May 2004 News

U.S. and Central America Sign Historic Free Trade Agreement

On May 28, U.S. Trade Representative Robert B. Zoellick and ministers of five Central American countries--Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua--signed the U.S.-Central American Free Trade Agreement (CAFTA), an historic agreement that will eliminate tariffs and trade barriers and expand regional opportunities for the workers, manufacturers, consumers, farmers, ranchers and service providers of all the countries. CAFTA will immediately eliminate tariffs on more than 80 percent of U.S. exports of consumer and industrial products, phasing out the rest over 10 years. The Central American countries already enjoy duty free access to the U.S. for over 75 percent of their exports, and the agreement expands their opportunities and promotes the kind of positive domestic reforms that will help them grow and prosper and trade with the U.S. The U.S. has completed FTAs with nine countries – the five countries of Central America, the Dominican Republic, Australia, Morocco and Bahrain - over the past six months. New and pending FTA partners, taken together, would constitute America’s third largest export market and the sixth largest economy in the world. View USTR press release View fact sheet on CAFTA View additional information on CAFTA View final text of CAFTA

U.S. and Bahrain Conclude Free Trade Agreement

On May 27, U.S. Trade Representative Robert B. Zoellick and Bahraini Minister of Finance and National Economy Abdulla Hassan Saif announced the completion of a comprehensive Free Trade Agreement (FTA) designed to remove barriers and facilitate trade between both countries. Bahrain is the fourth Middle Eastern country to have negotiated an FTA with the U.S. Commenting on the agreement, Zoellick stated, "The U.S.-Bahrain FTA is a pacesetter showing the way to implement the President's initiative for building prosperity, opportunity and hope in the Middle East. This free trade agreement with Bahrain will build on our existing FTA with a rapidly modernizing Jordan, and on the FTA with a reforming Morocco that we will sign in two weeks."

View USTR press release

View fact sheet on free trade with Bahrain

USITC Report on Impact of U.S.-Australia Free Trade Agreement

View the text (pdf) of the U.S. International Trade Commission's (USITC) report assessing the comprehensive bilateral free trade agreement (FTA) that the President has entered into with Australia. The USITC projects that, when the agreement is fully implemented, U.S. exports to Australia would increase by $1.5 billion and imports would increase by about $1.2 billion, with minimal impact on employment and output. According to the Commission's analysis, the sectors showing the greatest percentage increase in exports to Australia include coal, oil, gas, and other mineral products; textiles, apparel, and leather products; and other processed food and tobacco products. The greatest value increases in exports to Australia occur in other machinery and equipment, and motor vehicles and parts. While the FTA is not expected to generate significant increases of U.S. exports or imports of services in the aggregate, the FTA's creation of a Professional Services Working Group is expected to facilitate trade in professional services. The FTA's provisions on bilateral investment would result in national and nondiscriminatory treatment for all covered activities, and would set a clear minimum legal standard against which the parties' laws would be measured for compliance. Overall, the investment chapter provides investors a higher level of certainty regarding investment rules, which is likely to encourage investment. View USITC press release

2004 Comprehensive Report on Implementation of African Growth and Opportunity Act

USTR has submitted to Congress the 2004 Comprehensive Report of the President on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act (AGOA). This is the fourth of eight annual reports required under AGOA, and it received input from several offices and agencies, including the Commerce Department. Many important milestones were achieved during the past year in the implementation of AGOA and the strengthening of the U.S. trade and economic relationship with the countries of sub-Saharan Africa. These include: a significant increase in African exports under AGOA, including notable increases in non- fuel goods; the launch of negotiations for a U.S. free trade agreement with the Southern African Customs Union (SACU), the first-ever such U.S. agreement with sub-Saharan African countries; the addition of one new AGOA-eligible beneficiary country, and the removal of two countries from AGOA beneficiary status, bringing the total of beneficiary countries to 37; the holding of the third annual U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum in Washington; and the introduction of legislation in the House and Senate that would extend AGOA’s authorization, and enhance many of its provisions. AGOA is the cornerstone of the Bush Administration’s trade and investment policy toward sub-Saharan Africa, which is promoting free markets, expanding U.S.-African trade and investment, stimulating economic growth, and facilitating sub-Saharan Africa’s integration into the global economy.

View text of 2004 Comprehensive Report on Implementation of AGOA

Vietnam: Finance Ministry Publishes Tariff On U.S. Wine

Vietnam's Ministry of Finance has issued an official letter to announce that, effective May 1, wine originating from the U.S. is applied a tariff rate of 80 percent, which is the same tariff applied to wine originating from EU member countries. The U.S. had pressed the Vietnamese government for this tariff treatment under the Most-Favored Nation (MFN) provision of the U.S-Vietnam Bilateral Trade Agreement.

Vershbow Cites Opportunities in U.S.-Russian Economic Relations

According to a USIS Washington File report, U.S. Ambassador to the Russian Federation Alexander Vershbow outlined specific areas of opportunity and some of the larger issues in U.S.-Russian economic relations in May 21 remarks at the Wharton Global Alumni Forum in Moscow. Among the major issues on the U.S.-Russian economic agenda, according to Ambassador Vershbow, are protecting intellectual property rights (IPR) and reforming the financial services sector. Regarding IPR, which is a key issue in Russia's WTO accession, the ambassador stated, "Russian law enforcement agencies need to take much more vigorous steps to end optical disc piracy, which saw a disturbing increase in 2003." On financial services sector reform, the U.S. is urging Russia--in the WTO context--to further liberalize the conditions for the entry of foreign banks in Russia, said Vershbow, who believes those banks could "bring a burst of dynamism to Russian companies." Russia also will need to strengthen its democratic institutions and political culture if it is to secure the basis for sustainable growth. In spite of these challenges, Vershbow “…remain(s) optimistic that Russia's leadership can and will steer a course that will foster continued economic growth and make Russia an increasingly attractive market for trade and investment.” View USIS Washington File report (includes text of Vershbow’s remarks)

USTR Official Outlines Benefits of U.S.-Andean Free Trade Agreement

At the May 18 launch ceremony for the U.S.-Andean Free Trade Agreement (FTA) in Cartagena, Colombia, Assistant USTR for the Americas Regina Vargo said that the agreement between the U.S., Colombia, Ecuador, Peru and Bolivia will foster increased trade and investment among the signatory nations as well as bolster democracy and socioeconomic development in the Andean region. She stated that the FTA will benefit the Andean nations by locking in more permanently the special access to the U.S. market they currently enjoy under the Andean Trade Preference Act, which is set to expire in 2006, and added that it will attract investment to the region. The U.S.-Andean FTA will also allow the Andean nations to remain competitive with other nations in the U.S. market, Vargo said. To help the Andean nations adapt and better compete in the U.S. and global marketplace, Vargo said, the U.S. will work with these nations to increase their capacity to negotiate, implement, and take advantage of the U.S.-Andean FTA.

View USIS Washington File report

U.S. Ready to End Agricultural Subsidies, Negotiator Says

In a May 17 statement to the WTO General Council, Deputy USTR Peter Allgeier stated that the U.S. is ready to eliminate subsidies of agricultural exports and export credit programs. Allgeier said the U.S. welcomes the EU’s recent indication that it foresees agreement with other countries on eliminating export subsidies by a certain date. Such an agreement would help get WTO trade negotiations "back on track for significant progress" during the remainder of 2004, Allgeier stated. He said the U.S. is willing to negotiate with the EU and other trading partners a plan to achieve more global agricultural market access. Blending various market access proposals into a single proposal that can be agreed to by WTO members "is the most urgent task facing us in the next 10 days," he said. The next round of agricultural negotiations is scheduled for early June, while negotiations on tariff reductions and eliminating nontariff barriers are scheduled for July. View USIS Washington File report (includes text of Allgeier statement)

U.S. and Australia Sign Free Trade Agreement

On May 18, U.S. Trade Representative Robert B. Zoellick and Australian Minister of Trade Mark Vaile signed a landmark Free Trade Agreement (FTA) that will eliminate more than 99 percent of manufactured goods tariffs between the two countries from day one, open services and agricultural markets, and further deepen their already strong economic ties. Commenting on the signing, Commerce Secretary Donald Evans stated, “America’s manufacturers are big winners today thanks to the President’s market opening leadership. The agreement eliminates trade barriers on manufactured goods and creates incentives that will encourage manufacturers to put more workers on the shop floor while keeping our economy moving in the right direction. The alternative to free trade would be economic isolationism that would destroy American jobs, lower our standard of living and leave American workers on the sidelines.”

View fact sheets on U.S.-Australia FTA

View USTR press release (pdf)

Evans Releases Commerce Report on Reducing Standards-Related Barriers to U.S. Exports

On May 18, Commerce Secretary Donald L. Evans released a report aimed at reducing standards-related trade barriers and called for broader collaboration across government and with U.S. industry to prevent technical obstacles that impede U.S. exports. The new Commerce report, Standards and Competitiveness—Coordinating for Results (pdf), contains more than 50 recommendations, and summarizes key industry standards issues in international markets. Some of this information was gathered from more than 200 industry associations and standards organizations in 13 industry roundtables convened over the past year. The report seeks to improve the efficiency and effectiveness of the Department’s standards-related programs and policies. Its recommendations will help the Department identify new opportunities and better ways to work with the private sector and other U.S. government agencies on standards-related issues. In March 2003, Evans launched the Department of Commerce Standards Initiative (no longer available), an eight-point plan that responds to industry concerns that divergent standards, redundant testing and compliance procedures, and regulatory red tape are becoming one of the greatest challenges to expanding exports.

OECD Countries Seek Agreement to Advance WTO Talks

In a May 14 statement, OECD ministers said they are determined to reach by July agreements on frameworks for further WTO negotiations, but added that political will must be transformed into "concrete and decisive" actions in order to make it happen. The ministers urged WTO members to take advantage of a window of opportunity that has opened since negotiations collapsed in Cancún, Mexico, in 2003. They stated that, while progress on agricultural reforms is the key to advancing the negotiations, they cautioned that despite "encouraging" signs much needs to be done in all three major areas of the agriculture negotiations -- export competition, domestic support and market access -- to reach a point at which a "balanced" agreement would become possible. The ministers also noted the need for pension reform and adjusting health care policies, and warned that protectionist pressures may arise in the countries impacted by job outsourcing if the people negatively affected by this trend are not helped to adjust.

Zoellick Lays Out Plan for Advancing Global Trade Talks

In his May 13 address to the French Senate, U.S. Trade Representative Robert Zoellick urged WTO members to seize the opportunity made possible by the current economic expansion to make progress in long-stalled global trade negotiations. Zoellick said the negotiations have gained some momentum, described the serious obstacles remaining, and suggested a strategy for making dramatic gains. Negotiators have said that July represents a deadline of sorts for the negotiations, even though they most likely cannot conclude by the original December deadline. On agriculture, Zoellick suggested that all countries agree to eliminate agricultural export subsidies by certain dates, mentioning the EU move in that direction just days earlier. Wealthy countries need to agree to make substantial cuts in domestic trade-distorting subsidies, he said. Zoellick said that, besides achieving a framework for agriculture, the other crucial agreement needed for progress is to select for negotiation just one of the four so-called Singapore issues -- trade facilitation, which includes customs reforms. The other issues, long pressed by the EU, are investment, competition policy and government procurement transparency.

View text of Zoellick speech

U.S. to Sign Trade Agreement with Central American Nations May 28

U.S. Trade Representative Robert Zoellick and trade ministers from Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua will sign the U.S.-Central America Free Trade Agreement (CAFTA) on behalf of their nations on May 28 at Organization of American States (OAS) headquarters in Washington, according to a May 13 USTR press release. Zoellick said CAFTA will foster increased U.S. trade with the region and support continued openness and democracy in Central America, among other benefits. The U.S. has finished negotiations to include the Dominican Republic in CAFTA, but a period of congressional consultation required by the Trade Act of 2002 has not yet concluded, USTR indicated.

View USTR press release

Trade Official Cautions Congress Against Delaying AGOA III Bill

During May 11 testimony before the House Africa Subcommittee, Assistant U.S. Trade Representative Florizelle Liser said that African economies could face serious repercussions if passage of a proposed enhancement of the African Growth and Opportunity Act, known as AGOA III, is delayed beyond September 11. If the "third-country fabric provision" were allowed to lapse on September 30, she said, the momentum gained by several African countries in their textile sectors might stall, leading to a loss of jobs and investment. "There are some [textile] businesses [in Africa] that have already been transferred to Asia" in anticipation of the end of the AGOA provision, she added.

View USIS Washiongton File report

U.S. and Uruguay Initiate Bilateral Investment Treaty Talks

According to a May 11 USTR press release, the U.S. and Uruguay initiated negotiations of a Bilateral Investment Treaty (BIT) as part of the U.S.-Uruguay Joint Commission on Trade and Investment. Under a BIT, the United States and Uruguay would each extend substantive and procedural protections to each other's investors, allowing individuals to invest with greater confidence in the two economies, the USTR press release said. The Joint Commission also explored bilateral issues, including sanitary and phytosanitary issues, and discussed the possibility of a government procurement agreement. View USIS Washington File report (includes text of USTR press release)

U.S. Raises Concerns About Low Number of WTO Import Licensing Notifications

At the May 5, 2004 WTO Import Licensing Committee Meeting in Geneva, the U.S. expressed concern that many WTO members have not yet notified their import licensing requirements as required by the WTO Import Licensing Agreement. The U.S. actively encourages members to meet their obligations to notify under the agreement and regularly reviews the import licensing policies of WTO members to ensure they comply with the obligations of the agreement. During the meeting, the U.S. also raised specific questions regarding: China's import licensing policies; Brazil's import licensing requirements for soda ash and lithium carbonate; and Indonesia's import licensing requirements for textiles.

View WTO news item

USTR Zoellick Praises EU Offer to End Farm Export Subsidies

In a May 10 press release, U.S. Trade Representative Robert Zoellick praised the EU’s announcement that it will, as part of the WTO Doha negotiations, accept that all countries must set an end date for the abolition of agricultural export subsidies. The press release was issued shortly after the EU’s offer, which came in a letter to other WTO members from EU Trade Commissioner Pascal Lamy and Agriculture Commissioner Franz Fischler, was made public. Elimination of all agricultural export subsidies by some fixed deadline has been a U.S. demand in the WTO negotiations. Commenting on the EU's offer, Zoellick stated, “I hope this will provide a shot in the arm to the overall negotiations." Zoellick and ministers from 29 other industrialized countries are expected to work to advance the negotiations when they meet in Paris May 13-14, on the margins of the annual Organization for Economic Cooperation and Development (OECD) meeting. Agreement on agricultural trade reform is widely viewed as crucial to successful completion of the WTO negotiations.

View USTR press release

U.S., Malaysia Sign Trade and Investment Framework Agreement

On May 10, the U.S. and Malaysia signed a bilateral trade and investment framework agreement (TIFA), according to a USTR press release. U.S. Trade Representative Robert Zoellick and Malaysian Minister of Trade and Industry Dato' Seri Rafidah Aziz signed the agreement, which authorizes the creation of a Joint Council where trade issues such as intellectual property rights, tourism, information and communications technology, and biotechnology can be discussed. The discussions are expected to strengthen trade ties between the two nations, expanding U.S. access to the Malaysian economy while supporting Malaysia's efforts to diversify its economy, the USTR said. Malaysia is America's 10th largest trading partner. The two sides also agreed to coordinate in regional and multilateral fora and to work toward the successful conclusion of the WTO Doha Development Agenda, according to Zoellick. View USIS Washington File report (includes text of USTR press release)

U.S. and Brazil Hold Consultations on FTAA

The U.S. and Brazil, co-chairs of the Free Trade Area of the Americas (FTAA) Trade Negotiations Committee (TNC), held consultations in Washington on April 30 and May 3 to discuss the status of informal FTAA consultations that have taken place since the 17th meeting of the FTAA TNC in February. In a May 3 joint communiqué, the TNC co-chairs said the consultations to date have yielded "good progress" in crafting a framework to advance the FTAA talks. The co-chairs agreed that there is a need to continue informal consultations and will meet again later in May, the communiqué said. View USIS Washington File report (includes text of U.S.-Brazil communiqué)

State Department Official Outlines U.S. Goals for Latin America

In his remarks to the Council of the Americas, Assistant Secretary of State for Western Hemisphere Affairs Roger Noriega said that the U.S. is engaged in Latin America and is working to advance common interests, but regional governments also must do their part to promote trade and democracy in the hemisphere. Noriega said that the U.S.’s goal for the Western Hemisphere is "to generate broad-based growth through free trade and sound economic policies, to invest in the well-being of people from all walks of life, and to make democracy serve the citizen more effectively and justly." Noriega said the U.S. is actively pursing these ends -- in part through such measures as an ambitious trade agenda, the proposed Millennium Challenge Account aid program designed to reward countries that practice good governance, and the President's immigration plan that matches willing workers and employers. View USIS Washington File report

Ashcroft Warns of Corrosive Effects of Corruption in Government

In a recent address to the Organization of American States (OAS), U.S. Attorney General John Ashcroft said that the fight against corruption in government is "critical" to realizing the shared interests of the countries in the Western Hemisphere. Ashcroft stated that corruption "saps the legitimacy of democratic governments and can, in its extreme forms, threaten democracy itself." Ashcroft said World Bank studies estimate that the negative effects of corruption can reduce a country's economic growth rate by as much as a full percentage point each year. He pointed to the OAS Inter-American Convention Against Corruption, which he described as the first "broad-based multilateral agreement" focused on the problem. But he said a few OAS member states still are not party to that convention, and "to be successful in our fight against corruption, full hemispheric cooperation is needed and necessary." View USIS Washington File report (includes text of Ashcroft's remarks)

Secretary Evans Discusses Market Opening Efforts in Remarks to Council of Americas

In his May 4 remarks to the Council of the Americas, Secretary of Commerce Donald Evans noted the Administration’s success in opening markets in the Americas and other parts of the world through the negotiation of Free Trade Agreements. In the Americas, the Central American Free Trade Agreement (CAFTA), which is being negotiated with five Central American countries and the Dominican Republic, builds on the North American Free Trade Agreement’s (NAFTA) 10 years of success. The goal of the U.S. is to conclude the Free Trade Area of the Americas (FTAA), which would create a free market for some 800 million people producing $13 trillion in economic activity and $3.5 trillion in trade. The Secretary also commented that, in the 60 days since the U.S.-Chile FTA took effect, U.S. exports to Chile surged 22 percent from a year ago, reaching $475 million. Secretary Evans cautioned that the U.S. will be vigilant in ensuring that the terms of the agreement are fully carried out. View text of Secretary Evans’ remarks (no longer available)

U.S. and Australia Will Sign Free Trade Agreement May 18

The U.S. and Australia will sign their bilateral Trade Agreement (FTA) on May 18 in Washington, according to a May 3 USTR press release. This is the first FTA between the U.S. and a developed country since the U.S. and Canada signed their FTA in 1988. The FTA, negotiated over the course of nearly a year, was concluded February 8. USTR Robert Zoellick will sign on behalf of the United States, and Australia's Minister of Trade Mark Vaile will sign on behalf of his country. Zoellick stated, "We're excited about the opportunities an FTA with Australia will provide our exporters," he added, "and we're pleased with recent statements of support from members of Congress. The May 18 signing date between trade ministers offers the earliest possible date for us to move forward in consultation with Congress." In 2002, Australia was the United States' 13th largest single-country export market for goods. Two-way annual goods and services trade is roughly $28 billion, with two-way foreign direct investment totaling $60 billion.

View USTR press release (pdf)

Peru and Ecuador to Join With Colombia in May 18-19 Launch of FTA Negotiations with U.S.

On May 3, the U.S. announced that Peru and Ecuador will join with Colombia in the first round of negotiations on a U.S.-Andean Free Trade Agreement (FTA) scheduled for May 18-19. The FTA negotiations were scheduled to begin with Colombia alone, pending the resolution of certain issues with respect to Peru and Ecuador, which have now been addressed. The U.S. hopes to include Bolivia at a later stage, and is working with Bolivian officials to prepare. U.S. Trade Representative Zoellick commented that "The inclusion of Peru and Ecuador in the negotiation will expand benefits beyond the U.S.- Colombia relationship.” Peru recently resolved certain outstanding disputes with U.S. investors and has taken significant steps to settle others, while Ecuador has taken important steps to address certain concerns regarding the protection of worker rights and has resolved certain investor disputes. However, there remains work to be done in order for all outstanding issues to be completely resolved. The four Andean countries collectively represent a market of over $7 billion for U.S. exports, and are home to over $8 billion in U.S. foreign direct investment.

View USTR press release (pdf)

Annual “Special 301” Report Finds Continued Progress on Strengthening Intellectual Property Protection, but Significant Improvements Needed

On May 3, USTR released its “Special 301” annual report on the adequacy and effectiveness of intellectual property rights (IPR) protection in trading partners around the world. The report found that although several countries have taken positive steps to improve their IPR regimes, the lack of IPR protection and enforcement continues to be a global problem. The report calls for certain governments to take stronger actions to combat commercial piracy and counterfeiting. Addressing IPR enforcement problems in China is one of the Administration's top priorities. China recently made several commitments during the Joint Commission on Commerce and Trade (JCCT) meetings to take actions aimed at achieving a significant reduction in IPR infringement. This year's report announces an out-of-cycle review for China in early 2005 to evaluate China's implementation of its stated commitments and its overall progress on improving enforcement and significantly reducing IPR infringement. In addition, this year's report notes the importance of understanding how the regulatory regimes in certain countries, along with their IP systems, affect innovation and R&D in innovative industries. Congress has directed the Administration to examine and prepare a report on regulatory practices, intellectual property laws and other measures in the pharmaceutical industry.

View USTR press release (pdf)

View Special 301 report