International Trade: An Analysis of Free Trade Agreements and Congressional and Private Sector Consultations under Trade Promotion Authority
Published: 2007-11-07T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Congress granted the President Trade Promotion Authority (TPA) to negotiate agreements, including free trade agreements (FTA) in 2002. TPA stipulated negotiating objectives and procedural steps for the administration, including consulting with Congress and trade advisory committees. TPA lapsed in July 2007 amidst questions about its use. GAO was asked to review: (1) What FTAs have been pursued under TPA and why? (2) Overall, what is the economic significance of these agreements for the United States? (3) What is the nature of the consultation process for Congress and how well has it worked in practice? (4) What is the nature of the consultation process for trade advisory committees, and how well has it worked in practice? GAO interviewed staff of the Office of the U.S. Trade Representative (USTR), the International Trade Commission (ITC), congressional committees with jurisdiction, trade advisory committees, and others, and reviewed USTR documents.
section_title: What GAO Found
paragraphs: In the 5-year period thatTPA was granted to the President, from 2002-2007, the United States pursued 17 FTAs with 47 countries for a variety of foreign and economic policy reasons. Six FTAs have been approved and are in force, and negotiations for another 4 FTAs have been concluded. The United States has simultaneously pursued comprehensive, high-standard trade agreements on the bilateral and multilateral levels. Trade with countries for which FTAs were pursued under TPA comprises about 16 percent of U.S. trade and foreign direct investment. Twenty-seven percent of U.S. trade is with countries with FTAs in force prior to TPA (e.g., Canada and Mexico); 56 percent is with countries with which the United States does not have FTAs. The largest U.S. trade partners not pursued under TPA are the European Union, Japan, and China; the rest account for relatively small shares of U.S. trade. USTR held 1,605 consultations with congressional committee staff from August 2002 through April 2007, but satisfaction with the consultations was mixed. About two-thirds of these meetings were with the House and Senate trade and agriculture committees. Almost all the congressional staff GAO contacted viewed the consultations as providing good information, but slightly more than half said that they did not provide opportunities for real input or influence. These staff often said that they were not given sufficient time to provide meaningful input. The trade advisory committee chairs GAO contacted said that USTR and managing agencies consulted with their committees fairly regularly, although process issues at times hindered some from functioning effectively. For example, about half said that the 30-day deadline for reporting on the likely impact of FTAs can be difficult to meet, and the ITC had a similar problem. In addition, adherence to statutory representation requirements is not always transparent. Several committees have not been able to meet while their charters were expired, or members had not been reappointed. However, USTR and managing agencies are not required to report to Congress such lapses in a committee's ability to meet.

section_title: Letter
paragraphs: Pub. L. No. 107-210, Div. B, 116 Stat. 933, 993–1022 (codified at 19 U.S.C. §§ 3801-13).
Launched in November 2001 in Doha, Qatar, these negotiations involve 150 nations and  encompass a far-reaching agenda for liberalizing trade and bolstering development in  poorer countries. Among other things, they involve efforts to reach agreement to reduce  barriers such as tariffs (border taxes) and trade-distorting subsidies on agriculture,  manufactures, and services trade. For further background see www.wto.org and GAO,  World Trade Organization: Congress Faces Key Decisions as Efforts to Reach Doha  Agreement Intensify, GAO-07-379 (Washington, D.C.: Mar. 5, 2007). these agreements to the United States? (3) What is the nature of the  consultation process for Congress and how well has it worked in practice?  (4) What is the nature of the consultation process for private sector trade  advisory committees and other stakeholders, and how well has it worked  in practice? As agreed, we will provide a second report in spring 2008 that  will provide more information and analysis on the economic and  commercial significance of FTAs, as well as a review of progress made by  FTA partner countries in strengthening labor and environmental laws and  enforcement.
To answer these questions, we reviewed documents and interviewed  officials responsible for international trade policy and negotiations at the  Office of the U.S. Trade Representative (USTR); the Departments of  Agriculture, Commerce, Labor, State, and the Treasury; and the  Environmental Protection Agency, as well as officials of the U.S.  International Trade Commission (ITC). In addition, to determine what  FTAs have been pursued under TPA and why, we reviewed USTR  documents and interagency memoranda discussing FTA partner selection  and updated our findings from prior GAO work on FTA partner selection.  To determine the potential economic and commercial significance of these  FTAs, we analyzed official U.S. trade and investment data, as well as  studies and analyses from USTR, Commerce, ITC, and trade experts. To  determine the nature of the congressional consultation process and how  well it has worked in practice, we reviewed consultation provisions from  the Trade Act of 1974 up through the Trade Act of 2002, analyzed USTR’s  congressional consultation logs, and interviewed current and former staff  of USTR and the congressional committees that had participated in these  consultation meetings. In our congressional interviews, we interviewed  House and Senate committees, including majority and minority staffs, of  the trade, agriculture, and other committees of jurisdiction. To determine  the nature of the consultation process for the trade advisory committees  and how well it worked in practice, we reviewed relevant provisions in the  Trade Act of 1974, the Federal Advisory Committee Act (FACA), and  TPA; analyzed meeting records, charter information, and committee  rosters; and interviewed 16 of the relevant 27 trade advisory committee  chairs, judgmentally selected from the policy and technical levels of the  system, as well as select committee members referred to us by the chairs,  and the agency officials responsible for overseeing these committees. We  also updated findings from prior GAO work on the trade advisory  committees. We conducted our work from January 2007 through August  2007 in accordance with generally accepted government auditing  standards. (See appendix I for details about our objectives, scope, and  methodology.)
subsections: section_title: Background
paragraphs: In 2002, Congress passed legislation renewing the President’s ability to  enter into certain trade agreements and submit implementing bills on an  expedited legislative track without possibility of amendment. The bill  granting this “fast track” authority, renamed TPA, passed the House by one  vote amid contentious debate, with a noticeable split along party lines.  Although delegation of the constitutional authority to “regulate commerce  with foreign nations” dates back to 1934 and some form of fast track  authority was granted by Congress to every president since 1974, the  Bipartisan Trade Promotion Authority Act of 2002 restored this authority  after an 8-year hiatus.
Congress accompanied this grant with statutorily defined objectives for  the trade negotiations and requirements that the administration consult  with Congress and other stakeholders before, during, and after the  negotiations. If Congress decided that the President hadn’t satisfied his or  her obligations to consult under TPA, the implementing legislation could  be treated like any other bill. Congress has applied TPA procedures to  every implementing bill submitted under the Trade Act, according to  USTR. Additional information about the history of the consultation  requirements can be found in appendix II.
TPA also requires the administration to consult with private sector  advisory committees. It continues the advisory committee system  established under the Trade Act of 1974, which was intended to ensure  that representatives from private business and other groups with a stake in  trade policy could provide input before, during, and after negotiations. The  system has a three-tier structure of committees to advise the President on  (1) overall trade policy, (2) general policy areas, and (3) technical aspects  of trade agreements. The law requires the President to consult with these  committees on a continuing and timely basis. Each advisory committee  must submit a report to Congress and the President on each trade  agreement negotiated under TPA no later than 30 days after the President  notifies Congress of his or her intent to enter into the agreement.  The  system comprises about 700 advisors across 28 committees broadly  representative of the U.S. economy and various trade policy interests.
The Trade Act of 1974 also requires USTR to provide an opportunity to  private organizations or groups outside the advisory committee system to  present their views on trade issues. To comply with this requirement,  USTR publishes a Federal Register notice and the Trade Policy Staff  Committee conducts a hearing. The public can comment on any matter  relevant to the proposed agreement in response to the Federal Register  notice, either in writing or at the public hearing. USTR also consults with  groups outside of these mechanisms; sometimes USTR is contacted, and  sometimes USTR seeks out comments.
We reported on the trade advisory committee system in 2002 and found  that it has made valuable contributions to U.S. trade policy and  agreements. We also found, however, that consultations were not always  timely or useful and that the process needed greater accountability.  Furthermore, we found that committee structure and composition had not  been updated to reflect changes in the U.S. economy and trade policy. In  response to these findings, USTR and the other managing agencies have  taken several actions, including the installation of a secure Web site for  viewing draft agreement text; reconfiguration of the committee system;  introduction of a monthly teleconference of chairs; and introduction of  periodic plenary sessions for the third tier technical committees.
TPA was actively used by the President. In addition to pursuing numerous  FTAs, a global round of trade liberalization talks at the WTO launched in  November 2001 was subsequently notified under TPA. WTO talks made  some progress, but they were not concluded by the July 1, 2007, deadline  TPA set for an agreement to qualify. The President has called on Congress  to renew TPA, in part to continue pursuit of WTO talks in hopes of  achieving fundamental global agriculture reform and meaningful reduction  in trade barriers to goods and services worldwide. Some in Congress are  supportive, but others are skeptical, making an examination of recent  experience under TPA timely. Meanwhile, FTA negotiations with Malaysia  have continued despite the lapse in TPA. Congress must also decide  whether to approve the last four FTAs concluded under TPA—with Peru,  Colombia, Panama, and South Korea.
section_title: Since Passage of TPA, the United States Has Pursued Negotiations of 17 Comprehensive FTAs for Foreign and Economic Policy Reasons
paragraphs: Since the passage of TPA in 2002, the United States has pursued  negotiations towards 17 comprehensive FTAs covering 47 countries. FTA  partner countries were selected for a variety of foreign and economic  policy reasons. The United States followed a strategy of competitive  liberalization, which entails simultaneously pursuing bilateral, multilateral,  and global trade agreements. Furthermore, the United States only pursued  comprehensive FTAs, but a number of large trading partners were  unwilling to negotiate on sensitive topics such as agriculture in FTAs.
subsections: section_title: Since 2002, the United States Has Pursued Negotiations of 17 FTAs with 47 Countries
paragraphs: In the 5-year period that TPA was granted to the President, from 2002- 2007, the administration pursued negotiations toward 17 FTAs with 47  countries. These 47 countries extend from North America to South  America to the Pacific Rim to the Middle East. (See table 1.) Six FTAs have  been approved and are in force. An additional 4 FTAs with 4 countries  have been signed but not yet approved, and FTAs with Costa Rica and  Oman have been signed and approved by the U.S. Congress but are not yet  in force. Furthermore, an FTA with Malaysia is currently under  negotiation, and negotiations for the remaining 5 FTAs are not yet  concluded.
section_title: FTA Partners Were Selected for a Variety of Foreign and Economic Policy Reasons
paragraphs: The United States has negotiated comprehensive FTAs for a variety of  foreign and economic policy reasons. Agency officials confirmed that  since mid-2004, FTA partners have been judged on six criteria outlined by  the National Security Council, as GAO reported in 2004. These criteria are  as follows:    benefits to the broader trade liberalization strategy,    compatibility with U.S. interests,    congressional/private sector support, and    U.S. government resource constraints.
According to officials we interviewed, these criteria are broad and, as a  result, the administration has considerable discretion in choosing potential  FTA partners. Among the foreign policy considerations for selecting FTA  partners are the strengthening of strategic relationships and the promotion  of reform in partner countries. In addition to the first two criteria  mentioned above of assessing country readiness as well as the  economic/commercial benefit, forming regional trading blocks and  replacing trade preference programs were among the economic policy  factors.
subsections: section_title: Strengthening Strategic Relationships
paragraphs: Agency officials told us that establishing trading relationships with  strategic friends and allies was a key factor in deciding with whom to  enter into FTA negotiations. Particularly following the September 11  terrorist attacks and the onset of the Iraq war, pursuing FTAs with  moderate Muslim countries became a significant policy goal. In May 2003,  the President announced a Middle East Free Trade Initiative, which lays  out a plan of graduated steps for Middle Eastern nations to increase trade  and investment with the United States. Under this initiative, the United  States has entered into FTAs with Morocco and Bahrain and has approved  an FTA with Oman. This is in addition to the FTAs the United States  already had with Israel and Jordan. USTR indicated in its November 2004  letter of intent to enter into an FTA with Oman, for example, that Oman, as  a member of the Gulf Cooperation Council, will “continue to be an  important strategic colleague on a broad array of foreign and national  security issues.” The United States has sought to strengthen strategic  relationships through FTAs in other regions as well. For example, the  November 2003 letter of intent to enter into an FTA with Panama indicated  that “an FTA will serve to strengthen not only economic ties but also  political and security ones.”
section_title: Promoting Reform in Partner Countries
paragraphs: Another foreign policy goal in selecting FTA partners was promoting  economic and political reform in partner countries. Public statements  regarding the FTA with Morocco, for example, suggest that it would add  momentum to political reform already under way there. USTR also stated  that the Central America—Dominican Republic Free Trade Agreement  (CAFTA-DR) will strengthen “free-market reforms” in Central America,  adding that “the growth stimulated by trade and the openness of an  agreement will help deepen democracy, the rule of law, and sustainable  development.” Public documents related to the Andean FTA   initiative state that an Andean FTA would “enhance our efforts to  strengthen democracy and support for fundamental values in the region”  such as rule of law, sustainable development, transparency, anti- corruption, and good governance. USTR also indicated that an FTA with  South Korea would promote enhanced regulatory transparency in a top  U.S. trade partner.
section_title: Enhancing Regional Economic Initiatives
paragraphs: Beyond assessing a country’s readiness and potential  economic/commercial benefits, USTR publications and interviews with  senior agency officials suggest that sequencing from previous FTAs and  building toward larger regional initiatives were considerations for entering  into negotiations with a number of countries. For example, as the U.S.- Chile FTA negotiations were drawing to a close, the United States  announced its intent to enter into FTA negotiations with the Central  American countries of Costa Rica, El Salvador, Guatemala, Honduras, and  Nicaragua under CAFTA and later announced its intent to include the  Dominican Republic in those negotiations. USTR also submitted a letter of  intent to enter into FTA negotiations with the Andean countries of  Colombia, Peru, Ecuador, and Bolivia under the Andean FTA. The  individual letters of intent to enter in FTA negotiations with these ten  countries cited the complementary nature of these negotiations, which  would lend momentum to concluding the Free Trade Area of the Americas  (FTAA). Agency officials explained that when the United States pursues  individual bilateral FTAs, one goal is to enable them to be woven into  regional agreements under the mantle of broader integration. The  individual letters of intent to enter into FTA negotiations with Thailand  and Malaysia also cited the Enterprise for ASEAN Initiative as a factor in  the selection process, building upon the U.S.-Singapore FTA. The  administration envisioned similar regional or subregional trading groups  for the Middle East (the Middle East Free Trade Area) and South Africa  (SACU, Southern African Customs Union). (See fig. 1.)
For certain developing country FTA partners, one motivation in U.S.  selection was converting one-way U.S. trade preference programs into  two-way reciprocal agreements. Agency officials explained that under  preference programs such as the Generalized System of Preferences and  the Caribbean Basin Initiative, developing countries have preferential  duty-free access to the American market without having to reciprocate; by  entering into FTAs with them, the United States “levels the playing field”  by gaining market access in these countries. Public documents related to  the SACU trade negotiations, for example, noted an opportunity to replace  the African Growth and Opportunity Act trade preference program with  an FTA for several of the partner countries. The Andean FTA was  motivated in part by a desire to replace the Andean Trade Preference  Agreement, while the CAFTA-DR was motivated in part by a desire to  replace a major portion of the Caribbean Basin Initiative. Furthermore,  USTR officials noted that transitioning from unilateral trade preferences to  reciprocal trade agreements would deepen existing regional integration.  USTR identified section 202(b) of the United States-Caribbean Basin Trade  Partnership Act as an example of how this evolution was also a goal that  Congress shared.
section_title: Under TPA, the Administration Pursued Strategies of Competitive Liberalization and Comprehensive FTAs
paragraphs: As WTO negotiations have repeatedly stalled in the face of wide  substantive differences, particularly over agriculture, the United States  has sought to continue to be active in pursuing trade agreements at other  levels, even prior to TPA. As part of its mission to play the leading role in  developing and coordinating U.S. trade policy, USTR pursued trade  agreements throughout the 1990s not only at the global level through the  WTO, but also at the bilateral and multilateral levels, such as through the  U.S.-Jordan FTA and the North American Free Trade Agreement (NAFTA).
Since TPA passage, USTR officials stressed that they would  simultaneously pursue bilateral, multilateral, and global trade agreements  under a strategy referred to as “competitive liberalization,” or more  recently as “complementary liberalization.” This competitive liberalization  strategy linked trade policy to foreign policy, security policy, and  commercial policy goals. Although still committed to liberalization on a  global front, working in parallel with the WTO framework offered an  opportunity to keep the concept of achieving liberalization moving  forward despite setbacks at the global level.
Competitive liberalization had the dual goal of providing momentum for  global trade liberalization and providing an alternative if global trade talks  failed to progress. As former U.S. Trade Representative Robert Zoellick  explained in 2002, “we will not passively accept a veto over America’s  drive to open markets. We want to encourage reformers who favor free  trade. If others do not want to move forward, the United States will move  ahead with those who do.” Agency officials say that, due to its importance  to the global trading system and the potential of more significant and  broad-based economic gains, the successful completion of global trade  agreements such as the WTO Doha Round is the administration’s ultimate  goal and that FTAs were intended to serve as a stepping stone to that goal  since they can provide a substantial demonstration effect. U.S. Trade  Representative Susan Schwab said in her May 2006 Senate confirmation  hearing that pursuing FTAs helps “to establish the breadth and scope of  potential multilateral agreements in years to come by setting precedents  and by demonstrating the real benefits of free and fair trade.” For example,  according to administration officials, signing NAFTA contributed to  moving the last (Uruguay) round of global trade talks creating the WTO to  conclusion. Additionally, FTAs were seen as a tool to strengthen  relationships with trading partners similarly seeking progress in global  liberalization. In the letter announcing its intent to negotiate an FTA with  Australia, for example, the USTR stated “we believe that an FTA would  further unite and strengthen the alliance of countries leading the effort  toward global trade liberalization.” The second goal of competitive  liberalization was to provide an alternative venue for pursuing trade  liberalization as WTO talks lagged. However, whereas competitive  liberalization sought to pressure other countries to agree to tariff and  subsidy cuts in the WTO, complementary liberalization sees the  simultaneous pursuit of FTAs and WTO negotiations as a mutually  reinforcing effort. Former U.S. Trade Representative Robert Portman  explained in 2006 that, “where we have a free trade agreement, we find we  have…the ability to have a better relationship on the multilateral issues   it’s relatively easy on the global stage…to find some solutions.”
Closely tied to the strategy of competitive/complementary liberalization is  the strategy of pursuing only highly comprehensive “gold standard”  bilateral and regional FTAs. Such agreements have a number of absolute  requirements, based on the model USTR seeks to use. NAFTA was the  original “model,” although requirements have evolved with time and with  different regions. USTR insists, for example, that partners accept the  inclusion of agriculture, as well as a “negative list” approach to services,  because they believe this will provide greater liberalization and lessen  impediments to securing market access. Agency officials did say there is  some room to change specific language depending on a country’s  individual needs, such as changing what level of market access would be  proposed, and the timetable for phasing down barriers. However, officials  also noted that taking products, sectors, or issues off the table, particularly  ones such as intellectual property rights that are considered to provide a  U.S. competitive advantage, generally precludes or creates an impasse in  negotiations. Other countries that negotiate FTAs frequently exclude  sensitive industries or issues. Some trade experts argued that USTR’s  pursuit of comprehensive agreements limits potential FTA partners since a  number of larger economies are unwilling to enter into such  comprehensive negotiations. Administration officials recognized this and  cited the EU, Switzerland, and Japan as examples of major trading  partners with which an FTA with the United States could have significant  commercial value but where the trading partner appears unwilling to  assume obligations consistent with the objectives set out in TPA. USTR  reports that it paused negotiations pursued under TPA with other large  countries or subregions, such as the FTAA and SACU, in part for similar  reasons. At the same time, some partners were not considered ready for  FTAs because they either were not WTO members or had only recently  acceded.
Agency officials told us that a number of interrelated factors influenced  their decision to pursue exclusively comprehensive trade agreements:    Legislative requirements–Agency officials told us that TPA legislation  played a large role in the decision to pursue only comprehensive FTAs.  Since, under TPA, each agreement must make progress in meeting the  applicable negotiating objectives prescribed by Congress, USTR only  pursues FTAs in which the negotiating objectives are translated into 16  standard chapter headings, and the provisions require partner countries to  pursue a number of nontariff based reforms. These include transparency  in government procurement, protection from discrimination for investors,  and liberalization of financial and other services. Agency officials told us  that USTR has some discretion in how to pursue these objectives, but  since the objectives are statutorily mandated, their discretion starts at a  fairly high bar.
Foreign and economic policy goals–The administration has said that  pursuing comprehensive FTAs links trade policy to foreign policy and  security policy goals. According to USTR, comprehensive FTAs include a  number of provisions linking the trade agreement to other goals such as  encouraging reform and openness, strengthening partners’ regulatory  environments, and establishing the framework for promoting democracy.  Furthermore, agency officials and trade experts stressed that if the United  States pursued FTAs with “sweetheart exemptions” it would actually be  undermining the international trading system in violation of WTO rules  and regulations. Furthermore, agency officials questioned whether  pursuing noncomprehensive FTAs would lead to noticeable commercial  gains since trade barriers with large trading partners usually only remain  in sensitive industries.
Private sector input–Since all trade agreements must be approved by  Congress, USTR officials told us they only negotiate agreements that they  think will receive broad domestic support. As private sector  representatives have identified certain “deal breakers,” which must be  included in order to gain their support, USTR officials always include  these topics in the FTAs they negotiate. These topics include a negative  lists approach to services and inclusion of intellectual property protection  provisions.
Negotiating strategy–Agency officials and congressional staff involved in  trade issues also told us that since the precedent that the United States  only engages in comprehensive FTAs has been set, they have reinforced  their credibility in insisting on future comprehensive FTAs. Partner  countries also have a better sense of what the United States expects. A  trade expert we spoke with added that due to the asymmetric bargaining  strength of the United States compared with most of its negotiating  partners given the relative sizes of their economies, USTR likely has more  leverage in proposing the baseline agreement for the negotiation. On the  other hand, the United States has had less success in insisting on such requirements with some large prospective partners, such as Brazil,  Switzerland, and Japan.
Not everyone involved in trade negotiations, however, believes that  exclusively pursuing comprehensive FTAs is in the best interest of the  United States. We heard from both the private sector and former  congressional staff that strict insistence on comprehensive FTAs may  disadvantage the United States compared with other countries that engage  in FTAs more liberally. In addition, they told us that “one size does not fit  all” and developing countries need help to develop before they trade with  the United States. Agency officials told us, however, that due to the factors  listed above, they remain convinced that pursuing comprehensive FTAs is  the best policy for the United States. Furthermore, they pointed out that a  prospective FTA partner’s readiness to undertake obligations which would  meet TPA objectives and U.S. interests is evaluated in the selection choice.  If a country or group of countries is not ready, the United States uses other  mechanisms such as Trade and Investment Framework Agreements as  building blocks, including capacity building.
section_title: FTAs Pursued Account for Limited Share of U.S. Trade and Investment but Include Diverse Markets for U.S. Exports
paragraphs: Trade with countries for which FTAs were pursued under TPA accounted  for about 16 percent of U.S. trade in 2006 and about 16 percent of U.S.  foreign direct investment in 2005. FTAs seek to expand opportunities for  U.S. exporters in foreign markets, while solidifying the trade and  investment relationship with these trade partners. Of the remaining 84  percent of U.S. trade, 27 percent was with countries for which the U.S. had  an FTA prior to TPA (e.g., Canada and Mexico) and 56 percent was with  countries not pursued under TPA, including the EU, Japan, and China.
subsections: section_title: FTAs Pursued Account for about 16 Percent of U.S. Trade
paragraphs: Of the approximately $3.4 trillion in U.S. trade in 2006, FTAs pursued  under TPA accounted for about $558 billion, or 16 percent of the total.  This includes exports and imports and both goods and services. About half  of this trade (8 percent) was accounted for by agreements in force or  concluded; the remainder was with partners with whom the United States  has not yet concluded an agreement. Figure 2 shows the breakdown of  total U.S. trade (exports plus imports of goods and services) across groups  of trade partners.
FTAs pursued under TPA accounted for a somewhat larger share of total  U.S. exports (19 percent) than U.S. imports (15 percent). This pattern is  reversed with non-FTA countries, which accounted for 52 percent of U.S.  exports, but 59 percent of U.S. imports. Table 2 shows the share of overall  U.S. trade, exports, and imports by status of FTA negotiations under TPA.  In addition, countries with which the United States pursued FTAs  accounted for about 16 percent of U.S. foreign direct investment in 2005  (see app. III for more information on U.S. foreign direct investment).
Countries with which the United States has pursued FTAs under TPA are a  diverse group. Table 3 shows the countries pursued by the status of the  FTA negotiations. Concluded agreements already in force include  countries in Asia (Australia and Singapore), the Middle East and North  Africa (Bahrain and Morocco), and Latin America (Chile and CAFTA-DR).  The concluded agreement with South Korea, for which implementing  legislation has not yet been submitted to Congress, would account for the  single largest individual trade partner of those pursued under TPA (about  3 percent of total U.S. trade). However, the FTAA, for which negotiations  are at an impasse, would have encompassed the largest economic area  since it includes Brazil and Argentina, as well as existing FTA partners in  NAFTA (Canada and Mexico), CAFTA-DR, Chile, and others in the  Western Hemisphere.
section_title: FTAs Provide Permanent, Reciprocal Access for U.S. Trade and Competitive Playing Field for U.S. Exports
paragraphs: The FTAs pursued under TPA seek a high level of liberalization. As noted  previously, the United States has sought elimination of substantially all  trade barriers under its FTAs in order to maximize the overall economic  benefits of the agreements. While reduction or elimination of trade  barriers through FTAs has been estimated to create an overall net  economic benefit for the United States and its FTA partners, most  economic studies find the gains for the United States of the FTAs to be  relatively small compared with the overall U.S. economy. Assessments by  ITC of economy-wide and sectoral effects of actual, completed FTAs also  indicate positive but generally small effects on the U.S. economy and trade  overall. (The U.S. FTA with South Korea is predicted to have modest  effects.)  However, with the exception of Singapore, given the FTA  partners’ generally higher trade barriers, U.S. export gains are predicted to  be larger than import increases for each FTA the ITC has assessed. For  South Korea, U.S. exports are predicted to rise by $9.7 to 10.9 billion, while  U.S. imports from South Korea rise by $6.4 to $6.9 billion.
While FTAs require the United States to lower its trade barriers, several  FTA partners pursued under TPA already had special access to the U.S.  market through U.S. trade preference programs. For example, CAFTA-DR  economies had preferential access to the U.S. market through the  Generalized System of Preferences and the Caribbean Basin Initiative  (including the Caribbean Basin Trade Promotion Act, which provided  additional access). However, FTAs provide superior market access for  several reasons. First, product coverage under FTAs is more complete.  About 91 percent of products in the U.S. tariff schedule (for goods) are  either eligible for preferential access (54 percent) or are already duty-free  for most countries (37 percent). The remaining 9 percent of products are  still dutiable even for countries eligible for preference programs. FTAs  eliminate nearly all U.S. duties on these remaining products. Second, FTAs  are bilateral agreements that provide trade partners with permanent  access to the U.S. market. Preference programs are unilateral programs  that need reauthorization. Lapses in authorization have created  uncertainty in the past for both foreign exporters and investors. Finally,  since preference programs are unilateral, U.S. exporters do not receive  preferential duty-free access to foreign beneficiary markets. FTAs address  this disparity.
FTAs also help U.S. exports maintain a competitive advantage or  counteract the advantages of third-country competitors that may already  have better access to foreign markets through their own FTAs. In cases in  which competitors do not have an FTA with U.S. FTA partners, U.S.  exports gain an advantage over exports from competitors. The edge varies  by country and product and depends on the restrictiveness of the tariff  and nontariff barriers in our FTA partners’ economies. For example, in  CAFTA-DR countries, the simple average tariff rate across all products  ranged from 5.6 to 8.5 percent in 2006, with tariffs on agricultural products  ranging from 9.7 to 13.1 percent. Non-FTA countries must still pay these  rates on their exports. U.S. “most favored nation” tariff rates, which apply  to all but two U.S. partners (North Korea and Cuba) that do not otherwise  qualify for special, lower, rates, by comparison, were 3.5 percent overall  and 5.3 percent for agricultural products. In some countries, average most  favored nation tariff rates are even higher on agricultural products relative  to those on nonagricultural products. For example, according to the  WTO, the overall average tariff rate for South Korea on all products was  12.1 percent, but 47.8 percent for agricultural products. Table 8 in  appendix III shows the simple average tariff rates (non-FTA rates) across  U.S. FTA partners to provide an indication of the tariff benefits provided  by FTAs. For countries that have FTAs with trade partners besides the  United States, FTAs help restore the competitiveness of U.S. exports by  providing comparable access. For example, Chile also has FTAs with  Canada, Mexico, and the EU, as well as the United States. If the United  States did not have an FTA with Chile, then U.S. exporters would be at a  disadvantage relative to exporters from Canada, Mexico, and the EU. On  the other hand, since FTA partners are free to enter into additional  agreement with other countries, any advantage gained for U.S. exporters  may be temporary.
section_title: Majority of Trade Already Covered by FTAs Prior to TPA or Not Pursued under TPA
paragraphs: Non-FTA trade partners accounted for over half (56 percent) of U.S. trade  in 2006. The remaining share of U.S. trade was accounted for by countries  pursued under TPA (16 percent) and countries with which the United  States already had an existing FTA (27 percent). Of the non-FTA trade  partners, some of them comprised relatively large shares of U.S. trade.  Table 4 shows the top 20 markets for U.S. exports and top 20 suppliers of  U.S. imports among non-FTA trade partners. The largest market and  supplier—the EU with its current 27 member countries—accounted for  approximately 21 percent of U.S. exports and nearly 18 percent of U.S.  imports. Japan, China, and Taiwan were the next 3 largest markets and  suppliers for the United States, although China is the second largest non- FTA supplier after the EU.
There are several reasons why the United States has chosen not to pursue  some of the largest trade partners for FTA negotiations. As discussed  previously, the United States seeks to include agricultural liberalization in  its FTA agreements. This is a sensitive issue with the EU that is also being  dealt with at the WTO and has made prospects for a U.S.-EU FTA less  likely. Since trade barriers on nonagricultural products between the U.S.  and EU are already very low, an FTA that did not include agriculture  would have less impact. Similarly, agriculture issues are sensitive with  Japan and Switzerland. However, the United States did pursue an FTA  with South Korea, which also had sensitive agricultural issues but was  willing to address them within the context of an FTA. Although agriculture  is also a sensitive issue with China, the country also recently acceded to  the WTO (December 2001), is still implementing those commitments, and  has been in transition to a more market-based economy. Similarly, Taiwan  has recently acceded to the WTO.
After the top few non-FTA trade partners, remaining trade partners each  account for about 1 percent or less of U.S. trade. Since most of the  smaller non-FTA trade partners are WTO members, successful conclusion  of the WTO Doha Round would still provide market liberalization.  However, a Doha agreement would be less likely to completely eliminate  trade barriers; FTAs provide much deeper liberalization for individual  countries by eliminating trade barriers between the United States and its  FTA partners. Nevertheless, various studies conclude that a Doha  agreement, even though unlikely to eliminate all trade barriers, would still  have a much larger impact on global—and overall U.S.—trade than  eliminating all trade barriers with small non-FTA partners.
Comparing countries pursued under TPA with those not pursued shows  some differences in the U.S. trade and investment relationship between  these two groups. Overall, the U.S. tends to (1) maintain more balanced  trade with TPA countries, (2) export relatively more manufactured goods  (compared with services and agriculture), and (3) have relatively faster  investment growth with TPA countries, particularly in countries with FTAs  in effect. While these differences do not necessarily indicate the reasons  countries were chosen to be pursued, they do provide useful context for  the overall U.S. economic relationships with these countries as those  relationships get deepened. Appendix IV discusses these differences in  more detail.
section_title: USTR Consulted Extensively with Congressional Staff, but Staff Have Mixed Views about Having a Meaningful Opportunity for Input
paragraphs: Although USTR consulted frequently with Congress, some congressional  staff said that both the nature of the consultations and issues such as  timing of the consultations limited congressional input into FTAs. TPA  requires consultations with Congress before, during, and after FTA  negotiations, and records indicate consultations were extensive,  particularly with the primary trade committees. The preponderance of  congressional staff we interviewed viewed the consultation process as  generally a good conduit for information flow from USTR. While slightly  less than half of the staff we interviewed were satisfied with the quality of  consultations, slightly more than half believed that the consultations did  not provide the opportunity for meaningful input or influence into trade  negotiations. An important element of this perception for many of these  staff, particularly staff not on the trade or agriculture committees, was  their view that the timing of the consultation meetings did not give them  sufficient time to provide meaningful input to the negotiations. Several  staff also cited situations where USTR had not fully informed them of  important changes in the draft text under negotiation. Process issues of  concern included the role and function of COG, selection of FTA partners,  use of mock markup and the lack of a mock conference, the need to get  Congress to focus on trade agreements earlier in the process, the need for  additional technical information, access to USTR’s secure Web site, and  the importance of congressional staff working on FTAs obtaining security  clearances to facilitate the consultation process.
subsections: section_title: TPA Requires Significant Consultation with Congress
paragraphs: In addition to requiring the President to consult with Congress before,  during, and after trade agreement negotiations, TPA also established the  Congressional Oversight Group, known as COG. COG is to be consulted  at key points in trade negotiations, and its members are accredited as  official advisors to the U.S. negotiating delegation. COG was designed to  consult with and provide advice to USTR regarding the formulation of  specific objectives, negotiating strategies and positions, development of  trade agreements, and compliance and enforcement of negotiated  commitments. Its meetings were with the U.S. Trade Representative.  COG’s members were the Chairs and Ranking Minority Members of the  Senate Finance and House Ways and Means Committees plus two majority  and one minority Member from each. In addition, membership was  extended to the Chair and Ranking Minority Member of each House and  Senate committee that had jurisdiction over issues affected by the  negotiations, including agriculture and fisheries, which were specifically  designated by TPA for consultations.
TPA also contained a detailed time line for required consultations, as  shown in figure 3.
Before beginning trade negotiations, the President must:    notify Congress in writing of an intention to commence negotiations at  least 90 days before initiating negotiations;   consult, before, and after the submission of the notice, with the House  Ways and Means Committee, the Senate Finance Committee, other  relevant committees, and COG; and   conduct consultations with Congress regarding agriculture, import  sensitive agricultural products, the fishing industry, and textiles.
During negotiations, or before entering into (signing) trade agreements,  the President must:    consult with the House Ways and Means, Senate Finance, other  committees with jurisdiction over legislation involving matters affected by  the trade agreement, and COG, with respect to the nature of the  agreement, how it achieves congressional objectives set forth in TPA, and  the effect the agreement may have on existing laws; report to the House Ways and Means and Senate Finance committees on  any changes to U.S. trade remedy laws that an agreement would require at  least 180 days before entering into the agreement;   notify Congress of intent to enter into the agreement at least 90 days    submit private sector advisory committee reports to Congress within 30  days of notifying Congress of intent to enter into an agreement; and    provide the ITC, at least 90 days before entering into the agreement, with  the details of the agreement and request that ITC conduct an assessment  of the likely economic impact of the agreement; the ITC must then present  this assessment to the President and Congress no later than 90 days after  the President enters into the agreement.
There are also consultation requirements for the period between when the  President signs the agreement and when the implementing legislation is  voted upon in Congress. In order for the agreement to enter into force, the  President must do the following during this period:    submit to the Congress, within 60 days after entering into the agreement, a  description of the changes to existing laws that would be required to bring  the United States into compliance with the agreement; and   submit to Congress the final legal text of the agreement, a draft of an  implementing bill, a statement of administrative action proposed to  implement the trade agreement, and other supporting information,  including a statement describing how the agreement makes progress in  achieving goals set by Congress in TPA and a statement on how the  agreement serves U.S. commercial interests; there is no deadline for this  step.
If Congress believes that the President has failed to meet these  consultation requirements, it may make the implementing bill ineligible for  consideration under TPA procedures by adopting a procedural disapproval  resolution in both houses. In addition, Congress limits trade promotion  authority by making it a time-limited authority. The most recent grant of  TPA expired July 1, 2007. It could have expired 2 years earlier had  Congress passed a resolution that was introduced to disapprove of its  extension. Finally, TPA includes language stating that TPA procedures are  rules and that Congress retains the right of either house to change the  rules. In combination with the need to secure congressional approval of  each agreement, these conditions all help ensure Congress’s influence  over agreements.
section_title: USTR Has Consulted Frequently with Congress
paragraphs: USTR had held frequent consultation meetings with Congress on FTA- related issues, as well as other topics. USTR consulted with Congress  1,605 times on FTA-related issues between the date TPA was signed into  law on August 6, 2002, and the cutoff date for our analysis, April 20, 2007,  according to a copy of USTR’s consultation log. Of these consultations,  1,289 were related to specific FTAs, and 316 were related to general FTA  issues, such as investment provisions or agriculture issues. Consultations  were primarily in-person meetings with the trade and agriculture  committees but also included conference calls, particularly with the other  committees of jurisdiction.
Most USTR consultations (83 percent) were with staff of congressional  committees with jurisdiction over trade issues. USTR met 459 times with  the Senate Finance Committee and 454 times with the House Ways and  Means Committee. (See fig. 4.) It met 153 times with the House Agriculture  Committee and 152 times with the Senate Agriculture, Nutrition, and  Forestry Committee. Thus, about two-thirds of USTR’s consultations were  with these four committees. USTR also met with the other committees that  had jurisdiction over the following:    Fisheries–Senate Commerce, Science and Transportation and House  Intellectual property, competition, and immigration–House and Senate  Judiciary;   Financial services–House Financial Services and Senate Banking,  Housing, and Urban Affairs;   Telecommunications–House Energy and Commerce and Senate  Commerce, Science and Transportation; and   Government procurement–House Oversight and Government Reform and  Senate Homeland Security and Governmental Affairs.
In addition to these meetings, 163, or 9 percent, of meetings were with  individual Senators and Representatives, and 3 percent were with staff of  individual Senators and Representatives. Another 2 percent of meetings  were with other committees, caucuses, or congressional groups. COG met  as a body nine times, constituting less than 1 percent of meetings. USTR  also met with the Senate Foreign Relations Committee seven times and the  House International Relations Committee four times on matters related to  FTAs.
A USTR official told us that the majority of meetings were open to both  majority and minority committee staff, as well as to legislative assistants  of Members of Congress on the committees. This is consistent with GAO  analysis of the USTR logs, which showed that 148, or 11 percent, of the  1,329 meetings with staff of committees of jurisdiction were with majority  members only, and 6 percent were with minority members only. This was  also confirmed in our interviews with congressional staff.
Current and former USTR officials told us that, for each FTA, they met  with Congress throughout the process of negotiating and implementing the  agreement. This was generally confirmed in our interviews with  congressional staff. These officials said they met with Congress before  negotiations began, before each negotiating round (with more  congressional meetings in the later rounds of each FTA), before signing  agreements, during congressional consideration of the FTA implementing  legislation, and during FTA implementation. They said that they provided  the classified negotiating text to the staff with security clearances on the  trade and agriculture committees in advance of each round and discussed  it at the consultation meetings. These officials said there was ample  opportunity for committee staff to provide input during the negotiations  and that they valued the insights they gained as to what was important to  the committees. USTR officials said that they had never turned down a  request for a briefing and believed that they had fully consulted with  Congress. One former negotiator said that they could not conceive of a  way that USTR could do more consultations than it does now and that  consultations were both extensive and substantive.
As required by TPA, USTR developed guidelines for COG in consultation  with Congress that established notice, consultation, and reporting  requirements for agreements negotiated under TPA. USTR officials said  that in developing these guidelines they consulted with the Senate Finance  and House Ways and Means Committees and got their input. These  guidelines provide that, in the course of negotiations, USTR will consult  “closely and on a timely basis” with COG and all House and Senate  committees with jurisdiction over laws that would be affected by an  agreement.
To verify that consultations occurred before, during, and after  negotiations, we analyzed consultation patterns for two agreements.  Figures 5 and 6 show the number of USTR consultations with Congress on  CAFTA-DR and on the Australia FTA over time in relation to key points in  the negotiation and implementation process.
We also analyzed the total number of congressional consultations on FTA- specific and FTA-related topics and found they varied over time. (See fig.  7.) There were more consultations when more FTAs were under  negotiation at the same time. There were also more consultations in the   1 ½ years after TPA passed in 2002, when model text for each of the 16  standard FTA chapters was being developed.
section_title: Some Congressional Staff Noted Improvements That Could Be Made to Content and Process of Consultations
paragraphs: Current and former congressional committee staff on key committees  with jurisdiction over matters covered by FTAs provided us with their  views on a range of issues related to the FTA consultations. These issues  included the nature and extent of consultation meetings, as well as how  well they met their expectations and needs.
subsections: section_title: Consultations Weekly with Trade Committees, Less Frequently with Others
paragraphs: From August 2002 to April 2007, the trade committees (Senate Finance and  House Ways and Means) generally had weekly consultation meetings with  USTR officials that often lasted an hour to an hour-and-a-half. Sometimes  two or even three such meetings were held back to back on the various  FTAs being negotiated. Typically, the USTR lead negotiator and members  of the FTA negotiating team would meet in person with the committee.  Occasionally, the USTR staff were joined by staff from other agencies,  such as the Departments of Agriculture or Commerce. Generally, these  meetings were bipartisan, with both majority and minority professional  committee staff invited, as well as the responsible legislative assistants of  the Senators or Representatives that were members of the committee.
Trade committee staff said that most consultation meetings were held in  person. Some were conducted through a conference call, which was  usually shorter. Generally, there were more conference calls at the end of  the negotiations, when the USTR negotiators were more pressed for time  or were overseas at negotiating sessions and calling back to update the  committee staff on progress. Some of the trade committee staff we  interviewed commented that in-person meetings were much more useful,  although they understood the need for conference calls.
The trade committee staff we spoke with said that consultations generally  took place before and after each negotiating round. Before each round,  USTR provided the confidential text that it was going to table in the  negotiations with the FTA partner country. Staff with security clearances  had access to this text; staff without clearances received more general  information. After each negotiating round, USTR updated congressional  staff on the issues that had been raised, the progress made, and what they  thought the next round would bring.
The agriculture committees had consultation meetings with USTR  approximately every 2 weeks, with the Department of Agriculture  generally accompanying the USTR negotiators, according to a committee  staff person. Otherwise, the descriptions of the consultation meetings  were mostly similar to those of the trade committee staff. In contrast, the  other committees of jurisdiction generally had a much more limited  experience with consultation meetings than the trade and agriculture  committees, which are the main committees of jurisdiction regarding FTA  issues. Generally, the issues involved in the FTA negotiations were not  priority issues for these committees, and many of them had a much more  limited understanding of the proceedings. Most did not have clearances  and received more general descriptions of provisions that would be  negotiated, since they were not cleared to receive actual negotiating text.
The number of consultation meetings for these committees was  substantially less than for the trade and agriculture committees and varied  from once a month to once for each FTA.
section_title: Consultations Generally Praised for Providing High- Quality Information but Satisfaction with Input and Influence Mixed
paragraphs: Almost all of the committee staff we interviewed said that USTR provided  high-quality information that provided them with insight into the progress  of the negotiations. In this respect, they met the expectations of these  congressional staff for information related to the FTA negotiations. These  staff felt that the briefings were very well done. They also praised USTR’s  willingness to answer questions and follow up on particular issues of  interest. The general view was that USTR was very responsive in  answering questions and providing follow-up information.
In terms of satisfaction that the consultation meetings provided an  opportunity for input or influence on the trade negotiations, however, the  committee staff we interviewed were fairly evenly divided. Slightly less  than half of the congressional staff we interviewed felt that the  consultation meetings had met their expectations in this respect as well.  They were satisfied that they had been fully briefed, and the USTR  negotiators had listened to their views. They indicated that they knew that  USTR could not always obtain the results their committee or their Member  of Congress wanted, but felt that their views had been taken into  consideration. However, slightly more than half of the congressional  committee staff with whom we spoke felt that they did not have any real  input or influence on the trade negotiations. For these staff, USTR’s  consultation meetings had not met their expectations because they had  not provided an opportunity for a two-way exchange of information that  the staff considered a true consultation. One committee staff person  appeared to reflect the views of these staff in characterizing the  consultations as a good conduit for information flow from USTR, but not  as a good forum for working together and developing policy jointly. Others  characterized the meetings as helping them feel well-briefed, but not  consulted. Among these staff, several said they felt that USTR was  “checking the box” in their meetings with them. At the same time, among  the staff who indicated that the consultations were more of a one-way  briefing than a two-way consultation, several were on the other  committees of jurisdiction and said they did not have expectations of  more. They said that they were satisfied with receiving briefings because  this was not a priority issue for them or because they did not expect to  influence the negotiations. Overall, on this issue, the degree to which the  committee staff we interviewed felt that they had input or influence on  trade negotiations varied across parties. In particular, Republican staff  (which was in the majority in Congress for nearly all of the TPA period)  generally had more positive views about their input and influence than  Democrats.
We also found mixed views among the staff we interviewed on whether  the timing of the consultations gave sufficient time for staff to provide  meaningful input. Most, but not all, of the staff of the trade and agriculture  committees said the timeliness of consultations was good. However, staff  from the other committees of jurisdiction often said that the consultations  were not timely and cited this as a reason that they felt briefed rather than  consulted. They said that they generally weren’t briefed and given  information until the last business day before the negotiators were leaving  for the next round. This did not give them enough time to fully consider  the information, consult with their committee or Member to develop a  response, and give feedback that USTR would have time to consider.  These staff felt strongly that one way to achieve more meaningful  congressional input was to allow more time for feedback by having earlier  consultations and by providing them with text or other information in a  more timely manner. In addition, staff of one of the primary committees of  jurisdiction complained of last-minute consultations on some of the more  controversial issues. While they understood that the interagency process  took time and that USTR was moving as quickly as possible, they felt that  if congressional consultation was meant to be meaningful, USTR could  either build in the time needed for congressional consultation or delay  tabling the controversial text at the next negotiating round to allow time  for congressional input.
Among the committee staff who had expressed satisfaction with the  consultation meetings, several noted that the style of the briefer was  important. In some cases, the briefers tended to keep the briefing short  and let committee staff ask questions. The staff we spoke with said that if  they asked a question, the briefers would answer it fully. But, if staffers  didn’t know what to ask, they were at a disadvantage in obtaining  pertinent information. They said that most staff depended on the briefers  to let them know about issues of concern. This was very important to  them. It was much more helpful when the briefers provided the context  and alerted them to any changes in the text or any areas of concern  developing in the negotiations.
Several other committee staff, who were dissatisfied with the  consultations, expressed a much more negative view about briefers’  willingness to share information. While they agreed that the information  USTR provided was generally of good quality, they said there were  instances when, in their opinion, USTR deliberately did not offer  information on changes to the negotiated text that would be of concern to  staffers, unless they asked specific questions, which they often did not  know to ask. One committee staff said that this had been the case, for  example, with the U.S.-Korea FTA, in which significant changes had been  made to the investment chapter. Although the committee staff had  received the amended text, USTR did not mention that changes had been  made to a sensitive provision in the Expropriation Annex, which the  committee staff said was extremely controversial—to the point that the  language in the text had been carefully worked out in the 2001-2002 time  period and then never touched again. The staff person said that this text  was considered to be “set in stone,” and any change to it clearly merited  mention by USTR. With the press of business during consideration of the  U.S.-Korea FTA, the committee staff had not realized that it had been  changed, and they didn’t learn about it until they were alerted by the  private sector. The committee staff who were dissatisfied with the  consultations also said that there had been instances when it appeared  USTR had withheld information. For example, several committee staff  mentioned that a controversy related to the Australia FTA  pharmaceuticals benefits scheme resulted from USTR withholding  information. Again, committee staff found out about the controversial  provisions from the private sector when the text was made public. In  another example, some committee staff said that USTR had not adequately  briefed Judiciary Committee staff on the H1-B visas issue with the Chile  and Singapore FTAs. While there was disagreement among the staff who  commented on this as to whether USTR had adequately briefed the staff or  withheld critical information, a lack of clarity in the consultations did  result in the Judiciary Committee being highly upset about this issue. (As a  result of the Judiciary Committee’s views, USTR significantly modified its  objectives regarding immigration. Subsequent agreements have either  included a side letter stating that the agreement has no effect on U.S.  immigration law or policy or, in more recent agreements, this type of  provision has been included in the text of the agreement.) These staff felt  strongly that in order for the consultation process to work, Members of  Congress and committee staff need to know that USTR will always make a  good faith effort to tell them when substantive changes to the model text  have been made in the negotiations. In FTAs, specific details that are  negotiated are critical to the outcome.
section_title: Many Staff Cite Shortcomings in Consultation Process
paragraphs: Congressional staff also expressed concerns about the consultation  process, including the usefulness of COG, the congressional role in FTA  partner selection, the role of mock markup, the importance of earlier  congressional focus on FTA negotiations, the need for greater access to  technical information, and problems with access to USTR’s secure  website. Most of these issues focused more on internal congressional  matters than on USTR. In addition, USTR also stressed the importance of  congressional staff working on FTAs to obtain security clearances to  facilitate the consultation process.
subsections: section_title: COG Generally Not Seen as Successful
paragraphs: COG was a new mechanism under TPA intended to draw Members of  Congress into the consultation process, particularly members from  nontrade committees, and to provide them with a private and confidential  opportunity to have a consultative and advisory role in trade policy,  according to a committee staff person familiar with its creation. The staff  person went on to state that COG was also meant to provide greater  transparency and inclusiveness to the trade policy consultation process.  After it was launched in September 2002, COG was convened only nine  times before TPA lapsed in July 2007, according to the USTR consultation  log. COG’s record drew mixed reviews. Some trade committee staff had a  positive view of COG, saying that it had been a useful forum for input on  FTAs, including FTA selection, or that it was worthwhile because it had  provided a mechanism for transparency. However, most trade and  agriculture committee staff said it had been of limited usefulness and had  not functioned well. These staff said that COG was not well attended,  particularly after the first few years. While the trade committee members  continued to attend regularly, few others did. Some trade committee staff  said that the separate committee executive sessions with their Members  were more useful than COG. Most staff outside of the trade and agriculture  committees with whom we spoke were unfamiliar with COG or unaware it  existed; those staff who were familiar with COG did not find it to be  useful.
USTR officials and committee staff noted that it was difficult to schedule  meetings around the busy schedules of Members of Congress. One  committee staff said that it had been difficult to schedule attendance by  the Member because of short notice for the COG meetings, pointing out  that it would be helpful if COG meetings were put on a regular schedule.  Two committee staff said a limitation of COG was the requirement that  staff could only attend with their Member, so they could not cover  meetings the Member could not attend. Another committee staff said that  COG meetings should not be scheduled solely at the discretion of the  majority staff but also by the minority in order to protect minority rights.  Several committee staff described the COG meetings as formalities,  particularly as time went on. One staff of a Member on a trade committee,  but not on the COG, said that they had resented being excluded from this  trade policy-making forum.
section_title: FTA Partner Selection Concerns Due to Lack of Commercial Significance
paragraphs: Most congressional staff we interviewed who had a view on this issue felt  that their committee did not have any meaningful input into the selection  of FTA partner countries. However, there was substantially more  awareness and concern about this issue among the trade and agriculture  committee staff than among staff of other committees of jurisdiction.
Among those concerned about partner selection, the primary concern  seemed to be that so many smaller trading partners were being selected  for FTA negotiations, rather than larger trading partners with greater  commercial and economic significance. One committee staff commented  that, increasingly, every congressional vote for an FTA was a difficult vote  that involved using up significant political capital. While Members  supporting free trade had no problem in principle with negotiating FTAs  with smaller countries for foreign policy or other reasons, if Members  were going to be expending significant political capital, they wanted it to  at least be economically and commercially beneficial. Another committee  staff said that the selection of FTA partners and dialogue about it with  Congress should be more transparent and that the reasoning behind the  choices of FTA partners and the complicating factors should be openly  discussed.
Some staff said that in TPA the role of input into FTA partner selection  had been given to COG, rather than to committee staff. Although this role  was informal, some committee staff and USTR officials said that USTR  took COG’s advice on selection seriously and that some potential partners  supported by COG had been pursued by USTR. They cited the U.S.-Korea  FTA as an example.
A few committee staff favored restoring the gatekeeper provision, which  was part of prior fast track legislation but was dropped when TPA was  passed in 2002. The gatekeeper provision had required the President to  notify Congress and give it an opportunity to disapprove launching of  negotiations with a particular partner.  These staff felt that restoring it  might be beneficial in terms of potentially generating greater buy-in to the  FTAs selected for negotiation. Generally, only trade committee staff were  aware of the gatekeeper provision. Those opposed did not see any value in  it given COG’s role in discussing potential FTA partners. The former USTR  negotiators with whom we discussed this issue also opposed it. They were  particularly concerned about the potential effects of any requirement for  an affirmative vote for launching FTA negotiations with a trade partner  country because it would mean that Congress would have to vote twice for  each FTA and it would force a vote before anyone knew what the actual  benefits from the FTA would be.
section_title: Mock Markup Considered Important, but Mock Conference Controversial
paragraphs: Most trade and agriculture staff we interviewed were familiar with the  mock markup process—the informal committee process to “mark up” or  amend the draft implementing bills for FTAs. Most trade staff said that it  was an important part of the consultations process for TPA. Committee  mock markups are generally the only opportunity Congress has to offer  amendments to the proposed FTA implementing bill. However, while some  were concerned that the mock mark-up process had not been used  effectively, others were concerned that it could be misused in order to  delay consideration of FTAs or to introduce inappropriate last-minute  provisions that should have been addressed during the negotiations.
Some also expressed concern that the trade committees had not scheduled  mock conferences when the House and Senate had adopted differing  mock amendments. They said that a mock conference was an important  part of the consultation process. Some of these staff cited the case of  CAFTA when the House and Senate versions of the draft implementing  bills differed because the Senate Finance Committee and the House Ways  and Means Committee had recommended different mock amendments.  They said the two committees did not hold a mock conference and the  administration chose the version it preferred, the House version, ignoring  the Senate Finance Committee amendments. Other staffers said that  complex multilateral negotiations like those of the WTO would need a  mock conference, but that FTAs were simpler and a mock conference was  often unnecessary and time consuming.
section_title: Earlier Congressional Focus on FTA Negotiations Seen as Important
paragraphs: Some committee staff felt that an inherent problem with the consultation  process was that Congress tended to focus on the FTAs at the end of the  negotiations, when the deal was essentially done, and it was difficult (if  not impossible) to change the terms of the agreement. They said that this  resulted from the congressional culture of waiting until an issue was fully  developed and likely to become law before focusing on it. In contrast, they  said that trade negotiations particularly require congressional attention  throughout the process. For consultations to be meaningful and most  effective, they felt that it would be important to find ways through the  consultation process to facilitate Congress focusing earlier on the FTAs.  This was particularly critical given the nature of fast track provisions, in  which the final agreement comes to Congress for an up-or-down vote with  no amendments.
USTR officials, including some former lead negotiators who we  interviewed, also said that earlier attention by Congress was important.  Some of them expressed frustration that they would hold frequent  consultation meetings, but that many committee staff would not attend, or  would not actively engage. Then, at the end of the process, when the  negotiations were finalized, they would start to focus and ask questions  and want changes. This was very ineffective—sometimes USTR was able  to get changes, but often it was no longer possible to modify something  that could have been changed earlier in the negotiations.
section_title: Greater Access to Technical Expertise and Information Desired
paragraphs: Another issue raised by several congressional staff was the need for  greater access to technical information on an ongoing basis. These staff  said that although committee staff on the trade and agricultural  committees are knowledgeable about their fields, trade negotiations are  today too broad and complex for any one staff member to fully understand  all of the implications. One trade staff told us that staff on the other  committees of jurisdiction are at a disadvantage because trade is not their  primary issue, and they don’t have time to follow it. Having access to  expert staff, such as through a congressional trade office, would be very  helpful, according to one committee staff. Another committee staff  opposed what they feared might be creation of an additional bureaucracy  with a new trade office and instead said that GAO could serve this role.
In principle, the formal private sector trade advisors could help fill this  void. However, committee staff said that they did not have contact with  them during the FTA negotiations. One staff said that they used to be  invited to trade advisory committee meetings, but no longer. Although the  trade advisory committees provide extensive technical information to  Congress in their required reports on each FTA at the end of the process,  committee staff did not have access to their substantial knowledge base  during the negotiations.
A related issue raised by a few staff on some of the nontrade committees  of jurisdiction was that trade negotiations involve a great deal of  specialized terminology and information. Staff of one committee said that  sometimes they found it difficult to fully understand the briefings because  the negotiators used so much jargon. They said that it would be helpful if  USTR developed a primer describing the typical evolution of the trade  negotiations process and providing a glossary of trade terms. Other ideas  included USTR providing an overview on upcoming issues at the start of  the year, giving more of an overview on FTAs early on, and describing in  some detail FTAs at their conclusion.
section_title: Problems with Access to Secure USTR Web Site Limits Information Availability
paragraphs: An issue raised by many of the trade and agriculture committee staff that  we interviewed was access to USTR’s secure Web site on which it posts  the negotiating text for FTAs, as well as other information. The Senate  staff said that this was more a matter related to internal congressional  security issues than to USTR. Until this year, the Senate committee staff  that have access to the classified negotiating texts said they received hard  copy information because the Senate was unable to resolve security  concerns to allow electronic access. When USTR sent a hard copy to the  Office of Senate Security, it took the office a day to log it in and notify staff  of its availability. Then staff had to make an appointment to go to a secure  room in the Capitol in order to read these documents. The result was that  they had a significantly smaller window of time to access the documents  than if they had been immediately available electronically. Staffers said  that recently a computer in a Senate office building had been made  available for this purpose. While this was an improvement, they would  prefer to have access in their own offices, or at least their own buildings.  On the House side, committee staff did not have any electronic access to  USTR’s secure Web site, as of the end of August 2007. However, several  committee staff said that access was being planned and would greatly  improve timely staff access to negotiating information.
USTR officials said that they would welcome expansion of congressional  access to USTR’s secure Web site. They also said that an important related  issue is whether congressional staff working on FTAs under negotiation  had security clearances. USTR officials felt strongly that if more  congressional staff obtained security clearances, it would greatly facilitate  the consultation process, both in terms of access to information and  timeliness of information.
section_title: Consultations Afford Trade Advisory Committees Access, but Process Issues Impede Effective Provision of Advice
paragraphs: The trade advisory committee chairs we contacted said that USTR and the  managing executive branch agencies consulted with their committees on a  fairly regular basis, providing access to administration officials, but  process issues made it difficult for some committees to function  effectively. In addition to consultations with Congress, the administration  is required to consult with private sector advisory committees and with  the public at large to get a sense of their views. We spoke with 16 chairs  of the relevant 27 trade advisory committees, as well as five additional  committee members. They reported that consultations were generally  extensive in number. The chairs and members, however, had mixed  reactions as to whether the nature of the consultations, quality of  information provided, and feedback received were satisfactory.  Furthermore, process issues such as reporting time frames, committee  composition, and chartering and appointment sometimes impeded  advisory committees’ ability to provide advice on trade negotiations.
subsections: section_title: Consultations with Trade Advisory Committees Were Generally Extensive
paragraphs: Four agencies, led by USTR, administer the three-tiered trade advisory  committee system. (See fig. 8.) USTR directly administers the first tier  overall policy committee, the President’s Advisory Committee for Trade  Policy and Negotiations (ACTPN), and three of the second tier general  policy committees, the Trade Advisory Committee on Africa (TACA), the  Intergovernmental Policy Advisory Committee (IGPAC), and the Trade  and Environment Policy Advisory Committee (TEPAC), for which the  Environmental Protection Agency also plays a supporting role. The  Department of Labor coadministers the second tier Labor Advisory  Committee (LAC) and the Department of Agriculture coadministers the  second tier Agricultural Policy Advisory Committee (APAC). The  Department of Agriculture also coadministers the third tier Agricultural  Technical Advisory Committees (ATACs), while the Department of  Commerce coadministers the third tier Industry Trade Advisory  Committees (ITACs). Ultimately, member appointments to the committees  have to be cleared by both the Secretary of the managing agency and the  U.S. Trade Representative, as they are the appointing officials.
USTR and the relevant executive branch agencies consulted with the first  and third tier advisory committees on a fairly regular basis. The first and  third tier chairs we contacted generally felt that these consultations  provided the committees with important access to the administration and  ongoing negotiations. From fiscal year 2002 through May of fiscal year  2007, USTR met with the 16 ITACs a total of 729 times. From fiscal year  2002 through fiscal year 2006, USTR met with the six ATACs a total of 92  times. Most of these meetings were in person, although conference calls  were sometimes held for fast-moving issues or during the 30-day time  frame for report writing. In addition, USTR established a monthly  conference call for all trade advisory committee chairs, beginning in late  2002.
The number of consultations with USTR was more limited at the second  tier policy committee level. Although USTR has met fairly regularly with  APAC and TEPAC over the past 5 years, the LAC had no meetings for over  2 years from September 2003 to November 2005. Furthermore, IGPAC did  not have an in-person consultation with USTR from July 2005 to  September 2007. In late 2006, USTR instituted a monthly conference call  for IGPAC, together with state points of contact. Agency officials said  this was done to broaden outreach to the states and increase the frequency  of interaction with USTR without travel costs. The officials added that  they have also convened additional IGPAC conference call meetings, as  needed on particular issues. LAC and TEPAC (as well as ACTPN) have  liaison groups that meet more often. For example, the TEPAC liaison  group tries to meet every 4 to 6 weeks. According to members from these  committees, liaison meetings are at the staff level and are usually fairly  technical, whereas the principals’ meetings tend to look at broader,  political issues.
section_title: Committees Had Mixed Reactions to Nature of Consultations
paragraphs: Slightly over half of the committee chairs we interviewed felt that their  expectations of the consultation process were met, but overall views on  the opportunity to provide meaningful input varied. For example, one third  tier chair said that his expectations were met since the process works well  to facilitate access between negotiators and private sector representatives,  and the administration seems to take consultations seriously. The second  tier committees in particular, however, stated that their advice and  opinions were not considered. A few of the third tier committees  concurred. Those who said their expectations were not met told us their  committees were not being used properly. According to a few of these  chairs, while the administration has consultation meetings with them, they  are more to “check off the box” than to engage in meaningful dialogue.  The chairs feel that the administration tells them what has already been  decided upon instead of soliciting their advice. Furthermore, two ITAC  chairs told us that it is more effective to use venues other than the  advisory committee system to provide meaningful input. For example, one  chair said that a coalition of industry-related companies outside of the  ITAC is the major venue for consultations with the administration for that  industry. The chair told us that the ITAC advisory process tends to be at  the end of negotiations and is not as significant as it should be. At the  same time, the chair felt the ITAC did play a role in the consultation  process. Although it could not consult at the highly technical level that the  coalition could, it was able to consult on the broad direction of U.S. trade  policy for that industry. USTR officials told us that the fact that the advice  of any particular advisory committee may not be reflected in a trade  agreement does not mean that the advice was not carefully considered.  USTR emphasized that it does consider advice from its advisory  committees in formulating U.S. trade policy. At the same time, however,  USTR also acknowledged that for some contentious issues, the advice is  not in line with long-standing U.S. policy or congressional guidance set out  in TPA. In those instances, USTR told us they are very limited in what they  can do in response to advisory committee advice. This appears to be  particularly problematic for second tier policy advisory committees. For  example, the strength and reach of FTA investment provisions and dispute  settlement mechanisms have long been a concern of both IGPAC and  TEPAC. LAC, meanwhile, has criticized the worker rights standards and  dispute settlement mechanisms in FTAs as insufficient.
Overall, the first tier and most of the third tier committee chairs we  interviewed felt that the information USTR provided was of high quality  and detail, providing a mixture of publicly available information and more  proprietary, confidential information. Most of the second tier policy  committee and a few third tier technical committee chairs in our selection,  however, were not satisfied with the quality of information presented  during consultations and felt that it was no better than information  available to the general public. Of those committees, one chair felt USTR  was constantly holding back information, and the committee learned  something new only every seventh or eighth meeting. Another chair  expressed frustration at trying to get information as negotiations were in  progress, saying that USTR was reluctant to state what the other country  was proposing. Two of the chairs who were dissatisfied went on to say  that although most of the information presented is available publicly,  having access to administration officials was valuable. Several other  committee chairs also emphasized the value they place on having access  to the administration through the advisory committee process.
Approximately half of the advisory committee chairs with whom we spoke  felt that the administration was responsive to their advice and provided  feedback, whether or not their advice was incorporated into the  agreement. The first tier and over half of the third tier committee chairs  feel there is an adequate opportunity for dialogue and that their interests  are considered. Most of the second tier and a few of the third tier  committee chairs, however, expressed dissatisfaction with the feedback  from USTR. They expressed their perception that USTR is either biased  against their committee or that by being asked to comment on completed  deals, their opinions are not truly valued or taken into consideration. Two  chairs said USTR wants them to “rubber-stamp” decisions or to be  “cheerleaders” for the administration. Other chairs said their committees  rarely or never get feedback.
In general, the advisory committee chairs we spoke with were pleased  with the numerous changes that have been made to the advisory  committee system in response to GAO’s 2002 report. In particular,  members found the secure Web site very useful. A quarter of the chairs  said that having text on the Web site sooner, or when USTR says it will be  posted, would be helpful, but they agreed that the secure Web site was a  valuable tool. Three-quarters of the chairs we interviewed had no  complaints about the reconfiguration of the committee system to more  closely align with the current U.S. economy, although chairs and members  from slightly over a third of the committees we interviewed found  problems with the representation of interests on their individual  committees. Ten of the 16 chairs with whom we spoke did not find the  monthly chairs’ teleconference call useful, primarily because of a lack of  detailed information; those chairs located in Washington, D.C., cited lack  of new information. Furthermore, 8 of the 11 chairs we interviewed whose  committees are invited to the newly instituted periodic plenary meetings  (ATACs and ITACs) did not find them useful. A couple of those chairs did  acknowledge, however, that their out-of-town members might find them  more useful and that they are a good opportunity to hear cabinet-level  speakers to whom they would not routinely have access. Beyond the  plenary meetings, several chairs, particularly among the ITACs, said that  more interaction with other advisory committees would be useful.  Currently, only three ITACs (Customs Matters and Trade Facilitation,  Intellectual Property Rights, and Standards and Technical Trade Barriers)  allow for members from other ITACs to sit in on meetings in a nonvoting  capacity. There is also an Investment Working Group that draws from  across the ITAC committees that a couple of chairs said was a helpful  device.
section_title: Other Stakeholders Found Public Hearings Ineffective or Did Not Participate
paragraphs: Stakeholders outside of the trade advisory committee system were also  provided an opportunity to express their views on the record through the  public hearing process; however, they have found other methods to be  more effective. The administration holds public hearings and gives the  public an opportunity to submit written comments for each FTA. Anyone  is free to come to these meetings and express their opinions.
We spoke with three of the former Assistant U.S. Trade Representatives  who were in charge of negotiating FTAs over the past 5 years under TPA,  and each said that the public hearing process was useful and gave USTR a  good overall sense of what issues were important to the general public.  They noted that they sometimes gained information from viewpoints not  represented in the formal system and that comments were distributed to  responsible officials and taken into account.
While we did not speak extensively with stakeholders that used these  formal and informal avenues for input, we spoke with a few trade experts  in the nongovernmental organization and academic communities that had  used them or were familiar with them. The experts from the academic  community admitted that although they were aware of the public hearing  process, they did not participate in it. Those in the nongovernmental  organization community, however, had either personally participated or  their organization had, but they did not feel that their opinions were heard.  Furthermore, they felt left out of the process and that industry groups had  much better access. As a result, these groups said they have to go directly  to Congress to express their opinions through hearings or personal  contact.
section_title: Process Issues Impeded Committees’ Function
paragraphs: Despite the frequency and quality of USTR consultations with the advisory  committees, process issues such as short reporting time frames, lack of  transparency in committee composition, and delays in rechartering  committees and appointing members sometimes impeded committees’  ability to provide trade advice.
subsections: section_title: Reporting Deadlines Are Difficult to Meet
paragraphs: The Trade Act of 1974 requires trade advisory committees to provide to  the President, the Congress, and USTR a report detailing their advisory  opinion as to (1) whether and to what extent the agreement promotes the  economic interests of the United States and achieves the applicable overall  and principal negotiating objectives (for first and second tier committees)  and (2) whether the agreement provides for equity and reciprocity within  the sector or within the functional area. TPA legislation gives the  advisory committees 30 days after the President notifies Congress of the  intent to sign a trade agreement to submit these reports.
Approximately half of the committee chairs we interviewed said that this  deadline can be difficult to meet for both technical and logistical reasons,  and the committees cannot always give advice based on a thorough  review. Reasons they gave include the following:    FTAs are technical, complex documents including thousands of lines of  tariffs.
Advisory committee members are volunteers with full-time jobs and other  commitments.
Coordinating the FTA review and report within 30 days can be a challenge.
The text is sometimes not available until several days into the 30-day  period.
Negotiations are not always finalized for all sectors at the same time, and  the posting of various chapters is staggered.
Although committee members see versions of the text as the FTA  develops, the final agreed-upon text can change the implications for their  particular interest significantly.
The FTA with South Korea provides the most obvious and recent example  of presenting a challenge in meeting the deadline. Chairs told us the text  was not available to their committees until between 7 and 14 of the 30 days  had passed. Furthermore, although some issues such as rice had been  agreed upon in principle between the United States and South Korea at the  conclusion of the agreement and the advisors had been briefed on the  results, the final text had not yet been written. According to administration  officials, the FTA with South Korea was an exception, since USTR was  rushing to finish negotiations before TPA expired. Committee chairs told  us, however, that meeting the 30-day deadline has been difficult for other  FTAs as well. One of the second tier policy committee chairs, for example,  noted that the committee did not have access to the agricultural sections  of the final text of the Colombia FTA in time to complete the review prior  to issuing a committee report. The committee therefore had to submit a  pro forma letter, noting that they would provide a more detailed  addendum to their report after the full text became available. A third tier  committee chair told us that his committee regularly reserves the right to  amend its report. USTR officials acknowledged that the time frame for  report writing has been problematic for years. Furthermore, they pointed  out that as USTR is actually tasked with sending all of the committee  reports within 30 days to Congress, they need at least a couple of days to  collect reports from the various committees, make copies, and then send  them by courier.
It is also difficult for the ITC to provide in the specified time frame its  statutorily required report assessing the likely impact of the agreement  on the U.S. economy and specific industry sectors because of delays in  receiving the final agreement text. The President is required to provide the  ITC with the details of the agreement, as it exists at that time, 90 days  before the date on which the President enters into the agreement. The ITC  has a total of 180 days from that date to hold any hearings, do its analysis,  and submit its report. TPA also requires the President to update ITC on the  details of the agreement during this period. According to ITC officials, the  deadline is often difficult to make due to last minute changes and late  delivery of the final text. These officials told us that ITC sometimes does  not get the full text of the agreement and all of the annexes until they are  already more than halfway through the 180-day period. The ITC officials  agreed with advisory committee chairs who suggested that a longer report  writing window would be useful. One committee chair specifically  suggested extending the window by 15 days. Commerce and USTR  officials agreed that they would like to see at least 15 more days allowed  for report writing.
section_title: Incorporation of Nonbusiness Interests Remains Difficult, and Committee Composition Is Not Transparent
paragraphs: The represented interests on trade advisory committees are not always  transparent. Congress requires, through the Trade Act of 1974, that the  President seek information and advice from representative elements of the  private sector and the nonfederal government sector through trade  advisory committees that include representatives of certain interests. For  example, the first tier ACTPN is to include representatives of nonfederal  governments, labor, agriculture, small business, environmental and  conservation organizations, and consumer interests, among others. The  third tier committees are to be representative, insofar as is practicable, of  all industry, labor, agricultural, or service interests in the sector or  functional areas concerned. After we reported in 2002 that the committee  system’s structure needed to be revisited, USTR and managing agencies  worked with Congress in reconfiguring some of the committees. For  example, the LAC membership now includes primarily union presidents to  ensure that the administration receives advice from the highest levels.  Furthermore, the 21 industry functional and sector committees were  realigned and streamlined into 16 industry committees to more accurately  reflect the current U.S. economy and trade policy needs. USTR and the  other managing agencies, however, still have had difficulty incorporating  nonbusiness stakeholders into the committees. For example, USTR said it  has had difficulties finding labor representatives willing to serve on  ACTPN, the overall policy first tier committee that is required to be  broadly representative of key sectors and groups affected by trade. Just  under half of the committee members with whom we spoke expressed  frustration with the current composition of their committees. Members  who were dissatisfied with representation told us either that they felt that  certain relevant viewpoints were not adequately represented or that the  composition favored representation of one industry or group at the  expense of another. Furthermore, some members are the sole  representative of a nonbusiness interest on their committee. The  nonbusiness members we spoke with told us that although their interest is  now represented, they still feel isolated within their own committee. The  result is the perception that their minority perspective is not influential.
Available public information makes it difficult to determine what  perspective or interest a committee member represents. For example,  USTR officials pointed to the charters of the committees for which USTR  is the principal administrator for guidelines as to which representatives  they select. The charter for TEPAC, however, simply says that members  shall be from environmental interest groups, industry, agriculture,  services, nonfederal governments, and consumer interests, and that they  shall be broadly representative of key sectors and groups with an interest  in trade and environmental policy issues. The Department of Labor’s  charter for LAC only says members will be selected from the U.S. labor  community. In addition to charters, the Departments of Agriculture and  Commerce also put out Federal Register notices soliciting new members.  These notices stipulate that members must have expertise and knowledge  of trade issues relevant to the committees and that geographic,  demographic, and sector balance will be sought. Neither the charters nor  the Federal Register notices, however, explain how the agencies actually  determined which representatives they placed on committees, although  these are the documents agencies continually referred us to for this  information. Without reporting such an explanation, it is not transparent  how agencies followed their own guidelines for member selection or met  statutory representation requirements.
It is also not always transparent from the final roster which interest a  particular member represents. The FACA required the President to report  annually on the status of advisory committees, although this requirement  was terminated in 2000. The General Services Administration now  collects this information from the relevant executive branch agencies and  posts it on the FACA database (a publicly available database on  committees operating under FACA). While the Department of Commerce  reports on the specific interest each committee member represents, USTR  and the Departments of Agriculture and Labor do not. Instead, they list the  member’s occupation or affiliation. However, it is not always possible to  deduce from that information a member’s represented interest, as for  example, several committee members are from law firms or large  companies that deal with a variety of issues. Listing the name of the firm  or company alone does not necessarily indicate representation of a  particular interest. As a result, it is difficult to determine whether USTR is  receiving the information and advice Congress intended it to obtain from  these committees.
section_title: Rechartering and Appointment Processes Flawed
paragraphs: Weaknesses in the processes of rechartering and repopulating committees  have caused significant lapses in committees’ functions. Originally, FACA  called for the termination of advisory committees every 2 years unless  renewed or its duration is otherwise provided for by law. Legislation  passed in 2004 in response to our 2002 report leaves it to the discretion of  the President whether or not to extend the charters of the trade advisory  committees established under the Trade Act of 1974 to 4 years. All of  these committees, with the exception of LAC, now have 4-year charters.  Department of Labor officials told us this is because of miscommunication  surrounding the 2004 legislation. Charters of several committees have  been allowed to lapse recently, however, resulting in committees not being  able to meet for extended periods of time (up to 7 months in the case of  LAC). Furthermore, the process of selecting and appointing committee  members requires a number of time-consuming steps. The Department of  Commerce, for example, starts the process of appointing new members  approximately 9 months prior to the ITACs’ charter expiration dates, to try  and ensure that the work of the ITACs does not stop, and has been  successful in avoiding lapses as a result. However, other agencies do not  always start this process in time for committees to begin meeting once the  charter is renewed. When both processes of rechartering and member  appointment are delayed, it further reduces a committee’s ability to give  timely, official advice before the committee is terminated, and the  rechartering process has to begin again. This is particularly true in the  case of LAC, which still has a 2-year charter.
These periods of committees not being able to meet have occurred during  important stages of the U.S. trade agenda for both bilateral agreements  and the WTO. Most recently, the charters of APAC and all six of the ATACs  expired on April 29, 2007. The Department of Agriculture began the  process of soliciting new members on March 20. Although the committees  were rechartered in late May, as of late September 2007 they had still been  unable to meet because they had not yet been repopulated. A Department  of Agriculture official told us that this is because key people responsible  for the vetting process in the undersecretary’s office have been unavailable  due to travel schedules. In the interim, however, the United States signed  FTAs with Panama and South Korea on June 28 and June 30, respectively.  Although these committees were able to get their reports on the two FTAs  to USTR just before their charters expired, they have not been able to give  any official advice in the interim period, when agricultural issues— particularly rice in the FTA with South Korea—were still being negotiated.  In another example, the LAC did not meet from September 2003 until  November 2005. Department of Labor officials indicated this was due in  part to the difficulty in getting members vetted and appointed. During this  more than 2-year period, the United States was not only negotiating in the  Doha Round of the WTO, but was also negotiating FTAs with numerous  countries. The administration, however, is not required to report such  lapses and the reasons behind them. The FACA database does collect data  on the length of the current charter and the number of meetings held each  year. This information, however, is only reported on an annual basis, and  we found several discrepancies in the data posted, including incorrect  charter and meeting dates.
section_title: Conclusions
paragraphs: TPA expired on July 1, 2007, but the issue of its renewal awaits  congressional consideration. This report reviews what FTAs the  administration pursued under TPA. The systematic review this report  provides forms part of the historical record of what was achieved with this  important grant of authority. This report also examines how well the  congressional and private sector consultations worked in practice.  Although these are considered an essential check to ensure substantively  sound and well-supported agreements, our report finds room for  improvement.
Under this TPA authority, we found USTR has pursued bilateral and  subregional FTAs in order to advance both foreign policy and economic  policy goals and as building blocks to larger regional initiatives and global  trade expansion. While many in Congress and U.S. industry have  supported these FTA negotiations, some have been concerned about the  limited economic and commercial benefits gained. However, the U.S.  standard of only negotiating comprehensive FTAs has had implications for  the universe of suitable trading partners. Certain larger trading partners  like the EU and Japan have been unwilling to open up sensitive sectors  such as agriculture bilaterally. Negotiations with some larger developing  country partners such as Brazil were ultimately abandoned, in part  because they were unwilling to accept the comprehensive template  proposed by the United States on such topics, as well as intellectual  property rights and services. The results in terms of trade coverage  illustrate the limitations of pursuing comprehensive FTAs: those in force  or concluded under TPA accounted for just 8 percent of total U.S. trade.  Yet, after the EU, Japan, and China, the trade partners that remain to be  covered by FTAs each account for relatively small shares of U.S. trade.
TPA required that the administration consult with Congress as USTR  negotiated trade agreements. We found that USTR provided extensive  consultations on FTAs, numbering well over a thousand, over the past 5  years—a significant expenditure of effort, resources, and time for an office  of about 200 staff. However, while some current and former congressional  committee staff we spoke with were satisfied with the consultations,  others still came away feeling that they had not been truly consulted,  particularly staff outside of the trade committees. Current and former  USTR negotiators we interviewed believed that congressional input was  constantly being factored into their discussions, but said lack of early  focus by Congress on agreement details often complicated USTR’s ability  to incorporate congressional input. Clearly, clarification of expectations  on both sides is essential to any renewal of TPA.
Certain procedural issues also hampered consultations. For example, most  committee staff, particularly outside the trade and agriculture committees,  often did not feel that they had the time they needed to review the  information USTR shared with them on the status of the negotiations and,  in turn, provide meaningful input. Although USTR reports that it has  already taken the step of providing committee staff that have security  clearances with the negotiating text 5 days in advance, several committee  staff told us they frequently have less time. Staff also need to obtain  security clearances if they want to be able to access the classified  negotiating text; however, some key staff still lack clearances. In addition,  some staff with clearances are only able to access text through a  cumbersome paper process, while others enjoy electronic access through  USTR’s secure Web site. Discussing changes from previously proposed  text also appears essential to ensuring trust and effective communication.  However, both committee staff and former USTR negotiators commented  that process changes alone cannot resolve the issues at the heart of the  consultation controversy. They said that the political will to engage in  meaningful consultations is key and that consultations only work as well  as the political relations and good faith of players.
Just over half of the private sector advisory committee chairs we spoke  with said they were adequately consulted and told us that having direct  access to administration officials is valuable. Nevertheless, our work  suggests that tight reporting time frames and delays in finalizing text often  compromise committees’ ability to provide an advisory opinion within 30  days as to whether agreements promote U.S. economic interests, achieve  negotiating goals, and provide for equity and reciprocity, as TPA required.  The ITC faces similar challenges in securing text or agreement details that  can impede its ability to prepare required reports within statutory time  frames. Finally, delays in both committee rechartering and member  appointments have led to prolonged lapses in some committees’ ability to  convene and provide advice. Current reporting by the administration on  the trade advisory committee status does not provide sufficient  transparency, so Congress may be unaware of some committees’ inability  to meet and how statutory representation requirements are achieved. As a  result, to effectively perform the unique role in U.S. trade policy Congress  has given trade advisory committees, certain process issues need to be  resolved.
section_title: Matter for Congressional Consideration
paragraphs: To assist the U.S. Trade Representative and the other agencies in  improving the operations and input of the trade advisory committees,  Congress should consider extending the reporting deadlines for the trade  advisory committees and the ITC by 15 days, giving them 45 days and 195  days, respectively.
section_title: Recommendations for Executive Action
paragraphs: To facilitate better consultations with Congress, we recommend that the  U.S. Trade Representative:    Take steps to reach agreement with the committees of jurisdiction on the  amount of time they need to receive information in advance of  consultation meetings in order to afford them better opportunity for  meaningful input, and   Work together with Congress on ways to improve access to information  prior to consultation meetings, such as through security clearances, so  that congressional staff can better assess the status of negotiations and  provide advice to USTR.
To provide transparency and accountability to the composition of the  trade advisory committees, we recommend that the Secretaries of  Agriculture, Commerce, and Labor work with the U.S. Trade  Representative to annually report publicly on how they meet the  representation requirements of FACA and the Trade Act of 1974, including  clarifying which interest members represent in a manner similar to the  Department of Commerce and explaining how they determined which  representatives they placed on committees.
To assure Congress that it is receiving the private sector advisory opinions  that it intended in the Trade Act of 1974, we recommend that the  Secretaries of Agriculture and Labor work with the U.S. Trade  Representative to take the following two actions:    Start the advisory committee rechartering and member appointment  processes with sufficient time to avoid any lapse in the ability to hold  committee meetings, and   Notify Congress if a committee is unable to meet for more than 3 months  due to an expired charter or a delay in the member appointment process.
To promote greater efficiency in trade advisory committee function, we  recommend that the Secretary of Labor work with the U.S. Trade  Representative to extend the Labor Advisory Committee charter from 2  years to 4 years, to be in alignment with the rest of the trade advisory  committee system.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to USTR; the Departments of  Agriculture, Commerce, Labor, State, and the Treasury; the Environmental  Protection Agency, and ITC. The Department of Commerce provided  written comments, which are reproduced in appendix V. It said that the  report was generally an accurate summation of the status and impacts of  FTAs and provided a good overview of some of the complexities  associated with negotiating an FTA. USTR; the Departments of  Agriculture, Commerce, and Labor; the Environmental Protection Agency,  and ITC provided us with technical comments, which we have  incorporated where appropriate. The Departments of State and the  Treasury had no comments.
USTR staff also commented to GAO on the proposed recommendations  regarding statutory representation requirements in advisory committee  composition and consultation with Congress.  GAO incorporated these  comments as appropriate in the final report.  USTR indicated that it would  report on the actions taken in response to the recommendations in a letter  as required under U.S. law.
As agreed with your office, unless you publicly announce the contents of  this report earlier, we plan no further distribution until 30 days from the  report date. At that time, we will send copies of this report to interested  congressional committees; the U.S. Trade Representative; the  Departments of Agriculture, Commerce, Labor, State, and the Treasury;  the Environmental Protection Agency; and ITC. We also will make copies  available to others upon request. In addition, this report will be available  at no charge on the GAO Web site at http://www.gao.gov.
If you or your staff has any questions about this report, please contact me  at (202) 512-4128 or yagerl@gao.gov. Contact points for our Offices of  Congressional Relations and Public Affairs may be found on the last page  of this report. GAO staff who made major contributions to this report are  listed in appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To determine how Trade Promotion Authority (TPA) has been used in  negotiation of free trade agreements (FTA), we reviewed: (1) What FTAs  have been pursued under TPA and why? (2) Overall, what is the economic  significance of these agreements to the United States? (3) What is the  nature of the consultation process for Congress, and how well has it  worked in practice? (4) What is the nature of the consultation process for  trade advisory committees and other stakeholders, and how well has it  worked in practice?
To answer these questions, generally we reviewed documents and  interviewed officials responsible for international trade policy and  negotiations at the Office of the U.S. Trade Representative (USTR); the  Departments of Agriculture, Commerce, Labor, State, and the Treasury;  and the Environmental Protection Agency, as well as officials of the U.S.  International Trade Commission (ITC).
To determine what FTAs have been pursued under TPA and why, we  reviewed USTR documents and interagency memoranda discussing FTA  partner selection and updated our findings from our prior work on FTA  partner selection. We also interviewed relevant executive branch agency  officials, both current and former, in order to gain the perspectives of  those officials involved with the earlier FTAs negotiated under TPA. In  addition, we interviewed congressional staff from the House and Senate  trade and agriculture committees, as well as other committees of  jurisdiction, and over half of the trade advisory committee chairs, in order  to learn what input they had into the partner selection process.
To determine the overall economic significance of these FTAs, we  analyzed official U.S. trade and investment data, as well as selected studies  and analyses from USTR, ITC, and trade experts. U.S. goods trade  statistics are from the Bureau of the Census, and are through 2006. U.S.  services trade and investment statistics are from the Bureau of Economic  Analysis, and are through 2005, which is the most recent year available.  For the purpose of analyzing the overall U.S. trade and investment  relationship with TPA and non-TPA trade partners, we determined that  these data are sufficiently reliable. Where we combined the two data sets  to show the share of total trade (imports plus exports of goods plus  services), the modest changes that occur from year to year would only  have a minimal effect on the shares reported and no effect on the overall  findings. We also grouped detailed U.S. goods trade statistics into two  broad categories: agriculture and manufacturing based on the Harmonized  Tariff Schedule product chapters. Chapters 1 through 24 are agriculture  and the remaining nonagricultural chapters are manufacturing. ITC  maintains the official U.S. tariff schedule. A complete list of the product  chapters of the Harmonized Tariff schedule can be found at  www.usitc.gov. Finally, in order to analyze the growth of U.S. goods trade  flows over time we used Bureau of Labor Statistics import and export  price deflators at the most disaggregated level available to adjust U.S.  trade statistics for inflation from 1992 to 2006. We did not adjust U.S.  services statistics since reliable price deflators are not available for the  time period we examined.
To determine the nature of the congressional consultation process and  how well it has worked in practice, we reviewed fast track provisions from  the Trade Act of 1974 up through TPA to trace the evolution of the  consultation provisions. We also analyzed USTR’s congressional  consultation logs in order to determine which committees USTR had  provided with consultation meetings, how often, and on which FTAs. We  interviewed USTR officials about how the log was compiled and generally  found them sufficiently reliable for the purposes of this report. In addition,  we interviewed current and former USTR officials who had been involved  in providing the FTA consultations, as well as current and former staff of  congressional committees that had participated in these consultation  meetings, in order to obtain their descriptions of the consultation process  and their views on what had worked well and what could be improved. In  our congressional interviews, we interviewed both House and Senate  committees, including both majority and minority staffs, of all the trade,  agriculture, and other committees of jurisdiction that had been involved in  these consultations. The committees of jurisdiction comprised the  following:    Senate Finance and House Ways and Means,    Senate Agriculture, Nutrition, and Forestry and House Agriculture,    Senate Commerce, Science and Transportation and House Natural  Resources (fisheries subcommittees),   Senate and House Judiciary (intellectual property rights subcommittees),    Senate Banking, Housing, and Urban Affairs and House Financial Services,    Senate Commerce, Science and Transportation (telecommunications staff)  and House Energy and Commerce (telecommunications subcommittee),   Senate Homeland Security and Governmental Affairs and House Oversight  and Government Reform.
Of the 28 committee staffs (from 7 Senate committees and 7 House  committees, each with majority and minority staffs) that we contacted,  staff of 18 (64 percent) agreed to be interviewed. The views of the  committee staff we interviewed are not necessarily representative to all  relevant Senate and House Committees. We interviewed staff of all 4 trade  committee staffs, as well as 4 former trade committee staff in order to  assure coverage back to the beginning of TPA in 2002, due to staff  turnover on some committees. We also interviewed former committee  staff of the other committees of jurisdiction when there had been turnover  on the staff and the current staff were not sufficiently familiar with the  process to comment and referred us to the appropriate former staff.
To determine the nature of the consultation process for the trade advisory  committees and how well it worked in practice, we reviewed relevant  provisions in the Trade Act of 1974, the Federal Advisory Committee Act  (FACA), and TPA governing the establishment and function of the  committees as well as their reporting requirements and time frames. We  obtained and analyzed committee meeting records and charter and roster  information from both designated agency officials and through the FACA  database maintained by the General Services Administration. We  interviewed a nongeneralizable sampling of 27 trade advisory committee  chairs. We interviewed the first tier and all of the relevant second tier  chairs. For the third tier, we interviewed a judgmental sample of half of  the chairs—half of the agricultural technical advisory committee chairs  and half of the industry trade advisory committee chairs—representing a  cross section of both agriculture and industry, as well as select committee  members referred to us by the chairs for their alternative views.  Altogether, we interviewed 16 of the 27 chairs and 5 additional members.  The views of the trade advisory committee chairs with whom we spoke are  not necessarily representative of all committee chairs. We also selected  four other stakeholders to interview, based on literature and background  research, recommendations from trade experts, and participation in public  hearings held for each FTA. These stakeholders were trade experts in the  nongovernmental organization and academic communities. In addition, we  interviewed the executive branch agency officials responsible for  overseeing the committees, at USTR and the Departments of Agriculture,  Commerce, and Labor. We also interviewed agency officials from the ITC.  Finally, we updated findings from our prior work on the trade advisory  committees through interviews and document review and analysis.
We conducted our work from January 2007 to August 2007 in accordance  with generally accepted government auditing standards.
section_title: Appendix II: Expansion of Congressional Consultation Requirements and Role of Gatekeeper Provision
paragraphs: This appendix briefly reviews the evolution of congressional consultation  requirements under TPA. In general, consultation requirements have  expanded under each renewal of authority. The Trade Act of 1974 was the  first grant of fast track authority, which later became known as trade  promotion authority. It established the basic consultation framework,  including required notifications, consultations with congressional  committees, the advisory committee system, and the accreditation of 10  Members of Congress to serve as official advisors to the U.S. delegation of  negotiators. The Trade Agreements Act of 1979 extended fast track  authority but made no significant changes. The next renewal came  through the Trade and Tariff Act of 1984. This act added a new  requirement that the President notify Congress of intent to begin trade  negotiations at least 60 days in advance. Either the House Ways and  Means or the Senate Finance committees could deny fast track  consideration by disapproving of the negotiation within 60 days of the  notification. This provision became known as the “gatekeeper” provision.  In at least one instance, Congress reportedly used the provision as a tool  to successfully influence the administration.
The Omnibus Trade and Competitiveness Act of 1988 continued the  previous consultation requirements and added that the Congress could  withhold a trade agreement from fast track consideration by passing  resolutions of disapproval if it determined that the President had failed to  adequately consult with Congress. In addition, the 1988 act extended fast  track procedures only for 3 years but allowed an extension of fast track  procedures for an additional 2 years if the President requested the  extension, and Congress did not pass a resolution disapproving of the  extension. The Trade Act of 2002 included all of the consultation  requirements of previous acts with the exception of the gatekeeper  provision. Instead of giving the two main trade committees the power to  essentially veto potential trading partners before negotiations begin, the  2002 act replaced the 60-day notification of intent to begin negotiations  with a 90-day notification. The Trade Act of 2002 also established the  Congressional Oversight Group (COG) as an additional consultation  mechanism.
section_title: Appendix III: Detailed Information on U.S. Goods and Services Trade, Investment, and Tariffs of U.S. Trade Partners
paragraphs: This appendix provides detailed information on U.S. goods trade (table 5)  and services trade (table 6) with U.S. trade partners grouped by whether  the United States pursued an FTA with them under TPA, already had an  existing FTA with them, or did not pursue an FTA with them. It also  provides information on U.S. foreign direct investment in these countries  (table 7) and the countries’ average applied tariff rates (table 8).
section_title: Appendix IV: Comparison of U.S. Trade and Investment with FTA and Non-FTA Partners
paragraphs: The U.S. trade and investment relationship with countries that the United  States has chosen to pursue FTAs under TPA differs from that with non- FTA countries in several ways. The United States tends to (1) maintain  more balanced trade with TPA countries, (2) export relatively more  manufactured goods (compared with services and agriculture), and (3)  have relatively faster investment growth with TPA countries, particularly  in countries with FTAs in force.
subsections: section_title: U.S. Maintains More Balanced Trade with TPA Countries
paragraphs: The overall U.S. trade deficit has been large and growing for many years.  Much of the gap between exports and imports has been driven by  increased imports from Asian countries, including China and Japan. In  contrast, the United States has relatively more balanced trade with the  group of countries pursued under TPA. Figure 9 shows the goods trade  balances for TPA countries, existing FTA partners (e.g., Canada and  Mexico), and non-FTA countries (e.g., EU, Japan, China, India). The trade  balance with TPA countries is in deficit overall, but the deficit is relatively  smaller and has deteriorated less rapidly than the much larger deficit with  non-FTA countries.
Moreover, the trends in the U.S. trade deficit vary across the groups of  countries pursued under TPA. For TPA countries with which the United  States has put in force the FTA agreements (e.g., Australia, Chile, CAFTA- DR), the goods trade balance is in surplus. Figure 10 shows TPA countries  by the status of the FTA negotiations: in force, concluded but not yet in  force, and pursued but not yet concluded. For FTA agreements that have  been put in force, the United States maintains a small but growing trade  surplus. For agreements that have been concluded but not yet in force, the  United States maintains a trade deficit that has declined in recent years.  Finally, for countries in which the United States pursued an FTA  agreement, but has not yet completed negotiations, the trade deficit has  been negative and growing.
section_title: U.S. Exports More Manufacturing and Imports More Agricultural Products with TPA Countries
paragraphs: Relative to services and agriculture, manufacturing products comprise a  higher share of total U.S. exports to TPA countries (70 percent) compared  with non-FTA countries (59 percent), as shown in figure 11. This is  mirrored by a relatively smaller share of services exports to TPA countries  (26 percent) compared with non-FTA countries (36 percent). In addition,  while U.S. manufacturing exports to both TPA and non-FTA countries are  growing at similar rates (between 10-11 percent annually, from 2002–2006  based on a compound annual growth rate), U.S. services exports to TPA  countries are growing more slowly than U.S. services exports to non-FTA  countries (5 percent for TPA countries, versus 10 percent for non-FTA  countries). Table 6 in appendix III shows growth rates for services trade.
Manufacturing includes all nonagricultural goods trade. U.S. trade in goods statistics are for 2006.  U.S. trade in services statistics are for 2005, which is the most recent year available. See appendix I  for more information on our methodology and product composition.
In terms of U.S. imports, manufacturing products comprise a much larger  share of both TPA and non-FTA imports—80 and 82 percent, respectively,  than manufacturing comprises in U.S. exports to these groups. Figure 12  shows the composition of U.S. imports from both groups. While U.S.  services imports are relatively similar for TPA and non-FTA countries,  agricultural imports from TPA countries (7 percent) are much larger as a  share of total imports from TPA countries, compared to non-FTA  countries (2 percent). In addition, agricultural imports from TPA countries  have also been growing faster (9 percent annually) compared to imports of  agricultural products from non-FTA countries (6 percent annually) from  2002 to 2006, based on a compound annual growth rate.
section_title: U.S. Investment in TPA Countries Growing Relatively Rapidly Since Completion of FTAs
paragraphs: U.S. direct investment abroad (or foreign direct investment, FDI) in TPA  countries has grown more rapidly than investment in non-FTA countries,  particularly in recent years since the conclusion of FTA agreements. Table  9 shows that U.S. FDI in TPA countries registered a compound annual  growth rate of 9 percent between 1996 and 2005, and a 13 percent  compound annual growth rate since 2002. For TPA countries in which an  FTA with the United States is already in force, the compound annual  growth rate was 20 percent from 2002 to 2005. In comparison, U.S. direct  investment in non-FTA countries grew at a compound annual growth rate  of 7 percent over the same period.
section_title: Appendix V: Comments from the Department of Commerce
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Kim Frankena, Assistant  Director; Leyla Kazaz; Tim Wedding; Judith Williams; Gezu Bekele; Tina  Hodges; and Arthur Lord made key contributions to this report. Other  contributors include Grace Lui, Martin De Alteriis, and Karen Deans.