PRESS/TPRB/49
12November 1996
TRADE POLICY REVIEW BODY
Review oftheUnited States
TPRB 'sEvaluation
TheTrade Policy Review Body oftheWorld Trade Organization (WTO) conducted itsfourth
review oftheUnited States 'trade policies on11and12November 1996. ThetextoftheChairman 's
concluding remarks isattached asasummary ofthesalient points which emerged during thetwo-day
discussion.
Thereview enables theTPRB toconduct acollective examination ofthefullrange oftrade
policies andpractices ofeachWTO member country atregular periodic intervals tomonitor significant
trends anddevelopments which mayhaveanimpact ontheglobal trading system.
Thereview isbased ontworeports which areprepared respectively bytheWTO Secretariat
andthegovernment under review andwhich cover allaspects ofthecountry 'stradepolicies, including:
itsdomestic lawsandregulations; theinstitutional framework; bilateral, regional andother preferential
agreements; thewider economic needs andtheexternal environment.
Arecord ofthediscussions andtheChairperson 'ssumming-up, together withthesetworeports,
willbepublished induecourse asthecomplete trade policy review oftheUnited States andwillbe
available fromtheWTO Secretariat, Centre William Rappard, 154ruedeLausanne, 1211Geneva 21.
Since December 1989, thefollowing reports havebeencompleted: Argentina (1992), Australia
(1989 &1994), Austria (1992), Bangladesh (1992), Bolivia (1993), Brazil (1992 &1996), Cameroon
(1995), Canada (1990, 1992 &1994), theCzech Republic (1996), Chile (1991), Colombia (1990 &
1996), Costa Rica(1995), Côted'Ivoire (1995), theDominican Republic (1996), Egypt (1992), the
European Communities (1991, 1993 &1995), Finland (1992), Ghana (1992), Hong Kong (1990 &
1994), Hungary (1991), Iceland (1994), India (1993), Indonesia (1991 and1994), Israel (1994), Japan
(1990, 1992&1995), Kenya (1993), Korea, Rep.of(1992 &1996), Macau (1994), Malaysia (1993),
Mauritius (1995), Mexico (1993), Morocco (1989 &1996), NewZealand (1990 &1996), Nigeria
(1991), Norway (1991 &1996), Pakistan (1995), Peru(1994), thePhilippines (1993), Poland (1993),
Romania (1992), Senegal (1994), Singapore (1992 &1996), Slovak Republic (1995), South Africa
(1993), SriLanka (1995), Sweden (1990 &1994), Switzerland (1991 &1996), Thailand (1991 &1995),
Tunisia (1994), Turkey (1994), theUnited States (1989, 1992, 1994&1996), Uganda (1995), Uruguay
(1992), Venezuela (1996), Zambia (1996) andZimbabwe (1994).
MORE 96-4830PRESS/TPRB/49
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TRADE POLICY REVIEW BODY
Review oftheUnited States
CONCLUDING REMARKS BYTHE CHAIRPERSON
Thismeeting oftheTrade Policy Review Body hasnowcompleted thefourth review ofthe
United States 'tradepolicies andpractices. These remarks, which aremade onmyownresponsibility,
summarize themainpoints ofdiscussion. Theyarenotintended tosubstitute forthecollective evaluation
andappreciation ofU.S.trade policies andpractices. Details ofthediscussion willbereflected in
theminutes ofthemeeting.
Thediscussion developed under fourmainthemes: (i)Economic conditions andregional trading
arrangements; (ii)U.S. strategies forconducting trade policies; (iii)trade policy measures; and
(iv)sectoral issues.
Averylarge number ofquestions hasbeenraised inwritten form; many ofthese cover
overlapping issues. Welookforward toreceiving thereplies from theUnited States.
Economic conditions andregional trading arrangements
WTOmemberscomplimentedtheUnitedStatesonitsstrongeconomicperformance,characterized
byhighgrowth andlowinflation. Noting therising share oftrade inU.S. GDP, theyemphasized
thekeyrôleplayed bysecurely openmarkets forgoods, services andinvestment inU.S. economic
development andresource allocation. Binding ofmarket access conditions bytheUnited States was
alsoregarded asimportant totheworld trading system. TheUnited States wasthusurged toexercise
leadership intheWTO tobring negotiations onfinancial services, telecommunications andmaritime
transport toasuccessful conclusion.
During theperiod under review, netimports hadincreased andthecurrent account hadwidened
somewhat. Itwasrecognized thatthisnetimport expansion wastaking place during aperiod ofslack
demand inother developed markets, thushelping tostabilize world economic conditions. Some fears
wereexpressed thatarising current account deficit might contribute torenewed protectionist pressure
intheUnited States.
Some members commented ontheimportance ofservices totheU.S.economy, recognizing
thatproductivity gains inthatsector werecrucial toimprovements inliving standards. Inthatcontext,
theynoted theshiftinthedelivery ofservice imports from cross-border toestablishment andasked
ifthiswasrelated toState investment incentives.
Members remarked that,intheperiod under review, regionalism hadnotbeenamain motor
fortheexpansion ofU.S.foreign trade; tradewithCanada andMexico hadincreased atasimilar pace
asthatwithother trading partners.
Inresponse, therepresentative oftheUnited States emphasized theimportance ofopenmarkets
inhelping toassure efficient production structures. Thebenefit totheUnited States came from the
connection between anopen, competitive domestic environment andopenborders. Headded thatmany
intheUnited States hadendured stress inrestructuring theeconomy; these adjustment pressures had
ledtotheUnited States, overmany years, urging consideration intheWTO ofcorelabour standards.
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Inaddressing concerns thattheU.S.saving-investment imbalance, andassociated trade and
current account deficits, might erode public support foropentrade policies, henoted thatthetrade
deficit asashare ofGDP wasnowlessthanhalfthelevelofitsprevious peakin1987. Moreover,
therehadbeenconsiderable progress inreducing thefederal budget deficit, which wastheGovernment 's
mostdirect linkwithsavings andtherefore thetradedeficit. Arecent riseinthetrade deficit reflected
U.S. economic expansion, inwhich investment hadplayed agreater rôlethaninthepast. Inthis
expansion, theUnited States hadalsobeenasignificant poleofattraction forforeign capital.
Onservices, therepresentative noted thatinternal deregulation inanumber ofsectors hadraised,
andwould continue toraisesectoral productivity. Success inGATS negotiations would alsohelp.
Hebelieved thattheopenness oftheU.S.foreign investment régime, andthepractical requirement
foralocalpresence todeliver many services, underlay theshiftfromcross-border transactions toforeign
investment, rather thanState investment incentives.
Onregional trade links, therepresentative saidthattheoverall benefits ofNAFTA might be
considerably larger thanoriginally thought. NAFTA waslikely tohavecreated more trade thanany
potential diversionary effect, because ofthehugemarket anditssupport forwider economic reforms;
specifically, thelowleveloftheU.S.m.f.n. tariff meant thatthemargin ofNAFTA preference was
slight, andtherapid growth ofU.S.imports from most suppliers inrecent years wasevidence that
anydiversion wasmuch lessthangrowth.
Strategies forconducting trade
Members noted thestrong interaction inU.S.trade policy making between multilateralism,
bilateralism andunilateralism. Evidence thatWTO commitments wereatthecentre ofU.S.tradepolicy
making wasseeninitsfrequent useofdispute settlement provisions; however, ageneral dissatisfaction
withthecontinued unilateralism inherent in"Section 301"legislation wasexpressed. Members inquired
when theUnited States planned toimplement theAppellate Body ruling concerning "Standards for
reformulated andconventional gasoline" which wasadopted bytheDispute Settlement Body.
Questions wereraised about theimplementation oftheWTO Agreements attheStateandlocal
level, including thenotification ofsub-federal subsidies bytheUnited States.
Members noted thattheUnited States wascurrently without "fast-track" authority fortrade
negotiations. Participants asked theU.S.delegation tocomment ontheimpact oftheabsence ofsuch
authority.
ThelargenumberofbilateralagreementsconcludedbytheUnitedStateswasamatterofconcern.
Questions wereraised whether suchagreements wereimplemented onam.f.n. basis andwhether all
werenotified totheWTO. Therepresentative ofJapan stated thatthebilateral U.S.-Japan measures
under theFramework Agreement involved policy changes byboththeUnited States andJapan and
wereimplemented onam.f.n. basis. Therepresentative ofCanada noted thatthepossibility ofU.S.
useofitstrade remedy lawhadplayed arôleinreaching thebilateral Softwood Lumber Agreement.
Participants stressed thatreciprocity clauses contained inbilateral agreements could befundamentally
atoddswiththem.f.n. provisions ofthemultilateral trading system.
Anumber ofdelegations expressed their objections totheunilateral useoftrade policy
instruments fornon-trade-policy objectives. Inthiscontext, the"Helms-Burton Act"andtheIran-Libya
Trade Sanctions Actwere particularly mentioned andtheWTO consistency ofthese measures was
strongly questioned. Theextra-territorial useofenvironmental standards applied toimports oftuna
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andshrimp wasalsocriticized. Some members queried thenon-trade conditions forapplication of
GSPpreferences.
Concerningtradeinservices,participantsstressedtheimportanceofanopentradingenvironment
forthedevelopment ofanefficient services sector andnoted withregret thattheUnited States had
introduced abroad m.f.n. exemption toitsfinancial services offer in1995.
Although members welcomed theliberalization under thenewtelecommunications legislation,
several noted possible deviations from m.f.n. treatment toforeign services providers, ascontained
inreciprocity clauses, aswellasconcern withtheapplication ofthe"public interest" testbytheFederal
Communications Commission. Itwasalsonoted thatCOMSAT hadamonopoly onkeysatellite links.
Participants expressed disappointment thattheUnited States hadnotsubmitted anofferunder
theMaritime Transport Negotiations. They noted various restrictive measures applied todomestic
andinternationalmaritimetransportservices.ItwasalsostatedthattheUnitedStateshadtakenunilateral
measures under domestic legislation, aswellasviolating itsstandstill commitment bylifting aban
onexports ofAlaskan oilunder thecondition thatitbeshipped onU.S.flagged andmanned vessels.
Concerning themovement ofpersons, members noted therestrictive useofimmigration and
residence provisions applied bytheUnited States.
Inreply, theU.S. representative emphasized thatgood trade agreements should involve an
exchange ofbenefits. "Free ridership" wasnothelpful, andleadership required clear identification
ofpriorities. Enforcement oftrade agreements wasimportant inensuring adherence.
Inthiscontext, hesawSection 301asameans forcommunication ofexporters 'concerns:
heemphasized thatSection 301wasintegrally linked tothemultilateral dispute settlement mechanism.
Since theentry intoforce oftheWTO, allSection 301actions concerning WTO members hadbeen
pursued under theDSU.
Therepresentative declined tocomment ontheextra-territorial application ofU.S.legislation,
asthiswasunder consideration inDispute Settlement procedures.
Therepresentative noted thattheU.S.aiminservices negotiations wastoachieve substantive
commitments tomarket access andnational treatment byawiderange ofcountries. TheUnited States
would thuscontinue itsactive rôleintelecommunications andfinancial services, through putting in
goodoffers early. Inturn,meaningful down-payments wererequired fromother Members, providing
realaccess toforeign service providers andreflecting fullytheprinciples ofmarket access, national
andmost-favoured-nation treatment.
Hestatedthattherenewaloffast-tracknegotiatingauthoritywouldrequireextensiveconsultations
withthenewCongress, yettobeformed; theU.S. would keepMembers informed ofprogress in
thisregard.
Trade measures
While welcoming thelowaverage ofU.S. tariffs, Members noted thehightariff peaks in
particular sectors. Itwasnoted thatzero-for-zero initiatives would contribute tofurther reduction of
tariffaverages. Questions wereraised about increases intherateofthecustoms userfee,andwhether
thefeesubstituted fordeclines intariff revenue.
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DevelopmentsinU.S.anti-dumpingandcountervailinglegislationandtheirapplicationtospecific
cases wereraised bymany participants. While welcoming thereduction inthenumber ofnewcases,
members questioned theU.S. concept of"fair" trade, thedefinition of"national industry", theuse
ofdeminimisprovisions,thetimeframeforapplicationofthesunsetclause,theuseofanti-circumvention
measures, andtherelationship ofAD/CVD measures tocompetition policy. Thehighcostofanti-
dumping andcountervailing measures totheU.S. economy andtrading partners wasemphasized.
Members alsosawalackofconsistency between rules oforigin andlabelling requirements
usedtoadminister preferential treatment under various regional trade agreements. Inthiscontext,
theU.S. delegation wasinvited tocomment onthestatus ofaU.S. Treasury proposal tounify the
rules oforigin.
Members commended theUnited States foritscommitment toexpanding procurement coverage
under theplurilateral Government Procurement Agreement andforseeking greater transparency in
thisarea. However, many questions wereraised concerning conditions ofaccess toU.S.government
procurement. "Buy-American" and"Buy-State" provisions werecriticised asbeing wideranging and
nontransparent. Members considered thatset-asides forsmall andminority-owned businesses were
becoming more important overtimeandsought clarification onthese areas.
Standards andtechnical regulations wereraised bymany members asanareaofconcern. Issues
raised included theapplication ofenvironmental process standards toimports oftuna, shrimp and
gasoline. Thequestion oftheCorporate Average FuelEconomy (CAFE) Actwasalsocritically noted.
Inreply, theU.S.representative recalled thecontribution made bytheUnited States tooverall
tariff liberalization; these efforts would continue, inter alia,through theproposed Information
Technology Agreement. Binding oftariffs onabroad basis byallMembers wasveryimportant.
Hewelcomed theimprovements inanti-dumping andcountervailing provisions contained in
theWTO Agreements. Arevision ofanti-dumping andcountervailing regulations underway would
increase thelevel ofclarity ofU.S. procedures. Anti-circumvention provisions were, inhisview,
consistent withtheenforcement provisions oftherelevant Agreements andMinisterial Decisions. It
wasnoteasytosaywhythelevelofnewinvestigations haddeclined, asthiswaslargely determined
byprivate sector actions.
Therepresentative noted inpassing thatonlyafewMembers hadundertaken WTO disciplines
inGovernment procurement. TheUnited States wascommitted toliberalization inthisarea: the
transparency negotiation tobeproposed atSingapore could beastepping stone forwider membership
oftheGPA. U.S.policies were predictable andtransparent, evenwhen BuyAmerican preferences
applied. Restrictions under these provisions andset-aside procedures applied toasmall share of
procurement covered bythesuccessive Agreements: their importance hadinsome cases been
exaggerated. National security exceptions weremaintained inthesame framework asthose byother
trading partners. 37States hadagreed toGPA commitments.
TheUnited States wasparticipating actively inWTO work onrulesoforigin; U.S.policies
onadoption ofuniform rulesandapplication ofpreferential ruleswereconsistent withWTO obligations.
Therepresentative alsoemphasized thelinkages, bothdomestically andmultilaterally, thattheUnited
States sought topromote between trade andenvironmental issues, referring particularly torecent
international conventions onprotection ofseaturtles anddolphins.
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Sectoral issues
TheenactmentoftheFederalAgriculturalImprovementandReform(FAIR)Actwaswelcomed.
However, Members noted thehighaverage leveloftariffs applied toproducts forwhich quantitative
restrictions hadbeentariffied under theWTO Agreement onAgriculture. Although much lower tariffs
were applied toimports under tariff quota, many ofthese quotas remained underutilized, leading to
questions concerning theallocation ofquotas totrading partners. Members expressed regret thatexport
subsidies continued tobeavailable under theFAIR Act-andevenexpanded insome areas -andqueried
thetargeting ofcertain export subsidy provisions onparticular regions. SPSmeasures andproposed
changes tothese measures were alsocritically reviewed.
TheU.S.implementationofitscommitmentsundertheWTOAgreementonTextilesandClothing
(ATC) wasanimportant issue formany participants. Itwasnoted thattariffs inthissector remained
high. Some Members expressed considerable disappointment thatnoitems previously under quota
hadbeenincluded inthefirstintegration phase andthattheU.S. integration oftextile andclothing
products overfourphases, asrequired bytheATC, washeavily backloaded. Itwasconsidered that
thisviolated thespirit ofagradual phasing-in oftheproducts covered bytheAgreement andcould
inhibit theadjustment process intheU.S.market. Thechange intherulesoforigin applied totextiles
andclothing wasalsocriticized asbeing disruptive tointernational trade, while theuseofthesafeguard
provisions oftheATC wasconsidered bysome members tobeexcessive.
Inreply, theU.S.representative noted thattheFAIR Actwould move theU.S.agricultural
sectortowardsamoremarket-orientedapproach,goingbeyondobligationsagreedintheUruguayRound.
Thefurther influence ofsuchmeasures asloanrates, subsidies andtariffquotas onprices andproduction
wassignificantly reduced. Onloanrates, therewasnopricefloororgovernment stock accumulation;
international market conditions would determine theextent towhich theUnited States applied export
subsidies, withworld trade liberalization thekeytoeventual elimination orsuspension ofexport
subsidies.
Ontextiles andclothing, therepresentative noted thatthesectors wereamong themostsensitive
intheU.S. economy; clothing, inparticular, employed many economically vulnerable American
workers. TheU.S.market wastheworld 'slargest, withhighimport penetration. TheUnited States
hadmade great efforts toensure thatbothsectors werepartoftheUruguay Round package andthat
theU.S. Congress implemented theUruguay Round fully, asnegotiated, withappropriate phase-in
provisions. TheUnited States hadscrupulously abided byitscommitments and,ataminimum, would
continue todoso.Going beyond currently announced plans wasnotoutofthequestion butanysuch
consideration would depend onthewillingness ofother countries involved intextiles andclothing to
undertakecommensurateadditionalefforts.HeaddedthattheUnitedStateshadnotifiedacomprehensive
product integration schedule forthefulltransition period -beyond whatwasrequired intheAgreement -
soastoensure stability intheU.S.market andforitspartners.
Onrules oforigin fortextiles andclothing, when theUnited States codified itsrules ithad
provided 18months forpublic comment. Thesystem wascompletely transparent, andtheoverwhelming
majority ofU.S.ruleswereinlinewiththoseusedbyothermajor importers. TheU.S.useofsafeguards
wasinaccord withtheATC andhadbeenreviewed bytheTextiles Monitoring Body anddispute
settlement panels.
There weresignificant challenges ahead tothesuccessful transition toanintegrated, quota-free
textiles andclothing sector, asrequired bytheAgreement. First, theUnited States would needto
besurethatitstrading partners 'markets wereasopentoU.S.exports astheU.S.market wastoimports.
Second, theUnited States would needtoensure thatdisciplines intheAgreement onquota circumvention
were effective andadequate toremedy thesignificant problem.
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Overall remarks
Members noted various positive developments intheU.S.economy overthepasttwoyears,
including asignificantly increased volume andshare oftrade. They particularly welcomed thepassage
oftheUruguay Round Agreements Act,theentryintoforceoftheplurilateral Government Procurement
Agreement, thesubstantial reform measures intheagricultural andtelecommunications sectors, and
adecrease inuseofanti-dumping measures.
However, continuing concerns wereexpressed onanumber ofissues. Contradictory signals
werenoted. Despite thestated commitment tomultilateralism, andfrequent invocation ofWTO dispute
settlement procedures, aresort tounilateral approaches isstillinevidence. Acontinuing emphasis
onstrict bilateral reciprocity sitsuneasily withthestated attachment tomultilateralism. Criticisms
oflegislative provisions withextra-territorial effect were widely shared.
Among thesectoral issues raised, astrong concern about theUnited States textile régime was
registered bytextile-exporting countries. Intheservices sector, itwashoped thattheUnited States
would demonstrate astrengthened commitment tocompleting theunfinished business oftheUruguay
Round.
Members areconscious oftheweight which theUnited States carries within theworld trading
system andtheleverage which itconsequently exercises. Theyseekreassurance thattherelative restraint
inresort totrade remedies which characterizes periods ofeconomic buoyancy willprove durable.
Most importantly, theyareconcerned toensure thattheUnited States isaconsistent andreliable
proponent ofmultilateralism, withalongtermcommitment which willbestrong enough towithstand
pressures thatmayarise.
END