Emergency Committee For American Trade
Publications

Home
About ECAT
Hot Issues
Positon Statements
Press Releases
Trade Resources
Key Trade Votes
Publications
Steel
CAFTA
Search
Members Only

The European Union

MAJOR TRADE NEGOTIATIONS

ECAT Member Companies actively support the negotiation and implementation of comprehensive and trade-oriented bilateral, regional, and global trade and investment agreements. In the 1990s, the United States led trade and investment liberalization efforts with the North American Free Trade Agreement (NAFTA), the Uruguay Round Agreements and the WTO Agreements on Information Technology, Basic Telecommunications and Financial Services. In 2001 and 2002, the United States has renewed its push by entering into substantial new negotiations. These negotiations are important not only for the trade and investment liberalization that they bring, but also in maintaining a level playing field as many of the United States' trading partners, particularly the European Union (EU), Canada and Mexico, have embarked on a series of bilateral free trade agreements that provide special benefits to their farmers, manufacturers, service providers and workers to the exclusion of the United States. Renewing the consensus on trade and investment liberalization and passage of trade promotion authority legislation will allow the United States to regain its leadership in pursuing trade-oriented bilateral, regional and global trade and investment agreements. ECAT Member Companies are focused in particular on the following priority negotiations:

  • World Trade Organization negotiations;
  • Free Trade Area of the Americas negotiations; and
  • Negotiation of other bilateral and regional trade- and investment-liberalizing agreements.

World Trade Organization Negotiations

After several years of discussions and a failed attempt at the Third Ministerial Conference in Seattle, Washington in 1999, the World Trade Organization (WTO) successfully launched broad new trade liberalizing negotiations at its Fourth ministerial Conference in Doha, Qatar on November 14, 2001. As discussed below, the so-called "Doha Development Agenda" includes negotiations on both the "built-in agenda" items of agriculture and services, as well as additional areas, such as goods market access and planned for negotiations in other areas.

Background

In the Uruguay Round Agreements establishing the WTO in 1995, WTO members agreed to a "built-in" agenda to start negotiations in agriculture and services no later than the end of 1999. During the intervening years, WTO members discussed the possibility of launching new negotiations, but differences remained on what issues would be addressed. These discussions came to the forefront in 1999 as the WTO unsuccessfully sought to launch negotiations at the Third Ministerial Conference in Seattle. In particular, the United States sought a narrow agenda focused on market access and the built-in agenda negotiations on services and agriculture, while the European Union (EU) and Japan promoted a broad agenda, including new areas such as competition policy and investment. The European Union also opposed any language suggesting that negotiations in agriculture should aim to eliminate export subsidies, as sought by the United States and the Cairns Group of countries. The developing countries favored a narrow agenda, but also sought the opportunity to renegotiate existing agreements in areas such as textiles and antidumping and address implementation issues as discussed in more depth in Section 6. The United States and EU adamantly opposed efforts to reopen existing agreements, and the United States particularly opposed efforts to renegotiate the antidumping and subsidies agreements. These differences were not overcome and negotiations were not launched in 1999.

Following the failure of the Seattle Ministerial, WTO Director-General Michael Moore and General Council Chairman Stuart Harbinson worked assiduously to bridge differences between WTO members and broaden the participation of all countries. The United States and EU also worked to reconcile their own differences; for example, the United States agreed not to oppose the EU's efforts to include competition policy and investment in the new negotiations. The United States worked as well with many developing countries to emphasize the benefits of a new WTO round. In the lead-up to the Doha Ministerial, Harbinson prepared several draft Ministerial Declarations and sought to reach agreement on major issues with interested countries. As a result of these preparations, compromise by WTO members and, in some cases, ambiguous wording, WTO members were well prepared to reach agreement on the Ministerial Declaration and associated documents on implementation (discussed in Section 6) and health policy issues (discussed in Section 2).

Doha Development Agenda

The 52-paragraph Ministerial Declaration agreed to in Doha launched a new round of negotiations that began in January 2002 and is scheduled to conclude by January 1, 2005. The Doha Declaration covers the following key areas:

  • Agriculture
  • Services
  • Goods market access
  • WTO rules
  • Transparency in government procurement
  • Investment and competition policy
  • Electronic commerce
  • Environment
  • Intellectual property rights
  • Trade Facilitation
  • Dispute Settlement

Agriculture

The failure to reach a consensus on the framework for agricultural negotiations was a chief reason for the failure of the Seattle Ministerial. The United States and the Cairns Group sought strong language on the elimination of agricultural export subsidies, while the EU and Japan resisted.

Despite the failure of the Seattle Ministerial to launch a new round, WTO negotiations were launched on agriculture on February 7, 2001, pursuant to the built-in agenda mandate of Article 20 of the WTO Agreement on Agriculture. From March 2000 to March 2001, seven special sessions of the Agriculture Committee were held and 45 proposals were made by a total of 121 WTO member countries. A number of proposals - including those from the United States, the EU, Japan, South Korea, Mexico, and Switzerland - were comprehensive, covering the full range of subjects, and other proposals address specific issues.

At the Doha Ministerial, compromise language was finally reached, which allowed a broader round of negotiations to be launched. In particular, WTO members agreed "without prejudging the outcome of the negotiations, to "comprehensive negotiations aimed at: substantial improvements in market access; reductions of, with a view to phasing out, all forms of export subsidies; and substantial reductions in trade-distorting domestic support." This language met the objectives of the United States and Cairns Group governments on pressing forward on the elimination of export subsidies, but the EU was successful in qualifying these provisions by including the "without prejudging" language as a chapeau. Like much of the Doha Ministerial Declaration, the agricultural section provides that "special and differential treatment" will be "integral" to the negotiations. As well, non-trade issues will be taken into account as provided by the Agreement on Agriculture. Modalities for the negotiations are to be established by March 31, 2003, with comprehensive draft schedules due at the Fifth Ministerial Conference in Mexico, later in 2003. It is hoped that the expiration of the so-called "peace clause" in 2003 (which bars actions against certain agricultural subsidies) will promote the timely conclusion of these negotiations.

ECAT supports the stated objective of the United States to secure substantial, progressive reductions in support and protection, including deep cuts in bound tariff rates and elimination of export subsidies. ECAT also supports U.S. efforts to ensure that the world's agricultural producers can use biotechnology, without fear of trade discrimination either by outright bans or discriminatory and/or burdensome labeling requirements. The agriculture negotiations should aim to reduce tariffs across the board and a special effort should be made to reduce the highest tariffs to levels that would not prohibit imports. The negotiations should clarify that tariff-rate quotas are only transitional measures and provide for their phase-out. Sectoral zero-for-zero tariff agreements should also be encouraged. The negotiations should seek a reduction in the aggregate measure of support beyond that agreed in the Uruguay Round. The agreement on domestic support should be structured to provide incentives for market-oriented reform. In addition, the negotiations should strive for an immediate end to export subsidies. The United States also should seek to eliminate the monopoly control of state trading entities (STEs) and discipline their non-market behavior. The monopoly powers of STEs should be ended in ways that ensure the rights of establishment, non-discrimination, and national treatment for foreign and domestic firms. As discussed in Section 2 with regard to food issues, ECAT has developed and supports adoption of the Food Chain proposal as a principle to seek to eliminate barriers at all levels of the food chain.

Services

WTO members reached a consensus in Seattle in 1999 on services negotiations, agreeing that such negotiations should be comprehensive and not exclude any sector. WTO members also agreed that services market-access discussion would include financial services, telecommunications, professional services, energy services, and distribution. They also agreed to promote pro-competitive, non-discriminatory domestic regulatory regimes. Notwithstanding the failure of the Seattle Ministerial, the WTO launched services negotiations on February 25, 2000 in accordance with the "built-in agenda" mandated by Article XIX of the General Agreement on Trade in Services (GATS). Throughout 2000 and early 2001, member countries submitted proposals on the framework and substance of the negotiations. In March 2001, the Council for Trade in Services agreed to "Guidelines and Procedures for the Negotiations," which indicated that the main method of negotiation would be "request-offer. Following the March 2001 stocktaking meeting, member countries submitted negotiating proposals in a number of areas.

At the Doha Ministerial, ministers reaffirmed the Guidelines and set the following deadlines:

  • Initial requests for specific commitments by June 30, 2002; and
  • Initial offers by March 31, 2003.

ECAT supports efforts to expand significantly the liberalization commitments under the GATS. In particular, ECAT supports efforts by the United States to have the WTO agree on a negotiating strategy that aims to narrow reservations, as a means to secure broader, more meaningful market-access commitments. In addition, ECAT supports global commitments to:

  • Ensure rights of establishment and ownership for U.S. foreign investors through wholly-owned entities or other business structures;
  • +Secure national treatment for U.S. companies operating overseas to ensure that foreign investors have the same market access as domestic companies;
  • Eliminate unnecessary restrictions on cross-border transactions;
  • Promote pro-competitive, regulatory reform through the promulgation of adequate, consistent rules and the establishment of transparent, impartial regulatory administration;
  • Remove obstacles to the free movement of people by allowing business personnel easy access to visas; and
  • Improve market-access and national-treatment commitments in all sectors.

In the information technology service sector, continued efforts must be made to achieve full market access and national treatment commitments for all services related to information technology, including consulting, software-related services, data-processing services, database services, information technology outsourcing, web hosting, application hosting, information technology security services, computer maintenance and repair, customer support, information technology training, and other related services. It is critical, as well, that liberalization be taken at the highest level across modes 1, 2 and 3 (cross-border trade, consumption abroad and physical presence), rather than for sub-sectors. It will also be increasingly important to seek greater liberalization of basic and value-added telecommunications services. In addition, negotiations should ensure that broadly defined market access commitments apply to services and software made available over the Internet and to other evolving information technology services, which evolve too rapidly to keep pace with trade designations. In addition, WTO members should commit not to erect new regulatory or technical obstacles in this area.

The establishment of transparent, impartial regulatory regimes in local markets is also essential to make the existing GATS national treatment provisions and market-access commitments meaningful and to promote the international competitiveness of service providers.

Non-agricultural Market Access

WTO Ministers also agreed to launch negotiations on market access for non-agricultural goods to "reduce or as appropriate eliminate tariffs, including the reduction or elimination of tariff peaks, high tariffs, and tariff escalation, as well as non-tariff barriers." This issue, which was not part of the "built-in agenda," was a primary goal of the United States in the launch of the new negotiations. The Declaration specified that product coverage would be "comprehensive" with nothing off the table. Like other parts of the Declaration, it emphasized that the special needs of the least developed countries be considered and that appropriate studies and capacity-building measures be included.

No specific deadlines were included on agreeing to the modalities of the negotiations.

ECAT strongly supports efforts to eliminate tariffs worldwide. Tariffs distort efficient trade flows to the detriment of both the exporting and importing countries. Tariff elimination can represent an important force in the spurring of economic growth, as the elimination of tariffs under the 1997 WTO Information Technology Agreement (ITA) did for industries producing and consuming such products. ECAT strongly supports the inclusion of all WTO members in the ITA and the expansion of that agreement to cover other products and non-tariff barriers. ECAT also supports the Accelerated Tariff Liberalization (ATL) initiative, started in the Asian Pacific Economic Cooperation forum, to eliminate tariffs on chemicals, energy products, environmental products, fish, forest products, gems and jewelry, medical and scientific equipment, and toys; these eight sectors represent a balanced package and reflect the interests of both developed and developing countries. These sectors accounted for approximately one-third of total U.S. industrial exports in 2001.

WTO Rules - Antidumping and Countervailing Duty Rules

One of the most contentious issues at the Seattle Ministerial was whether to include negotiations on WTO trade remedy rules (e.g., antidumping and countervailing duty provisions). The United States strongly opposed such negotiations, while Japan, Korea, Brazil and other countries strongly sought the inclusion of these issues into any new negotiation.

In Doha, Ministers reached a carefully worded agreement to open negotiations on the agreements on antidumping and subsidies and countervailing measures. The Declaration states that negotiations are aimed "at clarifying and improving disciplines" under these agreements, "while preserving the basic concepts, principles and effectiveness of these Agreements and their instruments and objectives, and taking into account the needs of developing and least-developed participants." The Declaration also directed negotiators to indicate in the initial phase of the negotiations which disciplines they seek to clarify.

ECAT has long supported the inclusion of these issues as part of the new round of negotiations - both to ensure that negotiations go forward and to ensure that these rules do not impose unnecessary costs or burdens on U.S. companies, their workers or the U.S. economy. ECAT supports reforms of these rules in a manner that promotes balance between the interests of the petitioning industry and the interests of other U.S. industries and consumers.

Transparency in Government Procurement

The 1996 Singapore Ministerial Declaration established a working group to conduct a study on transparency in government procurement practices and to develop elements for inclusion in an appropriate agreement. The United States had hoped to gain consensus on moving forward with an agreement on transparency in government procurement at the Seattle Ministerial. The effort was stalled when developing countries refused to agree to Japanese and European demands that the agreement include commitments to provide greater market access to foreign suppliers as well greater transparency in government procurement practices.

The Doha Ministerial Declaration provides that negotiations on transparency in government procurement will take place after the Fifth WTO Ministerial Conference on the basis of a "consensus" to be reached on the modalities of the negotiations. The Declaration specified that negotiations would be limited to transparency and not address market-access issues. The Declaration also provides that member countries commit to provide adequate technical assistance and support for capacity building.

ECAT strongly supports negotiations on a government procurement transparency agreement. The United States should seek to include the following elements that have been developed through regional and WTO discussions on transparency in procurement:

  • The laws, regulations, and policies pertaining to any part of the government procurement process should be transparent and readily available to the public;
  • Adequate notice must be provided of bidding opportunities;
  • Bid specifications should be prepared based on neutral standards, and performance standards should be used to ensure that equivalent products are treated equally;
  • Objective criteria should be used in evaluating bids;
  • Bids should be opened in public in the presence of bidders to provide accountability;
  • Contracts should be awarded to the most highly-rated bidder, based on objective criteria;
  • Contracting agencies should provide bidders access to adequate dispute settlement procedures, including independent review of the bid process and remedies for non-compliance, including injunctive relief and monetary damages; and
  • Any preference levels or requirements must be notified to the WTO and made available to the public.

An agreement on transparency based on the principles outlined above is essential to promote predictable and competitive bidding environments within WTO member countries. ECAT also believes that efforts should continue to broaden the membership and coverage of the WTO Government Procurement Agreement and to harmonize its provisions on transparency with the text of any new transparency agreement.

The United States should also consider an alternative approach to removing barriers to procurement. Once a transparency agreement is negotiated and existing WTO member preferences, restrictions, and content requirements have been notified under the agreement, the United States could seek to initiate negotiations with WTO member countries to reduce domestic preference levels over time on an MFN basis, in the same manner that tariff rates have been reduced over time. This approach may be a way to broaden WTO member country compliance with transparency rules because, unlike the Government Procurement Agreement, it would not require a commitment to eliminate immediately all discriminatory procurement practices.

Investment and Competition Policy

The EU has long sought the inclusion of investment and competition policy issues as part of new WTO negotiations. At the first Ministerial in Singapore in 1996, the WTO agreed to set up working groups on these issues. At the Seattle Ministerial, no agreement was reached. In Doha, Ministers agreed to new negotiations to begin after the Fifth Ministerial Conference based on a consensus agreement to be reached at that Ministerial.

As discussed in more depth in Section 4, the Declaration directed the Working Group on the Relationship between Trade and Investment to focus on clarifying the following issues: scope and definition, transparency, non-discrimination; modalities for pre-establishment commitments based on a GATS-type, positive list approach; development provisions; exceptions and balance-of-payments safeguards; and consultation and the settlement of disputes between Members. Given the lack of full agreement on these issues, particularly within parts of the developing world, ECAT supports continuing effort to build a consensus on the importance of strong investment protections. ECAT also believes it is critical that negotiations move forward to promote a high standards agreement where possible.

On competition policy, the Declaration directed the Working Group on the Relationship between Trade and Competition Policy to focus on clarifying the following issues: core principles, including transparency, non-discrimination and procedural fairness, and provisions on hardcore cartels; modalities for voluntary cooperation; and support for progressive reinforcement of competition institutions in developing countries through capacity building. As with investment, there remains disagreement about the inclusion of these issues. ECAT supports, therefore, a continuing effort to build a consensus on these issues and recommends that the WTO focus on a subset of issues where consensus can be reached on high standards.

Electronic Commerce

Electronic commerce or e-commerce is an increasingly important venue for international trade that is now used in all sectors of the economy and will become increasingly important in the first decade of the millennium. Industry analysts estimate that e-commerce will generate more than $3 trillion in sales by 2003 and that in the next five years nearly half of the U.S. workforce will be employed by industries that sell their products online.

One of the biggest challenges for the WTO will be to ensure that the Internet economy is allowed to flourish and support the growth of the global economy. There are many barriers that can impede the growth of e-commerce, including conflicting national regulations on e-commerce regarding privacy standards, the imposition of duties on Internet commerce, and market-access barriers to various goods and services that are needed to create the infrastructure for electronic commerce. It is important that the WTO, in close coordination with other relevant international institutions and the U.S. business community, be ready to address the potentially wide range of barriers to e-commerce. The WTO work program on e-commerce is an important venue for continuing the examination of the trade-related aspects of e-commerce, although efforts should be made to address these issues in bilateral and regional agreements as well. Also of key importance to the growth of e-commerce is the early ratification and implementation of the WIPO "Internet" treaties.

At the Second WTO Ministerial in 1998, Ministers urged the General Council to establish a work program on e-commerce. The General Council adopted the plan for this work program in September 1998, which directed a series of discussions to be held in the Goods, Services, and Intellectual Property Councils and Trade and Development Committee. In November 2000, the WTO General Council failed to reach consensus on the establishment of an e-commerce working party as sought by the United States, Canada and Japan largely because of opposition by the EU. As a result, the WTO General Council and separate Councils continued to explore how best to address e-commerce issues in accordance with the work program.

At the Doha Ministerial, Ministers agreed to continue the existing e-commerce work program and directed the General Council to consider the most appropriate institutional arrangements for considering e-commerce and to report to the Fifth Ministerial in Mexico. WTO members did agree to maintain the current moratorium on the imposition of customs duties on electronic transmissions until the Fifth Session.

ECAT strongly supports efforts to ensure that trade and investment rules promote and do not inhibit the growth of e-commerce. In addressing e-commerce, several principles should guide negotiators. First, current WTO obligations, rules, disciplines and commitments (e.g., the GATT, General Agreement on Trade in Services (GATS) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS)) should apply to e-commerce. Second, goods and services delivered electronically should receive no less favorable treatment than goods and services delivered in physical form. Third, governments should refrain from imposing trade and other barriers that unnecessarily impede e-commerce. As well, efforts should continue to develop strong intellectual property protection rules. E-commerce issues are also discussed above with respect to services and non-agricultural goods market access.

Environment

The WTO Committee on Trade and Environment (CTE) was established in 1995. The committee's mandate is to make recommendations on what changes should be made to WTO rules to encourage a positive interaction between trade and environment measures and to avoid protectionism. The CTE's work is discussed in more detail in Section 6.

At the 2001 Ministerial Conference in Doha, Ministers agreed to launch negotiations on the following issues:

  • the relationship between WTO rules and specific trade obligations set out in multilateral environmental agreements (MEAs);
  • procedures for regular information exchange between MEA Secretariats and the relevant WTO committees; and
  • the reduction or elimination of tariff and non-tariff barriers to environmental goods and services.

The CTE was also directed to focus on the following issues and recommend, where appropriate, the desirability of future negotiations: (1) the effect of environmental measures on market access and those areas where the reduction or elimination of trade restrictions would benefit trade, the environment and development; (2) relevant provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights; and (3) labeling requirements for environmental purposes. The Ministerial Declaration also emphasized the importance of technical assistance and capacity building and directed that a report should be prepared for the Fifth Ministerial on such activities.

In addition, in the paragraph on rules, member countries also agreed to clarify and improve disciplines on fisheries subsidies in the context of the negotiations, while taking into account the importance of this sector to developing countries.

ECAT supports efforts to pursue complementary trade and environmental objectives, including, in particular, the reduction and elimination of tariff and non-tariff barriers to environmental goods and services. ECAT also strongly supports increased transparency and communication between the WTO and MEA secretariats. ECAT strongly supports efforts by WTO members to ensure that there is a positive relationship between WTO rules and MEA trade provisions and, in particular, that efforts are made to prevent disguised protectionism that will undermine growth in trade and investment that are critical to raising environmental standards worldwide.

Intellectual Property Rights

Much of the discussion about intellectual property rights issues in the lead-up to the Doha Ministerial concerned (1) developing countries' requests to delay implementation of their commitments under the TRIPS Agreement, and (2) concerns that the TRIPS Agreement somehow undermined countries' ability to protect the public health, particularly in the case of health-care crises such as the AIDS epidemic in Africa. With regard to implementation issues (as discussed in more depth in Sections 6 and 11), the Ministers were unable to reach agreement in Doha on how to address such concerns. As a result, these issues will be treated as part of the negotiations and the TRIPS Council is directed to report on its attempts to address these issues to the Trade Negotiations Committee by the end of 2002. On public health (as discussed in more depth in Section 2), a separate Declaration was issued to clarify that the TRIPS Agreement should not be interpreted to undermine countries' ability to take measures to protect public health.

In addition to these issues, the Ministers agreed to negotiate the establishment of a multilateral system of notification and registration of geographical indications for wines and spirits by the Fifth Session of the Ministerial Conference. Issues related to the extension of the protection of geographical indications will be address in the TRIPS Council. The Declaration also instructed the TRIPS Council to examine the relationship between the TRIPS Agreement and the Convention on Biological Diversity, the protection of traditional knowledge and folklore, and other relevant new developments raised by Members.

Trade Facilitation

UNCTAD estimates that the average customs transaction involves 20 to 30 different parties, 40 documents, and the entry of 200 data elements. With the lowering of average tariffs around the globe, the cost of complying with customs requirements can exceed the cost of duties paid. The 1996 Singapore Ministerial declaration established a WTO work program to assess the scope of WTO rules concerning simplification of trade procedures. While WTO rules contain a number of provisions that require transparency and minimum procedural standards in trade administration, with the exception of customs valuation of goods, there are no specific WTO provisions governing customs procedures.

The United States, the EU, Korea, and Switzerland have long supported the negotiation of a WTO agreement on trade facilitation aimed at reducing and simplifying administrative barriers to import and export transactions, and they proposed that trade facilitation negotiations be included in a new trade round. A number of developing country WTO members oppose such negotiations on the grounds that they do not have the resources to modernize their customs operations to implement such an agreement. These countries have proposed that instead of a new WTO agreement, the WTO should establish a comprehensive technical assistance program in trade facilitation in coordination with other organizations such as the World Customs Organization.

At the Doha Ministerial, Ministers agreed that negotiations on trade facilitation would take place after the Fifth Ministerial Conference in 2003 on the basis of a consensus on the modalities of the negotiations. In the interim, the Declaration instructed the Council for Trade in Goods to review and clarify the existing GATT agreement and to identify the trade facilitation needs and priorities of Members, in particular developing and least-developed countries. Member countries also committed themselves to ensuring technical assistance and support for capacity building.

ECAT supports the adoption of a binding WTO agreement on trade facilitation, based on the rules contained in the International Convention on the Simplification and Harmonization of Customs Procedures (Kyoto Convention), a work program on trade facilitation, and a commitment to simplify rules of origin. The United States should urge the WTO to support the efforts of the World Customs Organization to strengthen the Kyoto Convention. The United States should propose that the revised convention be used as a basis to develop a set of binding rules establishing high standards for customs procedures to be adopted by WTO members.

Dispute Settlement

Under the WTO built-in agenda, discussions on reform of the WTO dispute settlement process that began in 1998 were to have been completed in July 1999, but no agreement was reached due to lack of consensus. Efforts to reach a final agreement during the Seattle Ministerial were also unsuccessful.

At the November 2001 Doha Ministerial, the Conference agreed to negotiations "on improvements and clarifications of the Dispute Settlement Understanding," based on the work done thus far and new proposals. The Doha Declaration indicated that agreement should be reached not later than May 2003.

The reforms under consideration include shortening the time period for pre-panel consultations, allowing panels to be established on first request, establishing a "compliance panel" to handle disagreements over implementation of panel reports, and delaying retaliation until after a compliance review has been completed. The United States has indicated its willingness to accept these reforms, but wants to include additional transparency measures, such as permitting early publication of non-confidential panel submissions and final panel rulings, opening panel proceedings to the public, and allowing NGOs to file "friends of the court" briefs in dispute settlement cases.

ECAT strongly supports efforts to reform the WTO dispute settlement system to make it more transparent and make it function more effectively.

Next Steps

On February 1, 2002, WTO countries agreed on the organization of the negotiations mandated by the Doha Declaration. Acting as part of the Trade Negotiations Committee (TNC), they agreed to the establishment of seven negotiating bodies on the following issues:

  • agriculture
  • services
  • non-agricultural market access
  • rules geographical indications for wines and spirits
  • reform of the Dispute Settlement Understanding (DSU)

Each negotiating body would choose its own chairperson. Negotiating groups on agriculture, services, environment, TRIPS and DSU reform would be held in Special Sessions of existing committees and councils. New negotiating bodies would be established for non-agricultural market access and rules issues. In addition, the Committee on Trade in Development will hold special sessions to consider issues related to special and differential treatment for developing countries. Director-General Michael Moore was chosen as the ex officio chair of the TNC. The TNC is required to report to the General Council on its work and the work of the subsidiary negotiating bodies.

In preparing draft negotiating texts, WTO members agreed after some debate that the chairman's drafts must reflect "different positions on issues" ensuring that all countries comments would be included in the negotiating texts. The agreement also included provisions to ensure that developing countries with small delegations and staff would not be overburdened.

Negotiations will continue in 2002, with some reporting deadlines occurring as early as the end of the year.

For the United States to lead in these negotiations and move them forward, it is critical that the United States rebuild the consensus on trade and renew Trade Promotion Authority.

Importance of WTO Negotiations

The newly launched Doha Development Agenda has the potential to open markets on a broad range of goods and services that are critical to spur economic growth in the United States and throughout the world. The completed agreements could dramatically change agricultural trade, eliminating export subsidies and creating enormous new market opportunities for U.S. farmers. Similar opportunities will be available for U.S. service providers, industrial producers and others.

Even if agreement were reached only to cut global tariffs by a third, it would add $177 billion per year to the U.S. economy, equivalent to a $2,500 per year tax cut for the typical family of four. The expected gain from these negotiations for the developing world will also be significant, adding $90 to $190 billion in higher incomes. These economic gains will help promote a dramatically improved standard of living at home and abroad.

ECAT POSITION: ECAT strongly supports the Doha Development Agenda agreed to in November 2001. In particular, ECAT supports comprehensive negotiations on agriculture, services, industrial tariffs and other issues to expand market-access opportunities and reduce barriers across all sectors. ECAT also supports efforts to ensure that WTO provisions are developed and applied in a manner that eliminates barriers to and supports the growth of information technology goods and services.

Free Trade Area of the Americas

The ongoing Free Trade Area of the Americas (FTAA) negotiations, formally launched in 1998 and set to conclude in 2005, have the potential for creating the largest free trade area in the world, covering approximately 800 million people with a combined GDP of nearly $11 trillion. At the third Summit of Americas in April 2001, the leaders of the 34 nations negotiating the FTAA agreed that negotiations would be completed by January 2005. In 2002, market access negotiations will be initiated and the Seventh Ministerial to review the second draft FTAA text will be held in October. The United States has enormous benefits to reap from the FTAA and will need to play a leadership role to help move negotiations forward and possibly to accelerate them.

Total U.S. trade with the Western Hemisphere has more than doubled since 1990 to $739.5 billion in 2001. The share of the total value of U.S. trade accounted for by countries participating in the FTAA negotiations increased from 33 percent in 1990 to 38 percent in 2001. U.S. exports to the region accounted for 44 percent of total U.S. exports to all destinations in 2001.

Background on the Negotiations

At the 1994 Miami Summit of the Americas, the United States joined the 33 other nations of the Western Hemisphere -- excluding Cuba -- in agreeing to conclude a FTAA by 2005. FTAA negotiations were officially launched at the second Summit of the Americas meeting held in Santiago, Chile, in April 1998. The Santiago Summit Declaration endorsed the start of the FTAA negotiations and reaffirmed the goal of completing negotiations by 2005. It called for concrete progress, including specific business-facilitation measures, to be achieved by 2000. The Declaration states that the FTAA is to be balanced, comprehensive, and WTO-consistent, as well as to constitute a single undertaking (meaning signatories must adhere to all aspects of the agreement). The Declaration further provides that the negotiating process must be transparent and take into account the differences in the level of development and size of the economies in the Americas.

The Declaration established the following negotiating groups: market access, agriculture, investment, services, government procurement, dispute settlement, intellectual property rights, subsidies, antidumping and countervailing duties, and competition policy. The following three consultative committees were established to provide support to negotiators: the FTAA Consultative Group on Smaller Economies, the FTAA Committee of Experts on Electronic Commerce, and the FTAA Committee on Civil Society. There is a FTAA Trade Negotiating Committee (TNC) that oversees the entire negotiation process.

The FTAA Trade Ministerial in Toronto, Canada in November 1999 directed negotiators to begin to develop a draft text of an FTAA agreement to be ready for the next ministerial meeting to be held in Buenos Aires, Argentina, in April 2001. Trade ministers also endorsed the launch of a round of WTO trade negotiations and the goal of seeking the complete elimination of agricultural export subsidies. The trade ministers adopted eight customs facilitation measures to be implemented by January 2000. USTR announced the conclusion of an Inter-American Mutual Recognition Agreement (MRA) for conformity assessment of telecommunications equipment. The MRA will simplify the conformity assessment procedures for testing and certification of telecommunications equipment. Throughout 2000, the nine FTAA negotiating groups met to discuss and put together draft-bracketed texts on each of the issues. The United States submitted comprehensive proposals on each of the main issues.

The sixth Ministerial meeting was held in Buenos Aires, followed by the Third Summit of the Americas held in Quebec City in April 2001. Negotiating groups presented a draft text of the FTAA to the Ministers who recommended its public release. For the first time in a major negotiation, the heads of state agreed to the public release of the draft negotiating text, which was made public on July 3, 2001. The Summit also fixed the end date of the negotiations as January 2005, with entry into force as soon as possible, but no later than December 2005. The following additional deadlines were established:

  • On April 1, 2002, the Ministers directed that recommendations for the technical guidelines for the market-access negotiations be completed.
  • These market-access negotiations, in merchandise trade, services, government procurement and investment are to begin no later than May 15, 2002.
  • The second draft of the FTAA negotiating text is to be presented at the 7th Ministerial Meeting in Quito, Ecuador in October 2002.

In March 2003, the FTAA Administrative Secretariat will be moved from Panama to Mexico.

Status of the Negotiations and Outlook for 2002

As noted above, recommendations for the methods and modalities of market access negotiations are scheduled to be submitted on April 1, 2002 to permit the initiation of negotiations in merchandise trade, service, government procurement and investment by May 15, 2002. Ministers will hold their Seventh Ministerial in October to review the draft negotiating text and plan next steps. At that point, the United States and Brazil will begin their co-chairmanship of the FTAA process.

There remain major differences between the Western Hemisphere countries on a range of issues and in aspirations for the FTAA. For example, Brazil appears to prefer consolidating the MERCOSUR agreement before making concrete FTAA commitments. There are also indications that Mexico is less interested in accelerated FTAA negotiations, as it enjoys the preferential access it currently has to the U.S. and Canadian markets under NAFTA and is pursuing its own discussions with MERCOSUR. Argentina's financial collapse creates further strain on the negotiations and their planned conclusion in 2005, particularly given the anti-trade statement of the new president, Eduardo Duhalde. In the United States, reluctance to negotiate on trade remedy issues will hinder progress on the negotiations.

While the FTAA negotiations remain in their very early stages, U.S. trade and investment continue to be put at a competitive disadvantage in Latin America, as a result of the proliferation of preferential trading relationships that exclude the United States. The MERCOSOR arrangement, which provides preferential tariff treatment and access to member countries, is rapidly encompassing all of Latin America. The four MERCOSOR nations of Brazil, Paraguay, Uruguay, and Argentina have been joined by Chile as an associate MERCOSOR member. MERCOSOR has a tariff-reduction agreement with the Andean Pact nations of Colombia, Venezuela, Peru, Ecuador, and Bolivia and is attempting to expand its linkages to Canada and the EU. Canada has entered into a bilateral trade agreement with Chile, putting U.S. firms at a competitive disadvantage in vying for business in Chile against Canadian firms. U.S. firms are also at a disadvantage in Latin America in competing with Chilean and other Latin American firms that are eligible for MERCOSOR benefits. In investment, the United States has investment agreements with only three of the top ten Latin American recipient countries for foreign investment. The FTAA would include six additional countries. For the United States to regain leadership in these negotiations and move them forward, it is critical that the United States rebuild the consensus on trade and renew Trade Promotion Authority.

Importance of the FTAA Negotiations

The FTAA negotiations present an enormous possibility to eliminate barriers to trade and investment in the Western Hemisphere, which already accounts for 38 percent of total U.S. trade and 44 percent of total U.S. exports. A completed FTAA will provide U.S. farmers, manufacturers and service providers expanded export and investment opportunities that will help sustain U.S. economic growth and the high standard of living in the United States. Improved disciplines in intellectual property and investment and strong dispute settlement rules will help ensure that U.S. interests are protected. The FTAA also has the opportunity to adopt groundbreaking commitments on e-commerce to enhance the development of information technology and the new economy. On investment, the FTAA carries the possibility of creating regulatory environments open to new investment. This will not only promote increased investment and the trade flows that oftentimes follow, but will also promote the rule of law and respect for private property that are critical for the economic development of many of these countries. Finally, as trade alliances deepen, so too will political, economic and security alliances that are critical to the United States in the century ahead.

ECAT POSITION: ECAT supports the timely completion of comprehensive trade and investment- liberalizing negotiations to create a Free Trade Area of the Americas before or by 2005.

Comprehensive and Trade-Oriented Bilateral and Regional Free Trade Agreements

In 2001, the Bush Administration continued free-trade-agreement (FTA) negotiations with Chile and Singapore and implemented the U.S.-Jordan FTA completed in 2000. As well, in 2002, the Bush Administration proposed new FTA negotiations with the countries of Central America.

U.S.-Jordan Free Trade Agreement

On October 24, 2000, the United States and Jordan signed the U.S.-Jordan Free Trade Agreement. This is the United States' third free trade agreement (after the U.S.-Israel FTA and the NAFTA with Canada and Mexico) and the first U.S. FTA with an Arab country. The United States has a limited trade relationship with Jordan, with bilateral trade flows totaling only $568 million in 2001.

The FTA provides for the elimination of virtually all industrial and agricultural tariffs within 10 years and includes commitments with respect to services, intellectual property rights, e-commerce, and transparency. It also includes, for the first time ever in the text of a trade agreement, enforceable labor and environmental provisions, as discussed in more depth in Section 2.

The Jordanian parliament ratified the agreement in May 2001. The House of Representatives passed the U.S.-Jordan FTA Implementation Act, H.R. 2603, on July 31, 2001. The Senate passed the identical legislation on September 24, 2001. President Bush signed it into law on September 24, 2001.

While recognizing the strategic considerations that led to the negotiation of the U.S.-Jordan FTA, ECAT is concerned by several aspects of that agreement from a trade perspective, including the agreement's limited and non-binding dispute settlement provisions, its long tariff phase-down periods, and its unprecedented labor and environmental provisions.

ECAT does support, however, the efforts made to address e-commerce and information technology in this agreement. With ratification of this agreement, Jordan will become the first Middle East country to become a member of the Information Technology Agreement by committing to an accelerated reduction of all tariffs to zero on high technology goods. This agreement is also the first trade agreement to include commitments covering electronic commerce and represents an important starting point for future negotiations over these issues. In particular, the agreement includes a binding commitment not to impose customs duties on electronic transmissions, not to impose unnecessary regulation on electronic commerce and not to place unnecessary barriers to market access for digitized products or on delivery services through electronic means. As well, Jordan agreed to strong protections for intellectual property, beyond the WTO TRIPS agreement, including adherence to the provisions of the WIPO Digital Treaties and strong guarantees on enforcement. ECAT supports full implementation of this agreement in a manner that liberalizes trade and investment flows between the United States and Jordan.

U.S.-Chile Free Trade Agreement Negotiations

On November 29, 2000, the United States and Chile agreed to begin negotiations on a comprehensive FTA. The FTA will build on the efforts of the U.S.-Chile Joint Commission on Trade and Investment that was established in April 1998 to resolve areas of bilateral dispute and examine areas in which bilateral trade agreements could be reached in areas such as services, customs, and e-commerce. As part of this Commission, the two countries agreed to work together in APEC and the FTAA negotiations. The Commission also established ad hoc working groups to address a number of issues, including e-commerce, business facilitation, and mutual recognition agreements on the certification of technical standards.

U.S. and Chilean negotiators have held 10 rounds of negotiations since negotiations were launched. The 11th round of negotiations is scheduled for the week of April 8, 2002 to consider market access for agricultural and industrial products, investment, labor, environment, and dispute settlement. The 12th round is scheduled for the week of May 6th.

Despite extensive negotiations, there remain major unresolved issues, including services, e-commerce, agriculture, labor, environment and investment. On services, the United States is seeking strong commitments, in particular, on telecommunications and express delivery. Chile is seeking commitments on cross-border movement of personnel, which the United States has resisted. On labor and environment, Chile is willing to include chapters as in the NAFTA, but refuses any enforcement of such provisions by trade sanctions. Chile has proposed Chapter 11 of the NAFTA as the negotiating text for investment, but, as discussed in Section 4, the Administration is still meeting inter-agency to decide its position on investment negotiations. Agriculture remains a sensitive area, particularly as approximately 85 percent of Chile's agricultural exports are considered sensitive agricultural items (and would require special consultations under the pending H.R. 3005, the Trade Promotion Authority Act). The United States is also seeking the lifting of Chile's price-band arrangement that imposes variable tariffs to protect import-sensitive products from price movements. Negotiations on tariff phase-outs of sensitive manufactured goods still must be completed. Differing U.S. and Chilean sanitary and phytosanitary controls are also at issue. Negotiations are expected to be completed in 2002.

Bilateral trade between the United States and Chile has more than doubled in the past decade from almost $3 billion in 1990 to $6.1 billion in 2001. Chile is a member of APEC and MERCOSUR and has free trade agreements with Canada and Mexico. It has begun trade agreement talks with the EU and South Korea and is in discussions with Zealand, Singapore and Japan.

U.S.-Singapore Free Trade Agreement Negotiations

On November 16, 2000, the United States and Singapore agreed to launch FTA negotiations. The fifth round of negotiations was held in October 2001, and the sixth round in January 2002. U.S. and Singaporean negotiators have discussed the major areas of trade, including trade in agricultural goods; rules of origin and customs procedures; safeguards; antidumping, countervailing duties and subsidies; sanitary and phytosanitary (SPS) measures; technical norms and standards; investment; services; financial services; e-commerce; temporary entry of business people; competition policy; intellectual property; government procurement; transparency; and dispute settlement, as well as labor and environmental issues. Since there is no bilateral investment treaty between the two countries, investment issues are also being discussed in the context of the FTA negotiations.

Progress has been made on many key issues, including goods market access, rules of origin, and textiles and apparel. On services and investment, the countries agreed to a negative list approach (i.e., applies to all services or investment, unless specifically exempted) at the urging of the United States. Nevertheless, key differences remain. The seventh round of negotiations is scheduled for the week of March 11th and the eight round for week of April 22nd. Administration officials do not expect to complete the agreement until the second half of 2002.

Singapore is the United States' 12th largest trading partner. Bilateral trade between the United States and Singapore has nearly doubled in the past decade, from $17.8 billion in 1990 to $30.7 billion in 2001. Singapore is a member of APEC and ASEAN and has an FTA with New Zealand. On October 12, 2001, Singapore and Japan concluded an FTA that will take effect in April 2002. Singapore began FTA discussions with Canada and the four-member European Free Trade Association (Iceland, Liechtenstein, Norway, and Switzerland).

Other Proposed Negotiations

The United States is also in discussions about the launch of FTA negotiations with other countries.

  • Central America. On January 16, 2002, President Bush announced his intention to explore an FTA with Central America. This announcement follows discussions between the United States and the Central American countries of Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua in 2001 on forging stronger economic ties. These negotiations are expected to also promote progress on the FTAA. Discussions between the United States and Central American countries have continued in 2002. Many of the imports of these countries are already subject to duty-free treatment under the Caribbean Basin Trade Preferences Act, which expires in 2005: over 50 percent of total exports from El Salvador and Honduras come in duty-free, while approximately 20 percent of exports from Costa Rica, Guatemala and Nicaragua come in duty-free.
  • Australia. The United States is also exploring potential FTA negotiations with Australia. President Bush and Prime Minister John Howard announced efforts to forge a closer bilateral relationship, including through a potential FTA, on September 10, 2001. Talks were held between USTR Ambassador Zoellick and Australian Minister for Trade Vaile on January 30, 2002, where they agreed to examine the elements of a potential FTA, continue work to resolve outstanding agricultural issues, and consult with relevant stakeholders.
  • South African Customs Union. The United States is also exploring the possibility of negotiating an FTA with South Africa and the South African Customs Union (SACU) (South Africa, Botswana, Swaziland, Namibia, and Lesotho). USTR Ambassador Zoellick held exploratory talks during his February 2002 trip to Africa and SACU ministers have agreed to undertake internal consultations.

ECAT POSITION: ECAT supports the negotiation and implementation of comprehensive and trade-oriented bilateral and regional free trade agreements.

ECAT - Homepage
About ECAT | Hot Issues | ECAT Positions
Press Releases | Trade Resources | Key Trade Votes | Publications
Steel | CAFTA | Search | Members Only

Copyright 1999-2002, the Emergency Committee for American Trade