52604 Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Notices

or taken adequate steps on its own to

achieve fully compliance with the goals

and objectives established by United

Nations Convention Against Illicit

Trafficking in Narcotic Drugs and

Psychotropic Substance. The Bahamas

is a stale parliamentary democracy,

Since this is the first financing by the

Export-Import Bank of defense items or

services to the Commonwealth of The

Bahamas under section 2(b)(6) of the

Export-Import Bank Act, the other

determinations required by the Act are

inapplicble.

[FR Doc. 97–26569 Filed 10–7–97; 8:45 am]

BILLING CODE 4710–10–M

OFFICE OF THE UNITED STATES

TRADE REPRESENTATIVE

Report on Trade Expansion Priorities

Pursuant to Executive Order 12901

(‘‘Super 301’’)

AGENCY: Office of United States Trade

Representative.

ACTION: Notice.

SUMMARY: Notice if hereby given that the

United States Trade Representative

(USTR) has submitted the report on

United States trade expansion priorities

published herein to the Committee on

Finance of the United States Senate and

the Committee on Ways and Means of

the United States House of

Representatives pursuant to the

provisions (commonly referred to as

‘‘Super 301’’) set forth in Executive

Order 12901 of March 3, 1994, as

extended by Executive Order No. 12973

of September 27, 1995.

DATE: The report was submitted on

October 1, 1997.

FOR FURTHER INFORMATION CONTACT:

Irving Williamson, Chairman, Section

301 Committee, Office of the U.S. Trade

Representative, 600 17th Street, N.W.,

Washington, DC 20508, (202) 395–3432.

SUPPLEMENTARY INFORMATION: The text of

the USTR report is as follows.

Identification of Trade Expansion

Priorities Pursuant to Executive Order

12901

October 1, 1997.

This report is submitted pursuant to

Executive Order No. 12901 of March 3,

1994, as extended by Executive Order

No. 12973 of September 27, 1995,

regarding the ‘‘Super 301’’ annual

review. Under the Executive Order the

United States Trade Representative

(USTR) is required, by September 30,

1997, to ‘‘review United States trade

expansion priorities and identify

priority foreign country practices, the

elimination of which is likely to have

the most significant potential to increase

United States exports, either directly or

through the establishment of a

beneficial precedent.’’

Keeping America growing and

creating good high-wage jobs by tearing

down foreign barriers to American

goods and services continues to be

President Clinton’s top trade expansion

priority. For this reason the President

has asked Congress to renew fast track

procedures to negotiate tough new trade

agreements that break down trade

barriers and unfair trade restrictions in

key areas, such as in agriculture,

information technology,

telecommunications, automobiles,

medical equipment, environmental

technology and services, and the

creative power of our entertainment and

software industries. Fast track would

enable the United States to complete the

built-in agenda of the World Trade

Organization (WTO) by concluding

major trade negotiations that were

deferred at the end of the Uruguay

Round and by participating in

negotiations mandated by the Uruguay

Round agreements in areas ranging from

rules to origin to services. Fast track

would enable the United States to

pursue market-opening initiatives in

sectors where the United States either

leads the world or is a powerful

competitor, and where extraordinary

potential for growth exists. Fast track is

also essential if the United States is to

negotiate more comprehensive market

access agreements with individual

countries, as well as on a regional basis.

The Clinton Administration intends

to concentrate on the fastest growing

markets in the world in Latin America

and Asia. These markets are growing

three times faster than our own. Without

fast track, our competitors will continue

to negotiate trade agreements that

benefit their products at the expense of

our own. Fast track is necessary, not

only to promote our own economic

well-being, but to enable us to continue

to play a leadership role in advancing

the cause of freedom and prosperity in

the world.

The Administration is addressing the

most significant foreign trade barriers

through an ongoing strategy of vigorous

monitoring and enforcement of trade

agreements, strategic application of U.S.

trade laws, active use of the dispute

settlement provisions of our trade

agreements, and continued engagement

in multilateral, sectoral, regional and

bilateral negotiations. Through this

strategy the Administration has used the

trade law tools and dispute settlement

mechanisms at its disposal on more

than 70 occasions so far to enforce U.S.

rights. As a result of the 1997 review of

priorities, the Administration has

identified one priority foreign country

practice and will proceed under WTO

dispute settlement procedures in four

cases.

Priority Foreign Country Practice

• Korea—barriers to auto imports.

Specific Korean practices of concern

include an array of cumulative tariff and

tax disincentives that disproportionately

affect imports; onerous and costly auto

standards and certification procedures;

auto financing restrictions; and a

climate of bias against imported

vehicles that Korean officials have not

effectively addressed. While some of

these barriers were addressed in the

1995 bilateral agreement,

implementation of that agreement has

been disappointing, especially as new

practices have been introduced that

undermine the 1995 agreement.

Meanwhile, Korean auto manufacturers

are expanding domestic capacity, which

is forecast to rise from 2.8 to over 5

million units by the year 2000.

Although some progress was made

during recent bilateral negotiations to

improve market access in Korea for

foreign automobiles, Korea was not

prepared to undertake the reforms

which are necessary for real opening of

its autos market. In light of the

foregoing, the USTR has decided to

identify Korea’s barriers to imported

automobiles as a priority foreign

country practice under the Executive

Order and will initiate a section 301

investigation of Korea’s practices. The

United States continues to hope that it

can reach an agreement with Korea that

will effectively address U.S. concerns.

Strategic Enforcement

Enforcing our trade agreements and

our trade laws is among the

Administration’s top trade expansion

priorities. A critical part of our job is

what happens after an agreement is

signed. The Administration’s trade

policy recognizes that the best way to

build confidence in trade agreements is

to enforce them. Vigorous enforcement

is critical to ensuring good agreements.

The Administration has assigned top

priority to monitoring implementation

of its trade agreements, especially the

WTO agreements and NAFTA to ensure

that signatories live up to their

commitments and comply with the

rules. In the course of these monitoring

efforts, the Office of the United States

Trade Representative, in cooperation

with the Departments of Commerce and

Agriculture, has focused in particular on

foreign practices that could pose serious

problems to the international trading
Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Notices 52605

system if they proliferate in many

markets. Therefore, the Administration

has adopted a strategic enforcement

plan—aimed not only at challenging

existing barriers but also at preventing

the future adoption of similar barriers

around the world.

The Administration will continue to

make vigorous use of the dispute

settlement provisions in trade

agreements to ensure compliance with

the terms of those agreements. Since the

inception of the WTO the United States

has invoked the WTO dispute

settlement procedures far more than any

other member. The new WTO dispute

settlement procedures have already

yielded positive results—both in terms

of reduced barriers and increased export

opportunities. Efforts to enforce the WTO

agreements include not only dispute

settlement, but also making use of the

various oversight committees of the

WTO that ensure implementation of

WTO agreements, especially those

agreements that address the mechanics

of getting goods to the marketplace;

rules on technical barriers to trade

(standards, certification, testing

requirements); sanitary and

phytosanitary measures; import

licensing requirements; customs

valuation procedures; rules of origin;

and preshipment inspection procedures.

New Cases to be Launched

As a result of this year’s review of its

trade expansion priorities, and its

monitoring of compliance with U.S.

trade agreements, the Administration

will take the following actions to

enforce U.S. rights under those

agreements, with heavy emphasis on

challenging foreign government actions

that appear to circumvent the WTO

rules on export subsidies. • Japan—Market Access Barriers to

Fruit. USTR will initiate a section 301

investigation and in that context,

request the establishment of a WTO

panel to challenge the Japanese

government requirement of separate

efficacy testing of certain quarantine

treatments for each variety of imported

fruit, even where the same treatment has

been accepted by Japan as effective for

another variety. Although the fruit of

immediate export concern is apples,

Japan’s requirement operates as a

significant import barrier to nectarines,

cherries, and other fruits that are of

export interest to the United States. The

United States and Japan have already

completed consultations on this matter

pursuant to WTO dispute settlement

procedures, so the United States will

proceed directly to request a panel. • Canada—Export Subsidies and

Import quotas on Dairy Products. USTR

will invoke WTO dispute settlement

procedures in the context of a section

301 investigation to challenge practices

that subsidize exports of dairy products

from Canada, and Canadian

implementation of its import quotas on

milk. The U.S. dairy industry has

petitioned USTR to initiate this

investigation on the grounds that both of

these practices are inconsistent with

Canada’s WTO obligations and

adversely affect U.S. exports. • EU—Circumvention of Export

Subsidy Commitments on Dairy

Products. USTR also will invoke WTO

dispute settlement procedures in the

context of a section 301 investigation to

challenge practices by the European

Union (EU) that circumvent the EU’s

commitments under the WTO to limit

subsidized exports of processed cheese

and adversely affect U.S. exports to

third markets. The EU is counting these

exports against its limits on powdered

milk and butterfat to avoid the limits on

subsidies of cheese. USTR will also

closely monitor EU compliance with its

WTO agricultural subsidy commitments

on all other agricultural products. • Australia—Export Subsides on

Automotive Leather. Following bilateral

and multilateral consultations, Australia

agreed to eliminate export subsidies for

leather used in automobiles. However,

Australia’s subsequent package of

assistance for its industry (comprised of

a sizable loan and grant), has raised

similar concerns regarding consistency

with WTO subsidies rules. While some

progress has been made in recent

months, these concerns have not yet

been adequately addressed. Thus USTR

will invoke WTO dispute settlement

procedures, but remains hopeful that a

solution satisfactory to both countries

can be reached during consultations.

Recent Enforcement Actions

During the past year, USTR has

invoked WTO dispute settlement

procedures to challenge a wide variety

of foreign government practices, covered

by the broad range of agreements

administered by the WTO, seeking to

enforce the rules on tariffs, agriculture,

services, intellectual property rights,

antidumping measures, and sanitary

and phytosanitary measures. Those

complaints include challenges of: • Argentina’s import duties on

footwear, textiles, and apparel that

exceed the maximum to which

Argentina is committed under WTO

tariff rules: • licensing requirements in Belgium

that discriminate against U.S. suppliers

of commercial telephone directory

services; • Brazilian government measures that

give certain benefits to manufacturers of

motor vehicles and parts, conditioned

on compliance with average domestic

content requirements, trade-balancing

and local content requirements with

regard to inputs;

• the failure of Denmark to provide

adequate measures to enforce

intellectual property rights;

• reclassification by the European

Union, the United Kingdom, and Ireland

of certain computers and computerrelated equipment to different tariff

categories with higher tariff rates;

• import restrictions on more than

2700 agricultural, textile and industrial

products imposed by India for which

India can no longer claim a justification

for balance-of-payments reasons;

• Indonesia’s programs granting

preferential tax and tariff benefits to

producers of automobiles based on the

percentage of local (Indonesian) content

of the finished automobile;

• Ireland’s failure to expeditiously

bring its copyright laws into compliance

with the WTO agreement on intellectual

property rights;

• Japan’s barriers to market access for

photographic film and paper, and

barriers to distribution and retail

services in Japan;

• Korea’s taxes on Western-style

distilled spirits that are higher than

those assessed on the traditional

Korean-style spirit soju;

• an antidumping action by Mexico of

high-fructose corn syrup imports from

the United States that does not conform

to WTO procedures;

• a licensing system in the

Philippines that discriminates against

U.S. exports of pork and poultry; and

• the failure of Sweden to provide

adequate measures to enforce

intellectual property rights.

In addition to using dispute

settlement procedures strategically, the

Administration has continued to use the

leverage of U.S. trade laws to obtain

market access for U.S. goods and

services and to encourage other

countries to ensure adequate protection

of intellectual property rights:

• Japan—port practices. Restrictive

practices in Japanese ports have caused

serious difficulties for U.S. shipping

companies for many years. After initial

consultations with Japan failed to

resolve these problems, on September 4,

1997, the Federal Maritime Commission

imposed sanctions of $100,000 per

voyage on container vessels owned or

operated by Japanese companies

entering the United States.

Consultations to remove the restrictive

practices which impede open and
52606 Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Notices

efficient business operations of our

carriers continue.

• Argentina—patent protection. On

January 15, 1997, the Administration

decided to withdraw 50 percent of

Argentina’s tariff benefits under the

Generalized System of Preferences as a

result of its continued delay in

providing adequate patent legislation,

particularly for pharmaceutical

products.

• Bulgaria—intellectual property

protection. The ‘‘Special 301’’

provisions of U.S. trade law have been

used to obtain progress in improving the

legislative framework for protecting

intellectual property rights and

enforcing those rights in Bulgaria. Just

prior to the April 1997 Special 301

announcement, Bulgaria adopted

amendments to expand the scope of

protection for computer software.

• Korea—telecommunications. In

1996, Korea was identified as a Priority

Foreign Country under the

Telecommunications Trade Act of 1988.

Year-long negotiations bore fruit in July

1997, with commitments by Korea to

ensure that U.S. telecommunications

equipment suppliers would be treated

fairly in areas including procurement,

certification, type approval, protection

of intellectual property and technology

transfer.

• Mexico—telecommunications. In

the 1996 review under the

Telecommunications Trade Act of 1988,

USTR cited Mexico for not fulfilling its

NAFTA obligation to accept other

parties’ laboratory or test facility test

data relating to product safety in

certifying telecommunications

equipment for safe use. An agreement

reached in April 1997 established

procedures to resolve this issue, which

will further facilitate the export of U.S.

telecommunications products to

Mexico.

• Honduras—piracy. In response to

the failure of Honduras to address

effectively the unauthorized

broadcasting of pirated U.S. videos and

the rebroadcasting of U.S. satellitecarried programming, the

Administration is taking steps to

withdraw some of the tariff benefits

accorded Honduras under the

Generalized System of Preference and

Caribbean Basin Initiative programs.

Bilateral Market Access Issues

Through bilateral negotiations as well

as through enforcement actions, the

Administration continues to monitor

progress made toward increasing market

access for U.S. exports of goods and

services to key markets.

Japan

A top priority of the Administration

has been to increase access to the

Japanese market. The Administration

has negotiated 31 market-opening

agreements with Japan since 1993. The

most recent of these was concluded on

September 30, 1997, when agreement

was reached to extend and improve the

bilateral agreement on procurement by

Nippon Telegraph and Telephone

Company, commonly referred to as the

NTT agreement. This agreement will

provide U.S. telecommunications

suppliers with improved access to

NTT’s $13 billion market.

Bilateral agreements, combined with

enforcement of U.S. trade laws, use of

the WTO dispute settlement process,

and regional and multilateral initiatives,

have helped to increase significantly

U.S. exports to Japan. U.S. exports to

Japan increased 41 percent from 1993 to

1996.

Nevertheless, the Administration is

increasingly concerned that Japan’s

progress in opening its market has

slowed. Market access problems persist

and U.S. companies in a wide range of

sectors continue to face serious

impediments that hinder their ability to

compete in the Japanese market. These

barriers include a closed distribution

system, nontransparent regulations,

discriminatory procurement policies,

and restrictive business practices.

Meanwhile, the Japanese economy is

weaker than expected and Japan’s

current account surplus is increasing,

reaching 2.6 percent of GDP in the

second quarter of this year. Prime

Minister Hashimoto has publicly

articulated the objective of ‘‘promoting

strong, domestic demand-led growth in

Japan and avoiding a significant

increase in the external surplus.’’ It is

essential that Japan take seriously its

responsibilities to generate domestic

demand-led growth and open its

markets to competitive goods and

services from the United States and

other countries.

Our objectives correspond closely

with key elements of the Japanese

Government’s economic agenda.

Resolution of such issues as reform of

Japan’s port practices, significant

opening of Japan’s civil aviation market,

and improved market access for U.S.

autos and auto parts are early tests of

the Japanese Government’s commitment

to deregulation and market opening.

The deregulatory measures

implemented by the Government of

Japan in the sectors included in the

Enhanced Dereguation Initiative agreed

to by President Clinton and Prime

Minister Hashimoto at the G–8 Summit

last June—including

telecommunications, housing,

pharmaceuticals/medical technology,

and financial services—will also serve

as early indications of the seriousness of

Japan’s commitment to deregulation.

• Japan—Market Access for Autos

and Auto Parts. The United States and

Japan concluded an agreement in 1995

on the full range of market access

barriers facing sales of autos and auto

parts in Japan and to Japanese

companies outside Japan. Noteworthy

progress was made during the first year

of the agreement, with sales of North

American-made big Three vehicles up

34 percent last year and sales of U.S.—

made auto parts up 20 percent in 1996.

However, during the first six months of

1997, sales of North American-made Big

Three vehicles have declined 17 percent

over 1996 levels. Moreover, although

U.S. auto parts exports increased 14

percent during the first six months of

1997, foreign access to this market

remains limited. In light of these trends,

increased focus on implementation is

necessary. Of particular importance is

improved access of U.S. and other

competitive foreign firms to Japan’s

automotive distribution system,

including to new and existing

dealerships. With respect to auto parts,

continued progress will depend on

further meaningful deregulation of the

replacement market. The United States

and Japan will meet in early October

1997 to access progress based on the

quantitative and qualitative indicators

in the agreement and to discuss concrete

actions for improving market access in

this important sector.

• Japan—Market Access for Flat

Glass. Implementation of the 1995 U.S.-

Japan Flat Glass Agreement proceeded

well in the first year, but early progress

has not been sustained. While a major

objective of the agreement was to

provide foreign companies access to

distributors controlled by the three

major Japanese glass companies, the

increase in volume of foreign glass

within the Japanese glass distribution

system continues to be very limited, and

major Japanese distributors are not

carrying foreign glass in any meaningful

quantities. There also has been virtually

no increase in the overall use of

insulated glass and a decline in the use

of safety glass, even though the

Agreement provided that Japan was to

promote actively the use of both types

of glass. Among the promotion measures

Japan agreed to undertake was the

issuance of new standards to promote

the use of insulated glass in residential

and commerical construction. The

United States and Japan will hold

consultations in late October to discuss
Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Notices 52607

our market access concerns. The United

States will continue to press Japan to

take actions to ensure that genuine

market access is achieved under the

agreement.

• Japan—Market Access for Paper and

Paper Products. Despite continued U.S.

efforts in the part year, structural

barriers continue to impede U.S.

industry’s access to Japan’s paper

market. In the first six months of 1997,

Japan’s paper and paperboard imports

fell by more than 20 percent and import

penetration declined further to 4.3

percent. The United States seeks

agreement with Japan on a joint work

program designed to provide

substantially increased market access

for foreign paper and paperboard

products. Such a program would lead to

a reduction in structural barriers and

exclusionary business practices and will

result in meaningful access to

distribution channels and end users.

China

The Administration is actively

pursuing a broad range of market

opening initiatives with China. Through

active leadership in multilateral WTO

accession talks and pursuit of a full

bilateral agenda, we are seeking the

elimination of China’s multiple and

overlapping barriers to U.S. exports of

industrial goods, agricultural products

and U.S. services. Despite China’s

actions to liberalize its economy, many

aspects of its economic and legal regime

are inconsistent with international

norms. While our large and growing

trade deficit with China is the result of

many factors, China’s trade and

economic policies are a significant

contributor to that deficit. Opening

China’s market and brining China’s

policies into conformity with

international norms are the

Administration’s key objectives in the

trade area and the best means to address

the trade deficit.

Given the size and potential of

China’s market and the nature of

China’s trade regime, negotiating the

terms of China’s membership in the

WTO will continue to be a major focus

of U.S. efforts to open China’s markets.

The WTO accession negotiations

represent an important opportunity to

work with our trading partners and with

the Chinese government to develop an

accession package that opens markets

and commits China to create an

environment conducive to international

trade, requiring compliance with WTO

rules and internationally accepted trade

norms of transparency, predictability

and the rule of law.

The United States supports China’s

accession to the WTO on the basis of

commercially meaningful commitments

that provide market access for U.S.

goods, agriculture and services. China

has, in the context of the Asia Pacific

Economic Cooperation Forum (APEC),

taken some recent steps towards

liberalizing its trade regime. Effective

October 1, 1997, China will cut its

average tariffs to 17 percent as a step

towards meeting its APEC commitment

of a 15 percent average tariff by the year

2000. This is a welcome step, but more

is needed in the context of WTO

accession. The Administration is, for

example, committed to eliminating

quotas, licensing requirements and

other barriers affecting U.S. exports and

investment in the WTO Accession.

The united States is pursuing a

program of vigorously monitoring

compliance with existing agreements

and addressing new market access

barriers. During the Clinton

Administration, we have reached

important agreements on intellectual

property rights (IPR) protection, textiles

and market access. Concluding these

agreements, however, was only a first

step. We have continually worked with

China to ensure that implementation

problems are addressed.

• China—IPR Enforcement. We have

seen progress through closure of 58

pirate compact disc production lines

and the establishment of an

infrastructure for enforcement of IPRs.

Continuing problems exist regarding

computer software piracy and trademark

counterfeiting, however, since Chinese

authorities often fail to impose penalties

sufficient to deter illegal activities. U.S.

negotiators are continuing to work with

Chinese authorities to improve

compliance with our IPR agreements.

• China—Sanitary and Phytosanitary

Measures. Progress has been achieved in

opening China’s market to U.S.

agriculture for products such as live

cattle, bovine embryos, cherries and

applies from Washington, and most

recently grapes from California. Serious

problems still remain. We have, for

example, serious objections to China’s

unjustified sanitary and phytosanitary

(SPS) restrictions. China bans imports of

U.S. oranges, lemons, grapefruit, plums

and Pacific Northwest (PNW) wheat

based on SPS concerns. The United

States believes that China’s concerns

lack a scientific basis and are

unjustified. The United States exports

these products globally. U.S. negotiators

are now working to reach agreement

with China’s experts on the conditions

for importation of U.S. citrus, PNW

wheat and plums.

• China—Meat Imports. While China

has begun a one-year experiment to

allow U.S. meat imports for general

consumption, China has only certified a

handful of U.S. beef, pork and poultry

processing plants. Given the continued

application of high tariffs, however,

certification of plants has yet to result

in increased market access for our meat

exports. These are products in which

the United States is highly competitive

and enjoys a large global trade.

• China—Financial Information

Providers. We are nearing an interim

solution of a longstanding problem

concerning registration of foreign

financial information providers like

Dow Jones and Reuters. China’s plan to

authorize China’s main financial data

provider and competitor to U.S.

companies, Xinhua, to regulate foreign

economic information providers was

challenged by the United States from its

inception. This interim solution will

permit U.S. firms to continue their

operations in China while the United

States seek more comprehensive

commitments from China on market

access and national treatment for

financial service providers and online

data processing in the negotiations on

China’s accession to the WTO.

• China—Insurance Providers.

Foreign insurers’ access to the Chinese

market is severely restricted. U.S.

insurers must first establish a

representative office for two years before

applying for a license. If China grants

the company a license, numerous nonprudential restrictions apply on doing

business, including restrictions on the

form of investment, scope of business

lines, and geographic location. We are

seeking elimination of these nonprudential restrictions.

Korea

The Administration is focused on

eliminating barriers to entry and

distribution of U.S. products in Korea—

The United States’ fifth largest export

market overall, and fourth largest

market of agricultural and food

products. This year, the Administration

made solid progress toward opening the

Korean market through the use of U.S.

trade laws and WTO dispute settlement

procedures, negotiation and

enforcement of bilateral trade

agreements, and close coordination with

other countries on U.S. trade initiatives

regarding Korea, particularly in the

OECD and the WTO. Specifically, the

United States negotiated a bilateral

settlement addressing restrictive Korean

telecommunications practices; reached

agreement on an IPR action plan; and

used WTO procedures to improve

Korean market access for U.S. food and

agricultural products.

The Administration is committed to

continuing its varied and
52608 Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Notices

comprehensive efforts to tackle

commercial barriers in what U.S.

industry still describes as one of the

toughest markets in the world for doing

business. Korea must begin to take

actions and accept the responsibilities

commensurate with its new

international position as a developed

nation. Our priority will be on achieving

systemic changes to trade-restricting

procedures and rules in Korea,

including those affecting market access

for automotive products, cosmetics, and

food and agricultural goods.

• Korea—Impediments to Entry and

Distribution of Cosmetics. The Korean

government uses measures that restrict

the entry and distribution of cosmetics

including: restrictions on sales

promotions (premiums), including

changes to the valuation methodology;

delegation of authority to a Korean

industry association to screen

advertising and information brochures

prior to use; mandatory provision of

proprietary information on imports to

Korean competitors; redundant testing;

unreasonable prior-approval

requirements on cosmetic tester labels;

and burdensome import authorization

and tracking requirements. After

bilateral talks with U.S. officials, Korea

stated its intention to change some of

these measures, but the Korean

government still has not fully addressed

U.S. concerns, including those relating

to implementation of relevant

provisions in international agreements.

The Administration will continue to

pursue unimpeded trade in cosmetics

with Korea over the coming year and

will review the situation again in

January 1998.

• Korea—Import Clearance

Procedures. After WTO dispute

settlement consultations with Korea on

its long, burdensome, and non-sciencebased import clearance procedures, the

Korean government made changes,

including expediting clearance for fresh

fruits and vegetables; instituting a new

sampling, testing, and inspection

regime; eliminating some phytosanitary

requirements; and starting the process of

updating Korean Food Additives Code

standards.

However, Korean port inspectors have

failed to implement changes to which

the Korean government has committed,

including the elimination of

requirements for proprietary

information (on manufacturing process

and ingredient listing by percentage)

and for sorting of produce. Also, some

of the changes Korean officials are

implementing do not adequately

address U.S. concerns. The United

States will raise this issue at the October

meeting of the WTO SPS Committee and

has proposed consultations on the

Korean Food Additives Code. The

United States will take further action

under WTO dispute settlement

procedures if its concerns are not

addressed fully.

• Korea—Steel Subsidies. The United

States is concerned that the Korean

government may have provided large

subsidies for the establishment and

expansion of Hanbo Iron and Steel, and

directed the banking industry to

continue to extend credits beyond what

is financially prudent. U.S. industry is

concerned that such measures may be

subsidies that are creating unfair

competition through price undercutting

and displaced U.S. exports to Korea and

to third country markets. We have

sought further information from the

Korea government, both bilaterally and

in the WTO Subsidies Committee, and

will examine Korea’s practices in light

of its WTO obligations.

Problems Requiring Special Attention

As traditional barriers to market

access have been reduced at the border,

the increase in the application of

government measures under the guise of

technical requirements has increased.

These are problems that are being given

special attention by the Administration,

and that may warrant enforcement

action in the future if they are not

resolved satisfactorily.

Sanitary and Phytosanitary Measures

Numerous U.S. agricultural exports

have been denied import approval or

have faced costly import quarantine

requirements due to sanitary and

phytosanitary (SPS) barriers to trade

that lack a scientific basis and appear to

discriminate arbitrarily or unjustifiably

against U.S. agricultural exports. The

Administration has implemented an

aggressive agenda to address unjustified

SPS barriers, including high-level

technical talks with our trading

partners, raising these issues in the

WTO SPS Committee to apply

multilateral pressure, and resorting to

WTO dispute settlement procedures

where necessary.

As a result of intense efforts in the

past year, the Administration has

resolved technical issues bilaterally to

permit exports of tomatoes to Japan,

table grapes to China, lemons, table

grapes, kiwis, oranges and grapefruit to

Chile, sweet cherries to Mexico, rough

rice to Honduras, live swine to

Argentina and Peru, and live cattle to

Peru.

The Administration will continue to

press our trading partners to remove

unjustified SPS barriers facing U.S.

agricultural exports, including:

• EU–Specified Risk Material (SRM)

Ban and Cosmetics Directive. Two

recent directives approved by the

European Commission prohibiting the

sale in the EU of cosmetic products

containing tallow and its derivatives,

and governing the production of certain

materials, due to concerns regarding the

transmission of Bovine Spongiform

Encephalopathy (BSE), raise concerns

with respect to the EU’s WTO

obligations. The directives fail to

recognize that BSE is not known to

occur in the United States and that the

United States maintains an aggressive

surveillance program for BSE that

exceeds international standards. The EU

has failed to provide a scientific basis

for these requirements, and both

directives are expected to have severe

negative effects on U.S. exports of

pharmaceutical, cosmetic and tallow

products; and the potential impact on

the international availability of essential

pharmaceutical products also raises

serious public health concerns.

• France—Pet Food Imports. In

September 1996, France adopted new

requirements for pet food production,

restricting the use of certain animal

products or proteins and prohibiting the

use of certain material. The regulation

requires that manufacturers exclude

materials from the rendering process

that are commonly considered safe by

renderers and this has effectively

stopped all U.S. pet food exports to

France. France has not demonstrated the

scientific principle underlying the

restriction of non-mammalian material

as a protective measure against any risk

factor. This issue was raised by the

United States at the July 1997 meeting

of the WTO SPS Committee.

• Australia—Pest Risk Analyses. For

a number of years, and in a variety of

fora, the United States has requested

entry into Australia’s market for stone

fruit, shelled almonds, Florida citrus

fruit and California grapes. The United

States has submitted several pest lists to

enable Australia to complete its WTOrequired risk assessments. To date,

Australia has provided no scientific

basis for its prohibitions on U.S. exports

of these products, nor has it provided

pest risk analyses.

The delays experienced on these

issues have seriously hampered the

approval process for U.S. exports of

these commodities.

Technical Barriers to Trade

Technical barriers to trade are of

particular concern in our important

relationship with the EU. In successive

meetings of the WTO Committee on

Standards, and other WTO bodies, the

United States and other nations have
Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Notices 52609

flagged concerns that standards,

certification, and testing requirements

in the EU can sometimes pose serious

technical barriers to trade. The U.S.–EU

trade and investment relationship is the

largest and most complex in the world.

Sophisticated business interactions

across the Atlantic are affected to a

significant degree by standards,

technical regulations and conformity

assessment procedures. While the recent

U.S.–EU mutual recognition agreement

on conformity assessment, covering six

industrial sectors, should help reduce

standards-related barriers, U.S.

companies continue to be concerned

about certain aspects of EU standardsrelated practices that could inhibit U.S.

exports.

• EU –Design Restrictive Standards.

U.S. firms continue to encounter

difficulty in obtaining market access for

certain products in Europe due to

design-restrictive standards that may

have no bearing on the safety and

performance of the product. While U.S.

companies with U.S. Government

assistance may achieve some success in

addressing problems in individual

national markets, market access

becomes even more difficult if a

European regional standards body

decides to develop a European-wide

standard. The initiation of work on a

regional standard results in a standstill

on related work in individual member

States and thus can delay or, if

unnecessarily restrictive standards are

finally adopted, prevent improved

access to EU markets. The United States

continues to raise its concerns, both

bilaterally and in the WTO, with the

standards making process in the EU and

design-restrictive standards and has in

particular sought to address the

problems encountered by a U.S.

manufacturer of gas connectors.

• EU Ecolabeling Directive. The EU

Ecolabeling Directive sets forth a

scheme whereby EU Member States will

grant voluntary environmental labels

based on criteria approved by the

European Commission for products in

specific sectors. The United States

affirms its support for the concept of

ecolabeling and has previously

expressed appreciation for the EU’s

attempts to address problems raised by

the United States regarding its

ecolabeling program. However, while

improvements in the transparency of

procedures and opportunity for foreign

participation in the EU’s ecolabeling

program have been reported, concern

remains that the EU ecolabeling

program favors European industry, thus

leading to trade concerns.

• EU Units of Measurement Directive.

The EU plans to implement a directive

requiring that after December 31, 1999,

the only indications of measurement

that can be used on product labels will

be metric units. Currently, labels may

include other units (e.g., inches,

pounds) in addition to metric units.

Such a step is unnecessary and

burdensome, and will affect many U.S.

companies, particularly in those

industries where packaging and labeling

are key aspects of placing a product on

the market (e.g., food products,

consumer goods and cosmetics).

Other Bilateral Issues

• Argentina—Footwear Import

Restrictions. After the United States

initiated WTO panel proceedings to

determine whether Argentine import

duties on textiles, apparel and footwear

are within Argentina’s maximum

permissible rate, Argentina revoked its

challenged duties on footwear and

replaced them with similar duties in the

guise of an emergency import relief

measure. On September 1, 1997,

Argentina notified the WTO that this socalled safeguard measure would be

extended for three years. The United

States is reviewing this action in light of

Argentina’s obligations under the WTO

agreement on safeguard measures.

• Brazil—Import Financing Measures.

On March 25, 1997, Brazil imposed new

import financing rules that are adversely

affecting a wide range of U.S. exports to

Brazil. The measure, which requires

importers to purchase foreign exchange

to pay for imports upon importation or

180 days in advance rather than when

payment is due under their contract,

effectively increases the cost of many

imports by eliminating or reducing

supplier credits of less than one year.

The United States is consulting with

Brazil bilaterally and is reviewing the

matter in light of Brazil’s WTO

obligations.

• Taiwan—Market Access for

Pharmaceuticals. U.S. pharmaceutical

companies are increasingly concerned

about discriminatory aspects of

Taiwan’s reference pricing system for

pharmaceuticals. This system, as

applied by Taiwan’s Bureau of National

Health Insurance, appears to be

inconsistent with national treatment

principles. Taiwan authorities have

agreed to consultations on this problem

in the near future.

Multilateral Priorities

Within the next three years the United

States will participate in a number of

major WTO negotiations in areas where

we are a top global competitor. As a

result of the Uruguay Round, the United

States has a broad agenda in the WTO

to pursue further negotiations and

strengthen existing agreements. Among

others, WTO negotiations are scheduled

to open further the $600 billion global

agriculture market beginning in 1999; to

further open the $1.2 trillion global

services market; and to review the

Agreement on Trade-Related Intellectual

Property Rights (TRIPs) which protects

a variety of U.S. intellectual property

right holders, including U.S. copyright

holders whose foreign sales and exports

exceed $53 billion a year. Also included

is the two-pronged agenda to negotiate

improvements to the current reciprocal

Agreement on Government Procurement

and to conclude an agreement obligating

all WTO members to maintain

transparent procurement practices,

thereby enabling U.S. companies to

compete in the trillion-dollar global

government procurement market. We

will also review the WTO Dispute

Settlement Understanding that has

already enabled us to open many new

markets in the last two years. As

illustrated by most of the comments

received from the public by USTR in

preparing this report, high tariffs—

especially in the agricultural sector—

continue to block U.S. exports to a

number of markets. Fast track

procedures are essential if we are going

to capitalize on the additional market

opportunities presented by the WTO

negotiations.

Our most immediate goal is to obtain

significantly improved commitments

from our trading partners that will allow

us to conclude successfully the WTO

financial services negotiations by the

end of this year. These negotiations

represent an important opportunity to

reach a successful agreement that opens

new opportunities for U.S. financial

services providers in the key emerging

markets around the world and furthers

the integration of national financial

systems needed for a more

interconnected global economy in the

21st century.

Adding New Markets to the Rulesbased Trading System. The United

States continues to place high priority

on ensuring that its trading partners

accept the rule of law as it applies to

trade—ensuring that their trade and

economic policies are consistent with

international trade practices and norms,

such as those of the WTO. A principal

means of ensuring that new entrants

into the international trading system

accept the rule of law is through the

negotiation of the terms and conditions

of an applicant’s WTO membership.

New members must be prepared to

implement WTO obligations and to

grant commercially meaningful market

access commitments and concessions,

on both goods and services, as well as
52610 Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Notices

make specific commitments to limit

agricultural subsidies. There are

presently 29 applicants negotiating to

become members of the WTO, including

China, Russia, Taiwan, Ukraine, and

Saudi Arabia.

Sectoral Priorities

The Administration will continue to

ensure that U.S. industries that are

competitive global leaders enjoy export

success commensurate with their

competitive position. In the last year we

have taken major steps forward in

advancing this goal with the

Information Technology Agreement

(ITA) and the Agreement on Basic

Telecommunications. The ITA will

reduce tariffs to zero in a $500 million

global market in which the United

States is the world’s largest single

exporter. The Agreement on Basic

Telecommunications ensures that U.S.

companies can compete against and

invest in all existing carriers around the

world. U.S. companies will now have

access to markets accounting for over 95

percent of global telecommunications

revenue and will be in the best position

to take advantage of a $600 billion

industry that is expected to double or

even triple in the next 10 years. The

agreement provides U.S. companies

market access for local, long-distance

and international service and the ability

to establish or hold a significant stake in

telecommunications companies around

the world. Sixty-five countries adopted

procompetitive regulatory principles

based on landmark U.S. legislation, the

1996 Telecommunications Act.

We are seeking to build on our

success to pursue market-opening

sectoral agreements in areas where the

United States can capitalize further on

its global competitive advantage if

market access barriers are reduced,

including in areas such as trade in

chemicals, environmental technology

and services, medical equipment and

services, oilseeds and oilseed products,

and wood and paper products. Fast

track procedures are essential to ensure

that the United States can continue to

play the critical role in negotiations that

reduce such barriers.

Regional Priorities

The Asia Pacific region contains the

fastest growing economies in the world.

Reaching the goal of open markets with

the members of the Asia Pacific

Economic Cooperation Forum (APEC)

would increase U.S. global exports of

goods alone by 13 percent or $80 billion

a year. As a step toward that goal,

market opening agreements in key

sectors would provide important new

opportunities for U.S. exporters.

Latin America and the Caribbean are

the fastest growing markets for U.S.

merchandise exports. During the first

six months of 1997, our exports to the

region grew more than twice as fast as

our exports to the rest of the world. At

the recent meeting of the Trade

Ministers of the nations participating in

the Free Trade Area of the Americas

(FTAA) in Belo Horizante, Brazil, the

Ministers agreed that FTAA negotiations

should be launched at the Second

Summit of the Americas in April 1998.

The negotiations will address the full

range of issues from tariff reductions to

agriculture to structural issues such as

intellectual property rights protection

and government procurement. We

remain fully committed to negotiating a

comprehensive free trade agreement

with Chile.

In addition, we are continuing

intensive discussion with our partners

in Western Europe to complete

commercially significant sectoral

market-enhancing commitments in the

context of the Transatlantic agenda. The

United States and the EU are

participating in a joint study of high

priority sectors where we can

progressively eliminate or reduce

barriers. In June 1997 the United States

and the EU concluded negotiations on a

mutual recognition agreement that

facilities U.S. exports to the EU in

sectors such as telecommunications

equipment, pharmaceuticals, and

medical devices, by allowing U.S.

manufacturers to have conformity

assessment procedures, such as testing

and inspection, conducted in the United

States. This agreement will reduce costs

for both manufacturers and regulators

alike, and will help harmonize

standards in certain sectors.

Finally, through President Clinton’s

‘‘Partnership for Economic Growth and

Opportunity in Africa’’ initiative, we

seek to strengthen the process of

economic and political reform and

encourage the further opening of

African markets and the maintenance of

open markets through the assumption of

increased WTO obligations. Increased

African participation in the

international trading system should

benefit American and African exporters

alike and lay the foundation for

eventual free trade agreements between

African countries and the United States.

Appendix—Successfully Enforcing

WTO Agreements

Early victories. The United States has

won the first five cases that it has taken

through the WTO dispute settlement

panel process.

• Japan-liquor taxes. The United

States—joined by the EU and Canada—

successfully challenged a

discriminatory Japanese tax scheme that

placed high taxes on whisky, vodka, and

other Western-style spirits, while

applying low taxes to a traditional

Japanese spirit (shochu). This was an

important victory for the U.S. distilled

spirits industry, whose exports to Japan

have reached $100 million per year even

in spite of the heavy Japanese taxes.

Japan has already enacted legislation

that is a major step toward eliminating

the problem. The excise taxes on whisky

and other brown spirits are being

dramatically reduced, starting in

October 1997, and the excise tax on

shochu will be increased. The result

will be a drastic tax cut for our brown

spirits exports.

• Canada-restrictions on magazines.

The United States successfully

challenged a recently enacted Canadian

law that placed a high tax on American

magazines containing advertisements

directed at a Canadian audience. This

tax, which was the latest in a series of

Canadian government measures

designed to protect the Canadian

magazine industry from U.S.

competition, was specifically calculated

to put the Canadian edition of Sports

Illustrated, published by the Canadian

subsidiary of Time Warner, Inc., out of

business. By ruling in favor of the

United States, this case makes clear that

WTO rules prevent governments from

using ‘‘culture’’ as a pretense for

discriminating against imports.

• EU—banana imports. The United

States joined Ecuador, Guatemala,

Honduras, and Mexico in challenging an

EU import program that gave French

and British companies a big share of the

banana distribution services business in

Europe that U.S. companies had built

up over the years. Ruling against the EU,

the WTO panel and Appellate Body

found that the EU banana import rules

violated both the General Agreement on

Trade in Services and the General

Agreement on Trade in Goods by

depriving U.S. banana distribution

services companies and Latin American

banana producers of a fair share of the

EU market.

• EU—hormone ban. Both the United

States and Canada challenged Europe’s

ban on the use of six hormones to

promote the growth of cattle, and a

WTO panel agreed that the EU has no

scientific basis for blocking the sale of

American beef in Europe. This is a sign

that the WTO dispute settlement system

can handle complex and difficult

disputes where a WTO member

attempts to justify trade barriers by

thinly disguising them as health

measures. The panel affirmed the need

for food safety measures to be based on
Federal Register / Vol. 62, No. 195 / Wednesday, October 8, 1997 / Notices 52611

science, as they are in the United States.

In addition to potentially affecting over

$100 million in U.S. beef exports

annually, this ruling sets an important

precedent that will act to protect other

U.S. exporters from unscientific and

unjustified trade barriers in the future.

• India—patent law. The United

States recently obtained a panel ruling

against India for failing to provide

procedures for filing patent applications

for pharmaceuticals and agricultural

chemicals, as required by the WTO

agreement on intellectual property

protection. Besides serving notice that

the United States expects all WTO

members, including developing

countries, to carry out their WTO

obligations concerning intellectual

property rights, this case also

demonstrates that the WTO dispute

settlement mechanism can play an

important role in protecting American

rights and interests in this field.

Significant settlements. The WTO

agreements and the new dispute

settlement rules are already paying

dividends by helping us increase jobs

and exports. The new dispute

settlement rules often make it possible

for us to enforce WTO agreements

without ever having to reach a panel

decision. The fact that the WTO can and

will authorize us to retaliate pays off in

earlier settlements opening markets for

more of our exports. We have already

used the WTO procedures to obtain

favorable settlements in some important

cases:

• Korea—shelf-life requirements.

Consultations under WTO procedures

resulted in a commitment by Korea to

phase out its shelf-life restrictions on

food products—which removed a major

barrier to US exports of beef, pork,

poultry and frozen products.

• EU—grains imports. By

demonstrating our resolve to refer the

matter to a panel, we succeeded in

pushing the EU to implement a

settlement agreement on grains that

benefits U.S. exports of rice and malting

barley.

• Japan—sound recordings. In only a

matter of months after we held WTO

consultations, the Government of Japan

amended its law to provide U.S. sound

recordings with retroactive protection,

as required by the WTO agreement on

intellectual property rights.

• Portugal—patent law. After the

United States requested WTO

consultations, Portugal agreed to revise

its patent law to provide a 20-year term

to old, as well as new, patents, as

required by the WTO agreement on

intellectual property rights.

• Pakistan—patent law. After the

United States requested the

establishment of a WTO panel to

enforce the WTO intellectual property

rights agreement, Pakistan implemented

the requirements of that agreement to

provide procedures for filing patent

applications and preserving exclusive

marketing rights to protect

pharmaceuticals and agricultural

chemicals.

• Turkey—film tax. The United States

has used the WTO dispute settlement

process to convince the Government of

Turkey to eliminate discriminatory tax

treatment currently given to box office

receipts from exhibition of foreign films.

Turkey has agreed to change its practice.

• Hungary—agricultural export

subsidies. The United States, joined by

Argentina, Australia, Canada, New

Zealand, Thailand, and Japan, used the

WTO dispute settlement procedures to

address Hungary’s lack of compliance

with its commitments on agricultural

export subsidies. The result was a

settlement agreement in which Hungary

will have to cut its current export

subsidy levels by more than 65%.

Irving A. Williamson,

Chairman, Section 301 Committee.

[FR Doc. 97–26565 Filed 10–7–97; 8:45 am]

BILLING CODE 3190–01–M

DEPARTMENT OF TRANSPORTATION

Office of the Secretary

Aircraft Accident Liability Insurance;

Notice of Request for Extension of a

Previously Approved Collection

AGENCY: Office of the Secretary, DOT.

ACTION: Notice and request for

comments.

SUMMARY: In accordance with the

Paperwork Reduction Act of 1995 (44

U.S.C. Chapter 35, as amended), this

notice announces the Department of

Transportation’s (DOT) intention to

request the extension of a previously

approved collection.

DATES: Comments on this notice must be

received by December 8, 1997.

ADDRESSES: Comments should be

directed to the Air Carrier Fitness

Division (X–56), Office of Aviation

Analysis, Office of the Secretary, U.S.

Department of Transportation, 400

Seventh Street, SW., Washington, DC

20590.

FOR FURTHER INFORMATION CONTACT:

Carol A. Woods, Air Carrier Fitness

Division (X–56), Office of Aviation

Analysis, Office of the Secretary, U.S.

Department of Transportation, 400

Seventh Street, SW., Washington, DC

20590, (202) 366–9721.

SUPPLEMENTARY INFORMATION:

Title: Aircraft Accident Liability

Insurance.

OMB Control Number: 2106–0030.

Expiration Date: February 28, 1998.

Type of Request: Extension of a

previously approved collection.

Abstract: 14 CFR Part 205 contains

the minimum requirements for air

carrier accident liability insurance to

protect the public from losses, and

directs that certificates evidencing

appropriate coverage must be filed with

the Department.

Respondents: U.S. and foreign air

carriers.

Estimated Number of Respondents:

4,250 (avg. 1.3 responses per respondent

per year).

Average Annual Burden per

Respondent: .67 hour (.5 hours per

response).

Estimated Total Burden on

Respondents: 2,762.5 hours.

This information collection is

available for inspection at the Air

Carrier Fitness Division (X–56), Office

of Aviation Analysis, DOT, at the

address above. Copies of 14 CFR Part

205 can be obtained from Ms. Carol

Woods at the address and telephone

number shown above.

Comments are invited on: (a) Whether

the proposed collection of information

is necessary for the proper performance

of the functions of the Department,

including whether the information will

have practical utility; (b) the accuracy of

the Department’s estimate of the burden

of the proposed information collection;

(c) ways to enhance the quality, utility

and clarity of the information to be

collected; and (d) ways to minimize the

burden of the collection of information

on respondents, including the use of

automated collection techniques or

other forms of information technology.

All responses to this notice will be

summarized and included in the request

for OMB approval. All comments will

also become a matter of public record.

Issued in Washington, DC on October 1,

1997.

John V. Coleman,

Director, Office of Aviation Analysis.

[FR Doc. 97–26617 Filed 10–7–97; 8:45 am]

BILLING CODE 4910–62–P

DEPARTMENT OF TRANSPORTATION

Office of The Secretary

Reports, Forms and Recordkeeping

Requirements Agency Information

Collection Activity Under OMB Review

AGENCY: Office of the Secretary, DOT.

ACTION: Notice.