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:

The negotiating groups on agriculture, services, environment, TRIPs and DSU reform are being held in Special Sessions of existing committees and councils. New negotiating bodies were established for non-agricultural market access and rules issues. In addition, the Committee on Trade in Development has held special sessions to consider issues related to special and differential treatment for developing countries.

Fifth Ministerial Meeting of the WTO in Cancun

The Fifth Ministerial meeting of the WTO in Cancun, Mexico, was expected to reenergize and give a more specific direction to negotiators in all key areas. The draft Declarations sought to define, for example, the framework for negotiations in agriculture and non-agricultural market access and whether to proceed with negotiations in four additional areas – transparency in government procurement, trade facilitation, investment and competition policy.

Despite several attempts at compromise, Ministers were unable to agree on a joint Declaration and decisions were, thus, not made with respect to key issues related to the framework for the negotiations going forward. Major sticking points included how ambitious the frameworks would be with regard to the elimination of export subsidies and other trade-distorting support, the elimination of tariffs on agricultural and non-agricultural goods, and whether the negotiations would focus as well on any of the four so-called “Singapore” issues – trade facilitation, transparency in government procurement, investment and competition policy.

Following the Cancun Ministerial, the WTO Director-General and key ministers, including the U.S. Trade Representative, consulted widely on how to restart the process and find a way forward. In December 2003, the General Council met to determine how to proceed and it was agreed that negotiations should resume despite the lack of agreed upon frameworks.

In an effort to bring momentum to the negotiations, USTR Ambassador Zoellick wrote to all of his fellow WTO Ministers on January 11, 2004, urging a focus in the Doha negotiations on the core WTO issues of market access for agriculture, goods and services, with the following recommendations:

• Agriculture: Seek an agreement to eliminate export subsidies by a date certain, substantially decrease trade-distorting support and increase significantly market access opportunities.

• Non-Agricultural Market Access: Adopt an ambitious tariff-cutting formula, along with sectoral and other initiatives, with sufficient flexibility to work for all economies, as well as a plan to address non-tariff barriers.

• Services: Seek meaningful services offers from a majority of WTO members and provide technical assistance where required.

• Singapore issues: Pursue an agreement with respect to trade facilitation and leave the other issues (transparency in government procurement, investment and competition) for later discussion.

Agriculture

Despite the failure of the Seattle Ministerial to launch a new round, WTO negotiations were launched on agriculture on February 7, 2000, pursuant to the built-in agenda mandate of Article 20 of the WTO Agreement on Agriculture. At the Doha Ministerial, compromise language was finally reached, which allowed a broader round of negotiations to be included as part of a single undertaking. 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 agricultural negotiations were to be established by March 31, 2003, and draft schedules to be presented at the Fifth Ministerial. Neither deadline was met and disagreements over the ambitiousness of the modalities (or negotiating framework) that should be pursued were viewed as one of the reasons why the Cancun Ministerial did not result in a final agreement.

In July 2002, the United States tabled a far-reaching and comprehensive proposal to expand market access, eliminate export subsidies and reduce domestic support. With regard to export subsidies, the United States proposed:

• the elimination of export subsidies, with reductions phased in over a five-year period in equal annual increments;

• the elimination of export monopolies and ending of special financing privileges for state traders;

• the prohibition of export taxes on agricultural products, with an exception for developing countries;

• the establishment of specific rules to govern export credit activity; and

• the expansion of reporting requirements and analysis of food aid activities.

With regard to market access, the United States proposed:

• using the Swiss formula to harmonize and reduce agricultural tariffs from applied rates by cutting high tariffs more than low tariffs, ensuring no individual tariff exceeds 25 percent after a five-year phase-in period;

• an agreement among WTO members on a specific date for the elimination of all agricultural tariffs;

• expanding all TRQs by 20 percent and eliminating in-quota duties, phased in over a five-year period;

• tightening rules on TRQ administration to encourage quota-fill and greater transparency; and

• expanding trading rights to allow any interested entity to import products.

With regard to domestic support, the United States proposed:

• using a formula to limit all countries' use of trade-distorting support to 5 percent of the total value of agricultural production, with reductions made from current caps over a five-year period;

• simplifying the current system of calculating trade-distorting domestic support by including trade-distorting support linked to production limitations against the WTO cap; and

• an agreement by WTO members on a specific date for the elimination of all trade-distorting support.

The Cairns Group of agricultural exporting countries and other developing countries made similarly aggressive proposals supporting substantial reform, while the EU, Japan and others made much more limited proposals. In August of 2003, the United States and EU issued a joint proposal on agricultural issues that represented a compromise position, which was criticized by a number of developing countries as lacking sufficient ambition. Although significant progress was made on narrowing the differences between these groups, as represented by the various draft modalities papers and the draft Declarations circulated prior to and during the Cancun Ministerial, a consensus on the level of ambition for the agricultural negotiations has yet to reached. During the Cancun Ministerial, major differences arose between an informal grouping of developing countries led by Brazil (at times called the Group of 21), who sought much greater ambition in eliminating export subsidies and other trade-distorting support, and the EU and Japan, who sought a much more scaled back reduction in such areas. Negotiations on agriculture have yet to be restarted.

ECAT supports the stated objective of the United States to secure substantial, progressive reductions in support and protection, including deep cuts in applied 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. As proposed by the United States, the agriculture negotiations should aim to reduce tariffs across the board and 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 3 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

Services are currently covered in the WTO under the General Agreement on Trade in Services (GATS). The GATS covers four "modes of supply" of services, including cross-border delivery of services from one market to another by electronic or other means, establishment of a commercial presence in another market, travel by individuals to foreign markets to supply services, and the provision of a service from one market to the service consumer of another market.

WTO members reached a consensus in Seattle in 1999 on services negotiations to extend the coverage of the GATS, 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, computer and related 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). 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.

  On July 1, 2002, the United States made its initial services requests seeking:

• transparency in services regulation;

• increased access for telecommunications services, including basic and value-added services and the adoption of pro-competitive principles;

• increased market access in insurance, banking, securities, asset management, pension funds, financial information and advisory services, and other financial services, as well as regulatory transparency, fairness in the application of financial services regulations; and additional regulatory framework protections for insurance;

• increased access for express delivery services (excluding services reserved to postal authorities and services related to air transport or maritime transport services);

• increased access for energy services, including exploration and development services; services incidental to energy transmission and distribution; energy marketing services; and other services important to energy, energy products, and fuel;

• increased access for environmental services;

• full market access for retail, wholesale, and franchising services rendered either directly to customers from a fixed location or away from a fixed location via direct person-to-person, catalog, telephone, video or electronic sales;

• increased access for higher education, training services and testing services provided in traditional institutional settings;

• increased access for tourism related services;

• increased access for professional services;

• increased access for data processing services, software- and hardware-related services, and other computer and related services;

• increased access for advertising services;

• scheduled commitments that reflect current levels of market access in areas such as motion picture and home video entertainment production and distribution services, radio and television production services, and sound recording services;

• the removal of unclear, discriminatory, or market-restricting procedures and investment barriers; and

• increased access for temporary entry and stay of highly skilled workers.

Services were one of the least controversial areas considered during the Cancun Ministerial. Prior to and during the Ministerial, the United States and other countries continued to press countries who had not yet made offers to do so and to make significant offers of market opening. Developing countries have criticized the United States as a result of its failure to make any substantial commitments with respect to mode 4 – temporary entry of persons.

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, and on the liberalization identified in the U.S. proposal. 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

At Doha, 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.

The WTO Negotiating Group on Non-Agricultural Market Access set forth its work plan requesting proposals for approaches on the negotiations to be submitted between November 1 and December 31, 2002, and established May 31, 2003, as the deadline for an agreement on the modalities. The Negotiating Group also agreed to provide information on the types of non-tariff barriers that should be addressed by January 31, 2003, and to reach a consensus on approaches to address non-tariff barriers by May 31, 2003.

On November 26, 2002, the United States proposed a comprehensive and forward-leaning approach that would eliminate all non-agricultural tariffs by 2015. This proposal set forth two steps: First, WTO members would eliminate tariffs at or below 5 percent by 2010 and cut all other tariffs through a "tariff equalizer" formula to less than 8 percent by 2010. Tariffs in certain highly traded industry sectors should be eliminated as soon as possible, but not later than 2010. Second, WTO members would make equal annual cuts in remaining tariffs between 2010 and 2015, resulting in zero tariffs. U.S. tariffs cost American consumers $18 billion in 2000. A University of Michigan study found that the U.S. economy would expand by $95 billion as a result of tariff-free trade. At the Fifth Ministerial in Cancun, efforts to reach a consensus on the modalities with respect to non-agricultural market access eluded WTO members. The United States and some other countries sought an ambitious framework that would lead to the elimination of tariffs and address non-tariff barriers. Other countries sought a much less ambitious framework .

The first round of negotiations subsequent to the Cancun Ministerial was held at the end of March 2004.

ECAT strongly supports efforts to eliminate tariffs and non-tariff barriers 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 information technology 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

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.

In October 2002, the United States submitted its paper identifying four core principles:

• negotiations must maintain the strength and effectiveness of the trade remedy laws and complement a fully effective dispute settlement system;

• trade remedy rules must operate in an open and transparent manner;

• disciplines must be enhanced to address more effectively trade-distorting practices; and

• dispute settlement panels and the Appellate Body should follow the appropriate standard of review in interpreting obligations related to trade remedy laws.

In November 2002, the United States proposed methods to improve investigatory procedures in antidumping and countervailing duty investigations, including through greater transparency. In March 2003, the United States submitted a paper identifying several substantive areas where additional clarification and improvement in WTO antidumping rules may be required to:

• relate to cases involving producers of seasonal and cyclical agricultural products;

• clarify how overall weighted-average dumping margins should be calculated (including the issue of zeroing);

• ensure that governments can use appropriate and reasonable methods for calculating an “all-others”;

• clarify the application of antidumping and countervailing duties to “new shippers” who represent a company that had been subject to an order but reincorporated in a new form;

• clarify what provisional measures would be appropriate to preserve the right to impose duties retroactively where “critical circumstances” is found;

• improve the capacity of members to address issues of persistent dumping; and

• improve the ability of developing countries to adopt trade remedy laws.

Simultaneously, the United States submitted a paper identifying several substantive areas where additional clarification and improvement in WTO subsidies rules may be required, including:

• prohibit additional types of subsidies, including large domestic subsidies and government debt-forgiveness,

• increase the remedy for cases of serious prejudice;

• establish stricter rules against government loans and investment in private sector companies;

• establish stricter provisions on government sales of natural resources, such as timber and natural gas;

• clarify issues related to the provision of equity capital to specific companies;

• provide for greater equalization of treatment of direct and indirect taxation systems; and

• modify rules for handling cases involving fragmented industries.

The “Friends of Antidumping” group (including Brazil, Chile, Colombia, Costa Rica, Hong Kong, Israel, Japan, Korea, Mexico, Norway, Singapore, Switzerland, Taiwan, Thailand and Turkey) has made several proposals to modify the Antidumping Agreement to ensure that it does not impose unnecessary burdens on exporters and importers. Other papers have been tabled on subsidies and the relationship of these rules to regional free trade agreements.

In 2003, the Rules Group held five formal sessions. Since its inception, it has received 143 papers, most of them identifying issues for discussion.

Rules issues were generally not at the heart of the discussions at the Fifth Ministerial in Cancun. It is expected that discussions will continue to focus on identifying particular issues, including increasing transparency with respect to regional trade agreements.

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 as discussed further in section 3.

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.

During 2002, the Council on Trade in Goods held several meetings to identify the trade facilitation needs and priorities of WTO members, while also seeking to ensure adequate capacity-building and technical assistance.

At the Fifth Ministerial in Cancun, no agreement was reached on launching negotiations on trade facilitation, with some countries arguing that the WTO should only focus on its core issues. As explained above, the United States has proposed that negotiations on trade facilitation be launched on only this one of the four Singapore issues. This proposal reflects the fact that the widespread adoption of common rules on trade facilitation will have a very substantial positive impact on the global trading system and individual countries, whether developing or developed.

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.

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 as 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.

The Working Group made progress in 2002 in identifying the key elements of a potential agreement, including:

• publication of information regarding the regulatory framework for procurement; publication of information regarding opportunities for participation in government procurement;

• clear specification in tender documents of evaluation criteria for the award of contracts;

• availability to suppliers of information on contracts that have been awarded; and

• availability of mechanisms to challenge contract awards and procurement decisions.

The Working Group also discussed technical assistance and capacity-building needs.

Efforts by the United States and others to launch negotiations of an Agreement on Transparency in Government Procurement at the Fifth Ministerial in Cancun were not successful. Some countries, particularly developing countries, opposed significant new obligations in areas beyond the core market access issues of agriculture, industrial goods and services. Most of the developing country concern was directed at the investment and competition issues discussed in this section. There are certainly a number of developing countries that would welcome negotiations on transparency in government procurement as a way to help reform their own systems, which may be underdeveloped and/or corrupt. Developing country support for such provisions was evidenced most recently by the inclusion of core transparency in government procurement provisions by the six developing countries that agreed to the U.S.-Central American and Dominican Republic FTA discussed above. Moreover, the EU, which opposed movement on a Procurement Transparency Agreement in Doha and insisted that it be included in the package of Singapore issues, has recently changed its position and would support a consensus to move forward on transparency along with trade facilitation.

ECAT strongly supports negotiations in the WTO of a government procurement transparency agreement. It is a critical area not only for U.S. commercial interests, but to help all countries develop an open, rules-based system and to help stem corruption, which represents a very significant impediment to economic development and the reduction of poverty throughout the world. Efforts to lump together and then exclude from the negotiations all of the so-called Singapore issues – investment, competition policy, trade facilitation and transparency in government procurement – fail to recognize the widely differing views that many developing countries have with respect to each of these issues. Efforts should continue to help separate the transparency issue and the trade facilitation issue, which can and should move forward in the WTO, from the investment and competition policy issues, where there is widespread opposition.

Investment

The EU has long sought the inclusion of investment issues as part of new WTO negotiations. At the First Ministerial in Singapore in 1996, the WTO agreed to set up working groups on investment. 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.

The Doha Declaration directed the Working Group on the Relationship between Trade and Investment to focus on clarifying the following issues: scope and definition, transparency, and 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.

The Working Group held several meetings in 2002 at which WTO members expressed divergent views. The EU and Japan continue to strongly advocate the launch of negotiations, while some developing countries are less inclined. The United States has looked for a middle position, proposing a focus on such core principles as transparency and non-discrimination. WTO members also continue to debate the scope of an investment agreement, with the United States advocating a broad-based definition of investment that addresses commercial realities.

At the Fifth Ministerial in Cancun, the issue of investment arose as a particularly difficult issue, as many WTO members viewed it as too far beyond the core mandate of the WTO. As indicated above, the United States proposed in January 2004 not to pursue negotiations on investment in the WTO at this time. The EU has proposed that negotiations on investment, like the other Singapore issues, could be accomplished through a plurilateral agreement as opposed to a single undertaking.

ECAT supports a continuing effort to build a consensus on investment issues, but not to launch WTO negotiations at this time.

Competition Policy

Like investment, the EU has long sought the inclusion of 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. In Doha, Ministers agreed to new negotiations on competition policy to begin after the Fifth Ministerial Conference based on a consensus agreement to be reached at that Ministerial.

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.

The Working Group held several meetings in 2002 and received numerous documents on issues identified in the Declaration. The United States submitted papers on U.S. experience in providing technical assistance on antitrust issues, cartels, voluntary cooperation, transparency, non-discrimination and procedural fairness.

At the Fifth Ministerial in Cancun, there was little support beyond the EU for beginning negotiations on issues related to competition policy, as many WTO members viewed it as too far beyond the core mandate of the WTO. As indicated above, the United States proposed in January 2004 not to pursue negotiations on competition policy in the WTO at this time. The EU has proposed that negotiation on competition policy, like the other Singapore issues, could be accomplished through a plurilateral agreement as opposed to a single undertaking.

ECAT supports a continuing effort to build a consensus on competition policy issues, but not to launch WTO negotiations at this time.

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 have 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 maintain the current moratorium on the imposition of customs duties on electronic transmissions until the Fifth Ministerial.

The Work Program on Electronic Commerce met throughout 2002 and 2003, focusing on issues such as the classification of certain electronically downloadable products (as services or goods). With the lack of a substantive declaration at the Fifth Ministerial in Cancun, the moratorium on the imposition of customs duties was not formally extended.

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 TRIPs; and (3) labeling requirements for environmental purposes. The Ministerial Declaration also emphasized the importance of technical assistance and capacity-building.

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.

The CTE in Special Session commenced negotiations on these issues in 2002. Throughout 2002 and 2003, WTO members expressed differing views on the scope of the mandate, whether the mandate should be defined and how to phase the negotiations. Based on a U.S. proposal, much of the discussion in 2003 regarding MEAs and WTO rules focused on six MEAs that contain explicit trade obligations: (1) Convention on International Trade in Endangered Species (CITES); (2) the Montreal Protocol on Ozone Depleting Substances; (3) the Basel Convention on Hazardous Wastes; (4) the Cartegna Protocol on Biosafety; (5) the Rotterdam Convention on Prior Informed Consent; and (6) the Stockholm Convention on Persistent Organic Pollutants. Members also generally agreed on the need for finding additional mechanisms to enhance communication and cooperation with MEA secretariats. Members agreed that certain MEA secretariats could be invited on an ad hoc basis to observe the sessions of the CTE in Special Session. With respect to market access for environmental goods and services, WTO members discussed and made proposals for defining what constituted environmental goods and services, starting with the APEC and OECD definitions. In 2003, the United States proposed modalities for the negotiations, suggesting that a core list of environmental goods be identified for which all members would make concessions and an additional list that would not require full participation by all WTO members.

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 is 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) views 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 was 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 3), 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. Resolution of both the implementation and health issues is viewed as very important by developing countries.

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. This deadline was not met and it is expected that this issue will continue to be addressed in 2004 and 2005.

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.

In August 2002, the United States proposed measures to increase transparency and public access to dispute settlement proceedings, including through public hearings, public briefs, early public release of panel reports, and rules for the consideration of amicus curiae submissions. In December 2002, the United States (joined by Chile) also proposed several additional changes, including:

• establishing a procedure for the interim review of Appellate Body decisions;
• permitting countries to accept and reject specific aspects of a panel or Appellate Body report (rather than a “take it or leave it approach”);
• permitting countries to suspend panel and appellate body cases; and
• providing additional guidance to the panels and Appellate Body on issues of interpretation and the nature and scope of their tasks.

Members were unable to reach agreement on a proposal by the May 2003 deadline, which was extended to May 2004 by a decision of the General Council in July 2003..

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

Importance of WTO Negotiations

The 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. If U.S. proposals are adopted, it will result in the elimination of all tariffs by 2015 and provide enormous opportunities for U.S. service providers 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 by the WTO in November 2001. ECAT supports comprehensive negotiations on agriculture, services, industrial tariffs and other issues to expand market-access opportunities and reduce and ultimately eliminate 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. In particular, ECAT supports:

• the elimination of tariffs, non-tariff barriers, and export subsidies in agriculture, industrial products and services;

• reforms of antidumping and countervailing duty rules in a manner that promotes balance between the interests of the petitioning industry and the interests of other U.S. industries and consumers;

• 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;

• efforts to reform the WTO dispute settlement system to make it more transparent and make it function more effectively;

• efforts to ensure that trade and investment rules promote and do not inhibit the growth of e-commerce; and

• increased transparency and communication with multilateral environmental agreement bodies.

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 the Americas in April 2001, the leaders of the 34 nations negotiating the FTAA agreed that negotiations would be completed by January 2005. In 2002, trade ministers initiated market access negotiations, began a review of the second draft FTAA text and launched a Hemispheric Cooperation Program. The United States, which became a co-chair of the negotiations with Brazil in November 2002, has enormous benefits to reap from the FTAA and will need to play a leadership role to help move negotiations forward.

In 2003, the FTAA negotiations took a very different turn, with the 34 leaders agreeing to a two-track process at the Eighth FTAA Ministerial in Miami in November 2003. This was the result of significant disagreements among key countries, including Brazil and MERCOSUR that sought an FTAA focused on market access, as opposed to broader rules, which the United States, Canada and other countries in the Hemisphere have long supported as part of the FTAA process.

Total U.S. trade with the Western Hemisphere has more than doubled since 1990 to $760 billion in 2003. 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 2003. U.S. exports to the region accounted for 44 percent of total U.S. exports to all destinations in 2003.

Background on the Negotiations

At the 1994 Miami Summit of the Americas, the United States joined 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 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.

On May 15, 2002, the market access phase of the negotiations was initiated. At the seventh Ministerial in Quito, the second draft FTAA text was presented to ministers and also made public with solicitations for public comment. With the strong leadership of the United States, the ministers also agreed to a Hemispheric Cooperation Program through which countries would identify their capacity-building needs and programs would be developed to assist small and developing countries so that they can fully reap the benefits of the FTAA.

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

Status of the Negotiations and Outlook for 2004

At the Eighth FTAA Ministerial in Miami in November 2003, ministers of the 34 countries agreed to pursue a common set of obligations, while allowing any interested countries to also undertake additional obligations and benefits where there is no consensus at the hemispheric level. The ministers directed that a definition of the comprehensive set of common obligations be prepared, as well as procedures for their negotiation.

The creation of what some have called a two-tier approach resulted from concerns that the 34 countries could not bridge significant differences on the level of commitments sought to be obtained within the deadline of the negotiations. In significant part, Brazil and its partners in MERCOSUR, favored a much-reduced set of obligations, particularly in areas beyond market access. Rather than pursuing the FTAA over a longer period of time – while negotiating and consolidating comprehensive and high standard bilateral and sub-regional FTAs (such as the U.S.-Chile FTA, the U.S.-Central American and Dominican Republic FTA and potentially the U.S.-Colombian or Andean FTA) – or pursuing an FTA without those countries that did not want to achieve a comprehensive high-standard agreement, the United States and other countries in the Hemisphere who had sought a more comprehensive and higher standard agreement agreed to this compromise in an effort to realize concrete progress by 2005. As a result of this compromise, however, it is expected that comprehensive protections on investment, state-of-the art intellectual property protections and a negative-list approach to services will not likely be incorporated as part of the common set of obligations.

Efforts to reach a consensus on the framework on the common set of obligations, as well as procedures for their negotiation, were not successful at an informal meeting of senior officials in March/April 2004. As a result, the 2004 TNC meeting was delayed for a third time this year. As of late April, a new TNC has not been scheduled.

Importance of the FTAA Negotiations

As originally conceived, the FTAA negotiations presented 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 comprehensive and high standard FTAA would 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 would help ensure that U.S. interests are protected. As trade alliances deepen, so too would political, economic and security alliances that are critical to the United States in the century ahead.

With the new approach adopted by the 34 ministers in Miami, the opportunities presented by the FTAA are somewhat more ambiguous, but hugely important. Significant commitments in market access for agriculture, services and industrial goods could have very concrete benefits for U.S. farmers, companies and their workers. It can help level the playing field. Much depends on what is left off the table at the end of the day and the extent to which a significant block of countries adopts a comprehensive, high-standard upper tier of commitments that creates inducements over time for Brazil and other countries to agree to such standards.

ECAT POSITION: ECAT supports significant progress in eliminating barriers to agriculture, goods and services trade and developing strong, comprehensive protections with respect to investment and intellectual property rights that will promote economic growth and development and the rule of law throughout the Western Hemisphere.

Comprehensive and Trade-Oriented Bilateral, Subregional and Regional Free Trade Agreements

Following enactment of TPA, the Administration has launched negotiations or announced its intent to negotiate with 18 countries. In addition to the Australia, Central American and Dominican Republic and Morocco FTAs, where negotiations have now been concluded as discussed above, the Administration is engaged in the following ongoing or soon-to-be-initiated bilateral or subregional negotiations:

U.S.-South Africa Customs Union FTA Negotiations

The United States launched FTA negotiations in June 2003 with the South African Customs Union (SACU), comprised of South Africa, Botswana, Swaziland, Namibia, and Lesotho. Several negotiating rounds have been held and the Administration hopes to complete negotiations by the end of 2004.

The Administration is seeking a comprehensive agreement that will focus on key trade and investment issues. It is seeking to eliminate tariff and non-tariff barriers to trade and investment, which will also help create new opportunities for the United States and Southern Africa.

The SACU already represents the largest U.S. export market in sub-Saharan Africa, with U.S. exports totaling more than $2.7 billion in 2003. Major exports include machinery, vehicles, aircraft, medical instruments, plastics, chemicals, cereals, pharmaceuticals and wood and paper products.

ECAT POSITION: ECAT supports the timely completion and implementation of a comprehensive, high-standard and commercially meaningful U.S.-SACU FTA that will liberalize trade and investment.

U.S.-Bahrain FTA Negotiations and Middle East Initiative

The United States launched FTA negotiations in January 2004 with Bahrain. One negotiating round has been held and the Administration hopes to complete negotiations by mid- to late 2004.

The Administration is seeking a comprehensive agreement that will focus on key trade issues. It is seeking to eliminate tariff and non-tariff barriers to trade and investment, which will also help create new opportunities for the United States and Bahrain. The United States and Bahrain completed a Bilateral Investment Treaty (BIT) in 1999 that is currently in force. Given the high-standard protections contained in the U.S.-Bahrain BIT, higher in several respects than recent investment chapters in FTAs, ECAT strongly supports the U.S. decision not to renegotiate investment protections as part of its FTA negotiations.

In 2003, U.S. goods exports to Bahrain totaled $509 million, which included aircraft, vehicles, machinery, toys, sports equipment, and pharmaceutical products. Among the key U.S. agricultural commodity exports that could benefit from the U.S. Bahrain FTA are meats, fruits and vegetables, cereals, and dairy products. An FTA with Bahrain will support continued economic reform and investment opportunity, as well as its commitment to openness, transparency and the rule of law.

ECAT POSITION: ECAT supports the timely completion and implementation of a comprehensive, high-standard and commercially meaningful U.S.-Bahrain FTA that will liberalize trade.

U.S.-Panama FTA Negotiations

The United States launched FTA negotiations in April 2004 and the Administration hopes to complete negotiations by the end of 2004.

The Administration is seeking a comprehensive agreement that will focus on key trade and investment issues. It is seeking to eliminate tariff and non-tariff barriers to trade and investment, which will also help create new opportunities for the United States and Panama. The United States and Panama have a BIT in force that was negotiated 1982. While there are significant deficiencies with this BIT, including its exclusion of key sectors, it does provide full protection for investment agreements (existing and prospective). As a result, ECAT very strongly urges the Administration not to reduce existing protections, at the same time that it seeks strengthened investment protections for all sectors.

Panama represents the 42nd largest export market for U.S. goods. In 2003, U.S. goods totaled $1.8 billion, an increase of 31 percent from the previous year. U.S. imports from Panama remained unchanged with a total of $301 million. It had a trade surplus of $1.5 billion in 2003, an increase of $443 million from the previous year. However, U.S. foreign direct investment in Panama for 2002, was down by 20.5 percent.

ECAT POSITION: ECAT supports the timely completion and implementation of a comprehensive, high-standard and commercially meaningful U.S.-Panama FTA that will liberalize trade and investment. ECAT strongly urges that the investment protections already accorded to U.S. investors under the U.S.-Panama BIT not be reduced in any new commitments made as part of the FTA.

U.S.-Colombia and Andean Pact FTA Negotiations

The United States is planning to launch FTA negotiations with Colombia and possibly other Andean countries in May 2004. (As discussed in section 10, the United States already provides unilateral preferences to four of the Andean Pact countries, Colombia, Ecuador, Peru and Bolivia.) The Administration hopes to complete negotiations with the initial country or countries in 2005 and hopes to bring all four of the Andean countries into one FTA thereafter.

The Administration is seeking a comprehensive agreement that will focus on key trade and investment issues. It is seeking to eliminate tariff and non-tariff barriers to trade and investment, which will also help create new opportunities for the United States and Colombia and the other Andean countries.

Colombia represents the 27th largest export market for U.S. goods. In 2003, U.S. exports to Colombia totaled $3.8 billion, an increase of 4.8 percent from the previous year. U.S. FDI in Colombia is largely in the mining, manufacturing and wholesale sectors. In 2002, U.S. FDI was $3.7 billion, an increase from $3.6 billion in 2001.

If FTA negotiations are initiated with Ecuador, ECAT strongly urges the Administration not to renegotiate investment protections that are already covered in the U.S.-Ecuador BIT. This BIT is one of the most modern and effective BITs that the United States has negotiated. Renegotiating investment protections as part of a new investment chapter would only result in a diminution of key investment protections with respect to investment agreements, expropriation, and financial services measures, given how U.S. FTAs have reduced these protections from the high standards that the United States has formally sought (as discussed further in section 4). Furthermore, several U.S. companies are involved in ongoing investment disputes with Ecuador; any suggestion that investment protections would be modified through a negotiation would have an enormously negative effect on the interests of these companies and the broader interest of the United States.

ECAT POSITION: ECAT supports the timely completion and implementation of a comprehensive, high-standard and commercially meaningful U.S.-Colombia and U.S.-Andean FTA that will liberalize trade and investment. If FTA negotiations are initiated with Ecuador, ECAT strongly urges the Administration not to renegotiate or lower investment protections that are already covered in the high-standard U.S.-Ecuador BIT.

U.S.-Thailand FTA Negotiations

The Administration notified Congress of its intent to negotiate an FTA with Thailand on February 12, 2004. Under TPA procedures, negotiations can begin on or after May 12, 2004.

The Administration is seeking a comprehensive agreement that will focus on key trade and investment issues. It is seeking to eliminate tariff and non-tariff barriers to trade and investment, which will also help create new opportunities for the United States and Thailand.

Thailand represents the 18th largest U.S. trading partner in 2003, with two-way trade equal to over $20 billion. In 2002, U.S. foreign direct investment in Thailand rose to $6.9 billion from $6.4 billion the year before. U.S. FDI is primarily focused on the manufacturing, mining, and finance sectors.

ECAT POSITION: ECAT supports the timely completion and implementation of a comprehensive, high-standard and commercially meaningful U.S.-Thailand FTA that will liberalize trade and investment.

Consideration of Future FTAs

In addition to the FTAs discussed above, ECAT member companies remain interested in the potential for other FTAs that could be negotiated. With the exception of Canada and Mexico, the United States’ largest trading partners, the United States does not have and is not currently negotiating or contemplating an FTA with any other of its top 10 largest trading partners or other partners that represent significant markets for U.S. exporters and investors, either in terms of existing trade and investment or likely future trade and investment. ECAT companies recognize the difficulties in engaging in such negotiations with any of the common market countries of the European Union or even of such a negotiation with China, Japan, Russia or other key trading partners. Yet, the market potential of negotiating comprehensive and high-standard agreements with such countries sooner, rather than later, should be an issue squarely on the U.S. trade and investment negotiating agenda.

Copyright 1999-2002, the Emergency Committee for American Trade