection and the 

minimum rights that are to be conferred to their 

owners. The agreement extends the protection 

conferred under the Paris Convention to services and 

may require registration of distinctive service marks as 

acquired through use. Registration of trade or service 

marks provides protection for no less than 7 years and 

is renewable indefinitely. Well-known marks will 

receive additional protection. 

The agreement sets out requirements of use and 

nonuse of trademarks and servicemarks. It strictly 

limits the unauthorized use of identical or similar 

marks likely to prove confusing. The agreement also 

prohibits mandatory linking of trademarks and 

compulsory licensing of marks. 

Geographical Indications 

The agreement states that members are to provide 

the legal means to prevent an indication that misleads 

consumers about the true geographic origin of goods or 

that constitutes unfair competition under the Paris 

Convention. 79Additional protection is set out for 

geographic indications describing wines and spirits, 

even when nothing exists to mislead consumers about 

the product's true origin. Generic terms, such as 

"chablis" or "champagne" already in circulation will be 

allowed as exceptions, but countries using such 

exceptions must be willing to negotiate further to 

protect the geographic indication at issue. The 

agreement calls for future negotiations to establish a 

multilateral system of notification and registration of 

geographic indications of wines. 

Industrial Designs 

Industrial designs that are new or original are to 

receive protection for at least 10 years under the 

agreement. Owners of these designs are allowed to 

prevent products bearing or embodying this design 

from being manufactured, sold, or imported. The 

agreement also states that the cost of protecting textile 

designs should not impair chances for securing such 

protection and that members may provide protection 

through industrial design or copyright law. 

Patents 

Members of the Uruguay Round agreement are 

expected to comply with the substantive provisions on 

the Paris Convention concerning patents. As a result, 

20-year patent protection should be available for 

inventions, whether products or processes, in virtually 

all fields of technology. For the United States, this 

protection is particularly germane in the 

pharmaceutical and agricultural chemical industries. 

Patent protection over the 20-year period is to extend 

from the date of application. The agreement calls for 

filing procedures for pharmaceuticals and agricultural 

chemicals to be put in place promptly. 80 

However, certain exceptions are allowed. Products 

or processes that by agreement may not be patented are 

diagnostic, therapeutic, and surgical methods; plants 

and animals and essentially biological processes for the 

production of plants or animals (with the exception of 

microorganisms and microbiological and nonbiological 

processes, which may be patented); 81and inventions 

whose commercial exploitation is prohibited for 

reasons of public order or morality. Compulsory 

licensing of patents without authorization from the 

patent owner, such as for governmental use, is 

permitted, but only under strict conditions. 82Rights 

derived from a patented process are legally part of the 

directly resultant product. 

The United States, the EU, and Japan, have 

apparently agreed to pursue further discussions aimed 

at harmonizing differences in their patent applications 

26 
and approval procedures. The United States awards 

patents on a "first-to-invent" basis, whereas Europe 

and Japan use a "first-to-file" basis. It is expected that 

ultimately the United States will move closer to the 

"first-to-file" basis, but protracted negotiations are 

expected before reaching this end. 

Integrated Circuits 

Members agree to base protection of layout designs 

for integrated circuits on the provisions of the Treaty 

on Intellectual Property in Respect of Integrated 

Circuits (IPIC Treaty). However, the Uruguay Round 

agreement contains several additional protections: (1) 

a minimum 10-year protection period, (2) extension of 

protection to articles incorporating an infringed layout 

design, (3) permission for innocent infringers to use or 

sell stock in hand or ordered before learning of the 

infringement provided they pay a suitable royalty, and 

(4) permission for compulsory licensing and 

government use under certain strict conditions. 

In the closing days of negotiations, the United 

States reversed its previous position of accepting 

compulsory licensing for semiconductors contingent 

upon royalties, refusing to accept compulsory licensing 

with "commercial applications" (such as for 

semiconductors used in integrated circuitry). As a 

result, the final text allows such unauthorized licensing 

only for "public noncommercial use." National trade 

laws could thus be used in such situations in which the 

licensing of a product with commercial application is 

compelled, because no other multilateral or bilateral 

agreement has been reached. 

Proprietary Business Information 

Trade secrets and know-how with commercial 

value must be protected against breach of confidence 

or similar dishonest commercial practice. Protection of 

test data submitted by pharmaceutical and agricultural 

chemical firms to governments for marketing approval 

must also be protected from unfair commercial use. 

Restrictive Business Practices 

Licensing practices or conditions that abuse 

intellectual property rights, and thereby have an 

adverse impact on competition, can be redressed 

through consultations between governments. Remedies 

against such anticompetitive practices in contractual 

licenses must, however, be consistent with the rest of 

the Uruguay Round TRIPs agreement. 

Enforcement Provisions 

The agreement requires member governments to 

make procedures and remedies under domestic law to 

effectively enforce intellectual property rights available 

to nationals and foreigners on a nondiscriminatory 

basis. These procedures must not be unnecessarily 

complicated or costly, nor entail unreasonable 

time-limits or unwarranted delays. 

The agreement does not require a judicial system 

distinct from that which enforces laws in general nor 

any priority enforcement of intellectual property rights. 

The agreement specifies particular procedures 

concerning fair and equitable treatment, evidence of 

proof, injunctions, damages, and other remedies, 

including the right of judicial authorities to destroy or 

dispose of infringing goods. Parties to the agreement 

should also provide for legal redress in the form of 

criminal penalties and procedures at the least where 

willful trademark counterfeiting or copyright piracy 

takes place on a commercial scale. Such remedies 

should include fines and imprisonment likely to deter 

future acts. Judicial authorities must also have power to 

set up provisional measures, particularly where delay 

would lead to irreparable harm to the holder of these 

rights or where evidence is likely to be destroyed. 

Border provisions provide that customs officials 

may suspend the release of pirated or counterfeit goods 

into domestic circulation. Members must adopt 

procedures to allow interested parties to request border 

authorities to intercept pirated or counterfeit goods. 

Administrative Provisions 

The agreement is to be monitored by a newly 

created Council for Trade-Related Aspects of 

Intellectual Property Rights. The integrated GATT 

dispute-settlement system is to be used to hear 

complaints. The transitional period leading to the 

implementation of the agreement is 1 year for 

developed countries, 5 years for developing countries 

and those moving from centrally planned to market 

economies, and 11 years for the least developed 

countries. 

Countries with no means to provide patent 

protection in a technological area have up to 10 years 

to introduce this protection. However, these countries 

must accept filings for patent applications for two 

specific categories—pharmaceuticals and agricultural 

chemicals—from the start of this 10-year transitional 

period to preserve the novelty of the invention from the 

filing date, although the patent does not have to be 

granted until the end of the transition. An exclusive 

marketing right for 5 years (or until a patent is granted, 

27 
whichever is shorter) must be granted if authorization 

is given during the transitional phase before granting a 

patent. 

Plurilateral Agreements 

Government Procurement 

Negotiations on a new Agreement on Government 

Procurement (often referred to as the Government 

Procurement Code) were called for in the original 1979 

agreement. Begun in 1983, these negotiations resulted 

in the 1988 revision of the code. The next renegotiation 

of the code, while not formally part of the Uruguay 

Round, began with and was scheduled to finish with 

the conclusion of the Round. 

The procurement code departs from the traditional 

GATT approach of unconditional and all-inconclusive 

MFN treatment. It is limited in membership, and 

members are obliged to offer the code's benefits only 

to other signatories. It is also limited in the sense that 

each member commits to follow its disciplines only for 

specifically designated entities, known as covered 

entities. Finally, the agreement allows country-specific 

derogations should a signatory find another signatory's 

scope of coverage inadequate. 83 

The object of the most recent negotiations was 

threefold: 

(1) to extend coverage of the agreement to 

services, including construction services 

(the present code covers only goods); 

(2) to broaden coverage from only the 

central-government level to subcentral 

levels of government and entities whose 

procurement is closely linked to these 

governments, such as public utilities; 84and 

(3) to improve the text and disciplines of the 

current government procurement code. 

Although negotiators settled on a revised text of 

the agreement by December 15, 1993, and national 

schedules covering central government procurement 

entities were well advanced, negotiations continued 

into 1994 during the runup to the April 15, 1994, 

signing of the Uruguay Round agreements in the hope 

of covering more procurement by subcentral 

governments and public-sector utilities. 85The 

following discussion explains the basic obligations 

contained in the new agreement. 

Product Coverage 

In addition to broadening the scope of procurement 

contracts covered in terms of participating procurement 

agencies, the new agreement expands product 

coverage. The previous code applied only to 

procurement contracts for goods tendered by central 

governments. The new government procurement 

agreement expands product coverage to services, 

including construction services. The agreement will 

apply to procurement contracts for goods and services 

tendered by central government entities with a value 

above a "threshold" of SDR 130,000 (US$182,000) 

and above SDR 5 million (US$6.5 million) for 

construction services. 86The United States made no 

offers in sensitive service sectors, such as 

transportation, research and development, or the 

management and operation of Federal research centers 

and laboratories. 87 

Subcentral Coverage 

The new agreement also extends entity 

procurement coverage from central governments only 

to some subcentral governments and 

government-owned utilities and corporations. The 

United States has offered procurement by all U.S. 

executive agencies that are subject to the Federal 

Acquisition Regulations, by 24 States, which include 

the 5 largest ones, and by federally owned utilities. 88 

 However, at the end of 1993, the entity coverage 

negotiations were complete only among the United 

States, Israel, Hong Kong, and Korea. These 

concessions become effective in 1996 for Israel and in 

1997 for Hong Kong and Korea. 

Transparency 

Like the old agreement, the new accord contains 

provisions to enhance transparency. Procurement 

entities of central governments are still required to 

publish each procurement in a central and readily 

available publication. State and local governments may 

publish either an annual list of anticipated procurement 

or an annual notice on how firms can qualify to bid on 

procurement during the year. State and local 

procurement entities are also obligated to respond with 

specific procurement information to all firms 

indicating an interest in the notice, although transmittal 

of an invitation to tender regarding any particular 

procurement may be limited to selected firms from a 

list of qualified firms. The minimum period between 

announcement or invitation and the bid deadline under 

the agreement remains at 40 days in general, although, 

in certain very limited circumstances, the interval may 

be reduced to 10 days. 

28 
Improved Disciplines 

Bid-Protest Procedures 

A primary U.S. goal in revising the government 

procurement code was to establish a bid-protest 

system, whereby firms can challenge alleged breaches 

in the agreement's procedures. Although such a system 

already exists in the United States, it is less common 

abroad. Under the new agreement, government entities 

at all levels must ensure that nondiscriminatory, timely, 

transparent, and effective procedures are available for 

such challenges. An impartial and independent review 

body, free from outside influence during its 

appointment and with no vested interest in the 

procurement outcome, is required to be made available 

for these challenges. Court-like procedures are also 

required in the event the challenge body is not a court. 

The challenge procedures must include the possibility 

of suspending the procurement while the protest is in 

process, as well as the possibility of compensation for 

loss or damages inclusive of protest and tender 

preparation costs, or even reversal of the award 

decision after it has been made. Procurement entities 

must provide prompt notification, either oral or 

written, to all bidders on the contract award, if 

requested. 

Procurement Specifications and 

Offsets Rules 

All procurement agencies must provide technical 

specifications on a nondiscriminatory basis and are 

urged to formulate these specifications based on 

performance rather than design standards, using 

national or international standards whenever 

appropriate. (The Agreement on Technical Barriers to 

Trade specifically excludes procurement specifications 

from its scope.) Under the agreement, however, 

entities may claim exemptions for recycled products or 

other "quality of life" restrictions, provided they do not 

act as "a means of arbitrary or unjustifiable 

discrimination " 

Unlike the previous code, the new procurement 

agreement prohibits offsets, except when specifically 

reserved as derogations in individual country 

schedules. An offset is the award of a procurement 

contract conditioned on the acceptance of measures 

that encourage local development or improve 

balance-of-payments accounts. Examples of offsets are 

local-content requirements, investment requirements, 

and forced licensing of technology. 

Dispute Settlement 

With few exceptions, the Dispute Settlement 

Understanding under the Uruguay Round agreements 

is to be used for disputes regarding the Agreement on 

Government Procurement. However, only signatories 

of the procurement agreement may avail themselves of 

WTO dispute settlement for purposes of enforcing their 

rights under the Government Procurement Code. The 

agreement provides for the possibility of alternative 

remedies in cases where the standard remedy of 

withdrawal of inconsistent measures is not available. In 

view of the particular nature of procurement, the WTO 

Dispute Settlement Body is furthermore urged to 

shorten the time involved in deciding disputes arising 

under the agreement. 

Membership 

Concluded under the Uruguay Round agreements 

was the issue of finding a means by which to help 

developing countries become members of the 

Government Procurement Code. 89Negotiators agreed 

that initial consultations between current signatories 

and candidate governments would be followed by 

accession working parties. These working parties will 

examine the entity offers of the applicant countries and 

the opportunities that would be available in current 

signatory markets for the applicant. 90 

The present signatories are Austria, Canada, the 

EU, Finland, Hong Kong, Israel, Japan, Norway, 

Singapore, Sweden, Switzerland, and the United 

States. Korea recently acceded to the current code and 

will be a member of the revised code. Singapore is a 

current member but did not participate in the revision 

negotiations, thus it is not certain whether it will 

become a member of the revised code. The revised 

code is scheduled to become effective on January 1, 

1996; Korea will assume its obligations under the code 

1 year later, on January 1, 1997. Taiwan, the People's 

Republic of China, and Australia are in various stages 

of discussion concerning possible membership. 

Bilateral Differences 

The ability of signatories to specify particular 

procurement entities for derogation from coverage 

under national schedules has not only helped advance 

the effectiveness and the scope of the agreement but 

has also brought to the fore bilateral differences over 

its coverage that are as yet unresolved. 

The most serious bilateral difference has been 

between the United States and the EU. Two issues have 

posed difficulties between these two sides in the area 

of government procurement: (1) heavy electrical 

29 
power-generating equipment and (2) telecommunications goods and services. In May 1993, the 

United States and the European Union had finalized a 

2-year bilateral agreement providing access to central 

government procurement in the field of heavy 

electrical power-generating equipment, intended to be 

subsumed under the new code. 91A separate bilateral 

agreement on procurement in telecommunications 

goods and services was expected to parallel the one on 

electrical equipment and to be reached in time for the 

April 15, 1994, signing of the Uruguay Round Final 

Act.92Once U.S.-EU bilateral agreements in these 

areas are in place, swift extension of these agreements 

to a number of code signatories is anticipated, notably 

to Norway, Sweden, Finland, Austria, and Switzerland, 

which are applying for EU membership or are 

associated with the EU in a European Economic Area 

(EEA). 93 

Extending coverage to procurement by subcentral 

entities and utilities has not been agreed between the 

United States and either Japan or Canada. Japan has 

refused to reduce its threshold for procurement of 

construction services (three times higher than the SDR 

5 million agreed among most other parties). Canada is 

reluctant to cover its Provincial hydroelectricgenerating utilities known as Crown Corporations. 

Civil Aircraft 

Negotiations concerning trade in civil aircraft 

remained unresolved at the December 15, 1993, 

conclusion of the Uruguay Round. Although not 

formally part of the Uruguay Round, they had been 

scheduled—like the Government Procurement Code 

negotiations—to conclude with the Round. 94The 

United States and the EU did agree in part—and were 

subsequently joined by all other GATT parties—to 

bring trade in civil aircraft under the new Agreement 

on Subsidies and Countervailing Measures negotiated 

in the Round. Bringing the subject of civil aircraft 

under the Subsidies Agreement will provide greater 

subsidy discipline and improve the likelihood of 

resolving disputes in this sector by bringing them 

within the integrated dispute-settlement mechanism. 

At the December conclusion of the Round, the 

United States and the EU agreed to continue 

negotiations for 1 year with the aim of clarifying the 

U.S.-EU agreement on aircraft in such a way as might 

provide a basis for extending such agreement to other 

code members of the 1979 GATT Agreement on Trade 

in Civil Aircraft. 95The conclusion in July 1992 of a 

U.S.-EU bilateral accord over the question of domestic 

subsidies and supports granted to Airbus Industrie had 

sparked hopes that this bilateral agreement could be 

"multilateralized" to other signatories of the 1979 

GATT Civil Aircraft Code. 96However, disagreement 

over how to account for "government supports" that 

are not direct subsidies but are, nonetheless, 

subsidization in some form (for example, loans to the 

Airbus consortium that are forgiven or never repaid) 

precluded a firm U.S.-EU agreement and its extension 

to other members of the GATT Aircraft Code. 

The U.S.-EU bilateral agreement will remain in 

force while the United States and the EU continue 

negotiations. The bilateral agreement will continue to 

provide special disciplines on direct subsidies for large 

civil aircraft of 100 seats or more while the two sides 

address further the question of indirect support. 97 

 Since the conclusion of the U.S.-EU negotiations on 

December 14, 1993, multilateral disciplines under the 

Uruguay Round subsidies agreement apply to civil 

aircraft with less than 100 seats. (For further discussion 

of the GATT Civil Aircraft Code, the U.S.-EU bilateral 

agreement, and the Uruguay Round aircraft 

discussions, see the GATT Activities section later in 

this chapter.) 

Bovine Meat Arrangement 

The Arrangement Regarding Bovine Meat was one 

of the original codes of conduct agreed during the 

Tokyo Round. It came into force January 1, 1980, and 

has been extended through the end of 1994. The 

Arrangement is part of the Uruguay Round plurilateral 

agreements that apply only to a limited membership. 

There are 27 signatories that together account for 

roughly 90 percent of world exports in fresh, chilled, 

and frozen beef and veal (excluding intra-EU trade) 

and for about 60 percent of world production and 

consumption. The Arrangement is carried out by the 

International Meat Council, which holds generally two 

regular meetings a year. It seeks to promote expansion 

and liberalization of trade in meat and livestock. 98 

Dairy Arrangement 

The International Dairy Arrangement came into 

force January 1, 1980, as one of the Tokyo Round 

codes of conduct. It has been extended through 

December 31, 1994. The Dairy Arrangement is part of 

the Uruguay Round plurilateral agreements that apply 

only to a limited membership. The Arrangement is 

carried out by the International Dairy Products Council 

and has 16 signatories. It oversees trade in certain milk 

powders and milk fats, including butter and certain 

cheeses. The Arrangement seeks to liberalize world 

trade in dairy products under stable market conditions 

30 
and to advance the economic and social importance of 

milk and other dairy products in many countries. 99 

 The United States is not a signatory to the existing 

Arrangement and does not intend to join the new 

Arrangement. 

World Trade Organization 

Introduction 

The original General Agreement on Tariffs and 

Trade (GATT 1947) was negotiated as the chapter on 

rules for commercial policy in a larger document, 

subsequently negotiated in Havana in 1948, which 

would have provided for the establishment of a 

governing body, the International Trade Organization 

(ITO). 1 o0 The ITO was to be a third pillar of the 

multilateral system set up following the Second World 

War, contemporary with the IMF and the World Bank 

Countries participating in the drafting of the ITO 

charter, including the United States, had already agreed 

to the General Agreement—a trade agreement granting 

tariff concessions multilaterally and also comprising a 

body of principles regarding commercial policy that 

were intended to govern international trade under the 

ITO—by the time it became evident that the United 

States Senate was unwilling to ratify the ITO treaty. 

The General Agreement thus became the standing body 

of multilateral rules governing world trade. 101 

Over time, the General Agreement and the 

multilateral trading system that was built up around it 

have taken on some of the functions originally 

intended for the ITO. The resulting system has proved 

flexible. Member governments meet together regularly 

to discuss and resolve trade differences, holding an 

annual session of all members to review developments 

of the previous year and agree on future directions as 

need be. The lack of a definitive institution to 

implement the GATT—other than the Geneva-based 

GATT, which essentially provides facilities and 

operational support—has meant that members have 

had wide latitude to handle trade policy as they see fit. 

However, this discretion to conduct and enforce 

GATT provisions on a self-discipline basis has at times 

led to disarray and deadlock. Dissatisfaction by many 

GATT members over "free riders" grew because some 

contracting parties belonged to certain GATT 

disciplines but not to others, or accepted certain GATT 

disciplines when in their interest but not as easily if 

against their interest. 102A fragmented approach to 

administering the various agreements reached under 

GATT auspices caused uncertainty, with trade 

disciplines often applied unevenly. Exemptions and 

loopholes took hold where the most intractable 

problems existed, agriculture being one of the most 

notable areas in this regard. Members often sought 

redress for trade disputes under whichever GATT 

instrument appeared to offer the best likelihood of a 

favorable solution (known as "forum shopping"). 

Consequently, a more consistent and integrated 

system of world trade rules, along with an institution 

capable of ensuring its coherent operation, has been a 

longstanding desire of many GATT contracting parties. 

Indeed, the U.S. negotiating objectives set forth in the 

Omnibus Trade and Competitiveness Act of 1988 

include enhancing the status of the GATT. 103One of 

the principal achievements of the Uruguay Round is 

the advance it makes toward creation of such a system. 

Functions of the WTO 

The agreements reached during the Uruguay 

Round will be carried out under the single institutional 

framework of the World Trade Organization (WTO), a 

new body to be established as a result of negotiations 

during the Round. 104The WTO will not be a United 

Nations' organization, as the original ITO was 

conceived to be. The WTO is expected to be an 

organization of stature equal to the IMF and World 

Bank, although maintaining roughly the GATT 

Secretariat's present size and character. 

The WTO's functions are (1) to facilitate the 

implementation, administration, operation, and the 

furtherance of the Agreement Establishing the WTO 

and the multilateral trade agreements attached thereto; 

(2) to provide the framework for operation of the 

plurilateral trade agreements; (3) to serve as a forum 

for negotiations; (4) to administer the Dispute 

Settlement Understanding (DSU) and the Trade Policy 

Review Mechanism (TPRM); and (5) to cooperate with 

the IMF and the World Bank. 

Structure of the WTO 

A Ministerial Conference, to be held every other 

year, will carry out the WTO's functions and take 

actions necessary to this effect. The Ministerial 

Conference is also empowered to make decisions on all 

matters under any of the multilateral trade agreements 

upon request. 

Between Conferences, the General Council will 

oversee WTO operation and implementation of the 

Uruguay Round agreements, with the following 

subsidiary bodies to assist it: the Council for Trade in 

Goods, the Council for Trade in Services, and the 

31 
Council for Trade-Related Aspects of Intellectual 

Property Rights (TRIPS). These three councils will 

report to the General Council and may establish 

separate rules of procedure and/or set up their own 

subsidiary bodies as needed, such as committees or 

working parties, subject to the approval of the General 

Council. The General Council will convene as the 

Dispute Settlement Body (DSB) or as the Trade Policy 

Review Body when carrying out the responsibilities of 

the DSU or the TPRM, respectively. The General 

Council will rely on groups and bodies mentioned in 

the agreements it administers (figure K). Article VI of 

the WTO Agreement provides for a WTO Secretariat, 

whose Director-General will be selected by the 

Ministerial Conference and whose staff is to be 

impartial and to operate in accordance with regulations 

issued by the Conference. 

Operational Domain of the 

WTO 

As noted above, the WTO is to oversee and carry 

out the Uruguay Round agreements found in the 

annexes listed in the Agreement Establishing the World 

Trade Organization. The multilateral agreements under 

the WTO are to be considered a single body of work 

and, as such, are binding in their entirety on all WTO 

members. The WTO thus should be in a position to 

provide an even, consistent, integrated application of 

these rules. The WTO will also administer the 

plurilateral agreements, which are to be binding only 

on those members that have joined them. 

The original GATT will continue to be a legally 

distinct agreement from the GATT 1994. The terms 

"GATT 1947" and "GATT 1994" are used in WTO 

nomenclature to distinguish between the two legally 

separate sets of rules and obligations. The GATT 1994 

will incorporate (a) the text of the 1947 GATT, as 

amended; (b) various GATT legal instruments, such as 

tariff protocols, accessions, waivers, and decisions; (c) 

understandings negotiated during the Uruguay Round 

on how certain GATT articles are to be applied under 

the WTO; 1 °5(d) certain changes in terminology to 

adjust for the institutional structure of the WTO; and 

(e) an exception to part II of the GATT for specific 

legislation predating the GATT 1947. 106 

The GATT 1994 will be a "definitive" agreement, 

different from the "provisional" GATT 1947, so-called 

because it operates under the Provisional Protocol of 

Application (PPA). The PPA provided for the 

application of GATT 1947, "provisional" to the 

understanding that legislation predating the 1947 

GATT rules could supersede applicable GATT rules. 

This exception for pre-1947 legislation ("grandfather" 

clause) is relinquished when brought under the 

"definitive" GATT 1994, with the sole item remaining 

"grandfathered" under the WTO to be legislation 

relating to the United States Merchant Marine Act of 

1920, commonly referred to as the "Jones Act." 

Resolving Conflicts and Overlap 

Procedures have been drawn up to resolve possible 

conflicts or overlap, as stated below, between the 

Agreement Establishing the WTO and the agreements 

on trade in goods in annex 1A that it oversees, or 

between any of these agreements: 

• if WTO general provisions conflict with 

general provisions of an individual 

agreement (e.g. SPS, TRIMS), the WTO 

prevails; 

• if any general provision in a goods 

agreement in annex 1 A conflicts with more 

specific provisions of another goods 

agreement (e.g. agriculture), the more 

specific provision prevails; 

• if general provisions under the Dispute 

Settlement Understanding conflict with the 

more specific provisions under appendix 2 

of the DSU, the more specific provisions 

prevail. 

Decisionmaking in the WTO 

Article IX of the Agreement Establishing the WTO 

requires the WTO to continue the informal practice 

that has applied within the GATT of reaching decisions 

"by consensus." 107As with GATT 1947, voting 

provisions exist for situations in which consensus 

cannot be achieved. The U.S. Administration expects 

that such procedures will virtually never be used, given 

the GATT's long-standing tradition of 

consensus-building aimed at resolving the disputes at 

hand rather than of political coalition-building aimed at 

garnering sufficient votes. 108Each WTO member will 

have one vote, with the European Union being 

accorded as many votes as it has members that are also 

WTO members. 

Failing consensus, voting majorities in the WTO 

can have an effect, such as in adopting a definitive 

interpretation of provisions in an agreement on trade in 

goods or granting a waiver (for which a three-quarters 

majority is needed) or an amendment to the agreements 

carried out by the WTO (for which a two-thirds 

majority is necessary). In the latter case, a signatory's 

sovereign power is still maintained in its right of 

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33 
"nonacceptance" of an amendment that it finds violates 

a national interest. However, the agreement does 

provide a procedure whereby a three-fourths majority 

may decide that an amendment which, of such a nature 

that members who choose not to accept it may only 

retain WTO membership with the consent of the 

Ministerial Conference. This provision is virtually 

identical to that found in the article XXX 

(Amendments) of the GATT 1947, which has never 

been invoked. Certain provisions of the multilateral 

trade agreements may not be amended unless all WTO 

members agree, notably those establishing the core 

tenet of most-favored-nation treatment. 1 °9 

Entry Into Force 

The target date for the WTO's entry into force is 

currently January 1, 1995.111 However, this date is 

contingent on acceptance of the WTO Agreement by 

the legislative bodies or by other competent authorities 

of member state governments. The final date for entry 

into force will be established at a conference at which 

officials will examine the status of signatory 

ratification to determine when a critical mass should 

exist. 

Dispute Settlement 

WTO Membership and 

Accession 

Existing contracting parties to GATT 1947 are 

automatically eligible to become members of the 

WTO, provided they have accepted the Agreement 

Establishing the WTO and the multilateral trade 

agreements attached to it and have submitted schedules 

of concessions and commitments for the GATT 1994 

and the GATS. Accession to the WTO must be 

completed within 2 years of the date from which it 

opens for signature. 

If not already a signatory, however, an applicant 

must first accede to the GATT 1947, accept all 

Uruguay Round agreements, and submit schedules of 

concessions for trade in agricultural goods, in 

industrial goods, and in services. The terms of 

accession to the WTO are to be negotiated between the 

applicant government and the WTO General Council, 

which may approve an accession by a two-thirds vote. 

When a country not previously a signatory to the 

GATT 1947 accedes to the WTO, existing members are 

entitled to invoke a "global nonapplication" provision 

under the Uruguay Round agreements, whereby the 

existing member may choose not to apply the 

provisions overseen by the WTO in their entirety to the 

new member. 11 ° Such global "nonapplication" 

reservations may result from dissatisfaction with the 

balance of concessions obtained in bilateral 

negotiations that are part of the accession protocol or 

for other reasons. However, "sectoral nonapplication," 

whereby a member would not apply one or two of the 

three multilateral trade agreements—goods, services, 

and intellectual property—is not permitted. 

Introduction 

A significant reason for the creation of the new 

rules under the WTO was the need to improve and 

simplify the many dispute-settlement procedures that 

have arisen under the GATT over time. Contracting 

parties to the GATT have often expressed concern at 

the slow pace of dispute settlement when contentious 

issues are brought forward for resolution. The 

perceived flaws of the present system are exemplified 

by the ability of a single party to block the 

establishment of a panel and even the adoption of a 

panel report when considered in its national interest, a 

temptation resorted to not infrequently by key major 

trading countries. Each step of the process, from the 

naming of panelists, to agreement on the panel's terms 

of reference, to adoption of reports, has been subject to 

blocking maneuvers. 

The dispute settlement understanding adopts a far 

more automatic system by which to settle trade 

disputes between members, 112one that has been 

partially in effect under the expedited procedures 

adopted at the Montreal Mid-Term Review in April 

1989. 113Strict time limits apply to each stage of the 

process, and the dynamic for final resolution is 

reversed: panel reports are automatically adopted 

unless there is a consensus not to do so or the matter is 

appealed. In addition to more automatic procedures, 

previously disparate dispute-settlement rules are 

integrated into a standardized dispute-settlement 

process operating under a single Dispute Settlement 

Body, permitting more consistent rulings. The creation 

of a new appellate body to review rulings by the DSB 

should further reinforce this consistency. Finally, an 

integrated mechanism carries with it greater incentives 

for compliance by opening the possibility for 

cross-sectoral retaliation to enforce member rights. The 

operation of the new DSU rules will be reviewed 

within 4 years of the WTO's coming into effect. 

34 
Dispute Panels 

The agreement envisions creation of a Dispute 

Settlement Body to hear disputes concerning any of the 

agreements in the annexes (except annex 3) to the 

Final Act. The DSB will also administer the disputesettlement provisions of the plurilateral agreements, 

subject to a decision by the parties to those agreements 

setting out the terms for the application of the D SU to 

the individual agreement. In these cases, only the 

pertinent signatories may participate under the relevant 

rules. 

Dispute settlement will begin with formal 

consultations, which must be held within 30 days of a 

request. Members (other than the disputants) who 

consider they have a substantial trade interest in a 

dispute may request inclusion in these consultations. 

The complaining party has an automatic right to a 

panel if 60 days elapse after its request for consultation 

with no resolution achieved. 114Unless the DSB 

decides not to do so, a panel must be established at the 

meeting in which requested or at the following meeting 

of the DSB at the latest. 115Standard terms of 

reference for and composition of the panel, as 

determined by the Director-General, will be designated 

after 20 days unless the parties can decide on special 

terms or panelists. 116The panel report will be 

completed within 6 months 117and will be considered 

by the DSB and disputants for 20 days before its 

release to other members. The panel report will be 

adopted within 60 days of its release to all members 

unless one of the disputants notifies the DSB of its 

intention to appeal or unless the DSB agrees by 

consensus not to adopt the appellate report. 

The agreement makes the dispute process 

somewhat more open and transparent than it was 

previously. It requires disputants to provide 

nonconfidential summaries of their panel submissions 

for public purposes. Parties may also make public at 

any time their own submissions. The agreement 

expressly encourages expert review groups to be 

formed to advise on cases where scientific or other 

technical information bears critically on a case, such as 

when environmental regulations are at stake. 118Since 

the WTO will continue to be a governmentto-government forum, however, direct participation of 

nongovernmental interests is not envisioned in the 

Final Act. 

Appeal, Adoption, Retaliation 

The addition of an appellate body is intended to 

enhance the integrated nature of the GATT/WTO 

dispute-settlement system, providing a means by which 

to ensure the consistency of interpretations deriving 

from panel findings. Consistent interpretation, in turn, 

is expected by analysts to allow creation of a body of 

definitive rulings that may be applied across-the-board 

if the Ministerial Council so decides. 119 

The appellate body will have seven members, three 

of whom will hear any one case. Upon referral of a 

report to it, the appellate body will consider only (1) 

issues of law covered in the panel report, and (2) legal 

interpretations developed from the panel report. A 

report on the appeal will be issued within 60 days from 

the date of notification to appeal. The appellate body 

report will be adopted by the DSB and accepted 

unconditionally by the parties within 30 days after it is 

issued to members-at-large. 

After the panel process (including appeal) is 

complete, the party concerned will be asked to bring its 

offending policies into conformity with its obligations 

under the relevant agreement within "a reasonable 

period of time." This period is to be determined by the 

disputants and the DSB within 45 days of report 

adoption or, if need be, within 90 days of adoption 

through arbitration. Failing implementation of the 

panel report or the provision of mutually agreed 

compensation within 30 days following the date agreed 

upon for implementation, the DSB will automatically 

grant authority to the "winning party" to suspend 

concessions or other obligations. The entire disputesettlement process, even with recourse to appeal, 

should thus be completed within 18 months (figure 

L). 120 

The amount and type of retaliation proposed is 

subject to certain conditions and will be examined by 

the DSB before being authorized. It may also be taken 

to arbitration. Suspension of concessions are to be in 

the same sector and agreement as under consideration 

by the panel unless impractical or ineffective. In such a 

case, retaliation can be authorized for different sectors 

under the same agreement. If the latter is also 

impractical or ineffective, suspension of concessions 

under another agreement may be authorized if 

circumstances are serious enough to warrant it. 121 

Nonviolation Complaints 

A new "nonviolation" provision devises special 

rules for disputes where one member considers benefits 

negotiated with another member under the GATT are 

being "nullified or impaired" without any overt 

violation of the agreement. 122Essentially, these rules 

provide that when "nullification and impairment" of an 

35 
Figure L 

Summary of Dispute Settlement Stages 

Timeline 

Day Period Action 

Consultations requested. 

Consultations held. 

Panel established if no resolution (or at next DSB meeting). 

Terms of reference, panelists decided. 

Panel consideration. 

Disputants consider panel report. 

Members consider panel report — PANEL REPORT ADOPTED or appeal. 

Appeal. 

APPEAL REPORT ADOPTED UNCONDITIONALLY. 

Implementation period fixed. 

DSB authorizes retaliation. 

12-1/2 months to panel report 

15-1/2 months appealed 

18 months to retaliation 

Dispute Panel 

1 

30 30 

90 60 

110 20 

290 180 

310 20 

370 60 

Appeal 

430 60 

460 30 

Implementation 

505 45 

535 30 

Time elapsed 

Source: Compiled by USITC staff from the Final Act. 

agreement is found without violation thereof, the 

member concerned is not obliged to withdraw the 

measure but will be encouraged to reach a mutually 

satisfactory accommodation. Although arbitration will 

continue to be available, determinations as to the level 

of benefits nullified or impaired and suggestions as to 

means of resolving the dispute will not be binding 

upon the parties. 123 

Other Provisions 

The DSU states that members seeking redress for 

disputes involving either violation of an agreement or 

"nonviolation" situations "shall abide by" (that is, are 

required to use) the rules and procedures of the DSU. 

The DSU further states that members "shall not make a 

determination that violations have occurred, that 

benefits have been nullified or impaired, or that 

attainment of any objective of the covered agreements 

has been impeded" or suspend concessions unilaterally 

except through recourse to and in accordance with the 

rules and procedures of the dispute-settlement 

understanding agreed under WTO rules. In addition, 

members "must make any such determination 

consistent with the findings contained in the panel or 

appellate body report adopted by the DSB or an 

arbitration award rendered under this 

understanding. 99124 

The EU, Japan, and others have often seen section 

301 of the 1974 Trade Act, and its variations of 

"Super" and "Special" 301, as the unilateral imposition 

of U.S. law outside of U.S. jurisdiction, contrary to 

agreed multilateral procedures on dispute settlement. 

However, the United States does not interpret this 

WTO provision as invalidating or otherwise 

constraining U.S. trade law or limiting its options in 

the absence of applicable multilateral rules. As with 

other language in the Final Act that seems to be 

directed at U.S. trade law, the United States 

administration does not find its law to be inconsistent 

with such provisions because U.S. law currently 

requires recourse to GATT dispute settlement in cases 

involving a trade agreement, prior to taking other 

action. It further points out that section 301 is a useful 

vehicle by which private interests can seek 

governmental resolution of trade problems being 

experienced overseas. The existence of such a process 

and the establishment of priorities for negotiations it 

implies is not, the Administration says, a prima facie 

violation of U.S. international obligations.125 

36 
Marrakesh Ministerial 

Conference 

At the concluding session in December, 

participants agreed to hold a special ministerial session 

to sign the Uruguay Round agreements in Marrakesh, 

Morocco, on April 12 to 15, 1994. 126At the 

ministerial, a total of 111 countries signed the Final 

Act committing signatory governments to submit the 

Agreement Establishing the World Trade Organization 

and Annexes to their competent authorities for 

approval; 104 participants also signed the Agreement 

Establishing the World Trade Organization, all but 33 

of them subject to ratification, which must be 

completed within 2 years. The United States was 

among the countries that did not sign the Agreement 

Establishing the World Trade Organization pending 

legislative approval. 127 

A Preparatory Committee was established at the 

meeting to lay the groundwork for the entry into force 

of the WTO. Among the topics it will consider are the 

following: (1) how to conduct future work on the 

issues of trade and the environment, and of trade in 

services, (2) WTO financial and administrative 

arrangements, and (3) WTO rules of procedure. The 

Preparatory Committee is also empowered "to discuss 

suggestions for the inclusion of additional items on the 

agenda of the WTO's work programme." 128 

The latter represented a compromise reached after 

the United States and several other developed country 

members advocated formal inclusion of the issue of 

internationally recognized labor rights or "worker 

rights" in the ministerial declaration. The U.S. 

Congress has specifically directed U.S. negotiators to 

seek to address worker rights and fair labor standards 

under GATT auspices in both the Tokyo and the 

Uruguay Rounds, 129and the issue was addressed as 

well in the Havana Charter of 1948 that would have 

created an ITO. However, the GATT Director-General 

dissuaded the United States from insisting on such 

language in the declaration because many developing 

countries had expressed deep concern about its 

potential for protectionist abuse. 

As a result, only an oblique reference in the 

Marrakesh Declaration was possible. 13° In the 

Declaration ministers also agreed, among other things, 

"with immediate effect, and until the date of entry into 

force of the WTO, not to take any trade measures that 

would undermine or adversely affect the results of the 

Uruguay Round negotiations or their 

implementation." 131 

Finally, ministers considered and approved three 

decisions. Specifically, Ministers adopted the Decision 

on Trade and the Environment that establishes a 

standing Committee on Trade and Environment under 

the WTO. The Committee is scheduled to report to 

ministers within 2 years of the entry into force of the 

WTO (by January 1997). At the time, the Committee is 

to make recommendations on its future workplan and 

ministers are to review its recommendations and its 

terms of reference. 132 

There are 21 countries in various stages of 

accession to the GATT. 133The majority of the 

countries are not considered likely to become GATT 

members until after the WTO comes into effect. 

According to USTR officials, the decision adopted by 

ministers on acceptance and accession of the 

Agreement Establishing the World Trade Organization 

essentially highlights the fact that so-called "original" 

membership in the WTO, starting January 1, 1995, will 

offer no more practical benefits than membership at a 

later date. 

The Decision on Organizational and Financial 

Consequences flowing from the Implementation of the 

Agreement Establishing the World Trade Organization 

states that the Preparatory Committee shall consider 

the resource requirements and staff conditions of 

service for the WTO and prepare recommendations in 

this regard. The GATT Secretariat apparently believes 

it will be necessary to bolster its present staff resources 

in certain areas and to attain parity in compensation for 

WTO Secretariat staff with staff of the IMF and the 

World Bank 

Regular GATT Activities 

in 1993 

GATT Council 

The GATT Council carried out its standard review 

of activities during 1993, despite its primary focus on 

concluding the Uruguay Round. 134The GATT 

Council met eight times in 1993. Due to the pressing 

demands of the round, the annual report of the GATT 

Council of Representatives to the Contracting Parties 

was made at the session held on January 25 to 27, 

1994. At this 49th Session, the Council reported in 

large measure on: 

• a number of trade restrictions, involving 

primarily the EU and the United States, as 

well as the operation of the Trade Policy 

Review Mechanism; 

37 
• dispute-settlement matters, involving 

again primarily the EU and the United 

States as well as Canada, Japan, Korea, and 

Venezuela; 

• a review of a number of regional trade 

agreements, primarily involving the EU or 

EFTA as one partner with another 

partner(s) from Central or Eastern Europe 

or members of the former Soviet Union; 

• waivers, primarily related to renegotiation 

of tariff schedules as part of accepting the 

Harmonized System; 

• accession of new members, observer 

status, or status as a contracting party; and 

• administrative matters, such as budget, 

personnel, and procedural issues. 

A brief summary of action taken in each of these 

areas is provided below. 

Trade Policy Review Mechanism 

The TPRM reviewed the trade policies of nine 

members during 1993: Bolivia, the EU, India, Kenya, 

Malaysia, Mexico, Philippines, Poland, and South 

Africa. This compared with 13 reviews conducted in 

1992, and 8 in 1991. The reviews of Israel, Peru, 

Senegal, Turkey, and the United States were postponed 

to 1994 because of the effort needed to complete the 

Uruguay Round. 

Dispute Settlement 

Three dispute panels were established during 1993, 

and the GATT Council continued to monitor the 

implementation of panel reports from previous years. 

Panel on EU Banana Import 

Regime 

Five Latin American banana-producing countries 

(Colombia, Costa Rica, Guatemala, Nicaragua, and 

Venezuela) pursued two panel requests against the 

European Union in 1993 regarding its import 

restrictions on bananas. These producer countries had 

sought the good offices of the GATT Director-General 

beginning in September 1992 to help resolve the issue 

of quantitative import restrictions on bananas 

maintained by a number of EU member states. 

Unsuccessful in this approach, a panel was formed in 

February 1993 and issued a report under expedited 

procedures in June 1993, concluding that the 

restrictions as well as the tariff preference accorded to 

ACP countries for bananas were inconsistent with the 

GATT's nondiscrimination principle and prohibition on 

the use of quantitative restraints. 135 

In June 1993, another panel was formed to 

examine the EU-wide banana import regime that was 

scheduled to go into effect July 1, 1993. In March 

1994, the EU reached an accord with four of these 

producer countries 136that increased the import quota 

allocated to these Central American countries in return 

for their agreement to withdraw their GATT complaint 

and not challenge the import regime in GATT for the 

duration of the agreement (December 31, 2002). 

However, controversy continues, both within the EU 

and among Latin American producers, over the 

compromise. 

Panel on U.S. Automobile Taxes 

In May 1993, a panel was formed at the request of 

the EU to examine the GATT consistency of U.S. 

legislation on taxes levied on automobiles. Three 

separate automobile taxes were considered: (1) the 

corporate average fuel efficiency (CAFE) payment, (2) 

payments related to energy efficiency requirements 

(the so-called "gas guzzler" tax), and (3) a luxury tax 

on cars. The EU asserted that a high proportion of 

these taxes falls on imported cars, violating GATT 

article III on national treatment. 137 

Panel on U.S. Tobacco Measures 

In August 1993, the United States enacted a 

measure that imposed a 75 percent domestic content 

requirement on the U.S. manufacture of cigarettes as 

well as additional fees on imported tobacco. 138 

 Following requests in 1993, a panel was formed in 

January 1994 at the request of Brazil, Chile, Colombia, 

El Salvador, Guatemala, Thailand, and Zimbabwe to 

examine the U.S. measures. 139 

Monitoring of Previous Disputes 

On August 5, 1993, the United States and Canada 

announced that they signed a memorandum of 

understanding (MOU) that terminated the retaliatory 

duties on beer imports from one another. 14° The 

understanding resolved two GATT panel reports, one 

on U.S. measures on sale and distribution of alcoholic 

and malt beverages, and the other on import, 

distribution, and sale of alcoholic drinks by provincial 

marketing agencies in Canada. Both panels had been 

established in 1991. 

38 
GATT Committees 

Committee on Trade and 

Development 

During 1993, the committee considered the impact 

of the Uruguay Round on developing countries, as well 

as the possibility of extending the Generalized System 

of Preferences (GSP) to the Central and East European 

countries through the GATT "Enabling Clause" that 

permits contracting parties to give preferential import 

treatment to developing countries despite the MFN 

obligations under the GATT. 

The committee also debated the trade and 

environment issue—in conjunction with the GATT 

Group on Environmental Measures and International 

Trade—particularly the GATT contribution to the 

followup to the United Nations Conference on 

Environment and Development (UNCED) or "Earth 

Summit," held in 1992. Being the principal GATT 

body involved with the trade interests of developing 

countries, it was agreed through informal debate in the 

committee that the general outline of the GATT 

contribution to UNCED would focus on specified 

aspects of the links among sustainable development, 

environment, and trade. 141 

Group on Environmental Measures 

and International Trade 

During 1993, the Group on Environmental 

Measures and International Trade continued its 3-track 

"rules-based" agenda, begun with its activation in 

October 1991. The three elements of its work program 

cover (1) trade provisions of multilateral 

environmental agreements, (2) transparency of trade 

and environment measures, and (3) environmental 

packaging and labeling requirements. 142 

Trade provisions of multilateral 

environmental agreements 

The group's discussions have focused primarily on 

extraterritoriality: the use of trade measures to help 

protect environmental resources beyond a member's 

borders as well as their use applied separately to 

nonmembers of a multilateral environmental agreement 

(MEA). One approach to integrating trade and 

environment measures might be to accept the trade 

provisions found in MEAs as they exist, justifying 

them under GATT article XX provisions, which grant 

wide latitude for members to use trade measures to 

protect human, animal, or plant safety and health. 

Another approach under consideration by the group 

would define conditions for when trade measures used 

under an MEA would be accommodated under GAM'. 

This approach would require well-defined criteria, 

including a definition of what constitutes an MEA as 

well as guidelines on specificity for trade measures 

taken under an MEA. In turn, these criteria raise issues 

of what circumstances would make use of trade 

measures a "necessity" to achieve environmental 

policy and what dispute-settlement process might be 

used should conflicts between an MTA and another 

GATT arise. 

Transparency of Policy Measures 

The group agreed on several important points, such 

as the importance of transparency of trade and 

environment measures in order to build trade 

confidence and minimize distortions. There also 

appears to be a consensus that transparency 

requirements for environmental measures should be no 

more stringent than for other policy areas that might 

affect trade. The creation of national enquiry points, as 

required under the Standards Code, appears to be a 

possible solution to providing ongoing transparency. 

Another is providing notification of a national 

environmental rule beforehand with the opportunity to 

comment, as opposed to following its implementation. 

Environmental packaging and 

labelling requirements 

The technical nature of this subject elicited 

valuable information from members in 1993, 

particularly the problems caused by eco-labeling 

systems based on life-cycle analysis for exporting 

developing countries. The group concluded that it will 

need to study further a number of broader questions 

pertaining to regulatory vs. market-based approaches to 

packaging and labeling requirements, mandatory vs. 

voluntary measures, the scope for harmonization and 

mutual recognition of different country schemes, 

different approaches to setting criteria (such as 

processes and production methods — PPMs), and 

certification schemes for eco-labeling. 

Committee On Tariff Concessions 

The committee oversees renegotiations under 

GATT article XXVIII of member tariff schedules that 

incorporate concessions. The committee is presently 

involved with balancing concessions that resulted from 

members converting to the Harmonized System (HS) 

of tariff nomenclature that went into effect January 1, 

1988. By the end of 1993, 98 out of 115 GATT 

39 
members had adopted the HS, but only 21 members 

had filed HS tariff schedules, with a number of these 

done incorrectly. In 1993, the United States finished its 

article XXVIII negotiations with Egypt, India, and 

Tunisia. 143 

Committee On Budget 

The committee met to finalize the 1993 budget and 

present estimates for the 1994 budget. The United 

States provides approximately 15 percent, or US$11 

million, of the annual GATT budget. 144 

Committee on Balance-of-payments 

In 1993, the committee held balance-of-payments 

examinations with Israel, Nigeria, Philippines, Poland, 

South Africa, and Turkey. 

Regional Trade Arrangements 

(Art. XXIV) 

Article XXIV requires notification and review of 

any departures from the GATT principle of 

most-favored-nation (MFN) treatment due to formation 

of regional trade arrangements. In 1993, working 

parties concluded their review of agreements between 

the European Free Trade Area (EFTA) and Turkey, and 

between the Baltic states (Estonia, Latvia, and 

Lithuania) and Norway, Sweden, and Finland. A 

review of the EU's Lome Convention IV with 69 

African, Caribbean, and Pacific (ACP) states was 

completed without any firm conclusion as to its 

conformity with GATT trade rules. 

Working parties set up in 1993 on regional trade 

agreements included those between EFTA and 

Bulgaria, Israel, and Romania; between Switzerland 

and the Baltic states; and between the recently 

separated Czech and Slovak Republics. At the 1993 

annual meeting in January 1994, working parties were 

also formed to examine the North American 

Free-Trade Area (NAFTA) as well as the Southern 

Cone Common Market, known as MERCOSUR. 145 

 MERCOSUR is to be examined both by an article 

XXIV working party and, using less stringent criteria, 

by the GATT Committee on Trade and Development, 

which is charged with representing the interests of 

developing country members of GATT. 

Accessions and Observers 

Ten new members joined the GATT during 1993, 

with most acceding under article XXVI:5(c) which 

permits a country with full autonomy over the conduct 

of its external commercial relations and that was 

formerly a territory of another GATT contracting party 

to become a contracting party upon notification to the 

GATT. Mali, Swaziland, Saint Lucia, Dominica, Saint 

Vincent, Fiji, Brunei, and Bahrain all acceded to the 

GATT in 1993 under article XXVI terms, sponsored 

primarily as former colonies or protectorates of the 

United Kingdom or France. In addition, the separate 

states of the Czech Republic and the Slovak Republic 

acceded under the standard article XXXIII accession 

terms, based on bilateral tariff negotiations. (See table 

1-1 for a list of the Contracting Parties to the GATT in 

1993.) 

In 1993, ten working parties were formed to 

examine applications to become GATT members: 

Albania, Armenia, Belarus, Croatia, Jordan, Latvia, 

Moldova, Russia, Saudi Arabia, and Ukraine. These 

were in addition to working parties set up in 1992 to 

examine applications by Chinese Taipei, 146Ecuador, 

and Slovenia, and those set up in 1991 to examine 

applications by Bulgaria, Honduras, and Mongolia. A 

number of working parties begun in 1991 and 1992 are 

expected to complete their work in 1994. 

Discussions in the Working Party on the Status as a 

Contracting Party of China continued in 1993, but a 

"focused discussion" on aspects of China's economic 

policies left many of the questions posed unresolved 

(see ch. 4 for a further discussion). In 1993, observer 

status was extended to Azerbaijan, Croatia, 

Kyrgyzstan, and Macedonia, bringing observer status 

for members of the former Soviet Union to 9 out of 12: 

Armenia, Azerbaijan, Belarus, Estonia, Kyrgyzstan, 

Latvia, Lithuania, Moldova, and Ukraine. Georgia, 

Tajikistan, and Uzbekistan had no GATT affiliation by 

the end of 1993. Three out of five Yugoslav states 

became observers: Croatia, Macedonia, and Slovenia. 

In June 1993, the GATT Council confirmed its initial 

June 1992 decision that the Federal Republic of 

Yugoslavia (Serbia/Montenegro) was not the legal 

successor to the GATT seat held formerly by the 

Socialist Federal Republic of Yugoslavia. Neither 

Bosnia nor Serbia/Montenegro have current GATT 

affiliation. 

Tokyo Round Codes 

The conclusion of the Uruguay Round in 1993 and 

the future entry into force of the World Trade 

Organization will alter the operation of the Tokyo 

40 
Table 1-1 

Contracting Parties to the GATT: Status as of December 31, 1993 

Contracting Parties to the GATT (114) 

Antigua and Barbuda Fijil Mexico Togo 

Argentina France Morocco Trinidad and 

Australia Gabon Mozambique Tobago 

Austria Gambia Myanmar Tunisia 

Bahraini Germany Namibia Turkey 

Bangladesh Ghana Netherlands Uganda 

Barbados Greece New Zealand United Kingdom 

Belgium Guatemala Nicaragua United States 

Belize Guyana Niger of America 

Benin Haiti Nigeria Uruguay 

Bolivia Hong Kong Norway Venezuela 

Botswana Hungary Pakistan Yugoslavia2 

Brazil celand Peru Zaire 

Brunei Darussalam 1 ndia Philippines Zambia 

Burkina Faso 

Burundi 

Cameroon 

Canada 

ndonesia Poland 

reland Portugal 

srael Romania 

taly Rwanda 

Zimbabwe 

Central African Republic Jamaica Saint Lucia ) 

Chad Japan Saint Vincent 

Chile Kenya and the Grenadines ) 

Colombia Korea, Republic of Senegal 

Congo Kuwait Sierra Leone 

Costa Rica Lesotho Singapore 

Cote d'Ivoire Luxembourg Slovakia) 

Cuba Macau South Africa 

Cyprus Madagascar Spain 

Czech Republics Malawi Sri Lanka 

Denmark Malaysia Suriname 

Dominica) Maldives Swaziland ) 

Dominican Republic Mali 1 Sweden 

Egypt Malta Switzerland 

El Salvador Mauritania Tanzania 

Finland Mauritius Thailand 

Countries to whose territories the GATT has been applied and that now, as independent states, 

maintain a de facto application of the GATT pending final decisions as to their future commercial 

policy (19) 

Algeria Papua New Guinea Tonga 

Angola Qatar Tuvalu 

Bahamas Saint Christopher United Arab Emirates 

Cambodia and Nevis Yemen 

Cape Verde Kiribati 

Equatorial Guinea Sao Tome and Principe 

Grenada Seychelles 

Guinea-Bissau Solomon Islands 

1New member in 1993. 

2The GATT Council confirmed in 1993 its decision that the Federated Republic of Yugoslavia (Serbia and 

Montenegro) was not the successor to the signatory of the Socialist Federated Republic of Yugoslavia. The individual 

successor states are in the process of applying to the GATT separately. 

Source: GATT, "Mali is 105th GATT member," Focus, newsletter, No. 96, Jan.-Feb. 1993, p.8; GATT, Swaziland 

Becomes a Contracting Party to GATT, press release, GATT/1566, Feb. 12, 1993; GATT, Saint Lucia Becomes a 

Contracting Party to GATT, press release, GATT/1572, Apr. 14, 1993; GATT, Czech Republic and Slovak Republic 

Accede to the GATT, press release, GATT/1573, Apr. 16, 1993; GATT, GATT Membership Rises to 110 with the 

Accession of Dominica, press release, GATT/1574, Apr. 22, 1993; GATT, St. Vincent and the Grenadines Becomes a 

Contracting Party to GATT, press release, GATT/1578, May 18, 1993; GATT, Fiji Becomes a Contracting Party to 

GATT, press release, GATT/1600, Nov. 25, 1993; GATT, Brunei Darussalam and Bahrain Join GATT, press release, 

GATT/1602, Dec. 14, 1993. 

41 
Round codes of conduct, the latter of which had been a 

result of the Tokyo Round negotiations and entered 

into effect largely at the beginning of 1981. (See table 

1-2 for a list of the signatories to the Tokyo Round 

agreements in 1993.) Under the Uruguay Round 

package, the subjects covered by five of these codes 147 

 will be overtaken by the WTO and the limited 

membership of these codes will be expanded 

automatically to all WTO members. The operation of 

the four remaining codes 148will continue according to 

the rules set out by each code and applicable to each 

code's own membership, but will be overseen by the 

WTO under the plurilateral trade agreements in annex 

4 of the WTO agreement. 

Committee on Antidumping 

Practices 

In April 1993, the committee adopted a panel 

report on Korean antidumping duties on imports of 

polyacetal resins from the United States and Japan. The 

panel found that the Korean injury determination was 

not consistent with the GATT Antidumping Code. 149 

The committee was also presented with a panel 

report on U.S. antidumping duties on imports of fresh 

and chilled Atlantic salmon from Norway. The panel 

found that the United States had acted inconsistently 

with sections of the code regarding "like product" 150 

151comparisons. The United States and "fair price"

agreed to adopt the report. 152 

Committee on Customs Valuation 

During 1993, the committee reviewed the 

implementation and administration of the agreement by 

Argentina, Mexico, and Romania. The committee also 

welcomed new members of Bolivia, the Czech 

Republic, Morocco, and the Slovak Republic. There 

are now 45 signatories to the Customs Valuation 

Code, 155as well as 24 observers, four of which are not 

GATT contracting parties. 156 

Committee on Import Licensing 

During 1993, the committee reviewed notifications 

made to it concerning requirements under the 

Agreement on Import Licensing Procedures. At the end 

of 1993, there were 29 signatories to the agreement. 

Committee on Technical Barriers to 

Trade 

The committee conducted its 14th annual review of 

the Agreement on Technical Barriers to Trade (TBT), 

also known as the Standards Code and discussed the 

expansion of the code under the WTO. 

In 1993, the committee welcomed the Czech 

Republic, Indonesia, Malaysia, Morocco, the Slovak 

Republic, and Thailand as new members, 157although 

the agreement will become binding under the WTO on 

all members. New observers to the agreement in 1993 

included Chinese Taipei and Saudi Arabia, making a 

total of 46 signatories, 24 countries and 7 international 

organizations. 158 

Committee on Subsidies And 

Countervailing Measures 

In April 1993, the committee heard a panel report 

on U.S. countervailing duties (CVD) on imports of 

fresh and chilled Atlantic salmon from Norway. The 

panel concluded that the U.S. action was not 

inconsistent with the GATT Code on Subsidies and 

Countervailing Duties (or Subsidies Code). 153 

The committee also heard a panel report on U.S. 

countervailing duties on imports of softwood lumber 

from Canada. The panel found that the U.S. interim 

duties were inconsistent with the code. However, it 

found that the U.S. self-initiation of a CVD 

investigation on October 31, 1991, was not a violation. 

The committee agreed to reconsider the report at a later 

date. 154In June, a panel was formed to examine U.S. 

countervailing duties on imports of certain hot-rolled 

carbon steel products from the EU. 

Committee on Government 

Procurement 

In 1993, the committee began to consider Aruba's 

application for membership, and extended the 

application of the 1979 GATT Agreement on 

Government Procurement (also known as the 

Government Procurement Code) to Portugal as a new 

member. It also considered the panel report on U.S. 

procurement of a sonar mapping system, issued in 

1992. 159The committee also focused on concluding 

negotiations on a revision of the Government 

Procurement Code. 

Arrangement Regarding Bovine 

Meat 

The International Meat Council came into 

operation January 1, 1980, and has been extended 

through December 31, 1994. It comprises 

42 
Table 1-2 

Signatories to the Tokyo Round agreements: Status as of Dec. 31, 1993 

[Accepted (A); accepted, subject to ratification (S); provisional acceptance 

(P); reservation, condition, declaration, or any combination 0] 

Gov't Dairy Customs Import Civil AntiStan- procure- Subsi- Bovine prod- valu- licen- air- dumpdards ment dies meats ucts ation sing craft ing 

Contracting party: 

Antigua & Barbuda 

Argentina S S A A A* S 

Australia A A* A A A A A 

Austria A A A A A A A A 

Bahrain 

Bangladesh 

Barbados 

Belgium A A 

Belize P 

Benin 

Bolivia S S 

Botswana A 

Brazil A A A A* A 

Brunei Darussalam 

Burkina Faso 

Burundi 

Cameroon 

Canada A A A A A A A 

Central African Republic 

Chad 

Chile A A P A 

Colombia A* A S 

Congo 

Costa Rica 

Cote d'Ivoire 

Cuba 

Cyprus A 

Czech Republic A A A 

Denmark 

Dominica 

Dominican Republic 

EEC 1 A....A A A A A A A....A 

Egypt A A A A A A A 

El Salvador 

Finland A A A A A A A A 

Fiji 

France A A 

Gabon 

Gambia 

Germany 

Ghana 

Greece A 

Guatemala A* 

Guyana 

Haiti 

Hong Kong2 A A A A A A 

Hungary A* A A A A A 

Iceland 

India A A A* A A 

Indonesia A A* 

See footnotes at end of table. 

43 
Table 1-2—Continued 

Signatories to the Tokyo Round agreements: Status as of Dec. 31, 1993 

[Accepted (A); accepted, subject to ratification (S); provisional acceptance 

(P); reservation, condition, declaration, or any combination (*)] 

Gov't Dairy Customs Import Civil AntiStan- procure- Subsi- Bovine prod- valu- licen- air- dumpdards ment dies meats ucts ation sing craft ing 

Contracting party—Continued: 

Ireland A A 

Israel A A A* 

Italy A A 

Jamaica 

Japan A A A A A A A A A 

Kenya 

Korea A A A A 

Kuwait 

Lesotho A 

Luxembourg A A 

Macau 

Madagascar 

Malawi A* 

Malaysia A 

Maldives 

Mali 

Malta 

Mauritania 

Mauritius 

Mexico A A* A A 

Morocco A A 

Mozambique 

Myanmar 

Namibia 

Netherlands A A 

New Zealand A A A A A A A 

Nicaragua 

Niger 

Nigeria A A 

Norway A....A A A A A A A....A 

Pakistan A A A A 

Peru 

Philippines A A* A 

Poland S A A S A A 

Portugal A A 

Romania A A A A A A A 

Rwanda 

St Lucia 

St Vincent 

Senegal 

Sierra Leone 

Singapore A A A A 

Slovak Republic A A A A 

South Africa A A A A 

Spain A A A 

Sri Lanka 

Suriname 

Swaziland 

Sweden A A A A A A A A A 

Switzerland A A A A A A A A A 

See footnotes at end of table. 

44 
Table 1-2—Continued 

Signatories to the Tokyo Round agreements: Status as of Dec. 31, 1993 

[Accepted (A); accepted, subject to ratification (S); provisional acceptance 

(P); reservation, condition, declaration, or any combination (*)] 

Gov't Dairy Customs Import Civil AntiStan- procure- Subsi- Bovine prod- valu- licen-air-dumpdards ment dies meats ucts ation sing craft ing 

Contracting party—Continued: 

Tanzania 

Thailand A 

Togo 

Trinidad & Tobago 

Tunisia A A 

Turkey A A* 

Uganda 

United Kingdom A* 

United States A A A A A A A A 

Uruguay A A A 

Venezuela 

Yugoslavia3 a s a a a a 

Zaire 

Zambia 

Zimbabwe A* 

Noncontracting parties: 

Bulgaria A A 

China 

Ecuador 

Panama 

Paraguay 

Russia 

Total signatories 45 12 26 26 16 32 28 .... 22 ... 26 .... 

1The EEC is a signatory to all the agreements. Because the Standards Agreement and the Civil Aircraft 

Agreement cover matter that go beyond the authority of the EEC, each of the EEC member states is a signatory to 

these agreements. 

2Hong Kong, which had been applying several of the codes under the auspices of the United Kingdom, changed 

its status under the codes in 1986, and is now a signatory in its individual capacity. 

3The membership shown for the Socialist Federal Republic of Yugoslavia (SFRY) is excluded from the totals 

following GATT Council decision of June 1993 that the Federal Republic of Yugoslavia (FRY, Serbia and Montenegro) 

is not the successor state of the SFRY. 

Source: GATT, GATT Activities 1992, Geneva, June 1993, annex IV, pp. 173-175, GATT, Focus, No. 100, July 1993, 

p.5; and official GATT documents. 

27 signatories, representing 38 countries. 16° In 

November 1993, the signatories agreed to discuss 

revision of procedural rules and an update of the 

Arrangement once the Uruguay Round concluded. 

International Dairy Arrangement 

The International Dairy Arrangement came into 

operation January 1, 1980 and has been extended 

through December 31, 1994, with 16 signatories. 161In 

June 1993, the GATT Committee of the Protocol 

Regarding Milk Fat gave a derogation from the 

minimum export price for butter (US$1,350/ton) for 

supplies shipped to countries of the former Soviet 

Union for contracts concluded before December 31, 

1993, and delivered before March 31, 1994. 162 

Committee On Trade In Civil 

Aircraft 

The Agreement on Trade in Civil Aircraft, also 

known as the Civil Aircraft Code, remains in effect 

while the two dominant members, the United States 

and the EU, attempt to fashion a bilateral agreement 

that addresses their concerns over subsidies involved in 

the production of large civil aircraft. Once an 

acceptable bilateral agreement is reached, it is expected 

that the U.S.-EU bilateral agreement will provide the 

basis for a revision of the present Civil Aircraft Code 

45 
that would, in effect, "multilateralize" or extend it to 

other signatories. The effort to renegotiate the Civil 

Aircraft Code once the United States and the EU have 

settled a number of bilateral issues stems from a 

longstanding U.S.-EU dispute over subsidies involved 

in financing the Airbus Industrie consortium. The 

various milestones pertaining to the Airbus dispute are 

reviewed below. 

GAIT Civil Aircraft Code (1979) 

The GATT Agreement on Trade in Civil Aircraft 

was negotiated during the Tokyo Round as one of the 

separate "codes of conduct" and entered into effect on 

January 1, 1980. The Agreement established a GATT 

Committee on Trade in Civil Aircraft to oversee the 

code, which comprised 22 signatories as of November 

9, 1993: Austria, Canada, the EEC, Belgium, 

Denmark, France, Germany, Greece (subject to 

ratification), Ireland, Italy, Luxembourg, the 

Netherlands, Portugal, Spain, the United Kingdom, 

Egypt, Japan, Norway, Romania, Sweden, Switzerland, 

and the United States. 

Signatories to the Agreement agreed to eliminate 

import duties on civil aircraft and the bulk of aircraft 

parts. The Agreement applies to all civil aircraft; 

engines and their parts and components; all other parts, 

components, and subassemblies of civil aircraft; and all 

ground flight simulators and their parts and 

components. 

Although the agreement does not prohibit 

government financial support directly, it does require 

signatories to "seek to avoid adverse effects" from such 

supports and requires civil aircraft prices to be "based 

on reasonable expectations of reimbursement of all 

costs." 163Article 6 164of the agreement provides that 

the 1979 GATT Subsidies Code 165applies to trade in 

civil aircraft, but does not specify precisely how to 

apply it. 

U.S.-EC Airbus Disputes (1990) 

The United States initiated discussions in October 

1984 in the Aircraft Committee on the effects on 

industry competitiveness of EC member state support 

for the Airbus Industrie consortium, with consultations 

held with the principal governments involved in 

1986. 166 

In 1990, the United States continued to press the 

EC for more effective disciplines on aircraft 

development and production subsidies, raising the 

issue of German Government guarantees to ensure 

against exchange-rate movements as part of an 

agreement with Daimler-Benz to take over and 

privatize Deutsche Airbus. 167The United States filed 

a complaint over such exchange-rate guarantees with 

the Subsidies Committee in 1990, but only proceeded 

to formally request a dispute panel in 1991, following 

EC rejection of U.S. proposals concerning aircraft 

subsidies. The United States also sought consultations 

concerning all subsidies and supports for Airbus 

Industrie. 168In 1992, the panel ruled in favor of the 

United States over the German exchange-rate scheme, 

finding the program to constitute an export subsidy 

prohibited under the Subsidies Code. 

U.S.-EU Agreement on Civil Aircraft 

(1992) 

Following the 1992 panel finding, 169the United 

States and the EC agreed to resume bilateral 

negotiations on aircraft trade issues, leading in July 

1992 to a bilateral accord formally entitled the 

U.S.-EU Agreement concerning the Application of the 

GATT Agreement on Trade in Civil Aircraft, which 

provides for special disciplines concerning support for 

large civil aircraft of 100 seats or more. 17° 

The bilateral agreement addresses government 

supports, a broader concept than subsidies; prohibits 

production supports; limits development supports to 33 

percent of cost and requires their repayment with 

interest; 171and limits indirect supports to 3 percent of 

the annual commercial turnover of the civil aircraft 

industry covered by the agreement or to 4 percent of 

the same turnover of any one firm for the products 

covered by the agreement. 

Uruguay Round Aircraft Negotiations 

(1993) 

Trade in civil aircraft was one of the two issues left 

unresolved at the conclusion of the Uruguay Round 

when the U.S. and EU negotiators—Ambassador 

Mickey Kantor and EU External Affairs Commissioner 

Sir Leon Brittan—concluded their discussions on 

December 14, 1993. In a statement issued under the 

heading of "points resolved on December 14," 

Ambassador Mickey Kantor observed the following: 

We have agreed to resolve our differences on 

aircraft in a way that is equitable and serves the 

interests of both countries. We have to bring aircraft 

under the new Subsidies Agreement, which will result 

in greater discipline of subsidies and a stronger, more 

rapid, binding dispute resolution system. We have also 

agreed to continue negotiations for one year, aimed at 

broadening and improving the 1979 GATT Agreement 

on Trade in Civil Aircraft.172 

46 
The conclusion to the Uruguay Round aircraft talks 

leaves the text of the 1979 multilateral GATT 

Agreement on Trade in Civil Aircraft as well as the 

complementary disciplines agreed to in the 1992 

bilateral agreement between the EU and the United 

States in force without change. The Agreement to 

continue negotiations for 1 year is aimed at refining the 

1992 agreement in order to accommodate opinions and 

programs outside the United States and the EU. After 

these refinements have been made, a document will be 

presented to other GATT members for signature. 

47 
ENDNOTES 

1There were 114 contracting parties to the GATT 

with the accession of Bahrain on December 13, 

1993, the last accession in 1993. But with three 

non-GATT members participating in the Round, 

Algeria, China, and Honduras, the total number of 

participants in the Uruguay Round totalled 117 by the 

December 1993 conclusion. Subsequent discussions 

preparatory to the Marrakesh ministerial signing of 

the Uruguay Round agreements in the Final Act 

resulted in agreement to affiliate countries in the 

process of acceding to the GATT; consequently, the 

number of participants in the Marrakesh ministerial 

rose to 125. 

2During the December 1993 meeting, the 

starting date was set for July 1, 1993, but in the 

negotiations preparatory to the Marrakesh Ministerial, 

the date was advanced to January 1, 1995. 

3The tariff cutting negotiations held since the 

establishment of the multilateral trading system in 

1947 have been (1) Geneva, 1947; (2) Annecy, 

1949; (3) Torquay, 1950-51; (4) Geneva, 1955-56; (5) 

Dillon Round, 1960-61; (6) Kennedy Round, 1964-67; 

(7) Tokyo Round, 1973-79; and (8) Uruguay Round, 

1986-93. GATT and others, "A Brief History of the 

GATT," Trade Policies for a Better Future - The 

leutwiler Report, the GATT and the Uruguay Round, 

Martinus Nijhoff Publishers, Boston, 1987, pp. 

160-169. 

4Office of the U.S. Trade Representative 

(USTR), Executive Office of the President, Uruguay 

Round: Final Texts of the GATT Uruguay Round 

Agreements Including the Agreement Establishing the 

World Trade Organization as Signed on April 15, 

1994, Washington, DC. Subsequent endnotes in this 

chapter refer to the Final Act Embodying the 

Uruguay Round of Multilateral Trade Negotiations 

(version of 15 December 1993), Washington, DC., 

Apr. 15, 1994. 

5USTR, unclassified briefing on results of the 

Uruguay Round by individual negotiators, White 

House Conference Center, Jan. 14, 1994. 

6Art. XVI:4. Although this provision was inserted 

at the insistence of the EU in an attempt to constrain 

the unilateral use of U.S. trade law, the EU itself 

appears to find it rather constraining as a 

"self-executing" law under EU rules. 

7That is, by the GATT Contracting Parties acting 

collectively. 

8 For additional detail, see the section on the 

WTO at the end of this chapter. 

9For further background, see U.S. International 

Trade Commission, Operation of the Trade 

Agreements Program, 42nd Report, 1990, USITC 

publication 2403, ch. 1, and Operation of the Trade 

Agreements Program, 44th Report, 1992, USITC 

publication 2640, chs. 2 and 4. 

10The G-7 members are Canada, France, 

Germany, Italy, Japan, the United Kingdom, and the 

United States. The "quadrilateral" members are 

Canada, the European Union, Japan, and the United 

States. 

USTR, "Report on the Uruguay Round," press 

release, July 7, 1993. 

12Agreement was reached on distilled "brown" 

spirits, such as whiskey and brandy. Negotiations on 

distilled "white" spirits, such as gin and vodka, 

continued into 1994, seeking to reach agreement in 

time for the April 15, 1994, signing of the Final Act, 

but were not successful. 

13Harmonization of tariffs was agreed by 

developed and major developing countries in the 

chemical sector at very low rates: 6.5 percent in 

general, 5.5 percent in other chemical product 

groups, and zero in some others. White House, 

Executive Summary - Results of the GATT Uruguay 

Round of Multilateral Trade Negotiations, Dec. 15, 

1993, p. 2. 

14See chapter 2 section on APEC ministerial 

meeting for further details. 

15Ibid. 

16USTR, unclassified briefing on results of the 

Uruguay Round by individual negotiators, 

Government Services Administration auditorium, Dec. 

21, 1993. 

17The quad countries submitted their 

market-access offers at the end of February 1994. 

Although March 31, 1994, was the official deadline 

for final market-access offers, March 25, 1994, was 

the effective date to ensure final printing of these 

offers in time for mid-April signing. 

18 The Japanese refined-copper tariffs applicable 

currently to GATT members depend on customs 

value and are referred to as "temporary," despite 

their application for many years. These rates are 15 

yen per kilogram for a customs value of no more 

than 485 yen/kg, 500 yen/kg minus the customs 

value per kilogram for the value under 500 yen/kg 

but above 485 yen/kg, and free entry for a customs 

value at or greater than 500 yen/kg. Historically, the 

recent price of copper has remained consistently 

below 485 yen/kg. Japan's existing GATT-bound rate 

for refined copper is 21 yen/kg for all customs 

values. 

19USTR negotiator for market access, telephone 

conversation with USITC staff, Mar. 31, 1994. 

20For a full discussion of all the Blair House 

agreement, see USITC, Operation of the Trade 

Agreements Program, 44th Report, 1992, USITC 

publication 2640, pp. 18-20 and pp. 47-49. 

21The statement reads in part: 

.. We will not reopen the Blair House 

agreement, either directly or indirectly. 

Interpretation or clarification of Blair House 

cannot be a guise for modifying the terms of 

the agreement achieved in November, 1992. 

The Blair House agreement, reached nearly 

10 months ago, reflected a difficult 

compromise which the United States accepted 

in its entirety. The Blair House agreement was 

minimally acceptable to the United States and 

to the European Community's other trading 

partners. . . ." See USTR, "Statement by 

48 
Ambassador Mickey Kantor," press release, 

93-61, Sep. 21, 1993. 

22 In particular, such nontariff border measures 

as quantitative import restrictions and bans, variable 

import levies, minimum import prices, discretionary 

import licensing, nontariff measures exercised through 

state trading bodies, and voluntary export restraints. 

For example, section 22 import quotas under the 

U.S. Agricultural Adjustment Act of 1935 are 

included, as is the EU variable-levy import regime. 

White House, Executive Summary - Results of the 

GATT Uruguay Round of Multilateral Trade 

Negotiations, Dec. 15, 1993, p. 4. 

23For example, see Office of the United States 

Trade Representative, Results of the Uruguay Round 

Market Access Negotiations - GATT Schedule XX -

United States of America, 3 vols. Washington DC, 

1994. 

24 GATT, "The Final Act of the Uruguay Round," 

News of the Uruguay Round, No. 80, Dec. 14, 1993, 

pp. 8-9. 

25The agricultural safeguard mechanism 

depends on the extent of import penetration in the 

importing market. A safeguard action is triggered 

more easily by import surges when imports already 

occupy a large proportion of the market and less 

easily when imports are less available on the market. 

The safeguard mechanism triggered by import prices 

operates when the price of imports falls below a 

reference price, with applicable duties increasing as 

the import price becomes lower. 

26Developing countries are to reduce support by 

13.3 percent, as measured by the Aggregate 

Measurement of Support (AMS) mechanism 

constructed for these negotiations. Least-developed 

countries need not reduce their support, but must 

bind or "cap" their levels of support. 

27Such as research; pest and disease control; 

infrastructural services; training, extension, inspection, 

and marketing; food security; and food aid. 

28These direct program payments cover 

"decoupled" programs (that is, decoupled from 

production), such as disaster and other insurance, 

structural adjustment aid, and payments under 

environmental programs and under regional aid 

programs. 

29Five percent for industrial countries, 10 

percent for developing countries. 

39For the United States, the 20-percent 

reduction commitment has already been met through 

legislation passed in the 1985 and 1990 farm bills. 

White House, Executive Summary - Results of the 

GATT Uruguay Round of Multilateral Trade 

Negotiations, Dec. 15, 1993, p. 5. 

31Specific commodity groups, such as wheat 

and wheat flour, coarse grains, oilseeds, skim milk 

power, sugar, and so forth. 

32White House, Executive Summary - Results of 

the GATT Uruguay Round of Multilateral Trade 

Negotiations, Dec. 15, 1993, p. 4. 

93GATT, "The Final Act of the Uruguay Round," 

News of the Uruguay Round, No. 80, Dec. 14, 1993, 

p. 10. 

34That is, "nullification and impairment" of trade 

concessions received under previous GATT 

negotiations. Countries anticipate certain benefits to 

accrue to their economies from such concessions, 

which are received in exchange for certain trade 

concessions given. If these expected benefits are 

"impaired," attenuated, or otherwise substantially less 

than anticipated when negotiated—or if the benefits 

are "nullified," that is, eliminated entirely—because of 

policy action by the other government involved, the 

country losing its benefits may seek to redress the 

balance of concessions initially negotiated. If 

impairment of benefits arises from a breech in the 

agreement by the other party, the nullification and 

impairment proceedings under the GATT 

dispute-settlement system are based on violation of a 

trade agreement. However, if policy action by the 

other government impairs or nullifies the expected 

benefits by indirect action that does not violate 

directly the original exchange of concessions 

between countries but, nonetheless, reduces the 

value of these benefits, then dispute proceedings are 

based on nonviolation grounds. 

An example of nonviolation grounds is the 1962 

concession from the EU to the United States for a 

zero-tariff rate duty to be levied on oilseed imports. 

Benefits to the United States were expected in the 

form of exports of oilseeds, such as soybeans, to the 

EU. An EU policy to subsidize domestic production of 

oilseeds and subsidize consumption of domestically 

produced oilseeds did not violate the initial 

agreement to levy a zero tariff duty on oilseed 

imports but did, nonetheless, impinge on and impair 

the benefits expected to derive from the zero-tariff 

duty by reducing EU demand for imported oilseeds. 

35The first three topics included under the 

agriculture talks were internal support, import access, 

and export competition. 

36When scientific evidence is sufficient, a 

member may provisionally adopt sanitary and 

phytosanitary measures on the basis of available 

pertinent information. 

37The agreement states that the GATT Dispute 

Settlement Body may authorize an adjustment to the 

accelerated quota growth in stages 2 or 3 with 

respect to any member country found not to be 

complying with its obligations under the Agreement. 

38Quotas set by unilateral action must be at a 

level no lower than the actual level of imports during 

the 12-month period, ending 2 months before the 

month in which consultations were called. 

39Testing and certification were covered by the 

1979 Code. 

49One example is a previous U.S. complaint 

against the EU's hormone ban regarding meat 

imports, which foundered because of the 1979 

Code's limited coverage of such regulations and 

because of the difficulties of resolving the dispute 

under the then-applicable consensus basis of dispute 

settlement. 

41White House, Executive Summary - Results of 

the GATT Uruguay Round of Multilateral Trade 

Negotiations, Dec. 15, 1993, p. 17. 

42 Ibid., p. p 18. 

43Where imported inputs are contingent in some 

way on exports. 

49 
44Where a foreign investor must procure a 

certain amount of business locally to be permitted to 

invest locally. 

45Where access to foreign exchange is 

contingent on foreign exchange earnings from 

exports. 

46Less-than-normal-value is typically defined as 

prices lower than those prevailing in the exporter's 

home market. 

47Specifically, by clarifying when producers may 

be considered related to exporters or importers for 

purposes of excluded them from the interpretation of 

the term "domestic industry." MTN/FA II-A1A-8, p. 6, 

art. 4.1 (Definition of Domestic Industry). 

48Ibid., art. 5.4. The required proportions of 

domestic production of the like product are either (1) 

more than 50 percent of that portion of the domestic 

industry expressing an opinion, or (2) at least 25 

percent of the total production of the like product in 

question. 

49MTN/FA II-A1A-8, pp. 8 to 9, art. 5.8 (Initiation 

and Subsequent Investigation). 

50Known during negotiations as the "sunset" 

clause. 

51MTN/FA II-A1A-8, pp. 21 to 22, art. 17.6 

(Consultation and Dispute Settlement). 

52MTN/FA III-11(a). 

53Formally, the Agreement on Implementation of 

Article VII. 

54"Decision regarding cases where customs 

administrations have reasons to doubt the truth or 

accuracy of the declared value," MTN/FA III-4(a). 

55"Texts relating to minimum values and imports 

by sole agents, sole distributors and sole 

concessionaires," MTN/FA III-4(b). 

56The PSI and exporter representatives would 

be the International Federation of Inspection 

Agencies and the International Chamber of 

Commerce, respectively. White House, Executive 

Summary - Results of the GATT Uruguay Round of 

Multilateral Trade Negotiations, Dec. 15, 1993, pp. 

15-16. 

57Ibid., p. 17. 

58Ibid. 

59This "traffic-light" analogy drew the additional 

distinction between "yellow light" subsidies that could 

be challenged for causing "serious prejudice" to 

another member's exports and "amber" or "deep 

yellow light" subsidies that could be challenged for 

causing "presumptive serious prejudice" where injury 

is presumed. 

60Countervailing duty action offsets or 

countervails the effect of subsidies embodied in an 

imported good. 

61This threshold does not apply to civil aircraft; 

such products are expected to be subject to their 

own specific multilateral rules. 

62Countries such as 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, based on the 

most recent data from the World Bank. 

63Least developed countries must phase out 

their export subsidies over 8 years; developing 

countries, over 2 years when their subsidized sector 

reaches 3.25 percent of world trade for 2 consecutive 

years. 

64Variously called voluntary export restraints, 

voluntary restraint agreements or arrangements 

(VRA), voluntary export agreements, orderly 

marketing arrangements, and so forth. 

65Thus, while the 4-year VRA phaseout limit 

would end VRAs by January 1, 1999 given a 

January 1, 1995, beginning of the WTO—all 

members will be allowed one "grandfathered" VRA to 

extend to the end of 1999, the most notable likely 

one being the EU-Japan automobile VRA whose 

terms were already set to expire at end 1999. 

66White House, Executive Summary - Results of 

the GATT Uruguay Round of Multilateral Trade 

Negotiations, Dec. 15, 1993, p. 21. 

67The understanding contains obligations on 

market access for financial services when parties 

resort to prudential actions, with further rules 

regarding monopoly rights; financial services 

purchased by public entities; cross-border trade of 

certain insurance and re-insurance underwriting as 

well as financial data processing and transfer; the 

right to establish or expand the commercial presence 

of financial service firms, including new financial 

services; and the temporary entry of personnel. The 

national treatment provisions of this understanding 

treat access to public-sector payment and clearing 

systems and to official funding and refinancing 

facilities available as part of ordinary business. 

Participation in self-regulatory bodies, exchanges, 

markets, clearing houses, or similar agencies, 

organizations, or associations necessary to carry out 

business is also to be permitted on an equal 

national-treatment basis. "Understanding on 

Commitments in Financial Services," Draft Final Act, 

MTN.TNC/W/FA, Dec. 20, 1991, pp. 51-55. 

68"Decision on Negotiations on Basic 

Telecommunications," Final Act MTN/FA III-7(d), p. 1. 

69As of December 1993, such governments 

include Australia, Canada, Chile, the European Union 

and member States, Finland, Hong Kong, Hungary, 

Japan, Korea, Mexico, New Zealand, Norway, the 

Slovak Republic, Sweden, Switzerland, Turkey, and 

the United States. 

70"Annex on Negotiations on Maritime Transport 

Services," MTN/FA/Add. 1; is intended for 

incorporation under GATS art. XXIX (Annexes), 

beginning at MTN/FA II-A1 B, p. 28. The group is 

open to governments that wish to participate and that 

have signed the Final Act. As of December 1993, 

those governments are Argentina, Canada, the 

European Union and member States, Finland, 

Iceland, Indonesia, Korea, Malaysia, Mexico, Poland, 

New Zealand, Norway, the Philippines, Romania, 

Singapore, Sweden, Thailand, Turkey, and the United 

States. 

71"General Interpretative Note to Annex 1A," 

MTN/FA II, p. 13. 

50 
72USTR, "European Union - Broadcast Directive 

and Motion Picture Quotas," 1994 National Trade 

Estimate Report on Foreign Trade Barriers, pp. 

74-75. 

73The aerospace or aircraft industry is the 

foremost U.S. export industry in value terms. 

74The EU Broadcast Directive was legislated in 

large part because of member states, such as 

France, that seek a "cultural exemption" to reserve a 

portion of national broadcasting time for audiovisual 

productions considered part of this reserve. 

Opponents to cultural exemptions consider them 

trade barriers in the form of quota restrictions 

preventing consumers from demanding programs that 

are often productions exported from other countries. 

Such opponents also argue that the country of origin 

of multinational productions is often difficult or 

impossible to determine. 

75The intellectual property covered by the 

agreement is copyrights, patents, trademarks, 

industrial designs, trade secrets, integrated circuits 

(semiconductor chips), and geographical indications. 

76These include (1) the Berne Convention for 

the Protection of Literary and Artistic Works and the 

Paris Act of the Berne Convention signed July 24, 

1971, and cited as the Berne Convention (1971); (2) 

the Paris Convention for the Protection of Industrial 

Property and the Stockholm Act of the Paris 

Convention signed July 14, 1967, and cited as the 

Paris Convention (1967); (3) the International 

Convention for the Protection of Performers, 

Producers of Phonograms and Broadcasting 

Organizations, adopted in Rome on October 26, 

1961, and known as the Rome Convention; and (4) 

the Treaty on Intellectual Property in Respect of 

Integrated Circuits (IPIC Treaty), adopted in 

Washington DC on May 26, 1989, and also known 

as the Washington Treaty. 

77GATT, The Final Act of the Uruguay Round," 

News of the Uruguay Round, No. 80, Dec. 14, 1993, 

p. 25. 

78Art. 6 bis, the Berne Convention. As noted 

previously, although reproduction rights are commonly 

inalienable in Europe, the United States allows these 

rights to be bought and sold, and thus they are 

typically the property of publishing houses or 

production studios. 

79Art. 10 bis, Paris Convention (1967). 

80 White House, Executive Summary - Results of 

the GATT Uruguay Round of Multilateral Trade 

Negotiations, Dec. 15, 1993, p. 23. 

81However, plant varieties must either be 

patentable or have their own system of protection, 

such as the Union for the Protection of New Varieties 

of Plants (UPOV) Convention that sets down 

breeders' rights. 

82These include compulsory licensing considered 

on the individual merits of each case; reasonable 

efforts taken to acquire authorization commercially; 

use primarily for the domestic markets; and adequate 

remuneration paid to the rights holder. However, 

certain provisions may not apply in cases where 

compulsory licensing remedies anticompetitive 

practices. 

83USTR, The Uruguay Round of Multilateral 

Trade Negotiations Source Book, Washington DC, 

Feb. 1994, p. C-7. 

84Including utilities that are regulated such that 

they are de facto public entities or monopolies 

despite being privately owned. 

85GATT, "Focus on the Government Procurement 

Code," Focus, No. 102, Oct. 1993, p. 6. 

86 Special Drawing Rights (SDRs) are a form of 

currency created by the IMF that is composed of 

major national currencies in various proportions. 

87Small and minority preference programs were 

specifically excluded from Federal-level procurement 

coverage in the United States. 

88However, mass transit and highway projects 

receiving Federal funding were specifically excluded 

from procurement coverage in the United States. 

89"Decision on Implementation of Article XXIV:2 

of the Agreement on Government Procurement," 

Final Act MTN/FA III-8, p. 1. This decision is 

incorporated under the Uruguay Round, as distinct 

from the government procurement negotiations taking 

place outside-although in tandem with-the Round 

aimed at revising the agreement. 

90GATT, "The Final Act of the Uruguay Round," 

News of the Uruguay Round, No. 80, Dec. 14, 1993, 

p. 31-32. 

91USTR, "Statement by Ambassador Mickey 

Kantor - April 21, 1993," press release 93-26, Apr. 

21, 1993. The agreement reached required 

ratification by the EU Council of Ministers by May 10, 

1993. See USTR, "U.S.-EC Government Procurement 

Agreement Approved by EC Council of Ministers," 

press release 93-33, May 10, 1993. 

92On April 13, 1994, the United States and the 

European Union did reach a partial agreement on 

government procurement that is expected to be 

expanded to other members of the GATT Agreement 

on Government Procurement. The U.S.-EU 

agreement covers central and subcentral government 

procurement, as well as procurement by 

government-controlled entities, to begin on January 

1, 1996. The U.S.-EU Memorandum of 

Understanding on Government Procurement of May 

25, 1993, will be extended until that time. U.S. 

Department of State, "Information on April 13 

U.S.-EU Agreement on Government Procurement," 

telegram, message reference No. 105482, prepared 

by U.S. Department of State, Washington, DC, Apr. 

21, 1994. 

93USTR, The Uruguay Round of Multilateral 

Trade Negotiations Source Book, Washington DC, 

Feb. 1994, p. C-7. 

94USTR, 1994 Trade Policy Agenda and 1993 

Annual Report, Washington DC, Mar. 8, 1994, p. 40. 

ss USTR, "Statement by U.S. Trade 

Representative Mickey Kantor - December 14, 1993," 

press release, Dec. 14, 1993, p. 2. 

96The U.S.-EU accord is the Agreement 

Concerning the Application of the GATT Agreement 

on Trade in Civil Aircraft. For a full discussion of the 

U.S.-EU bilateral agreement on trade in civil aircraft, 

see USITC, Year in Trade: OTAP, 44th Report, 1992, 

publication 2640, pp. 50-51. 

51 
97USTR, 1994 Trade Policy Agenda and 1993 

Annual Report, Washington DC, Mar. 8, 1994, p. 72. 

98GATT, GATT Activities 1992, Geneva, June 

1993, pp. 73-74. 

99Ibid.,p. 75. 

100The charter came to be known as the 

Havana Charter. 

101Kenneth W. Dam, The GATT - Law and 

International Economic Organization (Chicago: 

University of Chicago Press, 1970), pp. 10-11. 

102White House, Executive Summary - Results 

of the GATT Uruguay Round of Multilateral Trade 

Negotiations, Dec. 15, 1993, p. 26. 

103Sec. 1101, 19 U.S.C. 2901, Public Law 

100-418. 

104The World Trade Organization was originally 

entitled the Multilateral Trade Organization (MTO) 

during the Round. Discussions in the Negotiating 

Group on Functioning of the GATT System (FOGS) 

named this institutional structure the World Trade 

Organization, as originally proposed by Canada in 

April 1990. During further negotiations, the name 

changed to the Multilateral Trade Organization, after 

a proposal presented by EU negotiators. At the 

conclusion of the Uruguay Round, the United States 

proposed to reinstate the name World Trade 

Organization to promote the idea of the broadest 

possible membership in contrast to the more limited 

or "plurilateral" membership inference that might be 

drawn from the word multilateral. 

105These can be found in the table of contents 

listed in figure D. They are the Understanding on the 

Interpretation of Article II:1(b), on the Interpretation of 

Article XVII, on Balance-of-Payments Provisions, on 

the Interpretation of Article XXIV, on the Interpretation 

of Article XXV, on the Interpretation of Article XXVIII, 

and on the Interpretation of Article XXXV. 

106GATT 1994 includes as well a protocol 

adopted at the Marrakesh signing of the WTO 

Agreement in April 1994. Facsimile communication 

from USTR Office of the General Counsel, May 18, 

1994. 

107 That is, if no member present at the meeting 

where the decision is taken formally objects to the 

proposed decision. 

108USTR, unclassified briefing on results of the 

Uruguay Round by individual negotiators, White 

House Conference Center, Jan. 14, 1994. See also, 

letter from Ambassador Michael Kantor to all 

members of Congress on April 29, 1994, on the 

Uruguay Round agreements and the creation of a 

World Trade Organization. Professor John H. 

Jackson supported this view in testimony delivered 

before the Senate Finance Committee on March 23, 

1994. 

109Art. I of the GATT 1994, art. 11:1 of the 

General Agreement on Trade in Services, and art. IV 

of the Agreement on Trade-Related Intellectual 

Property. The WTO's decisionmaking (art. IX) and 

amendment (art. X) rules also cannot be changed 

unless all WTO members agree, nor can tariff 

bindings under the GATT 1994. 

110The right of current GATT Contracting Parties 

to not apply the WTO agreements to other 

Contracting Parties will be limited to those cases 

where the countries concerned do not apply the 

GATT to each other at the time the WTO Agreement 

enters into force for them. 

111Following the Round's conclusion, key 

participants such as the EU and the GATT 

Director-General, Peter Sutherland, pressed to 

advance the implementation date by 6 months from 

July 1, 1995 to January 1, 1995, in an attempt to 

invigorate the sluggish world economic environment. 

These efforts were successful by the end of March 

1994, when countries agreed to make January 1, 

1995 the target date to inaugurate the WTO and the 

Uruguay Round agreements it will oversee, provided 

that sufficient legislative approval can be won in time. 

This advancement proved possible following removal 

of a stumbling block when Japan agreed to call a 

special session of its legislature in the fall of 1994 to 

consider earlier implementation. 

112The DSU is formally the "Understanding on 

Rules and Procedures Governing the Settlement of 

Disputes," MTN/FA II-A2. 

113The expedited dispute-settlement rules agreed 

to at the Montreal Mid-Term Review in April 1989 will 

be extended until the entry into force of the WTO. 

Their principal features are (1) specific time limits on 

consultation procedures; (2) arbitration as an 

alternative to panel rulings; (3) speedy establishment 

of panels by the GATT Council meeting following the 

one at which the initial panel request was made; (4) 

strict time limits for reaching agreement on terms of 

reference, panel composition, and panel reports; (5) 

delay of report adoption to be avoided; (6) overall 

time period from request for consultations to report 

decision not to exceed 15 months; legal advice for 

developing countries in disputes; and (8) 

implementation of panel reports to be considered by 

the Council within 6 months following report adoption. 

114Alternate means of settling disputes will 

include employing the good offices of the GATT 

Secretariat, namely, conciliation, mediation, and 

arbitration. 

115All decisions by the DSB must be by 

consensus. 

116The standard terms of reference are "To 

examine, in the light of the relevant provisions in 

(name of the covered agreement's cited by the 

parties to the dispute), the matter referred to the 

DSB by (name of party) in document DS/ . . . and to 

make such findings as will assist the DSB in making 

the recommendations or in giving the rulings provided 

for in that/those agreement/s." 

117Three months in cases of urgency. 

118White House, Executive Summary - Results 

of the GATT Uruguay Round of Multilateral Trade 

Negotiations, Dec. 15, 1993, p. 25. 

119See, for example, John H. Jackson, written 

testimony submitted to the U.S. Senate Finance 

Committee, Mar. 23, 1994. 

120 Ibid. 

121 GATT, "The Final Act of the Uruguay Round," 

News of the Uruguay Round, No. 80, Dec. 14, 1993, 

p. 30. 

52 
122A recent example of this "nullification and 

impairment" of benefits concept involved the 

concession for a zero tariff binding on imports of 

oilseeds granted by the European Union to the 

United States in 1962. Increases in EU subsidies 

paid to EU oilseed producers beginning in the late 

1970s, although not a direct violation of the trade 

concession relating to oilseed imports, significantly 

undermined imports of U.S. oilseeds by nullifying and 

impairing the benefits expected from the 1962 

concession. This conclusion was reached by several 

panels formed to examine the issue, but, after the 

EU blocked formal adoption of the panel report, the 

United States resorted to unilateral retaliation. Under 

the former rules, retaliation could only be authorized 

after a panel report was adopted by consensus. 

123See "Dispute Settlement Understanding," art. 

26, MTN/FA II-A2, p. 18. 

124 See "Dispute Settlement Understanding," art. 

23, MTN/FA II-A2, p. 18. 

125White House, Executive Summary - Results 

of the GATT Uruguay Round of Multilateral Trade 

Negotiations, Dec. 15, 1993, p. 25. 

126 GATT, "Uruguay Round Negotiations 

Conclude Successfully," News of the Uruguay Round, 

No. 81, Dec. 21, 1993, p. 5. 

127Australia, Botswana, Burundi, India, Japan, 

and Korea also did not sign the WTO Agreement at 

Marrakesh for this reason. GATT, "Results of the 

Uruguay Round Signing Ceremony on April 15th, 

1994 in Marrakesh, Morocco," News of the Uruguay 

Round No. 086, Apr. 18, 1994. 

128 MTN.TNC/MIN(94)/1/Rev.1, Apr. 11, 1994, 

P. 9. 

129Sec. 1101(14) of the Omnibus Trade and 

Competitiveness Act of 1988 (19 U.S.C. 2901, Public 

Law 100-410) includes among the U.S. negotiating 

objectives for reciprocal trade agreements "securing a 

review of the relationship of worker rights to GATT 

articles, objectives, and related instruments with a 

view to ensuring that the benefits of the trading 

system are available to all workers." 

130 "Ministers affirm that the establishment of the 

World Trade Organization (WTO) ushers in a new 

era of global economic cooperation, reflecting the 

widespread desire to operate in a fairer and more 

open multilateral trading system for the benefit and 

welfare of their peoples." GATT, "Marrakesh 

Declaration of 15 April 1994," MTN.TNC/W/143, Mar. 

29, 1994, par. 2. 

131 GATT Marrakesh Declaration, Apr. 15, 1994. 

Ministers also undertook "to strive for greater 

coherence of policies in the fields of trade, money 

and finance" and expressed "determination to resist 

protectionist pressures of all kinds." 

132The Committee's terms of reference derive 

from the TNC Decision on Trade and Environment of 

December 15, 1993, that seeks to promote 

sustainable development by identifying the relation 

between trade and environmental measures and to 

make recommendations on whether and how to 

modify a nondiscriminatory multilateral trading system 

as related to (1) the special needs of developing 

countries regarding the relation between trade and 

environment, (2) avoidance of protectionist trade 

measures, and (3) surveillance of trade measures 

used for environmental purposes. 

133They are Albania, Algeria, Armenia, Belarus, 

Bulgaria, China, Croatia, Ecuador, Estonia, Jordan, 

Latvia, Lithuania, Moldova, Mongolia, Nepal, Panama, 

Russia, Saudi Arabia, Slovenia, Taiwan (Chinese 

Taipei), and Ukraine. 

134USTR, 1994 Trade Policy Agenda and 1993 

Annual Report, Washington DC, 1994, p. 35. 

135GATT, "Panel on EC Banana Regime," Focus, 

No. 97, Mar. 1993, p. 2. 

136Colombia, Costa Rica, Nicaragua, and 

Venezuela. Guatemala had not accepted the 

agreement as of March 30, 1994, because it 

considers that it would not benefit greatly from the 

proposed increase in the EU tariff-rate quota. 

137GATT, "EC Seeks Panel on US Car Taxes," 

Focus, No. 98, Apr. 1993, p. 5; GATT, "Panel 

Established on US Car Taxes," Focus, No. 99, 

May-June 1993, p. 2. 

138U.S. Omnibus Budget Reconciliation Act of 

1993, sec. 1106. 

139GATT, "US Tobacco Measure Under Fire," 

Focus, No. 102, Oct. 1993, p. 4. 

140 GATT, "Other Business," Focus, No. 102, Oct. 

1993, p. 5. 

141These various aspects include market access 

for goods from developing countries that pertain to 

environmental concerns; monitoring and data 

collection; the relevance of current GATT rules 

pertaining to developing countries, sustainable 

development, environment, and trade; and the 

possible future role of the committee in these three 

areas. GATT, "GATT Starts Follow-up of Earth 

Summit Results," Focus, No. 101, Aug.-Sep. 1993, p. 

10. 

142 GATT, "GATT Trade and Environment Group," 

Trade and the Environment, TE 004, Nov. 26, 1993, 

Geneva, p. 2. 

143USTR, 1994 Trade Policy Agenda and 1993 

Annual Report, Washington DC, Mar. 8, 1994, p. 39. 

144 Ibid. 

145MERCOSUR members are Argentina, Brazil, 

Paraguay, and Uruguay. 

146Formerly called the Separate Customs 

Territory of Taiwan, Penghu, Kenmin, and Matsu. 

147The Antidumping Code, the Agreement on 

Subsidies and Countervailing Measures, the 

Agreement on Technical Barriers to Trade or 

"Standards Code," the Agreement on Customs 

Valuation, and the Agreement on Import Licensing. 

148The Agreement on Government Procurement, 

Agreement on Trade in Civil Aircraft, Arrangement on 

Trade in Bovine Meat, and Arrangement on Dairy 

Products. 

149Formally, the Agreement on Implementation of 

Article VI of the General Agreement on Tariffs and 

Trade. GATT, "Anti-dumping, Subsidies Committees 

Consider New Panel Reports," Focus, No. 98, Apr. 

1993, p. 8. 

53 
150Art. 2:4. 

151Ibid., 2:6. 

152 GATT, "Anti-dumping, Subsidies Committees 

Consider New Panel Reports," Focus, No. 98, Apr. 

1993, p. 8. 

153Formally, the Agreement on Interpretation and 

Application of Articles VI, XVI, and XXIII of the 

General Agreement on Tariffs and Trade. GATT, 

"Anti-dumping, Subsidies Committees Consider New 

Panel Reports," Focus, No. 98, Apr. 1993, p. 8. 

154Ibid. 

155Formally, the Agreement on Implementation of 

Article VII of the General Agreement on Tariffs and 

Trade and Protocol. 

156USTR, 1994 Trade Policy Agenda and 1993 

Annual Report, Washington DC, Mar. 8, 1994, p. 39. 

157Ibid., p. 40. 

158Ibid., p. 39. 

159The panel was formed in July 1991 at the 

request of the EU concerning U.S. procurement of a 

multibeam sonar mapping system for use in the 

Antarctic. The procurement was part of a contract to 

provide logistical and other support services for a 

vessel conducting Antarctic research and, because 

the 1979 Code does not cover service contracts, was 

subject to preferential treatment under U.S. "Buy 

America" legislation. The panel concluded in 1992 

that products, such as the mapping system, were 

nonetheless covered by the agreement whether or 

not part of a procurement contract for services. In 

May 1992, the United States requested time to 

consider the report, and the committee agreed to 

revert to the report at its next meeting in June 1993. 

GATT, "Sonar Mapping System," Focus, No. 90, 

May-June 1992, p. 8. 

160Signatories to the Arrangement are Argentina, 

Australia, Austria, Belize, Brazil, Bulgaria, Canada, 

Colombia, the EC, Egypt, Finland, Guatemala, 

Hungary, Japan, New Zealand, Nigeria, Norway, 

Paraguay, Poland, Romania, South Africa, Sweden, 

Switzerland, Tunisia, the United States, Uruguay, and 

Yugoslavia. 

161Signatories to the Dairy Arrangement are 

Argentina, Australia, Bulgaria, Egypt, the EU, Finland, 

Hungary, Japan, New Zealand, Norway, Poland, 

Romania, South Africa, Sweden, Switzerland, and 

Uruguay. 

162GATT, "Meat Markets," Focus, No. 100, July 

1993, p. 11. 

163USTR, 1986 National Trade Estimate Report 

on Foreign Trade Barriers, Washington DC, p. 100. 

164Government support, export credits, and 

aircraft marketing. 

165Formally, the Agreement on Interpretation and 

Application of Articles VI, XVI, and XXIII of the 

General Agreement on Tariffs and Trade, also 

referred to as the GATT Agreement on Subsidies 

and Countervailing Measures. 

166France, the United Kingdom, and West 

Germany. Spain has since become the fourth 

consortium member. USTR, 1986 National Trade 

Estimate Report on Foreign Trade Barriers, 

Washington DC, p. 101. 

167Ibid., p. 79. 

168Ibid., p. 83. 

169Adoption of the panel report was blocked by 

the EU, however. 

179USTR, 1994 Trade Policy Agenda and 1993 

Annual Report, Washington DC, Mar. 8, 1994, p. 72. 

171Raymond J. Waldmann, "Statement of 

Raymond J. Waldmann on Behalf of Aerospace 

Industries Association of America, Inc. Before the 

House Committee on Ways and Means 

Subcommittee on Trade," Feb. 22, 1994, p. 6. 

172USTR, "Statement by U.S. Trade 

Representative Mickey Kantor - December 14, 1993," 

Brussels, p. 2. 

54 
CHAPTER 2 

Regional Trade Activities 

The United States pursued two key regional 

initiatives in 1993: the North American Free Trade 

Agreement (NAFTA) and expanded cooperation with 

its economic partners in the Asia-Pacific region. Both 

of these efforts and developments within the Association of Southeast Asian Nations (ASEAN) are 

chronicled below. 

The North American 

Free-Trade Agreement 

Introduction 

On December 8, 1993, President Clinton signed 

into law the North American Free-Trade Agreement 

Implementation Act. 1The U.S. enactment was a key 

step toward NAFTA's entry into force on January 1, 

1994. It also marked the culmination of a long, and at 

times, fractious domestic debate about the desirability 

of pursuing expanded trade ties within North 

America. 2 

During the 1992 Presidential election campaign, 

candidate Clinton promised that, if elected, he would 

support NAFTA if accompanied with stronger 

provisions on labor and environment. 3As President, 

he continued such an approach. 4Negotiations towards 

that end began in March and were completed in 

mid-August. 

Meanwhile, a diverse coalition of opponents 

argued against the accord, citing continued economic 

uncertainty and concerns about additional job losses to 

Mexico, given wide disparities in wages and labor and 

environmental protection. While labor unions were 

almost uniformly against NAFTA's passage and put 

heavy pressure on Congress to reject the accord, the 

various environmental organizations split ranks. Many 

said they favored closer ties with Mexico, but felt more 

should be done to mitigate their fundamental concerns 

with the NAFTA as signed on December 17, 1992. 

Proponents emphasized that the United States 

would be better off with NAFTA than without it. Not 

only would U.S. market access to the growing Mexican 

market improve, thereby helping U.S. workers, they 

said the accord would also cement and give credit for 

the extensive economic reforms undertaken by Mexico 

over the past decade and set a positive tone for future 

relations with the rest of Latin America. Moreover, 

they suggested that the unprecedented cooperation on 

environmental, labor, and illegal immigration matters 

NAFTA spawned would surely be better than the status 

quo. Meanwhile, Mexican President Salinas de Gortari 

publicly stated that the NAFTA would not be reopened 

and urged Congress not to spurn a 

"once-in-a-generation opportunity" to stabilize 

U.S.-Mexican trade relations. 

Differences over NAFTA likewise came to 

symbolize a larger debate about America's future 

direction. Some critics, concerned about a perceived 

emphasis on foreign over domestic economic concerns 

and incremental diminution in U.S. autonomy over 

such matters as environmental protection, urged a more 

cautious approach to international economic 

engagements. 5President Clinton was among those 

casting NAFTA as emblematic of the unbroken 

bipartisan postwar consensus in favor of liberalized 

trade and as representative of the confidence and 

constructive engagement that should characterize U.S. 

trade policy in the future. 6NAFTA was not an 

alternative to a domestic economic strategy, President 

Clinton assured, but part and parcel of a larger plan for 

economic revival by expanding access to lucrative 

foreign markets.? 

On November 9, Vice President Gore and 

Presidential candidate Ross Perot debated NAFTA's 

merits on national television. Formal debates in the 

House and Senate followed shortly thereafter. Lost jobs 

and attendant damage to families and communities, 

head-to-head competition with lower wage, 

less-protected Mexican workers with little ability to 

effect democratic change, loss of U.S. sovereignty, and 

the role and cost of NAFTA-related bureaucracies and 

tribunals were among the concerns raised by various 

Congressional representatives. 8A sense of historic 

opportunity, the need for American economic 

55 
leadership in global and hemispheric affairs, the chance 

to expand trade with Mexico and enhance 

competitiveness vis-a-vis Japan and Europe, the 

beneficial effects on U.S. interests of improvements in 

Mexican living standards and conditions, and the need 

to harness and benefit from inevitable economic 

change were among the reasons cited by various other 

members for supporting the accord. 9 

The Implementing Bill 

Congress ultimately approved the NAFTA 

legislative package on November 20, just 16 days after 

it was submitted by President Clinton for its 

consideration. The legislative package consisted of the 

final text of the NAFTA, an implementing bill, and a 

Statement of Administrative Action (SAA). The 

implementing bill had been developed by the 

Administration in cooperation with appropriate 

Congressional committees. 1 ° 

Under "fast track" procedures, the bill, once 

introduced, could not be amended. Passage by both 

houses of Congress was required. 11Thus, a majority 

of either house could have disapproved the bill and 

effectively killed the agreement. The House vote on 

November 17 was seen as key: the final count was 234 

in favor and 200 opposed. The U.S. Senate approved 

the bill by 61 to 38 on November 20. 

The implementing legislation is divided into six 

titles, as follows: 

Title I: 

• approves NAFTA and the Statement of 

Administrative Action submitted by the 

President to Congress on November 4; 

• authorizes the President to exchange notes 

with Canada and Mexico to put NAFTA 

into effect when several conditions are met; 

• states that NAFTA will result in no change 

to Federal law other than those made by the 

bill or to State law other than as a result of 

Federal action to help make consistent or 

invalidate inconsistent State laws; 

• bars private suits to enforce NAFTA; 

• calls for issuance of the regulations 

required or appropriate to implement 

NAFTA within 1 year after entry into force 

(rules of origin regulations must be issued 

by Jan. 1, 1994); 

• authorizes establishment of and 

appropriations for the United States 

Section of the Secretariat established by 

Chapter 20 of NAFTA; 

• suspends portions of the United 

States-Canada Free-Trade Implementation 

Act of 1988; 

• requires Congressional approval before 

other countries may join NAFTA, states 

Congressional intent regarding future 

accessions, 12and requires reports to 

Congress on potential candidates for 

free-trade area negotiations. 

Title II: 

• concerns customs: tariffs, rules of origin, 

duty drawback, country of origin marking, 

and administrative and enforcement issues; 

• authorizes the President to proclaim 

changes in the U.S. tariff schedule; 

• legislates NAFTA's rules of origin. 

Title III: 

• implements NAFTA's safeguard, intellectual property, temporary entry, 

standards, and government procurement 

provisions; 

• establishes special monitoring regimes for 

various agricultural goods. 13 

Title IV: 

• pertains to antidumping and countervailing 

duty laws; 14 

• extends to Mexico the right to binational 

panel review of final AD/CVD orders; 

• establishes objectives for future subsidy 

negotiations with NAFTA countries. 15 

Title V: 

• establishes a transitional adjustment 

assistance program; 

• requires the President to submit to 

Congress a comprehensive study on 

NAFTA's operation and effects by January 

1, 1997; 

• authorizes establishment of commissions 

related to agreements on labor and 

environment; 

56 
• contains revenue-raising measures 

designed to offset NAFTA-related 

expenses. 

Title VI: 

• enacts the Customs Modernization and 

Informed Compliance Act, 16making 

improvements in Customs' enforcement 

capabilities generally and regulatory audit 

procedures; 

• authorizes the National Customs 

Automation Program, permitting 

electronic filing of customs forms, 

payment of duties, and fees. 

The Statement of Administrative Action describes 

the NAFTA and the bill, and indicates the regulations 

needed to implement them. It also elaborates on such 

matters as environmental, health, and safety standards 

in response to concerns raised about the implications of 

the pact for federal-state relations and the limitations 

NAFTA might place on Federal regulatory authority. 

Supplemental Agreements 

The NAFTA implementing bill was accompanied 

by several supplementary agreements and reports that 

represented the fulfillment of pledges made by the 

then-candidate Clinton in endorsing the accord. Chief 

among them were supplemental agreements with 

Canada and Mexico on environmental and labor 

cooperation and on emergency action. Accords on the 

three matters were announced on August 13, 1993 

(figure M). Presidents Clinton and Salinas and Prime 

Minister Campbell signed the agreements in their 

respective capitals on September 14. 

All three of these accords were executive 

agreements, and did not require domestic legislation or 

formal approval by Congress. However, the 

implementing bill made NAFTA's entry into force 

contingent on the exchange of diplomatic notes with 

Canada and Mexico providing for the entry into force 

of the supplemental agreements on labor and 

environment. 17The bill also provided authority for the 

establishment of the requisite multilateral and bilateral 

commissions and administrative offices. 18 

Labor and Environmental 

Cooperation 

The supplemental agreements on labor and 

environmental cooperation are regarded as the most 

ambitious of the three and are fairly similar in format. 

They are applicable throughout the territories of the 

United States and Mexico. The agreements bind 

Canada with respect to all matters subject to Canadian 

federal control. Canada committed itself to take 

measures necessary to bring its Provinces into 

conformity with the supplemental agreements and is 

limited in its ability to avail itself of the supplmental 

agreements' dispute-settlement procedures according 

to the extent of its Provincial participation. 

These two agreements have broad objectives. The 

labor agreement's aims include improving working 

conditions and living standards, promoting principles, 

such as freedom of association, and fostering 

compliance with and effective enforcement of labor 

laws. Key goals of the environmental agreement are 

fostering the conservation, protection and improvement 

of the environment, promoting sustainable 

development, and increasing cooperation on and 

enhanced enforcement of environmental laws and 

policies. 19 

In each agreement, the parties commit to ensuring 

that their laws and regulations provide for high levels 

of protection and that domestic procedures will be 

available to sanction or remedy violations, 20and to 

enforcing effectively their laws and regulations 

through appropriate governmental action. 21The 

parties commit that they will promptly publish and 

promote public awareness of their laws and regulations 

and assure fair, open, and impartial administrative and 

judicial procedures. 22 

Both supplemental agreements establish 

commissions made up of councils of ministers, 

coordinating secretariats, and advisory bodies to foster 

cooperation among the three parties on a broad range 

of issues and to monitor relevant laws and their 

enforcement. The structure and functions of these 

bodies are slightly different for each agreement. 

The Environmental Council is authorized to 

consider and develop recommendations on a range of 

environmental issues. 23It is also charged with 

cooperating with the Free-Trade Commission created 

by NAFTA on such matters as consultations under 

NAFTA article 1114 on whether a country has waived 

or derogated from environmental measures in order to 

attract investors. It is also tasked with "considering on 

an ongoing basis the environmental effects of the 

NAFTA."24Subject to the Council's direction, the 

Environmental Secretariat is empowered to develop 

annual monitoring and fact-finding reports. 25It may 

also consider submissions from non-governmental 

organizations regarding failure by a party to enforce its 

57 
Figure M 

NAFTA-related developments in 1993 

JANUARY 

Jan. 19 United States and Canada agree that CFTA will be suspended upon NAFTA's entry into 

force, but CFTA art. 708 will continue its application. 

FEBRUARY 

Feb. 5 In his first official comments on NAFTA since being sworn in, President Clinton 

reiterates his intention "to move forward with NAFTA while establishing a process to 

provide adequate protection to workers, to farmers, and to the environment." 

MARCH 

Mar. 5 

Mar. 17-18 

More than a dozen environmental groups urge Present Clinton to seek stronger 

enforcement mechanisms to accompany the NAFTA, including the creation of a 

three-country commission to investigate and punish violations of pollution-control laws. 

First round of supplemental negotiations on the environment, labor, and import surges 

held in Washington, D.C. Additional rounds held April 13-15, May 19-22, June 8, 

July 8-9, July 19-23, and July 29-30. 

APRIL 

Apr. 22 

Apr. 23 

Former Presidential candidate Ross Perot makes clear his opposition to NAFTA in 

testimony before the Senate Banking Committee; announces that he plans a major 

public campaign on the accord; and releases a book co-authored with Pat Choate 

deriding NAFTA. 

United States, Canada, and Mexico agree to rectify the December 17, 1992 NAFTA 

text by exchanging diplomatic notes. 

MAY 

May 27 Canadian House of Commons passes NAFTA bill by a vote of 140 to 124. 

JUNE 

June 17 

June 30 

Canadian Senate approves the NAFTA bill. 

Judge Charles Richey rules that the NAFTA is subject to the National Environmental 

Policy Act, a finding which would have required the Administration to prepare a detailed 

formal environmental impact statement on it. 

AUGUST 

Aug. 13 

Aug. 16 

Aug. 19 

Aug. 26 

Aug. 28 

Supplemental agreements regarding environmental and labor cooperation and an 

understanding on emergency action (import surges) are announced. 

The National Governors' Association approves a resolution affirming its support for 

NAFTA. 

President Clinton names Chicago banker Richard M. Daley to spearhead his campaign 

for NAFTA passage. 

Conservative critic Pat Buchanan announces that he is forming a group to oppose 

NAFTA, citing concerns about a loss in U.S. sovereignty and the cost to U.S. taxpayers 

for environmental clean-up in Mexico. 

Democratic Whip David E. Bonoir (D-Ml.) announces that, rather than mobilizing 

support for NAFTA, he will actively oppose the accord's passage. 

58 
Figure M—Continued 

NAFTA-related developments in 1993 

SEPTEMBER 

Sept. 3 

Sept. 14 

Sept. 15 

Sept. 22 

Sept. 24 

President Clinton recruits Republican and former Congressman Bill Frenzel to head 

effort to win Congressional support for NAFTA. 

Presidents Clinton and Salinas and Prime Minister Campbell sign supplemental 

agreements on labor and environment in respective capitals. Presidents Bush, Ford, 

and Carter attend the Washington signing ceremony and join Presidents Reagan and 

Nixon in endorsing the accord. 

Leaders of six environmental groups announce support for NAFTA. 

House Majority Leader Richard Gephardt (D-MO) finally announces his position on 

NAFTA: opposed. 

Court of Appeals for the District of Columbia Circuit unanimously decides that the 

National Environmental Policy Act does not require the Administration to prepare an 

environmental impact statement for NAFTA. 

OCTOBER 

Oct. 3 Jesse Jackson leads a rally in Canada condemning NAFTA. Union leaders, meeting in 

San Francisco, uniformly denounce the accord. 

Oct. 4 A written statement by Mexican President Carlos Salinas published in the Washington 

Post states that neither renegotiating NAFTA nor rescheduling NAFTA's entry into force 

"are real options at this stage." 

Oct. 19 President Salinas calls NAFTA a test of U.S. relations with Latin America and warns 

that the region would "feel cheated" if the agreement was jettisoned. 

Oct. 27 Following defeat of the Conservative Party in Canada's general elections, Prime 

Minister-designate Jean Chretien announces that Canada may not implement NAFTA 

without changes to preserve Canadian energy reserves and to rewrite unfair trade 

rules. 

NOVEMBER 

Nov. 4 Ad referendum agreement reached on creation of a Border Environmental Cooperation 

Commission (BECC) and a North American Development Bank (NADBank). 

Nov. 4 President Clinton submits NAFTA and implementing legislation to Congress, along with 

a statement explaining the administrative measures that are needed to bring the 

agreement into force. 

Nov. 9 Vice President Gore and Ross Perot debate NAFTA's merits in a nationally televised 

debate moderated by Larry King. A USA Today/CNN/Gallup poll shows marked 

increase 

in support for NAFTA after the debate, with those previously having "no opinion" 

swayed most. 

Nov. 17 U.S. House of Representatives approves NAFTA implementing legislation by a 234 to 

200 vote. 

Nov. 20 U.S. Senate approves NAFTA implementing legislation by 61 to 38 vote. 

Nov. 22 Mexican Senate ratifies the NAFTA as a treaty by a vote of 56-2. 

59 
Figure M—Continued 

NAFTA-related developments in 1993 

DECEMBER 

Dec. 2 Prime Minister Chretien announces intention to proclaim the NAFTA after agreement 

reached to establish Working Groups on dumping/antidumping and 

subsidies/countervailing duties; Canada issues statement on energy security and water 

rights. 

Dec. 8 President Clinton signs NAFTA implementing bill into law. 

Dec. 20 

Dec. 27 

Dec. 30 

Dec. 30 

Presidential Proclamation published in the Federal Register to put into effect the revised 

U.S. tariff schedule, remove Mexico from GSP eligibility. 

President Clinton determines that Canada and Mexico had completed the necessary 

steps to implement the NAFTA and supplemental accords and transmits the required 

report to Congress. 

Canada proclaims (enacts) NAFTA implementing legislation. 

United States exchanges diplomatic notes with Canada and Mexico to bring NAFTA and 

the supplemental accords into effect on Jan. 1, 1994. Canada and the United States 

suspend the CFTA while NAFTA is in effect and make transitional arrangements for 

ongoing disputes. 

Source: Compiled by staff of the U.S. International Trade Commission. 

environmental rules, and, under certain circumstances, 

to develop a factual record regarding such matters. 26 

The Labor Council is charged with promoting 

cooperative activities between the Parties regarding 

occupational safety and health, human resource 

development, labor statistics, and worker benefits and 

compensation. The staff of the Labor Secretariat will 

initially be limited to 15 positions.27It is charged with 

the preparation of periodic reports on such topics as 

labor law and administration, labor market conditions, 

and human resource development. It may also prepare 

studies on any matter at the Council's request. 28 

Each agreement provides vehicles for the provision 

of public advice and recourse to trilateral dispute 

settlement mechanisms to consider complaints about 

failure to enforce domestic laws. 29When disputes are 

not satisfactorily resolved within a reasonable time, 

both agreements also permit ultimate recourse to fines 

or trade sanctions, 3° if well-founded complaints are 

demonstrably linked to goods or services that are 

traded among the parties or that compete with goods or 

services of the complaining party. 31Such penalties 

would be the last step in a process designed to 

encourage early and amicable resolution of the 

problem at hand. 

Understanding Concerning 

Emergency Action 

Reflecting President Clinton's concern that 

NAFTA should be accompanied by additional 

mechanisms to deal with import surges, the United 

States, Canada, and Mexico reached an understanding 

regarding chapter 8 of the NAFTA, Emergency 

Action. 32They agreed to establish a working group to 

consider any issue related to emergency actions taken 

or contemplated under the GATT article XIX or under 

NAFTA chapter 8. The working group will also serve 

as a forum for examining trade, productivity, 

employment, and other economic factors with respect 

to any good. Such examinations will take place upon 

request of any party and with the concurrence of two of 

the three parties. 

Border Environmental 

Infrastructure Agreements 

On November 3, 1993, the United States signed an 

ad referendum agreement with Mexico to establish a 

Border Environmental Cooperation Commission 

(BECC) and a North American Development Bank 

(NADBank). The two agencies are to coordinate, 

oversee, and help fund environmental infrastructure 

60 
projects along the U.S.-Mexico border. The NADBAnk 

was specifically created to serve the BECC as a source 

of financing. Up to 10 percent of its capital shares will 

be available for purposes other than environmental 

infrastructure, including the promotion of community 

adjustment and investment. The United States and 

Mexico will each provide $225 million in paid-in 

capital to NADBank, which is expected to offer up to 

$2.0 billion in loans and partial guarantees. An 

additional $2.0 billion in World Bank and the 

Inter-American Development Bank funding is expected 

to support U.S.-Mexico border environmental 

activities. 33 

"Paying" for NAFTA 

As required by the "pay-as-you-go" provisions of 

the Budget Enforcement Act of 1990 and the 1993 

Omnibus Budget Reconciliation Act, the North 

American Free-Trade Agreement Implementation Act 

provided funding for all of the lost tariff revenue, along 

with the incremental appropriations associated with the 

implementation of the NAFTA and associated 

agreements. 34Funding came in the form of (a) a 

projected reduction in Commodity Credit Corporation 

outlays because of improvements in commodity 

markets after NAFTA goes into effect; (b) a projected 

increase in governmental efficiency resulting from the 

implementation of an electronic fund transfer system 

for business withholding and other tax deposits; (c) a 

temporary increase in the air and sea 

passenger-processing fees, a temporary lifting of 

current statutory exemptions from such fees, 35and an 

extension of the time period such passenger- and 

merchandise-processing fees will be in effect (through 

fiscal year 2003); and (d) an improved enforcement of 

tariff laws and detection of fraud by the U.S. Customs 

Service as a result of increased access to certain tax 

information. 

Accompanying Report on 

Environmental Issues 

The President transmitted a report on 

environmental issues to Congress along with the 

legislative package. The report addressed such topics 

as Mexico's pollution control regime and the potential 

environmental effects of the NAFTA. Its issuance 

reflected a continued willingness by the Administration 

to address the relationship of trade agreements to 

environmental objectives, even in the absence of a 

requirement to do so. 36Indeed, in expressing 

satisfaction with a unanimous decision by the Court of 

Appeals of the District of Columbia affirming the 

Administration's contention that a formal 

environmental impact assessment was not required for 

the NAFTA, the Administration expressed its 

continued commitment to insuring that environmental 

issues arising in connection with NAFTA are 

"seriously considered" and "effectively addressed." 37 

 Six leading environmental groups — the World 

Wildlife Fund, National Wildlife Federation, the 

Environmental Defense Fund, Conservation 

International, the Natural Resources Defense Council, 

and the Audubon Society — ultimately endorsed 

NAFTA. 

"Side" Agreements with Mexico 

The package transmitted by President Clinton to 

the Congress on November 4 included three 

freshly-initialed agreements with Mexico about 

NAFTA itself. Two of the exchanges of letters —

dealing with sugar and with frozen concentrated orange 

juice (FCOJ) — will cause substantive changes in the 

way NAFTA is implemented. However, trade in those 

products is still slated to be fully liberalized in the 15th 

year after NAFTA's entry into force. The third one 

represented Mexico's commitment to engage in early 

negotiations toward the acceleration of tariff 

reductions. 

Sugar 

In the case of sugar, the two countries agreed to 

modify the basis for determining the quantity of sugar 

that must be accorded duty-free entry. NAFTA ties the 

determination of the quantity of sugar which is entitled 

to duty-free entry to each Party's net production 

surplus. In the understanding reached on November 3, 

1993, the definition to determine whether a country is a 

net sugar producer was explicitly expanded to include 

consumption of high fructose corn syrup. Moreover, 

the annual fixed ceiling on the amount of sugar entitled 

to duty-free entry will be changed in the years 2000 to 

2007 to the smaller of the Party's net surplus 

production, or 250,000 metric tons. Previously, 

absolute ceilings would have ceased to apply if a 

country was or was projected to be a net surplus 

producer for two consecutive years. These changes 

came as a result of U.S. concern that Mexico could 

divert sugar into the export market by substituting high 

fructose corn syrup for sugar in the manufacturing of 

such products as soft drinks. 

61 
Frozen Concentrated Orange Juice 

For frozen concentrated orange juice, 38the two 

countries agreed to establish a tariff snap-back 

mechanism that would be applicable during NAFTA's 

first 14 years of operation. 39The United States is 

permitted to impose a tariff up to the then-applicable 

most-favored-nation rate on frozen concentrated 

orange juice imported from Mexico if frozen 

concentrated orange juice futures prices drop below a 

trigger level equal to the average price of the past 5 

years for the month in question, and if annual imports 

have exceeded a specified quantity (70 million gallons 

single strength equivalent from 1994 through 2002, or 

90 million gallons in years 2003 through 2007). The 

duty snap-back will cease to apply if the futures price 

is above the historical price for 5 consecutive days. 

NAFTA already provided for a tariff-rate quota with a 

higher duty rate on imports above 40 million gallons, 

but that tariff was slated to decline by 15 percent from 

the applicable MFN rate during the first 6 years of 

NAFTA's operation. 

Tariff Acceleration 

Reflecting concerns expressed by particular 

industries throughout 1993 about the pace of Mexican 

tariff elimination under NAFTA, Ambassador Kantor 

sought a commitment from Mexico to engage in 

negotiations toward an acceleration of that schedule. 

Such negotiations were envisioned in article 302.3 of 

the NAFTA and authorized in section 201(b) of the 

implementing bill. Ambassador Kantor requested that 

these negotiations be conducted on an expedited basis, 

and expressed particular sympathy for the requests 

made by producers of wine and brandy, flat glass, 

home appliances and bedding components. Mexico 

agreed to be available for such talks. 40In its 

November 4 Statement of Administrative Action, the 

Administration pledged to give priority to reducing 

imbalances in duty treatment among the three NAFTA 

partners and reducing Mexican and Canadian tariffs 

that are considerably higher than U.S. tariffs 

(mentioning the above-cited items and dry beans, 

cream cheese, and potatoes). 41 

The United States published a request for petitions 

for accelerated tariff elimination in the Federal 

Register of December 23, 1993. 42On December 29, 

the Office of the United States Trade Representative 

(USTR) announced that Canada would also participate 

in the exercise, expected to be conducted in two 

stages.43An expedited round of consultations would 

deal with priority items and be completed as soon as 

practicable in 1994; the remaining items would be 

considered thereafter. 

Presidential Determination; 

Canadian and Mexican 

Implementation 

The President's authority to bring the NAFTA into 

force was contingent upon several steps. Among them 

was a Presidential determination that Canada and 

Mexico had completed the necessary steps to 

implement the NAFTA and the uniform regulations 

called for in article 511 of the agreement, and the 

issuance of a report to Congress explaining the steps 

Mexico had taken to implement the commitments 

contained in chapter 19 regarding binational panel 

review and in Annex 1904.15 of the NAFTA regarding 

the operation of its antidumping and countervailing 

duty laws.44 

Canada's House of Commons passed NAFTA 

implementing legislation on May 27, and its Senate 

approved the bill June 17. The legislation was 

proclaimed (enacted) by the Canadian Government on 

December 30, after newly elected Prime Minister Jean 

Chretien had fulfilled a campaign pledge by securing a 

commitment from the United States and Mexico to 

engage in future work on dumping and subsidies. Two 

trilateral working groups were charged with 

completing this effort by December 31, 1995. 45 

The Mexican Senate ratified NAFTA as a treaty on 

November 22. Under Mexican law, treaties thus 

ratified have the force of law and take precedence over 

conflicting domestic legislation. Mexico had already 

passed a revised Foreign Trade Law to conform with 

many NAFTA obligations in June 1993 (discussed in 

the "Mexico" section in chapter 4 of this report); 

regulations on how the dumping and countervailing 

duty portions of the law would be administered were 

published in the official gazette in late December. 

On December 27, President Clinton determined 

that Canada and Mexico had completed the necessary 

steps to implement the NAFTA and supplemental 

accords, transmitted the required report to Congress, 

and directed the Secretary of State to exchange 

diplomatic notes with Canada and Mexico to bring 

NAFTA into effect. Diplomatic notes were exchanged 

with Mexico and Canada on December 30. 

Canada and the United States had earlier agreed 

that the U.S.-Canada Free Trade Agreement would be 

suspended while NAFTA was in effect. 46Certain 

portions of the CFTA are adopted by reference in the 

NAFTA—notably the schedules of tariff concessions 

previously accorded by the United States and 

62 
Canada47—or, by mutual agreement, remain in effect 

irrespective of their non-inclusion in the NAFTA 

itself.48Interim arrangements for the handling of 

ongoing disputes under CFTA dispute-settlement 

procedures were also made. 49 

U.S. Implementation 

By early 1994, the United States was well on its 

way to implementing most of the important regulations 

and other administrative actions needed to implement 

NAFTA. On December 15, 1993, President Clinton 

issued a proclamation putting into effect the U.S. tariff 

concessions, terminating Mexico's status as a 

beneficiary of the U.S. Generalized System of 

Preferences (GSP) in accordance with the NAFTA 

implementing bill, and making other changes in 

customs procedures and treatment required by NAFTA 

(for example, waiving fees imposed under section 22 

of the Agricultural Adjustment Act). 50On December 

27, President Clinton signed an executive order to 

effect certain administrative actions, such as waiving 

Buy America and requiring agencies to provide 75 

days notice before imposing new technical 

requirements needed to bring NAFTA into force. 51 

 The National Administrative Office for the North 

American Agreement on Labor Cooperation was 

established effective January 3, 1994, through a notice 

published in the December 30 Federal Register.52 

Interim rules of origin regulations, 53proposed 

country-of-origin marking rules, 54and interim rules on 

other customs matters have also been published, 55as 

have a variety of standards- and services-related 

notices. 56 

Next Steps 

NAFTA's operation will be overseen by the 

Free-Trade Commission, composed of the parties' 

three trade ministers. 57The inaugural meeting of the 

Commission was held on January 14, 1994. The 

meeting focused on early implementation of the 

agreement and formally launched the process of 

consultation and further liberalization envisioned by 

the NAFTA. NAFTA itself creates some 22 committees 

and working groups to accomplish these aims 58 

Subsequent agreements call for the establishment of 12 

more. 59The Committees began meeting in early 1994 

to establish longer term work plans. 

Moreover, the implementing legislation and 

Statement of Administrative Action impose numerous 

requirements upon the Administration to pursue 

matters with NAFTA partners or to take domestic 

action not strictly required by NAFTA itself. For 

example, the Administration agreed to pursue the 

inclusion of additional international environmental 

agreements in article 104 of the NAFTA, thereby 

giving them precedence over the NAFTA if conflicts 

arise. 60The implementing bill also mandated the 

establishment of an end-use certificate program for 

wheat and barley within 120 days after enactment 61 

 and the identification by the end of April 1994 of any 

new Canadian act, policy or practice affecting cultural 

industries that is actionable under "Special 301" 

provisions.62In addition, the President promised to 

request the U.S. International Trade Commission to 

conduct investigations under Section 22 of the 

Agricultural Adjustment Act regarding wheat and 

peanut butter imports. 63Both investigations are now 

under way. 64 

Some of the steps expected to have been completed 

by January 1, 1994, are still not completed. At this 

writing, none of the rosters for the various 

dispute-settlement panels called for in the agreement 

has been finalized, nor have the rules of procedure for 

general dispute settlement called for in NAFTA article 

2012. Although lists of State and Provincial measures 

that do not conform with the requirements of NAFTA 

chapter 14 and will be "grandfathered" were 

exchanged on January 14, 1994, the three parties 

agreed that, for certain types of measures, the deadline 

for finalizing reservations would be extended until 

June 30, 1994. Country-of-origin-marking rules and 

the terms of reference for newly created working 

groups on subsidies and dumping also remain under 

discussion and review. 

Efforts to establish the institutions that will carry 

out the NAFTA and the supplemental agreements on 

environment and labor continued into 1994. Agreement 

on the desirability of creating an International 

Coordinating Secretariat (ICS) for the NAFTA to be 

housed in Mexico City was announced at the January 

14, 1994, NAFTA Ministerial. While locations for the 

other two secretariats have recently been announced —

the Labor Secretariat will be located in Dallas and the 

Environmental Secretariat will be located in Montreal, 

Canada — the directors have yet to be selected and 

other issues remain unresolved. 

Several paths toward the eventual goal of free trade 

in the Western Hemisphere are being explored by the 

United States in conjunction with its NAFTA partners, 

including permitting other countries to accede to 

NAFTA. The U.S. Congress, meanwhile, included a 

requirement for several reports related to possible 

future free-trade agreements. On May 1, 1994, the U.S. 

Trade Representative submitted a report listing the 

countries that are the best prospects for free-trade 

63 
agreements with the United States. The President is 

directed by the NAFTA implementing bill to make 

proposals to Congress for the initiation of free-trade 

negotiations with one or more countries by July 1, 

1994. 

Economic Cooperation in 

The Asian Pacific Region 

Introduction 

Several foreign and domestic developments 

sparked an increased interest by the United States in 

the Asian Pacific region during 1993. U.S. companies 

have grown increasingly interested in the potential 

investment and trade opportunities in the region. The 

Asian-Pacific region contains some of the fastest 

growing economies of the world, accounting for over 

one-half of global GNP. In 1992, for example, real 

GNP growth ranged from highs of 12.8 percent in 

China, 8.0 percent in Malaysia and 7.5 percent in 

Thailand to lows of 1.5 percent in Japan, 0.9 percent in 

Canada and 0.6 percent in the Philippines. 65Average 

real GNP growth for the 15 economies of the 

Asia-Pacific Economic Cooperation (APEC) was 2.6 

percent in 1992 compared with 1.0 percent for the 

European Community. The APEC countries accounted 

for more than half of global GNP in 1990, or $11 

trillion. 66In terms of trade, U.S. exports to the 

Asian-Pacific region were higher than to either Europe 

or Latin America, totalling $132 billion in 1993. 

However, the United States ran a trade deficit with the 

region of $98 billion, mostly accounted for by Japan 

and China. 

On July 7, in a speech delivered at Waseda 

University in Tokyo, President Clinton called for the 

creation of a "new Pacific community," 67including 

Japan, the United States, and other economies of the 

region. While the concept of community was not 

explicitly defined in the speech, the most likely vehicle 

for further pursuit of the goal was the Asia-Pacific 

Economic Cooperation forum, the only governmental 

organization with membership on both sides of the 

Pacific. The United States has been a supporter of 

APEC since its initiation in 1989. 68During 1993, the 

United States was the host for the first meeting of 

leaders from member economies and for the annual 

Ministerial meeting. 

The Asian countries also took steps toward closer 

trade and economic ties among themselves. 

Apprehensions about the prospects for a successful 

conclusion of the Uruguay Round and moves towards 

regional integration in the EU and NAFTA resulted in 

more interest in fostering trade among Asian countries. 

The lowering of tariff and nontariff barriers by 

individual countries and a growing recognition of the 

need to attract foreign investment contributed to this 

trend. In the past, countries of the region viewed the 

Association of Southeast Asian Nations (ASEAN) 

largely as a vehicle for conducting a dialogue on 

security interests. Only recently have these economies 

turned more toward ASEAN as a focal point for 

furthering their economic interests through the Asian 

Free Trade Area (AFTA). In 1993, steps were taken 

towards rescheduling the phase-out of tariffs among 

member countries, beginning on January 1, 1994. The 

following section provides background information 

and a summary of 1993 developments in APEC and 

ASEAN. 

APEC 

Background 

APEC was established in 1989 as an informal 

consultative forum at a Ministerial Conference in 

Canberra, Australia. The 12 original members of 

APEC included the 6 ASEAN economies, the United 

States, Korea, Japan, Canada, Australia, and New 

Zealand.69The founding purpose of the organization 

was to promote official economic cooperation in the 

region.70The members of APEC recognized the need 

for an effective means of strengthening the multilateral 

trading system, providing an opportunity to assess 

trade and investment in the Asian Pacific region and to 

identify common economic interests. The "Three 

Chinas"—China, Taiwan and Hong Kong—joined 

APEC in 1991, bringing the total membership in 

APEC to 15 countries. 71 

The chairmanship of APEC is rotated annually 

among members. The United States chaired the 

organization during 1993. 72The Chair is responsible 

for hosting annual meetings of foreign and economic 

ministers in the region. Since 1989, five annual 

ministerial meetings have been held in Canberra, 

Singapore, Seoul, Bangkok, and Seattle. 73 

 Preparations for each Ministerial are carried out by 

lower level working groups and Senior Officials 

Meetings (SOMs) held throughout the year. During 

1993, five Senior Officials meetings were held in 

preparation for the Seattle ministerial hosted by the 

United States in November. 74The Senior Officials 

oversee 10 working groups, created during the 1990 

ministerial, covering broad issue areas. The working 

groups include trade and investment data, trade 

promotion, investment and industrial science and 

64 
technology, human resources development, regional 

energy cooperation, marine resources conservation, 

telecommunications, transportation, tourism and 

fisheries. 

All APEC decisions are based on the principle of 

unanimous consent. This means that just one member 

can block a decision. Some observers have noted that 

such procedures could eventually frustrate progress on 

certain issues given the disparity of political systems 

and levels of economic development represented in the 

organization. 

Developments During 1993 

Leaders' Meeting 

There were several main accomplishments by 

APEC during 1993. Probably the most significant 

event was the first meeting of leaders from the APEC 

economies on November 20, 1993, at Blake Island, 

near Seattle, Washington. 75 

The Leaders' Meeting occurred immediately 

following the fifth Senior Officials Meeting and 

Ministerial held November 17 through 19. In a Vision 

Statement issued following their day-long meeting, the 

leaders reaffirmed their commitment to the reduction 

of trade and investment barriers in the region and to the 

"development of APEC as a forum for producing 

tangible economic benefits to the region". 76They also 

called for a meeting of APEC finance ministers to 

consult on broad economic issues, including 

macroeconomic developments and capital flows. This 

was a departure from the position taken earlier by 

ministers who had opposed holding such a meeting for 

fear that a meeting of finance ministers could become a 

forum for negotiations on trade or economic policies. 

The APEC leaders pledged their "utmost efforts to 

bring the Uruguay Round to a successful conclusion by 

December 15." Just one day before the Leaders 

Meeting, the APEC ministers had adopted a strong 

statement calling for concrete steps to be taken during 

the Round on market access for industrial goods, 

agriculture, and services, and on a strengthened system 

of rules and disciplines. Each APEC economy 

participating in the Round offered specific sectoral 

commitments for improving market access, building on 

the package of initiatives that had been announced by 

the United States, Japan, the EU, and Canada in July. 

The Ministerial Meeting Joint Statement challenged 

other Uruguay Round participants and the European 

Union specifically to improve their own offers in 

Geneva. 77From the United States viewpoint, which 

had stressed the need to send a strong and clear 

message to the EU, adoption of the ministerial 

statement was an important step in moving toward the 

conclusion of the Round. Other APEC members had 

agreed that APEC should adopt a leadership role in 

attempting to jumpstart the Uruguay Round talks. 

Trade and Investment Framework 

Before the Leaders' Meeting, Ministers had agreed 

to the adoption of a "Declaration on the APEC Trade 

and Investment Framework," which outlines guidelines 

for future APEC policies on trade and investment in 

the region. The Framework establishes principles for 

future cooperation on economic issues, including 

APEC's intention to work toward development through 

"open regionalism," and reaffirms its commitments to 

strengthening the multilateral trading system under 

GATT. 

The ministers established a Committee on Trade 

and Investment (CTI) to implement the Framework 

with the objective of creating a "coherent APEC 

perspective and voice on global trade and investment 

issues and increase cooperation among members on 

key issues."78The CTI is expected to build upon the 

work of the Informal Group on Regional Trade 

Liberalization. The 1994 work program for the 

committee includes reviewing the results of the 

Uruguay Round and its implications for the region, 

pursuing efforts to simplify and harmonize customs 

procedures in the region, examining the investment 

environment and means to enhance investment in 

APEC, and identifying APEC's possible role in the 

area of standards and conformance. Korea will chair 

the CTI during 1994. The United States and Australia 

will serve as co-vice chairs. 

Other Issues 

Throughout 1993, APEC discussions at the Senior 

Officials and Ministerial level centered on several 

other major issues, including future directions for 

APEC, the pace and scope of institutionalization, 

membership, the APEC work program, and 

organizational issues. While APEC ministers made 

decisions relating to various aspects of these topics at 

the November Ministerial, additional issues were left 

to be addressed by APEC Senior Officials and 

Ministers over the long term. 

APEC has been moving gradually towards 

institutionalization, with the establishment of a 

Secretariat in 1992. However, there is considerable 

debate within the organization about the pace and 

extent to which this should occur. In general, members 

prefer that APEC remain a loose, consultative forum 

65 
and that it avoid the EU's more bureaucratic approach 

to handling regional economic issues. 

One of the most controversial issues addressed by 

APEC in 1993 was consideration of a recommendation 

by the Eminent Persons Group (EPG) for the creation 

of an Asia Pacific Economic Community by 1996. 79 

 The Bangkok Ministerial in 1992 had recommended 

the establishment of a group of "persons with high 

calibre and international repute within the region" to be 

nominated by member APEC countries to "develop a 

vision of trade in the Asia Pacific region to the year 

2000." The vision was to include "trends in economic 

growth, trade and investment, and the regional and 

global trade policy environment; a policy for 

advancing APEC's development through strengthened 

economic and trade linkages; identification of the main 

barriers to expanding trade in the region and ways to 

reduce these barriers; and identification of priorities in 

future multilateral trade negotiations and the evolution 

of GATT." In 1993 the EPG, chaired by C. Fred 

Bergsten, comprising 11 distinguished academics, 

former government officials and businessmen, was 

established. The EPG met three times in 1993 to 

develop its vision for APEC. 

The EPG report, presented at the November 1993 

Ministerial, recommended that APEC take specific 

initiatives in the areas of trade liberalization, trade 

facilitation, technical cooperation, and 

institutionalization in order to move toward a goal of 

free trade and investment within the region. In making 

its recommendations, the EPG called on APEC to 

respond to three perceived threats to the continued 

vitality of the Asian Pacific region: 1) the erosion of 

the global trading system; 2) the evolution of inward 

looking regionalism; and 3) the risk of fragmentation 

within the Asia/Pacific region. 80 

The EPG report's recommendations generated 

considerable debate at both the Senior Officials and 

Ministerial level, reflecting differences in views 

between ASEAN members and the developed 

countries over how fast APEC should move toward 

institutionalization. The United States, in particular, 

had hoped that APEC would endorse the EPG's 

concept of creating a free trade area or grouping. 

However, some members objected to the use of the 

term "community" to describe the ultimate goal for 

APEC and felt that it was premature for APEC to adopt 

all of the EPG's recommendations. Following 

numerous discussions, the reference to forming a 

community was left out of the Joint Statement of 

Ministers. Instead, the ministers declared that they 

"warmly welcomed" the EPG report's "broad thrust 

and direction," noting that its vision served as an 

"important foundation and catalyst for future regional 

cooperation." 81The Ministers, reflecting APEC 

members' preference for consultation and consensus, 

and viewing the document as a vehicle for discussion 

rather than a mandate, directed the APEC Secretariat to 

give broad distribution to the EPG report within the 

region. 

With regard to addressing specific EPG 

recommendations, the ministers agreed to group them 

into three categories: (1) recommendations closely 

related to APEC's ongoing work that would be 

implemented promptly, (2) recommendations related to 

the outcome of the Uruguay Round that would require 

additional consideration, and, (3) recommendations 

relating to long-term trade liberalization, that is, 

moving toward a free trade area that would require 

further elaboration by the EPG. The EPG, upon the 

advice of Senior Officials, was directed to provide 

ministers with more specific proposals on how to 

realize its long-term vision at their next Ministerial to 

be held in Indonesia in 1994. 

Organization and Structure 

At the November 1992 Ministerial in Bangkok, 

APEC agreed to establish a Secretariat in Singapore. 82 

 The Secretariat began functioning in 1993 with an 

Executive Director and 11 staff members. The majority 

of APEC members strongly favor a small Secretariat 

with a limited budget and have stated that they want to 

ensure that a UN or EU-like bureaucracy is not created. 

In November 1993, ministers voted the FY 1994 

budget to remain at the FY 1993 level of $2 million. 

During 1993, there was discussion at the Senior 

Officials Meetings and Ministerial about how to 

address the increasing numbers of overlapping 

committees and projects within APEC. Proposals to 

rationalize APEC's structure were developed, and 

ministers directed Senior Officials to provide 

recommendations on restructuring APEC at the 1994 

Ministeria1. 83 

Membership and Non-member 

Participation 

During 1993, there were consultations in APEC 

regarding the admission of Mexico, Papua New 

Guinea, and Chile as members. Following informal 

discussions at the November Ministerial, Mexico and 

Papua New Guinea were admitted immediately to 

APEC as members, while it was decided that Chile 

would be admitted at the 1994 Ministerial. In the 

interim, however, Chile was encouraged to participate 

in the activities of the Working Groups. Additional 

66 
membership decisions were deferred for 3 years during 

which time the Senior officials will develop policies 

and recommendations on membership. Guidelines for 

nonmember participation were also adopted by the 

ministers. Although they are not APEC members, 

groups such as ASEAN, the Pacific Economic 

Cooperation Council (PECC) and the South Pacific 

Forum, have attended APEC meetings as observers and 

contributed to APEC's work. The EU has requested 

observer status in APEC, but no action was taken in 

1993 to address the request. 

Other Actions 

Other actions taken at the 1993 Ministerial 

included endorsing the work of the ad Hoc Group on 

Economic Trends and Issues with regard to exchanging 

key economic statistics, carrying out studies on trade 

and investment issues, and discussing economic 

developments in the region. The Ministers also 

endorsed and approved the vision and policy 

statements of the 10 working groups. They recognized 

the importance of the private sector in APEC activities 

by directing Working Groups to expand their outreach 

to the private sector and pledging to find additional 

ways to broaden private sector participation in APEC, 

particularly through the CTI committee. In addition, 

the Ministers praised the work of the Secretariat while 

reiterating the desire of members to keep its staff and 

budget lean in order to avoid the "Brussels" syndrome. 

ASEAN and AFTA 

ASEAN 

ASEAN was established in 1967 in Bangkok and 

succeeded the Association of Southeast Asia. The 

original signatories to the Bangkok Declaration were 

Indonesia, Malaysia, the Philippines, Thailand, and 

Singapore. Brunei joined ASEAN in 1984. ASEAN 

holds annual meetings of ministerial-level 

representatives from member countries. The permanent 

secretariat for ASEAN was established in 1976 and 

located in Jakarta, Indonesia. 84The ASEAN economic 

ministers oversee five permanent committees, each 

hosted by a different member state, that were 

established to implement ASEAN's economic goals. 85 

The major purposes of ASEAN, as stated in the 

Bangkok Declaration, are to promote economic 

growth, expand trade, promote regional peace and 

stability, and improve transport and communications. 

Throughout the 1970s and particularly after the fall of 

South Vietnam, ASEAN's focus was on preserving 

peace and countering Communism in the region. 86In 

1976, following the signing of the Declaration of 

ASEAN Accord, ASEAN's emphasis began to shift 

from politics to economics. Members decided to focus 

on expanding productivity through establishing 

regional manufacturing facilities, cooperating on basic 

commodities and production processes, enacting 

preferential trading arrangements, and harmonizing 

trade and investment policies. 87 

ASEAN also holds regular dialogue meetings with 

the United States, the European Union, Australia, 

Canada, Japan, New Zealand, and the United Nations 

Development Programme to encourage investment, 

trade, and economic growth. These postministerial 

conferences among ASEAN foreign ministers have 

become important in facilitating communication 

between ASEAN and its major developed trading 

partners. 88 

Several market-sharing or production-cooperation 

schemes have been attempted under ASEAN, including 

the Preferential Trading Arrangements (PTAs), the 

ASEAN Industrial Joint Venture (AIJV), the ASEAN 

Industrial Complementation (AIC), and the ASEAN 

Industrial Projects (AIP). 89In general, these programs 

have been difficult to implement because member 

countries have sought exemptions and because 

nontariff barriers have diminished the effects of tariff 

cuts. 

AFTA 

In July 1991, at the annual postministerial 

conference, ASEAN foreign ministers issued a 

communiqué endorsing a proposal that had been put 

forth by Thailand to create an ASEAN free-trade area 

and set up a working group to submit 

recommendations at the annual summit in January 

1992.90At the annual meeting of ASEAN ministers in 

October 1991, the Prime Minister of Thailand Anan 

Panyarachun further encouraged the establishment of 

an ASEAN Free-Trade Area (AFTA) by the year 

2000.91In explaining the reasons for his proposal, 

Prime Minister Anan said: "ASEAN countries had no 

other choice but to integrate or become a small player 

in a large playing field." 92 

At the fourth annual ASEAN summit held in 

January 1992, the six ASEAN countries signed the 

Singapore Declaration or framework agreement to 

further economic cooperation and the Common 

Effective Preferential Tariffs (CEPT) 93agreement that 

would lead toward the AFTA. 94The AFTA would 

reduce tariffs on manufactured and capital goods and 

processed agricultural products to between 0 and 5 

percent over a period of 15 years, or by 2008. Fifteen 

types of manufactured goods were to be subject to 

tariff reductions immediately. The tariff reductions 

67 
were to occur in two stages, with the first beginning on 

January 1, 1993. The more advanced economies of 

Thailand, Malaysia, Brunei, and Singapore had favored 

a faster schedule for the elimination of tariffs, while 

Indonesia and the Philippines wanted to move more 

slowly. 95Because of the inability of members to agree 

on a common list of products to be covered, the initial 

tariff cuts were delayed. 

On October 8, 1993, in conjunction with the 35th 

annual meeting of ASEAN economic ministers, the 

AFTA Council attempted to reinvigorate AFTA by 

announcing that AFTA would be relaunched on 

January 1, 1994. During their meetings, the ministers 

agreed to a list and schedule for tariff reductions on 

32,000 items beginning in January 1994 (except 

Brunei, which would initiate the cuts in June 1994). 

Agricultural products are excluded from the list. AFTA 

local content requirements were set at 40 percent; 

however, details on how this would be calculated had 

not been decided. In reaching the agreement, one 

leader noted that ASEAN was moving forward with its 

plans for a free trade area because the developed world 

appeared to be moving toward protectionism and that 

ASEAN countries were concerned about the 

then-stalled Uruguay Round talks 96 

United States' Relationship with 

ASEAN 

ASEAN has served as an important organization 

for the U.S. Government for discussing security 

matters and economic matters with ASEAN 

members. 97In 1989, the ASEAN-U.S. Initiative 

(AUI) proposed a number of ways in which trade, 

investment, and economic relations could be enhanced, 

including the negotiation of bilateral investment 

treaties with individual countries. In 1990, ASEAN 

agreed that implementation of the AUI would be 

contingent upon the conclusion of the Uruguay Round 

and that, in the meantime, the U.S. dialogue would take 

place annually before the ASEAN ministerial meeting. 

On December 21, 1990, the United States signed a 

Memorandum on Trade and Investment with ASEAN, 

which established a Trade and Investment Cooperation 

Committee (TICC) to monitor trade and investment 

relations and to identify trade and investment 

opportunities. On October 11, 1991, the United States 

signed a Trade and Investment Framework Agreement 

(TIFA) with Singapore in accordance with the 

memorandum 98The United States is expected to 

eventually sign TIFAs with other ASEAN countries, 

furthering free trade in the region. 

On November 20, 1993, the United States initiated 

a new commercial program with ASEAN entitled the 

"ASEAN-U.S. Alliance for Mutual Growth" (AMG). 

The purpose of the program is to expand trade and 

stimulate economic growth between the United States 

and ASEAN. The program will initially focus on the 

following areas: (1) infrastructure development, 

including transportation, telecommunications, electric 

power, manufactures, and environmental technology; 

(2) trade and commercial development, including 

informational and promotional activities by various 

U.S. government agencies; (3) investment and 

technology, including mechanisms for sharing 

technology and protection of intellectual property 

rights; (4) small and medium enterprise development; 

(5) financing, including interagency coordination with 

the private sector; and (6) policy development, 

including establishing a policy dialogue to discuss 

intellectual property rights and standards issues. Senior 

Officials from the United States and ASEAN were 

scheduled to hold their first meeting on implementing 

the AMG in early 1994. 99 

Figure N 

Regional institutions and arrangements 

AFTA 

(ASEAN Free Trade Area) 

APEC 

(Asia-Pacific Economic 

Cooperation) 

ASEAN 

(Association of Southeast 

Asian Nations) 

EAEC 

(East Asian Economic 

Caucus) 

Agreement reached in January 1992 among the six ASEAN members to phase out 

tariffs on selected items over a 15-year period. 

A regional forum established in 1989 aimed at promoting economic cooperation 

among the economies of the Asia-Pacific. Membership as of January 1, 1994 

included— Australia, Brunei, Canada, China, Hong Kong, Indonesia, Japan, Korea, 

Malaysia, New Zealand, the Philippines, Singapore, Taiwan, Thailand, the United 

States, Mexico, and Papua New Guinea. 

A regional political and economic organization established in 1967. Its founding 

purpose was to promote economic growth, trade, regional peace and stability. 

Membership includes Brunei, Indonesia, Malaysia, the Philippines, Singapore, and . 

Thailand 

A regional consultative grouping (formally known as the East Asian Economic 

Grouping) proposed by Malaysia in 1990. In 1993, ASEAN agreed to incorporate the 

concept in some form under APEC. 

68 
ENDNOTES 

1 Public Law 103-108. 

2For a discussion, see, U.S. General Accounting 

Office, North American Free Trade Agreement: 

Assessment of Major Issues, GAO/GGD-93-137, 

Sept. 1993 and Office of Technology Assessment, 

U.S.-Mexico Trade: Pulling Together or Pulling 

Apart?, ITE-545, Oct. 1992. 

3Most prominently, his October 4, 1992, 

campaign speech in Raleigh, North Carolina. 

4See, for example, remarks made February 5. 

"The President's News Conference with Prime 

Minister Brian Mulroney," Weekly Compilation of 

Presidential Documents, Feb. 8, 1993, pp. 147-149. 

5See, for example, remarks of Patrick J. 

Buchanan, New York Times, Aug. 27, 1993, p. D-2. 

6See, for example, letter from President Clinton 

to the Congress of the United States in which he 

transmitted legislation to implement the NAFTA, Nov. 

4, 1993. 

7See, for example, "Presidential Statement on 

North American Free Trade Agreement Supplemental 

Accords," Aug. 13, 1993, reprinted in Weekly 

Compilation of Presidential Documents: 

Administration of William J. Clinton, 1993, pp. 

1613-4. 

8See, for example, remarks of Representatives 

Derrick, Soloman, and Sanders, Congressional 

Record, Vol. 139, No. 160, Pt. II (Nov. 17, 1993). 

9See, for example, remarks of Representatives 

Rostenkowski, Gingrich, Beilenson and Fish, 

Congressional Record, Vol. 139, No. 160, Pt. II (Nov. 

17, 1993), and of Senators Mitchell, Dole, Gramm, 

Harkin, and Wyden, Congressional Record, Vol. 139, 

No. 163 (Nov. 20, 1993). 

10 The Committees on Ways and Means, 

Agriculture, Banking, Finance and Urban Affairs, 

Energy and Commerce, Foreign Affairs, Government 

Operations, the Judiciary, and Public Works and 

Transportation. 

11 These procedures are established in section 

1103 of the Omnibus Trade and Competitiveness Act 

of 1988 (Public Law 100-418). 

12Including the pursuit of "greater market access 

for United States exports of goods and services and 

opportunities for export-related investment by United 

States persons," through bilateral or multilateral 

agreements that are "consistent with, and 

complementary to, existing international obligations of 

the United Sates and ongoing multilateral efforts to 

open markets." Sec. 108 (b). 

13Including cut flowers, peanuts, tomatoes and 

peppers, and frozen concentrated orange juice. 

14Chapter 19 of the NAFTA requires Mexico to 

make a number of changes in its antidumping and 

countervailing duty laws, primarily related to the 

process for conducting such investigations. Section 

402 of the NAFTA implementing bill establishes a 

process in the United States for preparing the roster 

of individuals eligible to serve on panels and 

committees and for selecting panelists and committee 

members for particular disputes. USTR was required 

to submit lists of candidates to the House Committee 

on Ways and Means and to the Senate Finance 

Committee; a list of the judges included on such 

rosters will be provided to the Senate and House 

Judiciary Committees. Section 402(h) of the bill also 

requires biannual reports by USTR on the steps it is 

taking to include candidates with judicial experience 

in rosters and panels. 

15Section 406 of the bill states that the 

objectives of the United States in future subsidy 

negotiations with NAFTA partners shall include 

increased discipline over domestic and export 

subsidies and maintenance of effective remedies 

against subsidized imports. 

16The Act's passage was considered desirable 

rather than necessary to implement NAFTA. (See 

Statement of Administrative Action, p. 2.) It had 

been approved by Congress earlier, but was vetoed 

by then-President Bush. 

17NAFTA Implementation Act, sec. 101(b)(2). 

18i bid ., secs. 531-544. 

19Such laws and policies do not include those 

directly related to worker safety or health or those 

whose primary purpose is managing the commercial 

harvest or exploitation of natural resources. 

Environmental Agreement, art. 45.2 (a) and (b). 

20Environmental Agreement, arts. 3, 2, and 5. 

Labor Agreement, arts. 2 and 3. 

21The dispute settlement process covers key 

labor areas such as health and safety, child labor, 

and minimum wages. However, industrial relations, 

including the right to organize and bargain 

collectively, are not subject to the labor agreement's 

dispute settlement procedure. 

22Environmental Agreement, arts. 4 and 7. 

Labor Agreement, arts. 6, 7, 4, and 5. 

23Environmental Agreement, art. 10. 

24Ibid., art. 10.6. 

25Ibid., arts. 12 and 13. 

26Ibid., arts. 14 and 15. The Commission is not 

permitted to pursue matters subject to pending 

judicial or administrative proceedings or to develop a 

factual record on any matter without the Council's 

expressed instruction based on a two-thirds vote. 

27Labor Agreement, art. 12.2. 

28Ibid., art. 14. 

29Environmental Agreement, arts. 14, 16, and 

17; Labor Agreement, art. 17. 

30 Environmental Agreement, arts. 34 to 36; 

Labor Agreement, arts. 39 to 41. In lieu of trade 

sanctions against its products, Canada agreed to 

make panel-ordered remedies directly enforceable in 

Canadian courts, but the United States and Mexico 

were unwilling to give automatic force to decisions by 

an international tribunal. Environmental Agreement, 

annex 36A; Labor Agreement, annex 41A. 

31Environmental Agreement, art. 24; Labor 

Agreement, art. 23. 

69 
32 Understanding Between the Parties to the 

North American Free Trade Agreement Concerning 

Chapter 8 - Emergency Action, Sept. 13, 1993. 

33U.S. Department of Treasury Fact Sheet, 

Border Environmental Clean-Up: Sources of 

Financing, telex, Nov. 9, 1993. 

34The offsets were provided for in sections 521 

through 523 of the NAFTA implementing bill. Some 

NAFTA-related spending is authorized only in the bill 

and thus remains subject to appropriations. Funding 

for the first installment ($56.25 million) of the $225 

million in paid-in capital the United States has 

committed to provide for the North American 

Development Bank in fiscal years 1994-1998 has 

been provided, but, the remaining $168.75 million in 

paid-in capital, that the United States committed has 

not been provided. U.S. Department of Treasury 

Fact Sheet, NADBank Funding, telex, Nov. 9, 1993. 

35The fees will be raised by $1.50 per 

international passenger arriving by air or sea (from 

$5.00 per passenger to $6.50) through fiscal year 

1997. Air and sea passengers arriving from Mexico, 

Canada, the Caribbean, and the U.S. territories will 

no longer be exempted from the fee until fiscal year 

1998, at which time their previously granted 

exemptions will resume. 

36The Administration's position that the National 

Environmental Policy Act did not require it to prepare 

a formal environmental impact statement in 

connection with NAFTA was upheld in a unanimous 

decision by the Court of Appeals for the District of 

Columbia Circuit in Public Citizen et al. v. USTR, 

issued September 24, 1993. The Court agreed with 

the Administration's argument that the NEPA and the 

EIS requirement applied to actions of Federal 

agencies, but not to actions of the President himself. 

The Court of Appeals decision reversed a June 30 

ruling by District Court Judge Charles Richey that 

had created uncertainty about the United States' 

ability to proceed with NAFTA and cast a pall over 

future trade liberalization initiatives. A similar suit 

regarding the GATT Uruguay Round was filed in late 

February 1994. 

37USTR, Statement of Ambassador Kantor on 

the Court of Appeals Decision in Public Citizen et al. 

v. USTR, press release, No. 93-64, Sept. 24, 1993. 

38All goods provided for in the Harmonized 

System subheading 2009.11. 

39U.S. Trade Representative Michael Kantor, 

letter to the Honorable Jaime Serra Puche, Secretary 

of Commerce and Industrial Development (Mexico) 

regarding frozen concentrated orange juice, Nov. 3, 

1993. The Honorable Jaime Serra Puche, letter to 

U.S. Trade Representative Michael Kantor, Nov. 3, 

1993, reprinted in North American Free Trade 

Agreement Supplemental Agreements and Additional 

Documents, House Document 103-160, pp. 94-97. 

49U.S. Trade Representative Michael Kantor, 

letter to the Honorable Jaime Serra Puche, Secretary 

of Commerce and Industrial Development (Mexico) 

regarding tariff acceleration, Nov. 3, 1993. The 

Honorable Jaime Serra Puche, letter to U.S. Trade 

Representative Michael Kantor, Nov. 3, 1993, 

reprinted in North American Free Trade Agreement 

Supplemental Agreements and Additional Documents, 

House Document 103-160, pp. 140-142. 

41 SAA, p. 31 . 

42 58 Federal Register 68186. 

43USTR, USTR Announces Initiation of Tariff 

Acceleration Round, press release, No. 93-79, Dec. 

29, 1993. 

44NAFTA Implementation Act, sec. 101(b)(1) and 

(2). 

45USTR, Canada Announces Intention to 

Proclaim NAFTA: U.S., Canada, and Mexico Release 

Joint Statements on NAFTA, press release 93-72, 

Dec. 2, 1993, and the accompanying, Statement by 

the Governments of Canada, Mexico, and the United 

States Regarding Future Work on Antidumping 

Duties, Subsidies, and Countervail. 

46This was accomplished via a January 19, 

1993, exchange of diplomatic notes. 

47See NAFTA, annex 302.2. 

48For example, Canada and the United States 

agreed that they would continue to abide by certain 

provisions of article 708 of the CFTA not 

incorporated in the NAFTA, that bilateral technical 

working groups and the Joint Monitoring Committee 

established under CFTA article 708.4 would continue 

to meet and work toward implementation of the goals 

enumerated therein, and that issues arising out of 

implementation of article 708 are deemed matters 

that might affect the operation of NAFTA in respect 

to which Canada and the United States may have 

recourse to dispute settlement procedures provided 

under chapter 20 of the NAFTA. This agreement 

was reached via a January 15, 1993, exchange of 

letters among the three NAFTA parties. 

49Twenty of the 48 binational panel reviews of 

dumping and countervailing duty rulings remained 

active at yearend 1993 under CFTA, chapter 19, 

including those involving imports of steel, softwood 

lumber, and magnesium from Canada and gypsum 

board, steel, pipe, and carpeting from the United 

States. These will remain subject to chapter 19 of 

the CFTA until the last Notice of Completion of Panel 

Review is published in the Federal Register or the 

Canada Gazette, at which time chapter 19 will be 

suspended. Matters that had been subject to dispute 

settlement under CFTA, chapter 18, were deemed by 

mutual agreement effected through a December 30, 

1993, exchange of letters to be matters "that might 

affect the operation of this agreement" under article 

2006 of the NAFTA for which the United States or 

Canada will have recourse to further dispute 

settlement under NAFTA, chapter 20. These matters 

include salmon and herring, UHT milk, durum wheat, 

sugar blends, wines and spirits, and provincial sales 

taxes. 

5° Presidential Proclamation 6641, Dec. 15, 1993, 

reprinted in 58 F.R. 66867, Dec. 20, 1993. 

51Executive Order 12889, Dec. 27, 1993, 

reprinted in 58 F.R. 69681, Dec. 30, 1993. 

5258 Federal Register 69410, Dec. 30, 1993. 

53Ibid., 69460, Dec. 30, 1993. 

5459 Federal Register 110, Jan. 3, 1994. 

5558 Federal Register 69460, Jan. 3, 1994. 

70 
56 A complete listing of the United States' 

NAFTA-related regulations is maintained by the 

United States Section to the NAFTA Secretariat, 

which was established via EO 12889 of December 

27, 1993 (reprinted in 58 F.R. 69681, Dec. 30, 1993), 

and is housed in the Department of Commerce. The 

U.S. Secretary is James Holbein. 

57 NAFTA, art. 2001. 

58 These are listed in NAFTA, annex 2001.2, 

along with citations to the NAFTA provisions that 

create them and describe their functions. 

59 The three parties agreed via a January 19, 

1993, exchange of letters to continue eight working 

groups and a joint monitoring committee that had 

been established under article 708 of the CFTA 

(dealing with agricultural standards). On August 13, 

1993, the three agreed to establish a working group 

on emergency action. In a December 2, 1993, joint 

statement, the three agreed to establish a working 

group on subsidies and countervailing duties and a 

working group on dumping and antidumping duties. 

At their January 14, 1994, ministerial, the NAFTA 

Commission agreed to set up two more working 

groups: one dealing with government procurement 

and another with investment and services. 

60 SAA, p . 4. 

61 Sec. 321 (f). The U.S. Department of 

Agriculture gave notice of its proposed rulemaking for 

end-use certificates on Apr. 13, 1994 (59 FR 17495). 

Wheat and barley are among the issues still under 

active negotiation between the United States and 

Canada. 

62 NAFTA Implementation Act, sec. 513. New 

Canadian restrictions on advertising revenues that 

are aimed at foreign-affiliated magazine publishers 

were not cited in the report itself, but were 

mentioned by Ambassador Kantor in his press 

statement accompanying the report. 

63 Letter from President William Clinton to 

Congressman John English, Nov. 15, 1993. 

64 The President requested the Commission to 

undertake investigations on wheat and peanut butter 

via a letter dated Nov. 15, 1993. The Commission 

instituted investigation nos. 22-54 (wheat) and 22-55 

(peanut butter) on Jan. 18, 1994. 

65 "Vision for the Economy of the Asia-Pacific 

Region in the Year 2000 and Tasks Ahead," 

Follow-up of the APEC Report, Report of the Fifth 

Senior Officials Meeting and Recommendations for 

Ministers, Nov. 1993, pp. 33-34. 

66 Ibid. 

67 President Clinton, "Building a New Pacific 

Community," an address at Waseda University, 

Dispatch, U.S. Department of State, Bureau of Public 

Affairs, vol. 4, No. 28, pp. 1-5. 

68 "Fact Sheet: U.S. Economic Relations With 

East Asia and the Pacific," Dispatch, U.S. 

Department of State, Bureau of Public Affairs, Aug. 

2, 1993, Vol. 4, No. 31, p. 554. 

69 ASEAN members include Brunei, Indonesia, 

Malaysia, the Philippines, Singapore and Thailand. 

713 Other regional cooperative fora, such as the 

Pacific Basin Economic Council and Pacific Economic 

Cooperation Council, are private organizations. 

71 "Expanded Regional Economic Cooperation 

Planned," FBIS, Oct. 18, 1991, p. 25. 

72 In January 1994, Indonesia assumed the Chair 

and will host the sixth Ministerial in November. 

Japan will host the 1995 Ministerial. 

73 U.S. Department of State, Bureau of Public 

Affairs, "Asia-Pacific Economic Cooperation (APEC), 

Fact Sheet, Office of Communication, Sept. 14, 1993. 

74 Delegations from Australia, Brunei Darussalam, 

Canada, the People's Republic of China, Hong Kong, 

Indonesia, Japan, the Republic of Korea, Malaysia, 

New Zealand, the Republic of the Philippines, 

Singapore, Chinese Taipei, Thailand and the United 

States participated in the meetings. Representatives 

of the ASEAN Secretariat, the PECC, and the South 

Pacific Forum (SPF) attended as observers. The 

APEC Secretariat was also represented at the 

meeting. 

75 President Clinton had invited all APEC heads 

of state to a summit during a speech at Waseda 

University in Tokyo on July 7, 1993. Malaysian 

Prime Minister Mahathir did not attend the November 

meeting, indicating that the decision to invite leaders 

should have been made by APEC as a group. In 

the past, Mahathir has voiced concerns about 

domination of the APEC agenda by the United States 

and has attempted to garner support for the East 

Asian Economic Caucus (EAEC) which would include 

only Asian countries. In 1993, ASEAN 

representatives agreed to fold the EAEC into APEC, 

but its structure and operations remained unclear at 

yearend. 

76 "APEC Leaders Economic Vision Statement," 

Seattle, Washington, Nov. 20, 1993. 

77 "Declaration of APEC Ministers on the 

Uruguay Round" and "Statement by APEC Members 

Participating in the Uruguay Round," Nov. 1993. 

78 "Declaration on an APEC Trade and 

Investment Framework," Annex 1, Joint Statement of 

APEC Ministers, Nov. 20, 1993. 

73 "A Vision for APEC," APEC report of the 

Eminent Persons Group to APEC Ministers, Oct. 

1993, pp. 8-12 and 15-19. 

80 Ibid. 

81 "Asia-Pacific Economic Cooperation Ministerial 

Meeting," Joint Statement, Seattle, Washington, Nov. 

17-19, 1993, p. 2. 

82 Ambassador William Bodde, Jr. was appointed 

as the first Executive Director of the Secretariat. 

83 "Asia-Pacific Economic Cooperation Ministerial 

Meeting," Seattle, Washington, Nov. 17-19, 1993, 

P. 9. 

84 United States National Committee for Pacific 

Economic Cooperation, "Directory of Pacific Basin 

Institutions," Oct. 1988. 

85 Robert L. Curry, "Regional Economic 

Co-operation in Southern Africa and Southeast Asia, 

ASEAN Economic Bulletin, vol. 8, No. 1 (July 1991), 

p. 21. 

71 
86 Ibid., p. 18. 

87"Spotlight Is on the ASEAN Countries as Tenth 

ASEAN-U.S. Dialogue Begins," Business America, 

June 17, 1991, pp. 16-21. 

88Curry, p. 26. 

89 PTAs provide for trade financing at preferential 

interest rates, preferences in government 

procurement, and the liberalization of nontariff 

measures. AIC provides for the coproduction of final 

products and components that complement other 

production within and among ASEAN countries. 

Under AIP, large-scale regional companies, in which 

member countries share 40 percent of the equity, 

may be established. The output of these regional 

industries is permitted to enter other member 

countries duty free. The AIJV program grants 

preferential tariff rates to intra-ASEAN trade from joint 

ventures involving two or more ASEAN countries and 

their foreign partner. The non-ASEAN partner may 

not hold more than 60 percent ownership in the joint 

venture. Curry, pp. 21-26. 

90"ASEAN Talks Turn to Tighter Economic 

Security Ties," Japan Economic Institute Report, Aug. 

2, 1991, pp. 9-11. 

91 "Anan Confident on Establishing Free Trade 

Area," FBIS, Oct. 1, 1991, p. 51. 

92Ibid. 

93The CEPT scheme was proposed by 

Indonesia as a method for reducing tariffs on 

manufactured goods, at first, to between 0 and 5 

percent. 

94"Fourth ASEAN Summit Opens in Singapore 

27 Jan," FBIS, Jan. 28, 1992, p. 1. 

95Mark Magnier, "Asian Free-Trade Compromise 

Proposed," Journal of Commerce, Jan. 23, 1992, p. 

5A. 

96United Press International, "ASEAN Ministers 

Create Product List for Tariff Cuts," Oct. 8, 1993; and 

"ASEAN to Forward Tariff Cuts by One Year," 

Bangkok Post, in Daily Report: Inter-Asian Affairs, 

Oct. 7, 1993, pp. 1-2. 

97See, for example, "Fact Sheet: Association of 

Southeast Asian Nations (ASEAN)," Dispatch, U.S. 

Department of State, Bureau of Public Affairs, Vol. 4, 

No. 31, Aug. 2, 1993, p. 552. 

98"Southeast Asia Trade Opening Up," The 

Globe and Mail, Oct. 14, 1991, p. B13. 

99U.S. Department of State, "U.S./ASEAN 

Announce Alliance for Mutual Growth," telegram, 

message reference No. 365821, prepared by U.S. 

embassy, Tokyo, Dec. 4, 1993. 

72 
CHAPTER 3 

Other Multilateral Trade Agreement 

Activities 

The Organization for Economic Cooperation and 

Development (OECD) and the United Nations 

Conference on Trade and Development (UNCTAD) 

both provide a forum for consultation and policy 

coordination on economic issues of interest to their 

members. Bodies associated with UNCTAD, such as 

the international commodity organizations, provide a 

basis for coordinating and regulating certain aspects of 

international trade. The work of these organizations 

generally complements the work done in the GATT. 

The following sections detail activity by these 

organizations in 1993. 

Organization For Economic 

Cooperation and 

Development 

Introduction 

Since its founding in 1960, the OECD has provided 

a forum for discussion and cooperative action among 

the 24 industrialized countries. The primary goal of the 

OECD is to foster sustainable economic growth among 

its members. In the ministerial communique issued 

annually at their mid-year meeting, OECD economics 

ministers focus on ways to carry out the structural 

reform of their economies necessary to promote growth 

and create jobs. 

Communique Focus 

At their 1993 meeting on June 2-3, ministers 

focused on the pressing need to conclude the Uruguay 

Round. They underscored the importance of 

strengthening multilateral trade policy rules, reforming 

agriculture to reduce the fiscal burden on national 

governments that reduces world savings, curbing the 

economic distortions caused by industrial subsidies, 1 

 and liberalizing international investment and services 

rules. They viewed reform in these areas as likely to 

eventually require changes in national policy in such 

areas as labor markets, human resources, migration, 

and the environment. 

Trade Issues of the 1990s 

The OECD often serves as a forum for discussing 

emerging economic topics, preparatory to their 

negotiation in the GATT or elsewhere. In looking 

beyond the Uruguay Round, the OECD ministers 

decided in 1991 to embark on new work in order to 

explore the trade issues of the 1990s. In light of the 

increasing globalization of business and the world 

economy, this work involves examining the links and 

interactions of trade policy with other areas considered 

largely domestic in nature. The issues to be pursued 

initially, as reaffirmed in the 1993 communique, 

include trade policy and its connection to (1) 

environmental policies, (2) investment policy, and (3) 

competition/antitrust policy. The OECD's work on new 

trade issues is being carried out by the Trade 

Committee in cooperation with other relevant OECD 

committees. 

Trade and Environment 

Work on trade and the environment is the most 

advanced of the new OECD agenda items. The aim is 

to study the interrelation between trade and 

environment policy, including how to better integrate 

the two to ensure the compatibility of trade and 

environmental policies and thereby contribute to the 

achievement of sustainable development. The goal is 

also to ensure that trade policy does not unwittingly 

undermine legitimate environmental goals. 

The Joint Experts Group on Trade and 

Environment, established jointly by the Trade 

Committee and the Environment Committee in 1991, 

presented the Procedural Guidelines for Integrating 

Trade and Environment Policies to the OECD 

ministers at their June 1993 conference. 2OECD 

73 
ministers endorsed the guidelines, which include a call 

for greater transparency and for consultation with 

interested parties during the development of trade or 

environment policy when one is likely to affect the 

other field significantly. They also called for 

examination of policies and agreements in each field to 

assess their impact on the other area and identify 

possible alternatives that could address concems. 3 

 These guidelines for policy behavior by member 

countries are intended as a first step in the OECD that 

will include further analytical work on 10 issues, 

although negotiation of trade and environment issues 

are likely to continue.4 

The joint experts group took up examination of 

each of the 10 subjects at their July and September 

1993 meetings: 

(1) Criteria and methodology for conducting 

examinations, reviews, and followup of trade 

and environmental policies and agreements; 

(2) Effects of trade liberalization on the 

environment; 

(3) Processes and production methods (PPMs); 

(4) Trade and environmental principles and 

concepts; 

(5) Dispute settlement and economic instruments; 

(6) Environmental subsidies and trade; 

(7) Use of trade measures for environmental 

purposes; 

(8) Life-cycle management and trade; 

(9) Harmonization of environmental standards; 

(10) Environmental policies, investment, and trade. 5 

In December, the OECD Environmental Policy 

Committee held a ministerial session over 2 days to 

discuss many of the issues involved in integrating 

environmental concerns into trade policies, particularly 

in the interim leading up to the signing of the GATT 

Uruguay Round in Marrakesh, Morocco, during April 

12-15, 1994. 6The high-level group discussed trade 

and the environment from different viewpoints, such as 

industry, labor, nonprofit bodies, and policymakers. 

Among the issues discussed were the use of trade 

instruments to achieve environmental goals; trade 

liberalization and the environment, focusing largely on 

developing country concerns; and the future role of 

GATT in taking up environmental issues as part of 

trade policy decisionmaking. 

Most delegates agreed that the GATT is the key 

forum for negotiation of trade and environment issues, 

and expressed support for the effort to create a GATT 

Committee on the Environment to serve this role. A 

key concern raised was how to constructively engage 

developing countries in discussions of trade and 

environment issues. The developing countries tend to 

view environmental protection as less pressing than 

other development objectives and fear that developed 

countries are using environmental objections to impose 

requirements that are detrimental to these other 

objectives. 

Trade and Investment 

Recent OECD work on investment policy has 

focused on preventing distortion of investment flows. 

This issue has been made increasingly important by the 

globalization and strategic alliances of business 

worldwide.? 

Discussions have focused on the feasibility of a 

Wider Investment Instrument (WIT). A WIT could 

improve the 1990's economic environment by 

providing agreed common investment standards for the 

treatment of investors and by ensuring that the benefits 

and responsibilities of a liberal investment regime are 

equitably shared. 8The Trade Committee, in 

conjunction with the OECD Committee on Capital 

Movements and Invisible Transactions (CMIT) and the 

Committee on Investment and Multinational 

Enterprises (CIME), had launched joint work in 

support of this aim Discussions in 1993 yielded 

substantial progress on identifying the possible 

contents of a WIT, raising the possibility of a 

negotiating mandate being extended at the 1994 

ministerial meeting to pursue a WIT when the group's 

feasibility findings are presented. 

The group has explored different elements 

considered likely to be part of a WIT including 

liberalization, investment protection, dispute settlement 

provisions, and a balance of commitments. Various 

members consider different components more or less 

desireable, but most anticipate combining into one 

instrument the OECD codes of liberalization 9with 

additional elements added over time. A broader 

approach encompasses an expanded definition of 

investment under the liberalization component, with 

binding or strong commitments from subnational 

entities, commitments both before and after a WIT is 

reached, and strict standstill requirements on 

investment restrictions (for instance, exceptions only 

for national security and public order). Under the 

investment protection or dispute settlement element, 

some members want investor access to arbitration and 

74 
more generally, are considering whether social policy 

or environmental issues should be included. 10Many 

members expected that a WIT, once established, could 

be open to non-OECD countries. 

Trade and Competition Policy 

The Trade Committee and the Competition Law 

and Policy Committee continued their joint effort to 

address the overlap between trade and competition 

policy. Progress during 1993 continued to be slow 

because of difficulty in developing agreed goals and 

objectives for joint work. Trade officials are attempting 

to ensure that foreign firms seeking market access 

abroad do not face artificial barriers, whereas 

competition policy experts are as yet unclear as to the 

specific barriers that must be addressed. 11• 

Specific objectives from a trade perspective that 

might be incorporated into the joint group's work 

include (1) establishing better international cooperation 

and coordination between trade and competition 

officials, (2) realizing the full benefits of trade 

liberalization through appropriate competition policy, 

(3) eliminating trade advantages resulting from lax 

competition rules or enforcement, (4) abolishing 

institutional barriers for market entry, such as 

distribution system barriers, and (5) developing a 

multilateral framework for integrating competition into 

trade rules, possibly along the lines of that suggested in 

the 1947 Havana Charter seeking to establish an 

International Trade Organization. 12 

The following types of restrictive conduct by 

enterprises have been selected as priority areas from 

both the competition and trade policy perspectives that 

are thought to merit further examination: vertical 

restraints, distribution systems, abuse of monopoly 

power, and horizontal agreements among industries in 

different countries. Indepth analysis of particular 

examples of these generic issues has been undertaken 

and has already provided a basis from which to 

compare policy goals, concepts, different analytical 

methods, as well as institutional processes in both the 

trade and competition areas. The aim of this work is to 

uncover a common framework from which to analyze 

further trade and competition policy issues that overlap 

during future negotiations. 13 

In December, the OECD Committee on 

Competition Law and Policy (CLP) held a week-long 

session to discuss trade and competition linkages, 

vertical restraints, international agreements, and other 

topics. In discussions, international cooperation or 

bilateral antitrust agreements were raised as two 

possible means by which to deal with international 

cartels or other horizontal agreements, and with other 

problems such as jurisdictional limits. Delegates 

discussing a multilateral antitrust code, such as 

envisioned under the 1947 Havana Charter, considered 

an international antitrust code unlikely in the near 

future. Many members also considered the GATT as a 

less likely forum for international antitrust work, 

preferring the smaller OECD forum. 14 

At the session's conclusion, the group agreed to 

refine their work program to find language that would 

avoid prejudging the work program's conclusion. It 

also agreed to explore ways to improve notification of 

merger investigations, under the 1986 OECD Council 

recommendation concerning merger investigations, 15 

 and ways to better share confidential information 

among investigators. 16 

United Nations Conference 

on Trade and Development 

The United Nations Conference on Trade and 

Development (UNCTAD) was created by the United 

Nations (UN) in 1964. Its purpose is to promote 

international trade as a means of accelerating the 

economic advancement of developing countries. 

UNCTAD is composed of 187 member states, 

including the 184 members of the United Nations plus 

Monaco, Switzerland, and Vatican City. UNCTAD 

convenes at the ministerial level approximately once 

every 4 years. UNCTAD VIII, the most recent 

ministerial conference, was held in February 1992. 17 

UNCTAD is the main forum for the General 

Assembly to deliberate on issues of international trade 

and economic cooperation. UNCTAD also provides a 

platform for countries at different stages of economic 

development, or with different economic systems, to 

exchange views on trade and aid programs. UNCTAD 

oversees the Generalized System of Preferences (GSP) 

and monitors and initiates international commodity 

agreements. 

Negotiation and Operation of 

International Commodity 

Arrangements 

UNCTAD is the primary organization within the 

UN system responsible for international commodity 

policy and commodity trade. In this role, UNCTAD 

promotes the negotiation of international commodity 

agreements among producing and consuming countries 

to stabilize market conditions for a wide range of 

primary products of vital economic importance to 

developing countries. 

75 
At the end of 1993, the United States was a 

member of 4 international commodity agreements 

covering jute and jute products, natural rubber, tropical 

timber, and wheat. In September 1993, the United 

States announced that it was ending its participation 

under the coffee agreement and it did not accede to a 

one-year extension of the agreement. The United States 

participated in negotiations for agreements covering 

cocoa and sugar, but did not sign them. These 

agreements are described in earlier reports in this 

series. 18Table 3-1 and the following sections 

summarize significant developments related to the 

agreements during 1993. 

Cocoa 

After four sessions of negotiating conferences over 

the past year failed to conclude a new International 

Cocoa Agreement (ICCA), a special meeting of the 

Cocoa Council was held June 8-11, 1993, in London. A 

new agreement was formulated and later adopted at the 

July 1993 cocoa negotiating conference in Geneva. 

This new agreement replaced the old ICCA, which 

expired September 30, 1993. The new ICCA will last 

for 5 years, with provisions for two yearly extensions. 

Previously, a buffer stock scheme was utilized to 

influence global market prices. The new pact will focus 

on production management and consumption 

promotion. To minimize depression of market prices, 

the 230,000-ton buffer stock remaining from the old 

ICCA will be liquidated over the next 4-1/2 years (in 

monthly installments), at a rate of 51,000 tons per year. 

The United States was not a signatory to any 

previous ICCA, nor is it expected to be a signatory to 

the new pact. Two major producers, Malaysia and 

Indonesia, share this position. In order for the new 

ICCA to become operative, five exporting countries, 

representing at least 80 percent of exports, and 

consuming countries, representing at least 60 percent 

of total imports, must participate. 

Coffee 

In June 1993, after a series of failures to negotiate 

a new International Coffee Agreement (ICA), the 

International Coffee Organization (ICO) agreed to 

extend the current ICA for another year to September 

30, 1994. The ICA will continue to exist as a forum for 

international cooperation on coffee matters, and allow 

time for the negotiation of a new agreement. 

On September 27, 1993, the United States notified 

the ICO that it could no longer justify participation in 

the ICA. Thus, it would not accede to the 1-year 

extension. Funding for continued participation was 

denied by lack of Congressional support and the U.S. 

coffee industry's strong preference for a "free coffee 

market." The United States has been an active member 

of the ICO since its inception more than 30 years ago. 

In early July, a group of several Latin American 

coffee-producing countries signed an agreement 

establishing a confederation of coffee producing 

countries. In efforts to increase world coffee prices, 

Brazil, Colombia, Costa Rica, El Salvador, Guatemala, 

Honduras, and Nicaragua agreed to a "coffee retention 

scheme" whereby members would withhold 20 percent 

of their exportable production from the market, 

beginning October 1, 1993. African producers later 

agreed to join with Latin American producers in 

establishing a joint-retention scheme that would 

account for nearly 90 percent of global coffee exports. 

Meetings were held in late September to officially 

inaugurate the Pact, which was implemented on 

October 1, 1993. 

The retention scheme is based on target price 

ranges of the 20-day moving average of the ICO 

composite coffee price for "Other Milds & Robustas." 

The formula to retain or release exports is as follows: 

1) prices below 75 cents per pound: 20 percent 

retention; 

2) prices between 75 and 80 cents for 20 days: 10 

percent retention; 

3) prices between 80 and 85 cents for 10 days: 0 

retention; and 

4) prices above 85 cents: a controlled release of 

stocks. 

Members who export less than 400,000 bags annually 

would be exempt from retention. 

The new "Association of Coffee Producers" (ACP) 

has 28 members and is headquartered in Brazil. The 

Association will focus on coordinating the production 

and marketing policies of producing countries, 

promoting coffee consumption, and supporting 

programs that would increase international market 

prices for coffee. Documents on controls relating to the 

retention plans will be centralized in the New York 

office of the National Federation of Coffee Growers of 

Colombia. 

Jute and Jute Products 

The International Jute Agreement (IJA), which is 

administered by the International Jute Organization 

(110) assisted by the International Jute Council (IJC), 

76 
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77 
has been in operation since January 9, 1984. The IJA 

operates without the use of export quotas, buffer 

stocks, or price stabilization measures. The IJA is 

scheduled to expire in January 1996. 

In 1993, the IJC held two meetings. These 

meetings, held during April and November in Dhaka, 

Bangladesh, focused on administrative and financial 

matters, review of the jute situation and policies 

affecting jute production and trade. 

Natural Rubber 

The International Natural Rubber Agreement 

(INRA II) was set to expire on December 28, 1993, but 

the International Natural Rubber Council extended the 

1987 agreement for one year to allow time to negotiate 

a new agreement. A United Nations Conference on 

Natural Rubber is to be held under the auspices of 

UNCTAD during April 5-15, 1994, to negotiate the 

successor agreement. 19Until November 1993, a 

decision on renegotiation was at an impasse mainly 

because producing and consuming members disagreed 

on revisions to the lower Reference Price. 20This 

disagreement began in February 1993 when the 

International Natural Rubber Organization Council 

postponed a decision to lower the Reference Price 

because of opposition by the producing member 

countries. 21However, according to the provisions of 

the agreement, the lowering of the Reference Price 

when the Daily Market Indicator Price (DMIP) 22falls 

below the Lower Intervention Price 23for a period of 

6 months prior to review is supposed to be automatic. 

Sugar 

Although the United States participated in the 1992 

negotiations for a new International Sugar Agreement 

(ISA), it is not a signatory of the 1992 ISA. The United 

States was a signatory to the previous 1987 

International Sugar Agreement. The 1987 ISA 

operated for its initial 3-year term and through two 

1-year extensions. Sixteen countries undertook action 

pertaining to the new 1992 ISA in 1993. These actions 

dealt with either notification of provisional application 

of the Agreement, ratification of the Agreement, 

accession to the Agreement, or approval of the 

Agreement. 

By December 31, 1993, the ISA had 31 members, 

including 9 new members gained during calendar year 

1993, based on the official communications received 

by the ISA from the Office of Legal Affairs of the 

United Nations. The ISA has not contained economic 

provisions to control prices since 1984. 

Tropical Timber 

The International Tropical Timber Council (ITTC) 

met three times in 1993 and in January 1994 in 

Geneva, Switzerland. These rounds of ITTC 

discussions resulted in the expansion of the 1983 

agreement. By the year 2000, the tropical 

timber-producing countries agreed that the 

internationally-traded tropical timber must be 

harvested under a sustainable yield program. In 

addition, the member countries of the northern 

hemisphere agreed that they must strive to obtain 

sustainable yields on their temperate and boreal forest 

by the year 2000. The International Tropical Timber 

Agreement is scheduled to expire March 31, 1994. 

Wheat 

The International Wheat Council (IWC) in 

November 1992 extended the International Wheat 

Agreement (IWA) until June 30, 1995. A new 

executive director of the IWC was appointed from the 

United States in August 1992 despite the fact that the 

United States was then in arrears in its financial 

obligations to the IWC. Technically, under the 

provisions of the agreement, the United States had lost 

its vote. The U.S. account has been current since 

November 1992. 

78 
ENDNOTES 

1In particular sectors such as shipbuilding, steel, 

and large civil aircraft. 

2OECD, Trade and Environment, June 1993, 

OECD/GD(93)99. OECD, "Procedural Guidelines Set 

for Integrating Policies on Environment and Trade," 

OECD Letter, No. 2/6, July 1993, p. 4. 

3OECD, "Procedural Guidelines," OECD Letter 

4U.S. Department of State, "OECD: Trade 

Committee, February 24-25, 1993," telegram, 

message reference No. 05215, Mar. 3, 1994, 

prepared by U.S. Embassy, Paris. 

5U.S. Department of State, "OECD: Meeting of 

the Joint Trade and Environment Experts, July 1-2, 

1993," telegram, message reference No. 17674, 

prepared by U.S. Embassy, Paris, July 7, 1993, par. 

7. 

6U.S. Department of State, "OECD: 

Environmental Policy Committee (EPOC) High-Level 

Session on Trade and Environment December 7-8, 

1993," telegram, message reference No. 00504, 

prepared by U.S. Embassy, Paris, par. 1. 

7The OECD codes of liberalization have 

provided investors with common investment 

guidelines since 1961, as well as a framework for 

discussion of problems and further liberalization. The 

codes were augmented in 1976 by the National 

Treatment Instrument (NTI) that obliged OECD 

member countries to grant national treatment to 

investments from other members for the 

establishment, operation, and disposition of 

investments. 

8U.S. Department of State, "OECD: Joint 

Meeting on the Wider Investment Instrument (WII) -

December, 1993," telegram, message reference No. 

35012, prepared by U.S. Embassy, Paris, Dec. 29, 

1993, par. 6. 

9The committees that oversee the 

codes-Capital Movements and Invisible Transactions 

(CMIT) for the codes of liberalization and Committee 

on Investment and Multinational Enterprises (CIME) 

for the NTI-as well as the Committee on Financial 

Markets (CFM), could be combined to reflect this 

integration and extension of the codes into a WII. 

U.S. Department of State, "OECD: The Wider 

Investment Instrument," telegram, message reference 

No. 24623, prepared by U.S. Embassy, Paris, Sep. 

16, 1993, par. 13. 

10U.S. Department of State, "OECD: Joint 

Meeting on the Wider Investment Instrument (WII) -

December, 1993," telegram, message reference No. 

35012, prepared by U.S. Embassy, Paris, par. 3. 

11U.S. Department of State, "OECD: Trade 

Committee, February 24-25, 1993," telegram, 

message reference No. 05215, prepared by U.S. 

Embassy, Paris, Mar. 2, 1993, par. 22. 

12Ibid., par. 21. 

13USTR, 1994 Trade Policy Agenda and 1993 

Annual Report, Washington DC, 1994, p. 44. 

14U.S. Department of State, "OECD: 

Competition Law and Policy Meeting, December 

6-10, 1993, Paris," telegram, message reference No. 

34364, prepared by U.S. Embassy, Paris, Dec. 21, 

1993, pars. 9-10. 

15Possibilities included modification of the 1986 

recommendation, imposition of a requirement on 

parties to a merger to notify "the fact of notifications" 

to other agencies, and better dissemination of 

information already in the public domain. Guidelines 

on confidentiality and a waiver system and model 

filing forms and harmonization of time periods will 

also be taken up as possible improvements. 

16U.S. Department of State, "OECD: 

Competition Law and Policy Meeting, December 

6-10, 1993, Paris," telegram, message reference No. 

34364, par. 9. 

17 For a detailed discussion of UNCTAD VIII, see 

USITC, The Year in Trade: OTAP, 1992, USITC 

publication 2640, July 1993, pp. 39-40. 

18Ibid., pp. 40-43. 

19U.S. Department of State, "United Nations 

Conference on Natural Rubber," telegram, message 

reference No. 00667, prepared by U.S. Embassy, 

Kuala Lumpur, Jan. 26, 1994; and U.S. Department 

of State, "UNCTAD: Dates Set for U.N. Conference 

on Natural Rubber," telegram, message reference No. 

00060, prepared by U.S. Embassy, Geneva, Jan. 4, 

1994. 

20The Reference Price is a midrange price level 

that is used to guide buffer stock operations (the 

principal price stabilization mechanism of the 

agreement). 

21Producing member countries reportedly want 

the agreement to support and stabilize prices. 

Economist Intelligence Unit, Rubber Trends, London, 

Mar. 1993, p. 18. 

22The Daily Market Indicator Price is a 

composite, weighted average of daily official 

current-month prices of selected grades of rubber in 

the Kuala Lumpur, London, New York, and Singapore 

markets. 

23 The Lower Intervention Price is set 15 percent 

lower than the Reference Price. 

79 
80 
CHAPTER 4 

U.S. Relations With Major 

Trading Partners 

This chapter reviews trade relations and principal 

bilateral trade issues with seven major U.S. trading 

partners in 1993: the European Union (EU), 1Canada, 

Japan, Mexico, China, Taiwan, and the Republic of 

Korea (Korea). An analysis of U.S. trade flows with 

these partners was provided in the introduction to this 

report. 

The European Union 

During the first half of 1993, the U.S.-EU bilateral 

trade relationship was marked by a dispute over EU 

implementation of discriminatory public procurement 

rules. Issues related to finalizing the Uruguay Round 

dominated the U.S.-EU trade relationship during the 

second half of 1993. Throughout 1993, the United 

States monitored the EU's full agenda on integration 

and enlargement to ensure that no new barriers to trade 

were created. Both the "1992" program and the 

Maastricht Treaty entered into effect. The EU also 

made significant progress in negotiating closer trade 

relationships with its European neighbors; for example, 

the European Economic Area agreement entered into 

force on January 1, 1994, and the EU nearly completed 

membership negotiations with four countries, which 

are expected to join the Union on January 1, 1995. 

Public Procurement 

The long-running U.S.-EU dispute over public 

procurement intensified on February 1, 1993, when the 

new U.S. Trade Representative Mickey Kantor 

announced that the Clinton administration intended to 

impose sanctions on the EU under Title VII of the 

Omnibus Trade and Competitiveness Act of 1988. 2 

 These sanctions came in response to EU 

implementation on January 1 of the so-called Utilities 

Directive, which the United States contends 

discriminates against foreign firms bidding on EU 

public utility contracts. 3 

The EU's Utilities Directive opens up procurement 

practices to EU-wide competition in the water, energy, 

transport, and telecommunications sectors. 4Within the 

EU, the directive has a market-liberalizing effect, as 

these sectors comprise primarily state-owned utilities, 

which had previously tended to give preference to 

national suppliers. However, article 29 of the directive 

allows procuring entities to exclude offers from 

consideration when less than half of the value of the 

tender is of EU origin. Article 29 also mandates a 

3-percent price preference to EU bids over equivalent 

non-EU-origin offers. 

Title VII of the 1988 Omnibus Trade and 

Competitiveness Act requires the administration to 

annually submit to Congress a report identifying 

foreign countries that discriminate against U.S. 

products or services in government procurement 

according to certain criteria. Title VII provides for 

consultations with these identified countries and for 

appropriate Presidential action (possibly including 

sanctions) to follow if the discrimination is not 

addressed within a specified time frame. In its first two 

Title VII reviews in 1990 and 1991, the U.S. 

administration took note of discriminatory 

procurement practices by the EU and its member states 

in the areas of telecommunications and heavy electrical 

equipment, but did not formally identify them under 

the statute. In January 1992, the administration 

conducted an "early review" of the EU's procurement 

practices, leading to a February 22 identification of the 

European Union as discriminating against U.S. 

businesses in procurement by its state-owned 

telecommunications and power generating utilities. In 

April 1992, President Bush announced that sanctions 

under Title VII would not take effect until January 

1993 to allow ample time for U.S. and EU negotiators 

to complete the GATT Government Procurement Code 

negotiations, enabling the EU to eliminate the 

discriminatory provisions of its Utilities Directive 

81 
before its scheduled implementation date of January 1, 

1993.5 

Because the Utilities Directive (including article 

29) was implemented unchanged on January 1, 1993, 

the Clinton administration announced that sanctions on 

the European Union would commence on March 22. 6 

 The sanctions would prohibit awards of contracts by 

Federal agencies for products and services from some 

or all members of the EU. In order to allow further 

time for negotiations to resolve the issue, the Office of 

the U.S. Trade Representative (USTR) twice postponed 

the deadline for imposition of sanctions. 7 

On April 21, the United States and European 

Union reached an agreement on procurement of heavy 

electrical equipment. 8Under the terms of the 

agreement, the EU would remove the discrimination 

against U.S. suppliers of heavy electrical equipment 

called for by the Utilities Directive and the United 

States would remove the "Buy American" preferences 

of the Tennessee Valley Authority and the five Federal 

power administrations of the Department of Energy. 9 

 The USTR estimated that this agreement would open a 

$20 billion market in the EU to U.S. firms. With 

respect to ongoing negotiations to improve the GATT 

Government Procurement Code, the United States and 

EU agreed to extend Code coverage to federal 

government procurement of services and previously 

uncovered goods. Both sides also agreed to explore the 

possibility of subfederal participation in the final 

GATT Code agreement. In addition, the two parties 

agreed to jointly sponsor an independent study of the 

procurement opportunities arising from their GATT 

Code proposals. No agreement on telecommunications 

was reached during the discussions. As a result, the 

United States announced that it would proceed with 

Title VII sanctions, adjusting them to reflect the 

remaining discrimination in the EU market. 113 

On May 28 the United States imposed sanctions on 

EU access to U.S. Government telecommunications 

and other services contracts worth approximately $20 

million annually. 11Nine of the twelve member states 

were affected; Portugal, Spain, and Greece were 

exempted from the sanctions since they have not yet 

applied the Utilities Directive. Angered by the U.S. 

decision to impose sanctions despite their recent 

negotiating success, Sir Leon Brittan, European 

Commissioner for External Economic Affairs, warned 

"...the US cannot expect us to ignore wholly unjustified 

action of this kind." 12Indeed, on June 8, the EU voted 

to impose $15 million in counter-sanctions. 13 

On June 10, two days after the EU 

counter-sanctions were agreed upon, the U.S. Trade 

Representative announced that a bilateral agreement 

with Germany over the procurement issue had been 

reached. 14Under the agreement, Germany agreed not 

to apply Article 29 of the Utilities Directive against 

U.S. bids. In return, the United States agreed not to 

impose on Germany the sanctions that were applied to 

other EU member states, and Germany would not 

impose on the United States the counter-sanctions 

agreed by the EU on June 8. The European 

Commission was surprised by the German move, 

warning that "any bilateral agreement of such a kind 

would be illegal under Community law" and that 

failure by a member state to transpose an agreed EU 

directive into national law "would render it liable to 

infringement proceedings." 15Defending their actions, 

German officials cited a 1954 Friendship, Commerce, 

and Navigation (FCN) treaty with the United States 

obligating them to guarantee nondiscriminatory market 

access to U.S-owned firms. According to these 

officials, the 1954 treaty takes precedence over the 

Treaty of Rome which established the European 

Community in 1957. 

The European Commission disagreed with the 

German interpretation of the law, pointing out that 

Article 234 of the Treaty of Rome calls upon member 

states to take appropriate action to eliminate 

incompatibilities between their preexisting bilateral 

agreements and EU laws. 16On July 14, the European 

Commission announced that it would propose to 

exclude the U.S.-German treaty and six other bilateral 

FCN treaties between the United States and EU 

member states from its annual rollover of treaties 

considered to be compatible with the EU's common 

commercial policy. 17 

Because Germany failed to provide a written 

guarantee to provide U.S. firms nondiscriminatory 

access to Germany's market, U.S. sanctions over 

telecommunications procurement remained in effect 

against Germany through the end of 1993. 18 

 Resolution of the U.S.-EU telecommunications 

procurement dispute remains linked to the ongoing 

negotiations to expand and improve the GATT 

Government Procurement Code. 

EU Integration and 

Enlargement 

The "1992f, Program 

January 1, 1993 marked the formal establishment 

of the EU's single internal market. With most of the 

1992 or single market program's legislation adopted at 

the Union level, in 1993 the European Commission's 

attention turned to member-state implementation and 

82 
the development of measures to encourage the 

effective functioning of the internal market. 19 

The European Commission's White Paper, which 

launched the 1992 program in 1985, listed some 282 

measures considered necessary to achieve a 

frontier-free market among the member states. As of 

February 15, 1994, the EU Council had adopted over 

94 percent, or 266, of the 282 measures. 2° Still 

awaiting adoption are measures mainly in the areas of 

company law, taxation, and intellectual property rights. 

As of mid-December 1993, 262 measures had entered 

into force, of which 219 required national 

implementing legislation. According to the European 

Commission, member states had transposed into 

national laws 87 percent of these 219 measures. 21 

To ensure the full economic potential of the 

internal market, in December the European 

Commission issued a "strategic program." 22 The 

program outlines both legislative and nonlegislative 

initiatives. First, the plan proposes more effective 

management of the internal market to ensure that EU 

laws are properly and evenly applied and enforced 

across member states and that new needs can be met as 

circumstances change. Accordingly, the European 

Commission plans to propose measures that would 

increase cooperation between the EU and member 

states, improve communication with businesses and 

consumers, and improve access to justice. Also, the 

European Commission recognizes the need to adopt the 

remaining White Paper proposals as well as related 

measures that establish the basic legal framework for 

the internal market. The plan proposes to enact more 

legislation to enhance the business environment, 

including developing a more favorable tax system for 

companies and creating cross-border European 

networks in the transport, energy, and 

telecommunications fields. Finally, the European 

Commission proposes to strengthen the internal market 

by linking more closely other EU policies, in particular 

competition policy, consumer policy, and policy in 

favor of small- and medium-sized enterprises. The 

European Commission intends to publish annual 

reports on the internal market that will review progress 

toward the objectives of the strategic program and 

recommend changes. 

The United States has supported the completion of 

the EU single-market program and has actively 

monitored its policies to ensure that U.S. interests are 

protected. Of particular concern to the United States in 

1993 were issues related to public procurement 

procedures in the Utilities Directive (see above); the 

Broadcast Directive; standards, testing, and 

certification; and intellectual property rights. 

Since 1989 the Broadcast Directive has required 

EU member states to guarantee "where practicable" 

that broadcasters reserve a majority proportion of their 

entertainment transmission time for European 

operations. By the end of 1993, all member states had 

transposed the directive into their national laws. Some 

member states reportedly have not implemented 

broadcast quotas, such as Great Britain, Germany, and 

the Netherlands. 23Other member states, such as 

France, had previously instituted quotas stricter than 

required under the Broadcast Directive. The United 

States believes that these quotas violate the GATT and 

has held consultations with the EU under GATT article 

XXII. In addition, broadcasting was addressed in the 

Uruguay Round, which resulted in coverage of the EU 

audio-visual sector under the General Agreement on 

Trade in Services (GATS). Although the Europeans 

refused to liberalize trade in this sector, the GATS 

provides for future negotiations aimed at 

liberalization.24 

The U.S. Government continues to raise a variety 

of issues with EU officials related to standards, testing, 

and certification. Concerns include the lag time in the 

development of EU standards, inconsistent application 

and interpretation by member states of internal market 

rules, the current policy that requires third-party testing 

and certification of regulated products take place in the 

EU, and the increasingly widespread use of the quality 

management standard ISO 9000, which can impose a 

costly certification process on U.S. exporters. In the 

area of intellectual property rights (IPR), some 

proposed EU directives establish rights based on 

reciprocity rather than national treatment. Furthermore, 

U.S. companies have objected to an IPR licensing 

policy adopted by the European Telecommunications 

Standards Institute (ETSI), a quasi-private 

standards-setting organization. 25The policy sharply 

circumscribes the ability of IPR owners to freely make 

licensing decisions. If U.S. companies choose not to 

adhere to the policy, they will be precluded from the 

ETSI standards-making process. As a result, ETSI 

standards will not address their technology and U.S. 

exports could be adversely affected. 26 

The Maastricht Treaty 

The Treaty on European Union, also known as the 

Maastricht Treaty, entered into force on November 1, 

1993, after a long ratification process. The treaty, 

which provides a framework for greater economic and 

political union within the EU, contains provisions for 

three "pillars" of cooperation in the Union: a common 

foreign and security policy, common action in home 

83 
and justice affairs, and a three-stage timetable for 

economic and monetary union (EMU). 27 

Stage 2 of EMU began January 1, 1994, with the 

establishment of the European Monetary Institute 

(EMI). The EMI will manage and coordinate 

member-state monetary policies through the second 

stage and will oversee preparations for the 

establishment of a single currency (the ecu) and the 

European Central Bank in the third stage. In 

preparation for stage 3 and the completion of EMU, 

member states are required to meet certain economic 

convergence criteria which include low public debts 

and budget deficits, low inflation and long-term 

interest rates, and currency stability for 2 years prior to 

a single currency. The Maastricht Treaty calls for 

monetary union by 1997 or 1999 at the latest, but poor 

economic conditions and monetary difficulties have 

threatened to cause delays. In particular, speculation 

against the currencies of the European exchange rate 

mechanism (ERM), designed to coordinate exchange 

rates among EU currencies as a precursor to a single 

currency, led EU finance ministers and central bankers 

on August 2 to abandon the 2.25-percent bands around 

central parities that held EU currencies in the ERM and 

replace them with 15-percent bands. This "temporary" 

measure remains in effect. Furthermore, mounting 

unemployment, recession, and growing public deficits 

threaten to derail progress toward EMU. 

Other topics covered in the Maastricht Treaty 

include European citizenship, a social protocol, and 

institutional changes. With respect to the latter, the 

European Parliament will see its role expanded to 

include co-decision powers with the Council of 

Ministers in certain policy areas and the power to ratify 

all the EU's mainly political, economic, and financial 

agreements with non-EU countries. 28 

By yearend 1992, all but three EU member 

states—Denmark, the United Kingdom, and 

Germany—had ratified the Maastricht Treaty. These 

three countries eventually ratified the treaty in 1993, 

but not without considerable struggle. Having first 

rejected the treaty in a popular referendum held in June 

1992, Denmark voted to accept Maastricht in a second 

referendum on May 18, 1993. The "Yes" to European 

union came after the other EU member states agreed at 

the Edinburgh Summit in December 1992 to allow 

Denmark to opt out of several provisions of the treaty, 

including those establishing the single currency, 

European citizenship, and common foreign and defense 

policies.29Encouraged by Danish ratification, but 

delayed by a Parliamentary dispute over an exemption 

from the social protocol and by a High Court challenge 

to British acceptance of the treaty without a popular 

referendum, the United Kingdom finally ratified the 

treaty on August 2, opting out of the social protocol, 

which guarantees employee rights throughout the 

EU.36 

German ratification of the Maastricht Treaty 

followed a Constitutional Court challenge initiated by a 

former German EU official, private citizens, and 

several members of the German Parliament who 

claimed that the treaty was unconstitutional. They 

argued that the treaty lacks provisions for adequate 

democratic control of EU decision-making bodies and 

that a transfer of sovereign powers to them would be 

unconstitutional. 31Article 20 of the German Basic 

Law, one of the cornerstones of Germany's 

constitutional order, provides for all state authority to 

come from the people, as members of a democratic and 

social federal state. On October 12, 1993, the 

Constitutional Court in Karlsruhe ruled that the 

Maastricht Treaty is compatible with the German 

constitution, including article 20, and on October 13 

Germany deposited its instruments of ratification. 32 

 Despite confirming the constitutionality of the 

Maastricht Treaty, the court reserved the right to 

oversee future integration in Europe with regard to its 

compatibility with the German constitution and to 

intervene if ever the rights of German citizens are 

violated. The court also restricted the areas where the 

European Court of Justice will have overriding 

competence over the German Constitutional Court. 33 

With the Maastricht Treaty scheduled to go into 

force on November 1, 1993, the EU heads of state met 

in Brussels on October 29 to celebrate ratification of 

the agreement and to launch the implementation of its 

provisions. At the summit, EU leaders initiated a 

common foreign and security policy which, by 

agreement, will be developed gradually and will reflect 

the common interests of all member states to protect 

the political and economic stability of the EU and its 

neighbors. 34In home and justice affairs, EU leaders 

agreed to move toward greater cooperation in the 

following areas: the creation of Europol (the European 

police agency); enforcement activities regarding illegal 

drug shipments; common action in the field of asylum 

law; the creation of a list of third countries whose 

nationals will require visas; judicial cooperation with 

particular reference to extradition; and the question of 

readmission of illegal immigrants. 35EU heads of state 

decided on the location of new European agencies and 

reaffirmed their commitment to continue efforts toward 

the establishment of EMU within the timeframe 

specified in the treaty.36 

84 
Relations With European 

Neighbors and Prospects for 

Enlargement 

The EU continued to strengthen its ties with 

countries outside of the EU throughout the year. The 

European Economic Area (EEA) agreement, which 

would create a free trade zone between the EU and five 

members of the European Free Trade Area (EFTA), 

had been targeted for entry into force on January 1, 

1993, the same time as the EU internal market 

program. 37However, several setbacks delayed its 

implementation. After a public referendum in 

Switzerland in December 1992 rejected the EEA, 

renegotiation of the treaty was required to 

accommodate Swiss non-participation. The revised 

agreement, reached in February 1993, called for the 

remaining EFTA members to make up part of 

Switzerland's expected financial contribution to the 

Cohesion Fund, which supports development of the 

poorer EU member states. It also rescheduled the start 

of the EEA and allowed Switzerland to join the EEA, 

if it so chooses in the future. Since the February 

renegotiation, delays in ratifying the agreement by 

several EU member-state parliaments further delayed 

its implementation, frustrating EFTA members who 

view the EEA as an important economic stimulus. 38 

On January 1, 1994, the EEA entered into force. It 

extends the four EU single-market freedoms—free 

movement of goods,39capital, services, and 

people—as well as certain horizontal policies, such as 

state aids and research and development to the EFTA 

member countries of Austria, Finland, Sweden, 

Iceland, and Norway. Although Liechtenstein is a 

contracting party to the EEA, it must renegotiate its 

customs union with Switzerland before it can 

participate. 

Some EFTA nations view EEA membership as an 

important transition to full EU membership; 40indeed, 

four EFTA countries began membership negotiations 

in 1993. Negotiations with Sweden, Finland, and 

Austria began on February 1, 1993, and negotiations 

with Norway started April 5, with a view to 

simultaneous accession by all four countries on 

January 1, 1995. Membership requires each applicant 

to accept in full the acquis communautaire, the body of 

primary and secondary legislation making up the EU 

legislative and policy framework, subject to possible 

transition periods or temporary derogations. 41The 

political neutrality of Austria, Sweden, and Finland had 

been viewed as a major stumbling block to accession, 

but these countries declared their commitment to the 

common foreign and security policy. 42The most 

difficult negotiations focused on agriculture, regional 

policy (aid to poorer regions), state monopolies (for 

instance, on alcohol distribution), and the environment. 

After a slower pace, the European Council at its 

October 29 meeting in Brussels urged acceleration of 

the enlargement negotiations to enable completion by 

March 1, 1994. 43Once accession is successfully 

negotiated, the European Parliament and the 

parliaments of the EU member states and applicant 

countries must ratify the membership. 

In addition to those countries whose accession is 

currently being negotiated, four other 

countries—Switzerland, Turkey, Cyprus, and 

Malta—have applied for full EU membership. 

Switzerland's application for EU membership, 

presented in May 1992, was suspended following its 

rejection of the EEA in December of that year. 

However, the Swiss Government plans to reactivate its 

membership application sometime after 1995, when the 

other four EFTA nations are expected to accede." In 

the meantime, concern about the impact of remaining 

outside the EEA and the EU has prompted Switzerland 

to strengthen its relationship with the EU through 

bilateral negotiations on a wide variety of topics, 

including technical barriers to trade, public 

procurement, intellectual property, and market access 

for agricultural products. 45 

Turkey saw some progress in its move toward 

Union membership on November 8, when EU and 

Turkish Foreign Ministers confirmed their commitment 

to complete a customs union by 1995. 46Turkey has 

been an associate member of the EU since 1964, but 

received a negative opinion from the European 

Commission on its formal membership application in 

1989 because of both political and economic reasons. 

Cyprus and Malta, which applied for membership in 

July 1990, received positive opinions from the 

European Commission on their applications in 1993. 

However, neither country is expected to join before 

1995. In Cyprus, the main obstacle is political. The EU 

hopes that the Greek Cypriot Government and Turkish 

armed forces, who govern the northern part of the 

island, can reach agreement under the U.N.-sponsored 

peace plan before negotiations for membership begin, 

although the situation will be reassessed in January 

1995 regardless. In the case of Malta, the EU has 

called for structural reforms of its protectionist 

economy, which is characterized by high taxes, high 

customs tariffs, and quantitative restrictions. 47 

Recognizing the significant effort put forth by the 

countries of Eastern and Central Europe to modernize 

their economies after decades of central planning, the 

European Council at the June 21-22 summit meeting in 

85 
Copenhagen announced a far-reaching package of trade 

and political liberalization measures for those countries 

with whom the EU has concluded association 

agreements ("associated countries"). 48(The EU has 

signed association agreements with Hungary, Poland, 

the Czech and Slovak republics, Romania, and 

Bulgaria.) EU leaders agreed that "the associated 

countries in Central and Eastern Europe that so desire 

shall become members of the European Union" as soon 

as they satisfy specified economic and political 

conditions. 49"Membership requires that the candidate 

country has achieved stability of institutions 

guaranteeing democracy, the rule of law, human rights 

and respect for and protection of minorities, the 

existence of a functioning market economy as well as 

the capacity to cope with competitive pressures and 

market forces within the Union. Membership 

presupposes the candidate's ability to take on the 

obligations for membership including adherence to the 

aims of political, economic and monetary union." 5° 

Further, EU leaders agreed that "future cooperation 

with the associated countries shall be geared to the 

objective of membership." 51To this end, they called 

for a multilateral framework for discussions on matters 

of common interest,52and announced steps to 

accelerate the process of trade liberalization called for 

in the association agreements. 53Among other things, 

the EU agreed to hasten from 4 years to 2 years the 

reduction of customs duties on EU imports of 

industrial products and to increase quotas for certain 

products more rapidly than agreed in the association 

accords. Although less significant, improved access for 

sensitive sectors, like steel, textiles, and agricultural 

products, were likewise agreed. The Union also 

reiterated its willingness to support the development of 

infrastructure networks in Central and Eastern Europe, 

as decided at the Edinburgh Summit of December 

1992.54 

Negotiations between the EU and the Russian 

Federation toward a Partnership and Cooperation 

Agreement continued in 1993, but were not concluded 

by yearend. 55Political turmoil in Russia served as a 

stumbling block to these discussions, but also 

prompted the EU in the spring 1993 to amend its 

negotiating mandate to support the reform process. The 

new mandate authorized negotiations that could lead to 

the incorporation of an "evolutionary clause" in the 

agreement, providing for the eventual creation of a free 

trade area between the EU and Russia. 56The 

negotiating mandate was amended a second time in the 

fall in response to Russia's concern that the EU was 

treating it as a state-trading economy, rather than a 

market economy. The new mandate calls for the EU to 

instead treat Russia as an "economy in transition." 

Under these circumstances, any antidumping or 

safeguard measures imposed by the EU would be 

significantly more liberal than if Russia were treated as 

a state-trading economy. 57 

Other Issues 

With the United States and the EU playing major 

roles in the Uruguay Round, much of the U.S.-EU 

trade relationship in 1993, particularly in the second 

half, focused on resolving outstanding Uruguay Round 

issues. These issues are discussed in chapter 1. 

However, several bilateral agricultural disputes were 

also resolved on the sidelines of the Uruguay Round 

negotiations. In particular, the 1992 Blair House 

agreement, which cleared the way for progress in 

multilateral agriculture negotiations, tentatively settled 

longstanding bilateral disputes over EU oilseeds 

subsidies, market access for corn gluten feed, and 

Spanish imports of corn and sorghum. 

During 1993, France tried to overturn the Blair 

House memorandum of understanding on oilseeds, but 

lifted its opposition when the EU agreed to grant 

several concessions to France. The Blair House 

agreement on oilseeds calls for the EU to penalize 

producers for planting oilseeds in excess of a 

maximum area and requires producers to take a 

specified percentage of land out of production each 

year. There is no limit on production. The EU Council 

approved the U.S.-EU oilseeds agreement in June and 

adopted implementing measures in December. 58 

The United States has seen less success on corn 

gluten feed. This dispute resulted when the EU denied 

U.S. corn gluten feed duty-free access to the Union on 

the grounds that the U.S. product did not meet the 

required technical specifications. 59Although an 

accord that restored duty-free status has been in effect 

since 1992, the Blair House agreement resolved 

remaining problems of product definition. However, by 

yearend 1993 the EU was unable to implement the 

Blair House memorandum of understanding on corn 

gluten feed. Member states, led by France, have 

claimed the corn gluten feed agreement is incompatible 

with reform of the Common Agricultural Policy 

(CAP), among other things. Instead, the accord has 

been extended several times, the latest through June 

30, 1994, and member states have been directed to treat 

corn gluten feed imports as if the Blair House 

agreement were in effect. Although trade continues, the 

United States remains unsatisfied until the agreement is 

permanently implemented. 60 

The Uruguay Round makes permanent an earlier 

agreement that Blair House extended for the year 1993. 

This agreement permits the entry of 2.0 million metric 

86 
tons of corn and 300,000 metric tons of sorghum into 

Spain annually In addition, the EU reduced tariffs on 

about 25 products. The agreement compensates the 

United States for sales lost when Spain joined the EU 

in 1986 and was required to change its agricultural 

regime to conform with the EU's CAP. 61 

Other old issues continued unresolved as 

permanent resolutions remained elusive. The EU's 

Broadcast Directive, which permits broadcast quotas in 

each member state, continued to be a source of concern 

to the United States (see above). An EU ban on growth 

hormones in livestock production, as well as one on 

bovine somatotropin (BST), a genetically engineered 

natural hormone that boosts milk production in dairy 

cows, remained in effect throughout 1993. 62The BST 

moratorium was scheduled to expire at yearend, but 

under a compromise agreement, the EU Agriculture 

Council approved a 1-year extension through 1994. 

The extra year will provide time to examine the 

implications of the ban, the consequences on trade, and 

the experience of countries, including the United 

States. 63Although the EU has determined that BST is 

safe, the ban continues for non-scientific 

socioeconomic reasons. For example, EU officials 

argue that the use of BST, which increases milk 

production, would contradict the EU's policy under the 

CAP to control production through quotas. Its use 

would also tend to favor large over small producers 

because of the extra expense, care, and sophistication 

required to use the product. 64 

According to the terms of the 1992 bilateral Airbus 

agreement, U.S. and EU officials met twice in 1993 to 

monitor its implementation. Although both sides traded 

charges, they also reaffirmed their commitment to the 

agreement. In addition, the meetings were used to 

discuss efforts to multilateralize the bilateral agreement 

through renegotiation of the GATT Agreement on Civil 

Aircraft. 65 

Canada 

Most bilateral efforts during 1993 were focused on 

cementing the North American Free Trade Agreement 

(NAFTA). For the U.S.-Canada bilateral relationship, 

the transition from the United States-Canada Free 

Trade Agreement (CFTA) to NAFTA was relatively 

free of discord since the new pact generally 

incorporated the elements of the former accord. 

A national election in Canada and the change in 

government that resulted were the focal points of the 

last quarter of the year in Canada. The new Canadian 

Government called into question certain elements of 

the recently negotiated NAFTA. 66The issues were 

subsequently clarified and handled to the satisfaction 

of both sides. Canada "declared," or enacted, NAFTA 

after securing a commitment to launch further work on 

dumping and subsidies. It also issued statements 

regarding NAFTA's relationship to Canadian energy 

security, and water policies. 67 

Nevertheless, the inevitable disagreements that 

mark any large two-way trading relationship continued 

to be present. U.S.-Canada trade frictions involving 

wheat, lumber, and steel dominated the list of products 

that were the subject of negotiations or trade actions in 

1993. Other bilateral issues also received considerable 

attention during the year, including beer, provincial 

liquor boards, plywood, and pharmaceuticals. They 

reflect a growing trend towards managing 

U.S.-Canadian trade disputes under the formal dispute 

settlement mechanisms that were first set in place by 

the CFTA and have now been carried over into 

NAFTA. 

Wheat 

Agricultural issues have continually contributed to 

bilateral challenges. Wheat rose to a more prominent 

position on the agricultural agenda in 1992, a status 

that continued throughout 1993 Canadian shipments of 

durum wheat to the United States and shipments of all 

types of wheat to Mexico initiated widespread 

complaints during the year from U.S. farmers and their 

representatives in Congress. These complaints rested 

on two bases: displeasure voiced by wheat producers 

over a perceived lack of transparency of Canadian 

Wheat Board (CWB) pricing procedures and 

displeasure about the Canadian system of Western 

Grain Transportation Act (WGTA) subsidies. 68U.S. 

wheat growers, particularly those in northern states, 

such as Montana and North Dakota, complained that 

Canadian transportation subsidies paid under the 

WGTA and nontransparent pricing systems enabled 

Canadian wheat farmers to gain an unfair advantage 

over U.S. producers. 69These concerns entered into the 

autumn congressional debate on NAFTA, but they 

remained unresolved at the end of the year. 

Early in 1993, U.S. wheat producers continued 

their 1992 claim that Canada was unfairly subsidizing 

its wheat industry. U.S. Wheat Associates, an 

agricultural trade association, stated on February 2, 

1993, that the CWB unfairly undercut the prices of 

U.S. wheat exporters in foreign markets. 70 

In addition, U.S. wheat producers have complaints 

about the WGTA. The WGTA is seen by U.S. farmers 

as an export subsidy, whereas Canada claims that it is 

strictly a domestic subsidy. U.S. wheat producers 

allege that subsidies paid by the WGTA are 

87 
responsible, in part, for an increase in Canadian world 

wheat exports at the expense of U.S. producers. In a 

May 19 letter to Agriculture Secretary Mike Espy, 25 

House members claimed that export subsidies in the 

form of Canadian government transportation subsidies 

paid under the WGTA helped to reduce the U.S. share 

of the Mexican wheat market from an estimated 75 

percent a few years ago to 14 percent in 1992. 

Canada's share of the Mexican market reached 66 

percent in 1992. 71The members urged the use of the 

Agriculture Department's Export Enhancement 

Program (EEP), which was designed to increase U.S. 

competitiveness in world agricultural markets and to 

counter unfair foreign practices that interfere with 

price support programs of the United States. In an 

attempt to offset the loss of market share in the United 

States and in Mexico, the USDA targeted Canadian 

wheat for the first time under the EEP, announcing on 

June 24 that it would sell 1.4 million metric tons of 

subsidized U.S. wheat to Mexico in the 1993-94 

marketing year. 72 

At the same time, a special USDA task force was 

established to study the rising level of U.S. wheat 

imports from Canada. The task force concluded in 

September that imports from Canada were "materially 

interfering with our income price support program" for 

wheat, having raised the cost of the deficiency payment 

program by approximately $600 million since the 

CFTA was implemented in 1989. This finding 

prompted a recommendation that the President 

consider an emergency proclamation under section 22 

establishing quotas on the import of Canadian wheat. 73 

 The task force also recommended that the U.S. 

International Trade Commission (USITC) be asked to 

conduct an investigation of Canadian wheat export 

practices. 

The recommendation for unilateral action against 

imports from Canada was submitted at the end of 

September, when Congress was beginning its 

consideration of NAFTA implementation legislation. 

Several grain-state legislators threatened to withhold 

their support for NAFTA if the administration did not 

take appropriate action to resolve the concerns of 

northern wheat farmers. In letters submitted during 

September and in a later resolution before the House of 

Representatives, these legislators called on the Clinton 

administration to (1) re-initiate Section 22 trade action 

to limit U.S. imports of Canadian wheat, (2) include a 

provision in the NAFTA implementing legislation to 

create a system of end-use certificates for imported 

Canadian wheat in order to ensure that Canadian wheat 

would not be mixed with U.S. wheat and re-exported 

under the EEP, (3) exchange letters with Mexico 

agreeing to take action against unfair export subsidies 

such as Canadian transportation subsidies, and (4) set 

up a permanent NAFTA working group on North 

American wheat trade to periodically review 

price-setting policies. 74 

In response to the threat of import quotas and 

accusations of unfair trade practices, Canadian officials 

defended their domestic support programs and 

maintained that WGTA subsidies are not export 

subsidies, pointing to a February 1993 CFTA 

binational dispute settlement panel report under 

chapter 18 of the CFTA in the matter of durum wheat 

exports. The panel determined that WGTA subsidies 

should be excluded from the calculation of what 

constitutes a fair price of Canadian commodities. 75 

U.S. pasta producers, located primarily in the 

midwest, have argued against restraints on imports of 

Canadian wheat. 76As the primary users of durum 

wheat in the United States, pasta manufacturers are 

concerned about the adverse effects of limiting imports 

of durum wheat from Canada. They claim that durum 

wheat stocks are already tight, and limits on imports 

from Canada could further restrict supplies and raise 

consumer prices. Legislative backers of their position 

called on the administration to follow the normal 

course of action under U.S. unfair trade laws in seeking 

remedy for domestic wheat farmers, instead of 

imposing emergency quotas. 77 

Just before the NAFTA vote in the House of 

Representatives, the Clinton administration announced 

its official plan for dealing with the alleged unfair 

wheat imports from Canada. 78On November 16, 

1993, the President directed the USITC to undertake an 

investigation, pursuant to section 22 of the Agricultural 

Adjustment Act, to determine if imports of wheat, 

wheat flour, and semolina are being or are practically 

certain to be imported so as to materially interfere with 

the USDA program for wheat. 79Under the plan, the 

USITC would, after 60 days, begin an investigation 

into allegations of Canadian subsidization of wheat 

shipments, unless agriculture officials from the two 

nations are able to work out their differences. At 

yearend both governments were engaged in discussions 

on the issue to try and forestall the USITC's initiation 

of a Section 22 investigation. 80 

In the meantime, Canada decided to challenge the 

U.S. decision earlier last year to subsidize wheat sales 

to Mexico to offset Canadian transportation 

subsidies.81Canadian spokesmen insist that the 

increased market share that Canadian firms enjoy in 

Mexico is a result of extensive market development 

there. 82Canada claimed that U S EEP sales to 

Mexico violate section 701.4 of the U.S.-Canada Free 

Trade Agreement, which requires the two sides to take 

88 
each others' interests into account when extending 

export subsidies. 83A bilateral dispute settlement panel 

has been established to review the case. 84 

By yearend efforts to resolve the bilateral dispute 

over wheat had been linked to other agricultural issues. 

Following conclusion of the Uruguay Round talks in 

mid-December, Canada announced plans to replace 

quotas on certain products (in the dairy, egg, and 

poultry sectors) with tariffs. The United States asserted 

that Canada had an obligation under the CFTA to 

completely eliminate all tariffs on such products 

imported from the United States by 1998. Other 

agricultural products at issue included sugar and peanut 

butter and paste. Bilateral discussions on the entire 

range of agricultural issues continued into 1994. 

Lumber 

The U.S.-Canada trade dispute on lumber is one of 

the longest running disagreements in the bilateral 

relationship, its origins going back to 1982. 85As 1993 

began, two reviews of 1992 decisions by both the U.S. 

Department of Commerce and the USITC in the 

self-initiated countervailing duty (CVD) case involving 

softwood lumber were pending before separate panels 

established under the dispute resolution mechanism of 

the CFTA.86Events during the year illustrate how the 

mechanism established under the CFTA to handle 

challenges to domestic determinations of dumping and 

countervailing duties operates. 

A 1992 decision by the International Trade 

Administration (ITA) of the U.S. Department of 

Commerce found Canadian subsidies on softwood 

lumber of 6.51 percent ad valorem. 87This was 

followed by a USITC decision that the U.S. industry 

was materially injured by reason of the imports that 

Commerce had determined to be subsidized. 88Canada 

formally requested a binational panel review of both 

the Commerce and the USITC determinations in June 

and July 1992, respectively. It was these binational 

panel proceedings that were pending in early 1993. 

ITA Determination 

On May 6, 1993, the binational panel established to 

review the Commerce determination of the existence 

and the amount of Canadian subsidies rendered its 

decision.89It affirmed, in part, and remanded, in part, 

the Department of Commerce final CVD determination 

with two partial dissents. 90The original Commerce 

decision found that both provincial stumpage programs 

and log export restrictions constituted countervailable 

subsidies. The panel ordered the agency to reconsider 

specific aspects of its decision, 91concluding that 

Commerce's determination that the programs were 

subsidies was not supported by the facts of record, and 

was not in accordance with U.S. law. 92The ruling also 

entailed the recalculation of the amount of any subsidy 

Commerce found on remand. The ITA was given 90 

days within which to provide its remand determination. 

While the determination on remand was due on August 

4, the withdrawal of a Canadian member of the panel 

and the selection of a replacement suspended the 

application of deadlines in the case. 

The ITA responded to the panel's order on 

September 17. Commerce again found that the 

provincial programs at issue constituted 

countervailable subsidies. In its recalculation of the 

rate of subsidization in the case, it determined that the 

rate of subsidization was 11.54 percent. 93 

The panel issued its second decision, on review of 

Commerce's remand determination, on December 17, 

1993. In a majority ruling the five-member panel held 

that the evidence was insufficient to support 

Commerce's finding that Canadian subsidies were 

market distorting. The panel thus remanded the case 

again, with specific instructions. The ITA was given 20 

days within which to respond to the panel's decision. 94 

 The decision was somewhat unusual in that the panel 

split along national lines for the first time in the history 

of the CFTA. The three Canadian panelists were in the 

majority, ordering a further remand, while the two 

Americans disagreed. 95While binational panels 

cannot make the determinations required of domestic 

agencies—they can only review the decisions of those 

agencies and issue guidance for further action—the 

majority was unusually proscriptive in its second 

decision. 96 

USITC Determination 

In July 1993, the panel established to review the 

USITC injury determination rendered its decision. On 

July 26, the panel unanimously remanded the agency's 

determination for further action. 97The panel found 

that the USITC must reconsider its affirmative injury 

determination in the case of subsidized Canadian 

softwood lumber imported into the United States. 98 

 The panel concluded that the USITC's "determination 

of material injury by reason of subsidized Canadian 

imports is not supported by substantial evidence on the 

record."99As in the previous panel decision 

remanding ITA's determination, the agency was given 

90 days to respond to the panel's ruling. 

October 25th was the deadline date for the 

determination on remand. On October 18, the USITC 

again made an affirmative determination by the same 

89 
4-2 vote. 100 In conducting its remand, the 

Commission reopened the record on the issue of the 

price effects of subsidized imports in the U.S. market. 

According to the Rules of Procedure for binational 

panel reviews, the panel had 90 days, or until January 

24, 1994, either to uphold the USITC's remand 

determination or remand the case to the Commission 

again. im 

Thus as the year ended, the lumber subsidies case, 

having been remanded during 1993 to both U.S. 

agencies responsible for the original decisions, was 

still unresolved. The ongoing binational panel reviews 

in the softwood lumber case have been closely 

scrutinized by trade practitioners on both sides of the 

border interested in how the CFTA procedures are 

working in practice. 

Steel 

Following the institution of a number of 

antidumping and countervailing duty cases in 1992, 

tensions in the steel sector, already pronounced at the 

beginning of 1993, continued for most of the year. The 

U.S. and Canadian markets, closely integrated in the 

automotive sector, were subjected to a series of 

cross-border dumping duties on steel. All of this 

bilateral activity took place in the context of much 

larger complaints that had spawned discussions toward 

an international commodity agreement on steel. 

Strains between the United States and Canada grew 

in late January and early February as both countries 

issued antidumping rulings against one another's steel 

producers. These rulings concluded several months of 

investigations. The dispute began on June 30, 1992, 

when 12 U.S. producers of flat-rolled carbon steel 

products filed petitions with the USITC and the U.S. 

Department of Commerce that initiated 48 

antidumping and 36 countervailing-duty (subsidy) 

cases against foreign steel makers. The petitions 

against Canada alleged dumping by Canadian firms, 

but contained no allegations of Canadian subsidization. 

The petitioners included such steel giants as LTV, 

Bethlehem, and U.S. Steel, and the accused Canadian 

firms included Stelco Inc., Dofasco Inc., and Algoma 

Steel Corp. 102 

The U.S. steel petitioners also alleged that foreign 

producers were "massively subsidized" over the last 12 

years by at least $100 billion. The U.S. producers 

claimed that they had invested heavily over the past 

decade, while downsizing by over 50 percent, in a 

successful effort to become competitive and that only 

subsidies allowed foreign firms to underprice them. 

The U.S. firms filed their petitions after the expiration 

of voluntary restraint agreements (VRAs) governing 

certain steel exports to the United States. The VRAs 

were negotiated with most major steel exporters in 

1984 and expired in March 1992. 103The VRAs did 

not apply to Canada. After the VRAs ended, the steel 

makers were advised by the Bush administration to use 

U.S. trade law provisions against unfair foreign 

actions. 

The U.S. steel makers who filed the petitions 

claimed that there was a global structural crisis in steel, 

characterized by a massive overcapacity due to foreign 

subsidies. They included Canadian producers in their 

list of offending firms. 104 

Following the U.S. action, the Canadian firms 

initiated antidumping actions against the United States 

and others in both September and November of 1992. 

The Canadian petitioners claimed that the U.S. firms 

were pricing below cost and causing material injury to 

Canadian firms. A statement by Revenue Canada, 

Customs and Excise, the Government agency that 

investigates dumping petitions, announced 

antidumping investigations on as many as 110 firms, 

including several American steel makers. The alleged 

average dumping margins on steel plate exported to 

Canada by U.S. firms was about 13 percent. 

Both countries' preliminary actions were decided 

in late January 1993. On January 26, the U.S. 

Commerce Department issued its ruling that steel firms 

from 19 nations were dumping in the U.S. market. 105 

 The duties on Canada ranged from less than 1 percent 

to as high as 68 percent (on certain steel from Stelco). 

The decision required the Canadian producers to post a 

cash deposit with U.S. Customs while they waited for 

the USITC to rule on whether the dumping was 

causing injury to U.S. firms. 

Canadian Minister of International Trade Michael 

Wilson spoke out against "the counterproductive nature 

of both countries taking antidumping action against 

imports from each other." 106 Meanwhile, members of 

Canada's Liberal opposition party used the dispute to 

criticize the CFTA, as well as the proposed NAFTA. 

Prime Minister Mulroney defended the CFTA, 

claiming that Canada was the only nation named in the 

U.S. action that had the right to petition a binational 

panel composed of both Canadians and Americans. 

Canadian Trade Minister Wilson repeated this 

sentiment, but stated that Canada's final remedy was a 

change in U.S. trade laws with respect to antidumping 

investigations, especially through approval of the 

Dunkel Text of the Uruguay Round. This text 

addressed such topics as requirements for the initiation 

of proceedings, "sunset" rules dealing with the phasing 

90 
out of dumping duties, and the methodology used to 

determine dumping margins. 

Many in the Canadian steel industry wanted both 

sides to drop the antidumping actions against one 

another because of the "unique integration" they 

claimed exists between the U.S. and Canadian steel 

markets. Total steel trade between the United States 

and Canada was over $3 billion in 1991, and the two 

countries also share a common market in the biggest 

steel-consuming sector, automobiles. Thus, the 

Canadian firms wanted both countries to negotiate a 

bilateral steel pact similar to that in the automobile 

industry. This proposed agreement, the North 

American Steel Sector Agreement (NASSA), would 

include the appointment of a panel of high-level steel 

executives who would examine the trade laws of both 

countries, recognizing the integration of the two steel 

markets. The Canadian Government endorsed this idea 

and proposed negotiations on such a pact to both the 

Bush and Clinton administrations. 107Although the 

U.S. producers did not reject the Canadian approach 

out of hand, they favored pursuing the antidumping 

investigations. 

The United States also renewed calls for a 

multilateral steel agreement (MSA). Previous MSA 

talks have included discussion about the discipline of 

national subsidies for steel firms, the elimination of 

steel tariffs, and a dispute settlement procedure. 

Negotiations, however, have remained at an impasse 

over the restraining of state subsidies and, in the view 

of foreign steel producers, over U.S. reluctance to 

include antidumping practices in the matters to be 

negotiated. A round of talks held immediately after the 

1992 expiration of the U.S. VRAs failed to resolve 

differences. Negotiations continued throughout 1993. 

In addition to the above-cited investigation on 

carbon steel plate products, the 1993 Canadian cases 

covered separate investigations into hot-rolled steel 

sheet, cold-rolled sheet, and galvanized steel. These 

four Canadian cases, although initiated over a period of 

15 months, mirrored the decision-making process that 

was taking place in the United States, where the major 

types of steel were all included in the single spate of 

cases. On May 6 the Canadian International Trade 

Tribunal (CITT) decided that there was no injury as a 

result of the alleged dumping of steel plate by U.S. 

firms, but that injury to Canadian producers had 

resulted from dumping by eight other countries. 108In 

an unusual move, the Canadian petitioners (Algoma, 

Stelco, and Ipsco) announced that they would appeal 

the CITT decision to a binational pane1. 109On May 31 

the CITT determined that there was similarly no injury 

to Canadian producers of hot-rolled sheet as a result of 

imports from the United States, Germany, France, Italy, 

New Zealand, and the United Kingdom. 11 ° 

The two "no-injury" findings of the CITT resulted 

in expressions of concern by the Canadian steel 

industry. As a result, the Canadian Government 

announced the formation of an Import Surveillance 

Committee to monitor "prices and levels of 

[third-country] imports and their possible impact on 

the Canadian market." 111 Canadian steel spokesmen 

maintained that U.S. actions could divert foreign steel 

out of the U.S. market and into Canada. Canada has 

authority to impose a temporary, immediate surtax if it 

determines that imports are causing or threatening 

serious injury to Canadian industry. The surtax could 

be imposed for up to 5 years once injury was officially 

determined by the CITT. The announced Canadian 

action also included a study into the differences 

between U.S. and Canadian trade remedy laws. 

Canadian steel representatives have charged that 

Canadian laws are less stringent than those of the 

United States. 112 

The final USITC determination on the question of 

injury was announced on July 27. The massive 

determination-72 cases, involving 20 countries and 

representing over 90 percent of U.S. steel imports of 

flat-rolled products—resulted in mixed decisions. The 

Commission found injury in the cases involving 16 of 

the countries and no injury for the 4 other countries. 

The affirmative decision resulted in the dumping duties 

against two of the four Canadian steel products under 

investigation becoming permanent. Injury 

determinations affected carbon steel plate and 

galvanized steel from Canada. The U.S. industry 

producing hot- and cold-rolled steel sheet was found 

not to be materially injured by reason of the imports 

from Canada. Canadian reaction to the USITC 

determinations was basically positive. 113 

The possibility of an international accord on steel 

remained uncertain after the USITC decision. On July 

28, 1993, the CITT made the last of the three major 

steel determinations in 1993. 114It found that the 

Canadian industry was injured as a result of dumped 

imports of cold-rolled steel sheet from five 

countries—the United States, Italy, Germany, France, 

and the United Kingdom. The United States continued 

to press for the continuation of multilateral steel 

negotiations, and talks were held until the conclusion 

of the Uruguay Round agreements on December 15. 

Success was achieved on eliminating tariffs in the steel 

sector as part of the Round's results, but other 

objectives were not achieved. 115As a result, a 

decision was reached to continue negotiations into 

1994. Because of the differences over subsidies 

between the United States and other countries, it 

91 
remained unclear whether any settlement could be 

reached in the near future. 116 

Japan 

During the first half of 1993, a review of 

U.S.-Japan trade policy was conducted leading up to 

the U.S.-Japan Framework agreement in July. For the 

remainder of the year, bilateral negotiations on 

numerous sectoral issues were conducted, and previous 

trade agreements were reviewed, under the aegis of the 

Framework. 

Other important domestic and multilateral 

developments affecting Japan's trade relations with the 

United States occurred during the same time period. 

For example, throughout the year there was intense 

pressure on Japan to lift its ban on imports of rice in 

support of the Uruguay Round negotiations. During the 

fall, there was some movement when Japan was given 

a 6-year moratorium on implementing tariffication on 

rice in exchange for improved minimum access 

arrangements over those in the Uruguay Round draft 

text. On December 14, just hours before the deadline to 

complete the Uruguay Round negotiations, Japan 

agreed to import between 4 percent and 8 percent of its 

rice consumption during 1995-2000, at which time the 

market would be open, but a declining, high tariff 

would be imposed on imports of rice. 117 

U.S.-Japan Framework 

Agreement 

Shortly after assuming office, the Clinton 

administration initiated a review of U.S.-Japan trade 

relations. The review was prompted by frustrations 

with the perceived lack of progress in gaining greater 

access to Japan's market, despite numerous agreements 

that focused primarily on changing procedures and 

rules. Interagency meetings were held during February 

through June, under the leadership of the National 

Economic Council, to debate potential policy options. 

Eventually a consensus was reached that the primary 

objectives of any agreement with Japan should be to 

demonstrate tangible progress in bringing down the 

trade deficit, to focus on results, and to include both 

structural and sectoral issues. At a summit meeting 

between President Clinton and Prime Minister 

Miyazawa on April 26, the two leaders agreed to 

establish a negotiating framework within 3 months and 

to hold semiannual leaders' meetings. 

Following intensive bilateral discussions, on July 

9, 1993, the United States and Japan reached 

agreement on a framework for a "new economic 

partnership." 118 The "Framework Agreement" 

provided a mechanism for conducting future 

negotiations on both structural and sectoral issues 

between the two countries. In terms of macroeconomic 

issues, Japan agreed to take measures to promote 

domestic demand-led growth and to increase access to 

its markets for competitive foreign goods and services. 

These measures were "intended to achieve over the 

medium term a highly significant decrease in its 

current account surplus. . ."119This clause became an 

immediate source of bilateral dispute. U.S. officials 

interpreted the clause to mean that Japan would reduce 

its global trade surplus to 1.5 to 2.0 percent of its GDP 

while Japanese officials disagreed, saying that no 

numerical target was set. 

Regarding sectoral and structural issues, the initial 

major "basket" areas for negotiation, as described in 

the framework, included (1) government procurement, 

(2) regulatory reform and competitiveness, (3) other 

major sectors, (4) economic harmonization, and (5) 

implementation of existing arrangements and 

measures. 120A final section of the framework 

agreement called for joint collaboration on global 

issues of mutual interest, such as environment, 

technology and human resources development, 

population growth, and ArDs. 

According to the framework accord, agreements on 

government procurement, 121insurance, and 

automotobiles and parts were to be reached by the time 

of the first meeting of heads of government in 1994 or 

within 6 months of the agreement. For other areas, 

"agreements on measures" were to be announced at the 

second meeting of heads of governments in July 1994. 

An assessment of progress under the framework 

agreement was to be reported during biannual meetings 

between the leaders of the two countries. The 

assessments were to be "based upon sets of objective 

criteria, either qualitative or quantitative, or both as 

appropriate." 122 

Negotiations were held in all five "basket" 

categories throughout the next few months. Differences 

in views between the two countries emerged on several 

issues, including the reason for holding the 

negotiations. The United States stressed that the basis 

for its proposals in each negotiating basket was to 

address the asymmetry represented by Japan's low 

level of manufactured imports and inward direct 

investment compared with that of other developed 

countries. 123U.S. negotiators also frequently cited 

high third country market-share statistics and low 

market shares in Japan for particular industries to 

support its claims that U.S. firms are competitive 

worldwide, but unable to sell in Japan. The Japanese 

92 
disputed statistics regarding its purchasing record of 

foreign products and indicated that third country 

market shares were not a valid means of making 

comparisons about the competitiveness of different 

products or services. 124 

A main source of dispute between the two 

countries regarding many sectors was the type of 

criteria that was to be included in the agreements for 

measuring progress in increasing market access. The 

U.S. officials indicated that they favored some type of 

numerical targets or market shares as one indicator of 

access, but that they were willing to consider multiple 

indicators, depending on the sector. The Japanese 

opposed the use of market shares or sales figures, 

citing the semiconductor agreement as an example of 

how such numbers tend to "take on a life of their own" 

once they have been incorporated in agreements. 125 

 Finally, Japanese negotiators claimed that the talks 

were reciprocal, whereas the United States stressed that 

they were not. U.S. negotiators also indicated that the 

United States reserved its rights under section 301 with 

respect to any and all agreements entered into with 

Japan. 

At year's end, the two countries remained "very far 

apart" in the negotiations and progress was 

characterized as "disappointing" by U.S. negotiators, 

particularly in insurance, automobiles and parts, and 

government procurement. 126Despite the slow pace of 

negotiations, U.S. negotiators indicated that texts of 

agreements had been tabled for some areas, and it was 

hoped that agreements could be finalized by February 

11, 1994, the date scheduled for a summit meeting 

between President Clinton and Prime Minister 

Hosokawa. 127By late December, U.S. officials 

publicly countered charges by Japan that the United 

States was moving toward managed trade in the 

negotiations. At the same time, they insisted that there 

had been no softening of the U.S. negotiating position 

with regard to incorporating quantitative and 

qualitative indicators into agreements with Japan. 128 

Major Projects 

During 1993, the United States continued to seek 

greater access to Japan's market for architectural, 

engineering and construction services. Specifically, 

U.S. negotiators sought amendments to the 1988 Major 

Projects Agreement (MPA), as modified in 1991. 129 

 Although U.S. firms have won some projects since the 

MPA was signed, according to the U.S. Department of 

Commerce, only $189 million worth of contracts out of 

an estimated $700 billion public and private sector 

market in Japan were won by U.S. firms in 1992. By 

comparison Japanese firms won $325 million in 

contracts in the United States during the same year. 130 

Specifically, U.S. negotiators requested that Japan 

abolish its designated bidder system which requires 

prequalification of companies based on their past 

experiences in Japan's market. The MPA was intended 

to allow U.S. firms to bid on certain projects wholly or 

partly owned by the Japanese Government based on 

the U.S. firms' home or overseas market experience 

(rather than in Japan), even though the designated 

bidder system continued to exist. 131The United States 

also asked Japan to expand the MPA to cover all 

central and local government public works projects; to 

enforce its antitrust laws to prevent "dango," or 

bid-rigging; and to set up objective, quantitative 

indicators to measure foreign companies' participation 

in Japan's market. 132 

During bilateral negotiations held on March 17 and 

18 to review the MPA, U.S. negotiators raised charges 

of Japanese violations of the MPA and suggested 

specific changes to the agreement. The two sides were 

unable to reach an agreement and a fourth set of talks 

was postponed. 133On April 30, USTR identified 

Japan under Title VII of the Omnibus Trade and 

Competitiveness Act of 1988 as maintaining 

discriminatory practices in government procurement of 

construction, architectural and engineering services. 134 

 Under the law, Japan was given 60 days to satisfy U.S. 

concerns by addressing the discriminatory practices, 

entering into GATT dispute settlement procedures, or 

facing sanctions by the United States. On June 7, the 

United States transmitted a negotiating proposal to 

Japan, containing many of the points listed above. On 

June 14 and 15, further bilateral negotiations were 

held, but Japan refused to accept the U.S. proposals. 135 

 Just a few days after the negotiations, Prime Minister 

Miyazawa lost his position following months of 

scandals involving pay-offs by construction companies 

to politicians and a no-confidence vote in the Diet. 

Elections were scheduled for July 18. On June 30, 

USTR announced that it was postponing sanctions 

required under Title VII until November 1, 1993, 

because Japan had agreed to begin negotiations based 

on the United States' June 7 proposal once a new 

government had been formed. 136 

Domestic political events in Japan continued to 

affect Japan's position in the bilateral construction 

talks. Throughout the summer, numerous local 

government officials and construction company 

representatives were arrested and indicted on 

suspicions of either receiving or giving bribes. On July 

29, Morihiro Hosokawa, campaigning on a platform of 

political reform, was selected to lead the first 

non-Liberal Democratic Party government since World 

93 
War II. The Prime Minister appointed a member of the 

Social Democratic Party as Construction Minister, and 

an advisory committee was set up to begin reviewing 

the designated bidder system. 

On October 26, the USTR announced that he was 

postponing sanctions until January 20, 1994, by which 

time Japan was expected to announce a detailed action 

plan addressing U.S. concerns. 137USTR Kantor stated 

that, in a preliminary action plan announced that day, 

Japan had agreed to (1) "adopt an open and 

competitive bidding system to replace the closed 

designated bidder system; (2) apply the reforms to all 

governmental and quasi-government projects above a 

specified threshold; (3) evaluate the corporate structure 

and capabilities of foreign firms; (4) take steps to 

prevent dango (bid-rigging) or bribery, including 

banning firms from bidding on public works contracts, 

(5) strictly apply its antimonopoly law; and (6) 

establish objective, transparent, and published 

standards for bidding and contracting procedures". 138 

 Ambassador Kantor also announced other criteria that 

the United States expected to see in the final action 

plan. On December 18, Japan's cabinet approved an 

action plan that appeared to address some U.S. 

concerns and could serve as a basis for reaching a 

settlement with the United States before the January 

20, 1994 deadline. 139 

Automobiles and Parts 

Automobiles and parts were a major focus of 

negotiations between Japan and the United States 

during 1993. The United States' trade deficit with 

Japan in automobiles and parts totaled $43.3 billion in 

1993, or 72 percent of the bilateral trade deficit. U.S. 

imports of passenger vehicles from Japan totaled 1.6 

million units, or $21.9 billion. U.S. exports of 

passenger vehicles totaled 56,741 units, or $1.0 

billion. 140U.S. imports of auto parts from Japan 

totaled $13.4 billion and exports totaled $1.0 

billion. 141Japanese nameplatel 42automobiles, 

including those made in the United States and third 

countries, accounted for 29.1 percent of the U.S. 

passenger car market in 1993. 143 

Framework Talks 

The automobile and parts sector was selected as 

one of the priority areas for negotiations under the 

U.S.-Japan Framework agreement because of its 

importance in bilateral trade. In addition, the United 

States was dissatisfied with the implementation of the 

1992 voluntary commitments made by Japan's 

automobile industry to increase its purchases of U.S. 

automobile parts to $19 billion by March 31, 1995. 

Throughout 1993 Japanese automobile producers were 

encouraged to establish long-term relationships with 

U.S. automobile parts producers through increased 

design-ins and joint research and development." 

Japanese automobile manufacturers promised to assist 

U.S. automobile producers in increasing their sales of 

U.S. vehicles in Japan through improved import 

expansion incentives. 145 

During September through December 1993, four 

rounds of bilateral negotiations on automobiles and 

parts were held in conjunction with the Framework 

talks During negotiations on October 19, the United 

States presented a proposal for a draft agreement with 

the aim of achieving a "prompt, substantial and 

sustained increase" in sales of foreign automobiles and 

parts in Japan and in sales of U.S. auto parts to 

Japanese transplants (that is, Japanese-owned 

production facilities) in the United States. 

The proposed draft agreement contained qualitative 

and quantitative criteria to assess the implementation 

of the arrangement. 146The proposal called on the 

Government of Japan to issue administrative guidance 

to Japanese transplants to encourage them to purchase 

more U.S. parts, with "special consideration for 

non-Japanese U.S. parts." Japanese companies would 

be asked to inform both governments of their projected 

purchases for 1995 and subsequent years and provide 

descriptions of specific plans to reach their projections. 

Japanese transplants would also be asked to expand 

their research and development, design and 

engineering, and supplier support efforts in the United 

States. With the aim of increasing sales of foreign 

vehicles in Japan, the proposal called on the 

Government of Japan to provide such incentives as 

preferential Government financing, purchasing 

vehicles for use by Government officials, increasing 

promotional activities, and providing information to 

consumers on foreign vehicles. 147The proposal 

suggested that the Japanese Government issue 

administrative guidance to encourage manufacturers to 

support their dealers in entering into franchise 

agreements with foreign automobile manufacturers and 

to engage in joint production and distribution ventures 

with foreign automobile manufacturers. 

Certain provisions of the proposed draft agreement 

encouraged the Japan Fair Trade Commission (JFTC) 

to take actions to effectively enforce the Antimonopoly 

Act. The Japan Automobile Manufacturers Association 

(JAMA) reacted by issuing a statement saying that the 

U.S. demands were "shockingly discriminatory and 

anti-market." According to JAMA, the U.S. proposal 

would discriminate against Japanese-owned companies 

94 
in the United States and joint ventures between U.S. 

and Japanese firms. 148 

Throughout the talks, Japan strongly opposed U.S. 

proposals for including quantitative indicators in any 

agreement, claiming that numerical indicators 

amounted to managed trade. 149During talks in 

November 1993, Japan proposed certain criteria of its 

own to measure U.S. automobile producers' efforts to 

participate in its market, including the number of sales 

outlets, the number of personnel who could speak 

Japanese, the development of products suitable for the 

Japanese market, and the quality of after-sales service. 

These criteria reflected Japan's view that the low level 

of sales by U.S. automobile firms in Japan could be 

attributed, in large part, to inadequate efforts by U.S. 

manufacturers. 

Other Issues 

In early February 1993, representatives of the Big 

Three U.S. auto producers announced that they had 

abandoned their consideration of filing an antidumping 

complaint on imports of automobiles from Japan. 

There were reportedly several reasons for the decision, 

including concerns about whether the companies could 

actually win a case, about adversely affecting their 

investments in Japan, and about giving the impression 

to the public that they were unable to compete without 

protection. In addition, the Clinton administration 

reportedly indicated that it would not support a 

petition. 15° In October 1993, hints that dumping 

charges could still be filed were raised by 

representatives of U.S. automobile companies who 

claimed that Japanese producers were not passing on 

the yen's appreciation in the prices of the automobiles 

sold in the United States. 151 

The Japan Fair Trade Commission (JFTC) issued a 

report in June confirming that close relationships 

between automobile manufacturers and dealers 

discourage dealers from handling more than one 

nameplate. 152U.S. automobile producers have 

consistently claimed that these relationships make it 

difficult for U.S. firms to distribute their vehicles in 

Japan. According to the JFTC report, no Japanese 

dealer sells more than one Japanese nameplate, 

although almost 2,000 Japanese dealers handle both 

Japanese and imported vehicles. The report also 

confirmed that dealers receive incentives such as 

rebates from manufacturers based on sales volume and 

geographic market shares. Manufacturers also loan 

personnel and provide financing to dealers to 

encourage them to sell their products. 153 

Supercomputers 

During 1993, the United States continued to 

monitor Japan's implementation of a bilateral 

agreement reached in June 1990 covering government 

procurement of supercomputers. 154Since the 

conclusion of the agreement and by the beginning of 

Japanese Fiscal Year (JFY) 1993, U.S. firms won 3 of 

11 supercomputer procurements through an import 

fund set up by Japan's Government. During JFY 1993, 

U.S. companies won 7 out of 16 supercomputer 

procurements. 155In all cases, no Japanese company 

submitted a bid, and U.S. companies had yet to win in 

head-to-head competition with Japanese 

supercomputer firms. 156 

On April 30, 1993, the USTR announced a review 

under section 306 of the Trade Act of 1974, indicating 

that it would "evaluate Japanese Government behavior 

under the agreement thus far and will closely scrutinize 

its conduct of each of the upcoming supercomputer 

procurements." 157The USTR announced that if Japan 

was found not in compliance with the 1990 agreement 

at the conclusion of the review expected in early 1994, 

it would take action under section 301 of the Trade Act 

of 1974. Specific problems cited by the United States 

(in April and during subsequent bilateral negotiations), 

regarding implementation of the agreement were: (1) 

the use of benchmarking tests that favor Japanese 

vendors, (2) the awarding of points to Japanese 

vendors for features that did not exist at the time of the 

bidding, (3) lack of adequate budgets by procuring 

entities to ensure procurements of new systems and not 

just upgrades, 158(4) lack of adequate market research 

by the Government of Japan to compare prices of 

similar machines in the private sector, (5) inadequate 

investigation of U.S. vendors' complaints by the 

Supercomputer Procurement Review Board, and (6) 

lack of adequate verification of features of Japanese 

supercomputers after delivery in cases where 

legitimate questions about non-existent features were 

raised. 159The United States also expressed concern 

about the Government of Japan's refusal to 

acknowledge that non-vector supercomputer 

architecture (massively parallel processing machines) 

and certain prototypes are covered by the 1990 

agreement. 

Semiconductors 

During 1993, the United States and Japan 

continued to hold bilateral talks and to monitor the 

foreign market share of semiconductors in Japan's 

market. Under a 1991 agreement, foreign market share 

in Japan was expected to grow to 20 percent by the end 

95 
of 1992 and to show "gradual and steady 

improvement" until the agreement ends in July 

1996. 160 

The year began on a positive note with the March 

announcement that during the fourth quarter of 1992, 

foreign market share had reached 20.2 

percent—surpassing the 20-percent threshold for the 

first time, as indicated in the tabulation below (in 

percent): 161 

Quarter Foreign Market 

Share 

Third 1991 14.3 

Fourth 1991 14.4 

First 1992 14.6 

Second 1992 16.0 

Third 1992 15.9 

Fourth 1992 20.2 

First 1993 19.6 

Second 1993 19.2 

Third 1993 18.1 

While welcoming the development, Ambassador 

Mickey Kantor indicated that the United States 

expected a "gradual and steady" increase in market 

share during the remainder of the agreement. During 

talks with Japan on March 23, U.S. officials clarified 

the statement, reportedly saying that the United States 

expected foreign market share in Japan to average 20 

percent during 1993. 162At the same time, the 

Semiconductor Industry Association (SIA) announced 

a five-point action plan for making further progress for 

increasing sales in Japan. The plan suggested closer 

cooperation between Japanese and U.S. industries to 

support more design-ins and the continued 

establishment of "quantifiable targets, which have 

proven effective" in measuring progress. 163The plan 

was later presented to the Electronic Industries 

Association of Japan which accepted suggestions for 

increased cooperation in promoting design-ins, but 

rejected calls for quantifiable targets. 164 

On June 17, 1993, Ambassador Mickey Kantor 

announced that the first-quarter foreign share of 

Japan's semiconductor market was 19.6 percent. 165 

 Once again, the USTR welcomed the relatively high 

figure, stating that it indicated that the fourth-quarter 

market share figure for 1992 had not been an 

aberration. He also reiterated the U.S. Government's 

expectation that foreign market share would average 

over 20 percent, at minimum, for the remainder of the 

year. 166 

During bilateral talks held August 2 and 3, Japan 

reportedly refused to ensure that foreign market share 

in Japan would average 20 percent. Reiterating the 

position it has taken in the past, the United States 

suggested that Japanese users, including electronics 

and automobile manufacturers, make more efforts 

toward buying more foreign semiconductors. The 

Japanese, in turn, urged U.S. semiconductor 

manufacturers to produce semiconductors suitable for 

Japanese users. 167 

On September 22, the second-quarter figures for 

foreign market share were released, showing a decline 

from 19.6 percent to 19.2 percent. Ambassador Kantor 

indicated that he was "extremely concerned" that Japan 

was failing to meet the 20-percent market share and 

that United States planned to enforce the agreement. 168 

 The SIA also expressed concerns about the drop in 

market share. 

On December 27, Ambassador Kantor invoked the 

emergency consultations clause under the 1991 

semiconductor agreement (for the first time since the 

agreement was signed) and formally requested that 

consultations be held in January. 169He indicated that 

the third-quarter foreign market share had dropped to 

18.1 percent. According to some observers, the talks 

were requested because the administration was under 

pressure to show that the semiconductor arrangement 

was successful given the emphasis that it was placing 

on benchmarks or numerical targets in the framework 

talks. 170Japan indicated that it would participate in 

the talks. However, Japanese officials blamed the 

decline in market share, which is calculated in yen, on 

exchange rate changes and shortfalls in supplies that 

caused U.S. companies to sell to their U.S. customers 

before selling to their customers in Japan. 

Mexico 

During 1993, U.S.-Mexican economic relations 

were most active in negotiating the three side 

agreements on labor, the environment, and emergency 

action that complement NAFTA and in "selling" the 

agreement, a process which resulted in two 

modifications of the existing NAFTA. 171However, 

other issues were discussed bilaterally during the year, 

including intellectual property rights, reference prices, 

and agricultural standards. Mexico also continued to 

implement economic reform measures that are 

expected to have a favorable impact on U.S. interests. 

Intellectual Property Rights 

Mexican enforcement of intellectual property 

rights (IPR) for copyrights, trademarks and patents 

remained an important bilateral issue throughout the 

year.172 U.S. software, audio and videorecording 

96 
companies and the U.S. motion picture industry were 

the principal parties complaining about violation of 

their copyrights in Mexico. Trademark infringement 

and difficulty in registering new trademarks were also 

identified as a major problem by some U.S. companies. 

Mexican officials reportedly stepped up their raids 

and seizures against offenders in the last months of 

1993. In October, the Government of Mexico formed 

an inter-agency enforcement commission to coordinate 

the prosecution of pirates and to educate the Mexican 

public. This was followed in November by the 

establishment of a strike force in the Attorney 

General's office. In December, the first criminal 

indictments ever obtained for software infringement by 

a computer software company in Mexico were 

issued. 173 

The Mexican Ministry of Trade (SECOFI) signed a 

landmark software licensing agreement on October 28 

with Microsoft Corporation, which will result in the 

installation of Microsoft products throughout the 

Ministry of Trade. On this occasion, Dr. Jaime Serra 

Puche, Mexico's Secretary of Trade and Industry 

noted: "We understand that intellectual property 

protection is fundamental to the economic, cultural and 

social development of Mexico, and we are completely 

committed to the actions necessary to promote this. By 

purchasing state-of-the-art software, we are advancing 

our goal of making Mexico more productive and 

competitive in today's global markets." 174 

Reference Prices 

A new bilateral issue arose on August 4, 1993, 

when the Mexican Secretariat of Finance and Public 

Credit (Hacienda) published a resolution establishing a 

system of "reference prices" for customs valuation 

purposes. 175Hacienda claimed that the measure was 

needed because certain imported goods were seriously 

underinvoiced, costing Mexico large losses in customs 

revenue. Reference prices (also called "estimated" or 

"minimum import prices") were to replace invoice 

prices as the basis for calculating duties on a range of 

consumer products, including textiles, apparel, 

footwear, wine, and electronic household appliances. 

Subsequently, authorities amended this new import 

valuation regime; they lengthened the original 

consumer product list and modified the minimum 

import prices both upward and downward. 176 

 Additional items on the list included disposable diapers 

and apples. Importers, whose invoice values were 

lower than the reference price, were directed (1) to pay 

duties based on the higher reference price or (2) to post 

a bond or other guarantee to cover the difference in 

payable duty. Established importers—those who had 

imported more than $7 million worth of merchandise 

in 1992—were allowed to petition the Hacienda to 

exempt them from posting payment guarantees. 177All 

importers had to face the likelihood of ultimately 

having to pay additional duties; therefore, their own 

competitive position, as well as that of the exporters, 

was weakened by the reference price system. 

U.S. exporters, especially of textiles, complained 

that the reference prices were too high and said they 

increased the cost of doing business with Mexico. In 

September, U.S. officials expressed their concern that 

the reference prices are contrary to the letter and spirit 

of the GATT, which does not permit minimum import 

values. Mexico reiterated that the new rules were 

designated to combat underinvoicing and customs 

fraud and claimed that they were GATT-consistent. 178 

On November 16, Mexico issued revised 

regulations, exempting large importers from the 

bonding requirements on habitually underinvoiced 

goods. 179Nonetheless, many U.S. exporters—some 

operating through small Mexican agents and 

distributors—remained unable to benefit from the new 

exemption. The system of minimum import prices for 

customs valuation of selected consumer items has 

essentially prevailed in Mexico, and continues to be a 

bilateral issue of contention. 

It should be noted that consumer items, the only 

category of products affected by the reference price 

system thus far, have historically accounted for only a 

small portion of overall U.S. exports to Mexico. 

Nonetheless, consumer items are gaining importance 

because they constitute the fastest-growing component 

of the total. Another concern of the United States was 

that Mexico might extend this practice to other types of 

U.S. exports, thereby undermining the tariff 

preferences negotiated in NAFTA. 18° 

Agricultural Standards 

Sanitary or phytosanitary standards, frequently 

perceived by both countries as de facto nontariff 

barriers to their agricultural exports, continued to be 

bilateral issues in 1993. For example, Mexico 

authorized sizable shipments of Pacific Northwest 

apples from Oregon and Washington State in the fall, 

but only after first holding them up on grounds that 

U.S. cold storage standards were inadequate. Also, 

following months of dispute concerning the U.S. 

quality control of the Mediterranean fruit fly, Mexico 

eventually allowed imports of considerable quantities 

of California table grapes during the year.181 

Mexico, too, has perceived certain proposed U.S. 

animal and plant health standards as disguised efforts 

97 
to protect the U.S. market. For example, in 1993, 

Mexican officials objected to a U.S. proposal to restrict 

imports of Mexican-origin Holstein cattle. This 

proposal, still under consideration by U.S. officials, 

arose due to concerns about the possibility of spreading 

bovine tuberculosis to U.S. cattle. Mexican avocados, 

which are barred from all of the United States except 

Alaska, are another target for Mexican complaints 

about U.S. application of health standards. In this case, 

the U.S. side was concerned about the threat of fruit fly 

contamination. Nonetheless, joint U.S.-Mexican efforts 

to control fruit flies are currently under consideration. 182The implementation of the NAFTA may 

help the two sides to better manage existing conflicts 

and promote cooperation in the area of agricultural 

health and safety rules. A series of trilateral 

committees and working groups are already at work on 

these matters. 

Tax Treaty 

A new bilateral tax treaty, signed on September 18, 

1992, was ratified by both the United States and 

Mexico in November 1993. The treaty became 

effective in the United States on December 28, 1993, 

and in Mexico on January 1, 1994. Designed for 

"Avoidance of Double Taxation and the Prevention of 

Fiscal Evasion," 183the treaty significantly broadens 

the one it replaced in terms of the scope of tax 

information that will be exchanged. 184The accord also 

establishes ceilings for Mexican withholding taxes on 

interest payments and U.S. withholding taxes on 

dividend payments, 185thereby reducing barriers to 

investments and to other business activities in both 

countries. 186 

Legislative Reforms 

Efforts to adapt legislation to the significantly 

altered, more open character of the Mexican economy, 

and specifically to Mexico's commitments under the 

NAFTA, led to important legislative developments in 

1993. A host of new laws, modifications of existing 

laws, decrees, and regulations became effective during 

the year. These measures covered a wide range of 

subjects, including government procurement, customs 

procedures, phytosanitary standards, the maquiladora 

industry, mining, forestry, financial services, the 

professions, navigation, Federal highway standards, a 

new Federal copyright law, taxes, PEMEX (the Federal 

petroleum monopoly), economic competition, foreign 

trade, and foreign investment. The new laws on 

economic competition, foreign trade, and foreign 

investment, which can be considered landmarks in 

Mexico's legislative history, are discussed below. 

Federal Economic Competition Act 

On June 22, 1993, the Salinas Government put into 

effect its "Federal Economic Competition Act" 

(FECA). Mexico's previous antimonopoly laws, 

written in the 1930s, did not cover many forms of 

anticompetitive behavior, and enforcement was slow 

and open to influence. In large part as a result, 

Mexico's business scene came to feature a heavy 

presence of cartels, which have routinely engaged in 

price fixing. 187 

In drafting the new antitrust law, Mexico drew 

mostly on the experiences of the United States, 

Canada, and Spain. FECA's declared purpose in article 

2 is to: 

. . . protect the competition process and free 

access (to the marketplace) through the 

prevention and elimination of trusts, trust 

related practices/activities and other 

restrictions to the efficient functioning of the 

markets of goods and services. 188 

FECA entrusts the enforcement of its antitrust and 

anticoncentration provisions to a Federal Competition 

Commission, which it created to function as a division 

of SECOFI. The five members of this Commission are 

to be appointed by the President of Mexico, initially 

for staggered terms, eventually for 10-year terms. The 

Commission is empowered to regulate monopolies and 

authorize certain mergers, acquisitions, and horizontal 

and vertical integrations. 

FECA provides for significant penalties for 

violations. Distinguishing between absolute 

monopolistic practices that are clearly unlawful and 

other "suspected" ones, the law establishes a rule of 

procedure to identify practices in the second category. 

This is similar to the approach of antitrust authorities in 

the United States. In the words of Mr. Santiago Levy, 

the first President of the Competition Commission: 

Price fixing arrangements, horizontal market 

division and bid rigging are considered 

unlawful. Other practices are subject to a rule 

of reason approach. 189 

FECA applies to public as well as private 

monopolies, except for certain constitutionally 

established public monopolies in "strategic areas" such 

as PEMEX, the petroleum monopoly, and CFE, the 

Federal Electricity Commission, workers associations 

98 
that are legally incorporated to defend their interests, 

and voluntary exporting groups that do not sell their 

products domestically. Also, the executive branch 

continues to be allowed to determine maximum prices 

for products and services necessary for mass 

consumption. The policing of these prices is entrusted 

to Mexico's Federal Consumer Protection Agency. 

With this legislation, as with other laws 

promulgated in anticipation of NAFTA's passage, the 

Salinas administration reportedly sought to harmonize 

the competition laws of Mexico with those of the 

United States and Canada. Beyond that, the new law 

aims to bring Mexican competition legislation to parity 

with that of all advanced market economies, thus 

making Mexico more appealing to foreign investors in 

genera1. 19° 

Foreign Trade Law 

Mexico published a new, comprehensive Foreign 

Trade Law in the Diario Oficial on July 27, 1993, 

effective the next day. 191This law superseded the 

Foreign Trade Regulatory Act of 1986 and various 

pertinent regulations. 192In stating the law's overall 

objectives, Title I, article 1 193includes the objective to 

regulate and promote foreign trade, to increase the 

national economy's competitiveness, and to facilitate 

the Mexican economy's integration into the global 

economy. Mexican authorities claim that this law will 

conform Mexican law to Mexico's commitments under 

the NAFTA and curb the Government's discretionary 

power. Reliance on public hearings is also expected to 

lead to greater transparency than before. 194 

Title III, article 6 of the Foreign Trade Law 

establishes a Commission on Foreign Trade, "the 

compulsory consultative body for agencies and entities 

of the Federal Government." 195Article 7 creates a 

Mixed Commission on Export Promotion to assist the 

Executive Branch. Articles 9-11 establish rules of 

origin for the first time in Mexico. In Title IV, articles 

12-27 codify provisions concerning tariff and nontariff 

restrictions, significantly enhancing thereby the 

transparency of Mexican trade restrictions. 196 

Title VIII of the Foreign Trade Law provides for 

export promotion activities. These are intended, among 

other things, to help Mexican firms "take advantage of 

the progress made in international trade negotiations" 

by offering appropriate foreign trade support services. 

Article 91 of Title VIII of the Foreign Trade Law 

promises a host of decrees to be issued in the Diario 

that will specify programs for the promotion of exports 

"concerning infrastructure, training, coordination, 

organization, financing, tax and customs 

administration, and upgrading of foreign trade 

mechanisms, provided they are internationally 

accepted practices." 197Article 92 institutes a "national 

export prize" whose purpose is "to recognize, on an 

annual basis, the efforts of Mexican exporters and 

institutions that support export activities." Title IX is 

consigned to lists of various violations under this law, 

penalties for such violations, and a description of the 

process of appeal to authorities for reversal of 

decisions already made with regard to certification of 

origin, unfair trade, breach of confidentiality, and other 

matters. The Diario published implementing 

regulations to the new foreign trade law on December 

30, 1993. 

Foreign Investment Law 

The passage of Mexico's new foreign investment 

law (FIL) was initially held up in the 1993 summer 

legislative session, during which so many other legal 

reforms were passed. The law was passed shortly after 

the NAFTA was approved by the U.S. and Canadian 

legislatures; it was published in the Diario Oficial on 

December 27, 1993, and made effective the following 

day. 

The new law replaces the "Law to Promote 

Mexican Investment and Regulate Foreign Investment" 

of 1973 (1973 law), which was generally unreceptive 

to foreign capital. Under the 1973 law, foreign 

investment had been excluded from a wide range of 

economic activities. In other areas where it was 

permissible, foreign ownership had been generally 

limited to 49 percent. 198However, by the early 1980s, 

capital from abroad was seen once again as desirable 

for Mexico, and the 1973 law was applied in an 

increasingly flexible manner. The law itself was first 

modified in 1984 during the administration of 

President de la Madrid to allow majority ownership in 

selected activities. 

In May 1989, the Salinas administration put into 

effect implementing regulations to the 1973 law, 

liberalizing the country's direct investment regime. The 

1989 regulations served to formalize investment 

procedures that already had been in place for some 

years, such as facilitating the approval process for 

foreign investment and greatly expanding the number 

of economic areas in which majority foreign ownership 

was allowed. 199Even though the 1973 law remained 

on the books, these more liberal regulations are 

regarded as having been a major factor in Mexico's 

considerable success in attracting foreign capital in 

recent years. 

99 
The United States, the largest foreign presence in 

the Mexican economy, currently accounts for some 

three-fifths of foreign direct investment in Mexico." 

This considerable U.S. share has been realized even 

though several economic activities of substantial 

interest to U.S. investors—petroleum, petrochemicals, 

mining, transportation equipment, auto parts, and 

services including most financial ones—generally had 

been reserved for the State or Mexican nationals. 

Most of the differences between the two countries 

with regard to foreign investment were resolved in 

NAFTA. NAFTA commits the partners to extend 

national treatment to each other's investments in most 

areas, subject to specified conditions. The NAFTA 

requires Mexico to phase out its "performance 

requirements" imposed on foreign entrepreneurs—

including specified export levels, capital controls, trade 

balancing, and minimum domestic content—that 

frequently have discouraged and antagonized U.S. 

investors and constrained U.S. exports to Mexico. 

It should be noted that the FIL does not extend 

NAFTA provisions to all countries. For example, under 

NAFTA's provisions on financial services in 

commercial banking and stock brokerages, investors 

from partner countries may eventually acquire assets 

that could make them wholly owned subsidiaries. By 

contrast, for all other foreign investors 30-percent 

equity participation is the limit. This difference in 

treatment became an issue between Mexico and the 

Organization for Economic Cooperation and 

Development (OECD), as some OECD members 

asserted that Mexico had taken action that 

discriminated against non-NAFTA members at the 

same time that discussions were underway concerning 

Mexico's accession to the OECD. 201 

The FM attempts to strike a balance between 

attracting foreign investment and preserving Mexican 

control in key sectors. FIL states its purpose in article 1 

of Title I as "...the determination of rules to channel 

foreign investment towards this country and promote 

its contribution to national development." 202The law 

codifies the terms agreed to in NAFTA and, going 

beyond that, extends national treatment to foreign 

investors from third countries, subject to specified 

limitations in article 4. Mexican officials have 

frequently emphasized that they wish to diversify the 

sources of foreign investment in Mexico. Therefore, 

they are actively pursuing investors not only from 

NAFTA partners but also from Japan, other Far Eastern 

countries, Europe, and other areas. 

Article 5 lists those segments of the economy that 

continue to be reserved exclusively for the State, thus 

excluding private Mexican and all foreign investors. 

These are: extraction of petroleum and other hydrocarbons; production of basic petrochemicals; generation of electricity and nuclear energy; mining of 

radioactive materials; communications via satellite; 

telegraphic and radiotelegraphic services; mail; 

railroads; printing of money and coinage; and control, 

inspection, and surveillance of maritime ports, inland 

ports, airports, and heliports. Most of these exclusions 

are mandated by Mexico's Constitution of 1917. 

Article 6 lists additional activities from which 

foreign investors are excluded. These include domestic 

land transport, retail trade in gasoline and natural gas, 

radio and television services other than cable 

television, credit unions, and development banks and 

institutions. 

The law opens up most other economic activities to 

foreign ownership, allowing minority ownership or, if 

approved by the National Commission on Foreign 

Investment (NCR) even majority ownership to aliens 

in areas previously reserved for Mexicans. Activities to 

which foreign ownership ceilings apply, as specified in 

article 7, include air-transport (25 percent); stock 

brokerage houses and commercial banks (30 percent); 

railroad services (49 percent); warehousing and 

shipping entities involved in domestic maritime 

navigation (49 percent); and production of automobile 

parts, equipment, and accessories (49 percent). In spite 

of the ceilings, some of the above activities, including 

air and land transportation, certain maritime and 

railroad activities, and stock brokerages, are being 

opened to foreigners for the first time. 203 

Article 8 lists additional activities in the 49-percent 

category, for which the NCFI may in its discretion 

allow foreign participation in excess of 49 percent. 

These include building and construction activities, 

certain port services, the administration of air 

terminals, certain educational and legal services and, 

most important from the U.S. point of view, oil and gas 

well drilling. Article 9 requires prior approval by the 

FIL in all economic areas where foreign participation 

exceeds 49 percent, provided the value of a proposed 

investment exceeds an amount to be determined 

annually by the NCFI. This amount has been presently 

set at 85 million new pesos (approximately $27.5 

million). 

Title II provides for the acquisition of real estate 

and trusts. Notably, article 10 allows foreign investors 

to buy land along the border and coastlines for 

nonresidential purposes. Previously, these areas had 

been reserved for Mexican companies, although 

100 
complex trust and stock ownership arrangements made 

investment possible for foreigners. The change in the 

new law will establish legal security for foreigners 

interested in investing in beach hotels and in 

developing industrial and commercial real estate in 

these formerly restricted geographic areas. By contrast, 

trusts are still required under the new law for 

residential property in the same areas, as provided for 

in article 11. 

Title VI provides for the structure of the NCFI, 

which will be comprised of cabinet ministers and 

chaired by SECOFI. This title also defines the 

Commission's authority and outlines its operations. 

Sanctions for violations are discussed in Title VIII, but 

prior to the determination or imposition of any 

sanction, the interested parties shall be heard. 

China 

Most-favored-nation (MFN) tariff status was the 

leading issue in trade and economic relations between 

China and the United States as 1993 began and 

remained so throughout the year. Chinese 

transshipments of textiles and apparel to the United 

States through third countries to avoid U.S. import 

quotas also became a major issue in 1993. Negotiations 

on a new textile-and-apparel agreement that would 

impose penalties on such transshipments remained 

stalled at year's end when the 1988 bilateral agreement 

expired. A further strain was placed on relations 

between the two countries when the United States 

banned the export of certain high-technology goods to 

China for 2 years. The sanctions, imposed as the result 

of mounting evidence that China had engaged in 

weapons proliferation, affected mainly U.S.-built 

communications satellites that were to be exported for 

launching by China. The Chinese Government's 

inadequate enforcement of intellectual property rights 

was yet another bilateral issue that remained 

unresolved in 1993. 

Talks on the implementation of the 1992 agreement 

on market access yielded better results. Although 

China failed to meet some of its market-opening 

commitments scheduled to take place in 1993, it 

reduced or eliminated other import barriers ahead of 

schedule. The commitments made by China under this 

bilateral agreement are based on the multilateral rules 

and trade liberalization principles that would apply if 

China were a member of the GATT. However, during 

the GATT meetings held in 1993 on China's 

application for accession, the United States and other 

member countries continued to raise questions about 

the ability of China to meet GATT obligations without 

further trade and economic reforms. 

MFN Status 

When President Clinton was inaugurated in 

January 1993, one of the major trade decisions he 

faced was to determine whether the MFN status of 

China should continue. MFN tariff treatment, the 

nondiscriminatory rates of duty that the United States 

applies as a matter of course to imports from most 

countries, is extended to products from China under the 

President's authority to waive full compliance with the 

freedom-of-emigration requirements imposed on 

nonmarket economy countries by section 402 of the 

Trade Act of 1974. The waiver for China, which has 

been in effect since February 1980, expires on July 3 of 

each year unless the President issues a determination to 

extend it at least 30 days before the scheduled 

expiration date. 

Continuation of the waiver has been an issue since 

the Chinese Government's military suppression of the 

student-led prodemocracy movement in June 1989. 

Legislation placing human rights and other conditions 

on the extension of China's MFN status was twice 

passed by the Congress but was vetoed by former 

President Bush. 204The situation changed in 1993, 

however, when President Clinton as well as the 

Congress favored making MFN renewal for China 

contingent upon significant improvements in its human 

rights record. 

On May 28, 1993, President Clinton issued a 

determination continuing the most-favored nation 

status of China for another 12 months beginning 

July 3, 1993, and concurrently signed an Executive 

order specifying the conditions in the area of human 

rights for recommending extension in 1994. 205The 

Executive order directed the Secretary of State to 

submit a recommendation to the President with respect 

to the next annual extension before June 3, 1994, and 

named two conditions that China was required to meet 

and five conditions that China could satisfy if it made 

"overall significant progress." 

Under the Executive order, the Secretary of State 

could not recommend extension of China's MFN status 

in 1994 unless he determined (1) that continuation of 

the waiver would substantially promote the 

freedom-of-emigration objectives of section 402 of 

1974 Trade Act and (2) that China was complying with 

a 1992 bilateral agreement on products made by prison 

labor. China's MFN status has been extended every 

year since 1980 on the grounds that the first condition 

was being met; 206however, for renewal of the waiver 

in 1994, this condition also required that designated 

101 
dissidents and relatives of dissidents be allowed to 

emigrate. The second condition would be essentially 

met provided China allowed U.S. officials to inspect 

prisons and other detention facilities that they 

suspected of using forced labor to produce goods being 

shipped to the U.S. market. 207In addition, the 

Executive order directed the Secretary to determine 

whether China has made "overall, significant progress" 

with respect to the following human rights issues: 

(1) taking steps to adhere to the Universal Declaration 

of Human Rights, 208(2) releasing and providing an 

acceptable accounting of Chinese citizens imprisoned 

or detained for the nonviolent expression of their 

political and religious beliefs, (3) ensuring humane 

treatment of prisoners, (4) protecting Tibet's religious 

and cultural heritage, and (5) allowing access in China 

to international radio and television broadcasts. 

Although the conditions for the renewal of MFN 

status in 1994 were limited to improvements in the area 

of human rights, the Executive order also directed the 

Secretary of State and other appropriate U.S. 

Government officials to pursue all legislative and 

executive actions to ensure that China abided by its 

commitments to the United States with respect to trade 

practices and the nonproliferation of weapons. In a 

report to the Congress that accompanied the MFN 

extension,209President Clinton outlined the steps 

already being taken by the new administration to 

resolve these other bilateral issues that Congress had 

previously included, in addition to human rights, 

among the legislative conditions for MFN renewal. 

With President Clinton's decision pending, 

Representative Pelosi (D-CA) and Senator Mitchell 

(D-ME) introduced in the Congress, on April 22, 1993, 

legislation imposing conditions on the extension of 

China's MFN status in 1994 (H.R. 1835 and S. 806). A 

similar bill (H.R. 1991) was also introduced by 

Representative Smith (R-NJ) on May 5, 1993. No 

further action was taken with respect to these 

measures, however, since the President's Executive 

order encompassed the essential elements of the 

proposed legislation. A joint resolution (H.J. Res. 208) 

to disapprove the 1993 continuation of MFN treatment 

for products from China was introduced by 

Representative Solomon (R-NY) and others on June 8, 

1993. This bill was defeated in the House and was not 

considered in the Senate, thereby providing further 

congressional endorsement of the President's handling 

of the MFN issue. 

The Chinese Government was viewed as having 

done little to advance human rights during the months 

immediately following President Clinton's decision, 210 

 and U.S. pressure on China to improve its trade 

practices and to abide by international rules on the sale 

of weapons also failed to yield positive results. In a 

meeting held on September 25, 1993, between U.S. 

National Security Advisor Anthony Lake and Chinese 

Ambassador to the United States Li Daoyu, the Clinton 

administration introduced a policy of more 

comprehensive engagement with China. Key 

components of this change in approach included the 

resumption of high-level contacts, cooperation on a 

wide range of common interests, and the active 

promotion of trade links. 211At the same time, 

administration officials emphasized that improvement 

in the area of human rights was imperative for the 

extension of China's MFN status in 1994. 

The high-level exchanges arranged with Chinese 

economic, political, and defense officials included a 

meeting between President Clinton and Chinese 

President Jiang Zemin in Seattle, Washington, on 

November 19, 1993, held in conjunction with the Fifth 

Ministerial Meeting of APEC. During the exchange, 

President Clinton "put forward key human rights 

conditions that must be met if Most Favored Nation 

status to China is to be renewed." 212 

China released some well-known political 

prisoners early or gave them medical parole in 1993; 

however, new arrests were reported and the Chinese 

Government still has not provided a full accounting of 

the thousands of persons detained during the 

suppression of the 1989 prodemocracy movement. A 

possible change in China's position occurred in 

November, when the Government announced that it 

would "give positive consideration" to a request from 

the International Committee of the Red Cross to visit 

its prisons. China has been slow, however, in 

responding to U.S. requests for access to facilities 

where prison labor is suspected of producing goods for 

export to this country. By the end of December 1993, 

U.S. embassy officials had been allowed to conduct 

on-site visits of only three suspected facilities since the 

bilateral agreement on prison labor products became 

effective in August 1992. 213Looking at the overall 

record, both administration officials and members of 

Congress agreed that China had not yet made the 

human rights improvements needed to satisfy the 

President's conditions for MFN extension in 1994. 214 

Textiles and Apparel 

The United States has gathered extensive evidence 

in recent years that China has repeatedly engaged in 

violations of the bilateral agreement controlling its 

exports of textiles and apparel to the U.S. market. 

Transshipments and overshipments by China have been 

the primary problems, inasmuch as both practices 

102 
seriously undercut the effectiveness of the textile quota 

system. However, despite months of negotiations that 

began in March 1993, the bilateral textile agreement in 

effect since the beginning of 1988 expired on 

December 31, 1993, before a new agreement 

addressing these issues could be reached. 215 

China's transshipments, its practice of initially 

shipping textiles and apparel destined for the United 

States to a third country where they are improperly 

labeled as having been manufactured in that country, 

are believed to have assumed massive proportions. For 

the period 1991-93, the U.S. Customs Service 

estimated that the value of such improperly 

transshipped Chinese textiles and apparel entering the 

U.S. market totaled about $2 billion annually. 216 Such 

transshipments reportedly took place through at least 

25 countries in areas as widespread as Europe, Asia, 

Africa, and Central and South America. 217The import 

categories found to account for the largest volume of 

transshipments were mainly those covering knit shirts, 

sweaters, underwear, cotton trousers, and shop 

towels.218 

Overshipments, or shipments that exceed quota 

limits specified in the bilateral agreement, were also 

identified as a major concern. This practice can result 

in significant market disruption since, as a rule, all 

merchandise entering the United States in excess of the 

annual limit for a textile or apparel category must be 

held in bond at Customs warehouses until it can be 

included in the next year's quota. During 1990-93, 

annual overshipments occurred in more than 50 percent 

of the 88 categories subject to limits under the United 

States-China agreement, 219indicating that the Chinese 

Government may not have been meeting its legal 

obligation to issue export visas for no more than the 

amount of goods for which it had quota. The problem 

is believed to have been largely the result of an 

inadequate control mechanism, rather than direct action 

on the part of the Government, since much of this 

overshipment reportedly resulted from the use of 

fraudulent visas. 220 

Even though China has been identified as the 

country of origin for most improper transshipments to 

the U.S. market, the transit countries may have also 

violated their textile-and-apparel agreements by 

allowing China to use otherwise unfilled portions of 

their quotas. To tighten its controls against this 

practice, the United States has begun to renegotiate all 

of its expiring bilateral textile agreements to include 

language that addresses specific instances of 

transshipment by either the originating or the transit 

country. This new language in the agreements will give 

the United States the right to make adjustments in a 

country's quotas if bilateral consultations do not 

resolve the issue. In the case of repeated offenses, the 

United States will have the right to reduce a specific 

quota by as much as three times the amount 

transshipped.221The agreements also are being 

revised to give U.S. officials the authority to make 

unannounced visits to a supplying country's textile and 

apparel factories and to include a commitment by that 

country to adopt enforcement procedures that 

effectively control both transshipments and 

overshipments. 222In 1993, the United States 

concluded bilateral textile agreements incorporating 

these provisions with 16 countries. 223However, China 

was not the only country that resisted. 

The United States also entered into negotiations 

with China to include, for the first time, silk and 

mostly silk-blend apparel among the categories subject 

to quota limits. U.S. imports of silk apparel from China 

have been rising rapidly in recent years, from $220 

million in 1989 to $1.0 billion in 1992 and to $2.6 

billion in 1993. This growth has largely resulted from a 

decline in the prices of these imports, consisting 

mainly of shirts and blouses, that has seriously affected 

the sales of U.S. manufacturers of similar cotton and 

manmade-fiber apparel. 

U.S. imports of textiles and apparel from China 

totaled $6.2 billion in 1993 (not counting improper 

transshipments and the overshipments held in Customs 

warehouses), making it the largest supplier to the U.S. 

market among more than 100 textile-exporting countries. About 80 percent of these imports from China 

consists of apparel items. The United States is the 

largest market for China's exports of textiles and 

apparel, which accounted for about one-third of its 

total foreign-exchange earnings in 1993. 

Export Sanctions on Satellites 

Since early 1992 China has shown increased 

support for international initiatives to control the 

proliferation of weapons of mass destruction. In March 

1992 it acceded to the Nuclear Non-Proliferation 

Treaty (NPT) and, although it did not join the Missile 

Technology Control Regime (MTCR), made a written 

commitment to the United States to abide by its 

guidelines and parameters. In January 1993 China 

became an original signatory to the Chemical Weapons 

Convention (CWC), thus making it either a member of 

or a participant in all of the leading nonproliferation 

agreements. Nevertheless, reports that China may have 

exported items controlled under these agreements to 

countries of proliferation concern continued to raise 

doubts about its compliance with its commitments. The 

matter of greatest concern to the new Clinton 

103 
administration involved reports that China had sold 

either M-11 missiles or related equipment to Pakistan 

in November 1992. Such a transfer is a violation of the 

MTCR, which serves to control the spread of missile 

and missile-delivery systems. 224 

On August 24, 1993, after several months of 

examining a mounting body of evidence, the United 

States issued a determination that China had 

transferred M-11 missile components to Pakistan. This 

finding automatically triggered the imposition of 

sanctions banning any new U.S. licenses to export 

specified high-technology munitions and civilian items 

having potential military use to China for 2 years. 225 

 The items mainly affected by the sanctions were 

satellites and satellite components that U.S. 

manufacturers had planned to export for launching by 

China.226This meant that China would be forced to 

virtually suspend the operation of its commercial 

satellite business but it also meant a loss in potential 

U.S. exports estimated to be $400 million to $500 

million annually during the 2-year period. 227 

U.S. law requires that sanctions be placed on 

countries that knowingly transfer certain types of 

technology to countries that do not adhere to the 

MTCR, and the nature of the specific sanctions to be 

imposed are determined by the MTCR guidelines. 

China was determined to have sold to Pakistan, a 

country that does not adhere to the MTCR, items on 

the MTCR list related to the development or 

deployment of the M-11 missile (Category II items), 

but conclusive evidence did not exist for a 

determination that it had transferred items that would 

make a substantial contribution to the development and 

production of the missile (Category I items). A variety 

of items are included in the Category II list, but exports 

to China of most of these items, including satellites, are 

prohibited under U.S. sanctions imposed following the 

June 1989 massacre of prodemocracy demonstrators in 

Tiananmen Square or are restricted under other U.S. 

laws and international guidelines. However, in March 

1992, after China had provided assurances to the 

United States that it would adhere to the MTCR 

guidelines, the Bush administration began to consider 

and issue waivers of the sanctions prohibiting satellite 

exports to China on a case-by-case basis. As a result, 

negotiations on several contracts for U.S.-built 

communications satellites to be launched by China had 

been concluded or were in progress when the new 

sanctions were imposed. 

The United States offered China the opportunity to 

launch satellites commercially when a U.S. company 

applied for licenses to export three of its satellites for 

launching on Chinese rockets and the two countries 

began negotiations on the terms of such an 

arrangement. Between October 1988 and January 

1989, the United States and China signed agreements 

covering pricing and other aspects of international 

trade in commercial space launch services, safeguards 

to prevent the unauthorized transfer of U.S. space 

technology to unfriendly third countries, and liability 

in the event of a launching accident. These three 

agreements met the requirements for the United States 

to issue export licenses for U.S.-made communications 

satellites to be launched by China and marked the entry 

of China into the international market for launch 

services. 

Although a prohibition on exports of satellites was 

among the sanctions that the United States imposed on 

China in 1989, exceptions were made for the three 

satellites that had led to the signing of the agreements. 

All three were subsequently exported to China, and 

two were successfully launched. 228Again in 1992 the 

prospect for more launchings improved as a result of 

the commitment China had made to adhere to the 

MTCR guidelines. Former President Bush waived the 

prohibition on U.S. satellite exports to China with 

respect to six specific projects in September 1992, and 

President Clinton issued waivers for two additional 

projects in July 1993. However, U.S. export licenses 

had been issued for only three of these projects before 

the new sanctions were imposed. 229 

During the months immediately preceding the 

imposition of sanctions, members of the Clinton 

administration had met with Chinese officials in an 

attempt to resolve the proliferation issue. However, the 

Chinese Government denied that there had been a 

violation of the MTCR and refused to discuss any 

evidence relating to the M-11 missile-related 

transfer. 230Despite the lack of progress made in these 

earlier talks, the United States subsequently offered to 

reopen negotiations to determine whether the two sides 

could agree on conditions for lifting the sanctions. At 

the first of these meetings, held in November 1993, the 

United States failed to persuade the Chinese 

Government to sign a formal, legally binding 

agreement to replace its earlier commitment to adhere 

to the guidelines of the MTCR. 231 

Other Bilateral Trade Issues 

IPR Enforcement 

China has made significant changes in its laws and 

regulations to protect intellectual property rights (IPR) 

but, in the view of the U.S. Government, has failed to 

provide adequate and effective IPR enforcement. The 

104 
piracy of films, tape cassettes, compact disks (CDs), 

laser disks, computer games, computer software, 

books, and magazines is rampant in China and still 

growing.232 

The improvement in China's laws and regulations 

was to a large extent the result of a memorandum of 

understanding (MOU) it reached with the United States 

in January 1992. Acting in response to commitments it 

made in the MOU, the Chinese Government issued 

regulations in 1992 that raised the minimum level of 

protection for computer software and other copyrighted 

works to international standards and revised its patent 

law to extend protection to agricultural, 

pharmaceutical, and chemical products. 233However, 

despite the commitment China also made in the MOU 

to establish an effective mechanism for IPR 

enforcement, its revised copyright law did not provide 

for criminal proceedings against piracy. 234Moreover, 

although the operation of the China Patent Office is 

regarded by USTR as being generally effective, the 

piracy of patented products has continued. 235 

In July 1993 China put into effect a revised 

trademark law that contains tough enforcement 

provisions, including criminal penalties for 

infringement. Trademark violations remain 

widespread, however, and a company's redress for 

infringement can be made difficult by such problems 

as prolonged investigations and the inexperience of 

Chinese courts in dealing with complex trademark and 

other IPR issues. 236The Anti-Unfair Competition 

Law was also adopted and became effective December 

1, 1993. This law for the first time provides legal 

protection in China for unregistered trademarks, trade 

names, and product packaging. It also includes a 

provision to protect trade secrets, thereby fulfilling 

another of China's commitments in the MOU. 237 

On November 30, 1993, United States Trade 

Representative Mickey Kantor announced that he was 

placing China on the "priority watch list" for its failure 

to enforce IPR laws and regulations. 238This list is 

compiled by the Office of the U.S. Trade 

Representative as part of its monitoring process under 

the "special 301" provisions of the Trade Act of 

1974.239Further bilateral consultations will be held in 

an effort to reach agreement on enforcement. However, 

if China should subsequently fail to meet its 

commitments to establish an effective IPR enforcement 

mechanism, it could be designated a "priority foreign 

country" under the special 301 provisions. This action 

would automatically trigger an investigation that could 

result in punitive trade sanctions. 

Market Access 

The first full year of China's implementation of a 

memorandum of understanding to open its markets to 

U.S. exports, signed by the two countries in October 

1992, ended with mixed results. The Chinese 

Government fulfilled some of the market-access 

commitments it had made on schedule or even ahead of 

the timetable set forth in the MOU. However, it failed 

to make other changes scheduled to take place in 1993, 

in particular, some of those relating to its import 

barriers on agricultural commodities. This uneven 

performance partly reflects the sweeping nature of the 

commitments, which require major reforms in China's 

import regime over a 5-year period and, as the reforms 

are phased in, structural changes in the various sectors 

of the Chinese economy opened to competition. 240 

Among the most important steps taken by China in 

implementing the MOU during 1993 were in opening 

its markets to industrial goods and in increasing the 

transparency of its trade regime. 241On December 31, 

1993, in keeping with the MOU timetable, China 

eliminated import restrictions on 258 items, 242 

 including iron and steel products, heavy machinery, 

machine tools, textile machinery, rail locomotives, 

helicopters, scientific instruments, and commercial 

aircraft. Acting ahead of schedule, it also lifted import 

restrictions on integrated circuits and selected chemical 

products and removed a system of import "controls" 

that had been used specifically for protecting the 

domestic production of 171 machinery and electronics 

products. For many products, however, U.S. access to 

the Chinese market is still limited by a variety of 

restrictions and import licensing requirements, often 

applied in conjunction with one another. 243The next 

scheduled reduction in product-specific import barriers 

is scheduled to take place on December 31, 1994. 

China's commitment to improve the transparency 

of its trading system was made one of the key 

provisions of the market-access agreement. Instead of 

using mainly internal directives to govern trade, the 

Chinese Government pledged to publish and make 

readily available to both governments and foreign 

traders all trade and investment-related documents. It 

began publishing numerous rules and regulations while 

the section 301 investigation that led to the MOU was 

still underway and has continued the process. In 1993 

the State Council went a step further and issued a 

directive mandating that no unpublished law, rule, 

regulation, or administrative guidance can be 

enforced. 244Nevertheless, despite the progress that 

China has made, the goal of achieving transparency 

105 
and uniformity of application of trade rules throughout 

China remains elusive.245 

The United States is continuing to negotiate with 

China with respect to certain obligations it failed to 

meet in 1993. These include a commitment to 

eliminate the use of agricultural standards and testing 

requirements that serve mainly as trade barriers 

inasmuch as they apply to foreign but not to domestic 

products. In addition, bilateral talks failed to resolve 

U.S. concerns about scientifically unjustifiable 

phytosanitary restrictions on imports of fruits, wheat, 

and tobacco. Some headway was made on this issue in 

late 1993, however, when China agreed to permit 

imports of apples from Washington State for a 1-year 

trial period and to permit TCK spore-carrying wheat 

from the Pacific northwest to enter Hainan Province in 

southern China. 246 

GATT Application 

The goal of attaining GATT membership continued 

to elude China in 1993, the seventh year since it 

applied for admission. The former Republic of China 

had been one of the founding members of the GATT in 

1947, but withdrew in 1950 after the Communists had 

gained control of the mainland and established the 

People's Republic of China (China) China reapplied 

for membership in 1986 and, as an original signatory to 

the GATT, views this current bid as a "resumption" of 

GATT contracting party status—a position that the 

United States and most other member countries oppose 

but about which no decision has been made. A GATT 

working party was set up in 1987 to begin the process 

of reviewing China's trading system and economy in 

terms of compliance with GATT rules. However, the 

process was suspended as a result of the Chinese 

Government's military suppression of the 

prodemocracy movement in June 1989 and of the 

slowdown in reforms that followed. A resurgence of 

reforms prompted the resumption of the GATT 

working party meetings in early 1992. 

During the last of three meetings of the GATT 

working party on China's application held in 1992, the 

member countries had begun to discuss possible 

elements of a protocol of accession. This apparent 

progress was reversed, however, as a result of bilateral 

talks on the terms of China's GATT admission held 

between U.S. and Chinese officials in early March 

1993. At that time the United States announced a set of 

five conditions that China must at a minimum meet for 

U.S. support of its accession. These conditions 

established the basic agenda for discussion at a 

meeting of the GATT working party on Chinese 

accession that was also held in March 1993 and, 

inasmuch as China resisted committing to two of the 

conditions, slowed progress at later meetings of the 

working party. 247 

The five conditions demanded of China by the 

United States were: a single national trade policy 

common to all provinces and regions; full transparency 

of its trading system; the continuing removal of 

nontariff barriers to trade; a commitment to move to a 

full market economy; and, until the transition to a 

market economy is completed, the acceptance of a 

"special safeguard system" to protect other 

GATT-member countries from possible surges in 

Chinese exports. China accepted the first three 

demands, and it adopted a series of trade reforms in 

1993.248 However, it would not make an outright 

commitment to move to a full market economy and 

initially refused to a consider a special safeguard 

provision. 

In October 1992, the Chinese Communist Party 

committed China to becoming a "socialist market 

economy." The adoption of this concept, which 

fundamentally assumes that the market mechanism is 

necessary for rapid economic growth and that central 

economic controls must be replaced by indirect 

macroeconomic methods, paved the way for further 

broadening the reform process. However, when the last 

1993 meeting of the GATT working party on China's 

accession adjourned in early October, China had not 

yet made clear to the participating member countries 

how it expected to achieve this goal. Many of the 

issues that had been raised were settled in December 

1993, when the Chinese Government announced a 

number of major reforms. Effective January 1, 1994, 

China abolished its overvalued official exchange rate 

in favor of a market-determined rate, a first step toward 

eventual convertibility of the yuan; implemented 

further cuts in tariffs; lifted additional nontariff import 

barriers; and introduced a series of sweeping tax and 

banking reforms. 249 

The matter of including a "special safeguard 

system" in China's protocol of accession was not 

settled during 1993. With both the United States and 

the European Union pressing the issue, Chinese 

officials finally accepted the principle of a special 

safeguard clause but insisted on negotiating a strict 

time frame and limits on its use. GATT article XIX 

already provides member countries with safeguard 

protection against import surges but, unlike the 

proposed safeguard system that would apply to China, 

its provisions obligate the importing country to pay 

compensation and also raise complications involving 

imports of the same products from other GATT 

members. 

106 
U.S. officials cite other "substantive issues" that 

must be resolved before China's trade regime is 

compatible with GATT standards. These issues include 

a number of agricultural regulations and standards 

maintained by China that serve mainly as barriers to 

trade, the continuing lack of transparency in its trade 

system, and its inadequate enforcement of intellectual 

property rights. 

Taiwan 

Two topics dominated U.S.-Taiwan trade 

discussions in 1993: Taiwan's application to join the 

GATT and ongoing U.S. concern about protection of 

intellectual property rights in Taiwan. By the end of the 

year, negotiations over Taiwan's GATT application 

entered a detailed phase as the United States requested 

Taiwan to reduce tariffs on a number of items and 

make other changes in its import regime. Protection of 

intellectual property rights in Taiwan, as in many 

recent years, was also a major topic of bilateral 

negotiations in 1993. In April, the United States placed 

Taiwan on the "priority watch list" under special 301, 

began a review of IPR protection in Taiwan, and 

established an "immediate action plan" to evaluate 

Taiwan's performance in protecting intellectual 

property rights. By yearend, IPR protection in Taiwan 

had improved and the bilateral dispute had dissipated. 

GATT Application 

A GATT working party was established in 

September 1992 to consider Taiwan's prospective 

membership 250The working party met four times by 

the end of 1993. 251Specific areas of discussion 

included Taiwan's area and other restrictions on 

agricultural imports, tariffs, membership in certain 

Tokyo Round GATT codes, and state-owned 

enterprises. In November 1993, the United States 

tabled a request of Taiwan to reduce tariffs on 2,800 

products. The United States also requested that Taiwan 

reduce tariff peaks on other items, maintain previously 

established low tariffs, and eliminate import bans, 

quotas, and other nontariff restrictions, largely on 

agricultural products, which are prohibited by GATT 

rules.252The following sections summarize 

discussions of the working party on those topics as of 

yearend 1993. 

Area Restrictions on Agricultural 

Imports 

Taiwan restricts imports of numerous agricultural 

products—such as apples, pears, grapes, bananas, 

citrus fruit, turkey meat, and whole ducks—that are 

raised in neighboring countries. In working party 

discussions, several GATT members said that Taiwan's 

area restrictions violate article I of the GATT, which 

establishes the principle of most-favored-nation 

treatment. Taiwan said that it intends to replace the 

area restrictions with a quota system consistent with 

GATT Article XIII (non-discriminatory administration 

of quantitative restrictions). 253For goods such as fresh 

fruits that are currently banned from all sources other 

than the United States, Taiwan plans to replace the 

prohibitions with tariff-rate quotas. The United States 

insists that current levels of market access not be 

diminished as a result of GATT accession. Taiwan said 

that its imports of U.S. goods would be no less than 

current U.S. levels. 254 

At the October meeting of the working party, 

Taiwan offered to convert GATT-inconsistent quotas 

and bans on agricultural imports to tariffs using a 

methodology proposed in Uruguay Round discussions 

that involves tariffication of domestic support 

measures (subsidies). The United States and other 

members of the working party countered that Taiwan's 

accession should be the basis of full conformity with 

established GATT rules.255In the U.S. view, measures 

used for accession differ from temporary measures 

designed for participants in the Uruguay Round in 

order to meet new disciplines established by the Round 

and should not be applied by parties seeking to accede 

to the General Agreement. 256 

Nontariff Border Measures 

Also at the October meeting, Taiwan introduced a 

"negative list" designed to streamline entry procedures 

for products subject to nontariff barriers. Of the nearly 

1,500 items on the list, import bans would continue for 

230 products, and about 450 would remain subject to 

discretionary import licensing, quantitative restrictions, 

quotas, monopoly controls, or area restrictions. Taiwan 

said the negative list was a major reform of its rules 

and regulations governing restricted imports so that 

"permission is the principle, restriction the exception." 

The United States expressed concern that the negative 

list was too long and continued the same 

GATT-inconsistent exclusionary measures. 257In a 

bilateral discussion with Taiwan after the Working 

Party meeting, the United States said it would continue 

107 
to assess the transparency and predictability of the 

draft negative list. 258 

Wheat and Wheat Flour 

At the October meeting, Taiwan said that licensing 

requirements for wheat imports had been eased. 

Imports of wheat flour, however, remain highly 

restricted pending an evaluation of the effect of 

liberalization of wheat imports on wheat flour 

processors.259 

Sanitary and Phytosanitary 

Measures 

In recent years, Taiwan's sanitary and 

phytosanitary standards have increasingly been viewed 

as an impediment to agricultural imports. In the U.S. 

view, the development and application of sanitary and 

phytosanitary rules and the enforcement procedures in 

Taiwan appear biased toward domestic production and 

against agricultural imports. 26° 

At the October meeting of the GATT Working 

Party, the United States registered concern that 

unpredictable application of sanitary and phytosanitary 

measures by Taiwan created a de facto import ban in 

certain categories. Taiwan stated that its quarantine 

review committee system for animal and plant products 

makes decisions on the basis of scientific principles. 

Taiwan tried to allay specific U.S. concerns regarding 

phytosanitary measures regarding importation of edible 

offals and frozen catfish fillets. 261 

GATT Codes 

The United States and other members of the 

working party urged Taiwan to join all Tokyo Round 

codes upon accession to the GATT. 262Taiwan said it 

plans to accede to the licensing code, antidumping 

code, subsidies and countervailing duty code, customs 

valuation code, and the code on technical barriers to 

trade. Several members of the working party urged 

Taiwan to join the government procurement and civil 

aircraft codes. 

The United States urged Taiwan to join the 

procurement code when it accedes to the GATT and to 

implement transitional measures to improve the 

transparency of the existing procurement system. 263 

 Several members of the working party criticized 

Taiwan's use of domestic-only bidding, regulations on 

issuance of construction licenses, and other aspects of 

government procurement that appear to be inconsistent 

with the government procurement code. Taiwan stated 

that it is drafting a procurement law more consistent 

with the government procurement code and that it is 

considering adherence to the government procurement 

code "at an appropriate time following GATT 

accession."264 

The United States, the EU, and Canada stated that 

Taiwan should join the agreement on trade in civil 

aircraft when it accedes to the GATT. Taiwan, 

however, said that it would not join the civil aircraft 

code until its domestic industry is "developed to a 

mature stage." The United States said that Taiwan's 

failure to sign the code would force foreign aircraft 

manufacturers to question whether investing in Taiwan 

would violate their respective GATT commitments. 265 

Tobacco Wine Monopoly Bureau 

Several countries criticized the monopoly tax 

imposed by the Taiwan Tobacco Wine Monopoly 

Bureau (TTWMB) on wine and distilled spirits. The 

United States said that the methodology the TTWMB 

uses for deriving the tax must be transparent and that 

the tax must be applied to imports and domestic 

products in an equivalent manner. Taiwan said that it is 

reviewing the monopoly tax system and plans to 

replace it with a GATT-consistent system of traditional 

duties and internal taxes. 266 

Protection of Intellectual 

Property Rights 

Protection of intellectual property rights in Taiwan 

has been the subject of bilateral dispute for several 

years. 267In 1993, the subject of legal protection of 

intellectual property rights in Taiwan and the 

enforcement of such provisions, were at the center of 

bilateral discussions. By the end of 1993, Taiwan took 

several steps to improve protection of intellectual 

property rights but still remained on USTR's special 

301 priority watch list. 

In 1993, bilateral discussion about protection of 

intellectual property rights took place in the context of 

special 301 provisions of the Trade Act of 1974. Early 

in the year, two U.S. business groups interested in IPR 

protection in Taiwan advocated not identifying Taiwan 

as a "Priority Foreign Country" under special 301. The 

Motion Picture Export Association described video 

piracy in Taiwan as a "major concern," 268but 

expressed greater concern over the "dramatic increase" 

in piracy in three European countries. 269The 

American Chamber of Commerce (Amcham) in Taipei 

said that IPR protection in Taiwan, although lower than 

U.S. standards, did not warrant designation of the 

country as a "priority foreign country" because of 

108 
improvements in IPR protection in Taiwan. 270Prior to 

the July review of Taiwan's special 301 status, the 

Amcham said that "Taiwan's patent, copyright, fair 

trade, and trademark laws are among the most stringent 

in Asia," and that special 301 sanctions should not be 

imposed on Taiwan. The Amcham added that a greater 

concern for owners of intellectual property rights is to 

develop cost-effective ways to recover damages in civil 

proceedings.271 

Taiwan has announced its intention to conform to 

international IPR standards, including those contained 

in a final Uruguay Round agreement. 272In 1993, 

however, several problems persisted regarding 

protection of intellectual property rights in Taiwan. 

Counterfeiting of famous name trademarked products, 

while less widespread than in past years, continued in 

1993. The United States offered assistance to Taiwan 

to help detect export of counterfeit trademarked goods. 

On the subject of copyright infringement, Taiwan's 

exports of pirated computer software have been limited 

by a computer software monitoring system, which was 

established pursuant to a June 1992 agreement between 

the United States and Taiwan. The export of pirated 

copies of compact discs (CDs) has reportedly been 

curtailed by the introduction of an export licensing 

system for CDs. 273In early 1993, Taiwan announced a 

new initiative to impose criminal prosecution against 

software and CD counterfeiters. 274In early May, 

Taiwan authorities destroyed 100,000 illegal and 

pirated videos and laser discs. 275 

Data compiled from various law enforcement 

agencies in Taiwan point to increasing enforcement of 

IPR laws by Taiwan authorities compared with 

previous years. In 1991-93, Taiwan authorities carried 

out about 9,000 raids on illegal video establishments 

each year. The number of illegal videotapes and laser 

discs seized varied considerably from year to year: 

440,000 in 1991; 120,000 in 1992; and 135,000 in 

1993. The number of police investigations of 

copyright, trademark, and patent infringement reached 

2,014 cases in 1992 and 4,162 in 1993. Notably, stiffer 

jail terms for those convicted of violating IPR laws 

were handed down in 1993 compared with previous 

years: in 1993, 191 sentences of 6 months or more, 

compared with 76 in 1992 and 39 in 1991. 276 

Testifying before Taiwan's legislature in favor of a 

bilateral IPR agreement, a representative of the 

American Institute in Taiwan suggested that Taiwan's 

continued economic strength is threatened by a lack of 

IPR protection. If Taiwan wishes to continue its 

technology-intensive economic development using 

technology protected in other countries by trademarks, 

copyrights, and patents, "unless the holders of those 

patents, trademarks and copyrights can have 

confidence that their products will be protected, they 

will not share them with you," the representative 

said.277 

On April 30, 1993, under provisions of special 301, 

the United States placed Taiwan on the "priority watch 

list" and began a review of IPR protection in Taiwan. 

In making the announcement, Ambassador Mickey 

Kantor announced that the U.S. Government would 

establish an "immediate action plan" to evaluate 

Taiwan's performance in protection of intellectual 

property rights. As part of the review, Ambassador 

Kantor gave Taiwan until July 31, 1993, to meet U.S. 

requirements regarding IPR protection to avoid further 

action under special 301 provisions. In particular, the 

United States sought enforcement of IPR protection in 

Taiwan, legislation to legitimize Taiwan's cable 

television systems, control of piracy by cable television 

stations, and the elimination of piracy of video games. 

Ambassador Kantor added that Taiwan needed to 

resolve serious problems about obtaining and enforcing 

trademarks in Taiwan. 278 

After the April announcement, the United States 

and Taiwan held several consultations regarding the 

immediate action plan for IPR protection in Taiwan. In 

July, Taiwan (1) committed itself to establishing an 

export monitoring system for trademarked goods, (2) 

agreed to complete other measures in the immediate 

action plan to improve administration, protection, and 

enforcement of trademarks, (3) agreed to a mechanism 

for implementing a ban on parallel imports of 

copyrighted goods, (4) signed bilateral copyright 

agreement, and (5) agreed on improved procedures for 

implementing the computer software export 

monitoring system. 

On August 2, 1993, Ambassador Kantor 

announced the results of a review of intellectual 

property practices in Taiwan. He said that Taiwan had 

completed many key parts of the special 301 

"immediate action plan," signed the bilateral copyright 

agreement, enacted a cable television law, and 

committed itself to improving trademark protection 

and enforcement. Taiwan's status on the "priority 

watch list," the USTR said, would be reviewed based 

on future progress in these areas. 279 

Taiwan's legislature passed a revised patent law in 

late December. 28° Particular areas of interest to the 

United States included patentability of new 

microorganisms, granting of property rights, extension 

of patent rights by 2-5 years for pharmaceutical and 

agricultural chemical products, 281compulsory 

licensing, reversal of the burden of proof in patent 

infringement cases, establishment of special patent 

109 
courts, and criminal penalties for the violation of new 

model and utility patents. 282The United States had 

been concerned about possible amendment to the 

patent law, such as allowing parallel imports of 

patented goods, that would dilute existing patent 

protection.283The language of the final text on 

parallel imports, according to Taiwan's National 

Bureau of Standards, leaves the determination of the 

legality of parallel to the courts. 284 

Republic of Korea 

The main areas of negotiation between the United 

States and Korea in 1993 were protection of 

intellectual property rights and access for foreign rice 

and beef in Korea. Korea was placed on the special 301 

"priority watch list" out of U.S. concern about 

insufficient legal protection of intellectual property 

rights in Korea. In the context of the Uruguay Round 

of GATT negotiations, Korea lifted its ban on imports 

of foreign rice. Finally, under U.S. pressure, Korea 

expanded its quotas on foreign beef imports. 

Intellectual Property Rights 

On April 30, 1993, Ambassador Kantor placed 

Korea on the "priority watch list" pursuant to special 

301 provisions of the Trade Act of 1974. In taking the 

action, Ambassador Kantor cited Korea's ineffective 

enforcement of trademark and copyright laws. 

Ambassador Kantor said that "rampant" piracy of 

computer software, compact discs, video and sound 

recordings, and counterfeiting of U.S. trademarks 

occurs in Korea. Finally, he noted that Korea needs to 

amend its laws pertaining to copyrights, computer 

software protection, and semiconductor mask works to 

ensure "adequate and effective" protection 285in those 

areas. At the time of the special 301 designation, 

USTR began a review of IPR protection in Korea. 

In February 1993, Korean authorities began a 

"special enforcement period" of strict enforcement of 

IPR laws.286During the special enforcement period, 

which extended through October, law enforcement 

authorities arrested suspected violators of IPR laws, 

raided markets where counterfeit goods are sold, gave 

high priority to IPR-related prosecution and, for the 

first time, regularly sentenced offenders to jail. 287 

As a result of Korea's increased prosecution of IPR 

violations, the U.S. Government did not designate 

Korea as a priority foreign country. Instead, Korea 

remained on the priority watch list. The United States 

said Korea needs to sustain enforcement of its IPR 

laws and to continue to improve its body of IPR laws 

to be downgraded or removed from special 301 

designation in 1994. 288 

Rice 

One of the most sensitive international trade issues 

facing Korea in the Uruguay Round came to a head in 

December when Korea agreed to lift its ban on rice 

imports. At the GATT talks, Korea agreed to allow a 

limited amount of rice imports phased in over several 

years. After talks between U.S. Secretary of 

Agriculture Mike Espy and Korean Foreign Minister 

Shin Hua Haeng in Geneva, Korea announced that it 

would open 1 percent of its rice market to imports by 

1995. The share of foreign rice would rise to 4 percent 

by 2005. After 2005, Korea would seek an extension of 

the quota or replace it with tariffs. 289U.S. officials 

estimate that Korea consumes 5.4 million tons of rice 

annually, but that production of rice in Korea had 

declined in the past year. 29° 

President Kim Young-Sam, who has enjoyed 

considerable popularity during the first year of his 

reform-oriented administration, announced the 

agreement to remove the import ban with an apology: 

"I sincerely apologize for having failed to block rice 

imports. . . . As president, I frankly take the 

responsibility." 291He added that "I decided that we 

can neither survive nor develop by becoming an 

international orphan. I thought we should open the 

door and go outward rather than close the door and 

defend what we have." 292He pledged that his 

government would actively support restructuring 

Korea's farming sector. 

Less than a week before agreeing to open the rice 

market, the Korean Government announced it was 

abandoning its efforts at the GATT talks to maintain its 

rice import ban. In Seoul the day before the 

announcement, more than 20,000 people rallied against 

the agreement. 293 

After the agreement was announced, thousands 

reportedly protested at scattered demonstrations 

nationwide against the prospect of rice imports. Led by 

farmers, civic leaders, and politicians, some of the 

demonstrators called for a national referendum on the 

question of opening agricultural markets to imports. 

Demonstrators criticized both U.S. pressure to allow 

rice imports and Korean Government officials who 

consented to opening the rice sector to imports. Some 

farmers set fire to crops while others symbolically 

burned a figure of the United States in effigy. After the 

agreement was announced, a spokesman for the 

opposition Democratic Party said "We will refuse to 

110 
ratify the agreement when it comes to the National 

As sembly."294 

Korea has long resisted U.S. and multilateral 

efforts to open its rice market. The Korean 

Government had maintained that the rice ban should 

remain in effect for reasons of food security. Korea 

also argued that rice imports would create serious 

political and economic difficulties by severely harming 

the livelihood of Korea's 8 million rice farmers. 295 

Although Korea may allow rice imports in the 

future, foreign rice suppliers may face difficulty 

finding customers in Korea. Of those willing to allow 

rice imports (about 26 percent of all those polled), 64 

percent said they would never purchase imported rice. 

Fourteen percent of total respondents said they were 

willing to buy foreign rice, but only if it cost about half 

that of domestic rice. The survey was conducted by the 

Korean Consumer's Union. 296 

Beef 

On June 26, 1993, the United States and Korea 

reached agreement to widen access for foreign beef in 

the Korean market. The agreement, signed after five 

rounds of negotiations over the previous 12 months, 

grew out of a dispute dating back to 1988. 297 

 Ambassador Kantor hailed the pact saying, "I am 

pleased that we have been able to conclude an 

agreement providing new market opportunities for U.S. 

beef exporters." 298 

Under the terms of the agreement, Korea's 

minimum beef import quotas will rise from the 1992 

level of 66,000 metric tons to 99,000 metric tons in 

1993, to 106,000 metric tons in 1994, and to 113,000 

metric tons in 1995. Actual imports exceeded the 

minimum import quota level in recent years as demand 

for foreign beef rose and Korean authorities attempted 

to reduce upward pressure on beef prices. For example, 

although the 1992 quota level stood at 66,000 metric 

tons, Korean authorities authorized a total of 132,000 

tons of beef imports. In 1993, Korea's beef 

consumption was projected to top 234,000 metric tons, 

a 4.3-percent rise over 1992 levels. 299 

The June accord stems from a 1988 dispute 

initiated when the American Meat Institute filed a 

petition with the Office of the USTR requesting a 

section 301 investigation of Korea's licensing system 

on imported beef. 300 The petition alleged that the 

licensing system restricted imports in violation of 

GATT article XI (prohibition on quantitative 

restrictions). Korea had justified the import 

restrictions, which applied to 450 items, under GATT 

article XVIII(b), the balance-of-payments (BOP) 

exemption. In May 1989, a GATT panel ruled that 

Korea's beef import quotas were inconsistent with the 

BOP exception of the General Agreement. Korea 

accepted the panel's findings in November 1989, 

thereby paving the way for consultations on 

implementing the panel's results. 301 

In the panel report, the GATT granted Korea until 

July 1, 1997, to phase out the BOP restrictions, 

"graduating" Korea from the status of a developing 

country eligible for BOP exceptions. Meanwhile, the 

United States and Korea have twice negotiated 

increases in the minimum beef import quota level. In 

April 1990, Korea agreed to increase its beef quotas 

and to bring the restrictions criticized in the panel 

report into conformity with the GATT. 

Korean farm groups have strongly opposed 

liberalization of the beef market. The Korean media 

quoted the Chairman of the Korea Peasant League as 

saying that Korean farmers are in a state of "raging 

indignation" over the beef plan. 302He called on the 

Korean Government to withdraw beef and other 

agricultural goods from the list of products to be 

"graduated" from the BOP list. 

The beef agreement also revises the way foreign 

beef will be distributed in Korea. Prior to 1990, foreign 

beef sales were channeled through a 

quasi-governmental agency. The 1990 beef accord 

called for establishment of a simultaneous buy/sell 

(SBS) system for foreign beef in Korea, which would 

allow direct access between buyers and sellers in the 

beef market. 303In recent negotiations, the United 

States expressed concern about operation of the SBS 

system. The new agreement guarantees that foreign 

suppliers can sell beef directly to Korean distributors 

and retailers. 

U.S. beef exports to Korea totalled $212 million in 

1992, making that country the third largest export 

market for U.S. beef. Australia and New Zealand, two 

other major exporters of beef to Korea, are also 

expected to benefit from the increased quota. Cattle 

farmers in Korea are likely to come under increased 

pressure to produce higher quality beef at prices 

competitive with imports. Despite the import 

restrictions, imported beef sells for less than half the 

price of domestically raised beef. The Ministry of 

Agriculture, Forestry, and Fisheries estimates that 

approximately 81 percent of Korea's 585,000 cattle 

farms raise no more than 5 head of cattle each. 304 

111 
ENDNOTES 

1With the entry into force on November 1, 1993, 

of the Maastricht Treaty on European Union, the 

European Community was renamed the European 

Union. 

2Office of the United States Trade 

Representative (USTR), "Title VII Action With 

Respect to the EC: Statement of Ambassador 

Michael Kantor," press release, Feb. 1, 1993. 

3Ibid. 

4For the complete text of this EU directive, see 

Council Directive No. 90/531/EEC on the 

Procurement Procedures of the Entities Operating in 

the Water, Energy, Transport and Telecommunications 

Sectors, Official Journal of the European 

Communities, OJ No. L 297 (Oct. 29, 1990), p. 1. 

5USTR, "USTR Factsheet: Title VII 

Announcement," press release supp., Feb. 1, 1993. 

6USTR, "Notice of Proposed Action and Request 

for Public Comment With Respect to the European 

Community Pursuant to Title VII of the Omnibus 

Trade and Competitiveness Act of 1988," 58 F.R. 

7163, Feb. 4, 1993. Purchases covered by the 

Agreement on Government Procurement and by all 

Department of Defense and other security-related 

purchases were excluded from the retaliatory action. 

7USTR, "U.S.-EC Joint Statement," press release 

93-13, Mar. 19, 1993; and Ambassador Kantor, 

"Statement Following the Bilateral Meeting With EC 

Commissioner Leon Brittan," Mar. 29, 1993, 

LEGI-SLATE, Federal Information Systems Corp. 

8USTR, "Statement by Ambassador Mickey 

Kantor," press release 93-26, Apr. 21, 1993. 

9The five Power Marketing Administrations of the 

Department of Energy are the Bonneville Power 

Administration, the Western Area Power 

Administration, the Southeastern Power 

Administration, the Southwestern Power 

Administration, and the Alaska Power Administration. 

10 USTR, "Statement by Ambassador Mickey 

Kantor," press release 93-26, Apr. 21, 1993. 

11USTR, "Implementation of Sanctions With 

Respect to the European Community Pursuant to 

Title VII of the Omnibus Trade and Competitiveness 

Act of 1988," 58 F.R. 31136, May 28, 1993. These 

sanctions were not limited to the telecommunications 

sector, but included such areas as dredging, 

transportation, hotel and restaurant services, legal 

services, investigation and security services, health 

and social services, and education and training 

services. 

12Delegation of the Commission of the European 

Communities, Office of Press and Public Affairs, "EC 

Responds to U.S. Sanctions on Procurement," 

European Community News, May 27, 1993. 

13"EC/United States: Germany Opts Out of 

Public Procurement Sanctions," European Report, 

No. 1866 (June 12, 1993), External Relations, p. 12. 

For more details, see Council Regulation No. 

1461/93 Concerning Access to Public Contracts for 

Tenderers from the United States of America, OJ No. 

L 146 (June 17, 1993), p. 1. 

14USTR, "U.S.-Germany Announce Bilateral 

Agreement on Government Procurement," press 

release 93-38, June 10, 1993. 

15Delegation of the Commission of the European 

Communities, Office of Press and Public Affairs, "EC 

Commission Warning on U.S./German 

Telecommunications Agreement," European 

Community News, June 11, 1993. 

16"EC/US: German Public Procurement Opt-out 

Heading to the Top," European Report, No. 1867 

(June 16, 1993), External Relations, p. 6. 

17U.S. Department of State, "EC Commission 

Seeks Changes in Bilateral FCN Treaties Between 

EC Member States and the U.S.," telegram, message 

reference No. 08425, prepared by U.S. Mission to 

the EU, Brussels, July 14, 1993. The other member 

states that have FCN treaties with the United States 

are Belgium, Denmark, Ireland, Italy, Luxembourg, 

and the Netherlands. 

18The Office of the USTR announced 

termination of these sanctions against Germany on 

March 10, 1994. See USTR, "Termination of 

Sanctions With Respect to the Federal Republic of 

Germany Pursuant to Title VII of the Omnibus Trade 

and Competitiveness Act of 1988," 59 F.R. 11360, 

Mar. 10, 1994. 

19For a detailed discussion of member-state 

implementation, see U.S. International Trade 

Commission, Implementing the European Community 

Single Market Sixth Followup Report (investigation 

No. 332-267), USITC publication 2723, Jan. 1994. 

20Info92, "The Figures," Feb. 28, 1994. 

21U.S. Department of State, "Internal Market 

Update: Brief Commission Review of Implementation 

at the End of 1993," telegram, message reference 

No. 00732, prepared by U.S. Mission to the EU, 

Brussels, Jan. 21, 1994. 

22European Commission, "Making the Most of 

the Internal Market," Dec. 15, 1993. 

23Ambassador Kantor, "U.S. Trade Policy," 

hearing before the House Foreign Affairs Committee, 

Mar. 2, 1994. 

24For more information, see chapter 1 on the 

Uruguay Round. 

25For a full discussion of this issue, see USITC, 

The Effects of Greater Economic Integration Within 

the European Community on the United States: Fifth 

Followup Report (investigation No. 332-267), USITC 

publication 2628, Apr. 1993, pp. 39-45. 

26U.S. Department of State, "Revision of the 

1993 National Trade Estimate Report-European 

Union," telegram, message reference No. 00798, 

prepared by U.S. Mission to the EU, Brussels, Jan. 

24, 1994. 

27For a more complete background on the 

Maastricht Treaty, see USITC, The Year in Trade: 

OTAP, 43rd Report, 1991, USITC publication 2554, 

pp. 84-85; and USITC, The Year in Trade: OTAP, 

112 
44th Report, 1992, 44th report, USITC publication 

2640, pp. 52-53. 

28Delegation of the Commission of the European 

Communities, "Maastricht Treaty on European Union 

Enters Into Force," EuroMemo, Nov. 1993, p. 2. 

29Denmark and the Treaty of European Union, 

Official Journal of the European Communities, OJ 

No. C 348 (Dec. 31, 1992), Document, p. 3. 

30U.S. Department of State, "UK Economic 

Developments, 7/19-7/23/93," telegram, message 

reference No. 13390, prepared by U.S. Embassy, 

London, July 26, 1993. 

31U.S. Department of State, "Court Ruling on 

Maastricht Could Be Delayed," telegram, message 

reference No. 13477, prepared by U.S. Embassy, 

Bonn, May 24, 1993. 

32U.S. Department of State, "Constitutional 

Court's Ruling on Maastricht," telegram, message 

reference No. 29781, prepared by U.S. Embassy, 

Bonn, Oct. 29, 1993. 

33Ibid. 

34For more details on the goals of the common 

foreign and security policy, see "Special European 

Council, Brussels, October 29, 1993," European 

Report, supp. No. 1899 (Nov. 3, 1993), p. 4. 

35Ibid., p. 5. 

36After much debate, the Council decided on the 

seats for the 11 new institutions to be established 

under the Maastricht Treaty. The most contested was 

the future location of the European Monetary 

Institute, which went to Frankfurt, Germany. The seat 

of the European Environment Agency will be in 

Copenhagen; Europol will be in The Hague; and the 

European Monitoring Center for Drugs and Drug 

Addiction will be in Lisbon. For a complete listing of 

the new institutions and their locations, see "Special 

European Council, Brussels, October 29, 1993," 

European Report, supp. No. 1899 (Nov. 3, 1993), p. 

11 

37For additional background information on the 

EEA, see USITC, The Year in Trade: OTAP, 42nd 

Report, 1991, USITC publication 2554, p. 85; and 

USITC, The Year in Trade: OTAP, 1992, USITC 

publication 2640, p. 53. 

38EFTA Press and Information Service, "Meeting 

of EFTA Ministers, Geneva, 16 June 1993, 

Communique," EFTA Bulletin, No. 4, 1993. 

39The EEA covers nonagricultural goods. 

40For example, see U.S. Department of State, 

"Austria Concerned About Possible Further EEA 

Delay," telegram, message reference No. 02570, 

prepared by U.S. Embassy, Vienna, Mar. 13, 1993. 

41U.S. Department of State, "EC Council 

Background Note on Enlargement," telegram, 

message reference No. 01321, prepared by the U.S. 

Mission to the EU, Brussels, Jan. 31, 1993. The 

acquis includes the Treaties of Paris and Rome, the 

Single European Act, the Maastricht Treaty, 

legislation adopted in accordance with these treaties, 

the case law of the European Court of Justice, and 

international agreements entered into by the Union. 

42David Spence, European Commission, "The 

Enlargement of the European Community," The 

Courier, Mar.-Apr. 1993, pp. 58-59. 

43"Special European Council," p. 8. Accession 

negotiations with Sweden, Finland, and Austria were 

completed March 1, 1994. The major issues that 

were to be resolved in 1994 were agriculture, 

regional policy, and applicants' contributions to the 

EU's budget. For each country, there was one 

primary stumbling block: for Sweden, the budget; for 

Finland, Arctic agriculture; and for Austria, alpine 

transit. Accession negotiations with Norway were 

completed March 16 after the issue of fishing rights, 

including access to cod in Norwegian waters, was 

resolved in a complex compromise. For more details 

regarding the accession agreements, see USITC, 

"The European Union Anticipates Four New 

Members," International Economic Review, May 1994. 

44"Swiss Aim For EC Accession by Year 2000," 

European Report, No. 1900 (Nov. 6, 1993), External 

Relations, p. 1. 

45"Swiss Happy With EC Decision to Launch 

Bilateral Negotiations," European Report, No. 1901 

(Nov. 11, 1993), External Relations, p. 3. 

46"Confirmation of Customs Union in 1995," 

European Report, No. 1901 (Nov. 11, 1993), External 

Relations, pp. 4-5. To complete the customs union, 

Turkey must end a wide variety of measures that are 

not compatible with EU rules, such as customs 

duties, business subsidies, and measures relating to 

state aid, monopolies, and public purchasing. 

47"Ministers Approve Initial Preparations for EC 

Membership," European Report, No. 1891 (Oct. 6, 

1993), External Relations, pp. 11-12. 

48"Copenhagen European Council, June 21-22, 

1993," European Report, supp. No. 1869 (June 24, 

1993). 

49Ibid., p. 8. 

5°Ibid. 

51Ibid., p. 9. 

52For example, transport, the environment, 

energy, foreign and security policy, and home and 

judicial affairs. 

53"Copenhagen European Council, June 21-22, 

1993," annex II, European Report, supp. No. 1869 

(June 24, 1993), p. 8. 

54Ibid. 

55In 1994, the major outstanding issues 

concerned trade in nuclear materials and 

establishment of foreign banks in Russia. See for 

example, "EU/Russia: Partnership Agreement Talks 

Drag on into Mid-February," European Report, No. 

1923 (Feb. 5, 1994), External Relations, p. 9. 

56U.S. Department of State, "EC General Affairs 

Council, April 5: Free Trade Offer for Russia," 

telegram, message reference No. 04351, prepared by 

U.S. Mission to the EU, Brussels, Apr. 7, 1993. 

57"EC/Russia: Partnership Agreement Expected 

to be Signed by Early December," European Report, 

No. 1902 (Nov. 17, 1993), External Relations, p. 8. 

58For a complete discussion of the U.S.-EU 

oilseeds dispute, see USITC, The Year in Trade: 

113 
OTAP, 44th report 1992, USITC publication 2640, pp. 

47-49. 

59For a complete discussion of the U.S.-EU corn 

gluten dispute, see USITC The Year in Trade: 

OTAP, 43rd Report, 1991, USITC publication 2554, 

pp. 90-91; and USITC The Year in Trade: OTAP, 

44th Report, 1992, USITC publication 2640, p. 49. 

60U.S. Department of State, "Blair House 

Agreement: Status of Corn Gluten," telegram, 

message reference No. 373569, Washington, DC, 

Dec. 11, 1993. 

61For a complete discussion of the 

enlargement-related farm trade dispute, see USITC, 

The Year in Trade: OTAP, 43rd Report, 1991, USITC 

publication 2554, pp. 91-92. 

62 For more background on the BST dispute, see 

USITC, The Year in Trade: OTAP, 43rd Report, 1991, 

USITC publication 2554, p. 92. 

63U.S. Department of State, "British Ambassador 

to the EC Responds to USEC's Letter on BST," 

telegram, message reference No. 00051, prepared by 

U.S. Mission to the EU, Brussels, Jan. 4, 1994. The 

U.S. Food and Drug Administration approved BST for 

use in the United States in November. 

64U.S. Department of State, "Demarche on BST 

Extension," telegram, message reference No. 31773, 

prepared by U.S. Embassy, Bonn, Nov. 26, 1993. 

65The December GATT Agreement on Subsidies 

and Countervailing Duties will cover the civil aircraft 

sector, including parts and components. Thus, the 

new Uruguay Round agreement extends both the 

product and country coverage of the U.S.-EU 

agreement and strengthens disciplines on subsidies 

compared to the bilateral agreement. Negotiations to 

revise the GATT Civil Aircraft Agreement will continue 

for another year. For more information, see chapter 

1. 

66U.S. Department of State, "NAFTA Update," 

telegram, message reference No. 06580, prepared by 

U.S. Embassy, Ottawa, Nov. 22, 1993. 

67Ibid. 

68 CWB is the sole legal exporter of wheat in 

Canada. It designates marketing quotas for farmers 

and has a marketing monopoly on grains for 

domestic use and for exports. 

WGTA reportedly provides a direct Government 

payment to Canadian railroads for rail shipments of 

western grain eastward to Lake Superior and 

westward to Vancouver, British Columbia. 

69Following requests from the House Committee 

on Ways and Means and the Senate Committee on 

Finance, the USITC initiated a fact-finding 

investigation into durum wheat on December 4, 1989. 

Durum Wheat Conditions of Competition Between 

the U.S. and Canadian Industries (investigation 

332-285), USITC publication 2274, June 1990. 

70Bureau of National Affairs, International Trade 

Reporter, Feb. 3, 1993, p. 180. 

71U.S. House of Representatives, letter to 

Secretary of Agriculture Mike Espy, May 19, 1993, 

reprinted in Bureau of National Affairs, International 

Trade Reporter, May 26, 1993, p. 854. 

72U.S. Department of State, "Additional EEP 

Guidance for Canada," telegram, prepared by 

Department of State, message reference No. 192288, 

Washington, DC, June 24, 1993. 

The U.S. action was appealed to a binational 

dispute resolution panel under chapter 18 of the 

United States-Canada Free-Trade Agreement on Oct. 

22, 1993. 

73Section 22 of the Agricultural Adjustment Act 

of 1933 requires the Secretary of Agriculture to 

recommend action against agricultural imports if it 

has been determined that they interfere with a U.S. 

agricultural support program. 

74Nine farm-state Senators, letter to Agriculture 

Secretary Mike Espy, Sept. 9, 1993, reprinted in 

Inside U.S. Trade, Sept. 17, 1993, p. 7. 

75The panel distinguished between export and 

domestic subsidies and found ". . .the WGTA 

subsidy payments through Thunder Bay are clearly 

domestic subsidies. Subsidy payments, as pointed 

out earlier, are prohibited only when they are export 

subsidy payments and occur in connection with 

export shipments to the United States through 

Canada's western ports. . ." See the final report by 

the Binational panel, In the Matter of: The 

Interpretation of and Canada's Compliance With 

Article 701.3 With Respect to Durum Wheat Sales, 

Secretariat Case No. CDA-92-1807-01, Feb. 8, 1993, 

par. 101, p. 43. 

76See, for example, Inside U.S. Trade, Oct. 1, 

1993, p. 9. 

77Under regular Section 22 procedures, the 

USITC would investigate whether the imports in 

question are in fact undermining the integrity of 

USDA programs designed to stabilize domestic 

agricultural commodity prices. The President acts on 

the basis of the USITC's formal investigation and 

report. He may decide to impose quantitative 

restraints and fees on imports, not to exceed 50 

percent of the value of the imported product, to 

protect relevant USDA programs. If the President 

decides that an emergency exists, the USITC 

investigation would still be carried out, but the 

restraints could be put in place immediately without 

the receipt of the Commission report. Such 

emergency action would continue in effect until 

terminated or made permanent by the President. 

78Section 321 of the NAFTA-implementing bill 

also calls upon the U.S. Secretary of Agriculture to 

require end-use certificates. 

79President Clinton, letter to Don E. Newquist, 

Chairman, USITC, Nov. 16, 1993. 

80 In the absence of a negotiated solution, the 

case (Investigation 22-54) was initiated on January 

18, 1994. It is expected to be concluded in July 

1994. 

81Zarocostas, John, "Trade Officials Clash at 

GATT over Subsidized Wheat Sales," Journal of 

Commerce, July 22, 1993, p. 3. 

82Government of Canada, "McKnight to Meet 

Mexican Officials on Use of Wheat Export Subsidies 

by the United States," News release No. 155, Aug. 

9, 1993. 

83Government of Canada, "Canada Requests 

FTA Panel on Subsidized Wheat Sales to Mexico," 

news release No. 208, Oct. 22, 1993. 

114 
84On March 28, 1994, Mexico formally launched 

a countervailing duty investigation into Canadian and 

U.S. wheat, claiming that subsidized sales by its two 

NAFTA partners were suppressing prices in Mexico 

and thereby hurting Mexican wheat growers. 

85Earlier reports in this series have chronicled 

the major trade actions affecting lumber over the 

years. See USITC, OTAP, 38th Report, 1986, USITC 

publication 1995, pp. 4-17 through 4-20; USITC, 

OTAP, 39th Report, 1987, USITC publication 2095, 

pp. 4-9; and USITC, The Year in Trade: OTAP, 43rd 

report 1991, USITC publication 2554, pp. 151-2. 

86For a discussion of developments in the 

softwood lumber case during 1992, see USITC, The 

Year in Trade: OTAP, 44th Report, 1992, USITC 

publication 2640, pp. 56-7. 

8757 F.R. 22570. 

88USITC, Softwood Lumber From Canada, 

investigation No. 701-TA-312 (Final), USITC 

publication 2530, July 1992. 

89The panel comprised five trade experts, three 

Canadians and two Americans. In accordance with 

the procedures of the CFTA, each country is able to 

name two panelists from a roster of experts, and 

these four together choose a fifth panelist. 

90Binational Panel, In the Matter of: Certain 

Softwood Lumber Products From Canada, Secretariat 

Case No. USA-92-1904-01, May 6, 1993. 

9158 F.R. 29809. 

92Two Canadian panelists dissented from the 

remand concerning log export restrictions, concluding 

that such restrictions are not countervailable. 

93Thus, the 6.51 percent rate was increased to 

11.54 percent. See In the Matter of: Certain 

Softwood Lumber Products From Canada, 

Redetermination Pursuant to Binational Panel 

Remand, Secretariat File No. USA-92-1904-01, Sept. 

17, 1993, p. 191. 

94See In the Matter of Certain Softwood 

Lumber Products From Canada, Decision of the 

Panel on Remand, Binational Secretariat Case No. 

USA-92-1904-01, Dec. 17, 1993. 

95Ibid. 

96". . . we must now remand to Commerce for 

a determination that provincial stumpage programs 

do not distort normal competitive markets for 

softwood lumber and, therefore, are not 

countervailable." Ibid., p. 65. The panel was similarly 

direct on the issue of log export restrictions. 

pp. 76-7. 

On January 6, 1994, the Commerce Department 

filed a determination with the Binational Secretariat, 

following the binational panel's instructions in the 

December 17 remand decision. The ITA determined 

that Canadian provincial stumpage programs and log 

export restrictions do not constitute a countervailable 

subsidy. See In the Matter of: Certain Softwood 

Lumber Products From Canada, Final Results of 

Redetermination Pursuant to Binational Panel 

Remand, Secretariat File No. USA-92-1904-01, Jan. 

6, 1994. 

On March 7, 1994, the binational panel upheld 

the ITA determination, affirming that provincial 

stumpage programs and British Columbia's log export 

restrictions were not countervailable under U.S. law. 

Following a series of bilateral discussions concerning 

possible conflicts of interests on the part of two 

panelists (see USTR, "Statement of Ira S. Shapiro, 

USTR General Counsel, Concerning the U.S.-Canada 

Softwood Lumber Case," press release, Feb. 24, 

1994), the United States on April 6, 1994, lodged an 

extraordinary challenge to the binational panel's 

action of December 17, 1993. 

97Binational Panel, In the Matter of: Softwood 

Lumber From Canada, Secretariat Case No. 

USA-92-1904-02, July 26, 1993. The panel was a 

different one than that which reviewed the ITA CVD 

determination. This one was composed of three 

Americans and two Canadians. 

98Panels under chapter 19 of the CFTA are not 

allowed to reverse the decision of a domestic agency 

in antidumping or countervailing duty cases. They 

may only uphold agency determinations or send them 

back with instructions for further review. 

99Binational Panel, In the Matter of: Softwood 

Lumber from Canada, Secretariat Case No. 

USA-92-1904-02, July 26, 1993, p. 20. Also see 58 

F.R. 42939. 

100USITC, Softwood Lumber From Canada, 

investigation No. 701-TA-312 (Remand), USITC 

publication 2689, Oct. 1993. 

101The Binational Panel on January 28, 1994, 

again remanded the case to the USITC. [See In the 

Matter of: Softwood Lumber From Canada, Decision 

of the Panel on Review of the Remand 

Determination of the U.S. International Trade 

Commission, Binational Secretariat Case No. 

USA-92-1904-02, Jan. 28, 1994.] The panel found 

that the Commission's price trends analysis did "not 

constitute substantial evidence and is otherwise not 

in accordance with law" (p. 36 of panel decision). It 

instructed the Commission to "provide a full analysis 

and explanation of the underlying data and the 

methodology employed in the creation and 

presentation of the price trends analysis" should it 

use such an analysis to support an affirmative 

determination. The Commission was given 45 days 

to complete its redetermination on remand. On March 

7, 1994, the Commission returned its decision to the 

panel. In its second remand determination, the 

Commission, by a vote of 3-2, again made an 

affirmative determination. In the vote on the second 

remand determination, one Commissioner who had 

participated in the original decision, Anne Brunsdale, 

did not participate because of her resignation. 

Another Commissioner, Vice Chairman Peter Watson, 

changed his vote from affirmative to negative. 

102USITC, Certain Flat-Rolled Carbon Steel 

Products from Argentina, Australia, Austria, Belgium, 

Brazil, Canada, Finland, France, Germany, Italy, 

Japan, Korea, Mexico, the Netherlands, New 

Zealand, Poland, Romania, Spain, Sweden, Taiwan, 

and the United Kingdom, Determinations of the 

Commission in Investigation Nos. 701-TA-319 through 

354 (Preliminary) and 731-TA-573 through 620 

(Preliminary), together with the Information Obtained 

in the Investigations, USITC publication 2549, Aug. 

1993, pp. 1-3, 1-83. 

115 
103See USITC, "Steel Import Program," The 

Year in Trade 1992: OTAP, 44th Report, 1992, 

USITC publication 2640, July 1993, p. 104. 

104 Petition of certain hot-rolled carbon steel flat 

products from Canada at pp. 3-4. 

105 58 F.R. 7066. 

106Minister of Industry, Science and Technology, 

and Minister of International Trade, "Wilson 

Expresses Disappointment Regarding United States 

Preliminary Determinations of Dumping Against 

Canadian Steel," news release No. 20, Jan. 27, 

1993. 

107Ibid., "Backgrounder on Canada-United States 

Steel Trade", p. 2. 

108 Bei gi-- , um Brazil, the Czech Republic, 

Denmark, Germany, Romania, the United Kingdom, 

and the former Yugoslav Republic of Macedonia. 

109Canadian Embassy, "Steelmakers to Appeal 

Ruling Exhonerating (sic) U.S. Companies," 

NEWSCAN, week ending May 28, 1993. This marked 

the first time under the CFTA that an industry 

(petitioner) had challenged a ruling under its own 

domestic trade laws and sought to appeal under the 

binational dispute-settlement process. 

11 ° The Canadian petitioners immediately 

announced that an appeal was being considered in 

the case of hot-rolled sheet. 

111Government of Canada, "Ministers Respond to 

Steel Industry Concerns," news release No. 133, 

June 17, 1993; and U.S. Department of State, 

"Canada to Monitor Steel Imports; Safeguard Actions 

Possible," telegram, message reference No. 03582, 

prepared by U.S. Embassy, Ottawa, June 22, 1993. 

112 "Telmer: Trade Suits Tearing Apart 

U.S.-Canada Interests," Iron Age, vol. 9, No. 6 (June 

1993), p. 12. 

113See Minister for International Trade, "Hockin 

Responds to U.S. Injury Determinations on Canadian 

Steel Imports," news release No. 148, July 27, 1993; 

and U.S. Department of State, "Canadian Reaction to 

USITC Injury Determination: Partial Victory 

Declared," telegram, message reference No. 04359, 

prepared by U.S. Embassy, Ottawa, July 30, 1993. 

114Canadian International Trade Tribunal, 

"Tribunal Releases Reasons for Injury Findings 

Against Imports of Cold-Rolled Steel Sheet," press 

release, Aug. 13, 1993. 

The final injury decision on the fourth case, on 

galvanized steel, is not due until July 1994. 

115"The principal U.S. objectives for an MSA 

include prohibitions against trade-distorting subsidies, 

the elimination of tariff and nontariff barriers, and the 

establishment of an effective mechanism to resolve 

disputes." USTR, 1994 Trade Policy Agenda and 

1993 Annual Report of the President of the United 

States on the Trade Agreements Program, p. 40-41. 

116According to a USTR report, ". . . negotiators 

have achieved substantial progress. . . most 

subsidies to steel producers will be prohibited." 

Remaining issues include dispute settlement, and 

remedy provisions, waivers from MSA disciplines, 

and the handling of official assistance to the steel 

sector for research and development, environmental 

assistance, worker retraining and closure. See USTR, 

"The Multilateral Steel Agreement," The Uruguay 

Round of Multilateral Trade Negotiations Source 

Book, Feb. 1994. 

117Susan MacKnight, "Decision Time for Japan's 

Rice Program," Japan Economic Institute Report, No. 

2A, Jan. 14, 1994, p. 11. 

118 "Joint Statement on the United States-Japan 

Framework for a New Economic Partnership," July 

12, 1993. 

119Ibid. 

12° The first area focused on "significantly 

expanding Japanese government procurement" of 

computers, supercomputers, satellites, medical 

technology, and telecommunications. In the area of 

regulatory reform, measures were to be taken to 

address laws, regulations, and guidance that impede 

market access to foods and services. Financial 

services, insurance, competition policy, transparent 

procedures, and distribution were the subject of 

negotiations under this basket category. Autos and 

parts were to be the subject of discussions under the 

"other major sector" category, with the aim of 

"achieving significantly expanded sales opportunities 

to result in a significant expansion of purchases of 

foreign parts by Japanese firms in Japan and 

through their transplants." Economic harmonization 

was to address issues affecting foreign direct 

investment in the United States and Japan, such as 

intellectual property rights, access to technology, and 

long-term, buyer-supplier relationships. Finally, under 

the fifth basket category, all existing bilateral 

arrangements and commitments made under the 

Structural Impediments Initiative (SII) were to be 

"closely monitored and fully implemented." 

121Telecommunications equipment and services 

and medical equipment and services were selected 

as two priority sectors for reaching agreement in the 

government procurement basket. 

122 "Joint Statement on the United States-Japan 

Framework for a New Economic Partnership," July 

12, 1993. 

123"Status of U.S.-Japan Framework Talks," 

Charlene Barshefsky, Deputy United States Trade 

Representative, address before the Japan Information 

Access Project, National Press Club, Dec. 16, 1993, 

LEGI-SLATE, Federal Information Systems 

Corporation, No. 1021505. 

124 See, for example, Seiichiro Noburo, Japanese 

Embassy Economic Minister, remarks before the 

International Trade Development Council, Sept. 16, 

1993, LEGI-SLATE, Federal Information Systems 

Corp. 

125Joan Spero, Undersecretary of State for 

Economic and Agricultural Affairs, "U.S.-Japan 

Framework Talks," USIA Foreign Press Center 

Briefing, Dec. 21, 1993, LEGI-SLATE, Federal 

Information Systems Corp., No. 1021866. 

126 "Press Conference With U.S. Trade 

Representative Mickey Kantor," Washington, DC, Jan. 

12, 1994, LEGI-SLATE, Federal Information Systems 

Corp., No. 1030786, and "U.S., Japan 'Far Apart' in 

Trade Talks," The Wall Street Journal, Jan. 3, 1994, 

P. 3. 

116 
127On February 11, 1994, President Clinton and 

Prime Minister Hosokawa held a news conference at 

the White House to announce that the two countries 

had failed to reach agreement under any of the four 

priority areas of the U.S.-Japan Framework 

Agreement talks. President Bill Clinton and Prime 

Minister Morihiro Hosokawa of Japan, press 

conference, White House, Feb. 11, 1994, 

LEGI-SLATE, Federal Information Systems Corp., No. 

1041654. 

128Joan Spero, Undersecretary of State for 

Economic and Agricultural Affairs, "U.S.-Japan 

Framework Talks," briefing, Foreign Press Center, 

Dec. 21, 1993, LEGI-SLATE, Federal Information 

Systems Corp., No. 1021866; and Bowman Cutter, 

Deputy Assistant to the President for Economic 

Policy, "U.S. Trade Policy in 1993 and Prospects for 

1994," briefing, Foreign Press Center, Dec. 23, 1993, 

LEGI-SLATE, Federal Information Systems Corp., No. 

1022021. 

129For background on the 1988 and 1991 

agreements, see USITC, OTAP, 40th Report, 1988, 

USITC publication 2208, pp. 107-108; and USITC, 

The Year in Trade: OTAP, 43rd Report, 1991, USITC 

publication 2554, pp. 109-110. 

139Jon Choy, "Washington Warns Tokyo on 

Construction Market Access," Japan Economic 

Institute Report, No. 17B, May 7, 1993, p. 7. 

131There were 17 projects covered under the 

original MPA. In 1991, another 17 projects were 

added, bringing the total to 34. Another 6 projects 

involving an estimated $20.3 billion in contracts will 

be covered under the MPA once the Government of 

Japan proceeds with procurement. 

132Jon Choy, "Events Shake Japan's Public 

Works Construction Market," Japan Economic 

Institute Report, No. 36, Oct. 1, 1993, p. 6. 

133This was the third in a series of negotiations 

to review the MPA that had started in 1992. Another 

set of negotiations had been scheduled to occur 

before an April 15 summit of President Clinton and 

Prime Minister Miyazawa. 

134USTR, "USTR Announces Three Decisions: 

Title VII, Japan Supercomputer Review, Special 301," 

press release 93-30, Apr. 30, 1993. 

135Jon Choy, "Washington Tries to Bulldoze 

Tokyo at Construction Talks," Japan Economic 

Institute Report, No. 23B, June 25, 1993, pp. 6-7. 

136USTR, "Statement by Ambassador Michael 

Kantor," press release, No. 93-94, June 30, 1993. 

137Ambassador Kantor, "Japanese Government 

Announcement on Public Sector Construction 

Procurement," press conference, Washington, DC, 

Oct. 26, 1993, LEGI-SLATE, Federal Information 

Systems Corp., No. 1002500. 

138Ibid. 

139On January 19, the USTR announced the 

termination of sanctions scheduled for January 20 

under Title VII of the Omnibus Trade and 

Competitiveness Act. The announcement was made 

following the approval of a substantive action plan by 

Japan's cabinet that was intended to make major 

changes in bidding practices and included an 

acceptance of objective measures to track 

performance. The action plan was accompanied by 

an exchange of letters between the two 

Governments. USTR, "Title VII Sanctions on Japan 

Construction Terminated," press release No. 94-03, 

Jan. 19, 1994. 

149The import and export data for vehicles do 

not include light trucks. 

141 U.S. Department of Commerce data. 

142Vehicles produced at Japanese facilities in 

Japan or elsewhere. 

143 Automotive News, Jan. 10, 1994, p. 50. 

144Tadashi Saito, "Private-Sector Views on 

Market Access in Japan," Japan Economic Institute 

Report, No. 29A, Aug. 6, 1993, p. 7. 

145The commitment by Japan to increase its 

purchases of U.S.-made auto parts was announced 

in conjunction with a summit meeting between 

President George Bush and Prime Minister Miyazawa 

in January 1992. See USITC, The Year in Trade: 

OTAP, 44th Report, 1992, USITC publication 2640, 

p. 59. 

146 "Around the Globe," Washington Trade Daily, 

Nov. 3, 1993, pp. 4 and 5. The U.S. proposal was 

published in this source. Proposal is not available 

publicly, but published information was confirmed in 

telephone interview with U.S. Department of 

Commerce officials, April 27, 1994. 

147Ibid. 

148 "U.S. Demands on Japan are Shocking 

Departure in U.S. Policy," News From JAMA, Nov. 8, 

1993. 

149See, for example, statement by Yutaka Kume, 

Chairman of JAMA, "U.S. Trade Framework 

Negotiators Off Course," JAMA press release, Dec. 

1, 1993. 

159Susan MacKnight, "Detroit Scraps Dumping 

Complaint on Japanese Cars," Japan Economic 

Institute Report, No. 5B, Feb. 12, 1993, pp. 6-8. 

151Mark Magnier, "Japanese Dumping Cars, U.S. 

Firms Charge," The Journal of Commerce, Oct. 22, 

1993, p. 3A. 

152"Japanese Agency Issues Reports on Foreign 

Entry Into Four Sections," International Trade 

Reporter, vol. 10 (July 7, 1993), pp. 1125-1126. 

153Tadashi Saito, "Private-Sector Views on 

Market Access in Japan," Japan Economic Report, 

Aug. 6, 1993, p. 7. 

154For information on the agreement, see 

USITC, OTAP, 42nd Report, 1990, USITC publication 

2404, pp. 119-120. 

155USTR, 1994 National Trade Estimate Report 

on Foreign Trade Barriers, Mar. 31, 1994, p. 157. 

156USTR, 1993 National Trade Estimate on 

Foreign Trade Barriers, Mar. 31, 1993, pp. 153-154. 

157 USTR, "Section 306 Review of Japan's 

Implementation of the 1990 U.S.-Japan 

Supercomputer Agreement," Fact Sheet, Apr. 1993. 

158Despite denials by Japanese Government 

officials, the United States has consistently alleged 

that Japanese computer companies have won 

117 
contracts in the past through "deep-discounting," 

partially because of inadequate budgets by procuring 

entities. U.S. Department of State, "Supercomputers: 

Tskuba University Bid: Cray Wins Follow-on Contract 

With MITI," telegram, message reference No. 18325, 

prepared by U.S. Department of State, Tokyo, Nov. 

17, 1993. 

159USTR, "Section 306 Review of Japan's 

Implementation of the 1990 U.S.-Japan 

Supercomputer Agreement," Fact Sheet, Apr. 30, 

1993. 

180For information on the 1991 agreement, see 

USITC, The Year In Trade: OTAP, 43rd Report, 1991, 

USITC publication 2554, p. 107; and USITC, The 

Year in Trade: OTAP, 44th Report, 1992, USITC 

publication 2640, pp. 60-61. 

161Statistics from the Office of the U.S. Trade 

Representative. 

162Susan MacKnight, "Chip Shot Puts Foreign 

Semiconductor Makers Over Top," Japan Economic 

Report, No. 11B, Mar. 26, 1993, pp. 5-6. 

163"Statement of the U.S. Industry Position 

Regarding Future Activities Under the U.S.-Japan 

Semiconductor Arrangement," Semiconductor Industry 

Association News, Mar. 22, 1993. 

164 "Industry Leaders to Continue Activities for 

Further Market Access and Enhanced Industry 

Cooperation," Semiconductor Industry Association, 

June 4, 1993. 

165USTR, "Foreign Share of Japanese 

Semiconductor Market Is 19.6 Percent in the First 

Quarter," press release 93-40, June 17, 1993. 

166 Ibid. 

167Bureau of National Affairs, "Japan Refuses 

U.S. Demand for 20 Percent Average Yearly Share 

of Japan Chip Market," International Trade Reporter, 

Aug. 4, 1993, p. 1298. 

168USTR, "Foreign Share of Japanese 

Semiconductor Market Drops to 19.2 Percent in the 

Second Quarter," press release No. 43-62, Sept. 22, 

1993. 

169USTR, "Foreign Share of Japanese 

Semiconductor Market Falls for Third Consecutive 

Quarter," press release No. 93-78, Dec. 27, 1993. 

170Keith Bradsher, "U.S.-Japan Chip Rift 

Deepens," New York Times, Dec. 28, 1993, p. Dl. 

171See "The North American Free Trade 

Agreement" in chapter 1. 

172See also USITC, The Year in Trade: OTAP, 

1991, 43rd Report, USITC publication 2554, p. 117. 

173USTR briefing paper, informal transmittal to 

USITC staff, Jan. 1994. 

174Ibid. 

175U.S. Department of State, telegram, message 

reference No. 21781, prepared by U.S. Embassy, 

Mexico City, Nov. 3, 1993; and Diario Oficial, Aug. 4, 

1993. 

176 Diario Oficial, Aug. 31, Sept. 9, Sept. 20, and 

Oct. 4, 1993. 

177 Diario Oficial, Aug. 31, 1993. 

178USTR briefing paper, informal transmittal to 

USITC staff, Jan. 1994. Information confirmed with 

U.S. Department of Commerce officials. 

179Ibid. 

180Ibid. On February 28, 1994, the Mexican 

Government published yet another new decree on 

reference prices, effective March 15, adding to the 

list of consumer items affected. Although this new 

measure provides for expedited processing for 

selected firms and gives importers a better idea of 

the costs involved, the essential, contentious 

elements of the previous decrees have been 

retained. 

181USTR briefing paper, informal transmittal to 

USITC staff, Jan. 1994. Information confirmed by 

U.S. Department of Agriculture. 

182Ibid. 

183President Clinton, letter of transmittal to the 

Senate for advice and consent, May 20, 1993, p. III. 

184 "Treasury News," Oct. 27, 1993. 

185U.S. Embassy, Mexico, Mexico: Economic 

and Financial Report, winter 1994, p. 79. 

186For an analysis of the Tax Treaty, see "What 

The New U.S.-Mexico Tax Treaty Means to Mexican 

Companies and U.S. Investors," U.S.-Mexico Free 

Trade Reporter, Jan. 7, 1994, p. 1. 

187U.S. Department of State, "Mexican Economic 

Competition Law," telegram, message reference No. 

18614, U.S. Embassy, Mexico City, July 27, 1993. 

188 Ibid. 

189Santiago Levy, "Mexican Regulators Humming 

the Deregulation Rag," The Wall Street Journal, July 

30, 1993. 

190Foreign Commercial Service,"Mexican 

Economic Competition Law, Its General Impact and 

Reception, and its Effects on U.S. Companies," 

telegram, message reference No. 3724, U.S. 

Embassy, Mexico City, July 27, 1993. 

191Foreign Trade Law, Diario Oficial, July 27, 

1993, unofficial translation by the U.S. Department of 

State. 

192For more information, see USITC, Review of 

Trade and Investment Liberalization Measures by 

Mexico and Prospects for Future United 

States-Mexican Relations, Phase I, USITC publication 

2275, Apr. 1990, pp. 4-12 to 4-22. 

193Mexican officials, interview by USITC staff, 

Mexico City, Aug. 1993. 

194Ibid. 

195Foreign Trade Law, Diario Oficial, July 27, 

1993, unofficial translation by the U.S. Department of 

State. 

196Ibid. 

197Ibid. 

198 Diario Oficial, Mar. 9, 1973. For more 

information on the 1973 law, see USITC, Review of 

Trade and Investment Liberalization Measures, 

USITC publication 2275, Apr. 1990, pp. 5-4 to 5-6. 

199These regulations were published in the 

Diario Official on May 16, 1989, effective the 

118 
following day. For more information, see USITC, 

Review of Trade and Investment Liberalization 

Measures, USITC publication 2275, Apr. 1990, pp. 

5-7 and 5-11. 

200U.S. Embassy, Mexico, Mexico: Economic 

and Financial Report, winter, 1994, p. 79. 

201U.S. Department of State, "Mexican 

Accession to the OECD," telegram, message 

reference No. 34141, U.S. Embassy, Paris, Dec. 17, 

1993, NewsEDGE, Internal News. 

202Foreign Investment Law, translated into 

English by Jauregui, Navarrete, Nader Y Rojas, 

Abogados, Mexico City, on Jan. 18, 1994, p.1. 

203Foreign Investment Law, Diario Oficial, Dec. 

27, 1993; and Michell S. Nader and Jorge Cervantes 

Trejo, New Mexican Foreign Investment Law, Jan. 

18, 1994, p. 4. 

204The United States-China Act of 1991 (H.R. 

2212), a conference version of a bill passed by the 

House and a similar bill passed by the Senate, was 

agreed to by the House on November 26, 1991, and 

by the Senate on February 25, 1992, but was vetoed 

by the President on March 2, 1992. The veto was 

overridden by the House, but was upheld by the 

Senate. The United States-China Act of 1992 (H.R. 

5318), was passed by the House on July 21, 1992, 

and by the Senate on September 14, 1992, and 

vetoed by President Bush on September 28, 1992. 

The veto was again overridden by the House, but 

was upheld by the Senate. 

205"Memorandum on Most-Favored-Nation Trade 

Status for China," Presidential Determination 93-23, 

and "Conditions for Renewal of Most-Favored-Nation 

Status for the People's Republic of China in 1994," 

Executive Order 12850, in 58 F.R. 31327. 

206This condition has been met every year since 

1980 mainly because China has allowed as many of 

its citizens to emigrate to the United States as the 

United States has allowed entry under its quota for 

immigrants from China. The U.S. Government has 

concluded, therefore, that the principal constraint on 

Chinese emigration is not the Government of China 

or its policies but the inability or unwillingness of 

other nations to absorb all Chinese nationals who 

wish to leave. See, for example, "Report to the 

Congress on Most-Favored-Nation Status for China," 

White House, Weekly Compilation of Presidential 

Documents, vol. 21, No. 21 (May 28, 1993), p. 984. 

207The agreement on prison labor products is a 

memorandum of understanding between the United 

States and China signed on August 7, 1992. It is 

designed to facilitate the efforts of the U.S. Customs 

Service to identify and seize imports of merchandise 

that have been produced in China by forced labor 

and to reduce the export of these goods by China to 

the United States. For a text of the agreement, see 

U.S. Department of State, Dispatch, vol. 3, No. 33 

(Aug. 17, 1992), p. 660. 

208This United Nations declaration is a broad 

statement of political and civil rights and of basic 

economic rights, such as access to adequate 

housing, education, and health care. 

203White House, "Report to the Congress on 

Most-Favored-Nation Trade Status for China," Weekly 

Compilation of Presidential Documents, vol. 21, No. 

21 (May 31, 1993), pp. 984-988. 

210The only noteworthy step taken by China 

during the summer of 1993 was to release a 

prominent Chinese dissident, Wei Jingsheng, on 

September 13, after more than 14 years of 

imprisonment. Most observers agreed, however, that 

this action did not represent a change in China's 

position on human rights but, instead, was a 

well-publicized gesture to stem criticism of its human 

rights record when Beijing was still among the cities 

being considered to host the Olympics in 2000. 

211 For a brief official statement on this shift in 

strategy, see Winston Lord, Assistant Secretary of 

State for East Asian and Pacific Affairs, hearing 

before the House Foreign Affairs Committee, 

International Security, International Organizations, and 

Human Rights Subcommittee, Mar. 24, 1994, 

LEGI-SLATE, Federal Information Systems Corp., No. 

1052982. 

212President Clinton, news conference during the 

APEC meetings in Seattle, WA, Nov. 19, 1993, 

LEGI-SLATE, Federal Information Systems Corp., No. 

1012108. 

213For more information on the developments 

cited and a detailed analysis of China's human rights 

record in 1993, see U.S. Department of State, 

Country Reports on Human Rights Practices for 

1993, pp. 604-620. 

214This was the consensus at a hearing on 

trade policy toward China held before the House 

Ways and Means Committee, Subcommittee on 

Trade, on February 24, 1994. Among those testifying 

were Winston Lord, Assistant Secretary of State for 

East Asian and Pacific Affairs; Charlene Barshefsky, 

Deputy U.S. Trade Representative; and members of 

Congress, including Representatives Pelosi, Solomon, 

and Smith. 

On May 26, 1994, President Clinton announced 

that he was renewing the MFN status of China, 

although he conceded that "the Chinese did not 

achieve overall significant progress in all the areas 

outlined in the executive order relating to human 

rights." This decision, the President explained, 

"offers us the best opportunity to lay the basis for 

long-term sustainable progress in human rights and 

for the advancement of our other interests with 

China." President Clinton, White House press 

conference announcing decision on MFN trading 

status for China, May 26, 1994, LEGI-SLATE, 

Federal Information Systems Corp., No. 1073290. 

215The United States and China resumed 

negotiations and signed a new bilateral agreement on 

trade in textiles and apparel on January 17, 1994. 

China accepted most of the terms that the United 

States had demanded after Ambassador Kantor, the 

U.S. Trade Representative, ordered its textile quotas 

under the expired agreement to be unilaterally 

reduced by 25 to 35 percent if an agreement had not 

concluded by that date. For more information on the 

new agreement, see "Arrangement Regarding 

International Trade in Textiles" in chapter 5 of this 

report. 

216Ambassador Kantor, USTR briefing on the 

imposition of lower 1994 quotas on textile products 

from China, Washington, DC, Jan. 6, 1994, 

119 
LEGI-SLATE, Federal Information Systems Corp., 

No. 1030313. 

217USTR, Fact Sheet on Textile Agreement With 

China, Jan. 6, 1994, pp. 1 and 3. 

218Office of Thrift Supervision, background 

briefing on the imposition of lower 1994 quotas on 

textile products from China, Washington, DC, Jan. 6, 

1994, LEGI-SLATE, Federal Information Systems 

Corp., No. 1030373. 

219USTR, Transshipment and Overshipment, fact 

sheet accompanying press release on Chinese textile 

quotas, Jan. 6, 1994, p. 1. 

220 Ibid. 

221Office of Thrift Supervision, background 

briefing on the imposition of lower 1994 quotas on 

textile products from China, Washington, DC, Jan. 6, 

1994, LEGI-SLATE, Federal Information Systems 

Corp., No. 1030373. 

222 Ibid. 

223Ibid. 

224The 22-member MTCR was established by 

the United States and other missile-technologysupplier countries in 1987. The guidelines were 

revised in January 1993 to extend the scope of the 

regime to missiles capable of delivering biological, 

chemical, and nuclear weapons. For more 

information, see U.S. Department of State, Dispatch, 

vol. 4, No. 3 (Jan. 18, 1993), pp. 41 and 42. 

225U.S. Department of State, China/Pakistan: 

M-11 Missile Sanctions, press release, Aug. 25, 

1993. 

226 Lynne Davis, Undersecretary of State for 

International Security Affairs, State Department 

special briefing on sanctions against China, 

Washington, DC, Aug. 25, 1993, LEGI-SLATE, 

Federal Information Systems Corp., No. 981592. 

227Ibid. 

228China's first launching of a U.S.-built satellite, 

which was made on behalf of a Hong Kong-based 

consortium, took place in April 1990, and the second 

launching was made for an Australian company in 

August 1992. The third satellite was destroyed in a 

launching accident in December 1992 and had not 

been replaced when the new sanctions were 

imposed. 

229U.S. Department of State analyst, interview 

by USITC staff, Sept. 6, 1993. 

230 Lynne Davis, Department of State special 

briefing on sanctions against China, Washington, DC, 

Aug. 25, 1993, LEGI-SLATE, Federal Information 

Systems Corp., No. 981592. 

231U.S. Department of State analyst, interview 

by USITC staff, Mar. 4, 1994. On January 7, 1994, 

the administration lifted its ban on the export of two 

satellites to China because they did not include 

components on the State Department's munitions list. 

The waiver of the sanctions on these particular 

satellites was the result of a reinterpretation of U.S. 

law to exclude items that were not militarily sensitive 

from coverage under the MTCR guidelines. U.S. 

Department of Commerce, Bureau of Export 

Administration, press release, Jan. 6, 1994. 

232The Washington-based Intellectual Property 

Alliance, which represents eight major U.S. 

commercial associations, has estimated that U.S. 

companies lose $415 million annually as a result of 

copyright infringement in China, $225 million of that 

from computer software piracy. 

233For more information on the IPR agreement 

and the steps taken by China in 1992 to fulfill its 

commitments in this MOU, see USITC, The Year in 

Trade: OTAP, 44th Report, 1992, USITC publication 

2640, pp. 67-68. 

234USTR, 1994 National Trade Estimate Report 

on Foreign Trade Barriers, pp. 51-52. 

235Ibid, p. 52. 

236 Ibid. 

237Ibid. 

238USTR, USTR Announces Action Against 

China Under the "Special 301" Provisions of the 

1974 Trade Act, press release, Nov. 30, 1993. 

239The "special 301" provisions on IPR were 

added to section 301 of the 1974 Trade Act, as 

amended in the Omnibus Trade and Competitiveness 

Act of 1988 (19 U.S.C. 2242). 

24° For a description of the major commitments 

made by China in the market-access agreement, see 

USITC, The Year in Trade 1992, OTAP, 44th Report, 

USITC publication 2640, July 1993, pp. 68-69. 

241 For more detailed information on the 

implementation of the market-access agreement, see 

USTR, 1994 National Trade Estimate Report on 

Foreign Trade Barriers, pp. 44-50. 

242The 258 items were comparable to the 8-digit 

tariff-line items in the Harmonized Tariff Schedule of 

the United States (HTS). 

243Ibid., p. 45. 

244USTR, 1994 Trade Policy Agenda and 1993 

Annual Report, p. 58. 

245USTR, 1994 National Trade Estimate Report 

on Foreign Trade Barriers, p. 56. 

246 USTR, 1994 Trade Policy Agenda and 1993 

Annual Report, p. 60. 

247The material in this section is based on 

information provided by the USTR staff. 

248For information on China's trade reforms in 

1993, see especially the section on market access 

under "Other Bilateral Issues," above. 

249As a result of these trade and economic 

reforms, China's request to become a GATT member 

by the end of 1994 was in general favorably received 

at a March 1994 meeting of the working party. 

However, the United States argued that too many 

issues remained unresolved to set a firm deadline for 

accession. 

250In 1990, Taiwan applied for membership in 

the GATT. Taiwan applied as the "Separate Customs 

Territory of Taiwan, Penghu, Kinmen, and Matsu" 

under provisions of article XXXIII. By electing this 

application method, Taiwan sought to deflect political 

controversy over the question of sovereignty since 

China is also applying for GATT membership. The 

Republic of China was a founding member of GATT 

in 1946, but left the organization in 1950 after the 

120 
People's Republic of China was established. Taiwan 

held GATT observer status from 1965-71. 

Taiwan, Penghu, Kinmen, and Matsu are the four 

main islands under Taiwan's jurisdiction. After 

accession, Taiwan will formally be referred to as 

"Chinese Taipei." 

251For background on Taiwan's effort to join the 

GATT, see USITC, The Year in Trade: OTAP, 44th 

Report, 1992, USITC publication 2640, pp. 71-72. 

252USTR, "U.S. Tables GATT Accession Goods 

Market Access Request of Taiwan," press release 

No. 93-69, Nov. 24, 1993. 

253U.S. Department of State, "Report on GATT 

Accession Working Party for Chinese Taipei, October 

12-15," telegram, message reference No. 09715, 

prepared by the U.S. Mission to the GATT, Geneva, 

Oct. 24, 1993. 

254For the October bilateral dialogue between 

the United States and Taiwan, see Ibid., message 

reference No. 09762. 

255Ibid., message reference No. 09715. 

256 For the October bilateral dialogue between 

the United States and Taiwan, see Ibid., message 

reference No. 09762. 

257Ibid., message reference No. 09715. 

258For the October bilateral dialogue between 

the United States and Taiwan, see Ibid. 

259Ibid., message reference No. 09715. 

260Because pesticide residue tolerances on fruit, 

for example, are based on pesticides used in Taiwan, 

but not in foreign countries, import procedures for 

foreign fruit become complicated. U.S. Department of 

State, "Taiwan's GATT Accession: Sanitary and 

Phytosanitary Restrictions," telegram, message 

reference No. 06987, prepared by the American 

Institute in Taiwan, Taipei, Oct. 6, 1993. 

261 U.S. Department of State, "Report on GATT 

Accession Working Party for Chinese Taipei, October 

12-15," telegram, message reference No. 09715, 

prepared by the U.S. Mission to the GATT, Geneva, 

Oct. 24, 1993. 

262The GATT Committee on Technical Barriers 

to Trade granted observer status to Taiwan in 

November 1993. U.S. Department of State, "GATT: 

Committee on Technical Barriers to Trade, Nov. 2, 

1993," telegram, message reference No. 10501, 

prepared by the U.S. Mission to the GATT, Geneva, 

Nov. 10, 1993. 

263For a summary of Taiwan's Government 

procurement practices, see U.S. Department of State, 

"Foreign Government Procurement Practices," 

telegram, message reference No. 01440, prepared by 

the American Institute in Taiwan, Taipei, Mar. 5, 

1993. 

264U.S. Department of State, "Report on GATT 

Accession Working Party for Chinese Taipei, October 

12-15," telegram, message reference No. 09715, 

prepared by the U.S. Mission to the GATT, Geneva, 

Oct. 24, 1993. 

265Ibid. 

266 Ibid. 

267 For background on bilateral IPR negotiations 

in 1992, see USITC, The Year in Trade: OTAP, 44th 

Report, 1992, USITC publication 2640, pp. 70-71. 

268 U.S. Department of State, "Motion Picture 

Industry Publishes its 1993 Trade Barriers Report," 

telegram, message reference No. 033113, prepared 

by the Department of State, Washington, DC, Feb. 3, 

1993. 

269 Ibid. 

270U.S. Department of State, "Amcham Letter re. 

Special 301," telegram, message reference No. 2851, 

prepared by the American Institute in Taiwan, Taipei, 

Apr. 28, 1993. 

271U.S. Department of State, "IPR: Amcham 

Letter to Ambassador Kantor;" telegram, message 

reference No. 05104, prepared by the American 

Institute in Taiwan, Taipei, July 23, 1993. 

272U.S. Department of State, "1994 Trade Act 

Report," telegram, message reference No. 07569, 

prepared by the American Institute in Taiwan, Taipei, 

Oct. 29, 1993. 

273Ibid. 

274"Taiwan Task Force Decides to Increase 

Enforcement Against Software, CD Piracy." 

International Trade Reporter, Feb. 24, 1993, pp. 324. 

275"Taiwan Government Seizes Illegal Videos, 

Laser Disks after U.S. Special 301 Action." 

International Trade Reporter, May 12, 1993, p. 794. 

276 U.S. Department of State, "Taiwan IPR 

Enforcement Data: Comparison of 1991, 1992, and 

1993 Statistics," telegram, message reference No. 

01056, prepared by the American Institute in 

Taiwan, Taipei, Feb. 18, 1994. 

277U.S. Department of State, "AIT Delivers 

Statement at Public Hearing on Bilateral Copyright 

Agreement," telegram, message reference No. 00142, 

prepared by the American Institute in Taiwan, Taipei, 

Jan. 11, 1993. 

278USTR, "Fact Sheet: Special 301 on 

Intellectual Property." Apr. 30, 1993, p. 5. 

279U.S. Department of State, "Special 301 

Out-of-cycle Reviews: Hungary, Thailand, and 

Taiwan," telegram, message reference No. 238026, 

prepared by the U.S. Department of State, 

Washington, DC, Aug. 5, 1993. 

280 U.S. Department of State, "Taiwan Patent 

Law Update," telegram, message reference No. 

08632, prepared by the American Institute in Taiwan, 

Taipei, Dec. 15, 1993. 

281The United States and Taiwan had already 

agreed in March on patent protection of 

pharmaceutical and agricultural chemical products 

that had been patented in the United States prior to 

1986, when Taiwan's previous patent law was 

enacted. U.S. Department of State, "1994 Trade Act 

Report," telegram, message reference No. 07569, 

prepared by the American Institute in Taiwan, Taipei, 

Oct. 29, 1993. 

282U.S. Department of State, "Taiwan's New 

Patent Law: Review of Key Articles," telegram, 

message reference No. 00108, prepared by the 

American Institute in Taiwan, Taipei, Jan. 6, 1994. 

121 
283U.S. Department of State, "1994 Trade Act 

Report," telegram, message reference No. 07569, 

prepared by the American Institute in Taiwan, Taipei, 

Oct. 29, 1993. 

284U.S. Department of State, "Taiwan's New 

Patent Law: Review of Key Articles," telegram, 

message reference No. 00108, prepared by the 

American Institute in Taiwan, Taipei, Jan. 6, 1994. 

285USTR, "Fact Sheet: Special 301 on 

Intellectual Property," Apr. 30, 1993, p. 6. 

286 "Toward an Advanced Economy: IPR 

Protection," Economic Bulletin, Economic Planning 

Board/Center for Economic Education, May 1993, p. 

11 

287U.S. Department of State, "1994 Country 

Trade Act Report for Korea," telegram, message 

reference No. 10974, prepared by the U.S. Embassy, 

Seoul, Nov. 15, 1993. 

288U.S. Department of Commerce, International 

Trade Administration, "Korea: Key Issues," Jan. 21, 

1994, p. 2. 

289"Market Opening Era Ushered In," Korea 

Newsreview, Dec. 18, 1993, p. 14. 

290 U.S. Department of Agriculture, Economic 

Research Service, "Rice Distribution and Outlook 

Report," publication RCS-68, Oct. 1993. 

291Quoted in "Japan To End Ban on Rice 

imports," Los Angeles Times, Washington Post News 

Service, Dec. 14, 1993. 

292"South Korea's President Kim Says Rice 

Market Opening Inevitable," Comtex Scientific Corp., 

Dec. 9, 1993. 

293"Opposition Continues in South Korea, Japan 

Over Rice Imports," Los Angeles Times, Dec. 8, 

1993. 

294"South Korean Opposition Politicians Vow To 

Fight Rice Import Agreement," Comtex Scientific 

Corp., Dec. 14, 1993. 

295Paul R. Gibson, "Korean Rice in the Pressure 

Cooker," International Economic Review, USITC, Dec. 

1991, pp. 8-9. 

296U.S. Department of State, "More consumers 

recognize inevitability of rice opening," telegram, 

message reference No. 11809, prepared by the U.S. 

Embassy, Seoul, Korea, Dec. 10, 1993. 

297U.S. Department of Commerce, International 

Trade Administration, "Korea: Key Issues," July 7, 

1993. 

298USTR, "U.S. and Korea Reach Agreement on 

Beef Market Access," June 29, 1993. 

299"Korea, U.S. Agree on '93 Beef Import of 

99,000 Tons," Korea Newsreview, July 3, 1993, p. 

16. 

300USITC, OTAP, Program, 40th Report, 1988, 

USITC publication 2208, p. 129. 

301For background, see USITC, OTAP, 41st 

Report, 1989, USITC publication 2317, pp. 119 and 

137. 

302U.S. Department of State, "Daily Seoul Press 

Translation, July 2, 1993," telegram, message 

reference No. 06480, prepared by U.S. Embassy, 

Seoul, July 2, 1993. 

303U.S. Department of State, "1994 Country 

Trade Act Report for Korea," telegram, message 

reference No. 10974, prepared by the U.S. Embassy, 

Seoul, Nov. 15, 1993. 

304U.S. Department of State, "Daily Seoul Press 

Translation, June 28, 1993," telegram, message 

reference No. 6762, prepared by the U.S. Embassy, 

Seoul, June 28, 1993. 

122 
CHAPTER 5 

Administration of U.S. Trade Laws 

and Regulations 

This chapter reviews activities related to the 

administration of U.S. trade laws during 1993. It is 

subdivided into sections on (1) import-relief laws, (2) 

unfair trade laws, and (3) certain other trade 

provisions, including section 22 of the U.S. 

Generalized System of Preferences (GSP), the 

Caribbean Basin Economic Recovery Act (CBERA), 

the Andean Trade Preference Act (ATPA), the 

Agricultural Adjustment Act, and the Arrangement 

Regarding International Trade in Textiles. 

Import Relief Laws 

The United States administers two safeguard laws 

and also administers a trade adjustment assistance 

program. There is one general safeguard provision 

under section 201 of the Trade Act of 1974 1and 

several bilateral provisions, including those defined 

under section 406 of the Trade Act of 1974 (market 

disruption by imports from Communist countries). 2 

 The adjustment assistance under the Trade Adjustment 

Assistance (TAA) program is included under Title II of 

the Trade Act of 1974. 

Safeguard Actions 

There were no remedies under sections 201 or 406 

in effect at yearend 1993. The Commission did not 

conduct any new or followup investigations under 

section 201 in 1993. 

Market Disruption 

Under section 406 of the Trade Act of 1974, 3the 

Commission conducts investigations to determine 

whether imports of an article produced in a 

"Communist country" are causing market disruption 

with respect to an article produced by a U.S. industry. 

"Market disruption" is defined to exist when imports of 

an article like or directly competitive with an article 

produced by a domestic industry are increasing rapidly, 

either absolutely or relatively, so as to be a significant 

cause of material injury or threat of material injury to 

the domestic industry. This provision is similar 

procedurally to section 201. 

In October 1993 the Commission commenced an 

investigation under section 406 concerning honey from 

the People's Republic of China, 4following receipt of a 

request from the United States Trade Representative. In 

December 1993, the Commission found that market 

disruption exists with respect to honey imports from 

China.5The Commission transmitted its report to the 

President in January 1994. 6 

Adjustment Assistance 

The Trade Adjustment Assistance (TAA) program, 

set forth in Title II of the Trade Act of 1974, authorizes 

the Secretaries of Commerce and Labor to provide 

trade adjustment assistance to firms and workers, 

respectively, that are adversely affected by increased 

imports. Initially authorized through the Trade 

Expansion Act of 1962, the current program is 

scheduled to expire on September 30, 1998. 7In 1993, 

a new subchapter was added to Title II of the Trade Act 

to provide transitional assistance to workers separated 

or threatened to be separated from their employment as 

a result of increased imports from Canada or Mexico 

under the NAFTA. 8 

The TAA system of readjustment allowances to 

individual workers is administered by the U.S. 

Department of Labor through its Office of 

Employment and Training Administration (ETA) in the 

form of monetary benefits for direct trade readjustment 

allowances and service benefits that include allocations 

for job search, relocation, and training. Industry-wide 

technical consultation provided through 

Commerce-sponsored programs is designed to restore 

the economic viability of U.S. industries adversely 

affected by international import competition. 9 

123 
Assistance to Workers 

The Department of Labor instituted 1,221 

investigations in fiscal year 1993 (October 1, 1992, 

through September 30, 1993) on the basis of petitions 

filed for trade adjustment assistance. This figure 

represents a decrease from the 1,465 petitions 

instituted in fiscal 1992. The results of investigations 

completed or terminated in fiscal 1993, including those 

in process from the previous fiscal year, are shown in 

the following tabulation: 1 ° 

Item 

Number of Estimated 

investigations number of 

or petitions workers 

Completed 

certifications 581 70,581 

Partial certifications 9 656 

Petitions denied 697 91,723 

Petitions terminated 

or withdrawn 49 2,866 

Total 1,336 165,826 

Assistance to Firms and Industries 

Through its Trade Adjustment Assistance Division 

(TAAD), the U.S. Department of Commerce's 

Economic Development Administration (EDA) 

certified 253 firms as eligible to apply for trade 

adjustment assistance during fiscal year 1993. This 

figure represents a 39-percent increase from the 182 

firms certified in the previous fiscal year. The TAAD 

administers its firm assistance programs though a 

nationwide network of 12 Trade Adjustment 

Assistance Centers (TACCs). Technical services are 

provided to certified firms through TAAC staffs and 

independent consultations under direct contract with 

TAACs. Funding for the TAACs during fiscal 1993 

totaled $13 6 million for provision of technical services 

to 865 firms adversely affected by international import 

competition. 

In addition to the technical assistance for the firms, 

a component of the TAAD program, Commerce funded 

four industry development projects valued at $460,000. 

The projects receiving such funding included gear, 

foundry, semi-conductor, and auto parts producers. 

The number of completed and partial certifications 

in fiscal 1993 decreased to 590, from 703 in fiscal 

1992. However, preliminary figures for fiscal 1993 

indicate that Labor expenditures for direct Trade 

Readjustment Allowances (TRA) to certified workers 

increased to $50.5 million, which was above the $42.7 

million expenditures in fiscal 1992. 

In addition, Labor provided training, job search, 

and relocation services valued at a preliminary estimate 

of $80.0 million in fiscal 1993 for worker activities in 

the areas shown in the following tabulation: 11 

Estimated 

number of 

Item participants12 

Training 19,500 

Job search 800 

Relocation allowances. 1,950 

Total 22,250 

Preliminary data for fiscal 1993 indicated that an 

estimated 22,250 workers used available service 

benefits, representing an increase of 11.5 percent from 

the workers receiving such services in the previous 

fiscal year. 

Laws Against Unfair 

Trade Practices 

The U.S. Department of Commerce issued 44 new 

antidumping orders during 1993, following completion 

of investigations by Commerce and the U.S. 

International Trade Commission. In addition, 

Commerce issued 18 new countervailing duty orders, 

following completion of investigations by Commerce 

and the Commission. There were no countervailing 

duty orders issued in 1993 based on an investigation by 

Commerce alone. 13During 1993 the Commission 

completed 15 investigations under section 337 of the 

Tariff Act of 1930, involving allegations of patent, 

trademark, or copyright infringement or other unfair 

methods of competition. In three of those 

investigations, the Commission determined that there 

was a violation of section 337 and issued limited 

exclusion orders prohibiting the importation of 

merchandise. Cease and desist orders prohibiting 

further violation of section 337 were also issued in two 

of those three investigations. 

In 1993, USTR initiated one new section 301 

investigation. In addition to the one new investigation, 

further developments occurred in seven investigations 

initiated prior to 1993. Table 5-1 summarizes USTR 

activities on section 301 investigations during 1993.14 

124 
tusatyearend 1 993 

UN 

See footnoteatend of table. 

Softwood lumber,Canada 

Patentprotection, Thailand 

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Statusat yearend 1 993 

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tentwith Sec.30 

127 
Antidumping Investigations 

The present antidumping law is contained in Title 

VII of the Tariff Act of 1930. 15The antidumping law 

provides relief in the form of special additional duties 

that are intended to offset margins of dumping. 

Antidumping duties are imposed when (1) Commerce 

(the administering authority) has determined that 

imports are being, or are likely to be, sold at less than 

fair value (LTFV) in the United States and (2) the 

Commission has determined that a United States 

industry is materially injured or threatened with 

material injury or that the establishment of an industry 

in the United States is materially retarded by reason of 

such imports. 

In general, imports are considered to be sold at 

LTFV when the United States price (i.e., the purchase 

price or the exporter's sales price, as adjusted) is less 

than the foreign market value, which is usually the 

home-market price, or, in certain cases, the price in a 

third country, or a "constructed" value, calculated as 

set out by statute. 16The antidumping duty equals the 

difference between the U.S. price and the 

foreign-market value. Most investigations are 

conducted on the basis of a petition filed with 

Commerce and the Commission by or on behalf of a 

U.S. industry. 

Commerce and the Commission each conduct 

preliminary and final antidumping investigations in 

making their separate determinations. 17In 1993, the 

Commission completed 35 preliminary and 73 final 

antidumping injury investigations. 18The 

disproportionately large number of final investigations 

was primarily attributable to antidumping 

investigations involving the U.S. steel industry, which 

commenced in June 1992. Antidumping orders were 

imposed as a result of affirmative Commission 

determinations in 41 of the 73 final investigations on 

products imported from 23 different countries. Details 

of antidumping actions and orders, including 

suspension agreements, 19in effect in 1993, are 

presented in tables A-24 and A-25. The following 

tabulation summarizes the number of antidumping 

investigations during 1991-1993: 20 

Antidumping duty 

investigations 1991 1992 1993 

Petitions filed 24 24 21 

Preliminary Commission 

determinations: 

Negative 22 13 5 

Affirmative (includes 

partial affirmatives) 31 72 30 

Terminated21 2 11 8 

Final Commerce determinations: 

Negative 0 2 1 

Affirmative 28 24 76 

Terminated 1 2 0 

Suspended 0 7 0 

Final Commission determinations: 

Negative 13 4 32 

Affirmative (includes 

partial affirmatives) 19 16 41 

Terminated 0 1 0 

Countervailing-Duty 

Investigations 

The United States countervailing-duty law is set 

forth in section 303 and Title VII of the Tariff Act of 

1930. It provides for the levying of special additional 

duties to offset foreign subsidies on products imported 

into the United States. 22In general, procedures for 

such investigations are similar to those under the 

antidumping law. Petitions are filed with Commerce 

(the administering authority) and with the Commission. 

Before a countervailing-duty order can be issued, 

Commerce must find a countervailable subsidy, and in 

most cases, the Commission must make an affirmative 

determination of material injury, threat of material 

injury, or material retardation by reason of the 

subsidized imports. 

Investigations are conducted under section 701 of 

the Tariff Act if the subject article is imported from a 

country that has signed the GATT Code on Subsidies 

and Countervailing Duties 23or has otherwise been 

designated a "country under the Agreement." 24 

 Investigations with respect to imports from other 

countries are conducted under section 303 of the Tariff 

Act. Such imports are subject to an injury investigation 

by the Commission only if (1) they normally enter free 

of duty and (2) international obligations of the United 

States require an injury investigation. 25For imports 

not falling under this category or under section 701, a 

countervailing-duty order may be issued under section 

303 on the basis of an affirmative subsidy 

determination by Commerce alone. 

Eighteen new countervailing-duty orders were 

imposed in 1993 as a result of investigations involving 

both Commerce and the Commission. No new 

countervailing duty orders were imposed on products 

following investigation by Commerce alone under 

section 303 of the Tariff Act. In 1993, the Commission 

completed 4 preliminary and 36 final injury 

investigations.26As with antidumping investigations, 

the disproportionately large number of final 

investigations was primarily attributable to 

investigations involving the U.S. steel industry 

commenced in June 1992. Details of 

128 
countervailing-duty actions and outstanding orders, 

including suspension agreements 27in effect in 1993, 

are presented in tables A-26 and A-27. The following 

tabulation summarizes the number of 

countervailing-duty investigations during 1991-93: 28 

Countervailing duty 

investigations 1991 1992 1993 

Petitions filed 8 4 3 

Preliminary Commission 

determinations: 

Negative 1 6 2 

Affirmative (includes 

partial affirmatives) 6 6 2 

Final Commerce determinations: 

Negative 2 2 0 

Affirmative 4 4 36 

Suspended 0 0 0 

Final Commission determinations: 

Negative 2 0 18 

Affirmative (includes 

partial affirmatives) 1 2 18 

Terminated 0 3 0 

Reviews of Outstanding 

Antidumping and 

Countervailing-Duty Orders 

Section 751 of the Tariff Act of 1930, as amended 

(19 U.S.C. 1675), requires Commerce (the 

administering authority), if requested, to conduct 

annual reviews of outstanding antidumping and 

countervailing-duty orders to determine the amount of 

any net subsidy or dumping margin and to determine 

compliance with suspension agreements. Section 751 

also authorizes Commerce and the Commission, as 

appropriate, to review certain outstanding 

determinations and agreements after receiving 

information or a petition that shows changed 

circumstances. In these circumstances, the party 

seeking revocation or modification of an antidumping 

or countervailing duty order or suspension agreement 

has the burden of persuading the Commission that 

circumstances have changed sufficiently to warrant 

review and revocation. Based on either of the reviews 

above, Commerce may revoke a countervailing-duty or 

antidumping order in whole or in part or terminate or 

resume a suspended investigation. 

The Commission instituted one investigation under 

section 751 in 1993, Stainless Steel Plate From 

Sweden.29This investigation was suspended based on 

a request from the petitioners that the Commission 

hold its investigation in abeyance pending resolution of 

a dispute regarding the scope of the antidumping order 

issued by the Department of Commerce. 30The 

investigation was not resumed in 1993. 

As a result of reviews conducted by Commerce in 

1993 based on a party's request, Commerce partially 

rescinded one antidumping order. 31Commerce 

completely rescinded one antidumping order based on 

a changed circumstances determination, 32rescinded 

one other order based on a determination that the order 

was no longer of interest to the interested parties, 33and 

completely revoked one antidumping order pursuant to 

court remand. 34Commerce also revoked one 

countervailing duty order based on a determination that 

the order was no longer of interest to the interested 

parties in 1993. 35Commerce did not terminate any 

investigations that had previously been suspended. 

Section 337 Investigations 

Section 337 of the Tariff Act of 1930, as amended 

(19 U.S.C. § 1337), authorizes the Commission, on the 

basis of a complaint or on its own initiative, to conduct 

investigations with respect to certain practices in 

import trade. Section 337 declares unlawful the 

importation, sale for importation, or sale after 

importation of articles that infringe a valid and 

enforceable U.S. patent, registered trademark, 

registered copyright, or registered mask work, for 

which a domestic industry exists or is in the process of 

being established. 36 

If the Commission determines that a violation 

exists, it can issue an order excluding the subject 

imports from entry into the United States, or can order 

the violating parties to cease and desist from engaging 

in the unlawful practices. 37The President may 

disapprove a Commission order within 60 days of its 

issuance for "policy reasons." 

In 1993, as in previous years, most complaints filed 

with the Commission under section 337 alleged 

infringement of a U.S. patent by imported 

merchandise. The Commission completed a total of 15 

investigations under section 337 (including one 

modification proceeding) in 1993, compared with 12 in 

1992. During 1993, the Commission also completed 

one preliminary investigation under section 603 of the 

Trade Act of 1974, which was instituted to determine 

whether there was a sufficient basis to institute a 

section 337 investigation regarding certain 

recombinantly produced human growth hormones. 

This was the first section 603 investigation relating to a 

section 337 complaint since 1984. As in recent years, 

the section 337 caseload was highlighted by 

investigations involving computer-related products, 

including semiconductors. Other section 337 

129 
investigations involved pharmaceutical products, 

industrial machinery, and various consumer products. 

Limited exclusion orders were issued by the 

Commission in the three investigations in which 

violations were found, and cease and desist orders were 

issued in two of those three investigations. Several 

investigations were terminated by the Commission 

without determining whether section 337 had been 

violated. Generally, these terminations were based on 

settlement agreements or consent orders. At the close 

of 1993, there were 17 section 337 investigations, 

including an advisory opinion proceeding and an 

ancillary candor proceeding, pending before the 

Commission. Commission activities involving section 

337 actions in 1993 are presented in table A-28. 

As of December 31, 1993, a total of 50 outstanding 

exclusion orders based on violations of section 337 

were in effect. Thirty-one of these orders involved 

patent violations. Table A-29 also lists the 

investigations in which these exclusion orders were 

issued. 

Other Import 

Administration Laws 

and Programs 

The United States now administers three unilateral 

tariff preference programs as part of its overall 

program of import administration: the Generalized 

System of Preferences, the Caribbean Basin Economic 

Recovery Act, and the Andean Trade Preference Act. 

Almost 45 percent of overall imports entering the 

United States in 1993 ($573.2 million) entered free of 

duty. Of that amount, 3.8 percent of total U.S. imports 

for consumption benefited from the duty-free 

privileges of the three programs described in this 

section. GSP duty-free imports accounted for 3.4 

percent, CBERA duty-free imports accounted for 0.3 

percent and ATPA duty-free imports accounted for 0.06 

percent of total U.S. imports for consumption. The 

following tabulation shows total duty-free imports for 

the programs described in this section (in millions of 

dollars): 

U.S. imports 1992 1993 

Duty-free imports: 

GSP 16,735 19,520 

CBERA 1,499 1,904 

ATPA 97 401 

This section of the report will also cover two other 

U.S. import programs—the Agriculture Adjustment 

Act and the series of bilateral agreements that result 

from the Arrangement Regarding International Trade 

in Textiles. 

Tariff Preference Programs 

Generalized System Of Preferences 

During the 1960s, the United Nations Conference 

on Trade and Development suggested that developed 

countries offer unilateral preferential tariff treatment to 

developing countries. The underlying rationale was 

that free trade would promote economic development 

and diversification more effectively than foreign aid. 

The U.S. Generalized System of Preferences (GSP) 

program was enacted in the Trade Act of 1974 and 

renewed in the Trade and Tariff Act of 1984. 38 

 Pursuant to the latter statute, the U.S. GSP expired on 

July 4, 1993, but was renewed retroactively for 15 

months in the Omnibus Budget Reconciliation Act of 

1993. Under this program, the President is authorized, 

subject to various conditions and requirements, to grant 

duty-free treatment to selected imports from designated 

developing countries. 

In 1993, under the GSP program, the United States 

granted duty-free entry to eligible imports from over 

140 beneficiary countries. 39Such imports are 

classified in more than 4,400 HTS tariff categories. 40 

 As shown in table 5-2, $19.5 billion in imports from 

GSP beneficiary countries actually received duty-free 

entry under the GSP program in 1993, out of $41.1 

billion in goods from GSP beneficiaries that were 

classified in GSP-designated HTS provisions. These 

figures compare with $123.1 billion in total imports 

from GSP beneficiaries in 1993 and $573.2 billion in 

total imports from the world. Table 5-3 shows the top 

10 beneficiary countries of the GSP program in 1993. 

Table A-30 shows the top 20 GSP products or product 

categories in 1993, and Table A-31 shows the overall 

sectoral distribution of GSP benefits. 

Each year, the Trade Policy Staff Committee 

(TPSC)41conducts a review that leads to modifications 

in product eligibility and country eligibility. In 1993, 

the TPSC completed the 1992 Annual GSP Review. As 

a result of the 1992 GSP review, two new products 

were added to the GSP program, and one item, wooden 

French doors from Malaysia, was removed from the 

program. The President also suspended Mauritania as a 

GSP beneficiary after determining that Mauritania "has 

not taken and is not taking steps to afford 

130 
Table 5-2 

U.S. imports for consumption )from GSP beneficiaries and the world, 1993 

(Millions of dollars) 

Item 

All GSP 

beneficiaries World 

Total 123,094 573,245 

GSP eligible products2 41,058 222,920 

Duty-free under GSP3 19,520 19,520 

GSP program exclusion 10,052 10,052 

Other 11,486 193,348 

Noneligible product imports 82,036 350,325 

1Customs value basis. 

2The import data show total imports from all beneficiary countries and from the world that are eligible for duty-free 

entry under GSP. For a variety of reasons, all imports from beneficiary countries under HTS provisions that appear to 

be "eligible" for GSP treatment do not always and necessarily receive duty-free entry under the GSP. Such "eligible" 

goods may not actually receive duty-free entry under GSP for at least four types of reasons: (1) the importer fails to 

claim GSP benefits affirmatively, (2) the goods are from a beneficiary country that has lost GSP benefits on that 

product for exceeding the so-called competitive need limits, (3) the goods are from a beneficiary country that has lost 

GSP on that product because of a petition to remove that country from GSP benefits for that product, and (4) the 

goods fail to meet the rule of origin or direct shipment requirements in the GSP statute. 

3These import data show total imports from all GSP beneficiary countries that actually received duty-free entry 

under the GSP. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Table 5-3 

U.S. imports for consumption under the GSP from leading beneficiaries, and total, 1993 

(Millions of dollars) 

Rank Beneficiary 

Total 

imports 

Imports of GSP articles 

GSP-eligible GSP duty-free2 

1 Mexico3 38,666 17,877 5,424 

2 Malaysia 10,482 5,122 2,948 

3 Thailand 8,536 3,280 2,143 

4 Brazil 7,728 2,618 1,886 

5 Philippines 4,863 1,546 1,304 

6 Indonesia 5,341 1,592 886 

7 India 4,534 942 752 

8 Israel 4,421 1,690 529 

9 Venezuela 7,775 331 321 

10 Argentina 1,188 499 320 

Top 10 93,537 35,501 16,517 

Total 123,094 41,058 19,520 

1These import data show total imports from the top 10 beneficiary countries that fall in HIS provisions that are 

eligible for duty-free entry under GSP. For a variety of reasons, all imports from beneficiary countries under HTS 

provisions that appear to be "eligible" for GSP do not always and necessarily receive duty-free entry under the GSP. 

See note 2 to table 5-2. 

2These import data show the total imports from the top 10 GSP beneficiary countries that actually received 

duty-free entry under the GSP program. 

3The NAFTA implementation bill required the President to withdraw beneficiary status under the GSP program 

from Mexico, effective on the date the President issued a proclamation to carry out the schedule of duty reductions 

with Mexico. A Presidential Proclamation was issued to this effect on Dec. 15, 1994. 

Note.-Because of rounding, figures may not add to the totals shown. 

Source: Compiled from the official statistics of the U.S. Department of Commerce. 

131 
internationally recognized worker rights" as required 

by sections 502(b)(7) and 502(c)(7) of the GSP 

statute.42Designations of the following countries as 

beneficiary developing countries under the GSP 

program were issued or became effective in 1993: 

Ethiopia,43Albania,44Russia,45and Kyrgyzstan. 46The 

NAFTA implementation bill, meanwhile, required the 

President to withdraw beneficiary status under the GSP 

program from Mexico, effective on the date the 

President issues a proclamation to carry out the 

schedule of duty reductions with Mexico. 47The latest 

Presidential Proclamation was issued on December 15, 

1993 .48 

On October 5, 1993, the USTR announced that it 

would accept seven worker rights petitions, five 

intellectual property petitions and 30 petitions to 

review GSP eligibility of specific items under its 1993 

annual GSP review. 49Of the product petitions 

accepted were those to add twelve products to GSP 

eligibility, those to remove two products from 

eligibility, and those to waive the competitive need 

limits of sixteen products. 5° 

The U.S. GSP program was extended until 

September 30, 1994 as part of the Budget 

Reconciliation Act signed in August 1993. During 

1993, the TPSC continued its consideration of possible 

proposals for renewal of the longer term renewal of the 

GSP program. 

Caribbean Basin Economic 

Recovery Act 

Eligible imports from 24 Caribbean Basin 

countries entered the United States duty free or at 

reduced duties under the Caribbean Basin Economic 

Recovery Act (CBERA) during 1993 (see list of 

countries in table A-33). CBERA has been operative 

since January 1, 1984, and, as currently amended, the 

act has no statutory expiration date. 51CBERA is the 

trade-related component of the Caribbean Basin 

Initiative (CBI). 52President Reagan launched CBI in 

1982 to promote export-led economic growth and 

economic diversification in the countries in the 

Caribbean Basin. 53 

A wide range of Caribbean products are eligible for 

duty-free entry under CBERA. 54Excluded from 

duty-free entry, however, are canned tuna, petroleum 

and petroleum derivatives, certain footwear, some 

watches and watch parts, sugar from any "Communist" 

country, and most textiles and apparel. Certain 

agricultural products (including sugar, dairy products, 

cotton, peanuts, and beef) may receive duty-free entry, 

subject to U.S. quotas and/or health requirements. 

Other restrictions apply to ethyl alcohol produced from 

non-Caribbean feedstock. Handbags, luggage, flat 

goods (such as wallets, change purses, and eyeglass 

cases), work gloves, and leather-wearing apparel are 

not eligible for CBERA duty-free entry; however, 

duties on these articles are being reduced by a total of 

20 percent beginning January 1, 1992, in five equal 

annual installments. 

Certain Caribbean textile and apparel products are 

eligible for preferential tariff treatment under the 

special Guaranteed Access Levels (GAL) program. 

While separate from the statutes governing CBERA, 

the GAL program is open only to countries that receive 

CBERA benefits. The GAL program was established 

in 1986 to improve access for Caribbean products 

within the context of overall U.S. textile policy 

implementing the Multifiber Arrangement. Under the 

program, the United States sets flexible quotas on a 

case-by-case basis for textile and apparel items 

assembled in eligible Caribbean Basin countries that 

have signed GAL agreements. Costa Rica, Dominican 

Republic, Guatemala, Haiti, Jamaica, and Trinidad and 

Tobago benefited from such agreements during 1993. 

GAL imports, which must be made from fabric formed 

and cut to pattern in the United States, receive 

treatment similar to that of imports under HTS 

subheadings 9802.00.60 and 9802.00.80. 55 

Total U.S. imports from CBERA countries in 1993 

were $10.1 billion, or 1.8 percent of all U.S. imports. 

Approximately two-thirds of these imports, valued at 

$6.6 billion, entered duty free under various U.S. 

programs or provisions, including CBERA, mostfavored-nation (MFN), GSP, and GALs (table 5-4). 

Duty-free CBERA imports rose to a record high $1.9 

billion (shown by country in table A-33). The leading 

items afforded duty-free entry under CBERA in 1993 

were leather footwear uppers, aromatic drugs, raw cane 

sugar, frozen boneless beef, and precious-metal jewelry 

(table A-32). 

Handbags, luggage, flat goods, work gloves, and 

leather wearing apparel that entered under CBERA's 

reduced duty provision accounted for less than 1 

percent of imports, or $38 million Duty-free imports 

of textile and apparel articles subject to GAL 

agreements totaled $787 million in 1993 (table 5-5). 

Andean Trade Preference Act 

Imports from Bolivia, Colombia, Ecuador, and 

Peru entered the United States duty free under the 

Andean Trade Preference Act (ATPA) during 1993. 

ATPA has been operative since December 4, 1991, and 

is scheduled to expire on December 4, 2001. 56ATPA 

is the trade-related component of the Andean Trade 

132 
Table 5-4 

U.S. imports for consumption under CBERA, by duty treatments, 1991-93 

(1,000 dollars, customs value) 

Item 1991 1992 1993 

Total imports 8,229,366 9,425,616 10,094,033 

Dutiable values 2,869,880 3,269,148 3,467,856 

Total Duty-free value2 5,359,486 6,156,467 6,626,177 

MFN3 1,912,824 2,097,079 2,101,160 

CBERA4 1,120,697 1,498,556 1,903,613 

HTS 9802.00.60 and 9802.00.805 1,418,075 1,777,260 2,144,210 

GAL (HTS 9802.00.8010) 410,905 618,245 787,500 

HTS 9802.00.8040 and 9802.00.8060 1,007,115 1,158,839 1,356,638 

GSP6 410,439 340,666 359,737 

Other duty free? 497,451 442,904 117,457 

CBERA reduced duty8 N/A 29,418 38,069 

1Reduced by the duty-free value of imports entering under HTS 9802.00.60 and 9802.00.80 and increased by the 

value of ineligible items (that were reported as) entering under the CBERA and GSP programs. 

2 Calculated as total imports less dutiable value. 

3 Value of imports which have a column 1-general duty rate of free. 

4 Reduced by the value of MFN duty-free imports and ineligible items that were misreported as entering under the 

CBERA program and by the value of reduced-duty items (handbags, luggage, flat goods, work gloves, and leather 

wearing apparel) reported separately above as dutiable. 

5 Value of nondutiable exported and returned U.S.-origin products or components. 

6 Reduced by the value of MFN duty-free imports and ineligible items that were misreported as entering under the 

GSP program. 

7 Calculated as a remainder, and represents imports entering free of duty under special rate provisions. 

8 Value of imports of handbags, luggage, flat goods, work gloves, and leather wearing apparel subject to 

20-percent duty reductions being staged into effect under the CBERA between 1992 and 1996. 

Note.—Because of rounding, figures may not add to totals given. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

Initiative. President Bush launched the initiative in 

1990 to combat the production of illegal narcotics by 

helping beneficiaries with economic development 

projects and programs. 57 

ATPA benefits were modeled on CBERA. A wide 

range of Andean products is eligible for duty-free 

entry. 58ATPA excludes from duty-free entry the same 

list of articles excluded under CBERA. Rum also is 

excluded. 59As under CBERA, handbags, luggage, flat 

goods (such as wallets, change purses, and eyeglass 

cases), work gloves, and leather-wearing apparel are 

not eligible for ATPA duty-free entry; however, duties 

on these articles are being reduced by a total of 20 

percent beginning January 1, 1992, in five equal annual 

installments. Unlike CBERA beneficiaries, the four 

Andean countries are not eligible for GALs. 

Imports from Colombia and Bolivia have been 

eligible for duty-free entry under ATPA since 1992. 

Imports from Ecuador and Peru became eligible for 

ATPA benefits during 1993. 60U.S. imports from the 

four Andean countries totaled $5.3 billion in 1993, or 

0.9 percent of all U.S. imports. Over one-half of these 

imports, valued at $3.1 billion, entered under various 

U.S. duty-free programs or provisions (table 5-5). 

Duty-free ATPA imports totaled $401 million in 1993 

(shown by country in table A-34). The leading items 

afforded duty-free entry under ATPA in 1993 were 

fresh cut flowers, including chrysanthemums, standard 

carnations, anthuriums, roses, and other cut flowers 

and flower buds, as well as plastic nonadhesive plates, 

sheets and foils, and precious metal jewelry (table 

A-35). Handbags, luggage, flat goods, work gloves, 

and leather-wearing apparel that entered under ATPA's 

reduced duty provision accounted for less than 

1 percent of imports, or $17 million (table 5-5). 

Agricultural Adjustment Act 

Under section 22 of the Agricultural Adjustment 

Act (7 U.S.C. 624), the President may, among other 

things, take action to restrict imports that render, or 

tend to render, ineffective or materially interfere with 

the operation of any U.S. Department of Agriculture 

(Agriculture) program. The President acts on the basis 

of an investigation and its ensuing report written by the 

U.S. International Trade Commission (USITC), 

although he may take emergency action pending 

133 
Table 5-5 

U.S. imports for consumption under the ATPA Act, by duty treatments, 1992-93 

(1,000 dollars, customs value) 

Item 1992 1993 

Total imports 3,049,595 5,282,292 

Dutiable value1 1,508,821 2,204,078 

Total Duty-free value2 1,540,774 3,078,214 

MFN3 1,011,633 2,006,841 

ATPA4 97,117 401,421 

GSP4 236,657 488,090 

FITS 9802.00.60 and 9802.00.80 122,048 121,856 

Other duty frees 73,319 60,006 

ATPA reduced duty6 N/A 17,396 

1Reported dutiable value has been reduced by the duty-free value of imports entering under HIS subheading 

9802.00.60 and 9802.00.80 and increased by the value of ineligible items (that were reported as) entering under the 

CBERA and GSP programs. 

2The total duty-free value is calculated as total imports less dutiable value. 

3Figures for MFN duty-free imports represent the value of imports that have a col. 1-general duty rate of free. 

4Values for ATPA and GSP duty-free imports have been reduced by the value of MFN duty-free imports and 

ineligible items that were misreported as entering under the programs. 

5The value for other duty-free imports was calculated as a remainder and represents imports entering free of duty 

under special rate provisions. 

6Value of handbags, luggage, flat goods, and leather wearing apparel subject to 20 percent duty reductions under 

ATPA staged into effect between 1992 and 1996. 

Note.—Because of rounding, figures may not add to the totals shown. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

receipt of that report. Also, following advice by the 

U.S. Secretary of Agriculture and an investigation by 

the USITC, the President may modify, suspend, or 

terminate import restriction actions for changed 

circumstances. 61 

On January 19, 1993, the President directed the 

USITC to conduct an investigation to determine if 

proposed modifications to import restrictions for 

certain dairy products would render, or tend to render, 

ineffective or materially interfere with a U.S. 

Agriculture program for milk. On July 7, 1993, the 

USITC reported its finding that changed circumstances 

exist and recommended that specified actions could be 

taken "without resulting in an article being or 

practically certain to be imported in such conditions 

and in such quantities as to render or tend to render 

ineffective or materially interfere with, a program or 

operation of the U.S. Department of Agriculture." 62 

 The specified changes were the exclusion of cajeta not 

,made from cow's milk from a quota; the exclusion of 

inedible dried milk powders used for calibrating 

infrared milk analyzers from a quota; the placement of 

margarine cheese from Sweden under the quota for 

low-fat cheese; the elimination of the import-licensing 

requirement for dried cream and malted milk and 

articles of milk or cream; and provisions for a specified 

reallocation of certain quotas for dairy products. These 

changes were completed before January 1, 1994. 

Arrangement Regarding 

International Trade in Textiles 

Bilateral agreements negotiated under the 

Multifiber Arrangement (MFA) regulate most U.S. 

imports of textiles and apparel. Countries on which the 

United States maintains quantitative limits, or quotas, 

for MFA products supplied almost 80 percent of the 

volume of U.S. textile and apparel imports in 1993. In 

the Uruguay Round of multilateral trade negotiations, 

completed on December 15, 1993, negotiators agreed 

on a 10-year phaseout of the MFA and of all quotas 

established under MFA authority, as discussed in 

Chapter 1. 

U.S. Bilateral Agreements 

The United States has quotas on MFA-product 

imports from some 40 countries. Together these 

countries supply about 80 percent of U.S. textile and 

apparel imports (table 5-6). The United States extended 

or renegotiated expiring agreements with all major 

supplying countries. It did not renew the agreement 

134 
with El Salvador or extend the quota on imports from 

Lebanon. The agreement with Mexico expired in 1993. 

Schedule 3.1.2 of annex 300-B of the North American 

Free-Trade Agreement (NAFTA), which entered into 

force on January 1, 1994, provides for limits on 

nonoriginating textile and apparel products imported 

from Mexico and sets forth a schedule for the 

progressive elimination of such limits by the year 

2003. 

Transshipments of apparel through third countries 

to evade quotas have become a growing concern to the 

United States. In an effort to curtail this practice, the 

United States has been negotiating stronger fraud 

language in the bilateral agreements. The new 

language clarifies the right of the United States to 

charge transshipments against quota, gives it the right 

to make plant visits to verify production capacity of a 

foreign manufacturer, and permits it to charge up to 

3 times the amount of the transshipments against 

quotas in instances of repeated violations involving a 

particular country. 

Most apparel transshipments are believed to have 

originated in China, with goods from there and other 

countries reportedly having been transshipped through 

more than 40 different countries. 63The United States 

and China were unable to agree on terms (including 

quota limits, illegal transshipment of textile products 

from China, and overshipping annual limits) to extend 

their bilateral textile agreement that had expired on 

December 31, 1993. On January 6, 1994, the United 

States Trade Representative (USTR) announced that 

the United States would cut 1994 quotas on MFA 

imports from China by 25 to 35 percent. Subsequently, 

on January 17, 1994, the USTR announced that the two 

countries had concluded a new 3-year textile 

agreement. The new agreement calls for zero growth in 

China's quotas in 1994 and for 1-percent annual 

growth for 1995-96. 64For the first time, chiefly silk 

apparel, not covered by the MFA, was brought under 

quota. Such silk apparel from China will be subject to a 

quota based on shipments in 1993 and subject to an 

annual growth rate of 1 percent. China also agreed to 

anticircumvention language similar to that included in 

the bilateral agreements renegotiated in 1993 and early 

1994. 

U.S. Trade in 1993 

U.S. imports of MFA products in 1993 rose by 9 

percent over the 1992 level to a record 15.8 billion 

square meter equivalents (SMEs) valued at $36 billion 

(see figure 0). The growth was smaller than the 1992 

gain of 13 percent. Import growth averaged 11 percent 

a year during the 1980s, before slowing to less than 

1 percent in 1990 and to 5 percent in 1991. Most of the 

slowdown in 1993 came in apparel, imports of which 

reached 7.5 billion SMEs valued at $28 billion. 

Apparel imports grew by almost 7 percent, or less than 

half the 15-percent growth in 1992. U.S. imports of 

textiles posted double-digit growth for the second 

consecutive year in 1993, when they again rose by 12 

percent. 

China remained the major U.S. foreign supplier of 

textiles and apparel in 1993, accounting for 13 percent 

of total imports. However, growth in imports from 

China slowed to roughly 8 percent, from 14 percent 

annual growth in 1992. The traditional Big Three 

Asian suppliers—Hong Kong, Korea, and 

Taiwan—saw their combined shipments fall for the 

fourth consecutive year, by 3 percent to 3.0 billion 

SMEs ($9.3 billion). With their shipments falling by 

almost 3 percent in 1993, the Big Three supplied just 

19 percent of the import market, down from 43 percent 

10 years ago. 

Faced with rising production costs at home and 

limited quota growth in the U.S. market, the Big Three 

have been exporting higher value-added goods and 

moving production of less expensive products to lower 

labor cost nations such as China and the ASEAN 

nations. The growth in imports from the ASEAN 

nations slowed considerably in 1993 when their 

shipments rose by 8 percent, after having grown by 25 

percent in 1992. Of the ASEAN suppliers, although 

Thailand, the Philippines, Indonesia, and Malaysia all 

generally showed much slower growth in 1993, the 

slowdown largely stemmed from a 22-percent drop in 

imports from Singapore. 

Mexico and the Caribbean countries rank among 

the fastest growing suppliers of apparel to the U.S. 

market. U.S. imports of textiles and apparel from 

Mexico and the Caribbean countries rose by 21 percent 

in 1993 to almost 2.3 billion SMEs. Most of the 

imports from the region consisted of apparel assembled 

from U.S. components, whose duties are assessed only 

on the value added offshore. Garments assembled in 

the region from fabrics formed and cut in the United 

States benefit from preferential quota access to the 

U.S. market. 

135 
Table 5-6 

Countries with which the United States has textile and apparel agreements or quotas: U.S. 

general imports under the MFA, in 1993, and expiration dates of agreements or quotas in place 

during 1993. 

Country Imports 

Expiration 

date 

1,000 dollars 

Bahrain 49,152 12/31/95 

Bangladesh* 765,818 01/31/95 

Brazil* 289,312 03/31/96 

Bulgaria 34,934 12/31/95 

China* 4,765,884 12/31/96 

Colombia* 1 347,436 12/31/95 

Costa Rica* 658,789 12/31/95 

Czech Republic* 43,655 05/31/95 

Dominican Republic* 1,457,653 12/31/94 

Egypt* 195,941 12/31/95 

El Salvador* 268,138 12/31/93 

Fiji* 48,955 12/31/94 

Guam (2) 10/31/94 

Guatemala* 565,194 12/31/94 

Haiti 95,686 12/31/94 

Hong Kong* 3,957,400 12/31/95 

Hungary* 62,866 12/31/95 

India* 1,285,493 12/31/95 

Indonesia* 1,111,439 06/30/94 

Jamaica* 390,919 12/31/95 

Laos 7,776 12/31/95 

Lebanon3 1,420 10/29/93 

Lesotho* 55,030 11/30/94 

Macau* 483,381 12/31/95 

Macedonia3 46,450 06/06/94 

Malaysia* 678,468 12/31/94 

Mauritius 162,299 12/31/95 

Mexico* 1,372,050 (4) 

Myanmar (Burma)3 29,752 01/31/95 

Nepal 83,307 12/31/97 

Oman 77,682 12/31/95 

Pakistan* 651,606 12/31/95 

Panama* 41,702 03/31/94 

Philippines* 1,337,104 12/31/95 

Poland* 74,573 12/31/95 

Qatari 48,366 09/23/94 

Romania* 15,337 12/31/94 

Singapore* 522,184 12/31/95 

Slovakia* 16,407 05/31/95 

South Korea* 2,476,923 12/31/95 

Sri Lanka* 840,222 06/30/95 

Taiwan 2,860,979 12/31/95 

Thailand* 1,131,108 12/31/95 

Turkey* 472,175 12/31/95 

United Arab Emirates 174,225 12/31/95 

Uruguay* 34,342 06/30/94 

*Signatory to the 12/09/92 Protocol that extended the MFA through 12/31/93. 

1The agreement with Colombia expired on 12/31/93. The United States currently has a memorandum of 

understanding (MOU) with Colombia providing for a quota on men's and boys' wool suits (category 443). 

2The agreement with Guam, a U.S. territory, is a "quota exception" for sweaters classified as products of foreign 

countries, but assembled in this insular area. Quota-free entry is allowed for a specified number of sweaters. Imports 

in excess of the specified amounts are charged to quotas established for the country of origin, usually the country 

where the sweater parts were knitted. 

136 
1989 1993 

ASEAN 12.6% 

ASEAN 11.5% 

China 

13.8% 

Mexico/ 

CBERA 10.1% 

Other 

9.0% 

Table 5-6 

Footnotes—Continued 

3This country does not have an agreement with the United States. The restraint level(s) for this country during 

1993 were imposed unilaterally by the United States. 

4The agreement with Mexico expired on 12/31/93. Under the North American Free-Trade Agreement (NAFTA), 

which went into force on January 1, 1994, non-originating textile and apparel goods from Mexico are subject to 

restrictions and consultation levels specified in NAFTA annex 300-B, schedule 3.1.2. These restraints will be 

progressively eliminated by the year 2003. 

Source: Trade data compiled from official statistics of the U.S. Department of Commerce, International Trade 

Administration, Office of Textiles and Apparel (OTEXA). Other information from OTEXA and the Office of the United 

States Trade Representative, Office of the Chief Textile Negotiator. 

Figure 0 

U.S. imports of textiles and apparel by major suppliers, 1989 and 1993 

Total 12.1 billion square meter equivalents Total 15.8 billion square meter equivalents 

Note.—Other Asia consists principally of the following countries: Bangladesh, India, Pakistan, Sri Lanka, Macau, and 

Nepal. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

137 
ENDNOTES 

1 19 U.S.C. 2251 and following. 

219 U.S.C. 2436. 

3Ibid. 

458 F.R. 54169, instituting investigation No. 

TA-406-13. 

5USITC, Honey From China, investigation No. 

TA-406-13, publication No. 2715, Jan. 1994, pp. 1-3 

and 1-4. The honey products covered by the 

investigation included natural honey, artificial honey 

containing natural honey, and preparations of honey 

from China. 

6In April 1994, the President decided not to take 

action on imports of honey from China. 

7The program and certain eligibility standards 

were modified by the Deficit Reduction Act of 1984 

and by the Omnibus Budget Reconciliation Acts of 

1981 and 1985. Additional modifications, primarily in 

job-training assistance and in coverage of certain 

workers in the oil and gas industries, were made 

though provisions of the Omnibus Trade and 

Competitiveness Act of 1988. Public Law 100-418, 

sec. 1421-1430. 

8NAFTA Implementation Act, Title V, NAFTA 

Transitional Adjustment Assistance and Other 

Provisions, Public Law No. 103-182, 107 Stat. 2057, 

sec. 501-507 (Dec. 8, 1993). 

9Sections 251 through 264 of the TAA. 

10 Derived from official statistics of the U.S. 

Department of Labor, Employment and Training 

Administration, Office of Trade Adjustment Assistance 

Management Information System. 

11 Ibid. 

12Preliminary figures. 

13See discussion of section 303 of the Tariff Act 

of 1930 below. 

14Information contained in this table was 

compiled from USTR, Report to Congress on Section 

301 Developments Required by Section 309(a)(3) of 

the Trade Act of 1974. 

15See 19 U.S.C. 1673 and following. 

1619 U.S.C. 1677b; 19 C.F.R. Part 353, Subpart 

D. 

17Upon the filing of a petition, the Commission 

has 45 days to make a preliminary determination of 

whether there is a reasonable indication of material 

injury or threat of material injury to an industry or of 

a material retardation of the establishment of an 

industry. If this determination is affirmative, 

Commerce continues its investigation and makes 

preliminary and final determinations concerning 

whether the imported article is being, or is likely to 

be, sold at LTFV. If Commerce reaches a final 

affirmative dumping determination, the Commission 

has 45 days thereafter to make its final injury 

determination. If the Commission's preliminary 

determination is negative, by contrast, both the 

Commission and Commerce terminate further 

investigation. 

18The figures set forth in this section do not 

include court-remanded investigations on which new 

votes were taken or investigations terminated before 

a determination was reached. 

19An antidumping investigation may be 

suspended through an agreement before a final 

determination by the U.S. Department of Commerce. 

An investigation may be suspended if exporters 

accounting for substantially all of the imports of the 

merchandise under investigation agree either to 

eliminate the dumping or to cease exports of the 

merchandise to the United States within 6 months. In 

extraordinary circumstances, an investigation may be 

suspended if exporters agree to revise prices to 

completely eliminate the injurious effect of the 

imports. A suspended investigation is reinstituted 

should LTFV sales recur. See 19 U.S.C. 1673c. 

20When a petition alleges dumping (or subsidies) 

with respect to more than one like product and/or by 

more than one country, separate investigations 

generally are instituted for imports of each product 

from each country and each such investigation may 

be given a separate number. For this reason, the 

numbers of investigations instituted and 

determinations made may exceed the number of 

petitions filed. Moreover, an investigation based on a 

petition filed in one calendar year may not be 

completed until the next year. Thus, the number of 

petitions filed may not correspond closely to the 

number of determinations made. Additionally, the 

numbers set forth in this table do not include 

determinations made following court-ordered 

remands. 

21These figures include petitions withdrawn 

voluntarily by petitioners. 

22A subsidy is defined as a bounty or grant 

bestowed directly or indirectly by any country, 

dependency, colony, province, or other political 

subdivision on the manufacture, production, or export 

of products. See 19 U.S.C. 1303(a)(1), 1677(5), and 

1677-1(a). 

23Agreement on Interpretation and Application of 

Articles VI, XVI, and XXIII of the General Agreement 

on Tariffs and Trade. 

24See 19 U.S.C. 1671. 

25Section 303(a)(2) provides that "[i]n the case 

of any imported article or merchandise which is free 

of duty, duties may be imposed under this section 

only if there are affirmative [injury] determinations by 

the Commission . . . except that such a 

determination shall not be required unless a 

determination of injury is required by the international 

obligations of the United States." 19 U.S.C. 

1303(a)(2). 

26The figures set forth in this section do not 

include court-remanded cases on which new votes 

were taken or investigations terminated before a 

determination was reached. 

27A countervailing-duty investigation may be 

suspended through an agreement before a final 

determination by Commerce if: (1) the subsidizing 

country, or exporters accounting for substantially all 

138 
of the imports of the merchandise under 

investigation, agree to eliminate the subsidy, to 

completely offset the net subsidy, or to cease exports 

of the merchandise to the United States within 6 

months; or (2) extraordinary circumstances are 

present and the government or exporters described 

above agree to completely eliminate the injurious 

effect of the imports of the merchandise under 

investigation. A suspended investigation is reinstituted 

if subsidization recurs. See 19 U.S.C. 1671c. 

28The numbers of investigations instituted and 

determinations made generally exceed the number of 

petitions filed. For example, the number of petitions 

filed does not include three investigations 

self-initiated by Commerce in 1993. The above 

numbers do not include determinations made 

following court-ordered remands. 

29 58 F.R. 35044 (June 30, 1993). 

3058 F.R. 44852 (Aug. 25, 1993). 

31"Final Results of Antidumping Duty 

Administrative Reviews and Revocation in Part of an 

Antidumping Duty Order: Antifriction Bearings (Other 

than Tapered Roller Bearings) and Parts Thereof 

From France, Germany, Italy, Japan, Romania, 

Singapore, Sweden, Thailand, and the United 

Kingdom," 58 F.R. 39729 (July 26, 1993). 

32"Active Matrix Liquid Crystal High Information 

Content Flat Panel Displays and Display Glass 

Therefor From Japan: Final Results of Changed 

Circumstances Administrative Review, Revocation of 

the Order and Termination of Administrative Review," 

58 F.R. 34409 (June 25, 1993). 

33"64K Dynamic Random Access Memory Chips: 

Revocation of Antidumping Order, 58 F.R. 54552" 

(Oct. 22, 1993). 

34"Oscillating Fans From the People's Republic 

of China: Notice of Court Decision, Retroactive 

Revocation of Antidumping Duty Order, and 

Termination of Administrative Review," 58 F.R. 30026 

(May 25, 1993). 

36"Acetylsalicylic Acid (Aspirin) From Turkey; 

Revocation of Countervailing Duty Order, 58 F.R. 

6213" (Jan. 27, 1993). 

36Also unlawful under section 337 are other 

unfair methods of competition or unfair acts in the 

importation of articles into the United States or in the 

sale of imported articles, the threat or effect of which 

is to destroy or substantially injure a domestic 

industry, to prevent the establishment of an industry, 

or to restrain or monopolize trade and commerce in 

the United States. Examples of "other" unfair acts are 

misappropriation of trade secrets, common law 

trademark infringement, misappropriation of trade 

dress, false advertising, and false designation of 

origin. Unfair practices that involve the importation of 

dumped or subsidized merchandise must be pursued 

under antidumping and CVD provisions and not 

under section 337. 

37Section 337 proceedings at the Commission 

are conducted before an administrative law judge in 

accordance with the Administrative Procedure Act, 5 

U.S.C. § 551 and following. The administrative law 

judge conducts an evidentiary hearing and makes an 

initial determination, which is transmitted to the 

Commission. The Commission may adopt the 

determination by deciding not to review it, or it may 

choose to review it. If the Commission finds a 

violation, it must determine the appropriate remedy, 

the amount of any bond to be collected while its 

determination is under review by the President, and 

whether certain public interest considerations 

preclude the issuance of any remedy. 

38Title V of the Trade Act of 1974 (Public Law 

93-618, 88 stat. 2066 and following.), and Title V of 

the Trade and Tariff Act of 1984 (Public Law 98-573, 

98 stat. 3018 and following.), as amended (19 U.S.C. 

2461 and following.). For general background 

information about the GSP program, see USTR, A 

Guide to the Generalized System of Preferences 

(Aug. 1991); and Committee on Ways and Means, 

The President's Report to the Congress on the 

Generalized System of Preferences as Required by 

Section 505(B) of the Trade Act of 1974, as 

amended, WMCP 101-23, (Washington, DC, 1990). 

38The countries that are designated as 

"beneficiary developing countries" for purposes of the 

GSP program are listed in general note 4(a) to the 

Harmonized Tariff Schedule of the United States 

(HIS). 

40 For purposes of the U.S. GSP program, HTS 

provisions that have the letter "A" or "A*" in the 

special subcolumn of rates of duty column 1 

encompass the designated "eligible articles." The "A" 

indicates that all goods classifiable in that provision 

from all beneficiary countries are eligible for duty-free 

entry. The "A*" indicates that all goods classifiable in 

that provision are eligible for duty-free entry, but that 

goods from at least one beneficiary country are not 

eligible for duty-free entry. General note 4(d) to the 

HTS lists those HTS provisions and the beneficiary 

countries whose goods are not eligible for duty-free 

entry. 

41The TPSC is an inter-agency group of 

high-level officials. 

42Presidential Proclamation 6575, June 25, 

1993, 58 F.R. 34855. 

43Ibid., 6517, Dec. 23, 

Ibid., 6575, June 25, 

1992, 

1993, 

57 F.R. 61757. 

58 F.R. 34855. 

46Ibid., 6599, Sept. 30, 1993, 58 F.R. 51561. 

46Ibid., 6635, Dec. 9, 1993, 58 F.R. 65279. 

47Public Law 103-182, 107 stat. 2057, sec. 201 

(a)(2) (Dec. 8, 1993). 

48Presidential Proclamation 6641, Dec. 15, 1993, 

58 F.R. 66867. 

48Eighty-nine GSP product petitions were 

rejected for review because they did not satisfy the 

GSP program's statutory or regulatory requirements 

or were already eligible for duty-free treatment. One 

petition was withdrawn. USTR, "Kantor Announces 

Acceptance of 1993 GSP Petitions," press release 

No. 93-61, Oct. 5, 1993. 

68USTR, 1994 Trade Policy Agenda and 1993 

Annual Report of the President of the United States 

on the Trade Agreements Program, Washington, DC, 

March 1993, p. 109. 

51 For a more detailed description of the CBERA, 

including country and product eligibility, see USITC, 

139 
Impact of the Caribbean Basin Economic Recovery 

Act on U.S. Industries and Consumers: Eighth 

Report, 1992, USITC publication 2675, Sept. 1993. 

52Public Law 98-67, Title II, 97 Stat. 384, 19 

U.S.C. 2701 et seq. Relatively minor amendments 

were made to CBERA by Public Laws 98-573, 

99-514, 99-570, and 100-418. CBERA was 

significantly expanded by the Caribbean Basin 

Economic Recovery Expansion Act of 1990, Public 

Law 101-382, Title II, 104 Stat. 629, 19 U.S.C. 2101 

note. 

59President, "Address Before the Permanent 

Council of the Organization of American States," 

Weekly Compilation of Presidential Documents: 

Administration of Ronald Reagan, vol. 18, no. 8 (Mar. 

1, 1982), pp. 217-223. 

54Section 213(a) of CBERA (19 U.S.C. 2703(a)) 

establishes criteria, or rules of origin, to determine 

which articles are eligible for duty-free treatment 

under the act. 

55U.S. customs duties, otherwise payable at the 

normal duty rate, are assessed only on the value 

added to the U.S. components as a result of 

processing or assembly in the foreign location; the 

U.S. content is duty-free. Both the dutiable and the 

duty-free components of GAL imports are reported 

under HTS statistical reporting number 9802.00.8010. 

56Public Law 102-182, Title II, 105 Stat. 1236, 

19 U.S.C. 3202. 

57President, "Remarks Following Discussions 

With President Rodrigo Borja Cevallos of Ecuador," 

Weekly Compilation of Presidential Documents: 

Administration of George Bush, vol. 26, no. 30 (Jul. 

23, 1990), pp. 1140-1143. 

58Section 204(a) of ATPA (19 U.S.C. 3203(a)) 

establishes rules of origin to determine which articles 

are eligible for duty-free treatment under the Act. 

59ATPA sec. 204(b), 19 U.S.C. 3203(b). 

60President, "Proclamation 6544-To Modify the 

Duty-Free Treatment Under the Andean Trade 

Preference Act, To Modify the Generalized System of 

Preferences, and for Other Purposes," Weekly 

Compilation of Presidential Documents: Administration 

of William J. Clinton, vol. 29, No. 15 (Apr. 14, 1993), 

pp. 583-586; and "Proclamation 6585-To Designate 

Peru as a Beneficiary Country for Purposes of the 

Andean Trade Preference Act," Weekly Compilation 

of Presidential Documents: Administration of William 

J. Clinton, vol. 29, No. 32 (Aug. 12, 1993), pp. 

1608-1609. 

61For items subject to additional import 

restrictions pursuant to section 22 of the Agricultural 

Adjustment Act, see Harmonized Tariff Schedule of 

the United States (1994), ch. 99, subch. IV, p. 99-53. 

For information on agricultural products subject to 

import restraints under various U.S. laws and 

programs, see USITC, The Economic Effects of 

Significant U.S. Import Restraints, publication 2699, 

Nov. 1993, ch. 4, pp. 29-39; and USITC, The 

Economic Effects of Significant U.S. Import 

Restraints, Phase II: Agricultural Products and 

Natural Resources, publication 2314, Sept. 1990. 

62USITC Certain Dairy Products, publication 

2659, July 1993, p. 3. 

63Ambassador Jennifer Hillman, Chief Textile 

Negotiator, USITC, testimony before the 

Subcommittee on Commerce, Consumer, and 

Monetary Affairs of the Committee on Government 

Operations, U.S. House of Representatives, Oct. 5, 

1993, p. 1. 

64The previous bilateral agreement with China 

allowed an overall average growth rate of 4.4 percent 

annually. Ambassador Kantor, USTR, "Briefing Re: 

Textile and Apparel Agreement With China," news 

conference, Washington, DC, Jan. 17, 1994, 

LEGI-SLATE, Federal Information Systems Corp., 

No. 1031158. 

140 
APPENDIX 

STATISTICAL TABLES 
Total,all commodities 

0 0 

CO 

0) 

O G. 

N E 

C') 

03 

cy) 

co 

CO 

0) 

C) 

T 

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142 
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CO CA. • 2 NI' W. 

N 7:7), 

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CO N 

to tt) 

CO ;71 

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NW CAmt 'r- L0 17 N - 00) 0) 0 

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0N NO MO CO N MN CO -q- c0 0 to O cow cmN r O N n 00 COW0 0 0 

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N CO q ,-(3) qm co .d- m.o.m co 

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CO ' to co 44 oe ee .4-- a 6 trir-.7 a 1-a Ch 6 

N 0 NI' COM MO MC0 NV' 0 CO MW W "TN CONt 

N 0 N CO NTCA CON. (IN.q,- o w t0 C'') ,a- ww w to cr) a) cri a a a .- ,-.- ,-,-- ,-,- 

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N N CO LON 2i F-7,TI 4z; ,c2 N. (72 2 Vrz 4 c" 0 to 0 m0

to O co. 7t '"Itt) N NW 0.0 r CD C') 0 ON.W 

q -e dd c9 t1) 0 fcc• CO N O) d 

m 1.0.. G8 .-CO g)i N 4 2 2c71 z71 42 4 CO NO 

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CC o 0 o 

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m a, 

1-0- 8 8, t) C 

C 

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= 

e m m C .m ca.- 

co .0 Wic 0.5.2 5 0 a .5.2.5) 4(3aNig M M .00 

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c

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Y8 28 moE 0 R. mE .cp. c...- x 0_ 

;, 

mo a m 

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mom 03 E-6 OM ,-m m (4 ,27,,E , ,Iim Cl) 

0 — 7 7 tD MISt 0 0) 0 0 a) o e ..y•- .-.Ep P.....- Cl.'-- o - 0 o 

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c7.5.c c — DU cam m o a.- .- o _c... . 0_ m .....0 -00 y. p - 0 S_ 

0 ag lw.52 vas - ,-, m• 0 x 0 ,_ '5. ca t :c 0 m o-..c m, o.,_o _ c 0 

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coo ct.-co ..2

-6 m ...5 :.7...m.00 la -c, mui. 71) 

mm 

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mai gq5

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II co a)_c - 0 II -13 E cn0,- cc "- =›..11•2.m •-.- 

a=2 i=cA.; lei' Velint lii _0_,-, E06 Cy . 0 0 o 

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M "450MCca0 M 

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.5 12 0a1) 862 z0 c 0) 0 .-0- 2 C . 2 0 c4 f,D) .. E as"„, -„ii 0 0 cLas--.. - 5 ui E -.7.. g rc•-0- g :c Eft, o .s S („ 13 c , ca .9. 2 8 3 kl . , , , F:881 g 0 .0 8 E 0 "p- as0 .._ o 

ram2 c• .8-oo -og 8 '0 N 7-3 8 °).-20 2 .' -o c '5 .V -ra.8-coici'vE .Fti=0-1/1 Ts 1-ri 

cao

-• c .., m22 5:c 0 1_0 3 E 0.8 c '5m° c ._ 2 aro m 0 .- coc as as ...... ..-... 

,-ouca0...m o- oomo -90.,ksp_coc-a0 

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occANM00 CD• ° ..-. (D• F, 0 co 2 2. }F- Fa. 

a dg rti (13 03 ttf M en 

a. 0- a. a. u.i= 02 6'0 11.03 0- a: tO I 0. z 

0) 0) C') 0'7 O r 00 0) 00 0 ON 

NONN OM Ntm cool m qc..1 0) 0) 

6 6 co 6 ON. 6 ,a- a,- 6co 0) r rc0 Mui a 

NNN 

0 0 0 0 MO 00 vtN NO 0 0 00 N 00 0 

NN cfN M N. 0 MCO 

MCO

N 

 MM MM COW WM WM W WM M MN .• 

143 
c) 

to 

O a) 

CO' 

to 

CO 

4 

CV. 

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•tr 

O 

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4 q 

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c \I co" to a) 

st 

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W WM 

CO •cr 

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d ,-=66 ce .--dt4 c6-7 ced d Ra6d d a om N 

et NM C0 

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CID. C1 RN. RI- • 

NO0 

1-.C1.°W0 CO 

N 

N 

N Co- 4-v, ddd d 

W OW 

W 11) I' 

co MN 

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N C1 ,- 

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m 

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N 

111 

a 

N 

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d 

CO CO 

V' 

CO 

0 

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CO I' CO 

NNO) 

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MCON 

NCON 

dm a 

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MN COM N NONM M CO 

OW NN I' NNWM 0 W 

olco ,--o 10. MOONN 0 co 

cDF dd co 66(56 a CO 

OW TtN CO NO)0.- W 0 

co a. .-CO q amor. it) u) 

-- - - - 

0 

to c4. 

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,- NiN N N 

MMO 

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.,- ci.a r.... air-Zoi co N.: CO v.; 

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a) 2 a) 50 

7-9 c g 3 -o-7-1 > m 3 as c 0 73 

288'•qi2 cli 0 0) O 2.- C C 0 _0 ac .2 - CD _CI O. - 8 = 0) — 

E o 4-12 & E 8 E '5 R .a Ca) To ca 

ooc (DE" o m 2T) 

-5 o-C3 .E a_c 

yri-gEmo 988 .0 0F,-. R E 

Td )-. "E In ...E -ci as 

as 2 

= 

0 0 

0 I. , 0 64) C 

EgSDRE8 EmS 75 .° E a. ' rd. a co 

co 0 

a) o_.= m= 0 ;74 r X 0, a) u) m c0 --0 .-0 c 

..i- 8 1@ Bu .0 0 gs, -a 0 a,:61a = 0 >, :8 

a c- ,.. 03 0 -c ....-0 ,009, cKici ...c3100 co COQ 5 -0 a) 04- .9 -c ixE--i- P.a = 0 

= 0 - CD = -- r :..0.5-0 

> -c-§ 2C)-)22g- 

. 

m c o-§•-•=7.--- CO 8 = (f) = cp 0 -0!•Es .c 2, ei-0 

0),. 00 0) !Intl" _ 0 0 m— mw ▪ my 

000) a) mo o -a.- E. 

-:-08 0,-(1 a ...- c CD .0 '0 0ip E E •-• 0 

•_-.. a) -0-2 -o 0 

-=o ,z4="00- 4" ,-. 0 

C 

mEm›.= 

as " c li 

_a 0 ..2 co2 le" ' 2 0 0 = t 8, 0 -0 0)., 0 03:- E -- ° 5 iya, 0 5 nobcra) (") 8' or'. -0 0_ , o .--o 7) c as -5 

_c 0,0 0 0. 2 = -0"600 , 5.=0 - (7, .c ..2).C "5 a> 0 En c •- co &-• 0 RS CD C.= C (1)000CC62:=0)c C 

00 _c C 1:'' 0 0 C3 13 -as --co 0 a) • - _c a) a)_, - , - 

0 - 0 . -- 2-, 2' 0 -2.-f Plt ..7031-1.(7> -82 ...• a; CD 17; 0 .-. LSO'ca$0.g. EL-tt000171 

MCM0)06:5 0 %2C

3 

-0 OM 137 0 -02MRg-922g 0-'6. 

773 " C mCCD.2 621.m7a 02 e, L- _o coo _c- o 

L c g 

0o...co0o09,00 (D.= m_c c.= x,_ o 0 ea - 0 5 0_ al ..1601°1 eu).,. 41 0°)ca8 'n 5,„ E :=0 oc§ g 

a87,1.,m... ax_c0 5224.iini-Eilillia0 

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o 

0,- -I:). 0 00 0, 0 2 2 °) '<Da 0 2 2 co'sr.E.o -5 0-5 > -E N .5 co; -- , m , (40 0 0 cm s o omo 0,_=om m..... m ___ c ,E E No.,- ,207;3cE-47.20Nrg, 0L slas - 01500c 0 0 4 _co as o3 03as as x 0 25 .d. a) .- ._ 

6 ' U L , lc m E a .5205= • -1= 03 -00 E -c -2-082-0 

;

- - sq Too 7-g,, 0 0 s -ra 0)20= a 

ca m--c 

0.c cot: m 7 -= oc- a -,_-0c c m E w E c-'- 1- 0.5 -0)- >m m 0 8_70 m-0 0a aot_3202.21-dgm> " 

cb-ci-E-76ma mt-;0275.3Et-TE°0-fnE-LJE E ;)052 gl .0 9 -1,10--t---ctc0-0-'n--0,.- -c iii"0 3 80 0 (0—' ° 0'8mc°8 0 -ao-R_coa>71,>cili o-• 

a_ M a_o a. 8zza_ a. a.z co m wzma. 2 

I' 00 Cr/ 0 0.-0) 0 ON.-,- V' CO 0 0 N M

N (71 Or cm o ONO) o Mr ,... ol C') 0) O) 7 CV CM 

C') NI- air: C' ,r,-...-c0 c; mcd am N 0)04 -C') 4 O o 00 o o o,r--o R NO ".4- 0 0 MO 00 CD 

N N NNr N CO CONN 

W W N‘tr W M I'NW N MN 

44' ,- WN 

CO I' (0 MMC/NW 

N 

 W Total,U.S.importsfromCanada 

17; 

Schedule B No.Description 

0 NO to 

0 OW M .1- rI cl s 

CA 

I.- v.... 

0 W E. CO4 

a 6 wi'Nf I-- a *aN N 

6 

0 

E 

E 

• 8 

O 

• 

13 

mC 

. 0 

m E 

o fs 

O guj O 

co co 

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c 

CO CO 

0- 

m 

C 

= 

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as 

as 

2 

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C) 

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0 

CC 

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8 

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Cr3 

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0 1- 5

mo I— —1 

144 
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co .— 

71 11:1 I.D. 

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0 -C 

03 -17 

SI E co >. 6 .., — 0) °) 

7 -0 3 • arE CD 0 

4. a 

C L mom 

rlw us oi0 EE u) a) -(T) 0-5-0 a_ can 0 ._ 0 

xc, m-o m ,_ -0= c3- 0)

-5 - - o u) a) *-- CD as0._ 0ma = -- 0_0.= Rp40 ,t t 

06,, c 0

1:80 8. a) 

 TO ca 6 0 :84-,0 0 z E E .0 c .2 (.003 -0 C Ca) 

03 03 

-E9:,,A.628-

E ., 

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c,— 0 

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> 08M> m e080 :--. co .... a) -o ,,, z 0 ..e 

c 0)E ()CIS 2 a)al 0 

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E 7)8g 

WM m —. -•.0 —,... 

7-C 

O > 7 c - - a) 

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LLW02<022M0 

Total all commodities 

17- 

0 cto 

g 

fpE 

,2 

=3-0•oto o 

.-.Za CIE or) cn 

2"( 1of EE cr) t -00.0-5 

• . 0) .3-0° cr 2 -5 

0 m = 

vi 2 2 

0) C-1" — 0 

co § 3 0 .4.6 Lts To us 5o 23 4..0 8

0 m2 

c_0c 52,,scoy c c „„, 

.E-- 9.7A..115V28 2(V; 

cra513 , c 012

-013i a6„., > u- > co o36 = 0 2 aro 3 0 ,-- -0c CD 03 7 c 46 , (DL, 

03 E al 

0) 

(1323- M2 7644S ZE 

(I) -0CO E -(9 E o > a) 

o 

c

-c o 

u_0302<022M0 

5 

E 

>, 

0 

C 

2 a) 

= 

0 

Total all commodities 

co 

(71 

Ch 

CO CO CA 

CD CD 

O 

Compiled fromoffic ial statisticsof the U.S. Departmentof Commerce. 

z 

co 

EiFUF3ficig§ 

• oi ad ciRacciacqc6 

0 N •43* 0 CO 

▪ •••• •nt IT 03 r CO. 

C\1 critticciui.- EA 

r•-.1.-cmcocmCONCOMCD 

CD Nir 01. 0 rCOC7 11) CD r. 

. Lei 01 Cr ".:Feceiccici,- 4 co N Cf) CO N —N O 

CO CON.- •-or 'Tr r ••••• CO . 

Cri LO-4: 6 ',- 

El" 

01 'Tr CO "1- N N U1 r 

• 03 r 0 CO 0 N N 

CO 01. 0) 'Tr N r VI 0 

co CV CO 1.0 

O coco— (0.40,0r. 

— Nei LnCr 

EAT 

N N 03 N N 03 V' 

03O C r CO 0) NN CO 

CO CO CO V) •;I: C7 CO SW CM 

teaduimuic6,-.4ui 

CD T r CO r 1- 

1.0 GO N %CO 0 N. 

C‘i N O N CO •ct N N .7 CO 

0) CO 0 0 CO CO CM 0 L0 Cf) 

• •;I: CY) U) 0 0 0) CO CO 

• 000der--76. c\ici mn.Nco.,--NwcomN 

NN CO LA CO •cr N •Cr NC64" .- 

CO •cr r CO 03 

10 C

I N

) 

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• C 0 •Cr'cr I Cr C\.1 C N N. rt CO (3) VICO N N 

csi Lri ce cri N cri CO 0 .4- a) C\I •-• Ch CM 0) 11) CO WIN CD CO CO N NI:U1 Cf). • F Cir 

T "T3 

0) 

T r. 

0 

6 

0 

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0 

12 

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0 **- N Ct) co N. a) CO r CM Cr) Nr In N 03 0) 

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(75 

145 
NCO 

CM 

'35 

E 

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c E 

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Total,U.S.exportstoMexico 

tO 

6 

cf) co 

co 

03 CO 

M".. 

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N N 

O) N 

CO N1 

CO Co U) CD Cf 01C00) Cr) CO 0 0) N 

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CO CO C0 u, coN N O)

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N- criFiZE4 N Mcnc°coc°C9 a) u) C70 dc 7,3 N N Ul 

0) (7). 

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co N- CO N M•ct 0) `Cl" N C001 

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CO 'I' •(/' Co Co C en 0 N N OIN 

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Cr) 1- CO N O co .11•01 CO 

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8 

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o c O 0) u) -2 ti c 0, o) 

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cts E 0. 0ca 0, as 

c o o cn o "5 _c a) c ,_ a) U co 0 "a---ct '5 .. 2 o -.E. . cm co a) ...-. o) o a) .. ca0 ■-• _C '0 0 irD .0 .as ›.-. a) cm73 

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CL a)5 5 cz.4- .= _c CD ,... 

.. . a) o) , c 0 C o..-... a) o a) 9 3 Ts' 1E to ._ co 0 -= 0) > > .fr:; c • a Ts nt ° CO V)

= co >, c7; 2 2- c:Lo ..6.. = t-- ,., o E c 0 0-a = (r) - ,_ 0 as 

738 tt 0) .- E 0-0 a) 0 

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0) " 00 C CO co 0 T.. cnZ-D- ) owa) .5 0 

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CO ..- - - 0 0_ TD oi 75 c .9- e-f_t)0 0 -- Bch .c1- e6n) cVg '''zc5N: co 0 

CD r... 0_ a a) 05 co 

a) "-E co 'N. C3/ 0022 a, 0-0 „ CO of L- a' --, •-• C 0.c 

9 (,) o cr)0 c - a) ,_ o co -a .= .r,- 0- c .= ..- 0$ 1-• 0 ay= .6 co 8 8 I:, i i,

. .6 8' o, 

.._ .._- „•._- as .2 0 0..,, ._ o - . .. ... , ._ 16. 0,- ■■ 4„ 6-5 04- cp LO >OD 06 5 .1 h..° • m c,j - o.o .--- (1).=0-00 73.0 as 0 ,- cc c -0 .-- to = Cr) -5 as -c m ° c > a) a) „.,ca o 0 ToCO 2 ° co m8 -.ell') 8-u.) S) CC .p .,yr CD CO 0 C) .-. oh 0 CL.0 cn = `•:, 

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C

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148 
Total, U.S.exportstothe EU 

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the U.S.DepartmentofCommerce. 

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CC3 (/) CD •-• E co o 

u_03024:COMMML) 

0 Irav.) 

8 c 

To is' 2 

 to E a) 

o -C 

CI _0 

.1 ....0 CCI) ...7 0,U (1) 

A E 0 >, a) 

a) co 

m -2 -0 • m , o a) 

C C 6' 0 E 7E v) 

: (1) as°) .g 70 'ECL'OCU -52C3 („) — 4—. 

CD , ..0 13) '5 

6' aS .02 0'5 c 

8 15 co o °-13 ,,tt 

co a LF, c a)lg 0 ,E.40_ as 

-fflas6c0:

0- ..-cou)oth 

E -0c -rzecz (131

`)2 g g 

. "0

CC 

1 m( ‘9 :D i 

-119 ) - ° `E2 l)2 I ::::!" 1 1 .,„ a.... -_. 

it,3 (.6 — .2 Di c _ .... 0 0>E 2 co (IL=0 

u_co ()M.:LC.)2220 

Total all commodities Total all commodities 

0 N CD N CO 0) N CfPct )11 CO N a) 

Source: Compi led fromofficial statisticsof the U.S. Departmentof Comm erce. 

151 
M rNOWN NM MWN 

N ONONO ON VMN 

- ,-.tmocv. ON VOW 

C) CD NCO T a0 01C0 

m a0 N0.NAw N^ 

Ea. 

s 4 

222 

O 

O 

0) 

0) 

= 

0 

0 

0. 

0 

0 

0 

G. 

0 

42' 

1/43 

.0 as 

co 02 

M rVISIOV 0 N 

0 MNONO M W 

M 4 

OMNWO 

cyi a0 tic co-CO 

r 4 

2 GG17W4 4 q 

✓ WWW00 MN 

CO rNWOW WO WNN 'CNN.41- .4.(0Mrr MO NON. 

Ml 4tri,- CO C0a0. CON.:cc.- 

0 NNMNN NO 000 01 0 in't 0.1 ww 9w Comm 

cy, ,- a 1-- r r r 

T En. 

V MNMOM .--N WMV 

M 0 0 0)00) 01W MN VMN co ,---coconol om CO O) 

oi co" CO al KN. CO 4 c5 N: CO 

M Wr•WCO COO) WWW 

WWW 

N 

W 

m. 

..- 

0 CO 

NOM00 

WNWVV 

NNOMV 

oS•arc\ir,:ciS 

MWrNN .1-mcomm 

M 

0 

ai 

0 U) 

4 

0) 

CO" 0 

NI. 

0 

N 

co 

4 

N 

M 

WrOMW 

VNOWW moolco.1- 

a a - cr; 4 

MNONN 

VVO0N 

0 

r 

co COs V 

M 

W 

CO 

m. 

o 

N Ch 000 qw.w qw M 

0) 

0 

0) c CS) 

-.Y 

• 

CD .

as cc = 

- 

c It l'i 

.._sl 'its- -0 

= 0 

. 

= a _a 0 '-' a) 0) - 46 6 as > a 

_c 8.=. E 8 a O o c ui 

o o 

o r. o E8 cr) f 0 

-o CD 0 V 00 0 0) 0 0 5.4- 

CD (1) x g E co 8 ca as o -o as a a 0 

.2- ?-1... 

a) 0 c ._, 268 '6 id -E--a a o 0 ca.- 

= "a).= c -o a) „... t- .c c 0 ° ,c , ,:10 '-- 0 u) 

(4 7g .2 is" -c8 "-x ..C.c 

C 0 .

0 

 •-• E a :-- a a) 

o ... .1. ... sy• 0 0. M E A C .54 .0 :E .16 C 0 

C M 

0 > 0 •S .5 0 

..0 C 0 

C M 

. 

.- E 41 c'E 9 

Ca C 7 0_0.- ..... 

82 

...... - 16 .... 6 -c E

% 0 a 0 .;•-..; ,.. _a 

0 tw mm '-'60----'- 

as 0 . 

N CU -0 n, -C c. -C a .(15 e'. 0 

ZBEM -0 INV- 141 '''' as u) ..--. u)E -271:0 

..C... c 2 8 ,4 1-6 .V O> 0 24 ,- 0 >em amt.= az = LE >,= 0= ,-, ...- .... 

, 

c c 

E -5.----= p.. us 0 a' 

_c ° c 03 .... -- tiLLS ca-g). -FD)E 2 o. 0" co Cl- r)s. (r) as 0 4) E °-0- o as ,_ 0 a E _,,,= 0t. as a )

c as „ 6c - - _ _ CIL •.■ .....• 0 

■C 0 0 o E CS .= c°-"02.2 a q.. a) .- 0 c,)0c E '6 ra.,_ c.2 a 

a ( crP-- .4- "c44:' -c 8 °-'0.- -°-1- mE .0a 3 a - co .-- E -?. -o 0 - Fa "r(a as 

O a 0o as .- -F, 0 8 ip Ets.• as 0 .0) -° g 

r 

*--- E ° (4 ° .2 17) _Tei 0 

,_ 0. 9- ti mom.-03=._ 0., ›.4: .0, _ 0, 9 0 2 ci 2 

0 a

s ...- = 0 aD CD CD rsfl) o a 

... . c coV_ E_C C 

0 

0 cn 

• C 2'13..0 C 04 8 -,..- ,„ -cD .., t og 0 5:1Ec> 0 ><615 -56 Emile F., 

''''_c - c s ,.., ,.. v, -- 0-60ma, ocpa,° o-a'Acia. -c N A 4-'-' - :..; 

M-C ...: ._ , = 01i ,.0 , . 0 ,_ _ co a) e 2 ;..._ = -0 ...., 

"co 4-coatoc7i 3O 0 08 Zi .

0--0 (a_z"a 

0

- ms :;c 1:3 l 

0 

"oo•-• 

oc _c .-00770.-c='..-0.=,...mom- o..--co, o mmo0==moco m moocm -0A0 c c:1 -c3 ---88. as a) 07,.. .-0 R-075 6 E -.7.3cE0 0 ,._01 0:garacli 

05 

O 0 "0 as N a; 0L- C' 2cE- 8 (n - -0 - a s c _ c 8 - as -Es 

.42 = . 8.0. F38-02-2-i-sar00_0.s2c-00, E_c 0_ __. 

c2 = c as , a a _ CD ..... ... ... 0 ..e 

0 

c Cr) 0 0) 2 3 

o = as a) o 2 m0 ..). -.E. - _ 

Q..., cc,„ _ _ 2 -To 0 ._ 0_. 0 .....--- .412 ......„, Ira ;.= ... m .6-• n _ c - f I 

M C in ......... " 0 M 0 = >, CO 0 ,.., ,,1 V. CO • CD 0 11, 0) W W 0 C 0 , g.,: C g =2cv-= 2

g 

_ az cp-z.

co 

a

_. o co .0 g gs 8 ' 4 '6 8 .2) as 0 .5.2) 0cei .- m"-. c2) o vs o E .t ..... 0

• 

0 ..-t-00cLoo O immo_ 0 swmma. co a. 

0 

0 0 0000r 00 rOM 0 00N00 M 0 

(N '4: 9 c\J cl 0. 01 cl c‘l 7.7c1N 7 0197017 01 9 

M N LONCIrr MV NNW N rOrrM r 0 

0 0 CONON OV VO0 0 00°000 0 N r 

✓ CO OVVNV )CO WNN V OWNNW V N 

V W rNWrW WN WOW V 7 0)N00 CO N 

- Trr'f . 

C:F} 

st W 

CO V 

CI 0 

a 4 I's 0 

CO ,^7 

;

- 

:"'r 

CO 

CO 

q 

M 

152 
CV 

C) 

r 

N 

'V' CO 

r CI 

T0) 

CV r 

NI* N 

0 •ct 

com 

0 'V' 

MN 

C') O M 

N 0 

•ct N a)a) 

0 

7 

"IT' 

0 

If) a) 

ON 

cel (.4 

U) Cf) 

N 

CO 

 0 

N 

c o co 

01 

9 

CO 

0 

N a) 

N 0 00 r 0 N tf) CO C) 

7 " r. a) co o coma) a) 

M 

0 

r,y: +-cr.; r 

N 0 

•cr h CA 6 oi 

0 0 r CD r N 

0 Nt NU) 0 N CO CO 01 111 'ot ol a) a) C) CO C) CO CT) 03 03 

r M N CO r 01 0 CV 01 CO Lt) 0 

CO CD CO 0) CD 0 'V' N CO U) 

CO M.0 *Cr U) •ct N N (N. CD 

• •cr C) CD tti c4 N N m CD 01 01 00 

• Cc).CO U)NJ: LO e••• 1`. .. 0. r 

(3) co NN co •-- 

47, 

.ct 

CD 

`ct 

N 

•ctN 

N 111 N 0) V' 

281. 41. ci, q„.: 6. 4 28. 

momwm 

0 CO CO CV CO r 

"Ch CV CD co CD CO 

0 C) CO 0) CO 

U) 

r CA CAO N LC) 

N N LO CO CO 

0 

qRl d. 

Cei 

'V' 

03 

•ct 

LO 

(4! 

(6 

o 

CO 

N 

W. 

C) 

Y1 

LIS 

0) 

CD 

Nr .

r 

CV 

;I) 

N MO, NM N NO M r U) .7 U) 

C) r CO CO U) •I' CO 0 0 CI CV 0 ,- 

N 0"Pct r CV CV M r N CV •ct st CD 

O co-r-: ..=cli czi t` N- CD CD a air: C) ..- N COO CD CD CO .c:t 'ct Cf) CD CD 

CV CV 0 0 r CD CO LO 111.CO CI ". -41-m. 

0 0C .ea MN a -- - - - ,_ 

0) 'I' 

CD 

CD 

C) 

.- 

0) 

m 

C) N r CV 01 CO 

C) CO 0 C) CO CO 

N 0 01W 'I' CO 

NI? c 6 ..- - c. N- N 

CV N CO CONr 01 N coNN N W 

. 

"Ct 

CO 

Cf) 

OS 

CV 

M 

a 

•rt 

N- "rE' cn CSIO schc; MO)

CD 0 

ON 

• c6c5 triai oitsi mm 

• c 0°. (1.. h . r r 4 R 

g 

"tv mm m NT r r r TT N 

49 

e. o 

c o E al ..!- 0 

COt5 

a , 

.° C/) 0 a„ 0) 0 

O ) CD -- 

1. tt; o = "51 -15,-._ C c E 13 -c) _c m c.) cs , o -0 -1-,4 

.. c - 0 > c 0 

ti .0 0 CI- .

o

c) :..,.. m ta: 2, m c c o m 

.c E (11 -8 c al ..,_. - 0 - 

_ 0 0 E o -pc 

o ,...

2 a) 

---co.5 CD c-'5„ c r a. o 

co 

, N Yri' 

• Vo..-) - -0.- ma s.S 108 * 

yco -C 

0 u., 0 

6. c a- a. 0 a_ 0 E E 

O I. 0 ,.; 

co iii 

co 

cm 

c c e > .co,)- c :0

m 

>._ Cho >"0 Ts as 

c2 o ,.., C

x3 o t'm c z E 49 -c). :E CO 0 

• F. C 0 ) a, C 0 .3. C P e x -a.g 

we C ... 8 2 TOIS Zr) kc ca -8 . c 

c - . ...,-,., t2 g _c mcgc 

LI ECO 

CO 0 > 0) 

0 Jo 0 0 7 0, _c 0 i.L0 0 > t: ca = C 8 ..e..2,:e m0 :ex. . 0 0 0 0. coc -C X '0 la > 

C=0z1c7„ ct000.> C 0 8 ...,a c m tb L' 0DI c C to 

57)03-c..0 u).-. 0.0.- a) oc:).- .... (1) -,, c a) m nc .15 L .5

m 

.: 

o 

4 '-(01.c11814-g° 

---0 o (6.1) 8.-- .... c _ 

4. ,E =10 E- dl (8=. )cocr0.

51- of C cy) -- 0 

_c wasm...,• 

as ()) `- C en e (1).-C ...c ca SI. 5 ..c.. .4... - cha "r° CtS mo 6.c.5..c 

o o c 0 0 "a ..c0 ;t: 

LOO OA) -- 

(1) > 4-. 

a,52 1111 

0.- = 0-20. 0, •E,aas . 

0, 8 .s 8, 0 • 0-= = le,: -as 

--0 - c

R 

-,7; O co 

c 

.c moco.c -c-'3 

:c a) 0-.- 

 2 L 82 t coo = m .to-”, c00..E11,7),Ii .c .it' c°'- 0 - ,T 0.8 .- - ci. E 1) ;12-. (5 comPTC.0 " "-mare!, 050 m °I! 

.c.="00"= °6 'cn e mac cmc 2.-° 8 ° 1 : 4

'0 5 5 1 exa w-c-i 7 I ck 

0 MC 

0 v._ ._ ai _c 0 a_ • 3...03 0. 0 0,_.0 

aCfg u) tE .-. -0(1)aC° a> 0 8 .C1 a) .200)co...,of.2 a)o_c-c..... e..2.2 8 0.....76 co:CI> .an5 " " cow)._ a) ..0 >00.CFon > 8 ,1-0...)c m0 > .0).5 0 0) a)-0 ., co pa .-- o = a)_c mco a)0 

....-m t.L.E m co.. ca,-0. mol2.- a815a2 m o am EY) FE Wel-,,c .2 g as :

0c 

 ..- llo 0 0 ,_ .._ 0 0 .... E ,..- as ENE 141mco..-_. co co "-,, coo a t coo" . ■ .... ...' ... ng .. "; cL X - "...> X m> c•OU) -c...c...- a-n ,.., c .... cf)OLL-Ow- Oviw ...c00 ,..” - --0c E --co 0. 0 6EzoihasE-.7.45t.-c)cart E= 0-6 15ollotn Ce 2 -8 1" ...b .voc'EEmc-8 . 0 .-801 03 7.--c -o ccm>m.0 -..7-6-....mma 

8 

8 

C 

as 

O

."3 

a)0 •° '' ° ° " al)0 C CI)0'0 0 CU 0)013 tr3-C

c 

0 7., 0-'0 C 0 C - 

C5) ,_ la 0 E ,„„_, c CO ,_ CD „, 0 0) ,_ c •-• 0 T-' CD 0 .0•••- .- c Tts ,_ CD 3.-- 7-1 (D tD e 5 a) .0 To To 

cawco_'"ccoc0. 0) - F)co_co•=2o.'- c7Firactsoco> 4 'c'o.01-0 '--ct" -5 5 c• E.-= co Fa''c mrE-.)0 -0->r m o 0, -57)1o.....,„,-.«-0-.- E al c c E "1:2, -. 1.- 1- 

cul?oc.-.-t ,a0c mm o tNt m c=ommt am$2.o.ot...,00 3 msnmoo mm ,pco-50 .- m ma....=.2p-com m om 0 00loarom , m ._ 

0- < 00 0.0- > i-0. 0- M b 2a 2 m di w cn 2 

d M 

Z " 

O Cr) 

0 I- N 2 a) 

0. 

0 

co 

8. 

O 

153 
CO 

0 

U) 

O 

C 

0 0_ E CV 

C) 

T 

CA 

O = 

0. 

Co

C 

C; I

CtS 

•:3 

C) cz, 

0 

(.6 

z 

0 

C.) 

c

▪ 

i 

0 

V 

0) 

eB 

cf) I4 4) • E 

c uj 

as 

CO Ps 111 0) 0 CO I- 0 01 

0 CO I',O 0) 0 /- N.-- CO 

,--commoocoulcoco.. 

criaric6c6c6criaR •-• 

N CO N •Ct r's 10 _CI C9 •:1- 

COCOWNN C0 609 " CV 1-- CO vMWWWOMNCINM 

WOMNNNWOMO 

WWWMWM.tN4M. r 

drOCC6RViNCer0; 

WNMMV'MWONtC0 

OrMW .4:WrrN ✓ — co" 

00 10 NM 01 1- 1- vCO N0 CO CO a) 0 CO 10 

• 01. 111 Cr) CC).0 0) 01. 1- 

CC).Cl* OS 4 

'Tr N ANN .-C) 6 

1.0 N Cr) 

01 I-- M.CO COC\1121 7,N 

69 cm 1r- C61- 

CO 0 CI CO Nt •Or N W N 

CO 0 CO 0 `V.,'.17 CO N. CO CD 0 ,- CO r•••• 01 

• 1"..: / .1- Ce Lea CO 

U) 0) CD 0 tO CD CO CO 

C9COCOMT CI) 

CO 10 CO 

rONI- WWNW.tWO 

,-WOOLOMMNWM 

N•• 10:Ct" CO... 00 10 0 1000 

L6tr)r-:,- tric6coat6 U) o) o CO CO 0 V' CO 

*•-• r C\ at ul(Nr"- 

r■ CD 

N N nt CO 44' CD CO 1`... 

'Cr 'I' CO CO CO CO CO CO 01 CO 

LO N CO Is... "V' 

•zi 

U)M •ch (13 

NO.—Mr 

ar:c6 

0 

CO 

LI) 

CO 

Total all commodities 

Ti ci) 

CL3 c 

o 

71 C 2 

a coE a) 

0 0 _c 

Trs g _o ›... 3 

f E y>, o 

m 12 a)-.- o a) ..o.aE2a) 

dg c7T-E0W2 

w0 .....- oot-on.olg „,_ 0 

x -„, ca m.- m-o - a) r- ro S.a- o rib. 

CO caln - -oom&-- cn = c :0 (,) 8 Cl- tj 1-3 

O 8 E a) 18 0=. (13..CC1 O 056 (13 23.-.MOME EMCA4m0 10 CC0 

0 • 15 •-• a) 8 Es co ,.. E'''' 

: 12 al 2...013)--s6 °)2 Cri *13 

->M g M>M 2 (0 82 --- 0 .1... CD -0 co , ,_ ac.= 

-00MMC-A.c, ,q5 

C 0) E = (‘S6 W° as o 

m il-o2Tva;-5 -(152 

"owlowE 0 - tisc.)E 

O CD *--- 0-C 

u-0302<02220 

0 CV C9 •V* 10 CO N. 03 0) 

C 

-cE o 0 _c Trig _0 

E a) 

CD 0) _ (D- e a> a) 

- c C .0 13 a) 

ms (13 cif c-s E't cs) 

m CUE '5 -o 

ar .uc,c2r,,o , z a 5 1::Las 

a) 8,y, t.0 -8 0 8_ m To as ,ffi 5 2 

E •-• -0 a) '" 

c.c.. c-o2 

06 

u) 

-D LI) 2 t, Cr) 

. — 112 (0 2asoa) 

,„ „, _ 

-pc Eal fg 

o 

- 

ova"— E 

a"3 1 CD E 28 (0 ,) E 

o o E-c 

L -0:102<02220 

c‘i cf).a- tr)co o) 

Total all commodities 

Compiled fromofficial statisticsof the U.S. Departmentof Commerce. 

154 
N N N r CO CO CO CI N COI- N 0 W LO u) a) co o 

r

• 

NO WM ON-17(000 71. Sci 8T rc*5 Sitc8 f2 

cfi-i'Lr>cer-: N to" vied' d oi ON O co csi ao 

M NW ON I-MN•IN OMW WM MNN rr W M 

m MWdd dNNN N Nrr rr r r 1- rr CO 0) 

M 69 

d 

N..- WN MONWM I's MWTt MN N NCO Or 0 .- 

NLO CON •cr U) N N CO Cf) CO CO ON a) (am (pe) U) ty) 

C0.0 IOW It COONM 7N 0) Mtn C) co-t (nem c..1 -aes, ,- ci Ili cci r:.* CO (0 (O tr) Lo07 &id' .- 6 a; (5 ai tried' it; 6 O cv).d- cn a) co NI- u.).,:t ce) co .1- Nt- Tr in LC) CI) CO CO N CO 0 N 0, 0)

- Cra La u) cm -a- el 

 0 4

*-NN r rrr rr r r CI N 

. 

..- 

MN COO NLOrWCO CO MWM MN M NCO WN W 

Nr d•.- OLOMrM N rOM Nr N- OM IcrCO 'h.: M 

c1- 0 1-I-N.NMON7 ICI' NOLO CO •ch M NCO MN . .. M . o 

dui CAC)i ce-a:' 6 oi O ONO(6 (5 r.. COCAr. NM o .-- r- Omca NM WN 4t0 M CONM WI-N c0 (*) .- CD LO 

a, N't WN MNNN N r r rr r r r 0 

69. T U1 U) 

O 

O 

4- a) 0) 

E 

0 

0 

Cl) 

0 

2 

to 

0 

0 

2, 

0 

Schedule B No. Description 

U) 

0) 

O 

c 

0) c ...C. 

a) 6 E 

- 

o = a) u, 5 .a O 1:1 

 

a o a x s.- a) - 

:0 

> 28g z in' ijo m a) .o c3c 

.0 c C aso';-. ._ a) (a = 0) ca .c = 

= as C ..-02 

c 2 e '5 0 88 -0 -0 1.3 . 8 m 0-,,, 

 c c 0 

• 

• -0 co 0 NO0M 

--e-00 n6 0 -c) 

O tti . C 

• 

0 o 

i .1=OCCe 

- c -5.12 c ca 0c t as °O)2 .- _ as 3-00 

O 8.,- t E V) OM —0 CC1 —....c.0 

....: C.) u) C 0 0 ,,.. 

EC1 C C Tti a; Cri CZ (0 

U a) -o 0 2 i-/ 22 

8 

-0 -0 0 -o 

o

- 

-c) -

C

ill •S a)_ 

E -cg 

O w° =y 

CO_ E ti. 

C) '6' ...c1:D' 

. 

a) 2 

,.- 00A 

r) 0 _c._071.. L 3 0 I)a. F) E 3 .c... m 

0 00 E 5 _ C.-0 C2-C2C° ai-o a) a) a 3 --- 

ca •• — .. -a ..-ci 0 co la Cl) o _c asas 5,:= o CD ti g cr,..c a) 0 7 w _ ,_ ._.- 0c..L., 0co co.c...,_c

- am 

0 r r 00 00000 0 00r NM M OM 0 

'Tt rN MO om-06N m NMM 7M m MN m 

• uic6,- 6 NO) 

O 

• 

-to 0.- 00000 N NNN 00 N 00 0 

CO Or WN NNNOvir "It MItcr NN d NN W 

W 00.7 CON WNrr.O W WWW NCO W CD‘t 

Ca -- ed 

t

u) 

as 

07 

= 

2 01

8 

ai 

a) 

 c<T1 

as 

o 

-

- = 

o

c 

0

' 

O 

a0-0c Mc 0 0.-

0

0O0

(7)

M00M o..m.

1

000 

cuc 

crl .... 

V ..-• as ..-0 m Ts cti co -= ctS 0 4.--' 

co 

ai 

03 

 el 0) 2 375 o 

00*

(13E

=

Ocncz82,92

-

o2

0

=

-

000)„90—„,(

13 

2

8.

5

.(;1

"45

3eggZg.

"4:

"

Ofg

2

Z1-g

5

;,---Et145

7

2! 

M

-

M-

-

momoo.in"

,

='

,

0comw"Mor.:=cowX 

al

/=0

'—

='-

-c='

--

>s

w

o

rn

==

c

tmtcoomco"oc 

. .1. 

 if5 

aa ou..cno a I-ao ma M mo 0 

(a -- , :ft 

Total,U.S.exportsto Korea 

155 
(1, 000dollars) 

O NONO CO 0 N N Cl) N c0 

c0 N- co 

N LO 03 01 

CO N CO 228 8 8_ '71 rd a, 0, N M

c6t6c5R or; Rui a0 c6 N Cl) c6 ;73 6iRc6o6 c.1 

Ch McoNN Lt) CO Lt, 

NN N 

CO CO CO 0 CD 01 CO 

c‘r 

N op. co 1-tt Cr) 

N1•0 co -a69. 

O CO 10 •-• 1- 10 N10 CO 0) CO N 10 10 1- 1- c.)1-1-0) 0 

1-cocpcoN K to CO co NI. a) o r- c.) o N ,- a) N co 

N- NOON CO ,- MN CO CO N 1: CO "t 17. NO) N N 3. ,- 

O 1W R Cs; 0 R NtrCO Nt:' 1- N CO co CO ed.cri o CO N in cc) ,- co.) 7.) c) co La co 0) CO N cn 0 N••• 10 CO '1' CO Cf) N 

C4 N. NCO CO CD '1' CO gcl-N 1-N ,- •r- N ,- N ,- ,- .- a) 10 

0) R c0 01 Z4-- ,... 1- 

0 d0Nd LO CO 0d N Nr 0 r O CO in .4- o cf) 

o CD CO t11 .4- CO 01 CO •Zr CO 

17) N OD N. CO

0 

 01 in co to no o o 4.co a) co 4 20°. 

c‘i (-6664 R c6 c6 

CO N 

ocr.. N- CO CO N N N N c0 0 O 0 1-CON CO CO 

0

) Le) N N N 10 

CO 

fA Q1 c6 

0 0 

,,,.. 

E' 

c 

e 0a_ 

0 0 Cl) 0_ O 0 8 CL 0 a) 5 0 0 - EC 0.3 

- 

o _o 0 iii ti id ti 'al a) c 10 co c .c to= CA = _a -5 2.c as o z = m _ a) _0 .0 a. E 2" c7, a) 4= _. cD o 6 (;) 0) 5 ) -cs c -a 0 

5 1-4 E 8 E 8 .z- .0 -0 . 0 -_, co -6 as - z 

a. - - 0 0 -0 

i t El, g :8 .. "0; - 0-5 

_c o 0 c a _c „... 0 Ego 5 9 ° .-• a) .... o-c. ) ;r a._ o _co_c al 

z:01 com a_ 

.3 8 2 8 _ 03-0 0_ - (7,,,, co 0 (3 U, 00 = ,..., 0 75 z--.- .0 c , -... 

-.2 

o ,5_, , 0 „. 0 0 0 c 0) ,_ a9 _c E c (9- 0 a) 0L.- ..- .-. .-- 0 ... c = -c _c •S -,.G o s 2 0 ,,•° -9_ 0= -92,-, 8.0 al E ° ° o .= -o 0

-- -0 •-•- c --- c c to CL ...., `. > :;...- m"- ...... .c e co)-o 2. § . -0 75 2 . 

co CD 0 = c• c• 0 m,‘ co 0-..._ ,, 0 CL 0 .c c -E c - 4-0 

.. , E 0 -0,., o c ..- c 5 5.= ot---' ,.,, ,- -c 0 5 .5 - S" ' -;5 a 0 0o -c) ..--.,= a. 0 2 a o co _c 13 I 0 •-• _c 0 ).0 0 Tri 5 t._..-5 to 0 c 'a 0 ..,.. 0 c 0 E.) 0 2 _c ca ..- CL 0) := •-tz 0 0 --) a) 0 Es: 5 (73 ... o 

o) o _c -..-. a).- ..c o 0 z.„-.._-_. aoo :2 2. c o c 0co- E o- 0, ., ±_o o go: 2 8 0' "'a :Li 2..a ) 17 o - E. 3 '-'- mc)CI) so 5 "- o -c 5 -'-' a ---: o s- •...- c ao >Nil 13 •-• 0 ;.)- E 'T '0• , - 0 ° -0 At • 61)as cr) 0 R 4 O -0 „c.) s a) To -0„, 0) 0_ 2 .120) 

0 cf)C C - 0 -E ,--,-- E in al E .:i; - ... -, .0 c,,, E as - 0 z 0 .- E . 1.. 0 ... 11-3 c a- cr, 0 cis , co •th--2 0 $ 03 ..._ ._ co >.z am Ci a_oc 1. 8 o 1-.: ca .--- .2 o .° 000- 0,..,_- m a) 0- -- cr.- of o_ a o ° al .....92 8 -,,, 0 0a > 0 "› 0.73 a ) 0_ 0- 

-

as .22 

o) ... c co fa _ -- o (..) - -0 o E ,0 a) .c..) 5 0 E ....

3 00-..- 0 - - 0= -- CD 0 -10 0_ 0a,0 6-.c ..c ..„,a 0.,„_. _ - '^ a) m.., E-5 :_g ..,.F.. . .5 Q , zo () 

(2 •- -0 '' " c ‘j a) co 0, = CD •-= CD 0 -0s -0 _c 0 2 6 2E 0 c .c 2 c al c .4/ 0 co a) co 0 as 0 

cn c5F 0

- 'E:3)a, co -0 , a$ ca,...- :c ci• Es a) a) :12 (1) _o c.- c as c- 53. c 

2 -

c 505e L- of_ 2 c 

,o,_-, (113 c Fa ... .....c.c c, .. a s o o 0 3:=, ., -ci, ,_.5 -F, a, 3 _v„ -0 15 00 

w= 

<D --r, a),,cv- ,--up20-6 05-c co >. 2 .c. a) 0c c o -- `..0 03 CO= 0) 0 ••=, .- ..., - a) 0 c e co- 2 c 0 t... 

° c.) 0)-- o a) 0a) 0'''' (13-- -- ° cti 1 7" a c7) a E a, o E 0 to-r, c - co 0 Eil. , o a) o.c 5 a_ > 0 c) co E 2 - o..o.- .a. a- ° > 0 mil) 0 52) o cu -o .- ca a), as 8 ..-, c 9? an „ ,2'_E o c.) 0.....f. co o,.. 2 .-- a..- ca..- c cn.p.- 0 0 .-c0 0 > c > -0'- 0,- c 0 .- 0 0 6 :5 to 5 •-• an a, 0co co .5 0- 

.0 03 .._.-. 0 . co .-.., 0..., cr) a) ..... 0 0._ 0 =c "co -r. "Ca .... • co-:* ca ••-• -C 0 

= .._. c n 0 a 1/4.,c kJ c > .. > = . 03 UL co ., 1,,L c 22 rl, co 0 .... an a, m 0 -0 a) c 

c 5°00 0- 0-5=57- 00)00 0),E. c8 00 (1-=0060)-08•C 3 ° 501. 00 

0 c l° 0 03 1.1), (0.-51.-0 0 20cg -coz-.-03 4000Cco_5.-c 47-1. 0 0 .- -0 075 0 so, 0O .:. x- > .._ .4.-. ci ail 0cog nE-10 0 17) 

o

2 •-•,_ g 6 tii -0 '-',.15 o 0_3 5.= ...- 0 

'' ° c-- °),- a' co a 0 ,- as c as c " a) -- o-.,7. -0 5 a) as 0_o" E 0 -.- 12 0 .-F- *E 15 co c a. c 0_ 0 0 a) 0 a), ; c.) a _ 7

ank CIS '" - 0 0 .- co -- '- 

9 ..„. 1 E..= 

c 0 c a) CD • - CD • 0 0 0 IT's .1•-• 0 .- 0 0 ir)- 0 CL 03 . -E.C.) 0 •-• 0.= CD S-<.61)0 0) .= 0)0 8 •g ......_ ,_ ., 0, c - _ c c., , co_ CL _ x to x 0, ry 0c cc 

5 ' as .5= 8; - 8 - 8 0.2 60 CtS 0 Ca C 0) 0 0 _0 03 112 cn CD 0 CD c 5,_- .- a) o Es 

ta b a o_ M < a. a u. M u. o) M 6 cc a. cc V) M Mi- 

.-N OCDON o CM 0 0, 

ZCI 

0 0 0 

Z CO.- -N 10. 0) co °I 7:1"" oo- N 

Mr-COM CO CO 0M ci 0 

tri 

N N 0 0 0 C) ,•-• 0 0 N 

10 1- N N CO 0 1-ris N 1-U1 N 

Z COW 0303•4- 03 CO co co co co co co co co co co co co 

Total,U.S.importsfromKorea 

156 
O 

co M 

C\1 

co 

CO 

U) CV 

0 

Tcs 

c 

Tcs f.D_ E

a) _c o

0 Ex

• 

0 ), CD CA 2. "2 -0 • arE 0 

C 

C L 0 0 (n 

0" c) ,9 r

0 0 en 

-o o_ ea 

xas .

0 5-o -o t.G 0-2.6 

rnasa2'

0 mc 

ELZ 112 5 -

xn;-13 r? Pa 0 (a 0 -0 a cc, 

EmCCS aiS-2C13 :80 1:(3 2 

0C 

Cp ; 73 2 Ri 2°6: 

Ct$V-I) v3 2(aoa) 

o) 2 (2 2 79 

-(u 0 > c._ g 2 451c ). E 0 a) 6- • - C -C (15 (15- 512 .0 

u-0302<02220 

Total all commodities 

NWNMCOMOMW 

lit0NMWN00301 

Ww.R, U3,--CONWWW 

CO CO-Cfl 

00 0. C; . In 0)00 co0.-M/CON 

NrN OMWN1".. 

EA 

WNCOMM,-MCIMW 

Orr MM T IA CO 

W air>. 0 at° a R 

N T 0,4*

,-NCO 

cri c■i(7c■ 

C\1 

0) 

EN 

O 

U) 

.-NNR13.4- MN01"...0 

"IMRON000"4-d- 0000 

WR03.7.COOONNO30, 

• tri cri cocoNo cococo-cro 

rr 

("(r a)C° CC) 0W 

T C.6 

m'-' 00)0

,4'NNWC0W 

CON1,,t0CIOMN'tts 

r —co N—vmm.1-0— 

a (5 ui a a 4 a r-.:* c\i' c.i 

co W OWOMM E N .t0.10,-C1 

co 00) ai

U) 

n 

0

▪ 

) 

1 

111N,--0)WWCONION 

1■ 0)OOMOM034-CD 

00)WtsNMONT

- 10 

cri cri cri 6'4 oicri aC a; 

maMLOCOON ovco_ ogt co co 

WM,-NMRONW

,--C1 

CO 3- We-NOIMW0 

co.qcoNco•-• 

cri-cr ci r-:co M 0 9010011,.. 

cis:rim 

0 

E. 

I— 2 

N 

O

70" 

to 

f0 m as C E

a) _c 0_

o 

>. 

E la >. cr) 

12 -0• o 

C C M 0 0 cr, Qca as aj u E (acr) r.o 0 a- . 

X (LS z.(a 5-o "t1"- -0 :G o- a)15 

c - 0 en 

0- as N t- co 23 6 CD- cz 

• ca -2 as 22 (a 5 2 E .0 ) . CVO C C 

113. 8 12 cg 

03-0 — co 

.>

• 

0369.1 020 0 

— cs) CD 13 

-0 0 RS 

_0 

C E (11cl cri ("••• 0 

tC c Ta --cf) E 

-001302 cZ(-)E o 0> 2.o_ ..om 0 0 .0 0 

u-0302402220 

Total all commodities 

0,-NO3.tMCONC00 0,--NCI,TWWNWM Source:Compiled fromofficial statisticsoftheU.S. Departmentof Commerce. 

157 
ScheduleB 

"Tr M.-000 0 NCO OCOCOCOminctct 1, N 0 

c7.0OONM NW LOCOMLOMONWM N NMWCONt .a- c4Lo .1mmoNco,--co 4 ' 

-cf CAtri.U) N.-CO COW 1.6 ":t:. O0 c.1 m C') c0.1MON N NM *-- CONLOW‘701N ,- T 0 0 co 

0) 

Cr) CA co WU) (e) N N N N 0 

N- 000'1- 0 0 ,t0 0,--NCIM ,70(00) ONCOW CO .4- 010 ,t0) N0,-- 0d- 000030000 NtNNN 0 itINON., q mo com,-,-Locomom m m co .1. 

N (0 •a- r--7N-7-cF-a:' cv a— drLe Lticqopc6c.i ai CO -a? c:± m 

cr) CO 

N 

.10000NN,--00001N ,--1- 001 OCOMM 

O) co N r,ts, •rt CV 't •- CA- ,-- .- t0 

1-• 1- ce NJ'. 

.-- 

0 Tr...—,NNI,CO 00 NCINN..-NNN,-. 0 0 CO "I N ,-...tN0-411,N- ChM cO0N0',- ONM0 M 0 N ,_ or1NCOO .t 0)0 ,--0000N000M0 N 0 CO 0 

I- Vi R COVi C6 ,- r- CO 0) 0) a CC; CI). In0/-Cr;' CO 6 N.: co0

O) m (0(0(0000 NI' ON (0(00N0000(.— r co c77) ,-- 

co NT - 000'1'0 N.-- .-,-..--...,..-.- +- CO 69- 1- 4 (-4 

c 

O Z6 -8 

,. _c -0 •-• a) V CA z 0 -o 

c c 

C 

a) _ - a E 8 

3 E8 0 

ch —„ .0 7D--c-.05 CD 

CO 0 

... r 

o -C 

i 8 E 

.-- -- a) .... E co us O us 0, as 

X 0 a 0 .c 0 7., :, 8 8 c — 

2 0 . - rs • Ed C E -a c a) 

▪ 

'FA ..a. „, 0 

.1-13 cos -- as 

a) 

.c 0 c a) Lc, 0 

,. c .5

0) 

P. 

= C ii. (1)'. CD

• 

C"' -0 CI) 0) 

0 JO = .7...=. . 

C E as -,-5 _C-.c,-,- as ._c 

0 . 0.1..?, = 0 0 0 E > -0 = . -- 0 735 a) „, -

0

c o 0) — as 10 0), ,., C.) 0 1-_■_0 2 E a c„ .....c.:,. C L 

073,- 2° as •—•”- . = co 

o c 4— 

-0 

 0 "rn fad E 

as " 75 

c 

C _. c' — and -* 2 a) (1) 0o 1E cn c -5 c 

m.- 3 C ,> 0 0 

c o_ > a) .- m m 

o o ai o 6.-o a) .c ,-- — 0 a> 0 -a 2 0- -5 .05Jo 

o ..... cp .0 CD C7) 0 _c . — .. -- 0.) 0 -. .... ..c730 °) E °z I5T' m 

... . c •-• c a)iii cn , 0"6 C 0 as . -.,-_ 113 -25 .5- c2 - m. -- irs c a :' .= I! (1). c 0 0 o as ,, E ,-, 5 a) ,.cn T. 

▪ 

0 con, o .... 8 5 5 :552 O o 0 co =m77, 0 6 3 c.0.0.7 5 . 8 E..)>fq" 8 

16 _c0t0x.-0'60.- 0 

2 

0"mc,;(....„.. 52-V8i22T2E-54 CD 

.- 00An-5 - .-=..--'oki Onspe.-,.0- 275 .--- c= 

_c > 00ili (3 -0 ,-(1)-00_ 0 ci2c:gtc,,e22' 0 0 0 

O 

'...6.7 0 -c as — c c a) 

.... 

u 2 x•-• a) 0 as " a) 3 ..t.- > o usto llf , 03 2 E•67) 

•0O c .. CD C 0 0- .- 0 0 0 0 -.-' .0 -0 c ..= _C as,1- 2 1.. (tS 00 C 'C cc E*.z.oTir---:E*1:3° c oas occ O as co .- c N as a) -C3El)C 

0=-0 0M-clu›.-0100 

00 X 0 'a cli- ers 5 = E 2 0)0.2 -2-0 cf, c R col) = co c fa.. mcnEE c 2moo -7-J -c- coaseo.-co-- 

-coomo 

CO 0 00 coccwci.5.Tio 1, —.-2 0 ..c - — co t al° 13) o as rt co E,- -E•co 0-0 o o E 0° as -- •- b

=

—Lomm=c— -, „ c Z-E 2.,_ 0 , - c) , cr).6- >,. C = .... -C >, 2 _ „.„ -a .., az cv „3 _ 

• - _0000 0—....0 ...,00 ... 

Ti O boumz n.om 2Lini.omo —3 2 

0 M rOOON 0 00 MOOrON00,- 

N o o 

C') 

• 

O o v-0000 ('4 (0 ci oi 0) 

00 d- cONOOON00 

CO N- MON0,- 

• 

0)0) 

CO 0 N NO WCOCON.-NWN ,t CO 

0 

Total,U.S.exportstoTaiwan 

158 
CO

O 

CO 03 

N 

0 tr) Total,U.S. importsfromTaiwan 

is 

10 0 0) N 0) cn g co 0 ..-- 

CM 

 LO CO 0 N U) CO 1,-. CO U) N CO NI- 

' q 8 - U3 CV In 'Cr Ch 00 N CO ..- N .- N- .- Cr) 0 N O 0 Id-N r.... o) co ..r .44- a) .- 0 0 01 40 0) CO 03 

• CfcC6 Cr;CO- CS•Cr Id.•Ch .4-- c.Nr 06 csiN: R c\F ai c.i c5 CO c:i O 1.13 03 r`s V) LO LO .4)1,N CO CO CO 0 03 a) 0) N- CO CO CO CO 0 NICO '4" NT CO t`') VI N N N N .-- ,-- .- ,- ,- MM .- .- N 0) 

00 4. to N 

CO .0' N 0 CD •cf 0 CO CO r•-• 0 CO 01 0 .1 CO 0 0 0 (43 co4f..2 c0, 54: 0) 

'-CO

)Nit CO CI t•-• N- •-• Cf) Cq 01. .1- N. MO tn. to co 

csi us CV-00 Mat) es 

• 

c.1.- co Mt-4 c\i" 

• 0 0 'cr 0 v- ••:1- el CO N •cr CO NO N LO CD 0) 

CD - CO MMNMM N MNN 

• 

NN LO 

T T 

0) N N CO 0) ti) N N CO CI) L C) Nt Cf) O N N 10 el CO CO 

N N CI 0) .r- CV CV '1" 0) CO 0 N C') Ito N CO N N CO 

CO •c CO N 0 0 N N N NI- ItiN 17 I"- )- LO CO.- CO co 

co- cd 0) CM CA iCO to ai 0000 c.- N: O.-a- CO CV cei cq 

o 0 C\I tj) •••-• LO LO 03 CI Cr) 14-- 0 N 000 N COO) CI) CO 

(N. '7'4' cv cv ,-- CO CI Cr) N ,- N .- N.- CO ..-• .- ,-- 

69- 

0 

N 

r.-. O- t". b" 

sy 

'o-o o) O) 

c a) 5 o! c E c .'7: 

--F, c °- 

4. c Ei' 

E -- '6 -6 

a. (i) _c 

46 

co 

.5 3 

0 

- 

n 0 

.s c -,..- 0 15 0 Zii CT .0 

OD -C C 0 

- a) '5 us 0-.c ..- 0) al s. 0 13 

*- 0 .E 2 

O E D 

c N. 

c -o'crl ---' cou) .--- °3 co els 

_c 

_c 

.05 

, ca 

-o 

co c a) 

E u) os. 

as 4-_- 0 0 

3 

_c ''' 

as 0) 03 

O c 0. 

4.= 

0 cm ' ci M -- .... - CA , (t) .- a)0 4-• (p _n co =- co us c ° at 

c O ) 

c 0 c '6 :2 (D 03 = >. CA ... :,.... 

81 a) a) °..c E cp 8' 8_ .. a) izi 8 D , _c ..... CD -L4 ..,..,, "r) --5 5 cTs cot tr-o . 

... a)= - 0) 

c_- >4... szki ,..c 03 co 0 .c a.8.s -_- ,,-. o c -= .c ..9- E 0).- 

o c.c 0 0 a 0 = -0 c 4 -0 , 

:.„ _:.cc.). .2 tg ° -..-. as 0 o 0as c .g- 5. a-ocno?..91E....-.- 

os 

a) .c o 0, 5 5 a 

c 

• 

= _0 

C 

Yo .y E *:-. Cr) 

Ti 

.-6.., c a, "8 f, .0 2 

(0 - -ac E 

E=c 0,ast.-o = o 

u) , o • 8i 2321.5 A 6"..5. 0 = accm 0° oas ,_ 

• 

 -0 1:).2 ca o o 

o c 0- coC a ..' ert E 0- X 

0) f'-) 2c3 8„,x Cc a) 

a Es 8 co D) .0._°13 os -0 0-'5 0,...7 c 2 :,-, 

>,= 2 ;., 8 .6 ci-s) 0. 

O 0 E CD •S •-• 13 "- = 'C - C ..2•- '" "5 5co u) "-0 - 

CIS ••••• 46 0 C 0 , 0 - - -0 .- c co ••.- -C 0 U) a... (t) ,..,`- co CD o E 'I' a)-- nas „cp ° - U L

-c °'-=- o 5 ,_ 5-c c co.- ..., 0 cscss.c C) - - 7■51 ca -...-,2 6 8 5 t cs co t 0 -o cm c.....- 0 it ,... L0-,:c...._ as _c 0- c = (3) of. E-E o o , i 1-4 72..2 r: a) 

c -- c2 

8 

co 

5 2 0.7)°- 0 ri ° ° 3'5 0 _0 c -ts co °- > riTs 2 43 as t o 

co co wt.; oo al t 85 -,-, 0 c o z co 0 o = c , P_ o 0 _c co .2 0 ,-, CU ct, rt's • .c >, 0 -0 c -0 M 1..: 0).- 0 0 c -CD -0 

0 

-0.- o u) .- as o .... 0 - , CDC2 0 13)S 11"3-c-0{C7).-•C 

2 8 o 0-O .8 _ - .- ..- _c as ;.--, 0, 2 = CO L..c -X . o com.2, 

... ›-0-.0 

.•-• 0 0 cve-.) 9.4 a) m = au *5 _c 

c as '=' 0 -5 E 'i t o- a-o 0 c; (3.= 5 c1 0..z wA ii) o u) -F, els- as o n, 

-0 c nsco' -.- 4 c°-h- Eo=cot7 0 -0--=c) ------ 0 gig co 5" 7 0 O 7 7 C '-. J3 

.... -0 ° .5-05 CO 2 '- MSL0:05. 6 

-

0' 0E -0 w.. (73 -13 2 =2 czz 0.w_a 0 C E ai, 0 .... , .c C a a) --= = co-5, in' ti, c 

co o a) 0-..- -..-. -a .- -o as 0 5 co o co ,- 5 "": 0'- 

re, E .:1- 0 co 0- ac, 2 -0 - •-• 5.2 • 0 .0 0 as n -rej o) ,2), c o 0 -0 3 -c o 0 • CD a) Tz .= o 0 . Ay. = zs c o >, 0 t - - 1-' a)..... 2 os E.= c c..- o .t o cm 5 x ._ 

c 0 0 0 03 -a 0 .'= 0..- s >,0-..-- coo o c a) -.E- 01_0a) o al L.. _c 0 .- - 

m M ko co I- 0_21- 0 w 0 cn w< (..) 

O N Oro a) CY) 0 0 c) .-- 00 to r- tom cf) 00 0 

Z d). C2, 7 (N .

cr! ..- co is c...) co.o cm ..- 0) CI)CjI 0) (No ..- 

N Nt N 

.-• CV C`') N 0 -4- . ..i: (-6 CO CO ci,- 

N- .4- 0 ..- .-- 1.- CO 0 ..- 0 0) N R ON 0 

to CG 6 cn 17 V) CV ..- 

I- •Yt NI-LO '1 .0 tO •tt CO .-- 

COCO

4* el 11) 0.) 'Cr 

CO

Cr (3) •tt X CO CO CO CO CO CO CS) CO CD CO CO 0) N Ch 0) CO CO C3) 03 a) 

0) 

CU 

2 a) 

E 

E 

• 8 O 

• 

15 

• C co a) 

▪ E 

o 

a) a 

0 • .• 

CO ao 

"c5) 

C 

03 

• 

0) 

E 

cn 

la 

4=. 

C 0 

E 

2 2 

o 7,31) 

co° E 

° 

o 

a? SC 

a; .5 

Z

o 

Z 

159 
O 

Z43.. 

CO 

co 

•1- 

U) 

Co 

co 

Co 

0 

Co 

CO 

co 

co 

CA 

t O 

a. 

Cn 

U) 

Total allcommodities 

0,-NMNI-WWNWM 

WWNMNMOOWO 

oic.friai.- ar-16'05N 

NM MTTNO) 

m cONtNLA 

N.,--MMIAWrOW 

MWOMNW WM Nr, . mow..-qm 

Coi (DS (6N ai 

N ,- WO ONtml- MW a WN oNto-o 

T Co 

NMCOMNNWNW 

CANi- MMNMADw

N 

,- 

alMCO N M.NNW

N

.CI 

0 N"-- MMvt Co co. 'd" 

N 

qc71W8WRIJPE182 co co

NMNMNONOWN M 

eSoCRuiaca'NFRoici 

cAd- ON NOOWW N 

W NN WNONN 

c\ied 

C 

Co 

• MONOM c0 c0 N 

O

▪ • 

0)NI- NCOLO. M •- Co 

a. COOIOrrraOC N-.- 

m—m— ow—NI-07 U) 

• CO LANV:LANIc 

NttCO U) 

co••MW.7NWMMM .1-wwNoC7)Ncowo o 

aico- cdco-ai 

cpTTO co,--oinco 

"cr NW CON,-.0,- Co 

-6a Co 

0 

I1TS U) 

c 

• 

cn 

cti f0 2 

- c. 0E o a) a) _c 

Ia .0 3 ,... 

MEu!›.. o 

="2-0 • a) t cD a) 

.cc:Eo30 blw m 6' 0EE P,, R 2_0 t-o a 0 ..; -(_,.., 

6 04 c - o 0 o ,-- ° k 0 ..... = c 

876 4 5 '-g. Vg IS 0 „ c 0 -g 0 5...._ cctos 

as m oasz.„00m, Emc lI m miacc m 

.E.9:„ti28i2(g .. 0-0 z:: CC-M 0)-00); ea 

I G C -DC M m C > aS 8 12 > co 2 as B zn 

4:: o -o, m ow... 

12Q42(711-grA21 

-o 5-o o >

w oc5 E_mll3 E'Emmmo cc.) 0a)E 

O 0- —c-c u_cooM<02220 

z 

0 

S 0 ,-NM'crWWNWM 

Total all commodities 

Compiled fromofficial statisticsof the U.S.Departmentof Commerce. 

160 
E 

E 

O

• 

-6 

co a) 

as E 

o 

a) ma 

O 6 

-0 

CO w 

as 

E• . 2 

2 as 

• To 

C = 

CE = 

2 2 

7513 

RE 

O8 

ciN 6 ,3 

750 

z fn 

Total,U.S.exportstoChina 

6 F0 ,C12 

 03 0 CC 

r: tT 

co 

0 NI' 

0N M 

CO 

cc> 

Co 

03 co. 

O N 

Nt 

NY CO0 

ll 

N a 0 m 

N N 

6 CO 

01 00000 00W ON 

0 NMCOr COW COO 

C) MCOrM Nr CO.- 

0) cia.4, a ac i dd Ch 0 NMNNF MIO NO 

M 0) ONNN Nr rr 

01 r 

r 

MCOrM MO NW 

0 OINOW 

*/00)01 4g zizs M aaap.: 4d 

MNN Mr 

W 

W 

 N rN rM 

N- r03.4- 0) OM WM 

rrN.t NrOO 00 00 Low. 

CA N MWM WM 

me, 

*01. 

0 

= 

'''. til 

0 

CO 

CO 

m 

e 

CO 

0) Lor, 

MO 

doi 

000 

CO ('7 

COa' 

NN 

NW 

MM 

mm 

dr: 

N 

r CO 

01 

o 

CO 

CO 

M 

o N 

1-0 CO-iNI- N 

In 

NW 

r0 

00 

roM rN 

MN!' 

.64 

U) MN ,- 

m 1-CONF 

r NI :MO 

CD ,-dd 

CO COCOO 

W rOlM 

rOlN 

rt):. comm 

N d(64 0 OCON 

CO NNNI, 

COCOMQ 

N omm. 

4c6,- 

0Nr 

N 

N CO 

' 

CO 

CO 

CO 

15 

O 

O 

0 

8 

co 

C L C 

o iii .0 8 CD Or. 

en C .1 C co 7j8 ..(,) .._ 

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174 
Table A-25 

Antidumping orders and findings in effect as of Dec. 31, 1993 

Effective date of 

Country and commodity original action 1 

Argentina: 

Silicon metal Sept. 26, 1991 

Rectangular tubing May 26, 1989 

Carbon steel wire rods Nov. 23, 1984 

Barbed wire Nov. 13, 1983 

Armenia: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Australia: 

Corrosion-resistant carbon steel flat products Aug. 19, 1993 

Canned bartlett pears Mar. 23, 1973 

Austria: Railway track equipment Feb. 17, 1978 

Arzerbaijan: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Bangladesh: Shop towels Mar. 20, 1992 

Belarus-Baltic: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Belgium: 

Cut-to-length carbon steel plate Aug. 19, 1993 

Phosphoric acid Aug. 20, 1987 

Sugar June 13, 1979 

Brazil: 

Cut-to-length carbon steel plate Aug. 19, 1993 

Lead and bismuth steel Mar. 22, 1993 

Circular welded non-alloy pipe Nov. 2, 1992 

Silicon metal July 31, 1991 

Nitrocellulose July 10, 1990 

Orange juice May 5, 1987 

Brass sheet and strip Jan. 12, 1987 

Butt-weld pipe fittings Dec. 17, 1986 

Pipe fittings May 21, 1986 

Construction castings May 9, 1986 

Canada: 

Corrosion-resistant carbon steel flat products Aug. 19, 1993 

Cut-to-length carbon steel plate Aug. 19, 1993 

Magnesium Aug. 31, 1992 

Steel rail Sept. 15, 1989 

Color picture tubes Jan. 7, 1988 

Brass sheet and strip Jan. 12, 1987 

Oil country tubular goods June 16, 1986 

Construction castings Mar. 5, 1986 

Raspberries June 24, 1985 

Sugar and syrups Apr. 9, 1980 

Paving equipment Sept. 7, 1977 

Racing plates Feb. 27, 1974 

Elemental sulphur Dec. 17, 1973 

Steel jacks Sept. 13, 1966 

Chile: 

Standard carnations Mar. 20, 1987 

Colombia: 

Fresh cut flowers Mar. 18, 1987 

Dominican Republic: 

Portland cement May 4, 1963 

Ecuador: Fresh cut flowers Mar. 18, 1987 

Estonia: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Finland: 

Cut-to-length carbon steel plate Aug. 19, 1993 

Rayon staple fiber Mar. 21, 1979 

See footnote at end of table 

175 
Table A-25-Continued 

Antidumping orders and findings in effect as of Dec. 31, 1993 

Effective date of 

Country and commodity original action 1 

France: 

Corrosion-resistant carbon steel flat products Aug. 19, 1993 

Lead and bismuth steel Mar. 22, 1993 

Ball bearings May 15, 1989 

Cylindrical roller bearings May 15, 1989 

Spherical plain bearings May 15, 1989 

Brass sheet and strip Mar. 6, 1987 

Nitrocellulose Aug. 10, 1983 

Sorbitol Apr. 9, 1982 

Anhydrous sodium metasilicate Jan. 7, 1981 

Sugar June 13, 1979 

Large power transformers June 14, 1972 

Georgia: 

Urea July 14, 1987 

Titanium Sponge Aug. 28, 1968 

Germany: 

Cold-rolled carbon steel flat products Aug. 19, 1993 

Corrosion-resistant carbon steel flat products Aug. 19, 1993 

Cut-to-length carbon steel plate Aug. 19, 1993 

Lead and bismuth steel Mar. 22, 1993 

Rayon yarn June 30, 1992 

Sodium thiosulfate Feb. 19, 1991 

Nitrocellulose July 10, 1990 

Industrial belts (except synchronous and V-belts) June 14, 1989 

Ball bearings May 15, 1989 

Cylindrical roller bearings May 15, 1989 

Spherical plain bearings May 15, 1989 

Crankshafts Sept. 23, 1987 

Urea July 14, 1987 

Brass sheet and strip Mar. 6, 1987 

Barium carbonate June 25, 1981 

Sugar June 13, 1979 

Animal glue Dec. 22, 1977 

Drycleaning machinery Nov. 2, 1972 

Greece: Electrolytic manganese dioxide Apr. 17, 1989 

Hong Kong: 

Manmade-fiber sweaters Sept. 24, 1990 

Photo albums Dec. 16, 1985 

Hungary: Tapered roller bearings June 19, 1987 

India: 

Stainless steel wire rod Dec. 1, 1993 

Pipes and tubes May 12, 1986 

Iran: Pistachio Nuts July 17, 1986 

Israel: 

Phosphoric acid Aug. 19, 1987 

Oil country tubular goods Mar. 6, 1987 

Italy: 

Synchronous industrial belts and V-belts June 14, 1989 

Ball bearings May 15, 1989 

Cylindrical roller bearings May 15, 1989 

Granular polytetrafluoroethylene resin Aug. 30, 1988 

Tapered roller bearings Aug. 14, 1987 

Brass sheet and strip Mar. 6, 1987 

Brass fire protection equipment Mar. 1, 1985 

Woodwind pads Sept. 21, 1984 

Spun acrylic yarn Apr. 8, 1980 

Pressure sensitive tape Oct. 21, 1977 

Large power transformers June 14, 1972 

Japan: 

Corrosion-resistant carbon steel flat products Aug. 19, 1993 

Electric cutting tools July 12, 1993 

Lenses Apr. 15, 1992 

Electroluminescent flat-panel displays Sept. 4, 1991 

Personal word processors Aug. 28, 1991 

PET film June 5, 1991 

See footnote at end of table 

176 
Table A-25-Continued 

Antidumping orders and findings in effect as of Dec. 31, 1993 

Effective date of 

Country and commodity original action1 

Japan-Continued: 

Cement May 10, 1991 

Benzyl paraben Feb. 13, 1993 

Nitrocellulose July 10, 1990 

Mechanical transfer presses Feb. 16, 1990 

Laser light-scattering instruments Nov. 19, 1990 

Drafting machines Dec. 29, 1989 

Small business telephone systems Dec. 11, 1989 

Industrial belts June 14, 1989 

Ball bearings May 15, 1989 

Cylindrical roller bearings May 15, 1989 

Spherical plain bearings May 15, 1989 

Electrolytic manganese dioxide April 17, 1989 

Microdisks April 3, 1989 

Granular polytetrafluoroethylene resin Aug. 24, 1988 

Brass sheet and strip Aug. 12, 1988 

Nitrile rubber June 16, 1988 

Forklift trucks June 7, 1988 

Stainless steel butt-weld pipe fittings March 25, 1988 

Color picture tubes Jan. 7, 1988 

Tapered roller bearings over 4 inches Oct. 6, 1987 

Filament fabric Sept. 23, 1990 

Cast-iron pipe fittings July 6, 1987 

Butt-weld pipe fittings Feb. 10, 1987 

Cellular mobile telephones Dec. 19, 1985 

Neoprene laminate July 19, 1985 

Calcium hypochlorite Apr. 18, 1985 

Titanium sponge Nov. 30, 1984 

Cyanuric acid Apr. 27, 1984 

Pagers Aug. 16, 1983 

High powered amplifiers July 20, 1982 

Large electric motors Dec. 24, 1980 

Portable electric typewriters May 9, 1980 

Spun acrylic yarn Apr. 8, 1980 

Steel wire strand Dec. 8, 1978 

Impression fabric May 25, 1978 

Melamine Feb. 2, 1977 

Acrylic sheet Aug. 30, 1976 

Tapered roller bearings 4 inches and under Aug. 17, 1976 

Steel wire rope Oct. 15, 1973 

Synthetic methionine July 10, 1973 

Roller chain Apr. 12, 1973 

Bicycle speedometers Nov. 22, 1972 

Cadmium Aug. 4, 1972 

Large power transformers June 14, 1972 

Fishnetting June 9, 1972 

Polychloroprene rubber Dec. 9, 1971 

Ferrite cores Mar. 13, 1971 

Television receiving sets Mar. 10, 1971 

Tuners Dec. 12, 1970 

Kazakhstan: 

Ferrosilicon Apr. 7, 1993 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Kenya: Standard carnations Apr. 23, 1987 

Kyrgyzstan: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Latvia-Baltic: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Lithuania: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

See footnote at end of table 

177 
Table A-25-Continued 

Antidumping orders and findings in effect as of Dec. 31, 1993 

Effective date of 

Country and commodity original action 1 

Malaysia: Extruded rubber thread Oct. 7, 1992 

Mexico: 

Cut-to-length carbon steel plate Aug. 19, 1993 

Steel wire rope Mar. 25, 1993 

Circular welded non-alloy pipe Nov. 2, 1992 

Cement Aug. 30, 1990 

Fresh cut flowers Apr. 23, 1987 

Cookware Dec. 2, 1986 

Moldova: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Netherlands: 

Cold-rolled carbon steel flat products Aug. 19, 1993 

Brass sheet and strip Aug. 12, 1988 

New Zealand: 

Kiwifruit June 2, 1992 

Brazing copper wire and rod Dec. 4, 1985 

Norway: Atlantic salmon Apr. 12, 1991 

People's Republic of China: 

Lock washers Oct. 19, 1993 

CDIW fittings and glands Sept. 7, 1993 

Ferrosilicon Mar. 11, 1993 

Sulfanilic acid Aug. 19, 1992 

Butt-weld pipe fittings July 6, 1992 

Tungsten ore concentrates Nov. 21, 1991 

Lug nuts Sept. 20, 1991 

Sparklers June 18, 1991 

Silicon metal June 10, 1991 

Sodium thiosulfate Feb. 19, 1991 

Hammers/sledges Feb. 19, 1991 

Picks/mattocks Feb. 19, 1991 

Bars/wedges Feb. 19, 1991 

Axes/adzes Feb. 19, 1991 

Nitrocellulose July 10, 1990 

Tapered roller bearings June 15, 1987 

Cookware Dec. 2, 1986 

Candles Aug. 28, 1986 

Construction castings May 9, 1986 

Paint brushes Feb. 14, 1986 

Barium chloride Oct. 17, 1984 

Chloropicrin Mar. 22, 1984 

Potassium permanganate Jan. 31, 1984 

Shop towels Oct. 4, 1983 

Printcloth Sept. 16, 1983 

Poland: Cut-to-length carbon steel plate Aug. 19, 1993 

Romania: 

Cut-to-length carbon steel plate Aug. 19, 1993 

Ball bearings May 15, 1989 

Urea July 14, 1987 

Tapered roller bearings June 19, 1987 

Russia: 

Ferrosilicon June 24, 1993 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Singapore: 

V-belts June 14, 1989 

Ball bearings May 15, 1989 

Color picture tubes Jan. 7, 1988 

Rectangular pipes and tubes Nov. 13, 1986 

South Africa: Brazing copper wire and rod Jan. 29, 1986 

South Korea: 

Cold-rolled carbon steel flat products Aug. 19, 1993 

Corrosion-resistant carbon steel flat products Aug. 19, 1993 

DRAMS May 10, 1993 

See footnote at end of table 

178 
Table A-25-Continued 

Antidumping orders and findings in effect as of Dec. 31, 1993 

Effective date of 

Country and commodity original action 1 

South Korea-Continued: 

Steel wire rope Mar. 26, 1993 

Stainless steel butt-weld pipe fittings Feb. 23, 1993 

Welded stainless steel pipes Dec. 30, 1992 

Circular welded non-alloy pipe Nov. 2, 1992 

PET film June 5, 1991 

Manmade-fiber sweaters Sept. 24, 1990 

Nitrocellulose July 10, 1990 

Small business telephone systems Feb. 7, 1990 

Color picture tubes Jan. 7, 1988 

Stainless steel c000kware Jan. 20, 1987 

Brass sheet and strip Jan. 12, 1987 

Pipe fittings May 23, 1986 

Photo albums Dec. 16, 1985 

Television receiving sets Apr. 30, 1992 

Spain: 

Cut-to-length carbon steel plate Aug. 19, 1993 

Potassium permanganate Jan. 17, 1984 

Sweden: 

Cut-to-length carbon steel plate Aug. 19, 1993 

Ball bearings May 15, 1989 

Cylindrical roller bearings May 15, 1989 

Seamless stainless steel hollow products Dec. 3, 1987 

Brass sheet and strip Mar. 6, 1987 

Staples Dec. 20, 1983 

Staplers Dec. 20, 1983 

Stainless steel plate June 8, 1973 

Taiwan: 

Lockwashers June 28, 1993 

Stainless steel butt-weld pipe fittings June 16, 1993 

Welded stainless steel pipes Dec. 30, 1992 

Circular welded non-alloy pipe Nov. 2, 1992 

Lug nuts Sept. 20, 1991 

Manmade-fiber sweaters Sept. 24, 1990 

Small business telephone systems Dec. 11, 1989 

Rectangular tubing March 27, 1989 

Stainless steel cookware Jan. 20, 1987 

Butt-weld pipe fittings Dec. 17, 1986 

Cookware Dec. 2, 1986 

Oil country tubular goods June 18, 1986 

Pipe fittings May 23, 1986 

Circular pipes and tubes May 7, 1984 

Television receiving sets Apr. 30, 1984 

Fireplace mesh panels June 7, 1982 

Carbon steel plate June 13, 1979 

Clear sheet glass Aug. 21, 1971 

Tajikistan: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Thailand: 

Butt-weld pipe fittings July 6, 1992 

Ball bearings May 15, 1989 

Pipe fittings Aug. 20, 1987 

Circular welded pipes and tubes Mar. 11, 1986 

Turkey: 

Pipes and tubes May 15, 1986 

Turkmenistan: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Ukraine: 

Uranium Aug. 30, 1993 

Ferrosilicon Apr. 7, 1993 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

See footnote at end of table 

179 
Table A-25—Continued 

Antidumping orders and findings in effect as of Dec. 31, 1993 

Effective date of 

Country and commodity original action1 

United Kingdom: 

Cut-to-length carbon steel plate Aug. 19, 1993 

Lead and bismuth steel Mar. 22, 1993 

Sodium thiosulfate Feb. 19, 1991 

Nitrocellulose July 10, 1990 

Ball bearings May 15, 1989 

Cylindrical roller bearings May 15, 1989 

Crankshafts Sept. 21, 1987 

Uzbekistan: 

Urea July 14, 1987 

Titanium sponge Aug. 28, 1968 

Venezuela: 

Ferrosilicon June 24, 1993 

Circular welded non-alloy pipe Nov. 2, 1992 

Aluminum sulfate Dec. 15, 1989 

Electrical conductor aluminum redraw rods Aug. 22, 1988 

Yugoslavia: 

Nitrocellulose Oct. 16, 1990 

Tapered roller bearings Aug. 14, 1987 

Suspension agreements in effect: 

Canada: Potassium chloride Jan. 19, 1988 

Hungary: Truck trailer axles Jan. 4, 1982 

Japan: 

Erasable programmable read-only memory chips Aug. 1, 1986 

Small motors Nov. 6, 1980 

Kazakhstan: Uranium Oct. 16, 1992 

Kyrgyzstan: Uranium Oct. 16, 1992 

Russia: Uranium Oct. 16, 1992 

Singapore: PETs July 26, 1993 

Tajikistan: Uranium Oct. 16, 1992 

Uzbekistan: Uranium Oct. 16, 1992 

Venezuela: Cement Feb. 27, 1992 

1 The U.S. Department of Commerce conducts a periodic review of outstanding antidumping duty orders and 

suspension agreements, upon request, to determine if the amount of the net margin of underselling has changed. If a 

change has occurred, the imposed antidumping duties are adjusted accordingly. The results of the periodic review 

must be published together with a formal notice of any antidumping duty to be assessed, estimated duty to be 

deposited, or investigation to be resumed. 

Source: U.S. Department of Commerce, International Trade Administration. 

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182 
Table A-27 

Countervailing-duty orders and findings in effect as of Dec. 31, 1993 

Effective date of 

Country and commodity original action1 

Argentina: 

Leather Oct. 2, 1990 

Welded carbon steel pipe and tube products Sept. 27, 1988 

Apparel Mar. 12, 1985 

Textile mill products Mar. 12, 1985 

Oil country tubular goods Nov. 22, 1984 

Cold-rolled flat products Apr. 26, 1984 

Wool Apr. 4, 1983 

Leather wearing apparel Mar. 18, 1983 

Nonrubber footwear Jan. 17, 1979 

Woolen garments Nov. 16, 1978 

Belgium: Cut-to-length carbon steel plate Aug. 17, 1993 

Brazil: 

Cut-to-length carbon steel plate Aug. 17, 1993 

Lead and bismuth steel Mar. 22, 1993 

Brass sheet and strip Jan. 8, 1987 

Construction castings May 15, 1986 

Agricultural tillage tools Oct. 22, 1985 

Pig iron Apr. 4, 1980 

Cotton yarn Mar. 15, 1977 

Certain castor oil products Mar. 16, 1976 

Canada: 

Alloy magnesium Aug. 31, 1992 

Pure magnesium Aug. 31, 1992 

Lumber July 13, 1992 

Steel rail Sept. 22, 1989 

Standard carnations Mar. 12, 1987 

Live swine Aug. 15, 1985 

Chile: Standard carnations Mar. 19, 1987 

Ecuador: Fresh cut flowers Jan. 13, 1987 

European Community2 : Sugar July 31, 1978 

France: 

Corrosion-resistant carbon steel flat products Aug. 17, 1993 

Lead and bismuth steel Mar. 22, 1993 

Brass sheet and strip Mar. 6, 1987 

Germany: 

Cold-rolled carbon steel flat products Aug. 17, 1993 

Corrosion-resistant carbon steel flat products Aug. 17, 1993 

Cut-to-length carbon steel flat products Aug. 17, 1993 

Lead and bismuth steel Mar. 22, 1993 

India: 

Sulfanilic Acid Mar. 2, 1993 

Certain iron-metal castings Oct. 16, 1980 

Iran: 

Roasted pistachios Oct. 7, 1986 

Raw pistachios Mar. 11, 1986 

Israel: 

Industrial phosphoric acid Aug. 19, 1987 

Oil country tubular goods Mar. 6, 1987 

Fresh cut roses Sept. 4, 1980 

Malaysia: 

Extruded rubber thread Aug. 25, 1992 

Carbon steel wire rod Apr. 22, 1988 

Mexico: 

Cut-to-length carbon steel flat products Aug. 17, 1993 

Porcelain cookware Dec. 12, 1986 

Textile mill products Mar. 18, 1985 

Ceramic tile May 10, 1982 

Leather wearing apparel Apr. 10, 1981 

Netherlands: Standard chrysanthemums Mar. 12, 1987 

New Zealand: 

Steel wire nails Oct. 5, 1987 

Steel wire Sept. 2, 1986 

Carbon steel wire rod Mar. 7, 1986 

See footnote at end of table 

183 
Table A-27-Continued 

Countervailing-duty orders and findings in effect as of Dec. 31, 1993 

Effective date of 

Country and commodity original action1 

New Zealand-Continued: 

Lamb meat Sept. 17, 1985 

Brazing copper rod and wire Aug. 5, 1985 

Norway: Atlantic salmon Apr. 12, 1991 

Pakistan: Shop towels Mar. 9, 1984 

Peru: 

Pompon chrysanthemums Apr. 23, 1987 

Rebars Nov. 27, 1985 

Apparel Mar. 12, 1985 

Textiles Mar. 12, 1985 

Cotton sheeting and sateen Feb. 1, 1983 

Cotton yarn Feb. 1, 1983 

Saudi Arabia: Carbon steel wire rod Feb. 3, 1986 

Singapore: Antifriction bearings May 3, 1989 

South Africa: Ferrochrome Mar. 11, 1981 

South Korea: 

Cold-rolled carbon steel flat products Aug. 17, 1993 

Corrosion-resistant carbon steel flat products Aug. 17, 1993 

Stainless steel cookware Jan. 20, 1987 

Spain: 

Cut-to-length carbon steel flat products Aug. 17, 1993 

Stainless steel wire rod Jan. 3, 1983 

Sri Lanka: 

Apparel Mar. 12, 1985 

Textiles Mar. 12, 1985 

Sweden: 

Cut-to-length carbon steel flat products Aug. 17, 1993 

Certain carbon steel products Oct. 11, 1985 

Viscose rayon staple fiber May 15, 1979 

Taiwan: Stainless steel cookware Jan. 20, 1987 

Thailand: 

Steel wire rope Sept. 11, 1991 

Butt-weld pipe fittings Jan. 18, 1990 

Ball bearings May 3, 1989 

Malleable pipe fittings Feb. 10, 1989 

Steel wire nails Oct. 2, 1987 

Rice Apr. 10, 1986 

Pipes and tubes Aug. 14, 1985 

Certain apparel Mar. 12, 1985 

Turkey: 

Acetylsalicylic acid (aspirin) Aug. 26, 1987 

Pipes and tubes Mar. 7, 1986 

United Kingdom: 

Cut-to-length carbon steel flat products Aug. 17, 1993 

Lead and bismuth steel Mar. 22, 1993 

Uruguay: Leather wearing apparel July 17, 1982 

Venezuela: 

Ferrosilicon May 10, 1993 

Circular welded nonalloy steel pipe Sept. 17, 1992 

Aluminum sulfate Dec. 19, 1989 

Electrical conductor redraw rods Aug. 22, 1988 

Zimbabwe: Wire rod Aug. 15, 1986 

Suspension agreements in effect: 

Argentina: Wire rod Sept. 27, 1982 

Brazil: 

Crankshafts July 28, 1987 

Orange juice Mar. 2, 1983 

Colombia: 

Miniature carnations Jan. 13, 1987 

Cut flowers Jan. 9, 1986 

Textiles Mar. 12, 1985 

Costa Rica: Cut flowers Jan. 13, 1987 

Peru: Shop Towels Sept. 12, 1984 

Singapore: Compressors Nov. 7, 1983 

Thailand: Textiles Mar. 12, 1985 

See footnote at end of table 

184 
Table A-27—Continued 

Countervailing-duty orders and findings in effect as of Dec. 31, 1993 

Effective date of 

Country and commodity original action1 

1The U.S. Department of Commerce conducts a periodic review of outstanding countervailing-duty orders and 

suspension agreements, upon request, to determine if the amount of the net subsidy has changed. If a change has 

occurred, the imposed countervailing duties are adjusted accordingly. 

2Includes Belgium, Denmark, France, Ireland, Italy, the United Kingdom, Germany, Luxembourg, the 

Netherlands, and Greece. 

Source: U.S. Department of Commerce, International Trade Administration. 

185 
Table A-28 

Section 337 investigations completed by the U.S. International Trade Commission during 1993 and 

those pending on Dec. 31, 1993 

Status of 

Investigation Article Country1 Commission Determination 

Completed: 

337-TA-315 Plastic Encapsulated No foreign Modified cease and desist order 

Integrated Circuits respondents as to one respondent. 

Italy Terminated based on a settlement 

agreement. 

Taiwan Issued a limited exclusion order. 

Japan Terminated based on a finding of 

no violation. 

337-TA-317 Internal Mixing 

Devices and 

Components 

337-TA-333 Woodworking 

Accessories 

337-TA-334 Condensers, Parts 

Thereof and Products 

Containing Same, 

Including Air 

Conditioners For 

Automobiles 

337-TA-337 Integrated Circuit 

Telecommunication 

Chips and Products 

Containing Same, 

Including Dialing 

Apparatus 

337-TA-338 Bulk Bags and 

Process For Making 

Same 

337-TA-339 Commercial Food 

Portioners, Components 

Thereof, Including 

Software, and Process 

Thereof 

337-TA-340 Specimen Container 

Systems and Components 

Including Alignment 

Indicator Labels, 

and Method of Use 

337-TA-341 Static Random Access 

Memories, Components 

Thereof and Products 

Containing Same 

337-TA-342 Circuit Board Testers 

337-TA-343 Mechanical Gear 

Couplings and 

Components 

Thereof 

337-TA-344 Cutting Tools For 

Flexible Plastic 

Conduit and 

Components 

Thereof 

See footnote at end of table. 

Taiwan Issued a limited exclusion order 

and cease and desist orders. 

Brazil, Canada, Terminated based on a settlement 

Philippines agreement. 

Denmark Terminated based on a settlement 

agreement. 

Canada Terminated based on a consent 

order. 

Taiwan Terminated one respondent based 

on a settlement agreement and 

the remaining respondent based 

on withdrawal of complaint. 

United Kingdom Terminated based on a settlement 

agreement. 

Canada Terminated based on a consent 

order. 

Taiwan Issued a limited exclusion order and 

a cease and desist order. 

186 
Table A-28—Continued 

Section 337 investigations completed by the U.S. International Trade Commission during 1993 and 

those pending on Dec. 31, 1993 

Status of 

Investigation Article Country1 Commission Determination 

Completed—Continued 

337-TA-346 Magnetic Switches Canada 

For Coaxial 

Transmission Lines 

and Products 

Containing The Same 

Terminated with prejudice based on 

withdrawal of complaint. 

337-TA-348 In-Line Roller Skates 

With Ventilated Boots 

And In-Line Roller 

Skates With Axle 

Aperture Plugs and 

Component Parts 

Thereof 

Canada, Hong Kong, .... Terminated some respondents 

Italy, Taiwan, based on consent orders, other 

Austria respondents based on patent 

licensing agreements, and the 

remaining respondents based on 

withdrawal of complaint. 

337-TA-353 Lens Panels For Taiwan 

Lighting Fixtures, 

Kits Containing 

Same, and Fixtures 

Containing Same 

Terminated based on withdrawal of 

complaint. 

Pending: 

337-TA-228 Fans with Brushless Japan 

DC Motors 

337-TA-333 Woodworking 

Accessories 

337-TA-345 Anisotropically Republic of Korea 

Etched One 

Megabit and Greater 

DRAMs, Components 

Thereof, and Products 

Containing Such DRAMs 

Advisory opinion proceeding 

suspended pending final judgement 

of U.S. district court. 

Pending before the All. 

Taiwan Ancillary proceeding pending 

before Commission. 

337-TA-347 Anti-Theft 

Deactivatable 

Resonant Tags 

and Components 

Thereof 

Canada, Bermuda, Pending before the Commission. 

Japan, 

Switzerland 

337-TA-349 Diltiazem Israel, Italy, 

Hydrochloride Finland 

and Diltiazem 

Preparations 

337-TA-350 Sputtered Carbon Japan, Taiwan 

Coated Computer 

Disks and Products 

Containing Same, 

Including Disk 

Drives 

337-TA-351 Removable Hard France 

Disk Cartridges 

and Products 

Containing Same 

See footnote at end of table. 

Investigation suspended pending 

completion of U.S. Patent Office 

re-examination proceeding. 

Pending before the All. 

Pending before the All. 

187 
Table A-28—Continued 

Section 337 investigations completed by the U.S. International Trade Commission during 1993 and 

those pending on Dec. 31, 1993 

Status of 

Investigation Article Country1 Commission Determination 

Pending—Continued 

337-TA-352 Personal Computers Taiwan Pending before the All. 

With Memory 

Management 

Information 

Stored In 

External 

Memory and 

Related Materials 

337-TA-354 Tape Dispensers Hong Kong, Taiwan Pending before the Commission. 

337-TA-355 Vehicle Security Taiwan Pending before the ALJ. 

Systems and 

Components 

Thereof 

337-TA-356 Integrated Circuit Japan Pending before the All. 

Devices, Processes 

For Making Same, 

Components Thereof, 

and Products 

Containing Same 

337-TA-357 Sports Sandals and Peoples Republic Pending before the All. 

Components of China 

Thereof 

337-TA-358 Recombinantly Denmark, Israel Pending before the All. 

Produced Human 

Growth Hormones2 

337-TA-359 Dielectric Miniature Canada Pending before the All. 

Microwave Filters and 

Multiplexers 

Containing Same 

337-TA-360 Devices For Taiwan Pending before the All. 

Connecting 

Computers Via 

Telephone Lines 

337-TA-361 Portable On-Car Germany Pending before the All. 

Disc Brake Lathes 

and Components 

337-TA-362 Methods of Germany Pending before the All. 

Assembling Plastic 

Ball Valves and 

Components 

1This column lists the countries of the foreign respondents named in the investigation. 

2Subsequent to the filing of this Section 337 Complaint, the Commission initiated a related Section 603 

investigation. The Section 337 investigation was instituted upon termination of the Section 603 investigation. 

Source: U.S. International Trade Commission, Office of Unfair Import Investigations. 

188 
Table A-29 

Outstanding sec. 337 exclusion orders as of Dec. 31, 1993 

Investigation 

No. Article Country1 

Date patent 

expires 

337-TA-44 

337-TA-55 

337-TA-59 

337-TA-69 

337-TA-74 

337-TA-83 

337-TA-87 

337-TA-105 

337-TA-112 • 

337-TA-114 • 

337-TA-118 

337-TA-137 

337-TA-139 

337-TA-140 

337-TA-143 

337-TA-146 

337-TA-148 

/169 

337-TA-152 

337-TA-161 

337-TA-167 . . . . 

337-TA-170 . . . . 

337-TA-174 . . . . 

337-TA-195 . . . . 

337-TA-197 . . . . 

337-TA-228 

337-TA-229 

337-TA-231 

337-TA-240 

337-TA-242 

337-TA-254 

337-TA-266 

337-TA-267 

Certain Roller Units No foreign respondents 

Certain Novelty Glasses Hong Kong 

Certain Pump-Top Insulated Containers Korea, Taiwan 

Certain Airtight Cast-Iron Stoves Taiwan, Korea 

Certain Rotatable Photograph and Cards Hong Kong 

Display Unit and Components Thereof 

Certain Adjustable Window Shades and Taiwan Feb. 7, 1994 

Components Thereof 

Certain Coin-Operated Audio-Visual Games Japan, Taiwan Non-patent 

and Components Thereof 

Certain Coin-Operated Audio Visual Japan, Taiwan 

Games and Components Thereof 

Certain Cube Puzzles Taiwan, Japan, Canada 

Certain Miniature Plug-In Blade Fuses Taiwan 

Certain Sneakers With Fabric Uppers and Korea 

Rubber Soles 

Certain Heavy-Duty Staple Gun Tackers 

Certain Caulking Guns 

Certain Personal Computers and 

Components Thereof 

Certain Amorphous Metal Alloys and 

Amorphous Metal Articles 

Certain Canape Makers 

Certain Processes for the Manufacture of Spain 

Skinless Sausage Casings and 

Resulting Products 

Certain Plastic Food Storage Containers 

Certain Trolley Wheel Assemblies 

Certain Single Handle Faucets 

Certain Bag Closure Clips 

Certain Woodworking Machines Taiwan, South Africa 

Certain Cloisonne Jewelry Taiwan 

Certain Compound Action Metal Cutting Taiwan 

Snips and Components Thereof 

Certain Fans With Brushless DC Motors Japan Jan. 15, 2002 

Certain Nut Jewelry and Parts Thereof Philippines, Taiwan Non-patent 

Certain Soft Sculpture Dolls, Popularly No foreign respondents Non-patent 

Known as "Cabbage Patch Kids," Related 

Literature, and Packaging Therefor 

Certain Laser Inscribed Diamonds and Israel July 12, 2000 

the Method of Inscription Thereof 

Certain Dynamic Random Access Memories, Japan, Korea Aug. 23, 1994 

Components Thereof, and Products Mar. 28, 1995 

Containing Same Aug. 6, 2002 

Sept. 24, 2002 

Certain Small Aluminum Flashlights Hong Kong, Taiwan Mar. 18, 2003 

and Components Thereof 

Certain Reclosable Plastic Bags and Singapore, Taiwan, Non-patent 

Tubing Korea, Thailand, 

Hong Kong 

Certain Minoxidil Powder, Salts Austria, Canada, Feb. 13, 1996 

and Compositions for Use in Hair Finland, Italy, Mexico, 

Treatment Switzerland 

May 24, 1 994 

Non-patent 

 Sept. 12, 1995 

Non-patent 

Non-patent 

 Non-patent 

 Non-patent 

Non-patent 

Aug. 9, 1994 

Nov. 8, 1994 

Dec. 26, 1995 

Non-patent 

Taiwan, Hong Kong, Korea Non-patent 

Taiwan, Korea Mar. 28, 1995 

Taiwan, Hong Kong, Jan. 23, 1996 

Singapore, Switzerland July 14, 1998 

Japan, West Germany Sept. 9, 1997 

Hong Kong, Taiwan 

Korea 

Taiwan 

Israel 

No foreign respondents Mar. 22, 1997 

Non-patent 

(Order expires 

Nov. 26, 1994.) 

Non-patent 

Aug. 29, 1995 

Non-patent 

Nov. 2, 1999 

July 26, 2000 

Non-patent 

Nov. 13, 1996 

Mar. 13, 2001 

Non-patent 

Non-patent 

See footnote at end of table. 

189 
Table A-29—Continued 

Outstanding sec. 337 exclusion orders as of Dec. 31, 1993 

Investigation 

No. Article Country1 

Date patent 

expires 

337-TA-268 Certain High Intensity Retroreflective Sheeting .. Japan May 24, 1994 

337-TA-275 Certain Nonwoven Gas Filter Elements Holland Nov. 1, 1994 

337-TA-276 Certain Erasable Programmable Read Republic of Korea Sept. 16, 1997 

Only Memories, Components Thereof, July 25, 1995 

Products Containing Such Memories, July 12, 2000 

and Processes for Making Such May 21, 2002 

337-TA-279 Certain Plastic Light Duty Screw Anchors Taiwan Non-patent 

Memories Aug. 4, 2004 

337-TA-285 Certain Chemiluminescent Compositions and ... France Non-patent 

Components Thereof and Methods of Using, Feb. 28, 1995 

and Products Incorporating, the Same Feb. 2, 1999 

337-TA-287 Certain Strip Lights Taiwan Non-patent 

Mar. 15, 2000 

337-TA-293 Certain Crystalline Cefadroxil Monohydrate Italy, Spain, Mar. 12, 2002 

Switzerland 

337-TA-295 Certain Novelty Teleidoscopes Hong Kong Non-patent 

337-TA-308 Certain Key Blanks For Keys of High Security Korea Jan. 13, 2004 

Cylinder Locks 

337-TA-314 Certain Battery-Powered Ride-On Toy Taiwan 

Vehicles and Components Thereof 

337-TA-315 Certain Plastic Encapsulated No foreign respondents 

Integrated Circuits 

337-TA-319 Certain Automotive Fuel Caps and Taiwan 

Radiator Caps and Related Packaging 

and Promotional Materials 

337-TA-320 Certain Rotary Printing Apparatus France, Spain 

Using Heated Composition, Components 

Thereof, and Systems Containing Said 

Apparatus and Components 

337-TA-321 Certain Soft Drinks and Their Containers Colombia Non-patent 

337-TA-324 Certain Acid-Washed Denim Garments Hong Kong, Taiwan, Apr. 26, 2005 

and Accessories Brazil, Chile 

337-TA-333 Certain Woodworking Accessories Taiwan Feb. 21, 2006 

337-TA-337 Certain Integrated Circuit Taiwan May 1, 2001 

Telecommunication Chips and Products 

Containing Same, Including Dialing Apparatus 

337-TA-344 Certain Cutting Tools For Flexible Plastic Taiwan June 29, 1999 

Conduit and Components Thereof 

Sept. 22, 2001 

Dec. 10, 2002 

Jan. 31, 2003 

Dec. 1, 2004 

Jan. 27, 2004 

 Aug. 23, 1994 

 Non-patent 

Apr. 11, 1995 

Dec. 11, 1996 

June 30, 2004 

Aug. 23, 2005 

Dec. 24, 2002 

1This column lists the countries of the foreign respondents named in the investigation. 

Source: U.S. International Trade Commission, Office of Unfair Import Investigations. 

190 
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193 
Table A-33 

U.S. imports for consumption from CBERA countries, customs value of duty-free imports by 

designated country, 1989-93 

(1,000 dollars) 

Rank Country 1989 1990 1991 1992 1993 

1 Dominican Republic 299,174 311,075 402,507 543,124 657,673 

2 Costa Rica 190,756 218,380 249,553 294,803 388,252 

3 Guatemala 112,627 154,205 137,157 189,649 208,262 

4 Bahamas 9,086 8,578 10,652 93,324 167,110 

5 Honduras 52,648 67,891 80,464 112,511 127,399 

6 Jamaica 51,543 60,689 60,080 48,154 76,496 

7 Nicaragua1 (3) 174 16,849 40,018 74,408 

8 Trinidad and Tobago 32,369 38,274 26,542 44,695 44,602 

9 Panama2 (3) 12,344 17,417 23,753 38,524 

10 Haiti 67,549 63,793 50,053 17,277 33,378 

11 El Salvador 27,606 28,313 30,041 27,075 26,530 

12 Barbados 14,851 15,198 15,728 15,478 20,177 

13 St. Kitts and Nevis 14,033 10,136 5,857 14,172 15,986 

14 Belize 14,029 18,566 5,445 23,733 12,526 

15 St. Lucia 2,971 3,552 3,195 3,935 4,463 

16 Netherlands Antilles 2,530 4,518 5,241 2,964 3,490 

17 Dominica 844 1,330 1,365 1,008 1,293 

18 Guyana 2,769 521 506 1,202 1,246 

19 Antigua 2,310 675 548 324 1,111 

20 Montserrat 96 0 0 41 271 

21 St. Vincent and 

Grenadines 5,642 1,517 140 165 233 

22 Grenada 2,201 2,809 1,307 1,081 144 

23 Aruba 0 4 0 10 21 

24 British Virgin Islands 138 157 52 68 17 

Total 905,762 1,022,686 1,120,697 1,498,556 1,903,613 

1Nicaragua was designated as a beneficiary effective Nov. 8, 1990. 

2Panama lost its beneficiary status effective Apr. 8, 1988, and was reinstated effective Mar. 1990. 

3Not applicable. 

Note.-Figures may not add to the totals given due to rounding. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

194 
Table A-34 

U.S. imports for consumption from Andean countries, customs value of duty-free imports under ATPA by 

designated country, 1992-93 

(1,000 dollars) 

Rank Country 1992 1993 

1 Colombia 95,024 323,369 

2 Ecuador (1) 34,335 

3 Bolivia 2,093 32,124 

4 Peru (1) 11,594 

Total 97,117 401,421 

1Not applicable. Ecuador and Peru were not designated as beneficiaries until 1993. 

Note.—Figures may not add to the totals given due to rounding. 

Source: Compiled from official statistics of the U.S. Department of Commerce. 

195 
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196 
INDEX 

Agricultural Adjustment Act: 

1993 case, 140; description of, 133-134; investigation 

of the effects of wheat imports, 99; use under NAFTA, 

63; 

Agricultural standards (Sanitary and Phytosanitary 

standards): 

and China, 106; GATT Uruguay Round Final 

Agreement on, 9; and Mexico, 97-98; and Taiwan, 

108; 

Airbus Industrie: 

dispute with EU, 46; agreement with EU, 30, 87; 

Aircraft: 

U.S.-EU agreement on, 30; see also Airbus Industrie 

and GATT Agreement on Trade in Civil Aircraft; 

Alcoholic beverages: 

settlement of dispute with Canada, 38; 

Andean Trade Preference Act (ATPA): 

activities in 1993, 132-133; eligible countries, 133; 

excluded products, 133; 

Antidumping law: 

description of, 128; GATT agreement on, 12-13; GATT 

committee on, 42; review of outstanding antidumping 

orders, 129; 

Apparel: 

See textiles and Arrangement Regarding International 

Trade in Textiles. 

Arrangement Regarding International Trade in 

Textiles (Multifiber Arrangement): 

activities in 1993, 134-137; agreement with China, 

102-103; 

Asia Pacific Economic Cooperation (APEC): 

description of, 64-65; activities in 1993, xix-xx, 

65-67; Policies on trade and investment, 65; 

institutionalization of, 66; newly admitted members, 

66-67; 

Association of Southeast Asian Nations (ASEAN): 

description of, 67; free-trade agreement, xx; relations 

with United States, 68; 

Automobiles: 

negotiations with Japan, 94-95; 

Beef: 

See meat imports. 

Beer: 

See alcoholic beverages. 

Blair House Agreement: 

developments related to, 6; 

Canada: 

bilateral relations with the United States, overview of, 

xxi; dispute over steel, 90-92; dispute over softwood 

lumber, 89; dispute over wheat, 87-89; economic 

overview, xxiv-xxv; merchandise trade with the United 

States, xxv; 

Caribbean Basin Economic Recovery Act 

(CBERA): 

activities in 1993, 132; 

eligible products, 132; Guaranteed Access Level 

program (GAL), 132; 

China: 

attempts to rejoin GATT, 106-107; economic overview, 

xxix; enforcement of intellectual property rights, 

104-105; merchandise trade with United States, xxix; 

Most Favored Nation status of, 101-102; sanctions 

against satellite exports, 103-104; transshipment of 

textiles and apparel, 102- 103; 

Cocoa: 

See International Cocoa Agreement. 

Coffee: 

See International Coffee Agreement. 

Copyright: 

See intellectual property and GATT Agreement on 

Trade Related Aspects of Intellectual Property Rights 

(TRIPS). 

197 
Countervailing-duty law: 

description of, 128-129; review of outstanding 

countervailing orders, 129; 

Eastern Europe: 

economic overview, xxx; trade benefits from the 

United States, xx; 

Economic cooperation: 

1993 developments in Pacific region towards, 64; 

Environment: 

GATT Group on Environmental Measures and 

International Trade, 39; NAFTA Border 

Environmental Infrastructure Agreements, 60-61; 

NAFTA supplemental agreements on, 57-60; OECD 

environmental agenda, 73-74; 

European Union (EU): 

Airbus agreement, 87; bilateral discussions with United 

States, xxi; broadcast directive, 24, 81-82; ban on 

livestock growth hormones, 87; Common Agricultural 

Policy (CAP), 86-87; developments towards Single 

Market, xx; dispute over corn gluten feed, 86; dispute 

over public procurement, xxi, 81-82; Eastern Europe, 

relations with, 85-86; European Monetary Union 

(EMU), 83-84; integration and enlargement, 82- 83; 

intellectual property, 83; Maastrict Treaty, 83-84; 

membership, 85- 86; merchandise trade with the 

United States, xxvi-xxvii; negotiations with EFTA for 

European Economic Area, 85-86; oilseed agreement 

with the U.S. (Blair House agreement), 86; standards, 

83; utilities directive, 81-82; 

Forest products: 

See lumber. 

GATT: 

activities in 1993, 37; committee activities in 1993, 

39-40, 42-46; review of regional trade arrangements, 

40; dispute settlements, 38; 

GATT Agreement on Trade in Civil Aircraft: 

activities in 1993, 45-56; dispute with EU over Airbus 

Industrie, 46; and Taiwan, 108; U.S.-EU agreement 

30; 

GATT Agreement on Trade-Related Aspects of 

Intellectual Property Rights (TRIPS): 

description of, 24-25, 27; copyrights, 26; geographic 

indications, 27; industrial designs, 26; integrated 

circuits, 27; patents, 26-27; proprietary business 

information, 27; trademarks, 26; restrictive business 

practices, 27; 

GATT Antidumping Code: 

activities in 1993, 42; 

GATT Bovine Meat Arrangement: description of, 

42, 45; 

GATT Dairy Arrangement: 

description of, 45; 

GATT Government Procurement Code: 

description of, 28; coverage of, 28; improvements in, 

29; membership, 29; and Taiwan, 108; 

GATT Membership: 

activities in, 40; China, 106-107; Taiwan, 107-108; 

GATT Subsidies and Countervailing Duties Code: 

activities in 1993, 42; 

GATT Uruguay Round: 

chronology of, xv; Korean rice imports, 110-111; 

GATT Uruguay Round Dispute Settlement 

Understanding: 

overview of, 34; 

procedural and structural changes, 35; and Section 301 

of 1974 Trade Act, 36; 

GATT Uruguay Round Final Agreements (see also 

World Trade Organization): Final Act, 1-4; 

agriculture, 6-8; antidumping, 12-13; customs 

valuation, 14-15; import licensing procedures, 16; 

intellectual property, 24-25; market access, 6-9; 

preshipment inspection (PSI), 15; rules of origin, 15-

16; safeguarding measures, 18-19; sanitary and 

phytosanitary measures, 9; services - see General 

Agreement on Trade in Services; subsidies and 

countervailing measures, 8-9, 16-18; technical barriers 

and regulations (TBT), 11-12; textiles and clothing, 

9-10; Trade Related Investment Measures (TRIMS), 

12; 

General Agreement on Trade in Services (GATS): 

description of framework agreement, 19-22; air 

transport annex, 23; audiovisual discussions with the 

EU, 24; financial services annex, 22-23; labor mobility 

annex, 22; maritime transport discussions, 23-24; 

telecommunications annex, 23; 

Generalized System of Preferences (GSP): 

administration of, 130; lost eligibility, 130-132; newly 

designated beneficiary countries, 130-132; 

198 
Germany: 

economic overview, xxvii; disputes with the EU over 

utilities directive, 82; procurement agreement with the 

United States, 82; 

merchandise trade with the United States, xxviii; rice 

imports, 92; semiconductor dispute, 95-96; 

U.S.-Japan Framework agreement, 92-93; 

Grain: 

See wheat. 

"Grey area measures": 

See GATT Uruguay Round Final Agreements: 

safeguard measures. 

Heavy electrical equipment: 

agreement with EU, 82, 29-30; 

Import relief laws: 

description of section 201, 123; description of section 

406, 123; trade adjustment assistance program (TAA): 

description of assistance to workers, firms and 

industries, 123-124; 

Intellectual property (see also GATT Agreement on 

Trade Related Aspects of Intellectual Property 

Rights): 

and China, 104-105; and EU, 83; and 

Korea, 110; and Mexico, 96-97; and Taiwan, 108-109; 

International Cocoa Agreement: 

activities in 1993, 76; 

International Coffee Agreement: 

activities in 1993, 76; 

International Jute Agreement: 

activities in 1993, 77-78; 

International Natural Rubber Agreement: 

activities in 1993, 78; 

International Sugar Agreement: 

activities in 1993, 78; 

International Tropical Timber Agreement: 

activities in 1993, 78; 

International Wheat Agreement: activities 

in 1993, 78; 

Japan: 

autos and parts, 94-95; dispute over the procurement of 

supercomputers, 95; economic overview, xxiii; Major 

Projects agreement, 93-94; 

Jute: 

See International Jute Agreement. 

Korea: 

See Republic of Korea. 

Latin America: 

economic overview, xxx; 

Lumber: 

softwood lumber dispute with Canada, 89; 

International Tropical Timber Agreement, 18; 

Major Projects agreement: 

dispute with Japan, 93-94; 

Market disruption: 

See Section 406. 

Meat imports: 

GATT Bovine Meat Arrangement, 30; Korea, beef 

agreement with the United States, 111; 

MERCOSUR: 

activities in 1993, 40; 

Mexico: 

bilateral relations with the United States, overview, 

xxi; economic overview, xxvi; Federal Economic 

Competition Act, 98-99; foreign investment law, 99; 

Foreign Trade Law, 99; intellectual property rights, 

96-97; merchandise trade with the United States, xxvi; 

reference prices, 97; 

sanitary and phytosanitary standards, 97-98; tax treaty 

with United States, 98; 

Multifiber Arrangement (MFA): 

See Arrangement Regarding International Trade in 

Textiles. 

Natural rubber: 

See International Natural Rubber Agreement. 

North American Free Trade Agreement (NAFTA): 

acceleration of Mexican tariff elimination, 62; Border 

Environmental Infrastructure Agreements, 60-61; 

Canadian and Mexican implementation of, 62-63; 

components of U.S. implementing legislation, 56-57; 

debate over, 55-56; dispute settlement, 60, 63; 

emergency actions, 60; funding for, 61; labor and 

199 
environmental agreements, 57, 60; Mexican side 

agreements: sugar and frozen concentrated orange 

juice, 61-62; operational agencies, 63-64; overview of, 

xix; recent chronology of, 58-60; 

Organization for Economic Cooperation and 

Development (OECD): 

competitiveness policy, 75; environmental agenda, 

73-74; investment agenda, 74-75; support for Uruguay 

round, 73; 

Patents: 

See intellectual property and GATT Agreement on 

Trade Related Aspects of Intellectual Property Rights 

(TRIPS). 

Phytosanitary standards: 

See agricultural standards. 

Public procurement: 

dispute with Japan, 95; dispute with EU, 82-83; GATT 

Committee on Government Procurement, 42; GATT 

Government Procurement Code, 28; 

Reference price system: 

dispute with Mexico, 97; 

Regional trade activities: 

See Asia Pacific Economic Cooperation (APEC), 

ASEAN, economic cooperation, European Union 

(EU), and North American Free Trade Agreement 

(NAFTA). 

Republic of Korea: 

beef agreement with the United States, 111; bilateral 

relations with the U.S., overview of, xxii; economic 

overview, xxviii- xxix; and intellectual property rights, 

110; merchandise trade with the United States, xxii; 

rice imports, 110; 

Safeguard actions: 

See Section 201 and GATT Uruguay Round Final 

Agreements: safeguard measures. 

Sanitary standards: 

See agricultural standards. 

Satellite technology: 

sanctions against exports to China, 103-104; 

Section 201: 

123; (no cases in 1993) 

Section 301: 

cases in 1993, 125-127; and China, 104-105; and 

Korea, xxii, 110- 111, and Taiwan, 109; 

Section 303: 

description of, 128-129; (no cases in 1993) 

Section 337: 

description of, 129-130; 1993 cases, 129-130; 

Section 406: 

description of, 123; 1993 case, 123; 

Section 701: 

description of, 128-129; (no cases in 1993) 

Section 751: 

description of, 129; 1993 case, 129; 

Semiconductors: 

dispute with Japan, 95-96; 

Softwood lumber: 

See lumber. 

Steel: 

dispute with Canada, 90-92; multilateral steel 

agreement, 91-92; 

Sugar: 

See International Sugar Agreement and NAFTA: 

Mexican side agreements. 

Supercomputers: 

concern over Japanese procurements, 95; 

Taiwan: 

adoption of Tokyo Round codes, 108; area restrictions 

on agricultural imports, 107; attempts to join GATT, 

107; economic overview, xxix; intellectual property 

rights protection, 108-110; merchandise trade with the 

United States, xxix; nontariff barrier reforms, 107-108; 

phytosanitary measures for agricultural products, 108; 

Tobacco Wine Monopoly Bureau, 108; 

Telecommunications: 

bilateral agreement with EU, 29-30; dispute with EU, 

81- 82; 

Textiles (see also Arrangement Regarding 

International Trade in Textiles): 

GATT agreement on, 9-11; imports from China, 

102-103; 

200 
Trade Adjustment Assistance Program 

(Title II of 1974 Trade Act): 

assistance to firms and industries in 1993, 124; 

assistance to workers in 1993, 124; description of, 

123-124; and NAFTA, 123; 

Trademarks: 

See intellectual property and GATT Agreement on 

Trade Related Aspects of Intellectual Property Rights 

(TRIPS). 

Tropical timber: 

See International Tropical Timber Agreement. 

Unfair trade laws: 

summary of 1993 actions, 124-130; see also 

antidumping law, countervailing duty law, section 301, 

and section 337; 

United Kingdom: 

economic overview, xxvii; 

United Nations Conference on Trade and 

Development (UNCTAD): 

developments in 1993, 75-78; 

United States: 

economic overview, xxvii-xxviii; 

U.S.-Japan Framework Agreement: 

description of 92-93; differing views on, 92- 93; 

negotiations over automobiles and parts, 94-95; 

Wheat: 

dispute with Canada, 87-89; see also International 

Wheat Agreement; 

World Trade Organization (WTO): 

administrative structure of, 32; decisionmaking 

process of, 32, 34; events leading up to, 31; functions 

of, 31; jurisdiction of, 34; Marrakesh Ministerial 

Conference, 37; membership of, 34; resolution of 

conflicts between agreements, 32; 

201 

Other Recent USITC Publications 

Potential Impact on the U.S. Economy and Industries of the GATT Uruguay Round Agreements: 

Volume 1 and Volume 2 (Inv. 332-353, USITC Publication 2790 (Vol. 1) and 2791 (Vol. 2), June 1994). 

This report reviews and analyzes studies of the economy-wide effects of the General Agreement on Tariffs 

and Trade Uruguay Round Agreements and analyzes the impact of both tariff and nontariff provisions of the 

Uruguay Round Agreements on the agricultural, industrial, and service sectors of the U.S. economy. 

Semiannual Steel Monitoring Report: U.S. Conditions (Inv. 332-327, USITC Publication 2759, 

April 1994). MUST BE PURCHASED FROM GPO. This report, based on a survey of steel producers and 

processors, examines current conditions in the U.S. steel industry, including developments in steel capacity, 

production, capital expenditures, environmental expenditures, spending on research and development, 

employment, and financial performance. (To order from GPO, cite Steel Semiannual Monitoring Report and 

send your check for $7.00 ($8.75 foreign) or provide your VISA or MasterCard number and expiration date 

to Superintendent of Documents, P.O. Box 371954, Pittsburgh, PA 15220-7954 (FAX to 202-512-2233)). 

U.S. Imports of Textiles and Apparel Under the Multifiber Arrangement: Annual Report for 1993 

(Inv. 332-343, USITC Publication 2763, March 1994). This report is the second of three annual reports on 

U.S. imports of textiles and apparel under the Multifiber Arrangement (MFA). The MFA is a multilateral 

agreement which provides a general framework and guiding principles for the negotiation of bilateral 

agreements between textile importing and exporting countries, or for unilateral action by an importing 

country if an agreement cannot be reached. The United States maintains quotas on MFA goods from some 

40 countries that supply almost 80 percent of the import volume of such products. 

Production Sharing: U.S. Imports Under Harmonized Tariff Schedule Provisions 9802.00.60 and 

9802.00.80, 1989-1992 (Inv. 332-237, USITC Publication 2729, February 1994). This report, updated 

each year, assesses by industry sector the products and countries that make use of the production sharing 

provisions of the Harmonized Tariff Schedule of the United States, which provide reduced tariff treatment for 

eligible goods that are processed in foreign locations but contain U.S.-made components. This report also 

examines the implications of the North American Free-Trade Agreement for the maquiladora industry in 

Mexico and phased-in access to the Mexican market for maquila production. 

Synthetic Organic Chemicals, U.S. Production and Sales, 1992 (Inv. 332-135, USITC Publication 

2720, February 1994). This report contains 1992 data about synthetic organic chemicals, the raw materials 

for many consumer and industrial products. The report is one of the few publicly available reports containing such comprehensive information. It covers about 6,000 individual chemicals and chemical products and 

includes a list of manufacturers of each item for which production and/or sales was reported. The report 

presents data aggregated in the format of the Harmonized Tariff Schedule of the United States on an 8-digit 

basis. 

Selected Publications of the United States International Trade Commission (USITC Publication 

2776, May 1994). This publication lists selected publications issued by the U.S. International Trade Commission that are currently in print. 

For information on how to order any of these publications, contact: 

The Office of the Secretary 

Publications Section 

United States International Trade Commission 

500 E Street, SW 

Washington, DC 20436 

phone: 202-205-1806 

fax: 202-205-2104 

TDD Terminal: 202-205-1810