February 2006 News

United States is Active Participant in Coalition to Jump Start WTO Services Negotiations

On February 28, the United States launched a new effort to jump start the WTO services negotiations. Joining with like-minded developed and developing countries, the United States will push for a common set of liberalization objectives in services sectors key to global growth and development. Services are a significant and growing part of the U.S. economy as evidenced by the $56 billion surplus in services trade in 2005, with 8 of 10 U.S. jobs in the services sector. In delivering an initial set of “collective requests,” the United States met the first services mandate of the December 18, 2005 Hong Kong Declaration, calling upon WTO members to work together in groups (or “plurilaterally”) to intensify the services negotiations and submit collective requests by February 28, 2006. As one of the most open services markets in the world, the United States is participating in collective requests across a host of sectors, including telecommunications, financial services, distribution services and educational services. By removing such limitations, the General Agreement on Trade and Services (GATS) supports economic development and benefits consumers by enabling the supply of important services that meet global standards for price and quality.

View USTR press release

United States and Colombia Conclude Free Trade Agreement

On February 27, the United States and Colombia announced they have concluded their work on a free trade agreement (FTA), which will eliminate tariffs and other barriers to goods and services, and expand trade between the United States and Colombia. The conclusion of the negotiations with Colombia was announced by U.S. Trade Representative Rob Portman and Jorge Humberto Botero, Minister of Trade, Industry and Tourism. Portman commented that the agreement will help foster economic development in Colombia, and contribute to efforts to counter narco-terrorism, which threatens democracy and regional stability. In 2005, Colombia and the United States had $14.3 billion in two-way trade, and Colombia is currently the second largest agricultural market for the United States in Latin America. U.S. foreign direct investment (FDI) in Colombia was $3.0 billion in 2004, primarily concentrated in the manufacturing, mining and wholesale sectors.

View USTR press release

U.S. Team To Discuss Intellectual Property Protection, High Tariffs On U.S. Auto Parts, With China

During a February 24 conference call with reporters, USTR General Counsel Jim Mendenhall announced that the Bush administration is sending trade negotiators to China to discuss that country's progress on improving enforcement of intellectual property rights and to try to resolve a dispute involving high tariffs that the Chinese are imposing on U.S. auto parts. Mendenhall said he would lead a team that is scheduled to meet with Chinese officials in Beijing March 1 to gather information on the Chinese government's efforts to combat the rampant piracy of U.S. copyrighted material. Regarding the high tariffs the Chinese are imposing on U.S.-made auto parts, Mendenhall stated the United States contends this is a violation of WTO rules. If a Chinese-manufactured vehicle does not contain a certain amount of domestic auto parts, any imported auto parts used are assessed an additional charge, according to Mendenhall. He stated that if progress is not made in resolving both issues, "the United States will consider filing trade cases against China before the World Trade Organization." Mendenhall added, "We are running out of options short of a more formal process to move this forward." Other cases against China are possible in 2006, he added, but the United States is not currently planning a WTO complaint against Beijing's practice of tying its currency to the U.S. dollar at a set rate.

View USIS Washington File report

Portman Statement Regarding Entry Into Force of CAFTA for El Salvador

In a February 24 press release, U.S. Trade Representative Rob Portman said he has recommended that President Bush issue a proclamation to implement the CAFTA-DR agreement for El Salvador as of March 1, 2006. El Salvador is the first country to receive this recommendation from USTR. He said that the United States has worked closely with El Salvador over the past several months to ensure its legislative and regulatory regime reflects the obligations and responsibilities set forth in the CAFTA-DR agreement. He added, "We will continue our work with all of our CAFTA-DR partners to ensure timely and full implementation of the agreement. We hope and expect that we will be able to bring additional CAFTA-DR partners into the agreement soon."

View USTR press release

Increased Investment Would Boost Philippines' Economic Growth

Following a two-day visit to the Philippines, his first stop in a regional tour, Treasury Under Secretary for International Affairs Timothy Adams said that the Philippine Government has made significant progress in implementing economic reforms, but more work must be done to attract investment and boost the country’s growth rate. Adams praised President Arroyo’s government for reducing the fiscal deficit and cutting losses in the power sector, adding that raising investment is essential to stronger growth. He recommended several confidence-building measures to increase willingness to invest by Filipinos at home and abroad and by foreign corporations. These include ratifying the Philippines’ existing financial services commitments to the WTO and new commitments in the WTO’s Doha Round of trade talks, and reforming the Philippines’ financial sector and participation by foreign firms in the country’s financial markets to increase their efficiency and health.

View USIS Washington File report

U.S. Reinstates Trade Preference Benefits for Liberia

On February 22, U.S. Trade Representative Rob Portman announced that President Bush has reinstated duty-free trade benefits for the Republic of Liberia under the Generalized System of Preferences (GSP) program. Noting that Liberia is emerging from nearly two decades of war, Portman commented that “GSP will be a useful tool in helping to rebuild Liberia and bring hope to its people.“ The benefits were suspended in 1990 because of worker rights concerns. Liberia 's reinstated benefits under the GSP program will become effective in two stages.

View USTR press release

President Bush To Promote Open Economies During Visit to India and Pakistan

During remarks to the Asia Society on February 22, President Bush discussed his upcoming trip to India and Pakistan. The President noted that the United States, Pakistan and India "share a common interest in promoting open economies," and added that good relations with the United States can help both nations in their quest for more peaceful relations. Commenting that the United States is pleased that India and Pakistan are beginning to work together to resolve their differences directly, Mr. Bush expressed U.S. support for increased trade and transportation links between the two countries. The President and Indian Prime Minister Manmohan Singh will continue their discussions under the U.S.-India strategic partnership agreement, through which the two countries are promoting free and fair trade, inter alia. While in Pakistan, President Bush said he would be discussing that country's democratic progress with President Pervez Musharraf. The President stated that the United States is taking several steps to open up markets and expand trade with Pakistan, which include efforts to conclude a bilateral investment treaty that would establish clear and transparent rules to provide greater certainty and encourage foreign direct investment.

View text of President's remarks to Asia Society

USITC Investigation into Probable Economic Effect of U.S.-Korea FTA

The U.S. International Trade Commission (USITC) is seeking public input for a newly initiated investigation into the probable economic effect of a U.S. free trade agreement with the Republic of Korea. As requested by USTR on February 6, the Commission will advise the President as to the probable economic effect of providing duty-free treatment for imports of products of the Republic of Korea on industries in the United States producing like or directly competitive articles and on consumers. In addition, as requested by USTR, the USITC will advise the President as to the probable economic effect of eliminating tariffs on imports of certain agricultural products of the Republic of Korea on U.S. industries producing the product concerned and the economy as a whole. The Commission will hold a public hearing in connection with the investigation on April 20, 2006. For information on filing a request to appear at the hearing or submitting written comments, please refer to the USITC press release.

United States Seeks To Finish WTO Negotiations with Russia, Ukraine, Kazakhstan and Vietnam in 2006

During his February 15 testimony before the House Ways and Means Committee, U.S. Trade Representative Rob Portman said that the Bush administration wants to complete WTO accession negotiations with Russia, Ukraine, Kazakhstan and Vietnam in 2006 and get congressional approval for those agreements. Portman said the United States is close to an agreement with Ukraine and "I hope we're close" to one with Russia. Under U.S. law, WTO agreements with these countries require approval by Congress to grant permanent most-favored-nation (MFN) status, also called normal trade relations. Committee Chairman Clay Shaw warned that continued piracy of copyrights and patents could jeopardize agreement with Russia, which is pressing to conclude negotiations before President Vladimir Putin hosts the annual Group of Eight (G8) leading industrialized countries' meeting in July. Portman testified to the committee after the administration released its 2006 trade agenda.

View USIS Washington File report

United States, India Review Progress in Trade Discussions

On February 16, Deputy U.S. Trade Representative Karan Bhatia met with his Indian counterpart, Commerce Secretary S. N. Menon, to review progress made in the U.S.-India Trade Policy Forum since its inaugural meeting in New Delhi in November 2005. The goal of the forum, according to Bhatia, is to identify and overcome impediments to trade and to formulate initiatives that could lead to a doubling of trade over the coming three years. The forum has four working groups focused on agriculture, tariffs and nontariff barriers, investment, and innovation. The groups have studied trade in goods and services, cooperation in knowledge-based industries and protection of intellectual property rights. Bhatia said the United States would like to see India continue lowering its tariffs and take steps to resolve outstanding commercial disputes, while Indian negotiators are seeking greater access to U.S. markets. Bhatia expects that progress in trade discussions will be among the issues highlighted during President Bush’s visit to India in March.

View USIS Washington File report

U.S. Praises Philippine for Improved IPR Enforcement

On February 15, USTR made a determination to lower the Philippines from the Priority Watch List to the Watch List under the Special 301 Review, which examines in detail the adequacy and effectiveness of intellectual property rights (IPR) protection. This determination resulted from an “Out-of-Cycle Review” (OCR) on the Philippines which concluded that throughout 2005, the Philippines bolstered implementation of its special legislation that was passed to stop illegal production of pirated optical discs by controlling the licensing of and conducting raids against pirate optical disc production facilities. In addition, Philippine authorities conducted numerous raids on retail stores selling pirated and counterfeit goods. The Philippine government also measurably improved coordination of government agencies responsible for IPR enforcement. However, the OCR also concluded that sustained effort and continued progress on key IPR issues will be essential to avoid a future return to the Priority Watch List. The United States will be monitoring closely efforts by the Philippines government to further improve its IPR enforcement regime.

View USTR press release

U.S. Trade Representative Portman's Presentation on U.S. Trade Policy

View U.S. Trade Representative Rob Portman's February 15 presentation to the House Ways and Means Committee regarding the achievements of the U.S.'s trade policy in 2005. In his presentation, Portman noted recent milestones and WTO dispute resolution highlights and laid out the Administration's 2006 trade policy, which is based on the WTO Doha negotiations, bilateral and regional agreements, and enforcing trade laws/strengthening trade agreements.

USTR to Strengthen Enforcement in Readjustment of U.S.-China Trade Policy

On February 14, U.S. Trade Representative Rob Portman unveiled the results of a top-to-bottom review of U.S.-China Trade Policy. The report, "U.S. - China Trade Relations: Entering a New Phase of Greater Accountability and Enforcement," is the first comprehensive statement of U.S. trade policy towards China since it joined the WTO in 2001. In a letter to Congress which accompanied the report, Portman outlined his objective of closer collaboration with Congress on U.S.-China trade policy, noting that "Despite three consecutive years of growing U.S. exports to China, our bilateral trade relationship with China today lacks equity, durability and balance in the opportunities it provides⬦ The time has come to readjust our trade policy with respect to China." The report announced a number of actions that will be implemented in consultation with Congress and other stakeholders to ensure meaningful progress in achieving the key objectives outlined in the report. These steps include: • Expanding USTR’s trade enforcement capacity to better ensure China’s compliance with trade obligations; including through establishment of a China Enforcement Task Force at USTR, to be headed by a Chief Counsel for China Trade Enforcement; ⬢ Expanding U.S. trade policy and negotiating capacity in Beijing and other resources in China to more effectively pursue top priority issues, especially the protection of intellectual property rights; ⬢ Increasing coordination with other trading partners on China trade issues of common interest, such as enforcement of intellectual property rights; and ⬢ Strengthening U.S. government interagency coordination, including through monthly review, by the Trade Policy Review Group and Trade Policy Staff Committee, of strategies and progress made in achieving the key objectives identified in the report.

View USTR press release

View text of report on China top-to-bottom review

View text of letter to Rep. Rangel on China top-to-bottom review

Economic Report of the President Finds U.S. Likely To Continue To Attract Foreign Capital

According to the 2006 Economic Report of the President, published February 13, the United States is likely to continue to attract more foreign capital than it sends abroad for a long time, even though the magnitude of future U.S. net capital flows is likely to decrease. The report said the size and persistence of U.S. net capital flows reflect the strengths of the U.S. economy, such as solid growth, high productivity and favorable business climate, as well as its shortcomings, such as a low and declining levels of domestic saving (mirrored by a rise in personal consumption spending). The annual report by the President's Council of Economic Advisers reflects the administration's thinking on key economic and trade issues affecting the United States.

View USIS Washington File report

View 2006 Economic Report of the President

G8 Finance Ministers Urge Progress in Doha Trade Negotiations

During their February 11-12 meeting in Moscow, the G8 Finance Ministers endorsed an "ambitious outcome" to the Doha Round of WTO negotiations that would encompass comprehensive agreements on agriculture, financial services, intellectual property and the special concerns of developing countries, which require “substantial aid for trade to help them take advantage of general liberalization.” In a statement issued in advance of the G8 summit in St. Petersburg July 15-17, the ministers welcomed the decision to focus on energy security at the summit, stressing the importance of a "global energy policy dialogue between oil producing and consuming countries and the private sector." They also called for the World Bank to set country-specific energy strategies to help developing nations achieve the Millennium Development Goals.

View USIS Washington File report

USITC Begins Assessment of U.S.-Peru Free Trade Agreement

As requested by USTR, the U.S. International Trade Commission (USITC) has instituted an investigation to assess the likely impact of a free trade agreement (FTA) that the President has proposed to enter into with Peru. The Trade Act of 2002 requires USITC to prepare a report that assesses the likely impact of proposed FTAs on the U.S. economy as a whole and on specific industry sectors and the interests of U.S. consumers. The Commission will hold a public hearing in connection with the investigation on March 15, 2006. For information about appearing at the hearing or transmitting written submissions for the record, please consult the USITC press release.

U.S. Trade Officials Comment on WTO Agricultural Biotechnology Decision

View the text of a statement by U.S. Trade Representative Rob Portman and Secretary of Agriculture Mike Johanns regarding the WTO's preliminary decision that the EU has a de facto moratorium on agricultural biotechnology products that is inconsistent with WTO rules. Portman commented, "We believe agricultural biotechnology products should be provided a timely, transparent and scientific review by the European Union, and that is why Canada, Argentina and the United States brought the case in the first place."

Commerce Secretary Gutierrez Testifies on President's American Competitiveness Initiative

View the text of Commerce Secretary Carlos M. Gutierrez's February 9 opening statement before the House Government Reform Committee, during which he discussed President Bush's American Competitiveness Initiative (ACI). The purpose of the Initiative is to help the United States meet the challenge of maintaining its leadership role as the most competitive economy in the world. The centerpiece of the ACI is the President's commitment to doubling funding for federal R&D in the physical sciences and engineering over the next ten years.

Trade Pact with U.S. Would Give South Korea "Overwhelming Benefits"

In a February 3 statement released by the U.S. Embassy in Seoul, U.S. Ambassador to South Korea Alexander Vershbow stated that South Korea's economy would enjoy "overwhelming benefits" such as increased U.S. investment and lower consumer prices with the completion of a free-trade agreement (FTA) with the United States. Vershbow cited research predicting that a U.S.-Korea FTA would increase Korea's real gross domestic product (GDP) by as much as 2 percent, boost exports to the United States by 15 percent and raise manufacturing employment by 6.5 percent. The United States and South Korea announced February 2 that the two countries plan to open talks around May on a comprehensive bilateral FTA to remove tariff and nontariff barriers and expand trade between their countries.

View ambassador's statement

View fact sheet on business support for U.S.-Korea FTA

Commerce Secretary Gutierrez, Deputy Secretary Sampson Discuss President’s Competitiveness Initiative

Commerce Secretary Carlos Gutierrez and Deputy Secretary David Sampson commented on President Bush’s Competitiveness Initiative, which he announced during his State of the Union address. In the February 2 “Ask the White House� online interactive forum, the Secretary fielded questions regarding the Initiative and U.S. competitiveness in general. In response to a question regarding the threat posed by China, Mr. Gutierrez noted that the Commerce Department is focused on expanding market access for American workers, businesses and farmers, and creating a level playing field in our trade with China, in addition to protecting intellectual property rights, because U.S. companies lose billions of dollars each year because of piracy and counterfeiting. In response to another participant who questioned why the U.S. was so focused on China, rather than on the Americas, the Secretary observed that in 2004 the U.S. exported more than $110 billion in goods to Mexico compared to less than $35 billion to China. According to Secretary Gutierrez, the United States is building on the success of NAFTA through negotiating additional free trade agreements with countries in the Americas. He stated, “Keeping America competitive requires us to open more markets for American goods and services.� During a visit to NCR in Dayton, Ohio, Deputy Secretary Sampson commented on the President’s Competitiveness Initiatives, stating that Mr. Bush “believes that the key to preserving America's economic strength and leadership in the world is by encouraging innovation, in new and better ways.� He stated that the Commerce Department will play a “key role� in the President's Competitiveness Initiatives. For example, Commerce’s National Institute of Standard and Technology (NIST) will contribute to new cancer therapies; smaller computer chips; and help researchers develop unbreakable codes to protect electronic financial transactions and strong commitment to research and development of new technology, among others.

View Secretary Gutierrez’s “Ask the White House� transcript

View Commerce press release

USITC Report Concerning Impact Of U.S.-Oman FTA

On February 3, the U.S. International Trade Commission (USITC) released its report assessing the bilateral free trade agreement (FTA) that the President has entered into with Oman. According to USITC’s executive summary of the report, titled "U.S.-Oman Free Trade Agreement: Potential Economywide and Selected Sectoral Effects," the U.S.-Oman FTA will likely have a small but positive impact on the U.S. economy. The FTA will likely increase export opportunities for U.S. firms when Oman immediately removes its uniform tariff of 5 percent ad valorem on U.S. goods and as it phases out its other tariffs on U.S. goods. The FTA also will likely increase opportunities for U.S. providers of services through improved market access and greater regulatory transparency. For example, the agreement will liberalize provisions affecting trade in insurance services as well as banking and securities services, such as asset management services. The provisions on trade facilitation, for example, will likely expand export opportunities for U.S. firms, particularly for goods often subject to technical and regulatory standards and requirements such as food products and building materials. The FTA's provisions on investment, though likely to have a small effect on the level of U.S. direct investment in Oman and the level of Oman’s direct investment in the United States, will likely provide U.S. investors operating in Oman with greater opportunities as well as equal treatment with Omani investors.

View USITC press release

View USITC report

United States, South Korea Announce Intention to Negotiate Free Trade Agreement

On February 2, U.S. Trade Representative Rob Portman announced the Administration’s intent to negotiate a free trade agreement (FTA) with Republic of Korea with the goal of removing tariffs and non-tariff barriers and expanding trade between the countries. Portman made the announcement at the United States Capitol building and was joined by Korea’s Minister of Trade Hyun-chong Kim and a bipartisan group of leaders in Congress. The negotiations will begin after the expiration of a 90-day consultation period. Portman commented, "This is the most commercially significant free trade negotiation we have embarked on in 15 years." Portman noted that Korea is the world’s 10th largest Economy, with an annual GDP rapidly approaching $1 trillion, and the U.S.’s 7th largest export market. Portman was pleased by the bipartisan enthusiasm the launch of FTA negotiations with Korea has generated, commenting that "USTR will continue its intensive bipartisan consultations with Congress on this and other trade matters."

View USTR press release

View President's statement on U.S.-Korea FTA

View fact sheet on economic and strategic benefits of U.S.-Korea FTA

View fact sheet on agricultural opportunities of U.S.-Korea FTA

View U.S. and Korea economic statistics

U.S. Adds New Welsh Grant to WTO Case Against Airbus Subsidies

On February 2, U.S. Trade Representative Rob Portman announced that the United States has made an additional complaint in its WTO challenge to EU subsidies of Airbus, objecting to a new grant from Wales to the aircraft consortium for training workers to build the A350 passenger plane. "We still believe that a negotiated solution is possible," Portman commented, "But one way or another, the subsidies need to end." Portman said that even after nearly two years seeking to end subsidies for large civil aircraft production, the United States still would prefer a negotiated resolution with the Airbus consortium countries of France, Germany, Spain and the United Kingdom, but the EU has continued to grant new subsidies to Airbus, “even as our WTO case proceeds." He added, "By taking this step, we are ensuring that the new subsidies will be included in our case." Also on February 2, at the WTO in Geneva, the United States blocked a retaliatory EU case against alleged U.S. subsidies of Boeing. Under WTO rules, the United States cannot block such a request a second time.

View USTR press release

Mexico Opens Market to U.S. Bone-In Beef

Secretary of Agriculture Mike Johanns announced February 1 that Mexico has resumed trade with the United States in bone-in beef from animals under 30 months of age. Mexico had closed its market to U.S. beef following the December 2003 discovery of bovine spongiform encephalopathy (BSE or mad cow disease) in a single Washington state cow imported from Canada. In March 2004, Mexico opened its market to boneless U.S. beef from animals under 30 months. Commenting on the decision, Johanns stated, "Mexico's decision to further open its market to U.S. beef is a testament to the safety of U.S. beef and a clear expression of confidence in the U.S. safeguards to prevent BSE." The United States, Canada and Mexico agreed to harmonize their BSE risk- mitigation measures in April 2005, and Mexico also announced February 1 that it would resume accepting bone-in cuts of Canadian beef as well.

View USDA press release

Ambassador-Designate Promises To Pursue Prominent Role for APEC

During his January 31 confirmation hearing before the Senate Foreign Relations Committee, Michael Michalak, President Bush’s nominee to serve as senior U.S. representative to the Asia-Pacific Economic Cooperation (APEC) forum, stated that APEC has become the premier mechanism for multilateral cooperation in the Asia-Pacific region. If confirmed for the position, Michalak said he would work to ensure the APEC forum's continued prominence in matters of trade, investment, and economic growth. He promised to advance U.S. objectives in the region, such as increasing prosperity through liberalization of trade and investment.

View USIS Washington File report