Emergency Committee For American Trade - Publications

SECTION 4: OTHER MAJOR TRADE NEGOTIATIONS AND AGREEMENTS

In addition to their work on the U.S.-Central America-Dominican Republic Free Trade Agreement (CAFTA) and World Trade Organization (WTO) issues discussed in the previous sections, ECAT Member Companies actively support the negotiation and implementation of comprehensive and trade-oriented bilateral, sub-regional and regional trade and investment agreements. In the 1990s, the United States led trade and investment liberalization efforts with the North American Free Trade Agreement (NAFTA), as well as several WTO agreements. That agenda was almost quiescent until Congress approved Trade Promotion Authority in 2002 (as part of the Trade Act of 2002). With that authority, the United States was able to accelerate and conclude ongoing negotiations and initiate several new ones. The President requested the extension of TPA on March 30, 2005 and that authority will be extended through July 2007 unless the House or Senate approves a resolution of disapproval before July 1, 2005.

Since its enactment in 2002, TPA procedures and authority have been used repeatedly to begin, pursue and conclude negotiations with numerous countries and sub-regional country groups, as well as to implement four key U.S. free trade agreements – with Chile, Singapore, Australia and Morocco.

These agreements and 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. While progress at the global level, i.e., the WTO, is the greatest prize, the United States’ bilateral and subregional efforts have been helpful to spur those global negotiations forward by creating support for higher standard liberalization commitments by developed and developing country partners.

This section reviews the process and importance of TPA renewal and examines ongoing bilateral, sub-regional and regional trade negotiations. Implementation of the U.S.-Central America-Dominican Republic- Free Trade Agreement is addressed separately in section 2, WTO negotiations are addressed in section 3 and Congressional approval in 2004 of the U.S.-Australia and U.S.-Morocco FTAs is addressed in section 5.

Renewal of the Trade Promotion Authority Framework

Almost 10 years after its expiration in 1994, Congress passed and the President signed into law trade promotion authority legislation as part of the Trade Act of 2002, Pub. L. 107-210. The Bipartisan Trade Promotion Authority Act of 2002 (TPA Act) revives and extends trade-negotiating authority legislation (formerly called “fast track”), which was developed over two decades ago as part of the Trade Act of 1974. TPA authority expires with respect to free trade agreement agreements entered into after June 30, 2005, unless the President requests an extension of this authority no later than April 1, 2005 and neither House passes a disapproval resolution before July 1, 2005, as explained in more detail below. If renewed, TPA procedures would govern agreements concluded by June 30, 2007.

Congress’ overall and principal negotiating objectives;
procedures for Presidential consultation with Congress;
procedures for Congressional consideration of legislation to implement a trade agreement; and
procedures for extending TPA.

Prior to the renewal of TPA in 2002, trade-negotiating authority procedures were used by Congress to consider five different trade agreements, all of which were approved and implemented: the GATT Tokyo Round Agreements (implemented by the Trade Act of 1979), the U.S.-Israel Free Trade Agreement (1985), the U.S.-Canada Free Trade Agreement (1989), the North American Free Trade Agreement (NAFTA) (1993), and the Uruguay Round Agreements (1994). TPA procedures were used by Congress to consider both the U.S.-Chile and the U.S.-Singapore FTAs, which were approved in July 2003 and entered into force in January 2004 and to consider the U.S.-Australia and U.S.-Morocco FTAs, which were approved in July 2004; the Australia FTA entered into force on January 1, 2005 and the Morocco FTA is expected to enter into force later this year.

Major Provisions

Duration: Provides TPA authority for free trade and tariff-only agreements entered into force before July 1, 2005, with potential two-year extension. TPA procedures are extended for two years if the President requests extension and neither House adopts an extension disapproval resolution (considered under expedited procedures) prior to July 1, 2005.

Negotiating Objectives: Provides the most extensive negotiating objectives ever included in a trade-negotiating authority bill and specifically directs the Administration to seek agreements that:

eliminate and reduce barriers to trade in manufacturing, services, electronic commerce, and agriculture;
eliminate and reduce barriers to investment, while providing strong protections for investments abroad;
promote adequate and effective protection of intellectual property rights, reflecting a standard of protection similar to U.S. law;
obtain wider and broader application of the principles of transparency and anti-corruption;
achieve full implementation of the WTO agreements and extend their coverage;
achieve increased transparency and non-discrimination in foreign government regulation;
promote the effective enforcement of a country’s labor and environmental laws; reduce or eliminate government practices that unduly threaten sustainable development and seek market access for U.S. environmental technologies, goods and services;
seek effective and timely resolution of disputes with respect to all principal negotiating objectives, including the ability to use dispute settlement and the availability of equivalent procedures and equivalent remedies;
preserve the ability of the United States to enforce rigorously its trade remedy laws, avoid agreements that lessen the effectiveness of such laws; and address and remedy market distortions that lead to dumping and subsidization;
obtain a revision of WTO rules related to the treatment of border adjustments for internal taxes;
obtain reciprocal market access for U.S. exports of textiles and apparel; and
seek commitments to vigorously enforce a country’s laws prohibiting the worst forms of child labor.

Promotion of Other Priorities: Directs the President to pursue additional priorities, including to:

seek greater cooperation between the WTO and ILO;
establish consultative mechanisms to strengthen the capacity of countries to promote respect for core labor standards and to implement standards to protect the environment and human health based on sound science;
conduct labor and environmental reviews of future trade and investment agreements;
take into account legitimate domestic objectives, including the protection of legitimate health, safety, essential security and consumer interests;
provide technical assistance with respect to other countries’ labor laws;
report to Congress on the labor rights of countries with which the United States is negotiating and on the extent to which a country has in effect laws governing exploitative child labor;
promote consideration of multilateral environmental agreements;
report to the House Ways and Means and Senate Finance Committees on the effectiveness of penalties or remedies imposed under a trade agreement; and
seek to establish consultative mechanisms on unanticipated currency movements.

Progress towards Negotiating Objectives: Provides that no trade agreement may qualify for expedited procedures unless it “makes progress” in meeting the applicable negotiating objectives and the President fulfills the consultations requirements. The President is also required to report to Congress on how the final agreement makes progress towards the bill’s objectives.

Expedited Procedures: Authorizes expedited procedures as contained in the original trade-negotiating authority legislation for implementing bills that contain provisions “necessary or appropriate” to implement the underlying trade agreement. Procedures require that 45 session days after an implementing bill is introduced, the relevant House committee(s) must report the implementing bill (without amendment) or be automatically discharged. The Senate committee(s) must report the bill (without amendment) or be automatically discharged 15 session days after its receipt from the House or 45 session days after its introduction, whichever is later. The implementing bill can be considered for up to 20 hours, without amendment on both the House and Senate floors. A chart showing the TPA timeline is provided below:

TPA TIMELINE

Pre-Negotiations

90 calendar days before initiating negotiations – Notify Congress of intent to initiate FTA negotiations.

Consult with Congressional Oversight Group (COG), Finance and Ways and Means and other committees before and after notification and meet with COG before initiating negotiations if majority of COG requests meeting. Additional consultations required if initiating agriculture, fishery or textile negotiations.

Initiation of Negotiations

Consult with COG, Finance and Ways and Means, Agriculture (if relevant) and other committees during negotiations, immediately before initialing agreement and before signing agreement.

180 calendar days before agreement signed – Administration must report to Finance and Ways and Means Committees on trade remedy law issues.

90 calendar days before agreement signed – President must notify Congress of intent to enter into the agreement and provide details of the agreement to the ITC and request preparation of ITC assessment.

30 calendar days after notification – Advisory Committees to submit reports on the proposed agreement.

After Agreement is Signed

60 calendar days after agreement signed – President must submit description of changes to existing laws required to bring United States into compliance with agreement.

No later than 90 calendar days after agreement signed – ITC submits report of its assessment to the President and Congress.

No deadline – President submits final text of agreement, draft implementing bill, statement of administrative action and supporting information on day when House and Senate are both in session.

After Implementing Bill Introduced

Implementing bill introduced in House and Senate on same day it is submitted by the President.

45 session days after implementing bill introduced – House committee(s) must report implementing bill or be automatically discharged.

15 session days after Senate’s receipt of the implementing bill from the House or 45 session days after its original introduction in the Senate, whichever is later – Senate Committee(s) must report out bill or be automatically discharged.

20 hours each of House and Senate floor debate, followed by final votes on the implementing bill.

Congressional Consultations: Provides extensive provisions for Congressional consultations beyond that included in prior trade-negotiating authority legislation, including the establishment of a permanent Congressional Oversight Group (COG) to provide ongoing oversight of negotiations. TPA Act provides that TPA procedures are not applicable if both Houses separately agree to procedural disapproval resolutions (under expedited floor procedures) for lack of notice or consultations within 60 days of each other.

Extension Procedures

Pursuant to the TPA Act, the authority only applies to free trade and tariff-only agreements entered into prior to July 1, 2005, unless the President requests an extension no later than April 1, 2005 and neither House adopts a disapproval resolution prior to July 1, 2005. If extended, TPA would apply to agreements concluded by June 30, 2007

On March 30, 2005, President Bush requested renewal of TPA and submitted a detailed report describing the use of TPA since its enactment in 2002 and why an extension is required.

	Snapshot of TPA Renewal Procedures
April 1, 2005:	President submits request to Congress for extension of TPA, accompanied by a report detailing use of TPA and justifying its renewal
June 1, 2005:	International Trade Commission (ITC) submits report to Congress providing a review and analysis of the economic impact of the trade agreements implemented between the date of TPA enactment and the date of the extension request. Advisory Committee for Trade Policy and Negotiations (ACTPN) submits report to Congress on its views on TPA renewal
On or after date of Presidential request:	Any member of the House or Senate may introduce a resolution disapproving extension request, to be referred, respectively, to the House Committee on Ways and Means and the House Committee on Rules or Senate Committee on Finance
After reported by Committee:	Disapproval resolutions are subject to expedited floor consideration if reported by the House Ways and Means or Senate Finance Committee.
* * * TPA is renewed if the President requests the extension by April 1, 2005 and neither House adopts an extension disapproval resolution before July 1, 2005.

The TPA Act also requires the Advisory Committee for Trade Policy and Negotiations (ACTPN) to report to Congress no later than June 1, 2005 its views of the President’s extension request. As well, the International Trade Commission (ITC) is required to submit a written report to Congress no later than June 1, 2005 providing a review and analysis of the economic impact of the trade agreements implemented following enactment of the TPA Act and preceding the date of the President’s request for an extension.

Following the President’s submission of his extension request, any Member of Congress may introduce a resolution disapproving the extension of TPA procedures. Such resolutions will be referred in the House to the Committee on Ways and Means and the Committee on Rules and in the Senate to the Committee on Finance. Floor consideration of such a disapproval resolution may only occur if reported by the Committee to which it was referred. If considered on the House or Senate floor, the expedited procedures for floor consideration apply.

If neither the House nor the Senate passes a disapproval resolution before July 1, 2005, TPA authority is extended to free trade and tariff-only agreements negotiated prior to July 1, 2007.

Importance of TPA Renewal

The renewal of TPA authority through July 1, 2007 is important to: (1) enhance U.S. leadership on trade and the President’s ability to conclude negotiations with foreign trading partners; (2) facilitate Congress’ consideration and implementation of such agreements; and (3) provide for greater Administration-Congressional consultations on issues where both the President and the Congress have overlapping constitutional prerogatives. As explained in greater detail below, the Administration is engaged in several important negotiations that will not be concluded before the June 30, 2005 deadline set in the TPA legislation. Failing to renew this authority will undermine the Administration’s ability to play a leadership role in key negotiations, including most importantly at the WTO.

TPA in Action (2002-2005)
TPA Procedures Promote Free Trade Agreement
Negotiations with 23 Countries

Since its enactment on August 6, 2002, TPA procedures have been used extensively by U.S. negotiators and the U.S. Congress:

2 on-going FTA negotiations were concluded (Chile and Singapore).
11 new sets of negotiations with a total of 21 countries were commenced; of which 6 negotiations (with a total of 11 countries) have been concluded.
6 new FTAs with a total of 11 countries have been signed.

4 FTAs have been approved by the U.S. Congress, signed into law and have now entered into force creating important new opportunities for U.S. farmers, manufacturers, service providers and their workers and U.S. consumers.

ECAT POSITION: ECAT strongly supports the renewal of TPA authority for an additional two years to enable the United States to continue to pursue the completion of the Doha Development Agenda and comprehensive and commercially meaningful FTA agreements.

Recently Completed Free Trade Agreement Negotiations

Following enactment of TPA, the Bush Administration embarked on a very active agenda to negotiate free trade agreements on a bilateral and subregional level. In 2003, agreements with Chile and Singapore were reached and approved by the U.S. Congress. In 2004, agreements with Australia and Morocco were concluded and also implemented by the U.S. Congress. The United States now has FTAs with eight countries:

COUNTRIES WITH WHICH
THE UNITED STATES HAS AN FTA

Entry into Force

Israel 1985

Canada 1989/1994

Mexico 1994

Jordan 2001

Chile 2004

Singapore 2004

Australia 2005

Morocco Expected in 2005

In 2003 and 2004, the Bush Administration embarked on or announced negotiations with an additional 18 countries and announced Middle East and Andean FTA initiatives. Negotiations with five Central American countries and the Dominican Republic have now been concluded as part of the CAFTA-DR (discussed in section 2), as have negotiations with Bahrain (discussed below). Ongoing negotiations of other bilateral and subregional negotiations are discussed at the end of this section.

COMPLETED NEGOTIATIONS
	Negotiations Completed	Signing	Current Status
Bahrain	May 2004	Sept. 14, 2004	Awaiting introduction and Congressional action
CAFTA-DR Costa Rica El Salvador Guatemala Honduras Nicaragua Dominican Republic	Jan. 2004 Dec. 2003 Dec. 2003 Dec. 2003 Dec. 2003 Mar. 2004	May 28, 2004 May 28, 2004 May 28, 2004 May 28, 2004 May 28, 2004 Aug. 5, 2004	Awaiting introduction and Congressional action

U.S.-Bahrain Free Trade Agreement

The United States launched FTA negotiations in January 2004 with Bahrain, which concluded on May 27, 2004. The FTA was signed on September 14, 2004 and is currently awaiting Congressional implementation.

Two-way trade was nearly $706 million in 2004.

Major Provisions

Manufactured goods: Provides that 100 percent of bilateral trade in consumer and industrial goods will be duty-free upon entry into force, expanding opportunities in particular for exports of aircraft, machinery, vehicles, and pharmaceutical goods. Tariffs on virtually all items on U.S. and Bahrain tariff schedules will also be eliminated immediately, with the rest eliminated over 10 years.
Agriculture: Provides that 81 percent of U.S. agricultural exports will be duty free immediately upon entry into force, expanding opportunities in particular for meats, fruits and vegetables, cereals, and dairy products. Remaining tariffs will be eliminated in 10 years. Bahrain also agreed to adopt a science-based and transparent regime to address sanitary and phytosanitary barriers.
Services: Provides that Bahrain will make significant openings in its services market through a negative list approach and includes strong disciplines on transparency. In particular, the FTA includes significant market access for financial and telecommunications services and e-commerce/trade in digital products.
Textiles and apparel: Provides duty-free treatment immediately for qualifying textiles and apparel (based on a yarn-forward rule), with an additional allowance of 65 million square meters equivalent for the first 10 years for non-qualifying items.
Government procurement: Includes important new non-discrimination, anti-corruption, and transparency rules for government contracting.
Intellectual property rights: Includes state-of-the-art protections for trademarks, copyrights, patents, and trade secrets, including stronger penalties, patent term restoration, data exclusivity and disciplines to strengthen enforcement.
Transparency: Includes state-of-the-art transparency standards, including in such areas as customs and regulatory rulemaking.
Labor and environment: Includes binding commitments to enforce effectively labor and environmental laws subject to dispute settlement. The parties reaffirmed their commitment to International Labor Organization principles and that it is inappropriate to weaken or reduce labor or environmental protection to encourage trade or investment. The parties also agreed to ensure that their environmental laws provide for high levels of environmental protection.
Dispute settlement: Provides that obligations in commercial, labor and environment areas are enforceable through a strong and innovative dispute settlement system.

Opportunities Created

In 2004, U.S. goods exports to Bahrain totaled 301 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 its continued economic reform and openness to investment, as well as its commitment to openness, transparency, high standard intellectual property protection that keeps pace with digital innovations and the rule of law. It also represents an important step towards a broader Middle East FTA.

Next Steps

Based on TPA procedures, the U.S.-Bahrain FTA is ready for Congressional consideration.

ECAT POSITION: ECAT supports Congress’ implementation of the U.S.-Bahrain FTA.

The U.S.-Central America-Dominican Republic FTA is discussed in Section 2.

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

Following enactment of TPA, the Administration has completed or launched negotiations or announced its intent to negotiate with 21 countries. In addition to the Australia, Bahrain Central America-Dominican Republic and Morocco FTAs, where negotiations have now been concluded, the Administration is engaged in the following on-going bilateral and subregional negotiations:

COUNTRIES WITH WHICH THE UNITED STATES IS CURRENTLY NEGOTIATING A FREE TRADE AGREEMENT
	Status
Andean Pact Colombia Ecuador Peru	Numerous negotiating rounds, could be completed in 2005
Oman	Negotiations begun in March 2005
Panama	Numerous negotiating rounds; could be completed in 2005
Southern African Customs Union Botswana Lesotho Namibia South Africa Swaziland	Numerous negotiating rounds; current negotiations on hold
Thailand	Only initial negotiating rounds have taken place
United Arab Emirates	Negotiations begun in March 2005
Western Hemisphere - FTAA (minus Cuba)	Efforts to reenergize negotiations taking place in 2005

U.S.-Colombia and Andean Pact FTA Negotiations

The United States launched FTA negotiations with Colombia, Ecuador and Peru in May 2004. As discussed in section 12, 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 in 2005.

ECAT strongly urges U.S. negotiators to seek the elimination of the following barriers as part of the FTA negotiations:

Investment barriers.
Tariff elimination to eliminate the remainder of agricultural and manufactured tariffs.
Non-tariff barriers across all sectors.
Agricultural barriers, including the elimination of price-bands.
Services barriers, through adoption of negative list commitments.
Government procurement barriers through commitments to transparent, predictable and fair tendering procedures.
Electronic commerce/digital products/information technology barriers.
Barriers created by the lack of full and effective protections for intellectual property rights.

Given existing concerns over the protection of investment in Ecuador and Peru, ECAT strongly urges the Administration to keep as closely as possible to the negotiating framework described in section 6, particularly with the treatment of investment agreements and the limitation of exceptions.

ECAT also urges the Administration to reject carve-outs of key sectors in any of the major chapters, from market access on goods and services to intellectual property to investment.

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. ECAT strongly urges that the Administration reject efforts to carve-out particular sectors. ECAT strongly urges the Administration to include high standard investment protections, similar to those included in many respects in the U.S.-Uruguay BIT, and the high standard intellectual property standards included in recent FTAs. ECAT also urges the Administration to ensure that existing government commitments are upheld, particularly regarding investment, so that negotiations are not delayed.

U.S.-Panama FTA Negotiations

The United States launched FTA negotiations in April 2004, but negotiations were not completed as expected by early 2005.

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 in1982. 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 as part of the FTA. ECAT also supports a strong approach on investment that will not leave key sectors of the economy excluded.

ECAT strongly urges U.S. negotiators to seek the elimination of the following barriers as part of the FTA negotiations:

Investment barriers, particularly with respect to the Panama Canal investments.
Tariff elimination to eliminate Panama’s agricultural and manufactured tariffs.
Non-tariff barriers across all sectors.
Services barriers, through adoption of negative list commitments.
Government procurement barriers through commitments to transparent, predictable and fair tendering procedures.
Electronic commerce/digital products/information technology barriers.
Barriers created by the lack of full and effective protections for intellectual property rights.

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.-Thailand FTA Negotiations

The United States launched FTA negotiations with Thailand in June 2004.

The United States is seeking a comprehensive agreement that will focus on key trade and investment issues and address the significant challenges in the market with respect to intellectual property protection. 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.

ECAT strongly urges U.S. negotiators to seek the elimination of the following barriers as part of the FTA negotiations:

Investment barriers, including restrictions in the Foreign Business Act
Tariff elimination to eliminate Thailand’s agricultural and manufactured tariffs.
Non-tariff barriers, across all sectors.
Services barriers, through adoption of negative list commitments.
Government procurement barriers through commitments to transparent, predictable and fair tendering procedures.
Electronic commerce/digital products/information technology barriers.
Barriers created by the lack of full and effective protections for intellectual property rights.

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 and strengthen the level of intellectual property and investment protection.

U.S.-Oman FTA Negotiations

The United States launched FTA negotiations with Oman in March 2005.

Oman became the 139th member of the World Trade Organization (WTO) on November 9, 2000. In acceding, Oman made a number of important modifications to its trade regime, dismantling barriers to goods and services. Yet barriers remain, particularly for investment and in some services and goods sectors.

ECAT strongly urges U.S. negotiators to seek the elimination of the following barriers as part of the FTA negotiations:

Investment barriers, particularly with regard to government screening and limitations on foreign ownership.
Tariff elimination to eliminate the remainder of Oman’s agricultural and manufactured tariffs.
Non-tariff barriers, particularly in the agriculture and petroleum sector, as well as Oman’s continued delay in allowing pharmaceutical products to be introduced into the market.
Services barriers, through adoption of negative list commitments.
Government procurement barriers through commitments to transparent, predictable and fair tendering procedures, particularly for Oman’s Tender Board which provides a 10 percent price preference to bids by Omani firms and sometimes fails to publicize adequately major tenders.
Electronic commerce/digital products/information technology barriers.
Barriers created by the lack of full and effective protections for intellectual property rights.
Potential barriers created by the Gulf Cooperation Council Customs Union.

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

U.S.-United Arab Emirates FTA Negotiations

The United States launched FTA negotiations with the United Arab Emirates (UAE) in March 2005.

UAE was a founding member of the World Trade Organization (WTO) and continues to participate in multilateral trade liberalization efforts. It has worked to diversify its economy particularly through tourism, manufacturing, financial services and entrepot trade, fostered by its development of the largest manmade seaport in the world. In March 2004, UAE signed a Trade and Investment Framework Agreement with the United States and, in December 2004, it also signed a Container Port Security Initiative with the United States, to protect global trade routes.

ECAT strongly urges U.S. negotiators to seek the elimination of the following barriers as part of the FTA negotiations:

Investment barriers, including:
- requirements under the UAE Commercial Agencies Law (Federal Law No. 18 of 1981, as amended) that establish foreign ownership limitations on business operations in the UAE (outside of the free trade zone);
- significant limitations on land ownership and land transfer by foreigners, and
- a discriminatory tax regime that burdens foreign banks.
Tariff elimination to eliminate the remainder of UAE’s agricultural and manufactured product tariffs.
Non-tariff barriers, including agency-sponsor-distributors requirements that reduce opportunities not only for investment, but also for the distribution and sale of U.S. agricultural and manufactured exports.
Services barriers, through adoption of negative list commitments.
Government procurement barriers through commitments to transparent, predictable and fair tendering procedures, including through reform of the Public Tenders Law of 1975.
Electronic commerce/digital products/information technology barriers.
Barriers created by the lack of full and effective protections for intellectual property rights.
Potential barriers created by the Gulf Cooperation Council Customs Union.

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

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, but progress has slowed and there is no set date for the conclusion of the SACU FTA.

The SACU already represents the largest U.S. export market in sub-Saharan Africa, with U.S. exports totaling more than $3.2 billion in 2004. Major exports include machinery, vehicles, aircraft, medical instruments, plastics, chemicals, cereals, pharmaceuticals and wood and paper products.

ECAT strongly urges U.S. negotiators to seek the elimination of the following barriers as part of the FTA negotiations:

Investment barriers.
Tariffs through the elimination of agricultural and manufactured tariffs.
Non-tariff barriers across all sectors.
Services barriers, through adoption of negative list commitments.
Government procurement barriers through commitments to transparent, predictable and fair tendering procedures.
Electronic commerce/digital products/information technology barriers.
Barriers created by the lack of full and effective protections for intellectual property rights.

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

Free Trade Area of the Americas

The ongoing Free Trade Area of the Americas (FTAA) negotiations, formally launched in 1998, 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, although that deadline can no longer be met. 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. Negotiations then stalled in 2004 as countries were unable to reach agreement on key issues regarding the two-track process.

Meanwhile, total U.S. trade with the Western Hemisphere has more than doubled since 1990 to $871 billion in 2004. 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 2004. U.S. exports to the region accounted for 44 percent of total U.S. exports to all destinations in 2004.

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, although that deadline can no longer be met. 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 simplifies 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 under negotiation. The United States submitted comprehensive proposals on each of the main issues in that year.

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.

Status of the Negotiations and Outlook for 2005

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 America-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. ECAT recognizes that the Administration is continuing to press for the inclusion of these commitments, particularly in the area of intellectual property rights with Brazil, which has already largely adopted many of the key intellectual property rights protections in its own law.

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. The TNC meeting was postponed. The co-chairs of the TNC met in Washington, D.C. in February 2005 and have scheduled their next meeting for the end of March 2005.

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 decades 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.

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 major 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 and others, particularly in Asia, sooner, rather than later, should be an issue squarely on the U.S. trade and investment negotiating agenda.