23064 Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices

The Administration continues to urge the

Taiwan authorities to take concrete steps to

bring these practices into conformity with

GPA requirements and ensure that they do

not constitute an unnecessary barrier to fair

and open competition in Taiwan’s

government procurement market.

Canada—Provincial Government

Restrictions: A number of Canadian

provinces apply price preferences and other

significant restrictions that discriminate

against U.S. suppliers interested in bidding

on provincial government procurement

contracts. To date, the Administration has

identified particular concerns with respect to

procurement restrictions applied by the

provinces of Ontario, Quebec and British

Colombia. The Administration is concerned

that the application of such restrictions may

result in a significant imbalance of bilateral

market access opportunities in government

procurement. Canada is the only GPA Party

that has yet to open its sub-Federal

procurement markets. Working closely with

interested U.S. states, the Administration

continues to urge Canada to bring provincial

governments and other government-owned

entities within the scope of NAFTA and GPA

procurement rules.

Germany—‘‘Sect Filters’’: In September

1998, the German Ministry of Economics

promulgated a ‘‘protection clause’’

(commonly referred to as a ‘‘sect filter’’)

meant to be incorporated into government

contracts for certain training and

consultation services. Among other elements,

the clause would have prohibited firms from

bidding on German government contracts if

they have employees that attend or

participate in Scientology seminars.

Following the promulgation of this

‘‘protection clause,’’ the United States

expressed concern in bilateral consultations

and in the 2000 Title VII report about the

clause’s potentially discriminatory effects on

government procurement. In subsequent

consultations with German government and

industry representatives, the Administration

urged Germany to rescind the sect filter

requirements.

In response, the German government has

revised its ‘‘protection clause’’ in a manner

that no longer prohibits firms from

competing for government contracts on the

basis of the affiliation of its management or

employees with the Church of Scientology.

This decision represents significant progress

in addressing U.S. concerns relating to the

use of ‘‘sect filters.’’ The Administration will

continue to monitor the implementation of

the revised policy to ensure that U.S. firms

and workers are not discriminated against in

procurement by German Federal and subFederal governments.

A. Jane Bradley,

Assistant U.S. Trade Representative for

Monitoring and Enforcement.

[FR Doc. 01–11354 Filed 5–4–01; 8:45 am]

BILLING CODE 3190–01–P

OFFICE OF THE UNITED STATES

TRADE REPRESENTATIVE

Report on Trade Expansion Priorities

Pursuant to Executive Order 13116

(‘‘Super 301’’)

AGENCY: Office of the United States

Trade Representative.

ACTION: Notice.

SUMMARY: The United States Trade

Representative (USTR) is providing

notice that it submitted the report on

U.S. trade expansion priorities

published herein to the Committee on

Finance of the United States Senate and

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 No. 13116 of March 31,

1999.

DATES: The report was submitted on

April 30, 2001.

FOR FURTHER INFORMATION CONTACT:

Demetrios Marantis, Associate General

Counsel, Office of the U.S. Trade

Representative, 600 17th Street, NW.,

Washington, DC 20508, 202–395–9626.

SUPPLEMENTARY INFORMATION: The text of

the USTR report is as follows.

Identification of Trade Expansion Priorities

Pursuant to Executive Order 13116: April 30,

2001

The Bush Administration has an ambitious

trade agenda, reflecting the importance

President Bush assigns to trade. This is an

opportune moment to reassert America’s

leadership in setting trade policy and to

build a post-Cold War world on the

cornerstones of freedom, security, democratic

values, open trade, and free markets.

The Office of the United States Trade

Representative (USTR) submits this ‘‘Super

301’’ report pursuant to Executive Order

13116 of March 31, 1999. This report sets

forth U.S. trade expansion priorities for 2001.

The Administration intends to expand trade

on multiple fronts, through negotiation of

new agreements and by ensuring that existing

agreements are fully implemented by U.S.

trading partners. At the same time, the

Administration intends to ensure that

Americans are able to reap the benefits of

market-opening agreements by resolving

problems that confront U.S. exporters. The

USTR prepared this report in close

consultation with U.S. Government agencies

on the basis of the 2001 Trade Policy Agenda,

the 2001 NTE Report, public comments

submitted to USTR, and information received

from U.S. Embassies abroad.

I. Trade Expansion Priorities for 2001

President Bush spoke at the recent Summit

of the Americas in Quebec City about the

benefits of trade: ‘‘Free and open trade

creates new jobs and new income. It lifts the

lives of all our people, applying the power

of markets to the needs of the poor. It spurs

the process of economic and legal reform.

And open trade reinforces the habit of liberty

that sustains democracy over the long haul.’’

Trade policy is the bridge between the

President’s international and domestic

agendas. As the former governor of a major

border state, President Bush has seen that the

free exchange of goods and services sparks

economic growth, opportunity, dynamism,

fresh ideas, and democratic values.

To fulfill the President’s vision, the Office

of the U.S. Trade Representative sets forth

the following two trade expansion priorities

for 2001: (1) Reestablish a bipartisan

consensus on free trade and (2) move on

multiple fronts to expand trade.

A. Reestablishing a Bipartisan Consensus on

Free Trade

The United States faces key decisions

about the future course of our trade policy.

Just as the World War II generation forged a

bipartisan consensus that sustained

successful trade expansion throughout the

Cold War, we must build a new consensus

to promote open markets for trade in the

decades to come.

There have been some encouraging

developments in the area of open trade in the

past year. Congress enhanced the Caribbean

Basin Initiative, passed the African Growth

and Opportunity Act, and enacted legislation

to grant permanent normal trading relations

to China. More recently, the United States

and the European Union (EU) have reached

an agreement to resolve the long-standing

dispute over bananas, and the United States

and Chile have pledged to complete

negotiations on a free trade agreement by the

end of the year. On April 22, President Bush

and the leaders of 33 other nations in the

Western Hemisphere signed a declaration at

the Summit of the Americas in Quebec City

pledging their support for completing the

negotiations on a Free Trade Area of the

Americas (FTAA) no later than January 2005.

The FTAA will be the world’s largest free

trade area, representing 800 million people.

There has also been encouraging progress

recently on resolving a number of trade

disputes through the World Trade

Organization (WTO) and the North American

Free Trade Agreement (NAFTA). Greece has

moved to counter the piracy of U.S. films and

television programs, Mexico has agreed to

allow dry beans from the United States to be

imported in a more timely and predictable

manner, and India has lifted its restrictions

on U.S. agricultural, textile, and industrial

products.

But there also have been setbacks. When

the House of Representatives voted in 1998

to deny the President trade negotiation

authority, it marked the first time the

Congress had ever rejected granting this

authority. And the failure to launch the

global trade talks in Seattle in December 1999

handed a high-profile victory to the

opponents of free trade, global competition,

and economic opportunity.

The history books recount the economic,

political, and indeed national dangers of a

breakdown in America’s trade policy. For the

first 150 years of the United States, there

were contentious Congressional debates over

tariff bills, some even leading to movements

for Nullification and Secession. Then the

Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices 23065

disastrous experience of setting protectionist

tariffs for over 20,000 individual items in the

Smoot-Hawley bill of 1930 led the Congress

four years later to try a different approach: a

partnership with the Executive to negotiate

lower barriers to trade around the world.

Launched by strong and innovative leaders,

Franklin D. Roosevelt and Cordell Hull, this

effort between the Congress and the

Executive became a bipartisan partnership,

and eventually produced prosperity,

opportunity, and liberty beyond the greatest

expectations of its supporters.

Federal Reserve Chairman Alan Greenspan

has put this success in historical perspective

by pointing out that the growth in trade as

a share of the world economy over the past

50 years has finally managed to reverse the

losses from the calamities of the early 20th

century, and now approximates the degree of

globalization around 1900. So today, just like

Americans at the turn of the last century, we

face critical decisions about the future course

for our country, trade, and the world.

The Benefits of Trade

There are three principal reasons why

further trade liberalization is important to the

American people. First, expanded trade—

imports as well as exports—improves the

well being of Americans. It leads to better

jobs, with bigger paychecks, in more

competitive businesses—as well as to more

choices of goods and inputs, with lower

prices, for hard-working families and harddriving entrepreneurs.

Exports accounted for over one-quarter of

U.S. economic growth over the last decade

and support an estimated 12 million jobs. In

the American agricultural sector, one in three

acres are planted for export purposes, and

last year American farmers sold more than

$50 billion worth of agricultural products in

foreign markets. Imports helped keep prices

down as jobs, compensation, and

productivity increased.

Votes for agreements like NAFTA and the

Uruguay Round may not have been easy to

cast. Yet those agreements contributed to the

longest period of economic growth in U.S.

history, with levels of full employment, and

without inflationary pressures, beyond the

forecasts of any economist. Conservative

estimates of the higher income and lower

prices stemming from the Uruguay Round

and NAFTA indicate an annual benefit of

between $1,260 and $2,040 for an average

American family of four.

The expanding global trade and the

expanding economic growth in the United

States are not coincidental; they are achieved

in concert. One strengthens and reinforces

the other. Moreover, restrictions on trade

have victims: farmers, school teachers,

factory and office workers, small business

people, and many others who have to pay

more for clothing or food or homes or

equipment because of visible and invisible

taxes on trade.

Second, as President Bush has stated, free

trade is about freedom: ‘‘Economic freedom

creates habits of liberty. And habits of liberty

create expectations of democracy.’’ During

the Summit of the Americas in Quebec City,

President Bush met with Mexico’s President

Fox, the first president elected from the

opposition since the Mexican revolution. It is

not an accident that after Mexico embraced

the opening of its economic system, as

embodied in NAFTA, it was drawn to a

democratic opening as well.

Free trade reduces government barriers and

encourages vibrant private and civic societies

governed by the rule of law. It opens societies

to people, to ideas, to debate, to competition,

and also to impartial transparent rules. That

freedom creates openings for the free press

and for NGOs, not just for businesses and

entrepreneurs. And it creates openings to the

outside world through the Internet, books,

and a whole series of new networks.

Third, expanded trade affects our nation’s

security. The crises of the first 45 years of the

last century—the economic retrogression

referred to by Chairman Greenspan—were

inextricably linked with hostile

protectionism and national socialism.

Communism could not compete with

democratic capitalism, because economic

and political freedom creates energy,

competition, opportunity, and independent

thinking.

Take an example from today. Colombia is

waging a battle to defend the rule of law

against those who finance their terror

through complicity in drug trafficking.

President Pastrana has said that one way to

counter this threat would be for Congress to

renew the Andean Trade Preferences Act

(ATPA), which expires in December.

Renewal, he says, would stimulate job

creation, strengthen the democratically

elected government, and diminish the appeal

of the drug trade. With a renewed and robust

ATPA, the United States and Colombia can

broaden our efforts on behalf of freedom—

from aid to trade.

Building Public Support for Trade

These benefits of open trade can only be

achieved if we build public support for trade

at home. To do so, the Administration must

enforce, vigorously and with dispatch, our

trade laws against unfair practices. In the

world of global economics, justice delayed

can become justice lost.

For the United States to maintain an

effective trade policy and an open

international trading system, Americans must

have confidence that trade is fair and works

for their benefit. That means ensuring that

other countries live up to their obligations

under the trade agreements they sign.

Change, particularly rapid adjustments,

can be very difficult—even frightening—for

many hard-working people. We need to help

people adapt and benefit from change—

whether prompted by trade, technology, ecommerce, new business models, or other

causes. Therefore, a successful trade policy

over the long term should be accompanied by

better schools, worker adjustment assistance,

tax policies that enable people to keep and

save more of their paychecks, and reforms of

Social Security and Medicare so older

Americans have a safer retirement.

In order to build continued support for free

trade, the United States, and all nations, will

need to be more adroit in aligning trade with

our values. That means responding to

concerns that trade undermines

environmental protection and labor

standards—while not permitting these issues

to be used for protectionist ends. By tackling

these issues today, we can help shape the

thinking about how to address them.

Getting Back in the Trading Game

To strengthen and speed America’s trade

and economic policy, we will need to

reestablish the bipartisan CongressionalExecutive negotiating partnership that has

delivered so much. In President Bush’s

address at the Summit of the Americas, he

made clear that achieving U.S. Trade

Promotion Authority was one of his top

priorities. This authority, as he has pointed

out, has been granted to each of the previous

five presidents. The Bush Administration is

committed to attaining U.S. Trade Promotion

Authority before the end of the year, and will

be working with the Congress to build the

broadest possible support.

In the absence of this authority, other

countries have been moving forward with

trade agreements while America has stalled.

We are in danger of being left behind. There

was a time when U.S. involvement in

international trade negotiations was a

prerequisite for them to succeed. That is no

longer true. Other countries are writing the

rules of the international trading system as

they negotiate without us.

The EU has free trade or customs

agreements with 27 countries, and 20 of these

agreements have been signed since 1990. The

EU is in the process of negotiating 15 more.

Last year, the European Union and Mexico—

the second-largest market for American

exports—entered into a free trade agreement.

The EU is also negotiating free-trade

agreements with the Mercosur nations and

the countries of the Gulf Cooperation

Council. Japan is negotiating a free trade

agreement with Singapore, and is exploring

free trade agreements with Mexico, Korea,

and Chile. There are approximately 130 free

trade agreements in force globally, but the

United States has only two agreements in

force: one is with Canada and Mexico

(NAFTA), and the other with Israel.

In the long run, our deadlock hurts

American businesses, workers, and farmers.

They will find themselves shut out of the

many preferential trade and investment

agreements negotiated by our trading

partners. To cite one example, while U.S.

exports to Chile face an eight percent tariff,

the Canada-Chile trade agreement will free

Canadian imports of this duty. As a result,

U.S. wheat farmers are losing markets in

Chile to Canadian exports. To correct the

disparity in tariffs, USTR is pursuing

negotiations with Chile on a free trade

agreement.

We cannot afford to stand still—or be

mired in partisan division—while other

nations seize the mantle of leadership on

trade from the United States. This would be

a huge missed opportunity, indeed an

historic mistake.

B. Moving on Multiple Fronts To Expand

Trade

In the 21st century, the economic and

political future of the United States will be

increasingly linked to those of our

hemispheric neighbors. U.S. trade and

investment with the hemisphere is projected

to exceed that with Europe by the end of this

decade. U.S. shipments to Latin America

23066 Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices

have increased by 137% in the past decade,

compared to a 96% increase for exports to

the rest of the world.

As Latin America grows, the United States

benefits. In recent years, every one percent

expansion in Latin America’s GDP was

associated with an additional $1.6 billion

worth of U.S. exports to the region. In the

months and years ahead, the Bush

Administration will be negotiating the FTAA.

A free trade area linking the Americas will

provide incentives and rewards for

governments pursuing difficult economic

reforms. A hemispheric free trade agreement

would also send a valuable signal—a signal

of confidence—to potential investors that

Latin American and Caribbean nations have

agreed to abide by common rules governing

trade, to create a truly hemispheric

marketplace, and that this mutual effort

offers not just stability, but opportunity. Even

as we negotiate the FTAA, we are open to

pursuing other complementary opportunities

to foster free trade with our neighbors, for

example, through bilateral free trade

negotiations, such as the current negotiations

with Chile.

Of course, America’s trade and economic

interests extend far beyond this hemisphere.

At the core of the WTO’s agenda this year

will be negotiations mandated by the

Uruguay Round agreements to pursue further

agricultural reform and liberalization in

services. We also want to launch a new

round of global trade negotiations in the

WTO, emphasizing a key role for agriculture.

We will also seek to negotiate regional and

bilateral agreements to open markets around

the world. There are opportunities in the

Asia Pacific and with APEC. We will start

with a free trade agreement with Singapore

and will work with the Congress to pass the

basic trade agreement with Vietnam

negotiated by the Clinton Administration. We

will urge Japan to deregulate, restructure and

open its economy, which is long overdue.

Further reforms in the Middle East and

Africa need our encouragement. We are

committed to working with the Congress to

enact legislation for a free trade agreement

with Jordan, and to implement the provisions

of laws to help Africa and the Caribbean.

Providing technical assistance to African and

Caribbean countries will be a key part of the

implementation process.

As India reforms its economy and taps its

great potential, we should explore ways to

achieve mutual benefits. To help developing

nations appreciate that globalization and

open markets can assist their own efforts to

reform and grow, we will need to extend the

legislation authorizing the Generalized

System of Preferences program.

Of vital importance, we will seek to work

closely with the EU and its candidate

members in Central and Eastern Europe, both

to fulfill the promise of a trans-Atlantic

marketplace already being created by

business investment and trade, as well as to

reinvigorate, improve, and strengthen the

WTO processes. The total amount of two-way

investment in the EU and the United States

amounts to over $1.1 trillion, with each

partner employing about 3 million people in

the other. We would be remiss to neglect our

common interests while working to resolve

more immediate disputes.

Now that there is a fragile peace in the

Balkans, we must secure it by pointing

people toward economic hope and regional

integration. Therefore, we would like to work

with the Congress to follow through on the

prior administration’s proposal to offer trade

preferences to countries in Southeast Europe.

As we move on multiple fronts to expand

trade, we will continue to emphasize WTO

accessions. The accession process is an

opportunity for reforming economies to

adopt trade liberalizing policies and practices

within the framework of WTO obligations. It

also provides a context for the United States

to expand market access opportunities for its

exports of goods and services and to address

outstanding trade issues. WTO accessions are

based on full implementation of WTO

obligations and the establishment of

commercially meaningful market access for

other Members’ exports. This strengthens the

international trading system.

These principles have formed the basis for

the completion of WTO accession

negotiations with a number of countries,

including Albania, Georgia, Estonia, Latvia,

the Kyrgyz Republic, Jordan, and Oman. In

other ongoing negotiations with countries

such as Russia, Ukraine, and Saudi Arabia,

U.S. participation in the accession process

will enhance the rule of law in trade and

enhanced market access, while

demonstrating support for the reform agendas

of these countries.

The Administration will also continue

efforts to complete China’s accession to the

WTO. Completing this process will provide

substantially greater market access for

industrial goods, services, and agricultural

products. It will require China to comply

with specific rules on import surges, antidumping and subsidies practices, while

eliminating many of the conditions China

requires for the approval of imports and

investment. We will also work to ensure that

Taiwan’s accession to the WTO is approved

at the same session of the WTO General

Council.

The Opportunity Ahead

The United States has an unparalleled

opportunity to shape the international

trading order. But we have to get back into

this game and take the lead. We are certainly

in a position to do so. The United States is

prepared to pursue a number of bilateral and

regional free trade agreements in the years

ahead, as well as the global trade negotiations

in the WTO. By moving on multiple fronts,

we hope we can create a competition in trade

liberalization. The message we are sending to

other countries is that the United States is

willing to negotiate. We are willing to open

if they open. But if some countries are slow,

we will move without them.

II. Monitoring Trade Agreements and

Resolving Disputes

The Bush Administration will continue to

work with Congress and American

businesses, farmers, workers and consumers

to ensure effective monitoring of U.S. trade

agreements and quick responses to noncompliance—including through the use of

WTO and other dispute settlement

procedures, WTO oversight committees, and

U.S. trade laws. At the same time, the

Administration will seek to prevent or reduce

problems facing U.S. exporters by working

with U.S. trading partners, including through

technical assistance where appropriate, so

that consultation and training will help head

off problems before they arise. Likewise,

together with the Departments of Agriculture,

Commerce and State, and other agencies,

USTR will continue to work bilaterally with

our trading partners to resolve disputes

quickly and expeditiously before these issues

become serious problems.

To ensure the enforcement of WTO

agreements, the United States has been one

of the world’s most frequent users of WTO

dispute settlement procedures. In enforcing

the WTO agreements, the United States has

focused in particular on foreign practices that

could pose serious problems to the

international trading system if they

proliferated in many markets. Therefore,

USTR aims not only at challenging existing

barriers but also at preventing the future

adoption of similar barriers around the

world.

A. Ensuring Compliance

Efforts to promote compliance with trade

agreements have used three principal tools:

(1) the WTO and NAFTA dispute settlement

mechanisms; (2) the various WTO oversight

bodies; and (3) enforcement of U.S. trade law.

Vigorous enforcement enhances the ability of

the United States to reap the benefits of trade

agreements that USTR negotiates, ensures

that we can continue to open markets, and

builds confidence in the trading system.

1. WTO and NAFTA Dispute Settlement

Results

WTO and NAFTA dispute settlement

procedures have enabled the United States to

resolve problems arising from the failure of

trading partners to implement their

international obligations, and to resolve

disputes over interpretation of various

provisions in the WTO or NAFTA

agreements. Our hope in filing cases is, of

course, to secure U.S. benefits rather than to

engage in prolonged litigation. Therefore,

whenever possible we have sought to reach

favorable settlements that address U.S.

concerns without having to resort to panel

proceedings. We have been able to achieve

this preferred result in 14 of the 32 cases

concluded so far, and have prevailed through

litigation in 15 cases. During the past year,

we have achieved the following results:

• Argentina-Patents: In May 1999, the

United States requested WTO consultations

with Argentina regarding its failure to

provide a system of exclusive marketing

rights for pharmaceutical products and other

issues relating to Argentina’s obligations

under the WTO Agreement on Trade-Related

Aspects of Intellectual Property Rights

(‘‘TRIPS Agreement’’). The United States

expanded its claims last year to address

Argentina’s failure to fully implement its

remaining TRIPS obligations that came due

on January 1, 2000, such as Argentina’s

failure to protect confidential test data

submitted to government regulatory

authorities for pharmaceuticals and

agricultural chemicals and its denial of

certain exclusive rights for patents. We are

pleased that recent consultations with the

Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices 23067

Argentina have been constructive and are

encouraged by the dialogue that has

developed to possibly resolve certain claims

in the case. However, there are still some

outstanding issues that must be addressed

before the dispute settlement case can be

fully concluded.

• Australia-Prohibited Export Subsidies on

Leather: On June 21, 2000, the United States

resolved its dispute with Australia regarding

subsidization of Australia’s sole exporter of

automotive leather. Under a bilateral

settlement agreement, the subsidy recipient

agreed to a partial repayment of the

prohibited export subsidy it received, and the

Australian Government committed that it

will exclude this industry from current and

future subsidy programs and provide no

other direct or indirect subsidies. This

agreement resulted from a WTO case brought

by the United States in 1998.

• Canada-Patent Protection Term: The

United States prevailed in its WTO challenge

of Canada’s failure to provide patent

protection consistent with its obligations

under the TRIPS Agreement. The United

States initiated this dispute in its 1999

‘‘Special 301’’ review of intellectual property

protection abroad. On September 18, 2000,

the WTO Appellate Body upheld a WTO

panel ruling that Canada had not complied

with its TRIPS obligation to provide to all

Canadian patents in existence since January

1, 1996, a term of protection of at least

twenty years from the date of filing the patent

application. Canada is to comply with this

ruling by August 12, 2001.

• Denmark-Enforcement of Intellectual

Property Rights: The United States used the

dispute settlement procedures in this case to

encourage legislative action by Denmark to

implement its TRIPS obligations, particularly

the requirement that WTO members make

available ex parte search and seizure

remedies to authorize ex parte searches and

seizures in civil intellectual property rights

enforcement proceedings. On March 28,

2001, the Danish Government enacted

legislation that provides this provisional

remedy.

• European Union (EU)-Banana Regime:

On April 11, 2001, the United States and the

EU reached an Understanding on a way to

resolve the bananas dispute, which

originated in the early 1990s. Beginning in

1997, the United States obtained various

WTO rulings against the EU’s banana regime

as well as the right to impose retaliatory

duties on $191.4 million of EU trade due to

the EU’s failure to comply with WTO rulings.

In 1999, the EU finally sought to change its

regime in a way that would be consistent

with WTO provisions and to consult actively

with the United States on ways to construct

a WTO-consistent regime. The U.S.-EU

Understanding achieves fundamental U.S.

objectives of reducing discrimination against

U.S. companies, increasing market access for

Latin American bananas, and securing

Caribbean banana exports to the EU.

• Greece-Television Piracy: Prior to

resolving this dispute, a significant number

of television stations in Greece regularly

broadcasted copyrighted motion pictures and

television programs without the

authorization of the copyright owners, and

effective remedies against such copyright

infringements were not provided. Following

WTO consultations, the Greek government

enacted new legislation to crack down on

pirate stations. In addition, the rate of

television piracy in Greece fell significantly.

On March 22, 2001, in a notification to the

WTO regarding the settlement of this dispute,

Greece committed to provide effective

deterrence against any increase in the level

of television piracy, to continue its efforts in

enforcing its intellectual property laws, and

to prevent any recurrence of the television

piracy problem.

• India-Import Quotas on Agricultural,

Textile and Industrial Products: On April 1,

2001, India completed its compliance with a

WTO ruling obtained by the United States

regarding India’s import restrictions on over

2,700 tariff items. The United States and

India agreed that India would implement the

WTO rulings and recommendations by April

1, 2000 for approximately 73 percent of the

tariff items at issue, and by April 1, 2001 for

the remaining items. In announcing India’s

new export-import policy on March 31, 2001,

Indian Commerce and Industry Minister

Maran explicitly cited the WTO ruling as the

reason for removing these quantitative

restrictions.

• Ireland—Copyright and Neighboring

Rights. The United States used WTO dispute

settlement consultations to encourage Ireland

to take further steps to implement its TRIPS

obligations. As a result of these

consultations, Ireland committed in February

1998 to accelerate its implementation of

comprehensive copyright reform legislation,

and agreed to pass a separate bill, on an

expedited basis, to address certain

particularly pressing enforcement issues.

Consistent with this agreement, Ireland

enacted legislation in July 1998 raising

criminal penalties for copyright

infringement. On July 10, 2000, Ireland

passed its comprehensive copyright

legislation, and implemented this legislation

on January 1, 2001. Based on these

developments, the parties notified the WTO

that a mutually satisfactory solution had been

reached.

• Korea—Beef Imports: The United States

prevailed through litigation in this dispute,

which challenged Korea’s regulatory scheme

that discriminates against imported beef by

confining sales of imported beef to

specialized stores, limiting the manner of its

display, and otherwise constraining

opportunities for the sale of imported beef.

Korea is to comply with the adverse WTO

rulings by September 10, 2001, and the

United States will monitor Korea’s

implementation to ensure that it is consistent

with these WTO rulings.

• Mexico—Basic Telecommunications

Services: The United States used WTO

consultations to encourage Mexico to ensure

competition in its $12 billion

telecommunications market. The United

States held two rounds of WTO consultations

with Mexico and requested the establishment

of a WTO panel on a variety of issues,

including Mexico’s failure to (1) prevent

Telmex (Mexico’s dominant telecom carrier)

from engaging in anti-competitive practices,

(2) ensure that Telmex offers its competitors

cost-oriented interconnection rates, (3)

require Telmex to interconnect with

competitors at the local level, and (4) permit

competitive international traffic

arrangements at cost-oriented rates. Thus far,

Mexico has taken positive steps to address

the first three issues. The Government has

issued dominant carrier rules to regulate

Telmex; encouraged carriers to agree to

substantial interconnection rate cuts for

2001; and ensured that competitors obtain

local interconnection from Telmex. However,

Mexico has not yet addressed the key issue

of international traffic or enforced its

dominant carrier rules. Absent progress on

these issues by June 1, the United States will

determine whether additional action is

necessary, including moving the pending

WTO case forward.

• Mexico—Beans: For several years,

Mexico had not permitted U.S. dry beans to

enter Mexico in a timely and predictable

manner under the NAFTA duty-free tariffrate quota (TRQ). On November 30, 2000, the

United States requested NAFTA

consultations on this matter. As a result, on

April 18, 2001, USTR reached an

understanding with Mexico’s Secretary of

Economy on Mexico’s allocation of the TRQ.

Mexico will now allocate the NAFTA TRQ

for beans on a regular schedule, with

auctions to be held each March and June. In

addition, Mexico has agreed to modify

several administrative provisions that

prevented effective use of the TRQ. Under

the NAFTA, exports of dry beans to Mexico—

one of our largest export markets—will be

free of all duties in 2008.

• Romania—Customs Valuation: Last May,

the United States requested WTO

consultations with Romania concerning its

customs valuation regime, which established

arbitrary minimum and maximum import

prices for products such as meat, eggs, fruits

and vegetables, clothing, footwear, and

certain distilled spirits, as referenced in a

database. Romania’s customs valuation

regime appeared to violate its obligations

under the WTO Customs Valuation

Agreement, the GATT, and the WTO

Agreement on Agriculture. After fruitful

consultations in July, Romania modified its

customs valuation procedures so that, in

practice, it no longer imposes minimum

reference prices on most U.S. exports. USTR

is working with Romania on the amendments

to its laws and regulations necessary to

finally bring its customs valuation regime

into compliance with its WTO obligations.

2. WTO Oversight Bodies

Through WTO oversight bodies, the United

States works to secure implementation of

WTO commitments. These oversight bodies

monitor implementation of the various WTO

agreements, review WTO Members’ laws and

regulations, identify potential problems, and

offer technical assistance or other expertise

when necessary to help ensure compliance

and implementation of commitments. The

United States actively asserts its rights and

pursues its interests through these

mechanisms.

• The WTO Committee on Agriculture

oversees the implementation of the

Agreement on Agriculture and provides a

forum for WTO Members to consult on

23068 Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices

matters related to provisions of the

Agreement. In many cases, the Committee

resolves problems so that Members do not

need to refer them to WTO dispute

settlement. For example, U.S. pressure on

Hungary regarding restrictive import policies

for beef products resulted in Hungary’s

decision to open a special quota for highquality North American beef. Questions

directed to Korea regarding its annual rice

import requirements led to improvements in

that country’s administration of its tariff rate

quota commitments. The Committee also

provided a forum for the United States to

raise questions concerning the agricultural

practices in many of our trading partners,

including elements of Canada’s domestic

support programs, the export subsidy

amounts associated with the European

Communities’ inward processing

arrangements for dairy products, and the

amount of product entered under tariff-rate

quotas in Norway. The United States also

raised extensive questions on the EU’s

support regime for horticultural products.

• The Committee on Customs Valuation

has actively considered issues relating to

individual deadlines of more than 50

developing country members to implement

the WTO Agreement on Customs Valuation.

Some members have requested additional

time to assume the Agreement’s obligations

in full. The United States and others,

working through the Committee, have

consulted with these members to craft

individualized extension decisions which

provide for benchmarked work programs

toward full implementation, along with

progress reporting requirements.

• The Committee on Technical Barriers to

Trade (TBT) has addressed specific technical

regulations which might be perceived as

creating unnecessary obstacles to trade. For

example, in 2000, the United States

continued to express concerns with draft EU

directives on (1) waste from electrical and

electronic equipment, (2) the restriction of

the use of certain hazardous substances in

electrical and electronic equipment, and (3)

batteries and accumulators. In this

Committee, the United States and other

countries have also expressed concern that

EU notifications of draft technical regulations

are made too late to allow a meaningful

opportunity for comment as foreseen under

the TBT Agreement. Finally, the United

States has raised questions and alerted other

WTO members to issues relating to restrictive

origin requirements in the Protocols to the

Europe Agreements on Conformity

Assessment under negotiation by the EU.

• In the Committee on Balance of

Payments (BOP) Restrictions, the effective

use of consultation procedures resulted in

the elimination by the end of 2000 of both

Romania’s and the Slovak Republic’s import

restrictions based on balance-of-payment

concerns. Furthermore, as a result of

consultations, both Pakistan and Bangladesh

submitted plans to eliminate all of their

balance-of-payments restrictions, which

means that all of the few remaining countries

imposing such restrictions now have

liberalization plans in place.

• The United States actively uses the

Committee of the Parties to the Government

Procurement Agreement (GPA) for

monitoring individual Parties’

implementation of GPA commitments. In

particular, the Agreement establishes a

process for reviewing how each Party has

implemented GPA requirements in its

national legislation. In 2001, the Committee

will be reviewing the implementing

legislation of Israel, Japan and Korea.

• The United States has used the Council

for Trade in Services and its subsidiary

bodies, especially the Committee on Trade in

Financial Services, to help ensure full

implementation of obligations under the

General Agreement on Trade in Services

(GATS). The United States has consistently

and successfully pressed countries to fulfill

their obligations to ratify and implement

their commitments under the Financial

Services and Basic Telecommunications

Agreements. As a result, in 2000, three more

countries—Ghana, Nigeria, and Kenya—

brought their GATS financial services

commitments into force under the GATS, and

one more country—Dominica—brought its

basic telecom commitments into force under

the GATS. In the Council, the United States

also promoted an agreement between the

WTO and the International

Telecommunications Union (ITU) to help

ensure that ITU technical assistance assists in

implementation of countries’ basic telecom

obligations, including those related to

regulation.

• The TRIPS Council monitors

implementation of the TRIPS Agreement,

provides a forum in which WTO Members

can consult on intellectual property matters

and carries out the specific responsibilities

assigned to the Council in the TRIPS

Agreement. During 2000, the TRIPS Council

monitored the Agreement’s implementation

by developing country Members and newlyacceding Members; provided assistance to

developing country Members so they can

fully implement the provisions of TRIPS; and

concentrated on institution-building, both

internally and with the World Intellectual

Property Organization (WIPO). The TRIPS

Agreement has yielded significant benefits

for U.S. industries and individuals, from

those engaged in the pharmaceutical,

agricultural chemical, and biotechnology

industries to those producing motion

pictures, sound recordings, software, books,

magazines and consumer goods.

• Finally, the Trade Policy Review

Mechanism has been instrumental in the

identification of potentially WTOinconsistent practices in members’ regimes,

and provides a forum in which pressure can

be brought to urge reform or elimination of

such practices. The trade policy review of

Brazil in November 2000 provided an

opportunity for the United States to question

the Brazilian Government about its lack of

notification to the WTO of its current import

licensing system and the WTO consistency of

this system. The United States was joined by

several other delegations including the EU,

India and Colombia in expressing

dissatisfaction with the licensing system. In

response to this criticism Brazil promised to

review its import licensing system, reduce

the products subject to licensing, and notify

the revised system to the WTO.

3. U.S. Trade Laws

U.S. trade laws are an important means of

ensuring enforcement of U.S. rights and

interests in trade. In the past year, use of

Section 301, Section 1377, Super 301,

Special 301, and Title VII has enabled the

United States to challenge market access

barriers to U.S. goods and services, protect

U.S. intellectual property rights, ensure

compliance with telecommunications

agreements, and address discriminatory

foreign government procurement practices.

Through its trade preference programs, the

United States also seeks to ensure that

beneficiary countries meet the statutory

conditions, which can include providing

internationally recognized worker rights and

adequate intellectual property protection.

• Section 301: Section 301 of the Trade

Act of 1974 is the principal U.S. statute for

addressing foreign government practices

affecting U.S. exports of goods or services.

Section 301 may be used to enforce U.S.

rights under international trade agreements

and may also be used to respond to

unreasonable, unjustifiable, or discriminatory

foreign government practices that burden or

restrict U.S. commerce. In response to a

petition from the North Dakota Wheat

Commission regarding allegedly

unreasonable trade practices of the

Government of Canada and the Canadian

Wheat Board, the USTR initiated an

investigation of such practices on October 23,

2000. This investigation is currently pending.

• Special 301: Section 182 of the Trade Act

of 1974 (commonly known as ‘‘Special 301’’)

requires USTR to identify annually those

countries that deny adequate and effective

intellectual property (IP) protection or that

deny fair and equitable market access to U.S.

IP products. Implementation of the law

involves the placement of countries of

concern into three separate categories—

Priority Foreign Country, Priority Watch List,

and Watch List. These designations are

determined in terms of the seriousness of IP

problems, with countries having the most

serious IP problems designated as Priority

Foreign Countries, which will result in the

initiation of a section 301 investigation

within 30 days of designation. On March 13,

2001, the United States self-initiated a

section 301 investigation following the

identification of Ukraine as a Priority Foreign

Country under Special 301 for Ukraine’s

persistent failure to take effective action

against significant levels of optical media

piracy and to implement adequate and

effective intellectual property laws.

• Super 301: Super 301 (mandated by

Executive Order 13116 of March 31, 1999)

provides a mechanism for the USTR annually

to review U.S. trade expansion priorities and

focus U.S. resources on eliminating

significant trade impediments to U.S.

exports. In the past year, the United States

made important progress on issues raised in

past Super 301 reports, including productive

discussions with Japan concerning

deregulation of Japan’s insurance market and

resolution of an outstanding textiles dispute

with India concerning the establishment and

notification to the WTO of India’s tariff

bindings on a wide range of textile and

apparel products of importance to U.S.

exporters.

Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices 23069

• Section 1377: In the past year, use of

Section 1377 of the Omnibus Trade and

Competitiveness Act of 1988 has led to the

successful resolution of a number of key

telecommunications trade barriers, including

those in Canada, Germany, Japan, Mexico,

and Peru. For instance, high interconnection

rates in Japan were a subject of last year’s

Section 1377 review. On July 18, 2000, the

United States and Japan reached agreement

to substantially lower interconnection rates

in Japan, saving competitive telecom carriers

more than $2 billion in two years. In

addition, in November 2000, the Canadian

telecom regulator reformed Canada’s

contribution collection (universal service)

regime, which was also subject to last year’s

Section 1377 review. These reforms are

expected to save competitive service

providers millions of dollars.

• Title VII: The Title VII report (mandated

by Executive Order 13116 of March 31, 1999)

identifies trading partners engaging in

discriminatory government procurement

practices. The annual Title VII report

highlights a number of foreign procurement

practices that are of significant concern to the

United States and that the Administration is

pursuing in a range of international fora.

• U.S. trade preference programs—

including the Generalized System of

Preferences (GSP), the African Growth and

Opportunity Act (AGOA), the Caribbean

Basin Initiative (CBI), and the Andean Trade

Preferences Act (ATPA)—are designed to

stimulate economic growth and alleviate

poverty in developing countries through their

integration into the international trading

system. To be eligible for these preferences,

a beneficiary country must meet certain

statutory requirements. Though the

requirements are not identical in the various

programs, they include providing

internationally recognized worker rights,

intellectual property rights, market access,

and having other laws and practices that will

reinforce the incentives provided. Recently,

Swaziland enacted a new labor law providing

internationally recognized workers rights in

order to retain GSP benefits and to become

eligible for AGOA. Likewise, Bangladesh

agreed to extend national labor laws to its

export processing zones and establish a

transition mechanism of worker elected

councils. The Administration is carefully

monitoring the situation to ensure full

implementation of the commitments

undertaken by the Bangladeshi authorities.

Deficiencies in Moldova’s intellectual

property protection were remedied, and

market access improved in India. The

Administration is continuing to review

Guatemala’s continued eligibility for

preferences under both the GSP and CBI

programs based on serious concerns about

labor practices in that country.

While promoting free trade abroad, we

vigorously enforce our trade laws in order to

give Americans the confidence needed to

keep markets open. The Administration is

committed to aggressively enforcing U.S.

trade laws to address the adverse impact that

unfairly traded steel imports have on U.S.

steel companies and U.S. jobs. There are

currently more than 150 anti-dumping and

countervailing duty actions in effect or under

investigation relating to steel products. In

addition, the steel industry is currently

receiving import relief under Section 201 of

the Trade Act of 1974 for line pipe and steel

wire rod products. In addition to actively

enforcing U.S. trade laws, the Administration

will engage key steel producing countries to

address bilaterally and multilaterally the

underlying structural distortions that foster

unfair trade in steel. Despite the trade

remedies that are currently in place, the

Administration is very concerned about the

health of the steel industry. The

Administration is monitoring closely the

global steel market and steel trade practices

and will take additional actions as needed.

B. Status of WTO Disputes

In the April 2000 Super 301 Report, USTR

announced its intention to resort to WTO

dispute settlement procedures as a means of

resolving concerns in seven instances. This

section reports on the status of those

disputes.

• Argentina-Patents: As discussed above,

progress has been made toward resolving this

dispute.

• Brazil-Customs Valuation: U.S. exporters

of textile products have reported that Brazil

uses officially-established minimum

reference prices as a requirement to obtain

import licenses and/or as a base requirement

for import. In practice, this system works to

prohibit the import of products with declared

values below the established minimum

prices. The Brazilian practice appears

inconsistent with Brazil’s WTO obligations,

including those under the Agreement on

Customs Valuation. The United States and

Brazil held WTO consultations on this matter

in July 2000. The United States is monitoring

the operation of the Brazilian regime and

consulting with U.S. exporters on possible

next steps.

• Brazil-Patent Protection: Although Brazil

has a largely WTO-consistent patent regime,

there remains one provision in Brazil’s patent

law that the United States considers

inconsistent with the TRIPS Agreement. This

provision requires all patent owners—

regardless of the subject matter of the

patent—to manufacture their products in

Brazil in order to maintain full patent rights.

Having been unable to resolve this issue for

over five years, the United States resorted to

WTO dispute settlement procedures and

requested consultations with Brazil in May

2000. The parties held consultations in June

and December 2000, but failed to reach a

mutually agreed resolution to the dispute. As

a result, the United States requested the

establishment of a WTO panel to resolve this

dispute. This panel was established in

February 2001.

• Denmark-Enforcement of Intellectual

Property Rights: As discussed above, this

dispute has been successfully resolved with

the enactment of legislation in 2001 to

implement Denmark’s TRIPS obligations.

• India-Measures Affecting Trade and

Investment in the Motor Vehicle Sector: This

dispute, which challenges the WTO

consistency of Indian measures that apply to

investment in the automotive industry, is

currently before a WTO dispute settlement

panel. The measures at issue require

manufacturing firms in the motor vehicle

sector to achieve specified levels of local

content, neutralize foreign exchange by

balancing the value of certain imports with

the value of exports of cars and components

over a stated period, and limit imports to a

value based on the previous year’s imports.

These measures appear to violate the WTO

Agreement on Trade Related Investment

Measures (TRIMs) and GATT.

• Philippines-Measures Affecting Trade

and Investment in the Motor Vehicles Sector:

On November 17, 2000, a WTO panel was

established to examine a U.S. challenge to

certain measures in the Philippines

automotive sector. Among other things, the

measures require producers to incorporate

specified amounts of locally produced

inputs, precluding the purchase of U.S. parts.

There is also a requirement that imports be

balanced in an amount related to a

company’s foreign exchange earnings. Under

the WTO TRIMs Agreement, the Philippines

was required to remove these measures by

January 1, 2000, unless the Philippines

received an extension. No such extension has

been granted and therefore the Philippines

appears to be in violation of its TRIMs

obligations.

• Romania—Customs Valuation: As

discussed above, considerable progress was

made in consultations, and this dispute is

close to resolution.

C. New Requests for Consultations

In addition to the disputes discussed

above, the United States has invoked WTO

dispute settlement procedures in three other

disputes since last year’s Super 301 report:

• Mexico—Measures Affecting Trade in

Live Swine: On July 10, 2000, the United

States requested consultations with Mexico

regarding a Mexican antidumping measure

on live swine from the United States as well

as sanitary and other restrictions imposed by

Mexico on imports of live swine weighing

more than 110 kilograms. Consultations were

held September 7, 2000. Following the

consultations, Mexico issued a protocol

which is designed to allow a resumption of

U.S. shipments of live swine weighing 110

kilograms or more into Mexico. At about the

same time, Mexico self-initiated a review of

its threat of injury determination based on

information, including a shortage of slaughter

hogs, that suggests that market conditions

have changed substantially in Mexico. The

United States is closely monitoring this

situation.

• Belgium—Rice Imports: Belgian customs

authorities have disregarded the actual

transaction values of rice imported from the

United States from July 1, 1997 to December

31, 1998, in computing the applicable

customs duties. By not using transaction

values to compute customs duties, Belgium

has assessed duties on rice that are higher

than the levels provided for in its WTO

commitments. Belgium’s administration of its

tariff regime for rice, moreover, has

contributed to substantial uncertainty

regarding the rate of duty that will be

applicable to shipments of imported rice. The

United States requested WTO consultations

in November 2000 with Belgium on these

issues, and on March 12, 2001, a WTO panel

was established to examine the matter.

23070 Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices

• EU—Import Surcharge on Corn Gluten

Feed: This dispute involves a tariff-rate quota

of 5 euros per metric ton imposed by the EU

on the first 2,730,000 metric tons of corn

gluten feed imported into the EU from the

United States. The EU imposed this import

surcharge in response to the U.S. import

safeguard measure imposed on wheat gluten

imported into the United States from the EU.

The United States considers that the EU

failed to satisfy the requirements of the WTO

Safeguard Agreement for such suspension of

concessions, and therefore the United States

requested consultations with the EU on

January 25, 2001.

III. Realizing the Benefits of Trade

The Bush Administration is carefully

monitoring practices a number of foreign

practices, using all the available tools to

address the concerns of U.S. exporters. These

include measures that occur in many markets

and across many sectors. The barriers

discussed below are just some examples of

the practices that the Administration is

carefully monitoring.

A. Import Policies

Restrictive or burdensome import policies

can undermine the ability of U.S. exporters

to realize the full benefits of market access

commitments. Such policies occur in many

forms. Provided below are examples of three

types of import policies that currently

represent serious barriers to U.S. exports.

Reference Prices: The WTO Customs

Valuation Agreement stipulates that the

transaction price is the primary basis for

customs valuation determinations. However,

certain countries appear to rely on ‘‘reference

prices,’’ which can artificially inflate the

customs value of imported goods. The United

States has actively pursued the issue of

reference prices in the WTO Committee on

Customs Valuation and has engaged in WTO

dispute settlement consultations with

Romania and Brazil regarding such practices.

As discussed above, WTO consultations with

Romania appear to have addressed many

concerns, and the United States remains in

WTO consultations with Brazil in an effort to

resolve similar issues. India continues to

maintain a minimum import price system for

imports of primary and secondary steel

products. In early 2000, the Government of

India removed primary steel products from

the regime. This action was challenged in the

Indian courts, which reapplied the regime to

primary steel products. The United States is

considering appropriate steps to take, which

could include WTO dispute settlement

action.

The continued existence of such practices

in Mexico remains of serious concern. On

October 1, 2000, Mexico significantly

increased the costs associated with its

reference price system by imposing a

burdensome new cash deposit guarantee

requirement for subject goods. Cash deposits

based on reference prices are not returned for

at least six months, and Mexican banks

charge high fees to open and maintain

customs accounts. Bilateral discussions with

Mexico are planned for mid-2001. Based on

these consultations, the United States will

consider what additional steps are necessary,

including WTO dispute settlement action.

Dealer Protection Laws: Several Central

American and Carribean countries (e.g.,

Honduras, Guatemala, Costa Rica, El

Salvador, Dominican Republic and Haiti)

have in place laws, regulations and other

measures which appear to have the objective

of preventing foreign exporters from

terminating importation and distribution

contracts with local companies except under

very stringent conditions often requiring

payments of large indemnities to the local

company. To the extent that they apply only

to imports, such laws may be inconsistent

with GATT national treatment requirements.

Application of these laws can have harmful

effects on the economy as a whole and on

consumers. U.S. exporters report that

distributors’ profit margins are extremely

high in these countries and that distributors

often refuse to service certain segments of the

local market. Faced with such conditions,

exporters are often prevented from bringing

their products to the market most effectively,

and consumers face high costs and limited

choice of products. We will address this

issue in a variety of contexts, notably in

bilateral discussions with our trading

partners.

Motor Vehicle Policies: Certain of our

trading partners maintain restrictive motor

vehicle policies which limit market access

for U.S. exporters. For instance, lack of

foreign access to the motor vehicle market of

Korea remains of significant concern. The

United States and Korea concluded a

Memorandum of Understanding (MOU) in

October 1998 according to which Korea

agreed to undertake a number of specific

actions. Although Korea has taken steps to

implement specific provisions of the MOU,

foreign access remains severely restricted, as

evidenced by the tiny foreign share of the

Korean auto market, which totaled 0.3

percent in 2000. Korea’s high tariffs and

cascading tax structure on motor vehicles

continue to impair the competitiveness of

imported motor vehicles. Moreover, Korean

consumers continue to believe they will face

public opprobrium for purchasing a foreign

car, the legacy of years of governmentsponsored anti-import campaigns. Although

Korea recently acceded to the 1998 Global

Agreement for the harmonization of world

automotive standards, it continues to develop

overly-burdensome standards that impede

imports and are contrary to the spirit of

global harmonization and the 1998 MOU.

The United States will continue to push

Korea to fulfill the objectives of the 1998

MOU and to develop a package of meaningful

measures that will result in substantial

increases in market access for foreign motor

vehicles.

U.S. exporters are experiencing related

problems in Japan. The 1995 U.S.-Japan

Automotive Agreement, which sought to

eliminate market access barriers and

significantly expand sales opportunities in

this sector, expired on December 31, 2000.

Although some progress was made under the

1995 agreement, the overall objectives of the

1995 agreement were not met. There are a

number of factors contributing to the

disappointing results, one of which has been

the weakness of the domestic Japanese

economy over the past three years. However,

the effects of the Japanese recession have

been disproportionately felt by foreign firms.

In addition, the pace of deregulation has

slowed significantly. Lack of transparency in

both procurement and rule-making persists,

and keiretsu ties continue to impede full and

fair competition in this market. Further,

while investment opportunities in the

vehicle market have increased notably,

opportunities for automotive parts makers

remain largely unchanged. This situation,

coupled with recent trends in bilateral

automotive trade, has underscored the need

for further market-opening efforts by Japan.

The United States hopes to work closely and

cooperatively with Japan on this issue in the

coming months.

B. Technical Regulations and Rule-Making

WTO Members have developed

disciplines—primarily through the

Agreement on Technical Barriers to Trade

(TBT)—to ensure that standards, testing,

conformity assessment procedures, and

related measures are developed and applied

in a transparent and non-discriminatory

manner. These disciplines have served to

prevent trading partners from using such

technical requirements for protectionist

purposes. Nevertheless, U.S. exporters

continue to face adverse conditions in several

important markets. Although there are many

other such barriers around the world, we

highlight the following two examples:

Technical Regulations: Such regulations

can impose onerous conditions on U.S.

exports. For instance, in Mexico, certain

regulations require the inspection and

approval of manufacturing facilities in order

to obtain a sanitary license to sell certain

herbal and nutritional products in Mexico.

However, Mexican authorities refuse to

inspect U.S.-based manufacturing facilities.

Denying U.S. exporters the ability to have

their facilities inspected and approved on the

same basis as their Mexican counterparts

raises serious concerns about Mexico’s

adherence to its trade agreement obligations.

The United States has raised these concerns

with Mexico. Mexican authorities have

advised us that they are looking at ways to

address our concerns consistent with NAFTA

and WTO obligations; however, to date, we

have seen no progress. If this problem is not

resolved in a timely manner that will allow

U.S. companies without Mexican-based

production facilities to resume exporting

their products to Mexico, the United States

will consider whether to request

consultations under the NAFTA or the WTO

to resolve this issue.

Transparency in Rule-Making: An

important aspect in the development of

technical regulations is transparency in the

regulatory process. Assuring transparency

and effective participation in the rule-making

process can be extremely useful in

preventing trade problems associated with

such measures. A growing number of U.S.

trade concerns stem from the lack of

transparency in the development of the

technical regulations of the EU. EU

procedures for the development of EU

technical regulations appear to undermine

multilateral provisions intended to provide

an opportunity for meaningful comment on

Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices 23071

draft regulations, because the EU notification

to the WTO is only made after the European

Commission has finalized its proposal (and

forwarded it to other EU institutions for

consideration/approval). As a result, the

United States and other interested parties are

unlikely to have a meaningful opportunity to

have any input or concerns addressed or

reflected in a directive’s provisions.

Furthermore, while European regional

standards can be used to meet an EU

directive’s ‘‘essential’’ requirements, EU

procedures do not provide a meaningful

opportunity to provide comments on the

relationship of these standards to the EU

directive’s requirements. The lack of

transparency in EU rulemaking raises serious

questions about EU compliance with

obligations under the WTO TBT Agreement.

The United States will closely monitor

developments and will consider all options

to ensure that these obligations are fully met.

C. Agricultural Practices and SPS Measures

The WTO Agreement on Agriculture and

on Sanitary and Phytosanitary (SPS)

Measures have been instrumental to the

ability of the U.S. agricultural sector to take

advantage of its competitiveness and export

its products abroad. The United States

continues to be vigilant in its effort to

prevent our trading partners from

maintaining trade-distorting practices that

disadvantage U.S. agricultural exports. For

example, as discussed above, in response to

a petition filed, the USTR is currently

investigating practices of Canada and the

Canadian Wheat Board under Section 301 of

U.S. trade laws. We also are examining

information gathered from U.S. agricultural

exporters to assist us in our negotiations on

agriculture in the WTO, the FTAA and

bilateral negotiations, including public

comments received in preparation for this

year’s Super 301 report.

In addition, the United States has serious

concerns that Japan, in an unprecedented

manner, is taking actions affecting access to

its markets for agricultural products. In early

April 2001, Japan implemented a new

quarantine inspection system for fresh

vegetables, strawberries and melons, which

limited the number of daily inspections at

Japan’s air and seaports. Japan took this

action without prior consultation with

trading partners or adequate explanation of a

scientific rationale for the new system. Japan

is also considering taking, for the first time,

import safeguard actions on a wide range of

agricultural and other products. It has

announced that it will implement safeguard

measures on three agricultural products—

fresh shiitake mushrooms, stone leeks (i.e.,

welsh onions) and tatami mat reeds—

beginning April 23, 2001. Among the other

products Japan is investigating are lumber,

onions, and tomatoes, which are of

commercial interest to the United States. U.S.

exports (CY 2000) of these products totaled

over $240 million. The U.S. Government, at

senior levels, has raised with the Japanese

Government its serious concerns about these

measures affecting imports. The United

States will closely monitor Japan’s import

measures to ensure they comply with WTO

obligations.

The United States also has serious

concerns regarding the process of import risk

assessment for SPS measures in Australia.

SPS measures protect against risks associated

with plant or animal borne pests and

diseases, additives, contaminants, toxins, and

disease-causing organisms in foods,

beverages, or feedstuffs. The WTO SPS

Agreement establishes rules and procedures

to ensure that SPS measures address

legitimate human, animal, and plant health

concerns, do not arbitrarily or unjustifiably

discriminate between Members’ agricultural

or food products, and are not disguised

restrictions on international trade.

Transparency is an integral aspect of the

development of SPS measures and is often

extremely useful in preventing trade

problems associated with SPS measures.

Although Australia revised and published its

import risk assessment procedures in 2000,

the process in Australia remains nontransparent and fraught with delays.

Australia’s continued ban on the importation

of California table grapes illustrates problems

encountered, and other countries have

comparable complaints. The United States

has been seeking entry into Australia’s

market, in some cases for more than a

decade, for Florida citrus, pork, poultry,

stone fruit, and apples in addition to

California table grapes.

D. Government Procurement

The 2001 ‘‘Title VII’’ report, which USTR

releases simultaneously with the Super 301

report on April 30 (available on the USTR

web site (www.ustr.gov)), addresses a number

of discriminatory government procurement

practices, including implementation of the

EU ‘‘Utilities Directive’’ by government

telecommunications utilities, various

discriminatory practices in the public works

sector of Japan, discriminatory practices and

procedural barriers to trade in Taiwan,

discrimination in Canada against U.S.

suppliers in provincial government

procurement procedures, and the potential

discriminatory effects of ‘‘sect filters’’ in

Germany. The ‘‘Title VII’’ report provides

background on these issues and the steps the

Administration is taking to address them.

E. Subsidy Practices

Unfair government subsidies distort the

free flow of goods and adversely affect U.S.

business in the global marketplace. Rules

covering industrial subsidies have evolved

and are intended to prohibit or discourage

the most distortive kinds of subsidies, and to

allow governments to use less distortive

subsidies in order to achieve the broader

social or economic objectives of interest to

them under certain circumstances. Provided

below are representative examples of subsidy

practices that the Administration is

monitoring closely.

The United States continues to be

concerned about the prospect of further

subsidization of the Airbus consortium by

Member State governments of the EU. Since

the inception of Airbus in 1967, Airbus

member governments have provided massive

subsidies to their respective member

companies to aid in the development,

production and marketing of the Airbus

family of large civil aircraft. Airbus partner

governments have borne 75 to 100 percent of

the development costs for all major lines of

Airbus aircraft and provided other forms of

support, including equity infusions, debt

forgiveness, debt rollovers and marketing

assistance. Some loans for Airbus programs,

repayable from royalties on aircraft sold,

have been effectively forgiven because

projected sales did not materialize. The EU

also supports Airbus indirectly through

government funded research targeted at

specific civil aircraft projects. Government

support of Airbus raises serious concerns

about EU Member State compliance with

their bilateral and multilateral obligations in

this sector. The United States has urged the

Airbus member governments to ensure that

their planned support for the Airbus A380

aircraft program is on commercial terms,

reflecting the fact that Airbus is now a highly

competitive global producer of aircraft. The

European Commission recently informed the

United States that seven EU Member State

governments have committed to substantial

direct support to develop the A380 aircraft.

The United States is examining the

information that the European Commission

provided and plans to seek further

information in future discussions with the

EU.

In addition, the Government of Korea,

through the Korean Development Bank

(KDB), has initiated a program aimed at

providing direct financial support to several

large companies that are encountering severe

cash flow problems. For example, the KDB

purchased $200 million worth of newly

issued Hyundai Electronics Industries (HEI)

bonds in January 2001. The KDB made

similar purchases of the newly issued bonds

of five other cash-strapped, debt-burdened

Korean companies, three of which are other

Hyundai subsidiaries. The KDB reportedly

plans to provide additional financing in the

future to HEI and other companies to cover

$15–20 billion in bonds coming due in 2001.

The Korean Government maintains that only

viable companies will benefit from temporary

KDB support and that the KDB support will

terminate at the end of 2001. The United

States has expressed its concern to Korea

about the negative implications of this type

of government-directed lending for Korea’s

restructuring efforts and the Korean

economy. The United States also has noted

that a significant share of the benefits under

this program has been provided thus far to

companies that are largely export focused

and has raised with Korea its concerns over

the potential inconsistency of this

intervention with the WTO Agreement on

Subsidies and Countervailing Measures.

F. Services and Investment Barriers

Services are what most Americans do for

a living. Service industries account for nearly

80 percent of both U.S. employment and

GDP. U.S. cross-border exports of commercial

services (i.e., excluding military and

government) were $255 billion in 1999,

supporting over 4 million services and

manufacturing jobs in the United States. U.S.

services exports have more than doubled

over the last 10 years, increasing from $118

billion in 1989 to $255 billion last year.

23072 Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices

Likewise, foreign investment provides capital

that fuels economic expansion, increases

productivity, improves living standards, and

provides links to the international

marketplace. Access to overseas investment

markets allows U.S. companies to remain

competitive in a world of new and changing

opportunities. U.S.-owned companies with

affiliates abroad accounted for 64% of total

U.S. goods exports in 1998.

These statistics reveal the importance of

services and investment in promoting open

markets. Continued liberalization in this area

represents a ‘‘force multiplier’’ for structural

reforms abroad and for economic growth

domestically.

Unfortunately, as discussed below, we

continue to encounter barriers to the supply

of U.S. services and to investment by U.S.

businesses, particularly with respect to

telecommunications regulations, traderelated investment measures (TRIMs) in the

automobile sector, and retail store laws. We

therefore make it a priority to intensify our

efforts to promote the dynamism of this

sector and reduce trade barriers.

Telecommunications Trade Barriers: Since

the WTO Basic Telecommunications

Agreement came into force in February 1998,

telecommunications markets overseas have

rapidly opened to competition. U.S.

companies have invested billions of dollars

to build global networks, partner with foreign

companies, and expand their commercial

presence in foreign markets. However, as

discussed in USTR’s review of

telecommunications trade agreements under

‘‘Section 1377’’, released on April 2, 2001

(see www.ustr.gov), practices of certain

trading partners raise serious concern about

compliance with their international

telecommunications obligations.

For instance, in Taiwan,

telecommunications regulations impose

serious limitations on the competitive

offering of telecommunications services and

undermine the ability of new entrants to

compete in Taiwan’s market. These

restrictions also appear to be inconsistent

with the commitments undertaken by Taiwan

as part of its bilateral WTO accession

negotiations with the United States to

liberalize its telecommunications market by

July 1, 2001. USTR welcomes the ongoing

regulatory review of Taiwan’s telecom

regulations and expects this review to result

in the promised liberalization of its market.

If Taiwan does not appear to be taking the

necessary steps to liberalize its market

consistent with its commitments, USTR will

consider appropriate action, including under

Section 1374 of the 1988 Trade Act. In

addition, as discussed above, the United

States remains seriously concerned that

Mexico has not yet addressed the key issue

of ensuring competition in the market for

international calls or enforcing certain rules

designed to address anti-competitive conduct

in telecommunications services. Absent

progress on these issues by June 1, the United

States will determine whether additional

action is necessary, including moving the

pending WTO case forward.

Auto TRIMS: The WTO Agreement on

Trade Related Investment Measures (TRIMs)

limits the ability of foreign governments to

develop programs that favor the purchase or

use of goods produced locally. Such

measures often reduce the export of U.S.-

manufactured goods and also impede a

company that operates in a market with

TRIMs from acting in an economically

efficient manner. The maintenance of TRIMs

has been a particular problem in the motor

vehicle sector. As discussed above, the

United States currently has two pending

WTO cases on this issue, challenging the

maintenance by India and the Philippines of

measures affecting trade and investment in

the motor vehicle sector.

The United States also has serious

concerns about local content requirements

imposed by Malaysia on the production of

motor vehicles. Under the TRIMs Agreement,

Malaysia was required to remove these

measures by January 1, 2000 unless

additional time was granted by the WTO. On

December 29, 1999, Malaysia made a formal

request for an additional two years to bring

these measures into compliance with its

obligations under the Agreement. The United

States has noted its willingness to agree to an

extension, but is concerned by conflicting

statements made by the Government of

Malaysia with regard to its intentions. For

this reason, the United States will continue

to monitor Malaysia’s compliance with its

WTO obligations in the motor vehicle sector.

Retail Store Laws: Retail store laws that

discriminate with regard to the country of

origin of the goods that a retailer can sell

harm not only the firms operating in this

sector, but also harm consumers by limiting

access to products that may be more

competitive in terms of price and quality.

The Philippines requires that certain foreign

retailers source at least 30 percent of their

inventory, by value, in the Philippines.

Additionally, firms specializing in luxury

goods must source at least 10 percent of their

inventory, by value, in the Philippines. These

requirements appear to violate the

Philippines’ commitments under several

WTO agreements. The United States will

monitor this issue to determine what action

should be taken to address these concerns.

G. Lack of Intellectual Property Protection

The USTR is releasing the ‘‘Special 301’’

report today (see www.ustr.gov), which

identifies those countries that deny adequate

and effective intellectual property protection

or that deny fair and equitable market access

to U.S. intellectual property products. As

discussed above, on March 13, 2001, the

United States self-initiated a section 301

investigation following the identification of

Ukraine as a Priority Foreign Country under

Special 301 for Ukraine’s persistent failure to

take effective action against significant levels

of optical media piracy and to implement

adequate and effective intellectual property

laws. In addition, this year’s Special 301

report addresses a number of key issues,

including (1) failure of numerous economies,

including Brazil and Taiwan, to take effective

enforcement action that provides adequate

deterrence against commercial piracy and

counterfeiting; (2) failure of the European

Union to provide national treatment for the

protection of geographical indications for

agricultural products and foodstuffs; (3)

failure by Argentina, Hungary and Israel,

among others, to provide adequate protection

for the confidential test data of

pharmaceutical and agricultural chemical

companies; (4) the insufficient term of

protection for patents in trading partners

such as the Dominican Republic and India;

(5) the inadequate protection for pre-existing

works in numerous trading partners,

particularly in Armenia, Azerbaijan, Belarus,

Kazakhstan, Tajikistan, Turkmenistan, and

Uzbekistan; (6) the failure of the Philippines

to provide adequate enforcement, including

making available ex parte search remedies;

and (7) lax border enforcement against pirate

and counterfeit goods in many of our trading

partners.

H. Barriers to Trade in Electronic Commerce

Barriers to electronic commerce can occur

at various points in the e-commerce value

chain, such as restrictions on basic

telecommunications services, Internet access

services, and services provided through the

Internet. For example, Israel is pursuing a

policy that would disadvantage U.S.

companies wishing to offer Internet access

services over the cable platform and would

favor the state-owned telecommunications

company (Bezeq). Although Israel has

licensed Bezeq to enter the high-speed

Internet access market without any licensing

fees, it has introduced legislation that will

require cable television companies seeking to

enter this market to pay licensing fees (above

their cable franchise fees). The United States

is seriously concerned that regulatory

favoritism undermines the investment

environment in Internet services in Israel. We

will closely monitor developments in Israel

as well as in other markets.

I. Other Barriers

Not all trade obstacles fit neatly into one

category. There are many exporters facing

conditions in overlapping categories that

combine to limit market access to U.S. goods

and services, and unfavorable treatment of a

certain foreign industry by any given country

often involves a multitude of overlapping

barriers. One illustration of how numerous

trade measures can affect the conditions for

access to overseas markets can be found in

the textile and apparel industries. U.S.

industry has raised a series of concerns

regarding a number of measures, often used

in combination, that impede access to

overseas markets, including: high tariffs,

additional import taxes and charges, some of

which may be forgiven for goods destined for

the export market, excessive and impractical

marking and labeling requirements, reference

pricing and non-automatic licensing,

burdensome certificates of origin

requirements, lack of intellectual property

protection, and pre-shipment inspection

requirements. Ironically, some of the

countries with the most protected internal

markets are also the most significant

beneficiaries of the WTO Agreement on

Textiles and Clothing’s liberalization and

elimination provisions, as applied by the

United States. The United States will

continue its efforts to work within the WTO

and with our trading partners to ensure that

all countries meet their WTO obligations to

Federal Register / Vol. 66, No. 88 / Monday, May 7, 2001 / Notices 23073

open their market to textile and apparel

products.

The United States has continuing concerns

about treatment of foreign, research-based

pharmaceuticals under the reimbursement

pricing systems in place in Korea and

Taiwan. These reimbursement pricing

systems lack transparency and appear

arbitrary, raising questions about whether

they are being implemented in a fair and

non-discriminatory manner. These systems

also create an uncertain business

environment for pharmaceutical

manufacturers. In addition, burdensome and

non-science-based regulatory requirements

are applied to pharmaceutical products in

Korea and Taiwan, including requirements

relating to the acceptance of foreign clinical

test data, testing, and approval of new drugs.

Korea and Taiwan need to undertake

significant improvements in their systems to

make them fair, non-discriminatory and

transparent. Finally, while the Korean

Government has been responsive to some

U.S. concerns in the pharmaceutical sector,

serious questions remain regarding the lack

of IPR protection for these products. In

particular, the lack of coordination between

the Korea Food and Drug Administration and

the Korea Intellectual Property Office

concerning marketing approval for

pharmaceuticals and inadequate data

protection, discourage the introduction of

innovative drugs. The U.S. Government will

continue to pursue these issues with the

Korean Government to ensure that foreign

pharmaceuticals are provided fair and nondiscriminatory treatment in the Korean

market.

Finally, the U.S. flat glass industry

continues to experience serious market

access problems in Japan, owing mainly to

the continued domination of the Japanese flat

glass market by domestic flat glass

manufacturers. Over the past year, U.S.

industry has strengthened its business and

marketing activities in Japan. However,

despite better quality, technology and

competitive prices, U.S. flat glass

manufacturers have failed to gain access to

the Japanese market commensurate with their

level of access in the rest of the world. The

domination by Japanese flat glass

manufacturers of distributors is a key

problem for U.S. firms. The leading Japanese

flat glass producers exert tight control over

flat glass distribution by majority ownership,

equity and financing ties, employee

exchanges, and purchasing quotas. The U.S.

Government remains very concerned about

the closed distribution channels in the

oligopolistic flat glass sector. To address

these concerns, the U.S. Government has

proposed, under the bilateral Enhanced

Initiative on Deregulation and Competition

Policy, that the Japanese Government take

further steps to promote competition in

wholesale and retail distribution channels for

a range of products, including flat glass. The

U.S. Government will continue to monitor

closely the flat glass industry and urges the

Japanese Government to promote

competition and eliminate unhealthy

oligopolistic behavior in the flat glass sector.

A. Jane Bradley,

Assistant U.S. Trade Representative for

Monitoring and Enforcement.

[FR Doc. 01–11355 Filed 5–4–01; 8:45 am]

BILLING CODE 3190–01–P

DEPARTMENT OF TRANSPORTATION

Federal Highway Administration

[FHWA Docket No. FHWA–2000–7392]

Transportation Equity Act for the 21st

Century; Implementation Guidance for

the National Corridor Planning and

Development Program and the

Coordinated Border Infrastructure

Program

AGENCY: Federal Highway

Administration (FHWA), DOT.

ACTION: Notice; request for comments;

solicitation of intent to apply for fiscal

year (FY) 2002 grants.

SUMMARY: This document provides

implementation guidance on sections

1118 and 1119 of the Transportation

Equity Act for the 21st Century (TEA–

21). These sections established the

National Corridor Planning and

Development Program (NCPD program)

and the Coordinated Border

Infrastructure Program (CBI program).

The NCPD and the CBI programs are

discretionary grant programs funded by

a single funding source. These programs

provide funding for planning, project

development, construction and

operation of projects that serve border

regions near Mexico and Canada and

high priority corridors throughout the

United States. States and metropolitan

planning organizations (MPOs) are,

under the NCPD program, eligible for

discretionary grants for: Corridor

feasibility; corridor planning; multistate

coordination; environmental review;

and construction. Border States and

MPOs are, under the CBI program,

eligible for discretionary grants for:

Transportation and safety infrastructure

improvements, operation and regulatory

improvements, and coordination and

safety inspection improvements in a

border region.

DATES: Intentions to make grant

applications should be received by

FHWA Division Offices no later than

July 6, 2001. Specific information

required for intentions to make grant

applications is provided in Section IV of

this notice. Comments on program

implementation should be sent as soon

as appropriate. The FHWA will consider

comments received in developing the

FY 2002 and FY 2003 solicitations of

grant applications as well as the

implementation of the NCPD/CBI

program. More information on the type

of comments sought by the FHWA is

provided in Section III of this notice.

ADDRESSES: Submit written, signed

comments on program implementation

for fiscal year FY 2003 to FHWA Docket

No. FHWA–2000–7392, the Docket

Clerk, U.S. Dockets, Room PL–401, 400

Seventh Street, SW, Washington, DC

20590–0001. All comments received

will be available for examination at the

above address between 9 a.m. and 5

p.m., e.t., Monday through Friday,

except Federal holidays. Those desiring

notification of receipt of comments

should include a self-addressed,

stamped envelope or postcard.

Intent to make applications for FY

2002 grants under the NCPD and CBI

programs should be submitted to the

FHWA Division Office in the State

where the applicant is located.

FOR FURTHER INFORMATION CONTACT: For

program issues: Mr. Martin Weiss,

Office of Intermodal and Statewide

Programs, HEPS–10, (202) 366–5010; or

for legal issues: Mr. Robert Black, Office

of the Chief Counsel, HCC–30, (202)

366–1359; Federal Highway

Administration, 400 Seventh Street,

SW., Washington D.C. 20590. Office

hours are from 7:45 a.m. to 4:15 p.m.

e.t., Monday through Friday, except

Federal holidays.

SUPPLEMENTARY INFORMATION:

Electronic Access

Internet users can access all

comments received by the U.S. DOT

Dockets, Room PL–401, by using the

universal resource locator (URL): http:/

/dms.dot.gov. It is available 24 hours

each day, 365 days each year. Please

follow the instructions online for more

information and help.

An electronic copy of this document

may be downloaded using a computer,

modem and suitable communications

software from the Government Printing

Office’s Electronic Bulletin Board

Service at (202) 512–1661. Internet users

may reach the Office of the Federal

Register’s home page at: http://

www.nara.gov/fedreg and the

Government Printing Office’s web page

at: http://www.access.gpo.gov/nara. In

addition, a number of documents and

links concerning the NCPD and the CBI

programs are available through the

home page of the Corridor/Border

Programs: http://www.fhwa.dot.gov/

hep10/corbor/corbor.html.