*EPF403 03/02/00
Text: Barshefsky on 2000 Trade Agenda
(Describes global efforts to open markets) (13,130)

U.S. Trade Representative Charlene Barshefsky has presented to Congress an aggressive program to expand U.S. trade in 2000 that includes strengthening the role of the World Trade Organization (WTO).

U.S. trade policy is premised on the understanding that open markets and freer trade are good for both the United States and its trading partners, Barshefsky says.

The Clinton administration agenda, which was transmitted to Congress March 2, calls for strengthening the role of the WTO with the aim of creating a strong and healthy trading system, she says. The agenda can be found at http://www.ustr.gov/reports/tpa/2000.

Bringing China into the WTO, opening China's markets to U.S. exports and supporting China's domestic reforms lead the regional and bilateral agenda, Barshefsky says.

Protecting intellectual property rights and promoting global electronic commerce and biotechnology are keys to building the 21st century economy, she says.

Barshefsky says the United States will scrupulously monitor adherence to trade agreements, by means of a "strategic enforcement plan."

Protecting the environment, supporting core labor standards, and looking out for consumers' interests are other aspects of the 2000 trade agenda, Barshefsky says.

Following are terms and abbreviations used in the text:

-- billion: 1,000 million.

-- trillion: 1,000,000 million.

-- HHS: Department of Health and Human Services.

-- WTO: World Trade Organization.

-- IBRD: The International Bank for Reconstruction and Development (World Bank).

-- IMF: International Monetary Fund.

-- UNCTAD: United Nations Conference on Trade and Development.

-- UNDP: United Nations Development Program.

-- TRIPS: Trade-Related Aspects of Intellectual Property Rights.

-- GATT: General Agreement on Tariffs and Trade.

-- GSP: Generalized System of Preferences.

-- ILO: International Labor Organization.

-- SME: small and medium sized enterprises.

Following is the text of Barshefsky's overview and the 2000 agenda:

(begin text)

[Office of the U.S. Trade Representative
Washington, D.C.
March 2, 2000]

THE 2000 AGENDA

I. Overview and the 2000 Agenda

I am pleased to submit to Congress the Trade Policy Agenda for the year 2000, and the 1999 Annual Report of the President of the United States on the Trade Agreements Program.

This will be the final such report of the Clinton Administration, and the first as we open the new century. As we report on the next year's trade policy initiatives, I would therefore like to put the body of the Report in some perspective. The 2000 Report reviews in detail the record of the past seven years, including a special report on the WTO pursuant to our statutory requirement under Section 125 of the Uruguay Round Agreements Act; and looks ahead to the challenges of the future.

The Clinton Administration's trade policies have built on a record, built since the era of Franklin Roosevelt, in which Americans have promoted a strong and confident trade policy premised upon open markets under the rule of law. We have done so in the understanding that by creating an open world economy under the rule of law, we can promote economic growth, development and rising standards of living for Americans and our foreign trading partners; create a more decent and just world economy; and build a stronger peace. As we celebrate the opening of a new century, we therefore also mark a half-century of American leadership toward a more open, fair and free world economy, beginning with the foundation of the General Agreement on Tariffs and Trade (GATT) in 1948, and capped by the nearly 300 separate trade agreements completed under President Clinton.

The Clinton Administration's achievements reflect these principles and touch every part of the world, based from the outset of the Administration on commitment to a policy which, as the President recently said in Davos, will yield "more growth and more trade, with better protection for working people and more sensible environmental policies."

These accomplishments stretch from the early days of the Administration, with the North American Free Trade Agreement and the Uruguay Round, through the multilateral agreements on Information Technology, Basic Telecom-munications and Financial Services; 38 market-opening agreements with Japan, 17 with the European Union, 20 with Canada, and 20 with China; 22 Bilateral Investment Treaties around the world; a broad improvement in protection of intellectual property rights worldwide; the launch of new initiatives in Africa, Asia, Europe, Latin America and the Middle East; the opening of the first major discussions on the links between trade policy, environmental and labor issues; and most recently, our historic agreement on China's WTO accession, which will dramatically open the world's largest nation to American exports.

This effort rests on the understanding that open markets and freer trade are good for both Americans and our trading partners overseas. This is true in economic terms, because with market opening comes growth, opportunity and rising standards of living: producers can sell to wider markets; consumers have greater choice and quality; technological progress accelerates; businesses become more efficient and competitive.

Open markets abroad offer the opportunity to export; and exports are essential to a strong economy. Almost 80 percent of world economic consumption, and 96 percent of the world's population, is outside the United States. And foreign tariffs and other trade barriers are still substantially higher than ours. If these markets are opened more fully to Americans in the years ahead, our farmers will face less risk of gluts that drive down prices, workers will find new opportunities for higher-wage employment, and American businesses will gain the economies of scale that enable them to invest in plants, research, and hiring.

Open markets at home are equally important. Imports create the choice, price and competition that raise family living standards - for all families, but most especially the poor - and help to dampen inflation. Imports, accompanied by a commitment to education and job training, also help American workers specialize in the most technologically sophisticated and financially rewarding fields. And they give businesses access to inputs - raw materials, parts, business equipment - that reduce overall costs and therefore improve efficiency and competitiveness.

These economic benefits rest in turn on a foundation of broader aspirations: the rule of law; a more stable international economy; a stronger peace. With a rules-based trading system that keeps markets open, trading nations rely on law and contract rather than on coercion in good times; and in moments of crisis - as we saw very clearly in the Asian financial crisis of 1997-99 - the world has a shield against cycles of protection and retaliation, and the "beggar-thy-neighbor" policies of the 1930s. And as countries trade more with their neighbors, they gain an interest in prosperity and stability beyond their borders, strengthening the chances of peace.

These policy achievements, in turn, have helped to catalyze an expansion of American goods and services exports, which have increased by 55 percent since 1992 despite the export-dampening effects of the Asian financial crisis. With exports of goods and services reaching $958.5 billion in 1999, the United States has regained its position as the world's largest exporting nation. This is especially important, as export-related jobs typically pay 13-16 percent above the average U.S. wage. (A statistical appendix at the end of this Report includes a more detailed review of trends over the past years.) Together with domestic policy measures such as the improvement of fiscal discipline since 1993 and increased investment in education, American trade policy has thus made a remarkable contribution to our prosperity in the past five years. By opening markets, advancing the rule of law, and promoting competition, our trade policy has contributed to a record of:

-- Growth: The U.S. economy has grown by $2.1 trillion or 28.6 percent, from $7.1 trillion in 1992 to $9.2 trillion in 1999. To put this figure in context, only two countries in the world apart from the United States have a GDP totaling $2 trillion or greater.

-- Jobs: U.S. employment has grown by nearly 21 million jobs, as unemployment levels dropped from 7.3 percent to 4.0 percent. This is the lowest unemployment rate since January 1970.

-- Rising Living Standards: American living standards are rising, as hourly wages for nonsupervisory workers are up by 6.5 percent. At the same time, openness to imports has helped to keep inflation low, broaden choice and improve consumer prices especially for basic household necessities. This is especially important for the poorest families.

-- Investment and Industrial Growth: Since the mid-1990s, U.S. non-residential business investment has risen by 10.4 percent per year. And since 1992, U.S. industrial growth is up 40.5 percent, including growth in manufacturing production of nearly $400 billion. By comparison, Germany's total industrial growth in the same period was only 6.3 percent and Japan's 3.6 percent.

-- Shared Benefit: Americans have broadly benefitted from our expansion, with poverty rates falling to the lowest level measured since 1979, and unemployment at record lows for African-Americans and Hispanics.

A final, and very important, point to note is that in the past seven years, the United States' share of world foreign direct investment has sharply increased, with foreign countries investing well over $500 billion in America between 1994 and 1998. Many had expressed fears that a more open world would promote investment in countries with lower wages or weaker labor and environmental standards. In fact, it appears that the United States - with our high standards - remains a very attractive investment destination.

Our responsibility now is to build upon these achievements as we look ahead to America's place in the world economy of the 21 st century. Expansion of trade will remain crucial to growth and technological progress for our nation and rising living standards for our people, and a strong trade policy will in turn be essential to expand trade and advance the principles of fairness, transparency and opportunity which allow us to succeed. In this work, critical goals include:

-- Continue our progress toward open and fair world markets, through leadership in the World Trade Organization, and broad, substantial initiatives with all our major trading partners in each region of the world;

-- Continue an active bilateral agenda, to solve trade problems and enhance exports;

-- Advance the rule of law and defend U.S. rights by ensuring full compliance with trade agreements and strongly enforcing our trade laws;

-- Encourage the full participation of all economies, including economies in transition and developing nations, in the world trading system on an equitable basis;

-- Ensure that the trading system helps lay the foundation for the 21st-century economy by offering maximum incentives for scientific and technological progress;

-- Ensure that trade policy complements and supports our efforts to protect the world environment and promote core labor standards overseas; and

-- Advance basic American values including transparency and accessibility to citizens and involvement of civil society in the institutions of international trade.

With the United States better prepared for economic leadership than any other nation, we look forward both to a successful and productive year and to further advances in our nation's economic strength and our people's standard of living in the years ahead. A detailed look at our record and priorities follows.

A. GROWTH AND RISING LIVING STANDARDS

1. The World Trade Organization

A strong and healthy trading system, exemplified by the World Trade Organization, is crucial to America's economic and security interests, and thus central to our trade policy.

American leadership in development of the trading system dates back over 50 years, to the Administrations of Presidents Franklin Roosevelt and Harry Truman. The leaders of the time acted in the light of their personal experience: they had seen the Smoot-Hawley Act in America and similar protectionist policies overseas deepen the Depression and contribute to the political upheavals of the 1930s. Fifteen years later, they believed that by reopening world markets they could promote growth and raise living standards; and that as open markets gave nations greater stakes in stability and prosperity beyond their borders, a fragile peace would strengthen.

The work they began has proceeded through five decades through eight Rounds of global trade negotiations, and decisions by 112 new members to join the 23 founding members. As we and others abandoned the closed markets of the Depression era, we have strengthened peace by integrating diverse nations into a modern economic world. And we have fostered what amounts to a fifty-year economic boom during which the world economy grew six-fold, per capita income nearly tripled, and hundreds of millions of families escaped from poverty. Perhaps the greatest tribute to the success of this work is the fact that virtually all the nations once governed by communist central planning techniques now see WTO entry as essential to successful reform and long-term growth.

America, as the world's largest exporter and importer, benefits perhaps most of all: the efficiency of our industries and the high living standards of our families reflect both the gains we receive from open markets abroad and our own open-market policies at home, as well as from a framework of rules designed to ensure that American products receive fair and predictable treatment around the world.

a. WTO Since 1995

The adoption of the World Trade Organization on January 1, 1995 was the next significant step in this work since the foundation of its predecessor, the GATT itself. In ratifying the Uruguay Round Agreements which created the WTO, the United States and other WTO members expanded the rule of law, through a system applicable to all members. We also created a strong dispute settlement mechanism, strengthening our ability to enforce our trading partners' commitments; and broadened those commitments both to further open industrial markets and to cover areas covered only partially or not at all, including agriculture, services, and intellectual property; and lowered barriers to create new opportunities for our industries and workers.

Since then, our work at the WTO has been central to some of our most important strategic trade policy goals. This Report contains, per our statutory responsibility under Section 125 of the Uruguay Round Agreements Act, a comprehensive review of the WTO's record thus far. Briefly speaking, it has been crucial to goals including:

Building the 21st -Century Economy - The WTO has been at the leading edge of our strategy to capitalize on American technological leadership as we build the economy of the 21st century. Through landmark agreements on Information Technology Products, Basic Telecommunications, and Financial Services, as well as the electronic commerce "duty-free cyberspace" commitment WTO members made in 1998, we have opened markets and preserved freedoms in areas where the United States is the world's most competitive nation, helping to spur investment, reduce costs to consumers and foster technological advance. These are discussed in more detail in the "21st -Century Economy" section below.

End of the Cold War - Ten years after the fall of the Berlin Wall, the transition economies - those nations in Asia and Central and Eastern Europe making the transition from communist central planning regimes to market economics - have made remarkable progress, and this owes a great deal to our work in the WTO. As we help these countries integrate into rules-based world trade, we both support internal reform and strengthen peace by giving their people better economic prospects, and their governments greater interests in world prosperity and stability.

Those nations which have completed the transition - for example, Poland, Hungary and the Czech Republic - have found that the WTO's principles of transparency, open markets and rule of law are also those which help economic reform succeed. Since 1995, six more transition economies have had the same experience: Slovenia, Bulgaria, Mongolia, the Kyrgyz Republic, Latvia, and Estonia. The work is likely to accelerate this year, as Georgia is soon to enter and the accessions of Albania and Croatia are near completion. We also have made significant progress with Armenia, Lithuania and Moldova; and held fruitful discussions with Russia and Ukraine. And (as is discussed in more detail below) in 1999 we completed an historic bilateral agreement on WTO accession with China.

This work extends well beyond the transition economies, of course. In the Middle East, for example, Jordan has completed its negotiations to enter the WTO. We have made significant progress with Oman, and held important discussions with Saudi Arabia. In Asia, we have completed our negotiations with Taiwan. And we also have made significant progress with Vanuatu in the Pacific.

Promoting Development and Economic Opportunity in the Poorest Countries - Our work at the WTO is also of crucial importance to the promotion of economic growth and sustainable development in the world's poorest nations. We have worked intensively, for example, with African and CBI nations to ensure that they can participate fully in the trading system, and to offer these nations new opportunities for market access.

World Economic Stability: The WTO also has strengthened the world's ability to address economic crises. During the financial crisis of 1997 and 1998, for example, the respect WTO members showed for open market commitments helped to prevent a cycle of protection and retaliation similar to that of the Depression era, ensuring affected countries the access to markets they needed for recovery, and minimizing damage to American farmers and manufacturing exporters.

b. Next Steps

The coming year marks an important turning point for the multilateral trading system. Three areas in particular will be central to our agenda.

First of all, we are developing the negotiating agenda of the future. The issues it will address are challenging and difficult, as the WTO's inability to launch a new Round at its Ministerial Conference in Seattle showed. But as in the past, we believe the most challenging tasks are those with the largest potential rewards for growth, the rule of law, and a more open and equitable world economy.

In this we are pleased that WTO members, per the existing commitment made in the Uruguay Round, have agreed on the opening of formal negotiations on agriculture and services, as well as continuing with a work program to ensure the long-term effectiveness of the WTO and its Agreements. The core elements of the negotiating agenda are before us, in the opening of talks on agriculture and services, as required under the "built-in agenda" WTO members agreed upon in 1995. These are the sectors in which world markets remain most distorted and closed, and in which the opening of trade will mean perhaps most to future prospects for rising living standards, technological progress, and sustainable development across the globe.

In agriculture, the WTO Agreement on Agriculture, with binding commitments on market access, export subsidies and domestic support, provides the basis on which to pursue further agricultural reform. We are now working with other countries to ensure negotiations in Geneva focus on substantive reform proposals such as eliminating export subsidies; reducing tariffs; expanding market access opportunities for products subject to tariff rate quotas (TRQs), including better disciplines on the administration of those TRQs; reducing trade-distorting domestic support levels; and ensuring that the operation of agricultural state trading entities are more market-oriented. We also want to ensure access for biotechnology products by ensuring that regulatory regimes are open, transparent, science-based and subject to due process.

In services, we are developing negotiating proposals for a wide range of sectors where our companies have strong commercial interests, including energy services, environmental services, audiovisual services, express delivery, financial services, telecommunications, professional services, private education and training, private healthcare, travel and tourism, and other sectors of great importance to the American economy and in particular its high-tech sectors. Broadly speaking, our objectives are to further remove restrictions on services trade and ensure non-discriminatory treatment. We also need to ensure that the commitments we obtain accurately reflect our companies' rapidly changing range of commercial activities, and reflect the many different means U.S. service providers use to meet the needs of their foreign customers, in particular as electronic commerce and the Internet develop and change international commerce.

Beyond these mandated negotiations, we have pressing needs to address market access concerns in non-agricultural products, electronic commerce, issues related to trade and the environment, trade and labor, trade facilitation, transparency in government procurement, and perhaps other topics as well. Thus, while there are a number of different options for proceeding with trade liberalization beyond agriculture and services, we are working to build consensus for a new Round.

To build such a consensus will not be a simple task. However, the outlines can be drawn, if WTO members prove willing to focus more fully on the shared benefits of success, and find the balance that allows us to move ahead. As the President has said, we will keep working toward consensus; we are willing to be flexible, but to succeed our trading partners must be flexible as well.

At the same time, we are focusing intensely on implementation of agreements. With the WTO now five years old, the transformation from the General Agreement on Tariffs and Trade is nearly complete, as commitments and concessions agreed in the Uruguay Round on such areas as Intellectual Property Rights Protection, Customs Valuation, Trade-Related Investment Measures and Industrial Subsidies near full implementation. As noted in the next section, we are monitoring WTO members' implementation of these commitments closely, and will not hesitate to use our dispute settlement rights when necessary to ensure compliance.

Finally, we are working towards institutional reform of the WTO. Our agenda here will center on the need for greater transparency - both externally, in terms of citizen access, and internally, in terms of the ability of all WTO members to participate fully in the work of the system.

The United States has been at the forefront of efforts to ensure that the WTO is open and accessible to the public. We have made progress and seek additional action by WTO members to provide better and more ready access to WTO documents, including dispute settlement documents. We also are building upon reforms to date to foster greater interaction with the NGO community and more effective outreach. Strengthening transparency in dispute settlement proceedings is also a very high priority. More generally, the United States will continue to urge its trading partners to make additional progress in enhancing the accountability and openness of the institution, and to promote transparency. And we will continue to work to ensure that the system does all it should to promote environmental protection and respect for internationally recognized core labor standards.

2. Regional and Bilateral Agenda

Together with and complementing our focus on the World Trade Organization has been a bilateral and regional agenda covering each part of the world and our major trading partners. Our record and future priorities in this flow from a general view that as we strengthen our trade relationships overseas, we create opportunities for growth, higher-wage employment and technological progress at home; sustainable development overseas; and broadly speaking, greater stability and stronger chances for peace.

a. China

One of the most challenging such initiatives, and also one in which we have made truly historic progress, is our trade policy with China. As we look to the year 2000, our top trade policy priority is the completion of China's WTO accession, and the approval of permanent Normal Trade Relation (NTR) status for China.

Our trade policy goals have been to open China's markets to American exports, support Chinese domestic economic reform, and integrate China into the Pacific and world economies. We have used a variety of means to achieve these goals, including commercially meaningful agreements that open opportunities for Americans.

This culminated last November in our historic bilateral agreement on China's accession to the WTO. When implemented, this agreement will open the Chinese economy to the world more fully than at any time: reducing and eliminating barriers to the American exports and strengthening guarantees of fair trade for American businesses and working people. It is an agreement, as the President has stressed, in the fundamental American economic and national security interest, and also in the interest of reform in China.

Our bilateral agreement is comprehensive. It covers tariff and non-tariff barriers to U.S. exports of industrial goods, agricultural products and services. China will also apply specific rules to address import surges, anti-dumping and subsidies practices and requirements for export performance, local content, offsets, and technology transfer. Market opening will begin from day one once China completes its accession. The phase-in of China's commitments will be limited to five years in almost all cases, and in many cases to one to three years. These commitments are specific and enforceable through WTO dispute settlement, U.S. trade laws, and other special mechanisms.

We will work closely with the U.S. Congress to secure permanent Normal Trade Relations treatment for China on the basis of this agreement. This is essential for our own interests.

WTO accession for China requires no substantial concessions by the United States. We make no change whatsoever in our current market access policies, and preserve our right to withdraw market access for China in the event of a national security emergency. Likewise, we amend neither our laws controlling the export of sensitive technology, nor our trade laws. But we must grant China permanent NTR or risk losing the full benefits of the agreement we negotiated, including broad market access, special import protections, and rights to enforce China's commitments through WTO dispute settlement.

All WTO members, including ourselves, pledge to give one another permanent NTR to enjoy the benefits available in one another's markets. If Congress were to refuse to grant permanent NTR, our Asian, Latin, Canadian and European competitors will reap these benefits but American farmers, businesses and workers may well be left behind.

Finally, of course, the full benefits of this agreement will require extensive monitoring and enforcement. With permanent NTR in place, WTO accession will substantially strengthen our enforcement capability with respect to China, for example through WTO dispute settlement, our ability to work with 134 other WTO members instead of acting alone, multilateral monitoring, and our own trade laws. We also are preparing for the largest monitoring and enforcement effort ever given to any trade agreement, as part of President Clinton's request for new enforcement and compliance resources at the USTR, the Commerce Department, USDA and other branches of government with enforcement responsibilities. This effort will cover China's obligations in the WTO and also import issues such as dumping and countervailing duties.

As we worked toward this bilateral agreement, we built upon a record of bipartisan support for a market-opening China trade policy, dating to the lifting of the trade embargo in 1972 and our Bilateral Commercial Agreement in1980, and including 17 specific agreements in the Clinton Administration. Three of the most significant of these agreements include:

Intellectual Property - In the early 1990s, China's status as the world's largest exporter of pirated CDs and CD-ROMs was one of the most problematic aspects in our trading relationship. This led to trade confrontations with China, including invocation of sanctions on two occasions. The United States ultimately negotiated agreements in 1995 and 1996 that led China to close the vast majority of pirate production facilities; cease the export of pirated products and significantly improve enforcement - the principal focus of the agreements.

Textiles - Textile transshipment and market access barriers have also historically been a problem in our textile trade relationship with China. While problems remain, two separate agreements, in 1994 and 1997, combined with sustained enforcement efforts by the U.S. Customs Service and the Administration, as well as imposition of triple charge penalties, have helped to mitigate these problems. Growth in China's textile exports to the United States also has slowed, a function of the textile agreement. The 1997 agreement also committed China for the first time to significantly reduce its textile import restrictions.

Agriculture - Most recently, our Agreement on Agricultural Cooperation in April of 1999 lifted long-standing bans on exports of American citrus, meats and Pacific Northwest wheat, imposed without a sound scientific basis. As in the cases of intellectual property and textiles, we are holding frequent consultations with the Chinese authorities charged with implementing the agreement.

b. Japan

With Japan, our largest Asian trading partner and the world's second-largest economy, we have worked throughout the Administration to promote reform, market-opening and deregulation that will both create opportunities for Americans and help to restore health to the Japanese economy. Thus, the Clinton Administration's comprehensive approach to economic relations with Japan, established under the United States-Japan Framework Agreement at the beginning of the Administration in 1993, addresses sector-specific barriers and underlying structural obstacles in the Japanese market, as well as macroeconomic issues.

Since 1993, the United States has concluded 38 market-opening agreements with Japan in such sectors as telecommunications, medical technology, autos, flat glass, agricultural products and insurance. The Administration has placed top priority on monitoring Japan's implementation and enforcing U.S. rights under these agreements. In 1997, the Administration complemented this approach with the launch of the U. S.-Japan Enhanced Initiative on Deregulation and Competition Policy to address the regulatory obstacles that impede market access in key sectors of the Japanese economy. The initiative has made substantial progress in deregulating and opening to competition the telecommunications, housing, energy, financial services, pharmaceuticals and medical devices sectors.

The Administration's multifaceted approach to Japan, has resulted in a 20 percent increase in U.S. exports to Japan. Between 1993 and 1997, before the onset of Japan's recession, U.S. exports to Japan increased by more than a third, with exports in those sectors covered by bilateral agreements growing twice as fast as overall exports to Japan. Japan was also the largest purchaser of U.S. private services exports in 1998 (latest data available), accounting for 12.5 percent of total U.S. private services exports. These gains are particularly significant given Japan's continued economic recession.

The United States and Japan reached three new trade agreements in 1999. In May 1999, the United States and Japan announced a package of new Japanese deregulation measures that substantially expands on the progress made in the first year of the Enhanced Initiative. In addition, the United States and Japan concluded a new bilateral telecommunications procurement agreement in July 1999 that ensures open, non-discriminatory, and transparent procurement by the four successor Nippon Telegraph and Telephone (NTT) companies, which together are the largest purchaser of telecommunications equipment in Japan. The two countries also entered into a series of agreed-upon measures to reform Japan's structural and regulatory policies which ultimately will make Japan a more attractive place for U.S. firms to invest.

Finally, in order to explore the underlying causes of the 1998 steel surge, the United States and Japan initiated a bilateral dialogue on steel. While import levels have fallen recently, the Administration remains concerned with structural issues in Japan, such as possible obstacles to competition and restructuring in Japan's steel market, which may have contributed to the oversupply of steel.

This work will continue in the year 2000, as we place a high priority on greater access for U.S. goods and services, promoting deregulation and structural reform, and advocating greater use of pro-competitive policies throughout the Japanese economy. We will continue to utilize bilateral consultations, WTO negotiations and dispute settlement, and the Asia-Pacific Economic Cooperation forum (APEC) to achieve our market opening objectives.

c. Other Asia-Pacific Trading Partners and APEC

Over the past seven years, the Clinton Administration has worked toward the creation of a broadly more open and vital regional Asia-Pacific trading environment, through regional negotiations beginning with the historic Asia-Pacific Economic Cooperation forum (APEC) Leaders Meeting in Seattle in 1993; the opening of markets in Korea, ASEAN, India, Australia and other major trade partners; work toward full normalization of trade relations with the three nations and 100 million people of Indochina; strengthened rule of law regionwide, with a special focus on intellectual property; and economic liberalization in the aftermath of the 1997-99 Asian financial crisis.

Specific accomplishments here include the landmark Information Technology Agreement begun in APEC and adopted by the WTO in 1997; 13 bilateral agreements to open markets to beef, automobiles, pharmaceuticals and other products in South Korea; 20 bilateral agreements with the members of the Association of Southeast Asian Nations (ASEAN); completion of Bilateral Commercial Agreements with Cambodia and Laos (with NTR still pending for Laos but granted for Cambodia) and our negotiation of an agreement in principle on market access in Vietnam last year. The APEC Leaders Meeting also inaugurated a program of regional discussions on trade liberalization. This has included sectoral initiatives as well as a broader commitment to regional liberalization under the Bogor Declaration of 1994, calling for "free and open trade in the region" by 2010 for developed countries and 2020 for developing countries; programs on trade facilitation, electronic commerce, and other issues; and the building of consensus on tariff liberalization in 15 other industrial sectors.

These efforts have been complicated by the unprecedented economic crisis which struck Asia between 1997-1999. The region has begun its recovery, with all countries in the region beginning to register positive growth in 1999. This rapid recovery was in no small part due to the structural reforms undertaken in many of the economies most affected by the crisis, as well as the region's abiding commitment to retain open market policies as agreed in WTO commitments and national policies as well. This enabled trade in the region to expand in 1999, and avoided a destructive spiral of protectionism such as characterized the world economy in the 1930s.

As the region emerges from this crisis, it is crucial that economic and structural reform proceeds. Our trade policies will generally support this goal. We will work to ensure that APEC continues making specific and concrete strides toward achieving its goal of open markets in the region, and just as importantly, to continue to play a leading role in the global trading system, by acting as a catalyst for multilateral trade liberalization. We also will continue working with our individual trading partners, and closely monitor the trade and investment reforms set out in the International Financial Institutions (IFI) stabilization programs in the region. Effective implementation of these reforms are not only central to continued recovery in a number of Asia Pacific economies, but have implications for a number of areas critical to regional trade, such as improved market access, transparency, economic deregulation, attracting investment efficiently, and allocating public and private resources based on market disciplines.

d. Western Hemisphere

The 1990s marked a revolutionary shift in our trade relations with our neighbors in the Western Hemisphere. As nations throughout the Americas strengthened consensus on democratic government and open markets, we have fundamentally strengthened our trade relationships with our closest neighbors and built consensus for a long-term vision of hemispheric unity and shared prosperity.

At the outset of the Clinton Administration, we completed negotiation of, and secured Congressional approval for, the North American Free Trade Agreement (NAFTA). This created the world's largest and most comprehensive free trade area, and is the first agreement to mandate cooperation to protect the environment and workers' rights, and to provide sanctions for ineffective enforcement of labor and environmental commitments.

Since the NAFTA, trade among the three signatories has expanded by more than 85 percent, exports to Canada are up 66 percent, and U.S. exports to Mexico have doubled, making Mexico our second largest trading partner after Canada. And as this agreement has gone into effect, we have made additional gains in our relationships with Canada and Mexico, including agreements on softwood lumber, magazines and agricultural market access for cattle, wheat and other products in Canada. Today, a third of all America's exports are to these two countries.

At the same time, we will continue to attach a high priority to the full and effective implementation of the North American Free Trade Agreement. Here we maintain oversight and management of the Agreement through a comprehensive trilateral work program involving more than 25 different committees, working groups and their subsidiary bodies. The Department of Labor and the Environmental Protection Agency respectively coordinate the work of implementing NAFTA's side agreements on labor and the environment. Overall direction to NAFTA implementation is provided by the annual NAFTA Commission.

And we continue, of course, to pursue active bilateral agendas with both our NAFTA partners. This will include implementation of our bilateral agreements on agriculture, lumber, tourism and sport fishing, and magazines with Canada; in Mexico, enforcing intellectual property rights and building a cooperative enforcement program; gaining greater access for U.S. telecommunications service providers; addressing the dispute over the NAFTA transition to open trade in sugar; pursuing greater market access for U.S. high fructose corn syrup exporters; effectively addressing barriers to U.S. agricultural exports as they may arise; and ensuring that Mexico's customs valuation procedures are not unfair impediments to trade or inconsistent with the WTO. Likewise, we have pursued a strong market-opening policy throughout the hemisphere, including agreements to open markets to autos in Brazil, strengthen intellectual property protection regionwide, and promote the rapid development of electronic commerce.

With respect to our neighbors in the Caribbean and Central America, we are working with Congress for legislation to enhance the Caribbean Basin Initiative or CBI, by extending its scope and product coverage. For fifteen years, CBI has been fundamental to growth, economic diversification, and strengthening trade ties with Central America and the Caribbean island nations. It has made a substantial contribution in particular to the support of peace in Central America, and also has helped to make the beneficiary nations the destination for $19 billion in American exports. Its enhancement is of fundamental importance to help the Caribbean countries maintain their competitiveness and growth, and continue strengthening this relationship.

Most broadly, at the Summits of the Americas in Miami and Santiago, we embarked upon a historic mission, launching negotiations - including every hemispheric democracy - to create a Free Trade Area of the Americas (FTAA). This would eliminate tariffs and non-tariff barriers to trade in goods and services throughout the Hemisphere and establish a single set of rules for fair trade in the region, and fulfill a two-century old dream of a hemisphere united by shared commitment to democracy, shared prosperity and mutual benefit.

This commitment has already led to the implementation of specific business facilitation measures, easing trade with all our major hemispheric partners. Despite a period of economic stress in the aftermath of the financial crisis, the negotiations have moved forward on schedule, as evident in the unanimous decision of the 34 trade ministers at the Toronto Ministerial meeting of the Free Trade Area of the Americas in November 1999 to adopt an ambitious negotiating agenda for the next 15 months. The region also joined at Toronto in seeking the global elimination of agricultural export subsidies in the agricultural trade negotiations occurring in the WTO.

With the Third Summit of the Americas scheduled for April 2001 in Quebec, Canada, we are intensifying the FTAA negotiations this year. Our agenda concentrates in four areas: negotiating draft texts of the chapters of the Agreement by April 2001; carrying out a continuing program of business facilitation; addressing the views and concerns of civil society; and deepening our region's understanding of the implications and benefits of electronic commerce for our societies.

Among the most prominent issues raised by elements of civil society is that of ensuring that our trade liberalization policies and our environmental protection policies are mutually supportive. On November 16, 1999, the Administration issued the White House Policy Declaration on Environment and Trade, along with an Executive Order (13141) in which the President directed USTR and the Council on Environmental Quality to conduct environmental reviews of negotiations of certain trade agreements. Accordingly, this year the Administration will initiate its environmental review of the FTAA. This review will serve to inform both the public and our negotiators of the environmental considerations that must be taken into account as we formulate our negotiating positions. As we implement the principles of the Declaration on Environment and Trade, we also will work with other stakeholders to address concerns including issues of worker rights, transparency, and consumer protection.

e. Africa

The past seven years have been one of the most innovative and productive periods in the history of our trade relationship with Sub-Saharan Africa. While at present, our trade relationship with the continent is relatively small (with two-way goods trade totalling $19.6 billion last year, and a market share of less than 8 percent), sub-Saharan Africa, with a population of approximately 640 million people, over 10 percent of the world's population, represents a market of great potential for the United States.

As many countries in Africa are institutionalizing new democratic governments and economic reforms aimed at creating more competitive, market-oriented economies, President Clinton has opened a strategic initiative which helps promote these reforms, strengthens our ties to Africa's leading reformers, promotes regional economic integration, and ultimately will help create a new and far deeper American economic partnership with Africa. This has included initiatives at the USTR to create an Office of African Affairs, and to expand the Generalized System of Preferences by over 1700 tariff lines for the least developed nations.

In 1999, this initiative led to our first Trade and Investment Framework Agreements (TIFAs) with African partners. TIFAs with South Africa and Ghana established permanent mechanisms for addressing trade and investment issues and for identifying and eliminating or reducing barriers to trade and investment. We signed a third TIFA with Nigeria in February of 2000, and hope to build on this success through a similar agreement with the West African Economic and Monetary Union (WAEMU). The TIFAs will be used to address market access barriers to U.S. trade and investment and to identify means to expand and diversify trade between the United States and sub-Saharan Africa.

Our principal policy goal for the year 2000 is passage of the African Growth and Opportunity Act (AGOA). The Act has received bi-partisan Congressional support and passed the House of Representatives in July 1999 and the Senate in November 1999, and now is awaiting action by a House-Senate Conference Committee. Enactment of AGOA would provide increased market access for products from reforming sub-Saharan African countries, institutionalize an annual U. S.-Sub-Saharan Africa Trade and Economic Cooperation Forum, and encourage the establishment of funds and guarantees to support private sector and infrastructure development in Africa.

Other U.S. Government agencies are working under the Partnership initiative or other programs to provide debt forgiveness, technical assistance and expanded opportunities for transportation and energy services, Internet and electronic commerce capacity, support for combating HIV/ AIDS and other diseases, and promotion of enhanced business and economic relations. These programs complement each other by helping to create an environment for trade and investment-based economic growth. This in turn will contribute to sustainable development, help promote more stable and democratic governments and will make countries better able to combat serious cross-border threats such as infectious diseases, environmental degradation, narcotics trafficking, and terrorism.

The United States also will continue to intensify its efforts to assist sub-Saharan African countries to increase institutional capacity to participate more fully in the multilateral trading system, as part of a general commitment to ensure that the least developed countries have both greater access to markets and more ability to take advantage of the opportunities the WTO offers. We are working directly with a number of African partners in this, for example in our joint submission with Nigeria, Lesotho, Senegal, Zambia and Bangladesh of a proposal to revitalize the capacity-building and technical assistance efforts of the WTO and other international institutions. This new approach will begin with the Integrated Framework, which requires cooperation between the IBRD, IMF, UNCTAD, UNDP and donor countries. We also are sponsoring regional workshops on WTO issues, with one to be held shortly in Nigeria.

f. Middle East and North Africa

In the Middle East, the advances in the peace process, together with a broad regional momentum towards reform have enabled us to develop an innovative set of duty-free programs to help stimulate investment, growth and regional economic integration. By opening regional markets, and helping to spur greater trade and investment among the Middle Eastern nations, trade policy will help to give participants in the peace process greater concrete stakes in its long-term success.

The foundation of our work is our existing Free Trade Agreement with Israel, under which bilateral trade has quintupled to over $17 billion since 1985. We are, of course, working to further strengthen this relationship as we address bilateral intellectual property, agricultural market access, and telecommunications issues; and we are seeking opportunities to extend the area of prosperity and open trade it has created.

In 1996, for example, the Administration strengthened the trade and peace process by extending duty-free treatment under the U. S.-Israel FTA to products from the West Bank and Gaza Strip. Under this arrangement, the United States has received assurances from the Palestinian Authority of reciprocal duty-free treatment of U.S. products entering those areas.

We also in 1998 initiated a "Qualifying Industrial Zone" program, with the cooperation of the late King Hussein of Jordan and then-Israeli Trade Minister Natan Sharansky. Under this program, several specific Israeli-Jordanian industrial projects employing nearly 10,000 people now receive duty-free treatment in the United States. In the coming year, we intend to build on this under the umbrella of the Middle East Peace Process by extending the Qualified Industrial Zone (QIZ) program in Jordan to the Aqaba-Eilat area, and by working to enlist Egyptian cooperation in establishing QIZs.

At the same time, we will continue to deepen our bilateral relationships with countries in the region, such as Egypt, Jordan, Turkey and Morocco through our established Trade and Investment Councils. The U.S. Government aims in 2000 to complete a Trade and Investment Framework Agreement (TIFA) with Tunisia and begin TIFA negotiations with Algeria in the next year. And we are promoting WTO accession for a number of Middle Eastern nations, supporting Jordan's successful accession to the WTO in 1999, significant progress with Oman, as well as negotiations with Saudi Arabia and soon Lebanon. In each case, the Administration will seek to ensure that the trade regimes of these economies are consistent with WTO requirements, and that commitments are implemented upon accession.

g. Western Europe

Our trade relationship with Western Europe is of fundamental importance to America's economic and national security interests. It is the largest regional trade and investment relationship we have anywhere in the world: bilateral goods and services trade likely reached $500 billion last year; 44 percent of our foreign direct investment is in the EU; and likewise 59 percent of the EU's FDI is in America. In this relationship we have opportunities to find new areas in which we can open markets and create export opportunities. At the same time, we have very substantial disputes with the EU, in which we vigorously assert American rights and interests.

Our work with the European Union since 1993 has addressed both of these areas. In our disputes, we used all means at our disposal to protect our rights and interests. We have, for example, used WTO dispute settlement, including retaliation as authorized by panel decisions, to enforce our rights in agricultural disputes over bananas and beef hormones. We also have strongly asserted American interests in cases of discriminatory regulation such as those relating to hushkits. In these cases and in others, we will remain steadfast in ensuring that the EU meets its commitments. By the same token, we also have responded strongly when the EU has challenged U.S. measures or practices, such as its WTO dispute against the Foreign Sales Corporation (FSC) provisions of U.S. tax law. This is a matter of high priority for us. We need to find a constructive solution to the Appellate Body's recent decision against certain provisions of the FSC. We respect our WTO obligations, and will seek a solution that ensures that U.S. firms and workers are not at a competitive disadvantage with their European counterparts.

Notwithstanding our disputes, we have also found common ground and shared interest on a broad range of interests. We have negotiated 17 specific trade agreements with the EU, in areas from government procurement to electronic commerce, regulatory policy and other issues. These have enabled us to capitalize on areas of common interest, notably through our conclusion of a Mutual Recognition Agreement (MRA) which improves market access, reduces costs and shortens the time required to market many U.S. products in the EU, while maintaining our current high levels of health, safety and environmental standards. Product sectors covered by the US-EU MRA now represent over $50 billion in annual two-way trade. The MRA will eliminate duplicative testing and certification for products in the following sectors: telecommunications and information technology equipment; network and electromagnetic compatibility (EMC) for electrical products; electrical safety for electrical and electronic products; good manufacturing practices (GMP) for pharmaceutical products; product evaluation for certain medical devices; and safety of recreational craft. Altogether, this work has helped spark a $44 billion increase in goods exports to the EU since 1992, and a $32 billion increase in exports of services between 1992 and 1998.

We took this work further at the U. S.-EU Summit of May 1998, launching the U.S.-EU Transatlantic Economic Partnership (TEP), which is designed to reduce barriers to bilateral U. S.-EU trade and to improve U. S.-EU cooperation on a range of trade issues. The TEP has enabled us to address seven broad areas, including technical standards; agriculture; intellectual property; government procurement; services; electronic commerce; and shared values in fields such as trade-related labor and environmental issues. In the year 2000, we and the EU intend to bring as many TEP activities to fruition as possible. We will aim in particular for early results in areas involving transatlantic regulatory cooperation, including such specific steps as a mutual recognition agreement on marine safety equipment; a pathbreaking series of mutual recognition arrangements for insurance, architect services and engineering services; and full implementation of a pilot project to highlight areas of congruence and difference in how U.S. and EU authorities regulate bioengineered products.

h. Central Europe and the New Independent States

A central focus of Administration trade policy since 1993 has been support for efforts by new democracies to make a successful transition away from communist central planning practices. Thus, we have sought to develop strong, healthy trade and investment relations with the countries of Central Europe and Eurasia, and encourage them to join the WTO.

In pursuit of these goals, we have negotiated trade agreements and investment treaties throughout Central Europe and Eurasia. These agreements - Bilateral Investment Treaties with such nations as Albania, the Baltic States, Georgia, Romania and others; agreements on intellectual property with Bulgaria, Hungary, Latvia, Lithuania and others; Bilateral Commercial Agreements and other measures - have led countries of the region to take key steps in liberalizing their trade regimes and removing barriers to investment. In addition, the Administration has encouraged these countries to join the WTO, thus deepening economic reform and supporting the development of markets and the rule of law.

Since 1993, eight countries in the region have become members of the WTO and another 14 states - including Russia and Ukraine - applied for WTO membership. Cases such as that of Bulgaria show how important this has been for lasting reform. More recently, Estonia, the Kyrgyz Republic and Latvia have entered the WTO; Albania, Croatia and Georgia are expected to join in 2000.

We also have supported the efforts many of these nations have made to join the European Union. However, we also have insisted that EU accession take into account our concrete trade interests. As a priority in 2000, we are thus pursuing consultations with the ten Central European countries in accession negotiations with the EU, seeking to address the problem of tariff differentials faced by U.S. exporters vis-a-vis EU exporters to those countries.

The Administration also will work with Congress to achieve passage of the "Southeast Europe Trade Preference Act" (SETPA). This bill, creating trade and export opportunities for countries in the Balkans committed to peace and reform, is an integral part of the commitments made by the United States at the Sarajevo Summit in July 1999 to help bring stability and economic development to Southeast Europe.

B. BUILDING THE 21ST CENTURY ECONOMY

Given America's leading position in the high-tech industries, and the importance of a strong high-tech sector to our national competitiveness, the Clinton Administration has made a special focus of protecting the results of our research and development, and opening markets for the high-tech sector through a program of strengthening respect for intellectual property, opening markets across the spectrum of high-tech industries, helping countries develop pro-competitive regulations in fields like telecommunications, and facilitating technological advance in new fields through initiatives on emerging fields such as electronic commerce and biotechnology.

Major specific achievements include:

Intellectual Property Rights - Respect for intellectual property rights is central to technological innovation. Creative and innovative products that rely on intellectual property protection, such as computer programs and motion pictures, are typically very costly to develop but relatively cheap to copy. Our use of the "Special 301" law and the Uruguay Round's TRIPS agreement has helped fundamentally to improve intellectual property standards worldwide. Today, the vast majority of our trading partners have passed modern intellectual property laws and are improving their enforcement of these laws.

We are now monitoring WTO members' implementation of their TRIPS Agreement obligations and will enforce these commitments in the most effective way. We also are implementing campaigns against worldwide piracy of new optical media technologies, and against end-user piracy of software. These issues are integral parts of our regional negotiating agenda in Asia, Latin America, Europe, Africa and the Middle East, together with development of compliance plans, technical assistance and other measures.

At the same time, we are ensuring that trade policy remains sufficiently flexible to respond to public health crises such as AIDS. In 1999, we developed an arrangement to ensure more direct interaction between USTR and HHS on health-related intellectual property issues. When a foreign government expresses concern that U.S. trade law related to intellectual property significantly impedes its ability to address a health crisis, USTR will seek substantive information from HHS on the health conditions prevailing in that country. This enables the Administration to respond fully and appropriately to public health crises, within the context of the TRIPS Agreement.

Sectoral Market-Opening - We also have an active sectoral high-tech agenda. This opened with a series of bilateral high-tech agreements with Japan, covering semiconductors, cellular phones, medical technology and other products, and moving on to such areas as basic telecommunications, wireless cable, direct-to-home satellite services and cable TV, medical equipment and pharmaceuticals, financial services, energy and other fields. This led to major achievements and goals including:

-- Semiconductors: Beginning with implementation of the 1991 U. S.-Japan Semiconductor Agreement and its successor agreements in 1996 and 1999, we have helped to raise the foreign share of the Japanese market, which had averaged 16.7 percent in 1992, to over 30 percent since the first quarter of 1997. Moreover, the European Union and Korea's elimination of semiconductor tariffs to become participants in the 1996 agreement fulfilled longstanding U.S. goals, paving the way for the Information Technology Agreement which substantially eliminated semiconductor and most other information industry tariffs worldwide.

-- Information Technology Agreement: Using the Semiconductor Agreement as a base, we reached a landmark multilateral agreement in the much broader Information Technology Agreement (ITA) of 1997. By 2000 for the majority of countries, it will eliminate all tariffs on $600 billion worth of goods: 95 percent of the world production of semiconductors, computers, telecom equipment, integrated circuits and other goods associated with the Information Superhighway. This is a step important for its vast size - these products make up about one in every thirty dollars of world GDP - and its potential to promote economic growth and freedom of information. We are now seeking consensus on an expansion of this agreement - the "ITA II" - to include even more products, and to address problems related to trade in the sector, including standards and non-tariff measures.

-- Agreement on Basic Telecommunications Services. This Agreement, which came into force in February, 1998, opened up 95 percent of the world telecommunications market to competition, promoting pro-competitive regulatory principles in all participants and covering the vast majority of nearly $1 trillion in telecommunications trade. In just two years, the ability of dominant carriers in foreign countries to keep rates artificially high and depress demand for telecommunications services and electronic commerce has been significantly eroded, helping to bring down rates dramatically, to levels as low as 10 to 20 cents per minute, for calls between the United States and countries such as Japan and Mexico. And as a result of the broader market access and increased investor stability provided by WTO commitments, new investment in undersea fiber optic cables may result in a fifty-fold increase in capacity by the end of 2001, compared to mid-1999. The rapid expansion of the Internet into more and more parts of the world, at higher capacities and faster speeds, is due in significant measure to the market-opening path on which this agreement has placed the world's trading nations.

-- Agreement on Financial Services: This Agreement was concluded in December 1997 and came into effect in March, 1999. Covering nearly $60 trillion in banking, insurance and securities transactions each year, it has already helped U.S. service suppliers expand commercial operations and find new market opportunities across a wide spectrum of developed country and emerging markets, through both investment in foreign banking institutions, brokerage and insurance sectors and cross-border trade. Growth potential for competitive U.S. financial services suppliers is high, including helping emerging markets modernize their financial services systems and improving their infrastructure for trade in goods and services.

Global Electronic Commerce - In accordance with the President's Global Electronic Commerce initiative, the Administration seeks to preserve electronic transmissions over the Internet as duty-free. At the Second WTO Ministerial Conference, in May of 1998, we won agreement on this duty-free- cyberspace initiative, and we will push for its further extension, with a goal of making it permanent at the earliest possible time.

We also have begun a longer-term work program, whose goals include ensuring that our trading partners avoid measures that unduly restrict development of electronic commerce; ensuring that WTO rules do not discriminate against new technologies and methods of trade; according proper application of WTO rules to trade in digital products; and ensuring full protection of intellectual property rights on the Net. In addition, the United States has initiated a capacity-building program, the Internet for Economic Development Initiative, to help developing countries improve their ability to use the Internet.

Likewise, in our negotiations toward the Free Trade Area of the Americas, at APEC and in the Transatlantic Economic Partnership, we have created special committees to advise us on ways to ensure all participants can take maximum advantage of electronic commerce.

Biotechnology - American agriculture and medicine are among the chief sources of innovation in this emerging field. These technologies have remarkable potential, for example, to reduce the use of pesticides and ease pressure on land, water and other natural resources. USTR thus seeks to ensure that farmers and ranchers can use safe, scientifically proven techniques to make agriculture both more productive and friendly to the environment, without fear of encountering trade discrimination. However, such advances also raise consumer concerns which must be met through fair, transparent, timely and science-based regulatory policies that ensure the strongest protection for public health and the environment in the United States and worldwide. This is a priority for us in the Transatlantic Economic Partnership negotiations and in developing our agenda for future WTO negotiations.

C. ENFORCING THE RULE OF LAW IN TRADE

All of our negotiations and agreements since 1993, and each of the initiatives now underway, are predicated on full implementation of commitments. This ensures confidence in trade policy, and allows both the United States and our trading partners to gain the full benefit of our agreements. The Administration has respected our own commitments in this regard, and we expect the same of our trading partners.

Consequently, we have devoted more attention and resources than ever before to monitoring and enforcement. We reach our goals through a variety of means, including:

-- We assert U.S. rights through the World Trade Organization, including the stronger dispute settlement mechanism created in the Uruguay Round, and the WTO Committees and Bodies charged with monitoring implementation and surveillance of agreements and disciplines.

-- We vigorously monitor and enforce our bilateral agreements.

-- We invoke U.S. trade laws in conjunction with bilateral and WTO mechanisms to promote compliance.

-- We provide technical assistance to trading partners, especially in developing countries, to implement key agreements like the Agreement on Basic Telecommunications and TRIPS.

-- Through NAFTA's trilateral work program and use of NAFTA's dispute settlement mechanism, we seek to promote America's interests under that Agreement, as well as using its labor and environmental side agreements to promote fairness for workers and effective environmental protection.

-- Through the Special 301 law, we identify priorities for intellectual property enforcement each year;

-- The Generalized System of Preferences also contains conditions for beneficiary countries, including respect for intellectual property rights and core labor standards, which we have used with respect to a number of developing countries.

In the course of these monitoring efforts, the United States focuses in particular on foreign practices that could pose serious problems to the international trading system if they were to proliferate in many markets. Therefore, the Administration has adopted a strategic enforcement plan - aimed not only at challenging existing barriers but also at preventing the future adoption of similar barriers around the world. This has enabled us to succeed in more than 100 enforcement actions over the past seven years.

In this work, we have used the combination of formal dispute settlement and U.S. trade laws to enforce the agreements we have negotiated. With respect to our domestic laws, we have aggressively used Section 301 of the Trade Act of 1974, "Special 301" for intellectual property rights enforcement, "Super 301" for dealing with barriers that affect U.S. exports with the greatest potential for growth, Section 1377 of the Omnibus Trade and Competitiveness Act of 1988 for telecommunications issues, and Title VII of the 1988 Act for enforcement of procurement agreements.

At the WTO, the United States has been the world's most frequent user of dispute settlement procedures. In the last 5 years, we have filed 49 complaints at the WTO, thus far settling favorably 10 cases and winning 13 others through WTO panels and the Appellate Body. We have won favorable settlements and panel victories in virtually all sectors, including manufacturing, intellectual property, agriculture and services.

The accomplishments of the WTO dispute settlement mechanism in the last five years particularly stand out when compared to the record of the prior mechanism under the GATT. Under the GATT, panel proceedings took years, the defending party could simply block any unfavorable judgment, and the GATT panel process did not cover some of the agreements. Under the WTO, there are strict timetables for panel proceedings, the defending party cannot block results unfavorable to it, and there is one comprehensive dispute settlement process covering all of the Uruguay Round agreements. The first five years have demonstrated that a WTO Member cannot violate its obligations without consequences. Moreover, if a WTO Member violates its intellectual property or trade in services obligations, another Member can be authorized to retaliate against the goods of the violating Member. The Administration has demonstrated its commitment to enforce this in practice by imposing retaliatory trade measures against the European Union for its failure to comply with WTO rulings on bananas and on beef from cattle treated with hormones.

To carry out this work as effectively as possible, in particular with the prospect of enforcing our bilateral agreement with China on WTO accession, we have added new personnel to carry out a larger enforcement workload, without compromising our efforts to negotiate further market access in key markets. Specifically, we have created an Enforcement unit headed by an Assistant U.S. Trade Representative, and in FY 1998 Congress provided us with funds to hire seven new attorneys to handle the added volume of work at the WTO and elsewhere. We also work closely with the Departments of Commerce, Agriculture, State, Treasury, the Customs Service and other agencies involved in enforcement of trade laws and agreements. President Clinton's FY 2001 budget request will give the USTR, together with these other agencies, critical additional resources for enforcement.

D. HONORING OUR VALUES

The Clinton Administration has sought to ensure that the trading system honors our values even as it raises living standards. This includes high standards of environmental protection, the observance of core labor standards, and high levels of consumer protection. Our record at home over the past thirty years has shown clearly that as we open trade and promote economic growth, we also can ensure strong and rising standards of protection for our air and water, strengthen observance of core labor standards, and protect consumers. That is a principle we advance in the world economy as well.

1. Trade and Environment

Our commitment to this principle was made clear at the outset of the Administration, with the creation and effective implementation of the North American Agreement on Environmental Cooperation in conjunction with the NAFTA. Cooperative activities under this agreement have improved environmental protection in a number of different areas - for example, in conservation of North American birds; creation of a North American Pollutant Release Inventory; development of regional action plans for the phase-out or sound management of toxic substances, including DDT, chlordane, PCBs and mercury; and creation of a trilateral working group that has improved the enforcement of environmental protection laws. We also benefitted from the US-Mexico agreement which established the Border Environment Cooperative Commission (BECC), and from the North American Development Bank (NADBank) created in conjunction with NAFTA. While much work remains ahead, the BECC has fifteen environmental infrastructure projects under construction today, funded in part by the North American Development Bank, including the first wastewater treatment plants in Juarez.

We also have led at the WTO. Our work in the Uruguay Round ensured that the WTO Preamble cites sustainable development as a fundamental goal of the system, explicitly recognizes the right of all its members to set levels of environmental protection and consumer safety, including at even higher levels than common international standards, and helped to create the creation of the Committee on Trade and the Environment. This focus on environmental issues at the WTO has continued ever since, with discussions in the Committee on Trade and the Environment; last year's convening of a first-ever WTO High Level Symposium on Trade and Environment in Geneva; and the encouragement of closer collaboration between the WTO and the UN Environmental Program, which reached a cooperation framework agreement in December of 1999.

In the future, as President Clinton emphasized in November 1999, in issuing the White House Policy Declaration on Environment and Trade, our efforts to expand trade are consistent with our strong commitment to promoting environmental protection world wide. Our participation in the work of the WTO, as well as in other fora, will be guided by the principles in the declaration. We also will implement the November 1999 Executive Order on Environmental Reviews of Trade Agreements. In this connection, the Office of the U.S. Trade Representative and the Council on Environmental Quality, in consultation with other agencies, are developing guidelines for the implementation of the order.

In this work, cooperation with our trading partners on trade and environment issues is essential, given the importance of these issues in attaining a more sustainable and prosperous global economy. We will continue this through our active participation in the Free Trade Area of the Americas negotiation, APEC, the Transatlantic Economic Partnership, the relevant committees of the WTO (such as the Committee on Trade and Environment), and other multilateral and regional fora. In these efforts we will continue to emphasize the importance of ensuring that trade rules are supportive of high environmental standards, and we will pursue opportunities where trade liberalization can yield direct environmental benefits as well as trade benefits. For example, we will continue to work to address the problem of fishery subsidies that contribute to over-fishing, as well as agricultural export subsidies and barriers to trade in environmental goods and services.

2. Trade and Labor

Our trade policy also has complemented and supported efforts to ensure respect for internationally recognized core labor standards.

In the year ahead, the Administration will continue the effort to focus the WTO's attention on the relationship between trade and labor. At the Singapore WTO Ministerial Conference in 1996, the WTO for the first time recognized the importance of labor standards and cooperative work with the International Labor Organization, while clearly separating protectionist trade policies that would, among other things, harm development prospects in poorer countries. We wish to build on this to ensure that the trading system works more effectively with the International Labor Organization, with businesses and with citizen activists to help ensure observance of internationally agreed core labor standards - banning forced labor and exploitive child labor, guaranteeing the freedom to associate and bargain collectively and eliminating discrimination in the workplace.

Thus, and in conformity with our statutory mandate under the Uruguay Round Agreements Act, we have proposed closer collaboration between the WTO and the International Labor Organization and the establishment of a Working Group on Trade and Labor at the WTO. We also have raised labor standards in country policy reviews under the Trade Policy Review Mechanism, which examine each WTO member's trade regime and offers other members an opportunity to raise questions.

We also are enforcing provisions of existing U.S. law that provide for withdrawal of U.S. trade preferences in the case of clear violations of worker rights, notably through enforcement of the provisions in the recently reauthorized Generalized System of Preferences, which make benefits conditional on respect for core labor standards. One example is the case of Pakistan, where we partially removed GSP trade preferences from Pakistan over child labor concerns. In addition, we also worked through the Labor Department and the ILO to assist countries in developing long-term solutions to the problem, by addressing specific Pakistani industries. As a result, 7,000 children have been removed from jobs stitching soccer balls and 30,000 children from jobs knotting carpets. We also have used GSP to achieve substantial progress on labor issues in Swaziland, Honduras and several other countries.

Several specific agreements also have offered us new ways to address labor issues. For example, the North American Agreement on Labor Cooperation under NAFTA has generated our largest cooperative effort on labor anywhere in the world. It covers occupational safety and health, employment and training, industrial relations, worker rights and child labor and gender issues, and allows citizens to draw attention to labor practices and improve working conditions. This has contributed to important tangible benefits. For example, a labor tribunal reversed itself and granted a union registration in the Maxi-Switch case; a secret ballot union representation vote was conducted for the first time in Mexico in the GE case, and by government employees in the Fisheries Ministry. Mexico's Federal Government intervened in a positive effort to resolve the very contentious Han Young case; and the Mexican Supreme Court struck down state and federal restrictions on union organizing as unconstitutional. Mexico also has taken other steps to advance the rights of workers, including promulgating new safety and health regulations and increasing significantly funding for enforcement of worker rights, including in child labor.

A similar recent case is our textile agreement with Cambodia, which includes provisions encouraging improved enforcement of its labor laws in the apparel sector, in exchange for certain increases in textile market access.

3. Trade and Consumer Concerns

Likewise, trade policy contributes substantially to consumer policy goals. Our open-market policy at home brings fundamental consumer benefits, including the creation of competition which dampens inflation and leads to better prices, quality and choice. This openness to imports is important for all American families, but most of all the poorest among us.

To build upon these fundamental principles of trade policy, and to ensure that they fully harmonize with high standards of consumer protection, we have engaged consumer groups and representatives in broad policy discussions. A principal venue for this is USTR's participation in the Transatlantic Consumer Dialogue (TACD). Created a year ago to give advice to the United States and the EU on the Transatlantic Economic Partnership, the dialogue comprises approximately 65 consumer groups from 16 countries. On both sides of the Atlantic, the groups have long track records of achievement in the consumer protection and safety fields.

In its short history, the group has met three times, focusing on three issue areas: food safety, electronic commerce and trade. Both the EU and the United States have benefitted from the dialogue on these complex issues and from the policy resolutions put forward as consensus positions of the consumer groups. In addition to this interaction, the U.S. Government drew important lessons from its meetings with the U.S. TACD Steering Group. At four such meetings last year, the group discussed policy positions, attendance at the U. S.-EU Summit, and the government's responses to policy recommendations.

At the last TACD meeting, held in Washington in February 2000, consumer organizations noted government progress in areas such as access to essential medicines in developing countries, eco-labeling, fair-trade labeling and regulatory cooperation. A continued priority will be ensuring that trade rules address consumer concerns including maintaining the highest standards of public health and safety.

E. TRANSPARENT AND ACCESSIBLE INSTITUTIONS

Finally, U.S. trade policy has sought to advance basic American concepts of good governance, by making the institutions of trade more transparent, accessible and responsive to citizens, including, as the President has said, new voices.

One principal forum here is the WTO, where we are seeking agreements on more rapid release of documents, ensuring that citizens and citizen organizations can file amicus briefs in dispute settlement proceedings, and that dispute settlement proceedings be open to public observers. In the interim, President Clinton has made a standing offer to open any dispute panel involving the United States to the public, if our dispute partner agrees.

Absent such changes, public confidence in the system will erode. Last year, and most recently at our US-EU Summit in December, we proposed that we and the EU, as the largest users of WTO dispute settlement, immediately agree in our transatlantic disputes to open the panel hearings to public observers. We hope that the EU will accept this proposal promptly.

Likewise, we are working to improve the WTO's internal processes to ensure that all members, including the smallest and least developed, can fully participate. Since 1986, when the Uruguay Round opened, the WTO has grown by over 50 percent, from 90 to 135 members, with more to follow this year. It is not only larger but more diverse, ranging from the world's most developed to its poorest countries, and covering each point of the spectrum in between. Each of these members has different priorities and interests, adding to the complexity of negotiations. Over time we should develop a more effective means of ensuring both participation and efficient consensus-building. Director-General Moore has begun consultations with WTO members toward this end. However, as we address the issue, we must be careful not to alter the principle of consensus for decision-making in the WTO. And we also must ensure that such procedural discussions do not distract us from taking immediate action on core policy issues.

A second forum is the FTAA negotiations, in which two years ago we created a Civil Society Committee to give business associations, labor unions, environmental groups, student associations, consumer representatives and others a formal means of conveying concerns and ideas to all of the governments involved in the talks. This Committee has received 69 submissions from all over the hemisphere, including from labor organizations, environmental groups, Chambers of Commerce, professional associations, academics and individual citizens. These submissions were reviewed by the FTAA Ministers in Toronto, contributing to our overall development of policy for the FTAA. The Committee will remain a feature of the FTAA talks as they proceed in the coming year.

And we have worked throughout the Administration to increase the participation of small and minority enterprises (SMEs) in trade policy. Especially as electronic commerce grows, trade offers these firms substantial new opportunities. Thus, we are seeking opportunities to ensure that the issues of greatest importance to these businesses are integrated into trade policy formulation and multilateral and regional trade negotiations. One example is the development of the APEC Working Group on SMEs. We also proposed last year that the WTO recognize the unique needs and contributions of SMEs to the international trading system. In 2000, the Administration plans to work with Industry Sector Advisory Committee for SMEs to find new ways to educate small and minority enterprises on the WTO and to create an opportunity for their more active engagement in multilateral trade negotiations.

F. CONCLUSION

This is, and has been, an ambitious and far-reaching agenda. It ranges from integrating China, the world's largest nation, into a global economy of open markets under the rule of law; to opening world services and agricultural markets through a new round of negotiations at the WTO; building a hemispheric community of market democracies; promoting expanded market access and inter-regional trade in Africa and the Middle East; fostering technological progress; fostering sustainable growth and development in the poorest nations; ensuring that trade policy supports environmental protection and core labor standards; and advancing the core concepts of transparency and accessibility in the institutions of trade. These are difficult and complex issues, and progress on them may at times be slow, difficult and marked by controversy.

But the most difficult and complex tasks are also those with the greatest rewards. As we look out to the challenges of the new century, we are aware that others have shouldered equally difficult tasks in the past. And the record of both the past seven years and the past half-century of trade policy gives us a great deal of confidence in our nation's capacity to meet them today.

Taken as a whole, the record Americans have built since the Roosevelt Administration, and which President Clinton's Administration has greatly extended, has fulfilled its core missions. It has promoted the rule of law. It has created new opportunities worldwide and here at home, contributing to a record of growth and employment with few parallels in American history. It has helped us to build a more prosperous and stable world. And as deeply changed as today's world may be, these remain goals to which new generations of Americans can aspire in a new century.

Charlene Barshefsky
U.S. Trade Representative
March 1, 2000

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(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: usinfo.state.gov)
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