January 2004 News

USITC Report on U.S. Trade and Investment with Sub-Saharan Africa

On January 27, the U.S. International Trade Commission (USITC) released its fourth annual report on U.S. trade and investment with sub-Saharan Africa (SSA), intended to help President Bush develop a comprehensive trade and development policy for the countries of the region. In 2002, U.S.-SSA merchandise trade totaled $24.1 billion, down from $27.8 billion in 2001. Total U.S. imports from SSA countries eligible for AGOA benefits (including the GSP provisions) totaled almost $9 billion in 2002, an increase of 9.9 percent from $8.2 billion in 2001. U.S. exports to SSA declined by 12.7 percent in 2002 to $5.9 billion, and U.S. imports from SSA fell by 13.5 percent to $18.2 billion in 2002. In 2001, the United States recorded a cross-border surplus in services trade with Africa of $1.7 billion. Foreign investment portfolio flows to SSA totaled $700 million in 2002, reversing the $1 billion outflow recorded in 2001. As in prior years, South Africa accounted for virtually all foreign portfolio investment flows to SSA in 2002.

View U.S. Trade and Investment with Sub-Saharan Africa

U.S. and Costa Rica Reach Agreement on Free Trade

On January 25, the U.S. and Costa Rica concluded negotiations to finalize Costa Rica's participation in the U.S.-Central America Free Trade Agreement (CAFTA), phasing out tariffs and other trade barriers and promoting regional economic integration and growth. The U.S. concluded negotiations with El Salvador, Guatemala, Honduras and Nicaragua last month. U.S. Trade Representative Robert B. Zoellick and Costa Rica's Minister of Foreign Trade Alberto Trejos announced the agreement in Washington. Zoellick commented, "Costa Rica needed a little more time to complete its participation in the CAFTA, and we're very pleased it has joined its Central American neighbors in this cutting-edge, modern FTA designed to expand trade between friends and neighbors." In the last few weeks the U.S. and Costa Rica resolved outstanding issues in areas such as market access for agriculture, textiles and apparel, and professional services. Costa Rica also made specific commitments to gradually open its telecommunications market in three key areas - private network services, Internet services, and wireless services B and committed to establishing a regulatory framework to help foster effective market access. Costa Rica also made specific commitments to gradually open its telecommunications market in three key areas -- private network services, Internet services, and wireless services -- and committed to establishing a regulatory framework to help foster effective market access. (links no longer available) View USTR press release (pdf) View additional information on U.S.-Central American Free Trade Agreement View Draft Text of the Agreement

U.S. and Bahrain Launch Free Trade Negotiations

On January 26, the U.S. and Bahrain launched negotiations on a free trade agreement in Manama to lower tariffs and barriers and expand trade between the two countries. Subsequent negotiation rounds will alternate between the U.S. and Bahrain, with a goal of completing the negotiations by the end of the year. U.S. Trade Representative Robert Zoellick commented, "Bahrain is an important strategic partner in the Middle East that continues to implement significant economic and political reforms – reforms that a free trade agreement with the United States will support and accelerate." U.S. goods exports to Bahrain in 2002 totaled $419.2 million, while Bahrain's goods exports to the U.S. in 2002 totaled $395.1 million. View USTR press release (no longer available)

USTR Takes Country-by-Country Approach Toward Mideast Free Trade Area

In a January 15 address to a forum hosted by the Washington International Trade Association, Assistant U.S. Trade Representative Catherine Novelli underscored the importance of a country-by-country approach in the U.S. effort to promote a broad Middle East free trade area by 2013. Novelli said the tremendous economic disparities and structural differences between countries in the Middle East are impediments to implementing a "one size fits all" policy.

View USIS Washington File report

US Wins Key Issues in WTO Softwood Lumber Appeal

On January 19, USTR announced that the WTO Appellate Body has found in favor of the U.S. on key elements in the U.S.-Canada dispute on softwood lumber. USTR spokesman Richard Mills stated, “We're extremely pleased with the outcome in this appeal. The United States used its trade remedy laws effectively in response to unfair Canadian lumber subsidies, and the WTO Appellate Body has found in our favor on the key issues. The WTO Appellate Body has upheld our determination that Canada's practices amount to an unfair subsidy, and they agreed in the key respects with the way in which we administered our trade laws in response." Mills added that while the U.S. remains committed to finding a durable solution to the dispute, “…we will continue to use our trade laws to ensure a level playing field." View USTR press release (no longer available)

Commerce Secretary Evans Delivers Bush Administration’s Manufacturing Report

On January 16, Commerce Secretary Donald Evans delivered the Bush Administration’s manufacturing report at a business roundtable at Lincoln Electric with Cleveland area manufacturers, where he outlined recommendations to address the challenges faced by the industry. “President Bush is dedicated to growing the Ohio manufacturing industry and creating new jobs. This is our strategy to remove the barriers that are holding back American manufacturers and costing jobs,” said Evans. “This report is a single step in an ongoing process: Ensuring that American companies are competitive in every part of the world.” During the roundtable, Evans announced that Grant Aldonas, Under Secretary for the International Trade Administration, would serve in an interim capacity as point person for manufacturers until Congress passes the legislation to create and fund the position of Assistant Secretary of Manufacturing and Services. The report includes recommendations that will: establish the President’s Manufacturing Council; create the Office of Industry Analysis to gather data; call on the Treasury Department to lead a tax simplification study focused on lowering compliance costs for manufacturers; improve coordination of over $15 billion in economic development programs to help address the economic challenges facing distressed communities that are manufacturing-dependent communities; and ask the Office of Management and Budget to lead a comprehensive regulatory review (assisted by the Office of Industry Analysis) to inventory existing regulations, [evaluate proposed reforms and then implement those reforms on a priority basis. View Commerce Department press release (no longer available) View Manufacturing in America (no longer available)

Agriculture Reform Key to Global Trade Talks, U.S. Official Says

In a January 16 statement to the WTO in Geneva, Deputy U.S. Trade Representative Linnet Deily said that the U.S. sees agriculture reform as the cornerstone of WTO negotiations and remains committed to an ambitious agenda, including the goal of having all WTO members open their markets more fully to farm imports. She defended current U.S. farm programs, noting that the U.S. is in full compliance with its WTO obligations and that the average bound U.S. tariff on agriculture products is 12 percent, compared to the average foreign tariff of 62 percent. With respect to the planned U.S. implementation of "country of origin" labels for certain commodities, Deily said that "at present, only fish and seafood labeling are funded and scheduled for implementation in 2004 under this program, while additional reflection is necessary for the other designated products." Deily said that the U.S. will implement the WTO Agreement on Textiles and Clothing (ATC) on time, but added that ATC implementation by many U.S. trading partners has been a "severe disappointment." Regarding trade in financial services, Deily said the U.S. is "very open" to foreign participation in its banking sector, noting that foreign banks hold about 18 percent of all U.S. banking assets.

View USIS Washington File report

Commerce Secretary Evans’ Statement on U.S.-China Purchase Agreements

On January 13, Commerce Secretary Don Evans released a statement regarding China’s signature of $2.3 billion in contracts with leading U.S. high-tech firms for equipment. The Secretary stated: "This is a monumental event that represents further strengthening of U.S.-China trade relations. Our trade with China is very important to the United States. The $2.3 billion in purchases underscores the importance of China’s high-tech market to our U.S. companies. These agreements will help generate corporate revenue, and they will support high-tech manufacturing jobs in many American communities." "I congratulate China on its continued market-opening measures and look forward to increased bilateral trade in the future."

Zoellick Visits Dominican Republic as Free Trade Negotiations Begin

View the text (no longer available) of a USTR press release regarding U.S. Trade Representative Robert Zoellick’s January 14 visit to the Dominican Republic, during the first of three negotiating rounds of free trade talks with the Dominican Republic. The negotiations are designed to integrate the Dominican Republic into the recently completed negotiations with El Salvador, Guatemala, Honduras, and Nicaragua on a U.S. - Central American Free Trade Agreement (CAFTA).

National Intellectual Property Law Enforcement Coordination Council 2003 Report

The National Intellectual Property Law Enforcement Coordination Council (NIPLECC) reports annually on its coordination activities to the President, and to the Committees on Appropriations and the Judiciary of the Senate and House of Representatives. Included in this report is a compendium of agency activities relating to domestic and international intellectual property rights enforcement efforts and NIPLECC’s mission.

View NIPLECC 2003 Annual Report

Bush Outlines Regional Challenges at Special Summit of Americas

Speaking January 12 at the inaugural ceremony of the Special Summit of the Americas in Monterrey, Mexico, President Bush said that leaders in the Western Hemisphere must implement reforms to ensure that governments are responsive to the needs of citizens and to promote opportunity for all. Toward this end, Bush observed that the U.S. has increased its foreign aid and has altered the way that U.S. aid is provided to developing countries. Under its New Compact for Development, U.S. assistance is now linked to good governance, social investment in health and education, and economic reforms, Bush explained. Over the long term, he said, trade "is the most certain path to lasting prosperity" in the hemisphere. Bush said that the U.S. is committed to free and fair trade in the hemisphere through the negotiation of a Free Trade Area of the Americas (FTAA) and a growing number of bilateral free-trade agreements with regional partners. As these accords advance, Bush said, "the essential foundations of prosperity and progress remain democracy and the rule of law." To bolster these foundations, the president said, nations must curb corruption, deny safe haven to corrupt officials, and "create a culture of transparency in the Americas." He recalled that earlier in the day he had signed a proclamation denying corrupt officials entry into the U.S., and encouraged other leaders to do the same.

View USIS Washington File report

U.S. Trade Representative Calls for Energizing Global Trade Talks

U.S. Trade Representative Robert Zoellick is calling on member countries of the WTO to re-invigorate the WTO trade negotiations, which collapsed in September at the ministerial meeting in Cancun, Mexico. In a letter sent to more than 140 WTO trade ministers, Zoellick urged a "common sense" approach to unresolved trade issues. The letter proposes appointing as chairman of the WTO General Council a member from a developing country even though under normal rotation the chair would go to a developed country this year, and suggests scheduling the next ministers' meeting before the end of 2004. Emphasizing the 2002 U.S. agriculture proposal and de-emphasizing the less ambitious 2003 joint U.S.-EU proposal, Zoellick proposed eliminating agricultural export subsidies by some deadline to be determined and urged making substantial cuts in domestic farm supports. On manufactured goods, Zoellick urged pursuit of an ambitious but flexible tariff-cutting formula that would suit all WTO members as well as zero-tariff initiatives for specific sectors. Zoellick called for greater progress on services negotiations and suggested that issues related to investment and competition policy be dropped from the agenda for the time being. "A Common Sense Approach to Advance the Doha Development Agenda" (no longer available)

India: Unexpected Tax Reform Measures

On January 8, Finance Minister Jaswant Singh announced a wide range of measures that notably included reductions in tariffs and an elimination of the 4 percent special additional duty (SAD). These measures took effect on January 9. The reduction in the "peak rate" (customs tariff) on most non-agricultural goods from 25 to 20 percent, combined with an elimination of the SAD, will have a greater than 9 percentage point-effect on the total cost of imported goods. With the compounding nature of the tax system the average imported good was assessed 50.8 percent of its value in tariffs. Now the same good will only incur a 39.2 percent total tariff burden, resulting in an 11.6 percentage point decrease in the cost of many imported goods. This, combined with the continued appreciation of the rupee against the dollar, means that U.S. exports to India should become more competitive.

Request for Public Comments Regarding IPR Protection and Market Access

View the text of a Federal Register Notice issued by USTR requesting written submissions from the public concerning foreign countries' acts, policies, and practices that are relevant to the decision whether particular trading partners should be identified under Section 182 of the Trade Act (i.e., "Special 301" provisions). Submissions must be received on or before 12 noon on Friday, February 13, 2004.

U.S. Elevates Korea to Priority Watch List

On January 8, USTR announced that Korea will be elevated to the Priority Watch List as a result of the findings of the Special 301 Out-of-Cycle Review (OCR) concluded in late December 2003. The Review found that growth of online music piracy has caused serious economic damage to both domestic and foreign recording companies, and continued piracy of U.S. motion pictures in Korea has resulted in millions of dollars in lost revenues for U.S. and Korean copyright holders. The 2003 Special 301 Report, released in May, highlighted a series of continued concerns regarding the lack of adequate protection and enforcement of intellectual property in Korea. View USTR press release (no longer available)

Malaysia Revises Auto Taxation Regime

Malaysia has revised its auto taxation regime, with rates based on engine size and the vehicle’s country of manufacture. The Malaysian government lowered import taxes on all vehicles, not just those which met ASEAN content rules. In general, the least powerful vehicles and those with a minimum of 40 percent ASEAN content face the lowest tariff rates. Excise taxes (ranging from 60 to 100 percent) will now be imposed on all vehicles, a shift from past practice; previously, only domestically made or assembled autos were subject to excise duties. For more information on Malaysia’s auto taxation regime, please contact Georgia Creech of the Commerce Department’s Market Access and Compliance unit at 202-482-3832.

U.S. Free Trade Agreements with Chile and Singapore Enter Into Force

On January 1, 2004, the U.S.’s Free Trade Agreements with Chile and Singapore entered into force. Prior to signing the agreements in September, President Bush commented they will benefit all three countries and are steps toward greater prosperity, democracy and security globally. Commerce Secretary Don Evans stated that the agreements “… are a start to building on our economy’s strengths and identifying to the world that America is serious about expanding free trade."

View President Bush’s proclamation on implementing the U.S. –Chile Free Trade Agreement

View How to Benefit from the new US-Chile FTA Agreement

View President Bush’s proclamation on implementing the U.S. –Singapore Free Trade Agreement