WT/TPR/M/126/Add.3 Page 21
World Trade OrganizationOrganisation Mondiale du Commerce
Organización Mundial del Comercio
WT/TPR/M/126/Add.3
22 November 2004
(04-5013)
Trade Policy Review Body
14 and 16 January 2004 / Original: English/
anglais/
inglés
TRADE POLICY REVIEW
UNITED STATES
Minutes of Meeting
Addendum
Chairperson: H.E. Mrs. Mary Whelan (Ireland)
This document contains the final responses from the United States[1].
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Organe d'examen des politiques commerciales
14 et 16 janvier 2004
EXAMEN DES POLITIQUES COMMERCIALES
ÉTATS-UNIS
Compte rendu de la réunion
Addendum
Présidente: S.E. Mme Mary Whelan (Irlande)
Le document contient les réponses finales fournies par les États-Unis1.
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Órgano de Examen de las Políticas Comerciales
14 y 16 de enero de 2004
EXAMEN DE LAS POLÍTICAS COMERCIALES
ESTADOS UNIDOS
Acta de la reunión
Addendum
Presidenta: Excma. Sra. Mary Whelan (Irlanda)
Este documento contiene las respuestas finales de los Estados Unidos1.
WT/TPR/M/126/Add.3
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WT/TPR/M/126/Add.3
Page 241
RESPONSES FROM
THE UNITED STATES
CHAPTER I: RECENT ECONOMIC DEVELOPMENTS
Question: (Switzerland #1)
How does the U.S. intend to correct the twin deficits? How sustainable are they in the medium term? What could be the impact of the continuing dollar depreciation on key elements of the current account of the balance of payments?
Question: (Turkey #1)
Within the last two years, both the U.S. budget and current account deficits have started to widen. How does the U.S. consider to tackle the issue of twin deficits?
Answer
Much of the shift from budget surplus to deficit came from a timely fiscal response to the weakening of the U.S. economy. This fiscal action contributed to the U.S. economic revival, and it is benefiting both the United States and the rest of the world.
The budget deficit is expected to be about $500 billion in fiscal year 2004. This is a legitimate subject of concern. We intend to reduce it. Even this large, however, the deficit should be kept in perspective. The ratio is lower than for deficits in 5 of the previous 20 years and is well below the deficit peak of 6.0percent in 1983.
Under U.S. Administration policies, the deficit is projected to begin declining after this year. It is expected be in a $300 billion range for 2005 and 2006. By 2009, the deficit is expected to fall to half its 2004 level, or around 1.7 percent of GDP. This is lower than the average deficit-to-GDP ratio over the last four decades. The ratio of government debt-to-GDP declines over this period as well. This progress, of course, requires maintaining the fundamentals of strong economic growth together with spending restraints. The links between budget deficits and current account deficits are tenuous at best. Over the last 7 years, the most significant increase in the U.S. trade and current account deficits occurred during the period of fiscal surpluses.
Current account balances are related to many factors other than the budget balance, many of which are out of the immediate control of the government. These include changes in relative rates of economic and productivity growth among countries, relative inflation rates and relative attractiveness of capital markets. Much of the increase in U.S. net capital inflows and the U.S. trade deficit has been related to the relatively strong performance of the U.S. economy over the last decade. One path of adjustment for the external deficit would be for Japan, European Union members and a number of other countries to improve their rates of economic growth and imports of goods and services.
Question: (China #2)
Could the U.S. please provide detailed statistics and information on imports that assist to control its domestic prices and to achieve the objectives of its macroeconomic policy?
Answer
The Bureau Labor Statistics collects price data and disseminates an index of U.S. import and export prices. Statistics and information on trends in U.S. import prices are publicly available at: http://www.bls.gov/mxp/.
Question: (China #3)
How will U.S. authorities ensure that trade will not be unduly hindered by administrative and other barriers when dealing with the "twin deficits" issue in the future?
Answer
The United States is fully committed to meeting its obligations under all WTO agreements. Furthermore, the United States will continue to pursue energetically a successful outcome in the Doha negotiations, which are an opportunity for all Members to reduce many of the tariff and non-tariff barriers that hinder trade.
Question: (China #4)
How does the U.S. comment on the fact that Sino-U.S. imports and exports simultaneously increased in recent years against the adverse trend suffered by U.S. merchandise trade with other partners?
Answer
The Chinese economy has been one of the fastest growing in recent years. Its imports from the world, not just the United States, are increasing rapidly. It is, therefore, not surprising that U.S. exports to China have increased sharply in recent years, even as they have shown little growth and even declined to a number of trade partners that have not enjoyed China's recent economic dynamism. The rapid growth of U.S. imports from China reflects both the increasingly strong recovery and expansion of the U.S. economy, as well as China's highly competitive position vis a vis many third country suppliers to the U.S. market of a considerable range of products imported by the United States.
CHAPTER 2: DEVELOPMENTS IN TRADE AND INVESTMENT POLICY
(4) Preferential and Other Arrangements
Question: (New Zealand #8)
What is the strategy and criteria for conducting further regional and bilateral free trade agreements, in particular with countries which are already strong advocates of free and open trade? Could the UnitedStates elaborate on how it sees bilateral trade agreements as complementing multilateral negotiations?
Answer
The U.S. strategy is to pursue actively numerous regional and bilateral initiatives to liberalize trade, including free-trade agreements (FTAs). All FTAs negotiated by the United States have WTO rules as a foundation. Initiating FTA negotiations with countries committed to trade liberalization helps ensure the U.S. goal of comprehensive coverage in the resulting agreement. In addition, pursuing agreements with free-trade advocates permits even greater degrees of innovation in FTAs. The innovations pioneered in these agreements can be, and have been, replicated in multilateral agreements. These regional and bilateral agreements can act to accelerate and deepen multilateral liberalization. By pursuing multiple free trade initiatives, we are creating a "competition for liberalization" that provides leverage for openness in all negotiations and establishes models of success that can be used on many fronts.
Question: (China #5)
What is the opinion of the United States about the impact of FTA arrangements on the multilateral trading system regarding the negotiating and administrative resources and the possible impacts incurred on trade by the multi-structure on implementation, inter alia the rules of origin, of various FTAs?
Answer
Please refer to the response to New Zealand question #8. Regarding resources, any active trade agenda will require resources. However, it is our view that the economic benefits to our citizens and the citizens of our free-trade partners far outweigh any administrative costs or resource burdens.
The United States maintains rule of origin regimes in the context of its preferential trade arrangements that are transparent and provide great certainty and predictability to the trading community. For example, as part of its FTA origin regimes, the United States issues binding advance rulings at the request of traders, consistent with the commitments under the WTO Agreement on Rules of Origin. The FTA origin regimes are designed for efficient administration by the customs authorities of the Parties and provide trade facilitative methods for traders to achieve compliance with FTA origin provisions.
Question: (European Union #6)
The EC notes with concern a growing discrepancy between the pro-market access stance the U.S. takes in multilateral fora and the use of far-reaching safeguard measures in recent bilateral agreements, such as the FTA with Chile. Is the U.S. moving the substance of trade agreements - including safeguard - into bilateral or regional agreements, while only supporting multilateral trade liberalization in as far as it benefits U.S. exports?
Answer
U.S. FTAs, from NAFTA to the more recently concluded agreements, are exemplary among WTO Member regional trade agreements with regard to the great extent they eliminate barriers to agricultural trade. They therefore squarely promote GATT Article XXIV objectives, rather than create any discrepancy as suggested in the question. The U.S. - Chile FTA includes a price-based safeguard mechanism on a limited and fixed number of products that allows for a proportional increase in the tariff, which cannot exceed MFN rates. Safeguard provisions are fairly common in FTAs. In the U.S.-Chile agreement, their use as a transitional device in fact facilitates the removal of tariff barriers on sensitive products. We see no conflict between this safeguard mechanism and pursuing highly ambitious agriculture goals in the WTO, as the United States has done since the launch of the Uruguay Round in 1986. We consider our objectives in the Doha Round to serve the interests of U.S. agriculture as a whole.
Question: (European Union #46)
Bilateral, regional and global trade liberalization is vital for promoting prosperity, growth and development to the benefits of the world at large. The EC considers that the WTO and multilateral liberalization is the most certain way for promoting global interests for industrialized countries and developing countries at large. How does U.S. judge the relative importance and weight of bilateral/FTA policies and further development of the WTO system in terms of its own trade and development needs? And to what extent has the U.S. analyzed and compared the efficiency and level of economic benefits delivered by bilateral trade agreements by comparison with multilaterally agreed liberalization?
Answer
The United States is steadfast in its commitment to the rules-based system of the WTO, and continues to be a leader in pursuit of ambitious multilateral liberalization through the WTO. With regard to bilateral and regional liberation, the U.S. strategy is to ensure a complementary approach between multilateral system of the WTO and our regional and bilateral initiatives. Rigorous pursuit of bilateral and regional liberalization does not lessen the U.S. commitment to the multilateral system. U.S. bilateral and regional agreements use the WTO as a foundation for further cooperation on trade. These regional and bilateral agreements can also act to accelerate and deepen multilateral liberalization. By pursuing multiple free trade initiatives, we are creating a "competition for liberalization" that provides leverage for openness in all negotiations and establishes models of success that can be used on many fronts. The innovations for greater liberalization pioneered in our bilateral and multilateral agreements can be, and have been, replicated in multilateral agreements. Finally, it is notable that a recent IMF study of U.S. trade agreements concluded the U.S. model for bilateral and regional agreements meets many of the criteria for ensuring these agreements yield the greatest possible benefits.
Question: (Japan #3)
Does the U.S. consider that all the FTAs, which the U.S. has concluded after the passing of the TPA legislation by the Congress, achieve all the 17 principal negotiating objectives stipulated in the TPA legislation? Do the FTAs, which the U.S. will negotiate in the future, need to be consistent with all the 17principal negotiating objectives without exception?
Answer
Section 2102(b) of the Trade Act of 2002 ("Trade Act") (19 U.S.C. 3802(b), sets out seventeen principal negotiating objectives. Several of those objectives are explicitly applicable to negotiations in the World Trade Organization (WTO). Objectives relating to Improvement of the WTO and Multilateral Trade Agreements (Section 2102(b)(7)), WTO Extended Negotiations (Section 2102(b)(13)) and Border Taxes (Section 2102(b)(15) are examples. For agreements that are subject to trade promotion authority procedures, the Trade Act requires the President to state that the agreement "makes progress in meeting the applicable objectives described in section 2102(a) and (b)." (Section 2105(a)(2)(B)). President Bush submitted this statement and supporting documentation to the Congress with the draft bills implementing the United States-Chile Free Trade Agreement and the United States-Singapore Free Trade Agreement. Future free trade agreements that are submitted to the Congress for approval and implementation will need to meet these same requirements.
Question: (Japan #4)
Please explain the U.S. position on the relationship between the WTO-based multilateral trading system and the bilateral and regional FTAs. Does the U.S. pursue different roles for respective FTAs? If so, does the U.S. consider that it is preferable to have as many FTAs as possible?
Answer
With regard to the U.S. view on the multilateral/regional/bilateral relationship, please see the response to question #8 from New Zealand and to question #46 from the European Union. As we understand Japan's question, the United States does not pursue different roles for its FTAs, but seeks to ensure their complementarity to the multilateral system. In the choice of FTA partners, the United States seeks countries committed to liberalizing trade more deeply than required by current multilateral commitments. While the U.S. FTA strategy is to pursue actively numerous regional and bilateral initiatives to liberalize trade, the question of whether it is preferable to have as many FTAs as possible must depend ultimately on the degree of multilateral liberalization our WTO partners are willing to undertake.
Question: (Japan #5)
The negotiation of the U.S.-Central American Free Trade Agreement (CAFTA) was concluded in December 2003, between the U.S. and four Central American countries except Costa Rica. Will the Congress start its discussions on the CAFTA only after conclusion of the negotiations with Costa Rica? If the U.S. does not reach an agreement with Costa Rica, does the U.S. intend to conclude the CAFTA only with the four Central American countries excluding Costa Rica? What is the relationship between CAFTA and FTAA?
Answer
Negotiations between the United States and El Salvador, Guatemala, Honduras and Nicaragua on a U.S. - Central American Free Trade Agreement (CAFTA) were indeed closed in December 2003. Costa Rica has been an active participant in CAFTA since the beginning of the negotiations in January 2003. Costa Rica and the United States concluded negotiations for Costa Rica to join CAFTA in January 2004. In March 2004, the United States and the Dominican Republic concluded trade talks integrating the Dominican Republic into CAFTA. United States views the success of CAFTA as a milestone that lends further momentum toward conclusion of the FTAA. With regard to Congressional consideration of CAFTA, we have notified Congress of our intent to enter into this agreement. We will work closely with Congress to ensure timely consideration of CAFTA after it is signed.