May 2006 News

Incremental WTO Deal Not Acceptable to U.S., Official Says

At the Organization for Economic Cooperation and Development (OECD) meeting in Paris, Deputy U.S. Trade Representative Susan Schwab said the United States remains determined to conclude the long-stalled negotiations successfully in 2006. "We can only achieve success if the negotiations produce significant, new market opportunities," Schwab said, adding that the United States wants “real results, not just 'cuts on paper.'" Schwab made her statement on the second day of the annual OECD ministers' meeting.  European Union (EU) trade commissioner Peter Mandelson had previously said his bloc would be willing to improve slightly its offer to cut agricultural tariffs if other WTO members made more concessions. The United States has maintained that the existing EU offer, for relatively small cuts in tariffs coupled with hundreds of exclusions, would achieve no real increase in agricultural market access.

View text of Schwab’s statement

U.S. and Switzerland Sign “Trade and Investment Cooperation Forum” Agreement

On May 25, U.S. Trade Representative Rob Portman and Swiss Federal Councillor Joseph Deiss signed the U.S.-Switzerland Trade and Investment Cooperation Forum Agreement. This agreement establishes a "Trade and Investment Cooperation Forum" for the United States and Switzerland to discuss bilateral trade and related issues and examine ways to strengthen our economic relationship. "Today’s agreement will provide a vehicle for deepening and broadening already strong U.S.-Swiss economic relations," said Ambassador Portman. "We will use the Forum to pursue initiatives in specific areas, with a view to concluding agreements or other arrangements that offer real opportunities for workers, farmers, service providers, manufacturers and consumers in our two countries." Two-way goods trade between the United States and Switzerland was $23.7 billion in 2005. The stock of U.S. foreign direct investment in Switzerland was $100.7 billion; two-way goods trade in services was $17.6 billion, and foreign direct investment was $223.6 billion.

View USTR press release

U.S., China To Develop Industrial Standards Assessment System

The United States Trade and Development Agency (USTDA) announced that the American Chamber of Commerce in China will receive a technical assistance grant to promote increased cooperation between the United States and China in the development of commercial and industrial standards and regulatory policy. The $500,000 grant will support the development of a U.S.-China Standards and Conformity Assessment Cooperation Program (SCACP), USTDA said.  The initiative will make it possible for U.S. and Chinese industry and government representatives to work together in establishing policies and processes for the development of standards and regulations and in assessing conformity. Transparent standards and regulations and a consistent conformity-assessment system will help China meet the obligations it assumed in its WTO accession agreement, according to USTDA. The WTO's Agreement on Technical Barriers to Trade acknowledges that technical regulations and industrial standards vary from country to country, but tries to ensure that regulations, standards, testing and certification procedures do not create unnecessary obstacles to trade.

View text of USTDA statement

U.S. Proactive Trade Agenda Delivers Results

USTR has released a fact sheet detailing its accomplishments during the last 12 months. For example, during this period, the Central American/Dominican Republic and Bahrain Free Trade Agreements (FTA’s) have been passed, FTA negotiations with Korea and Malaysia have been launched, and negotiations with Peru, Oman and Colombia have been completed. Several other agreements, including the U.S.-China Textile Agreement, the U.S.-EU Wine and Enlargement Compensation Agreements, and the U.S.-Mexico Tequila Agreement are in force.

View USTR fact sheet

Deputy USTR Bhatia to Visit Taiwan, India and Vietnam

According to a USTR press release, Deputy U.S. Trade Representative Karan Bhatia will travel to Taiwan, India and Vietnam May 24 to June 2 to advance the US trade agenda. Bhatia stated, "With our recent bilateral market access agreement with Vietnam, a vigorous trade discussion with India and our ongoing engagement with Taiwan, we are demonstrating that we are eager to deepen our relationship with our Asian neighbors." In Taiwan, Bhatia will lead an interagency delegation that will participate in meetings under the American Institute in Taiwan/Taipei Economic and Cultural Representative Office Trade and Investment Framework Agreement. In India, Bhatia will lead bilateral trade discussions under the Trade Policy Forum, the purpose of which is to enhance the U.S.-India trade and investment environment. In Vietnam, Bhatia will take part in the Asia Pacific Economic Cooperation (APEC) Trade Ministers’ meeting.

View USTR press release

Negotiators See Progress on U.S.-China Beef Trade Protocol

On May 15, the U.S. Department of Agriculture (USDA) announced that the U.S. and China have made progress in negotiating an agreement that would allow for resumption of U.S. beef exports to China. Delegations from the two countries met in Beijing May 13-14 to discuss the terms of a science-based trade protocol, consistent with food-safety guidelines of the World Organization for Animal Health (OIE). The talks followed up on China's commitment -- made a month earlier at the 17th meeting of the U.S.-China Joint Commission on Commerce and Trade (JCCT) in Washington -- to reopen its market to U.S. beef by June, following development of such a protocol.  During the talks, the two sides also completed a memorandum of cooperation that would enable them to address food-safety issues on an ongoing basis. The U.S. has pushed for implementation of trade guidelines based on the scientific standards of the OIE, which oversees livestock safety issues for 167 member countries. U.S. and Chinese officials expect to meet for a second round of talks within the next few weeks, according to a USDA spokesman, while another team of USDA officials is traveling to Japan to continue discussions on resumption of U.S. beef trade to that country, USDA said.

View USDA press release

U.S., Vietnam Conclude In Principle Bilateral WTO Accession Agreement on Market Access

On May 14, USTR announced that the United States and Vietnam have reached an agreement in principle on a bilateral market access agreement that will lower trade barriers to many U.S. industrial and agricultural products and services. The agreement will help clear the way for Vietnam's WTO accession, according to USTR. U.S. Trade Representative Rob Portman commented, "This is a very good agreement for the United States. It opens a new and growing market for American agricultural goods, services such as financial services, and manufactured products." The announcement noted that the formal signing of the bilateral agreement would take place in the near future once both sides have undertaken the required legal and legislative consultations.

View USTR press release

Imports of Rice at Issue in U.S. Trade Negotiations with Korea

U.S. trade experts say that rice, the staple food for much of Asia, will be a tough issue in negotiations on a U.S.-South Korea free-trade agreement (FTA) and could be an issue in U.S.-Malaysia FTA talks. Chris Garza, director of congressional relations in Washington for the American Farm Bureau Federation, said that his group has worried since the Koreans announced right after negotiations were launched in February they wanted rice excluded. Jeffrey Schott, a scholar at the Institute for International Economics in Washington, predicted that Korea will agree to a tariff-rate quota (TRQ) to allow some more imports.  "I would be surprised if there was free trade in rice at the end of this negotiation," Schott said, "but I would be even more surprised if the negotiation didn't produce increased market opportunity for U.S. exporters of rice to the Korean market." Schott said he doubted Korea could prevail in excluding rice from FTA negotiations the way the United States prevailed in excluding sugar in its FTA with Australia. According to the Farm Bureau, rice is also an import-sensitive commodity in Malaysia subject to government protection.  A Malaysian government corporation is the sole authorized importer of rice, with broad power to regulate imports by license and responsibility for promoting sale of the domestic crop, the Farm Bureau says.

View USIS Washington File report

U.S.-Oman Trade Pact Advances, but Division on Labor Persists

Members of the House Ways and Means Committee voted in favor of a free-trade agreement (FTA) negotiated with Oman, but remained divided over labor protection in that country. By a 23-11 vote, with only Republicans voting yes and most Democrats voting no, the Ways and Means Committee approved on May 10 in informal session draft legislation that would implement the FTA. The agreement would provide duty-free access on trade between the two countries, immediately for all industrial goods and over time for all agricultural goods. Some Democrats expressed hope that Oman soon will address their concerns about labor issues to make possible their voting in favor when the FTA comes before the full House. Republicans emphasized the diplomatic importance of approving an agreement with a long-standing ally in a strategic region where the United States faces hostility. Committee Chairman Bill Thomas said Oman's government has committed to reform its labor laws by October 31.  Oman's commitments should be at least as strong as those made by Bahrain before Congress passed in 2005, with overwhelming bipartisan support, an FTA with that country, he said. 

View USIS Washington File report

Relations with China a Top U.S. Concern, State's Zoellick Says

During his May 10 testimony before the House International Relations Committee, Deputy Secretary of State Robert Zoellick stated that relations with China are a top concern for the United States, and will be for the foreseeable future. Zoellick stated that China is increasing its influence within the international system, and he acknowledged that "China's growing global footprint" is a cause for tensions. That is offset, he said, by the fact that China's focus is now on pursuing its own economic, political and military strength vis-à-vis other states within the international system rather than promoting communist revolution and ideological struggle from outside it. He added, however, that China's great economic strides are threatened by corruption that undermines the legitimacy of its leadership. Zoellick discussed the need for China to become a "responsible stakeholder," explaining that "a more influential China has greater capacity than most to help maintain the peaceful, prosperous, and open international system from which it has benefited."

Zoellick also noted there are concerns on both sides regarding economics and trade and access to markets. These issues were discussed during the recent meeting of the U.S.-China Joint Commission on Commerce and Trade (which was co-chaired by Commerce Secretary Carlos M. Gutierrez), which addressed issues affecting U.S.-China trade and investment. At the meeting, China committed to addressing a number of U.S. trade concerns in three areas: enhancing access of U.S. companies and farmers and ranchers to the Chinese market (which includes re-opening its market to U.S. beef imports); improving protection of intellectual property rights in China; and moving toward a transparent and market-oriented system of government procurement in China.

View USIS Washington File report

View Commerce press release on JCCT

View text of Secretary Gutierrez’s JCCT press statement

View JCCT outcomes fact sheet

Special 301 Report Notes Continued Progress on Intellectual Property Rights, Identifies Significant Improvements Still Needed in China and Russia

The 2006 “Special 301” report on the adequacy and effectiveness of intellectual property rights (IPR) protection provided by trading partners around the world was issued recently by USTR. The report identifies governments who need to take stronger actions to combat piracy and counterfeiting, for example, by cracking down on illegal optical disc production and Internet piracy, or stepping up border enforcement against trade in fake goods. Commenting on the report, U.S. Trade Representative Rob Portman noted that it acknowledged “the positive steps that several of our trading partners have taken to strengthen IPR protection over the past year," but added that more needs to be done, “… particularly with the implementation of effective protection and enforcement against piracy and counterfeiting." As China is a top IPR enforcement priority, USTR will maintain heightened scrutiny of China, step up consideration of its WTO dispute settlement options, and for the first time scrutinize IPR protection and enforcement at China’s provincial level by conducting a special provincial review in the coming year. While the report noted that Russia has taken some steps to curb pirated production of optical discs in factories, particularly those located on government-owned property, high levels of IPR infringement remain, particularly infringements connected with Russia-based optical disc plants and websites.

View USTR press release on 2006 Special 301 report

View text of 2006 Special 301 report

U.S. Trade Official Praises Pakistani Economic Reforms

During his remarks to the American Business Council in Islamabad on May 5, Under Secretary of Commerce for International Trade Franklin Lavin praised the efforts of the Pakistani government to open the country’s economy to greater trade and investment and said the government’s economic reforms have produced stronger U.S.-Pakistani commercial relations.  But he said those ties still fall well short of their potential, and urged Pakistan to continue its efforts to build an investment-friendly economic environment that will foster greater economic cooperation. Lavin praised President Pervez Musharraf’s commitment to good governance, the transparency of government procurement policies, Pakistan’s prosecution of intellectual property rights (IPR) violations, and encouraged Pakistan to extend IPR protections to pharmaceuticals. Lavin said that once the United States and Pakistan finalize a Bilateral Investment Treaty (BIT), the U.S. Senate will evaluate Pakistan’s business climate and investment policies to determine if they meet the same standards as other countries with which the United States has BITs.

View text of Lavin's remarks

Portman Says Few Weeks Remain for Success in WTO Negotiations

During a May 3 press briefing in Geneva with Secretary of Agriculture Mike Johans and Deputy U.S. Trade Representative Susan Schwab, U.S. Trade Representative Rob Portman indicated that any chance of success for the Doha WTO negotiations will become clear in the weeks ahead. WTO members missed the April 30 deadline for agreeing on modalities, or specific formulas and deadlines, to cut agricultural and industrial tariffs and government payments to farmers. Portman has been pressing the EU and other wealthy countries to embrace deep cuts in agricultural tariffs as the United States proposed in October.  He also has been pressing rapidly growing emerging economies to accept deep cuts in industrial tariffs and to open their markets to services. Portman said the United States remains committed to successful conclusion of the negotiations.

View transcript of press briefing

Secretary Gutierrez’s Statement on TABD Recommendation for Barrier-Free Transatlantic Marketplace

Commerce Secretary Carlos M. Gutierrez stated that the Department welcomes the Transatlantic Business Dialogue’s (TABD) 2006 recommendations towards a barrier-free transatlantic marketplace. He stated, “The U.S.-EU economic relationship is a testament to the benefits of trade liberalization, and we will continue to tackle barriers to trade and investment as identified by the TABD and our larger stakeholder community.”

Minor Agreement Not Acceptable Result of Doha Trade Talks

In a statement to the WTO Trade Negotiations Committee in Geneva, Deputy U.S. Trade Representative Peter Allgeier said that participants in the WTO negotiations should not aim for a deal that achieves only a minor opening of markets. He added that members should not delay tough decisions for months more. In the U.S. view, the EU and other wealthy markets need to cut sharply support payments to farmers as well as farm tariffs, and rapidly expanding developing countries need to reduce barriers to imported manufactured goods and services. "The developing countries, most of all, need such a result," Allgeier said.  "They will be the biggest losers if we fail." Not acceptable, he said, are "cuts on paper" where participants agree to reduce their higher bound tariff rates, the caps set by earlier WTO agreements, but not the lower rates actually now applied. WTO Director-General Pascal Lamy has instructed participants to engage in vigorous, continuous negotiations until a scheduled monthlong break at the end of July.

View text of Allgeier's statement

Auto Barriers in Korea, Malaysia Pose Trade Negotiation Challenge

According to U.S. experts, opening up trade in autos poses a major challenge in free-trade agreement (FTA) negotiations with South Korea and Malaysia. While both countries’ practices are different, Korea’s and Malaysia’s auto markets are described as among the most closed to foreign competition. The first round of U.S.-Korea FTA negotiations is scheduled the week of June 5, but Stephen Collins, president of the Automotive Trade Policy Council, said that he does not expect quick resolution of U.S.-Korea auto issues. The United States has been pressing Korea for at least 10 years to open its auto market to competition, but import penetration remains less than 3 percent share of the total South Korean auto market. Jeffrey Schott, a senior fellow at the Institute for International Economics in Washington, said Korea must open its market more to foreign competition if it wants an FTA.

Collins said that Malaysia is the biggest market in Southeast Asia for automobiles, with more than half a million sales a year, but the Malaysian Government has protected its auto industry from foreign competition using high tariffs and nontariff barriers for many years. Those policies already have begun to change, however, partly because of Malaysian participation in the WTO and in an FTA with its neighbor countries in the Association of Southeast Asian Nations (ASEAN), according to USTR. While the Malaysian Government has eliminated some local-content requirements and has cut its tariffs for autos having at least 40 percent ASEAN content, it has imposed excise taxes on autos to compensate for the lost tariff revenue. Nevertheless, Collins said, the FTA negotiations offer a good opportunity to open Malaysia's market to more imports, citing significant reforms to the country's national auto policy announced just weeks ago.

View USIS Washington File report

United States and India Enhance Commercial Dialogue

On May 2, Under Secretary of Commerce for International Trade Franklin L. Lavin and Indian Commerce Secretary S.N. Menon launched a renewed Commercial Dialogue between their two countries, three months after President Bush and Indian Prime Minister Singh announced they would elevate and expand the dialogue. Originally established in 2000, the Commercial Dialogue serves as a mechanism for addressing bilateral trade disputes. Noting that U.S.-India trade has nearly doubled in the last three years, Lavin stated that the Commercial Dialogue will: continue to involve the private sector to reduce bilateral trade issues; foster progress in functional, cross-cutting areas, such intellectual property rights and trade remedies; and re-focus its existing work on standards to address sectoral topics. Lavin added that he would like to explore a roundtable on pharmaceuticals and a business mission under the aegis of the Commercial Dialogue.

View ITA press release