APEC Individual Action Plan Peer Review Session

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2008/SOM1/012anx4

Agenda Item: V

Individual Action Plan Peer Review Sessionfor USA - Questions Submitted by Member Economies

Purpose: Consideration

Submitted by: APEC Secretariat

/ First Senior Officials’ MeetingLima, Peru
2-3 March 2008

APEC Individual Action Plan Peer Review Session

for the United States of America

Questions submitted by member economies

CANADA

Comment on Chapter IV. Investment

In assessing the national security impact of a transaction, FINSA expands several factors for CFIUS's consideration, rather than just expanding the concept of national security so as to include transactions involving critical infrastructure and critical technologies. Additional factors for consideration now also include: foreign-government control, potential for regional military threat to the interests of the U.S., projected long-term U.S. needs for critical resources, and the relevant country's cooperation on counter-terrorism, non-proliferation, and export control matters.

Question on Chapter III. Services

The report noted that services in the U.S. can be regulated at the federal or state level and vary across states (page 26). Currently, there is no option for an insurer to obtain a federal charter/license. The U.S. indicated that legislation had been introduced in the Senate and the House that would allow insurers to choose federal rather than state charters under an "optional federal charter" regulatory system (page 82). This would be of benefit in terms of transparency and transaction costs. The latest information given by the U.S. was that Senate Committee hearings were expected in late-2007. Can the U.S. provide any updates on this item?

Comment on Chapter IV. Investment

CHINA

In 2007, US adopted Foreign Investment and National Security Act of 2007. Could US explain what are the major differences between the new Act and the previous policy? What are the implications to the foreign investments? Is there any clear definition by US on the notion of important infrastructure and technology? According to the new Act, what kind of materials and information should be presented if the investors do have intention to invest to areas that are required such a review?
Could US give a general introduction on how to ensure its SPS measures will not distort normal trade? What measures have US adopted to ensure that the SPS procedures will not be intervened by the administrative actions? The Agriculture, Rural Development, Food and Drug Administration, and Related Agencies AppropriationsAct, 2008 clearly states that the fund raised should not be used in formatting and implementing any rules and regulations that permit important of Chinese processed poultry. Whether has US adopted such an approach to limit the import from other certain normal trading partners before? With such a limitation, whether is there still possibility for US to make the importation of China’s processed poultry possible?
According to US WTO commitments on legal services, 24 US states have made commitments on cross-border supply, consumption abroad and commercial presence, the rest 27 states have not made commitments on Mode 3(commercial presence). Foreign lawyers must obtain foreign legal advisory admission before conducting legal services. Foreign legal service providers are requested in most of US states with at least 5 years of relevant experience before applying registration. Could US state the reasons and more detailed information for those requirements and limitations?

JAPAN

(Customs Procedures)

Regarding the 100% Cargo Inspections mentioned in the 2nd paragraph of the Chapter 6 and Chapter 15, we are concerned that it could give negative impacts on the exportation from Japan to the US if it is not operated in an appropriate manner. We believe that it should be implemented in line with the WCO Guideline so that it will not hinder smooth trade. What is the view of the US on this point?

The United States has been taking layered risk management approach for the security of trade through the implementation of various security initiatives, such as CSI and C-TPAT.

As one of those initiatives, the proposed rules for so-called “10+2 (ten plus two)”, which requires additional advance data filing from U.S. importers and carriers, are now issued. It would be appreciated if you could share your idea on the consistency between the security filing data elements and the WCO SAFE Framework.

(Government Procurement)

Japan appreciates the US’s efforts to develop an Integrated Acquisition Environment (IAE), which will facilitate the access of buyers and sellers to information about government procurement. Could the US provide any information about when it will start operating?

KOREA

1. There are growing concerns from major trading partners of the United States, including Korea, over a series of new security initiatives on trade, including 100% cargo inspection. While the United States has made some progress in trade facilitation by promoting paperless trading in new projects such as Virtual Private Network (VPN), it has at the same time taken measures to strengthen security of trade. It is reported that such trade-restricting measures as frequent use of station inspections on cargo instead of mobile inspections have already increased costs of trading with the U.S.

How would the U.S. deal with these security-oriented measures, which are expected to offset much of the benefits from current trade facilitating programs? Is the U.S. considering any interim measures to minimize possible shocks on its trading partners or differentiated application of security initiatives based on individual risk assessment on trading partners?

2. There have been concerns from our industries that the United States' application of the Communications Act is not adequately transparent. According to Section 310(b)(4) of the Act, the review process is not open to the public when a foreign investor applies for the approval of indirect investment through the U.S. radio station license holder, thereby making the investment climate uncertain. What is the U.S. Government's view on the idea that an open review of its consistency with public interest will make the process more transparent? What prevents the U.S. from doing so?

MEXICO

1. Pages 22-23 of the report suggest that the US is already a highly liberalized economy in terms of tariffs; in particular we note the importance the US places on the Doha Round to further reduce tariffs. Nevertheless, due to the emphasis that APEC places on unilateralism, and as stated on the report, since the US relies heavily on external markets to drive the industrial and consumer market in the domestic economy, does the US envisage further unilateral liberalization, and if so, which are the sectors most likely to be considered?

2. Both page 12 and in the presentation depict a chart on the inflows of FDI into the US. We have noted that while inflows from most regions have decreased in the period 2000-2006, investment coming from Middle East and Asia-Pacific has shown the opposite trend. We are interested in learning which are the most representative sectors of the US economy (other than possibly the automotive) in which Asia-Pacific capital has been destined to, or whether these inflows have basically dispersed throughout the whole economy?

THAILAND

Thailand is well aware that the introduction of “Improving America’s Security Act of 2007” in August last year, which requires all ship cargos entering the US to undergo thorough screening at foreign ports and is derived from US efforts to ward off the risk of terrorist attacks.

Industries in Thailand have expressed concerns over possible implications of the measures. One serious implication would be the financial expenses involved, when participating countries are required to purchase expensive scanning equipment. Also, participating countries might need to increase investment in human resources to successfully operate the system. The 100 percent scanning requirement might also aggravate the already congested cargo traffic, which could in turn disturb the overall supply chain.

The difficulties brought about by the measures could be perceived in many countries as “restriction on trade”. Full implementation of the measures will require more studies and examinations. The US views and clarifications on this supposition will be highly appreciated.

In addition, Thailand would like to seek clarification on whether or not these measures would be inconsistent with the goals set out in the Second Trade Facilitation Action Plan (TFAP II) adopted by the MRT in 2007, which seek to reduce trade transaction costs by an additional 5% by 2010

Moreover, if the US reserves the right to apply such measures, Thailand believes it will be helpful if the US would consider offering assistance packages to developing countries to help them adjust to and participate in the program. The assistance program may include capacity-building, as well as cost sharing or other cost compensation mechanisms.

Section 609 of Public Law 101-162 prohibits the import of shrimp and shrimp products which have been caught with commercial fishing technology that may be harmful to sea turtles. Shrimp import is prohibited unless certified by the U.S. Department of State. Furthermore, one of the regulations stipulates that shrimps must be harvested from aquaculture facilities in which the shrimps have spent at least 30 days in ponds prior to being harvested. Could the United States clarify the rationale for this provision?

Import permits are required for the importation of certain animals, animal products, organisms and vectors and veterinary biological products, to protect U.S. livestock and poultry against the introduction of diseases that do not exist in the United States. The permit system is applied to animals from all countries except Canada and Mexico with some variation resulting from the species and country of origin’s disease status. We would like to know the reason why Canada and Mexico are exempted from this regulation.

Thailand’s Department of Livestock Development, Ministry of Agriculture and Cooperatives have submitted an application under the permit system, but the application has not been approved as yet. Up to the present day, Thailand has not been able to export animal and animal products to the United States except seafood. We would appreciate the United States’ comment on the status of this issue.

The United States does not apply any tariff quota or surcharges, safeguards, concessionary export financing, export taxes, government-mandated counter trade, or trade-related subsidies or tax exemptions that are contrary to her international obligations. With few exceptions, U.S. only maintains non-tariff measures (NTMs) required to protect health, safety, security or the environment, or to discharge U.S. obligations under international agreements. Please specify new NTMs that have been introduced and how significant are all the measures with respect to meeting the Bogor goals?

What are U.S. plans to further reduce the coverage of its system of discretionary import licensing (for plants and plant products, animals and animal products, steel, natural gas, controlled substances, beverages, and tobacco product)?

What is the rationale for U.S.’s quantitative import restrictions (TRQ) on dairy products, sugar, sugar-containing products, peanuts, cotton, and beef? Is there a plan to replace these restrictions with alternative forms of regulation?

What is the rationale for U.S. to control the import of fish, fish products, and sport fishing equipment other than protection of dolphins and other marine resources? Is there a plan to replace these measures with alternative forms of regulation?

What are U.S.’s plans to reduce agricultural export subsidies?

Is there any barrier, measure, new regulation or requirement under the Bioterrorism Act?

US import restriction on shrimp and shrimp products under the section 609

of Public Law 101-162

The measure prohibits the import of shrimp and shrimp products which have been harvested with commercial fishing technology that may adversely affect turtles unless the US Department of State certifies that it does not pose risk to sea turtle. It is not consistent with the APEC Bogor Goals of free and open trade.To achieve that goal, trade facilitation and reduction of trade barriers among APEC Member Economies are needed.

In this matter,Thailand would like to inquire the US plan to improve this impediment since Thailand has also improve the turtle conservation measures and use

Turtle Excluder Devices (TEDs) considerably.

US Automatic detention of the Thai canned seafood (crabs and shrimps)

The measure has been in place since 1980 and has not been lifted, even though Thailand has a highly developed industry with high quality products and a high standard of sanitation which is recognized worldwide.

Thailand feels that this measure is unfair and discriminating to the Thai industry and that these items should be removal from automatic detention list.

1.Is there any intellectual property-related dispute settlement system (outside the court) in the US, Canada and Peru? If so, Can you provide more information? (history, methods using for the settlement etc.)
2. Some comments or observations on the system.

ABAC

We note initiatives adopted by the US relating to secure trade, including the 100 percent cargo inspection provided under Public Law No. 110-53 or the Implementing Recommendations of the 9/11 Commission Act of 2007 as cited in Chapter 6 of the IAP Study Report and in the response to question 84 of the Appendix to the report. The implementation of this security measure could significantly hinder shipments due to time or prohibitive costs (it is estimated, for example, that the cost of one scanner is approximately $1.5-$3.0 million). What countervailing measures does the US intend to provide in order to offset such problems? Will the US be prepared to assist economies in financing the scanning equipment?

ABAC would like to seek clarification from the US on its response to the query relating to the interpretation of the Bogor Goals in terms of reducing all tariffs and eliminating non-tariff measures by 2010 (Question 10 of the Appendix).

ABAC notes that the US is actively pursuing bilateral and plurilateral FTAs. A number of the FTAs concluded provide for the phase out of tariffs on certain products beyond the Bogor deadline of 2010 and in one instance the full implementation of commitments go even beyond the 2020 target for developing economies. How does the US reconcile this with its commitment to the Bogor Goals? [This seeming inconsistency between the provisions of FTAs concluded and the Bogor Goal commitments is observed in FTAs concluded by a number of other APEC economies.]