*EPF409 01/15/2004
Excerpt: U.S. Committed to WTO Negotiations' Success, Trade Official Says
(USTR's Deily seeks others' ideas for moving round forward in 2004) (2560)

The United States remains committed to successful conclusion of World Trade Organization (WTO) negotiations, "prepared to engage constructively and energetically with our WTO partners," Deputy U.S. Trade Representative Linnet Deily says.

In a January 14 statement made at the WTO in Geneva, Ambassador Deily cited a letter sent days earlier by U.S. Trade Representative Robert Zoellick to other trade ministers identifying ways to revive the negotiations, called the Doha Development Agenda (DDA).

"We look forward to others' ideas and assessments of how we can advance together and view this exchange as an essential element in making 2004 a year of accomplishment," Deily said.

She reiterated U.S. commitment to substantial reform in agricultural trade, including eliminating export subsidies, increasing market access, and reducing tariffs and trade-distorting domestic support payments.

She defended U.S. implementation of existing WTO obligations on agriculture, textiles and steel. She described the several regional and bilateral free trade agreement (FTA) negotiations Zoellick's office has pursued, some completed and some ongoing.

Deily reported a number of developments demonstrating U.S. encouragement of trade from developing countries, including spending on trade capacity building and technical assistance and continuing preferential tariff treatment for qualified countries -- in 2002, two-thirds of U.S. imports entered duty free, she said.

Following is an excerpt of Deily's statement, which responds to the WTO's review of U.S. trade policy:

(begin excerpt)

Trade Openness: The United States continues to maintain an extremely open foreign trade regime. The simple average of U.S. MFN-bound tariffs [MFN is most-favored nation status, which actually represents ordinary tariff rates] is 3.6 percent. This average will fall further with the full phase-in of U.S. Uruguay Round tariff commitments. Our trade-weighted average applied tariff is 1.6 percent. In 2002, two-thirds of imports entered the United States free of duty. Of particular note, estimates for 2003 indicate it is the first year in which the value of U.S. goods imports from middle- and low-income countries, at $642 billion, exceeded that from high-income countries, at $624 billion. U.S. service markets are open to competition, and U.S. regulatory processes are transparent and accessible.

Exports, Imports and Trade Balance: U.S. trade flows over the period under review have been restrained by the pattern of recession and recovery in the United States and weak economic conditions in a number of countries outside the United States. As noted earlier, U.S. real imports have increased and exports fallen since 2000 by 5 percent each. This lack of growth in U.S. trade is also reflected in the value of trade relative to the size of our economy: U.S. exports plus imports of goods and services fell from 26 percent of GDP [gross domestic product] in 2000 to 24 percent in 2002. Nevertheless, the United States -- long the world's largest trading nation -- is expected to report $2.6 trillion in trade in 2003, with over $1.5 trillion in imports alone. As noted earlier, the U.S. trade deficit in trade in goods and services for 2003 currently annualizes to nearly $500 billion. That represents an increase of well over one-third since 2000.

Conclusion: The strengthening and further opening of global markets through successful conclusion of the DDA negotiations and other trade liberalizing efforts should support economic recovery and the income-increasing expansion of world trade for low-, middle-, and high-income countries alike. We believe strengthened growth, not just in the United States, but more broadly among WTO members, should likewise contribute to the moderation of global trade imbalances.

II. TRADE POLICY DEVELOPMENTS

1. Multilateral Initiatives

Over the review period, the United States sustained a vision of ambitious multilateral trade liberalization and worked energetically in its pursuit. Bearing in mind its role in world trade, the United States worked to ensure there was a successful launch at Doha and the agenda was sufficiently broad to enable all participants to benefit. We believe the launch at Doha was a considerable achievement for the WTO. The magnitude and scope of the DDA give it the potential to transform world trade and command our continued efforts to ensure its success.

Reducing trade barriers is a powerful method of increasing opportunities to the world's citizens to achieve prosperity -- an especially compelling goal for the developing world. The United States believes strongly that 2004 should not be a lost year. U.S. Trade Representative Robert Zoellick recently conveyed to all WTO ministers some ideas to reinvigorate the Doha negotiations. He offered what he views as common sense ideas for narrowing differences and reenergizing the momentum in our dialogue. We look forward to others' ideas and assessments of how we can advance together and view this exchange as an essential element in making 2004 a year of accomplishment.

The United States believes that multilateral trade liberalization is a tool we must employ to help accelerate growth in the developing world. To leave it unused makes little sense. In this regard, funding for trade capacity building and trade-related technical assistance is an important element in enabling developing countries to wield this tool effectively. The United States has chosen to be a partner with developing countries in their efforts to liberalize trade. The United States is the single largest donor of trade-related technical assistance in the world, contributing $752 million in fiscal year 2003. The United States has contributed more than $3 million to the WTO for trade-related assistance since the launch of the DDA. U.S. bilateral programs providing trade-related assistance complement WTO efforts in many countries. In addition, the United States contributes to the Integrated Framework, which we view as an important effort by the donor community to rationalize and prioritize the special trade-related needs of the least developed countries. Finally, substantial funding for technical assistance is an integral part of programs like AGOA [African Growth and Opportunity Act] to better enable countries to capture market access opportunities. In fiscal year 2003, total U.S. funding for capacity building support in AGOA was nearly $69 million.

2. Regional and Bilateral Initiatives

Over the review period, the United States actively pursued trade liberalization on a regional and bilateral basis. Three free trade agreements [FTAs] -- Chile, Singapore and CAFTA [Central American Free Trade Agreement] -- concluded successfully, and the United States announced its intent to negotiate eight more -- the U.S.-Southern Africa Free Trade Agreement, as well as agreements with Australia, Morocco, Thailand, Panama, Colombia, Peru and Bahrain. Several of these negotiations are part of broader regional initiatives, such as the Enterprise for ASEAN [Association of Southeast Asian Nations] initiative, the Middle East Free Trade Area, and the U.S.-Andean Free Trade Area. In the ongoing negotiations on the Free Trade Area of the Americas, Ministers of the 34 FTAA countries recently reaffirmed their commitment both to its comprehensive agenda and to its conclusion by January 2005.

The United States looks to WTO rules as the foundation for negotiating these agreements and is committed to the comprehensive coverage of products upon entering negotiations on an agreement. U.S. FTA policy also emphasizes diversity in regional coverage, which yields a greater complementarity of trade patterns. We expect these agreements to also lock in broader reform agendas among the participants. In a recent study, the International Monetary Fund concluded that the combination of these characteristics in free trade agreements result in the greatest potential economic benefits.

The United States continues to benefit from the operation of its existing agreements with Israel and Jordan, and the North American Free Trade Agreement [NAFTA]. Under the world's largest free trade agreement, NAFTA, three-way trade among the U.S., Canada and Mexico has reached $621 billion, more than double the pre-NAFTA level. Since its entry into force in 1994, the Parties have implemented four rounds of accelerated tariff reductions, have implemented side environmental and labor agreements, and have initiated the exploration of improvements, on such issues as harmonization of tariffs, rules of origin and investor-state arbitration.

3. Autonomous Initiatives to Foster Development

Another aspect of U.S. trade policy is comprised of efforts to foster the further integration of developing countries and newly emerging economies into the multilateral trading system through enhanced market access opportunities. The United States provides duty-free access for most products from developing countries through several preferential trade programs. These programs are the Generalized System of Preferences (GSP), which includes enhanced benefits for the least developed countries, the African Growth and Opportunity Act (AGOA), the Caribbean Basin Trade Partnership Act and the Andean Trade Promotion and Drug Eradication Act. These programs offer important and effective access opportunities to the U.S. markets for a wide range of products. Over the period of review, market access under the regional programs was expanded further. These programs indicate the importance the United States attaches to helping these countries become full participants in the global trading system.

4. Trade Policies by Measure

i. Security Initiatives

During the review period, the United States created the Department of Homeland Security and reconfigured several federal agencies to respond to the need for heightened security. The United States also adopted significant changes in its import procedures to protect and facilitate trade. By using advance information, risk management and technology, and by partnering with other nations and with the private sector, the twin goals of security and trade facilitation do not have to be mutually exclusive. Since 9-11, we have developed ways to make our borders more secure that also ensure the efficient flow of legitimate trade and travel.

The major measures adopted include the Container Security Initiative (CSI), the 24-hour rule and the Bioterrorism Act. All of these measures seek to increase systematically the level and quality of information available in order to better assess and isolate risk. Under CSI, the U.S. Customs and Border Protection has entered into bilateral partnerships with other governments to identify high-risk cargo containers and to pre-screen them before they are loaded on vessels destined for the United States. The 24-Hour Rule requires the electronic transmission of detailed manifest information 24-hours in advance of a container's loading and is designed to work in conjunction with CSI. Finally, the Bioterrorism Act of 2002 (BTA) is designed to protect the United States against bio-terrorist threats to its food supply, including food from foreign sources, through both registration and prior notice requirements.

ii. Steel Safeguards

In June 2001, President Bush announced a strategy to respond to the challenges facing the U.S. steel industry. President Bush requested the U.S. International Trade Commission (ITC) to investigate injury to the U.S. industry and directed initiation of negotiations on two fronts, including negotiations on rules that will govern steel trade in the future. The comprehensive investigation by the ITC found that imports of certain steel products were a substantial cause of serious injury to domestic steel producers, and in March 2002 President Bush imposed temporary safeguard measures. These steel safeguard measures were found inconsistent with WTO rules in November 2003. President Bush issued a proclamation terminating these measures in December. This proclamation stated that the U.S. steel industry wisely used the 21 months of breathing space the safeguards provided to consolidate and restructure. The industry made progress increasing productivity, lowering production costs, and making America more competitive. The President concluded the safeguard measures had achieved their purpose.

An integral part of President Bush's 2001 steel initiative strategy was to address the underlying, structural problems of the global steel industry that have contributed to a decades-long, cyclical proliferation of unfair trade competition and trade remedy responses. In the last year, the United States has helped to spearhead international efforts in the OECD [Organization for Economic Cooperation and Development] to bring about market-driven rationalization of the world's excess and inefficient steel-making capacity while also formulating better disciplines over practices which can distort markets and artificially sustain such capacity. In the intervening year, the nearly 40 participating governments representing the world's major steel-producing countries have made good progress in outlining an agreement and defining its core elements.

5. Trade Policies by Sector

i. Farm Legislation

The Farm Security and Rural Investment Act of 2002 lays out food assistance and nutrition, agriculture, resource conservation and rural development policies for the United States for the next six years. The 2002 farm legislation continues past programs to support agricultural prices and farm incomes and is fully consistent with U.S. obligations under the Uruguay Round Agreement on Agriculture. Programs in this legislation are designed to meet policy goals in a targeted, transparent manner, thereby keeping trade distorting support to a minimum. Further, due to concern that the United States remain consistent with its international obligations, Congress included a "circuit breaker" in this legislation, which requires the Secretary of Agriculture to ensure that we do not exceed any WTO ceilings.

While concern was expressed at the time the 2002 farm legislation was enacted that it constituted a significant increase in U.S. farm spending over the previous farm legislation, this was not actually the case when account is taken of annual supplemental spending for disaster and emergency assistance that had also been provided by Congress. Looking at actual spending, which is influenced both by the legislation and market conditions, trade-distorting domestic subsidies are trending downward.

Looking forward, the United States continues to focus on the bold vision for agricultural reform reflected in the proposals offered in July 2002 in the DDA. The United States is committed to negotiating on a multilateral basis a broad program of agricultural reform. The United States stands ready to substantially reduce tariffs, increase market access, eliminate export subsidies, and substantially reduce trade-distorting domestic support, provided our partners in the WTO are prepared to join us. These U.S. proposals were developed in close consultation with Congress, and enjoy broad Congressional support.

ii. Textile Phase Out

The United States has been faithfully implementing the phase out of textile quotas as provided for by the ATC [WTO Agreement on Textiles and Clothing]. During the course of ATC implementation, U.S. imports of textiles and clothing have increased 122 percent. The United States is committed to the completion of the implementation of this agreement at the end of 2004. Although the domestic U.S. textile industry has been undergone a difficult period of adjustment, we expect a smooth transition when ATC textile restraints are removed.

6. Looking Forward

Over the review period, the United States pursued trade and economic policies geared to strengthening the global economy and providing a firmer basis for prosperity. The United States views the rules-based multilateral system of the WTO as an essential feature of the global economy in the 21st century and appreciates the hard work and professionalism of the WTO staff. We are committed to the successful conclusion of the DDA and are prepared to engage constructively and energetically with our WTO partners to move the negotiations forward. We believe the DDA offers a compelling vision of a world trading system that offers significantly greater opportunities for achieving prosperity for all WTO Members.

(end excerpt)

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

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