Emergency Committee For American Trade - Publications

ECAT 2008 AGENDA

SECTION II.1: WORLD TRADE ORGANIZATION

The World Trade Organization (WTO) marked its 13th anniversary on January 1, 2008, although its origins are much older, starting with the creation of the General Agreement on Tariffs and Trade (GATT) under the Bretton Woods Agreement in 1947. The United States was instrumental in the creation of and a founding member of both the GATT and the WTO.

The trade liberalization shaped by the GATT and now the WTO has been a major engine of global economic growth, helping to lift hundreds of millions of people out of poverty over the past five decades. Since the founding of the multilateral trading system and eight successful rounds of trade negotiations, the world economy has grown six-fold and per capita income worldwide has tripled. With a membership of 23 countries in 1947, the WTO has now grown to 151 members. World trade in goods alone grew from approximately $50 billion in 1947 to $11.8 trillion in 2006. Worldwide commercial trade in services grew to nearly $2.8 trillion in 2006. During the same period, the United States economy has grown, with an amazing increase in U.S. Gross Domestic Product (GDP) per capita (in 2000 dollars) from $12,000 in 1948 to approximately $43,440 in 2007. Over the past decade, the rate of increase in the per-capita GDP of the United States has been greater than for nearly every other advanced industrialized country.

Since the establishment of the WTO in 1995, U.S. exports and overall trade have expanded significantly, with:

A $580 billion or nearly 100-percent increase in U.S. agricultural and manufacturing exports; and
A $200.6 billion or 98-percent increase in U.S. services exports (through 2006, the last year for which data are available).

Such increases have contributed to substantial growth in U.S. GDP and U.S. GDP per-capita. Imports into the United States also grew significantly by $1.2 trillion, improving the variety, quality and availability of products throughout the United States, lowering the cost of products for U.S. consumers and manufacturers, increasing the competitiveness of U.S. companies, and helping to dampen inflationary pressures.

The Uruguay Round Agreements and successor WTO agreements on information technology, telecommunications and financial services have contributed importantly to gains in the U.S. economy. It is also notable that these three post-Uruguay Round WTO agreements lowered other countries’ barriers in sectors where the United States is highly competitive, creating new opportunities for U.S. manufacturing and service companies and their workers.

Since the advent of binding dispute-settlement rules in 1995 – dispute-settlement rules strongly advocated by successive U.S. Administrations – the WTO has also been requested to resolve over 350 cases, helping developed and developing countries to resolve their disputes peaceably and fairly. For the United States, as one of the most active participants in the dispute-settlement system, this has meant the successful resolution of 49 cases where the United States has challenged other governments’ trade restrictive measures. The United

States has also been a defendant many times, successfully negotiating and/or winning 34 of the cases brought against it. The WTO dispute settlement system is discussed in more detail at the end of this section.

At present, the United States’ highest WTO priority is to reenergize and promote the conclusion of the Doha Development Agenda (Doha or DDA) negotiations, which seek to achieve:

greatly improved market access for manufactured goods through the substantial reduction and/or elimination of tariff and non-tariff barriers;
substantial progress in opening services markets;
significant reform of customs and trade-facilitation procedures; and
agricultural export-subsidy elimination, the reform of other trade-distorting agricultural subsidies, and significant improvements in agricultural market access.

These and other aspects of the Doha Agenda, including improving dispute settlement, trade remedy and fishery rules and promoting the reduction of barriers to environmental goods and services, are hugely important to level the playing field in many key areas, putting U.S. farmers, companies and workers on an equal footing with their competitors who already enjoy relatively open markets in the United States. These negotiations are discussed in greater depth below.

Doha Development Agenda Negotiations

After several years of discussions and a failed attempt at the Third Ministerial Conference in Seattle, Washington, in 1999, the WTO successfully launched broad new trade-liberalizing negotiations at its Fourth Ministerial Conference in Doha, Qatar, on November 14, 2001. In the summer of 2004, WTO member countries reached a Framework Agreement to move the negotiations forward in a number of key areas—agriculture, non-agricultural market access, services, rules and trade facilitation. WTO member countries decided, however, not to proceed with negotiations on transparency in government procurement – the other major issue on which ECAT and the broader U.S. business community sought agreement – or investment or competition policy.

Modest progress on the Doha negotiations was achieved at the Sixth WTO Ministerial Conference in Hong Kong in December 2005, but negotiations were put on hold in July 2006, after efforts to move the negotiations forward proved unsuccessful. In November 2006, WTO Director-General Pascal Lamy urged negotiating chairs to resume consultations as appropriate. Draft texts in agriculture and manufacturing were released in July 2007 and revised texts were set forth in February 2008, along with a stocktaking report on services. Efforts will continue in the coming months to reach agreement among WTO members on a framework for moving forward to the final stage of the negotiations

The continuation of the Doha negotiations presents both opportunities and challenges for ECAT and other U.S. companies. The negotiations present prospects of increased market access and other benefits that will spur economic growth both at home and abroad. At the same time, other countries will seek to carve back on intellectual-property protections and other commitments that are already part of the WTO agreements.

Over the past several years, the United States has strengthened considerably its leadership in the WTO through very ambitious proposals and a willingness to eliminate U.S. barriers if other countries eliminate theirs. In addition, the United States has shown the strength of its convictions through implementation of the decisions of several key WTO dispute settlement panels against U.S. practices, including the elimination of the Continued Dumping and Subsidy Offset Act (the so-called Byrd Amendment).

ECAT and ECAT member companies will continue their efforts to promote further concrete progress on the Doha Development Agenda. In particular, ECAT will continue to focus its work on several key areas, including market access, trade remedies, trade facilitation, dispute settlement and work on strengthening the United States’ role in the WTO.

Background

In the Uruguay Round Agreements establishing the WTO in 1995, WTO members agreed to a “built-in” agenda to start negotiations in agriculture and services no later than the end of 1999. During the intervening years, WTO members discussed the possibility of launching new negotiations, but differences remained on what issues would be addressed.

These discussions came to the forefront in 1999 as the WTO unsuccessfully sought to launch negotiations at the Third Ministerial Conference in Seattle. In particular, the United States sought a narrow agenda focused on market access and the built-in agenda negotiations on services and agriculture, while the European Union (EU) and Japan promoted a broad agenda, including new areas such as competition policy and investment. The European Union also opposed any language suggesting that negotiations in agriculture should aim to eliminate export subsidies, as sought by the United States and the Cairns Group of countries. The developing countries favored a narrow agenda, but also sought the opportunity to renegotiate existing agreements in areas such as textiles and antidumping and address implementation issues. The United States and EU adamantly opposed efforts to reopen existing agreements, and the United States particularly opposed efforts to renegotiate the antidumping and subsidies agreements. These differences were not overcome and negotiations were not launched in 1999.

Following the failure of the Seattle Ministerial, then WTO Director-General Michael Moore and then General Council Chairman Stuart Harbinson worked assiduously to bridge differences among WTO members and broaden the participation of all countries. The United States and EU also worked to reconcile their own differences; for example, the United States agreed not to oppose the EU’s efforts to include competition policy and investment in the new negotiations. The United States worked as well with many developing countries to emphasize the benefits of a new WTO round.

In the lead-up to the Fourth WTO Ministerial Conference in Doha, Chairman Harbinson prepared several draft Ministerial Declarations and sought to reach agreement on major issues with interested countries. As a result of these preparations, compromise by WTO members and, in some cases, ambiguous wording, WTO members reached agreement on the Ministerial Declaration, associated documents and health-policy issues.

Doha Development Agenda

The Doha Development Agenda negotiations are the ninth round of negotiations under the auspices of the GATT and WTO. The 52-paragraph Ministerial Declaration agreed to in Doha launched a new round of negotiations that began in January 2002 and was scheduled to conclude by January 1, 2005. That deadline was not achieved, and no new deadline has been formally established.

Issues Covered in the Doha Declaration

Agriculture
Services
Goods market access
WTO rules
Transparency in government procurement
Investment and competition policy

Electronic commerce
Environment
Intellectual property rights
Trade facilitation
Dispute settlement

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

Agriculture
Services
Non-agricultural market access (NAMA)
Rules
Trade and environment
Geographical indications for wines and spirits
Reform of the Dispute Settlement Understanding (DSU)

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.

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.

2004 Framework Agreement

After months of discussions and meetings following the Cancun Ministerial, many led by the United States, the WTO’s General Council adopted, on August 1, 2004, the so-called Framework Agreement to move forward the Doha negotiations by establishing the following structure for the negotiations:

Agriculture: Negotiators will seek:

Elimination of agricultural export subsidies
Reductions in trade-distorting domestic subsidies, with higher levels cut more
Tariff cuts, with deeper cuts of higher tariffs, and quota expansion
Disciplines on export credits and guarantees
New disciplines on state trading enterprises
Special focus on cotton subsidies and tariffs

Manufactured Goods: Negotiators will seek:

Formula tariff cuts, with higher tariffs being cut more
Sectoral tariff elimination/harmonization
Reduction of non-tariff barriers

Services: Negotiators will seek intensified market-access negotiations, with revised offers due May 2005.

Trade Facilitation: Negotiators will launch negotiations to clarify and improve customs procedures to expedite the movement of goods and to enhance cooperation and technical assistance.

Development: Negotiators will reflect development concerns through:

Special and differential treatment provisions, particularly for least developed countries
Technical assistance
Continued work on implementation issues, including those related to the TRIPS agreement

Other Issues: The General Council directed negotiators to continue other negotiations, including:

Trade remedies (antidumping, countervailing duties, safeguards), to clarify and improve disciplines;
Environment, to explore the relationship between WTO rules and multilateral environmental agreements and the reduction or elimination of tariff and non-tariff barriers on environmental goods and services; and
Dispute Settlement, to improve and clarify the WTO’s dispute settlement system.

Negotiations Not Launched:

Transparency in government procurement
Competition policy
Investment

Sixth WTO Ministerial Conference in Hong Kong

The Sixth WTO Ministerial Conference in Hong Kong in December 2005 sought to achieve concrete progress towards setting the parameters for the Doha negotiations. That result was not fully achieved, as Ministers were only able to agree to a rough path forward, with much of the significant negotiations left for 2006 and beyond. In addition, the Hong Kong Ministerial Conference was able to address several corollary issues, which the United States hoped would lead to more progress in the negotiations.

Key Elements of Sixth WTO Ministerial Declaration

Agricultural Export Subsidies

Establishes 2013 as the end date for agriculture export subsidies.

Agricultural and Consumer and Industrial Market Access

Establishes April 30, 2006, as the date for reaching consensus on modalities for both agricultural and consumer and industrial products.
Establishes July 31, 2006, as the date for the submission of draft market-access schedules for agricultural and consumer and industrial products.
Affirms use of Swiss formula for non-agricultural tariff reductions, but failed to reach consensus on further details.
Reaffirms importance of sectoral initiatives for consumer and industrial goods.

Services Market Access

Calls for the submission of collective services requests by February 28, 2006.
Establishes July 31, 2006, as the date for submission of the second round of revised market-access services offers.
Establishes October 31, 2006, as the deadline for final services offers.

Trade Facilitation

Agreed to intensify efforts to draft trade-facilitation text by the end of 2006.

Market Access for Developing Countries

Agreed to liberalize 97 percent of trade with least-developed countries.
Agreed to reduce barriers to cotton trade, including export subsidies, by 2006.

ECAT remains disappointed, however, that U.S. trading partners in Europe and elsewhere were unable to match the ambitions of the United States, resulting in the lack of more concrete progress in defining the negotiating parameters more clearly in agriculture, manufacturing and services. In many respects, significant progress on some of the most important issues that will determine whether these negotiations can promote significant growth and alleviate poverty – overall liberalization in agriculture, manufacturing and services – have been again delayed.

2006-2008 Developments

WTO members failed to meet many of the deadlines set by the Sixth WTO Ministerial Conference in Hong Kong – most notably the April 30, 2006, deadline for establishment of modalities. In July 2006, the United States and several key trading partners sought to achieve concrete progress on the modalities, particularly with respect to agricultural support and agricultural market-access issues where there have been major differences in the negotiating position of key members, including the United States, European Union, Brazil, and India. Ministers were unable to achieve agreement on modalities in July 2006 and Director-General Lamy indicated that the Doha negotiations would be suspended.

In November 2006, Director-General Lamy indicated that there appeared to be renewed opportunities for the negotiations to move forward and directed negotiating chairs to recommence consultations and work toward resolution of main issues.

In July 2007, the Chairs of the agricultural and manufacturing negotiations issued draft texts that sought to narrow differences, although many key issues were left unresolved or “bracketed” to reflect differences among WTO members.

In November 2007, the Chair of the Rules negotiations released a draft rules text on trade-remedy and fisheries rules. This text was disappointing in not making the types of improvements in the trade-remedy rules that are required to ensure that these rules are not used as unfair barriers to trade.

In February 2008, the Chairs of the agriculture and manufacturing negotiations issued revised draft texts. While the agriculture text was able to narrow some differences, numerous open issues remain that will determine whether the text will lead to a concrete market-opening result in key markets. The NAMA text represented a step backwards, particularly with respect to developing-country flexibilities, implementation periods, and lack of progress on non-tariff barriers. Shortly after the release of the agriculture and manufacturing texts, the Chair of the services negotiations released a stocktaking report on the work of the services negotiations. Work must accelerate in services, so that negotiations on services proceed in conjunction with the other two pillars on an ambitious track

Work is continuing in each of these three critical areas to determine if differences can be narrowed sufficiently in the coming months so that ministerial-level decisions can be made on the framework (or so-called modalities) on agriculture and manufacturing and key outcomes can be made clearer in the services negotiations.

ECAT Priorities

Market Access

Critical to the ultimate success of the Doha is substantial and meaningful market access in the three key areas of trade – agriculture, manufacturing and services – by developed and developing countries alike. Anything less than a highly ambitious and comprehensive approach – such as efforts to define too narrowly U.S. interests – will almost assuredly lead to a least common denominator approach and the failure of this opportunity to make substantial progress towards the type of market liberalization that is critical for economic growth and higher standards of living. It is important as well that efforts be made to move each of the negotiating areas forward so that current access levels are bound and new market access is created.

Agricultural Market Access

The removal of barriers across all levels of agricultural trade is not only a commercial imperative, it is also critical to help promote access to affordable food and better living conditions throughout the world, where many live on less than $2 a day. U.S. negotiators must continue to seek ambitious and comprehensive market liberalization in agriculture. Key objectives for the United States should include:

A comprehensive agreement that does not exempt any commodity or product. To do otherwise would open the floodgates to a myriad of exceptions that will substantially undermine the opportunities for the United States’ competitive agricultural and non-agricultural sectors;
Elimination of agricultural export subsidies as quickly as possible, with early deep cuts for the highest level of subsidies;
Elimination of differential export taxes (DETs), which effectively operate as export subsidies for value-added agricultural products such as refined soybean oil, refined palm oil, or bio-diesel;
Substantial reduction and elimination of agricultural tariffs, with deep cuts as early as possible to reduce prohibitively high tariffs;
Elimination of agricultural tariffs on a sectoral basis (zero-for-zero) where possible;
Substantial reduction and elimination of trade-distorting domestic support;
Minimal use of “sensitive product” category, since the very products the many developed countries want to protect, such as sugar, are the ones that could most benefit developing countries; and
Elimination of monopolistic practices of state-trading enterprises.

Consumer and Industrial Goods Market Access

Tariff and non-tariff barriers on consumer and industrial goods distort efficient trade flows to the detriment of both the exporting and importing countries; their reduction and elimination represent an important factor in generating economic growth and achieving development goals. In the non-agricultural market-access sector comprising consumer and industrial products, the U.S. negotiators should seek:

Substantial Reduction and Elimination of Consumer and Industrial Tariffs: Continued promotion of U.S. proposals to eliminate and substantially reduce consumer and industrial tariffs by a date certain is very important to promote a strong growth-producing agreement. Given that actual tariff levels are well below actual bindings and tariff cuts apply to bindings, ambition with respect to developed and developing countries in terms of coefficient levels is vital to ensure that tariffs are reduced in a meaningful and concrete manner.
Zero-for-Zero (Sectoral) Initiatives: Negotiation and implementation of zero-for-zero initiatives in key sectors in a critical mass of countries are also vitally important to spur progress and interest in Doha, as well as to foster the competitiveness of U.S. products. Zero-for-zero initiatives should be included in such key sectors such as entertainment products, electronic/electrical products which includes information technology and related products (not already covered by the ITA), energy, chemicals, toys, environmental products, medical and scientific equipment, forest products, fish, and gems and jewelry. These sectors, many of which were identified first in APEC discussions, represent a balanced package and reflect the interests of both developed and developing countries.
Non-Tariff Barriers: Reduction of NTBs has been established as an integral component of the Doha mandate, and negotiators should continue to identify and eliminate these barriers. NTBs range from discriminatory or inhibiting import, tax, investment and technology-sharing policies to unjustified rules, technical standards, specifications, certifications and other regulatory procedures that function as de facto barriers by favoring local suppliers or otherwise placing U.S. firms at a competitive disadvantage. Rules that are unnecessarily complex, technical specifications not based in terms of performance and functional requirements, and arbitrary customs valuation procedures can represent more substantial barriers to trade than tariffs. Accordingly, negotiations should make it a priority to eliminate current NTBs, while preventing the establishment of new ones. For example, standards included as technical specifications should be developed under an open, voluntary, consensus-based process; publicly available; vendor neutral; and, where applicable, based on international standards. As well, more countries should be encouraged to adopt paragraph 2 of the WTO Committee on Customs Valuation decision on the value of carrier media bearing software for data processing, commonly known as WTO Decision 4.1. In adopting paragraph 2, countries commit to use the value of the carrier medium and the carrier only when determining the customs value for data and instructions (software) imported on carrier medium (e.g., discs). Further, countries should work to expand the scope of this Decision to cover not only data and instructions (software), but also carrier media (e.g., discs, tapes, magnetic drives) that include sound, cinematic or video recordings. delivered on a physical medium be assessed on the value of the physical medium, not on the imputed value of the content. As discussed below, new barriers should not be created for content delivered electronically, for which the WTO should adopt a permanent moratorium on customs duties for electronic transmissions.
E-Commerce: As technology has advanced, many of the products that previously have been distributed in physical form are more efficiently and productively distributed through a variety of media, such as the Internet, satellite and cable. The final outcome of Doha should ensure that new barriers are not erected on products now being delivered electronically or in similar formats. Software, entertainment and other products delivered online should be subject to the same trade rules and protections as these products enjoy when delivered on physical medium, including full market access, national treatment, MFN protections, and commitments under the Agreement on Technical Barriers to Trade, the Agreement on Government Procurement, and the Agreement on Trade-Related Investment Measures. In addition, the WTO moratorium on customs duties on electronic transmissions should be made permanent.

Services

Services are a key component of global trade that must be considered on par with agriculture and industrial-goods market access. Indeed, services are essential inputs into the production of products in virtually all sectors of the economy, and the price and quality of services are important components in the cost and productivity of the agricultural and manufacturing sectors. More liberalized, efficient services trade is, therefore, an essential component in promoting the competitiveness of the entire economy. In February 2006, the United States joined with other major trading partners in submitting collective requests in a number of key services sectors, including audiovisual, computer and related services, construction, educational, distribution, energy, express delivery, environmental, financial, and telecommunications. These requests largely seek removal of foreign investment restrictions, limitations on the form of establishment or cross-border supply of services, discriminatory regulatory policies, nationality requirements and restrictions on competition.

The key priorities of U.S. negotiators in the services negotiations should include seeking global commitments to:

Increase market-access and national-treatment commitments across all sectors, including advertising, audiovisual, distribution, education, energy, financial, computer and related services, print media and publishing, retail, basic and value-added telecommunications, wholesaling, express delivery and professional services;
Ensure rights of establishment and ownership for U.S. foreign investors through wholly-owned entities or other business structures;
Eliminate unnecessary restrictions on cross-border transactions;
Promote pro-competitive, regulatory reform through the promulgation of adequate, fair and consistent rules and regulations;
Establish transparent, impartial and independent regulatory administration processes through the (a) public publication of texts of proposed and existing regulations, including substantive rules of general applicability, policies and interpretation of rules and regulations and (b) institution of due process for the making of rules and regulations which would establish how and within what timeframe public comment may be made;
Ensure that market-access commitments apply to services, including software and entertainment products made available over the Internet, and to other evolving information-technology services, which develop too rapidly to keep pace with trade designations;
Remove obstacles to the free movement of people by streamlining and improving the administration of U.S. business visa policies in order to facilitate the entry of business travelers (a broader discussion of temporary-entry provisions is found in section III.10);
Commence negotiation of government-procurement commitments within the General Agreement on Trade in Services (GATS); and
Ensure that the rights of U.S. companies that have already been acquired are guaranteed going forward.

Special and Differential Treatment

Recognition of the different situations of developing countries, particularly least-developed countries, is important, as recognized by the Doha mandate. Yet, that recognition should not be expanded to undermine the benefits of trade liberalization that are so critical to help spur economic growth in such countries. Proposals to extend transition times should be viewed on a case-by-case basis, and efforts to exempt countries from making commitments should be actively discouraged.

Trade Facilitation

The trade facilitation negotiations are extremely important to help developed and developing countries reduce administrative burdens, increase efficiencies and lower costs for consumers. Indeed, APEC has calculated that progress on trade facilitation could cut export costs by five to 15 percent. Key objectives should be to produce tangible progress to reduce customs clearance times and costs and promote more efficient trade movement and processing. Key priority areas for the negotiations should be based on the World Customs Organization Revised Kyoto Convention and the work of APEC, including addressing such issues as:

Transparency and greater government-private sector communication and coordination;
Simplification, harmonization and greater efficiency in processing, with special programs for major shippers;
Modernization and automation, including through the use of paperless transactions and secure methods for electronic payment; and
Consistent and predictable resolution of issues, including an expeditious right to appeal rulings.

WTO Rules – Antidumping and Countervailing Duty Rules

As recognized by the Doha Agenda, negotiations are necessary to clarify and improve disciplines under the trade-remedy rules (e.g., antidumping and countervailing duty provisions). While for many years the United States was the largest user of these rules, that situation has changed considerably and the United States has become the third-largest target of antidumping cases. The existing rules framework adopted during the Uruguay Round negotiations already permits foreign countries to misuse the trade-remedy rules to block U.S. exports and has led to numerous U.S. products being denied effective access in foreign markets, including:

Poultry
Beef
Pork/Swine
Rice
Apples
Corn syrup
Potatoes
Foodstuffs
Chemicals
Plastics
Textiles
Metals
Electrical equipment
In that regard, U.S. negotiating priorities should include:
Increased transparency in the operation of trade-remedy rules;
Improvements in processes for reviewing the standing of petitioners in bringing trade-remedy cases;
Improved requirements for notifying foreign business of the launch of trade-remedy cases;
Increased recognition of commercial business practices as normal, not unfair, pricing behavior, particularly for agricultural, cyclical and other products;
Increased fairness in the calculation of antidumping and countervailing duty provisions and full implementation of WTO decisions, such as on zeroing;
Definitive sunset of orders after set period of time;
Application of de minimis and fair-comparison rules to administrative reviews; and
Increased balance in the rules to account for public-interest considerations, including consideration of proposals on the lesser duty rule and a public interest test.

Market Access for Least-Developed Countries

ECAT strongly supports the implementation by the United States of a comprehensive and trade-liberalizing package of duty-free, quota-free treatment for least-developed countries (LDCs) in accordance with the duty-free, quota-free decision of the WTO. ECAT believes that such a package, implemented as the Doha agreement enters into force, is strongly in the interest of the United States and will help create new and meaningful economic opportunities for the LDCs, as well as benefit U.S. consumers and firms.

The United States currently provides substantial duty-free, quota-free treatment to LDCs through such programs as the African Growth and Opportunity Act (AGOA), the Caribbean Basin Trade Partnership Act (CBTPA) and the Generalized System of Preferences (GSP). Yet, each of those programs contains significant exceptions that in many cases limit precisely those types of products that LDCs are best positioned to produce and export to the United States. In particular, the GSP program exempts from duty-free, quota-free treatment textile, apparel and footwear products, leather products, and sugar and other agricultural products subject to a tariff-rate quota, as well as other products. Indeed, GSP only covers 4,600 of the nearly 10,000 U.S. tariff lines. AGOA and CBTPA provide some textile and apparel benefits to the countries eligible for such benefits, but still contain numerous exclusions.

ECAT urges that the United States expand duty-free, quota-free access to products currently excluded from these preference programs in order to provide the type of meaningful access to LDCs that would help foster concrete economic opportunities. In particular, LDCs should be accorded duty-free, quota-free treatment for products currently exempt from U.S. preference programs, including sugar and other agricultural products subject to TRQs, textiles, apparel and footwear.

Dispute Settlement

While the United States may not agree with all WTO panel decisions, the WTO dispute-settlement system on balance has been a very effective mechanism in enforcing U.S. rights. The United States has made aggressive use of the dispute-settlement process, bringing more complaints than any other WTO member. It has prevailed in or favorably settled the majority of the cases that it has filed.

In order to promote continued respect for this very important and innovative system of dispute settlement, longstanding U.S. initiatives to reform and improve the operation of the WTO dispute-settlement system should continue to be included as U.S. priorities. In particular, greater transparency and openness for documents and hearings are critical to foster a greater understanding of this system. As well, efforts should continue to clarify the rules to promote greater flexibility in settling disputes among members.

Government Procurement

Government procurement comprises a significant share of the global economy. For many WTO Members, government procurement may represent 10 to 15 percent of GDP, and this figure may reach as high as 20 percent of GDP in some developing countries. The WTO Agreement on Government Procurement (GPA) provides a strong framework for ensuring that the procurement practices of signatory nations are open and competitive, and respect the core WTO principles of national treatment, MFN, and transparency.

ECAT remains very disappointed that transparency in government procurement was not formally commenced by the July Framework Agreement. Nevertheless, U.S. priorities in this area remain no less important, and we urge the United States to emphasize the importance of further government-procurement liberalization in the course of the Doha negotiations. Work is ongoing to implement the results of efforts to simply the text of the GPA, and efforts to expand the membership of the GPA should intensify. Accession to the GPA should remain a key U.S. negotiating priority for ongoing WTO accession negotiations, such as with Russia and particularly with such key countries as China, India and Brazil, during the course of the Doha negotiations.

The importance of obtaining market access to China’s government procurement market cannot be overstated. China’s government is the largest single purchaser of goods and services in China, yet it has enacted a law that requires procurement of only domestic goods, services, and public works. ECAT is very troubled by recent proposed regulations that would severely restrict U.S. products from being sold to China’s government. ECAT welcomes China’s launch of its formal negotiations to join the GPA as discussed in section III.3 and will continue to urge a strong and timely outcome of these negotiations.

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. Adoption of U.S. proposals would result in the elimination of all tariffs by 2015 and provide enormous opportunities for U.S. service providers and others.

Depending upon the final outcome, some estimates predict that the Doha agreement would provide a net increase of $2,500 for an American family of four and could lift 500 million people out of poverty and help promote a dramatically improved standard of living at home and abroad. Even agreement only to cut global tariffs by a third would add $177 billion per year to the U.S. economy. 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.

To conclude the Doha negotiations this year, all countries must redouble their efforts to reach the type of broad, market-opening framework that will set the stage for the final negotiations to achieve the needed ambitious outcome across the three key sectors – agriculture, manufacturing and services. ECAT also urges forward progress on other key areas of the negotiations, such as trade facilitation, e-commerce and rules, to ensure that the market opening achieved in the three primary areas of the negotiations cannot be undone by other barriers.

ECAT Position: ECAT strongly supports conclusion of a comprehensive and commercially meaningful Doha Development Agenda covering 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 and digitally delivered goods and services. In particular, ECAT supports:

the substantial reduction and elimination of tariffs, non-tariff barriers, and export subsidies in agriculture, industrial products and services;
the adoption of a binding WTO agreement on trade facilitation, based on the rules contained in the World Customs Organization’s Revised International Convention on the Simplification and Harmonization of Customs Procedures (Revised 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;
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 so that trade-remedy actions cannot be misused as trade barriers to unfairly block U.S. exports; and
increased commitments by WTO members to the Government Procurement Agreement and adoption of reforms of that agreement negotiated in 2006.

WTO Institutional Framework

The legal framework of the WTO encompasses:

the rules of the multilateral trading system under the original GATT, set out under GATT Articles I through XXVIII;
the agreements negotiated during successive GATT negotiations to which all WTO members must subscribe, including the General Agreement on Trade in Services (GATS), the Agreement on Trade-Related Intellectual Property Rights (TRIPS), and the Agreement on Trade-Related Investment Measures (TRIMs);
plurilateral agreements on government procurement, aircraft, meat, and dairy in which membership is voluntary; and
dispute settlement and trade-policy review mechanisms.

The WTO Agreement is a “single-undertaking,” under which member countries must adhere to the basic WTO rules and all of the other broad agreements that have been negotiated under the GATT and the WTO.

The WTO is not a static institution; it has sought to keep the trading system in step with technological development through the negotiation of agreements on information technology, telecommunications, financial services, electronic commerce and other matters. The WTO rules also have promoted global economic stability by requiring WTO member countries to maintain open markets. The willingness of the United States and other WTO members to resist protectionist pressures to close their markets during the recent Asian financial crisis laid the foundation for a speedier financial recovery.

The GATT/WTO has grown from 23 members in 1947 to 90 members in 1986 to 151 members by the end of 2007, accounting for over 90 percent of world trade. An additional 30 countries are in the process of applying for WTO membership, including Russia. Since the early 1980s, WTO membership has grown increasingly diverse, as developing countries now account for more than 80 percent of total WTO membership.

Although WTO dispute settlement is binding, compliance with WTO panel recommendations is voluntary. The WTO has no authority to force a member country to change its domestic laws or policies and, therefore, does not pose a threat to enforcement of U.S. health, safety, or environmental standards. In cases in which a WTO member chooses not to bring itself into conformity with a panel decision, the affected WTO member countries have the right to request compensation or to retaliate.

Despite some adverse decisions against the United States, it is important to remember that the binding dispute-settlement process is the backbone of the WTO. While the United States may not agree with every WTO panel decision, overall the United States has been a major beneficiary of the WTO dispute-settlement process, and has prevailed in most of the WTO disputes that it has initiated.

Efforts to increase the transparency of the WTO are discussed in section III.5

Implementation of WTO Agreements

Implementation of WTO commitments remains a core issue for the U.S. government and U.S. industry. From agriculture to intellectual property to unfair barriers to trade, the United States and ECAT companies actively seek improved compliance through negotiation, technical assistance, formal consultations and, potentially, formal dispute settlement. Key issues of focus for ECAT companies include the following:

The failure of countries to meet their TRIPS commitments and provide effective enforcement of intellectual property rights.
Subsidies, including the EU’s aircraft subsidies.
Standards, licensing and customs barriers, including the EU’s customs procedures and its proposed new chemical regulations.
Agricultural barriers, such as the unscientific barriers to genetically modified organisms and other agricultural products in Europe, China and elsewhere.

At the same time, other countries have very different agendas. Since 1999, major developing countries, such as Egypt, India, Indonesia, and Nigeria, have sought flexibility in the application of implementation deadlines for certain WTO agreements as a pre-condition to their support for further WTO liberalization, including the Doha Development Agenda negotiations. In particular, these countries asked that the moratorium on bringing certain cases against developing countries under the TRIPS agreement be extended, and that implementation deadlines under the TRIMs and Customs Valuation agreements also be extended. Developing countries also sought a review of developed countries’ implementation of their commitments under other agreements, such as the WTO Agreements on Textiles and Clothing, Agriculture, Antidumping, and Subsidies and Countervailing Measures.

After extensive negotiations in the lead-up to and during the Doha Ministerial, WTO member countries agreed to a separate decision on Implementation-Related Issues and Concerns (Implementation Decision), in addition to the Ministerial Declaration that launched the negotiations. The Implementation Decision set forth approximately 50 initiatives to help developing countries comply with existing Agreements on Sanitary and Phytosanitary Measures, Trade-Related Aspects of Intellectual Property Rights, Subsidies and Countervailing Measures, Antidumping, Textiles and Clothing, Trade-Related Investment Measures and Technical Barriers to Trade. In some cases, the Member Countries agreed to certain interpretations or to refrain from certain actions; in other cases, WTO committees were directed to consider issues further. Among the most significant provisions agreed to were the following:

With regard to textiles and apparel, countries agreed to exercise “particular consideration” before initiating antidumping cases on products from developing countries from 2005 to 2007 and to non-binding language on the early integration of products and effective quota elimination. The United States and Canada resisted, however, developing country demands to liberalize quota-growth calculations.
In agriculture, countries agreed to exercise restraint in challenging measures notified under the green box by developing countries to promote rural development and adequately address food-security concerns.
In antidumping, countries agreed not to initiate a new investigation on a product within one year of the initiation of a previous investigation, unless circumstances have changed.
In subsidies, WTO members agreed that countries would be moved off the list of least-developed countries excluded from the export-subsidy prohibition only if their per-capita gross national product exceeded $1,000 for three consecutive years.
In intellectual property, countries agreed not to initiate nullification and impairment cases while the TRIPS Council was reviewing how to handle developing countries’ implementation of the TRIPS agreement. The Implementation Decision also required the WTO to “put into place a mechanism for ensuring the monitoring and full implementation” of the requirement that developed countries provide incentives to encourage technology transfer to developing countries.
The Committee on Trade and Development is directed to make recommendations regarding extending mandatory special and differential treatment to least-developed countries.
In several areas, the Implementation Decision urges countries to provide financial or technical assistance to least-developed countries.

The final Doha Ministerial Declaration also clarifies that negotiations on outstanding implementation issues will be an “integral part of the Work Programme.” Issues for which there is a negotiating mandate shall be addressed under the mandate and other outstanding issues shall be addressed by relevant WTO bodies. As discussed in section III.4, the transition period for least-developed countries to implement certain TRIPs obligations was extended to 2016.

WTO members also made several new commitments on technical cooperation and capacity-building. The Doha Ministerial Declaration directed the development of a plan to ensure long-term funding for technical assistance. In accordance with this direction, the WTO General Council established the Doha Development Agenda Global Trust Fund in December 2001, with a greatly increased budget for technical assistance.

ECAT Position: Full implementation of WTO agreements is the cornerstone of the multilateral trading system and must remain a top priority on the WTO agenda. The United States should continue to insist that all WTO Members implement the WTO Agreements in a timely and comprehensive manner. Technical assistance and assistance for capacity building are important tools to help advance the United States’ implementation goals. Developing-country concerns regarding implementation should be addressed through increased technical assistance and not become the pretext for renegotiating existing WTO agreements. ECAT urges the Administration to oppose efforts to reopen the TRIPS, TRIMs, or other agreements or to delay further their implementation.

WTO Accessions

Another important area of WTO activity this year will be achieving progress on the accession of the 301 countries that have applied to join the WTO. Accession negotiations involve a review of a country’s trade regime and its consistency with WTO obligations. WTO applicants must agree to abide by WTO rules and enter into commercially viable, market-access commitments on goods, services, and agriculture that are negotiated both bilaterally and multilaterally.

Negotiations take place in a Working Party established by the WTO and bilaterally. These negotiations result in four documents: (1) the consolidated schedules containing a country’s market-access commitments for goods and services, the so-called market-access package; (2) the protocol, containing the terms of accession; (3) the working party report; and (4) the draft decision of the working party on the applicant’s request for accession. The market-access package consists of schedules of tariff reductions and other commitments that the applicant country has made on goods, services, and agriculture. Market-access

Afghanistan, Algeria, Andorra, Azerbaijan, the Bahamas, Belarus, Bhutan, Bosnia Herzegovina, Bhutan, Cape Verde, Equatorial Guinea, Ethiopia, Iran, Iraq, Kazakhstan, Laos, Lebanese Republic, Libya, Republic of Montenegro, Russian Federation, Samoa, Sao Tome and Principe, Republic of Serbia, Seychelles, Sudan, Tajikistan, Tonga, Uzbekistan, Vanuatu, and Yemen. commitments are negotiated bilaterally with WTO member countries and then combined into a single package of concessions, which applies to all WTO member countries on a MFN basis. The protocol of accession is negotiated multilaterally within the WTO working party on accession. The protocol sets out the applicant country’s commitments to abide by WTO rules and provides for transition periods or other special rules. The working party report also contains a discussion of the terms a country has agreed to and the specific commitments that it has made in the course of negotiations. Once the market-access schedules are finalized, they are incorporated into the protocol of accession. The working party then must reach consensus on the draft protocol package that is sent to the WTO General Council for approval. While the General Council has approved all previous accessions by consensus, a country may request a vote. In such a case, approval of an applicant’s accession requires a two-thirds majority vote.

Once accession negotiations are complete, the applicant country must be prepared to implement its WTO obligations and commitments. Each current WTO member country must decide whether to sign the country’s protocol of accession and extend WTO benefits to the new WTO member. WTO members may choose not to apply WTO benefits to a new member pursuant to Article 13 of the WTO. In 2002, WTO members also agreed to accelerate and simplify the accession process for least-developed applicants. Vietnam became the 150th WTO member on January 2007 and Tonga became the 151st WTO member in July 2007. The WTO approved the accession of Ukraine to the WTO in February 2008; Ukraine must now complete its own domestic ratification process. Russia’s proposed WTO accession is discussed in section II.3.

Status of WTO Committees

Rules of Origin

The WTO began work on the development of harmonized, non-preferential global rules of origin in 1995, with the deadline of completing the work in three years. The new harmonized system would be based on the principle of substantial transformation, under which a product is considered to originate from the country in which substantial transformation takes place. In June 1999, the Technical Committee on Rules of Origin at the World Customs Organization (WCO), which is assisting the WTO in this effort, forwarded to the WTO Committee on Rules of Origin several hundred product-specific issues that could not be resolved on a technical basis.

Progress in the WTO Committee on Rules of Origin has been slow, and the deadline for completion of the harmonized system has been extended several times. In particular, there remain significant unresolved issues in the agriculture and textile chapters, among other product specific chapters.

Trade and 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. Since its formation, one of the main areas of the CTE’s focus has been the relationship between the WTO and trade measures applied pursuant to multilateral environmental agreements (MEAs). Discussions in the CTE have supported addressing environmental problems through cooperative, multilateral action under MEAs. There is no consensus within the CTE on the use of trade sanctions in MEAs, except that in the event a dispute arises between WTO members who are also signatories to a MEA, they should first try to resolve the dispute under the provisions of the MEA.

The CTE has discussed the call for greater transparency in the WTO’s relationship with “civil society,” the term used by the United States to refer to labor, environment, and other non-governmental organizations. To this end, the CTE has held a number of sessions with representatives of civil society on trade and environment issues. In March 1999, the CTE sponsored the High-Level Symposium on Trade and Environment, which was attended by 130 NGOs.

The CTE has stated that trade-related environmental measures should not be required to meet more burdensome transparency requirements than other measures that affect trade. The CTE also has stated that no modifications are needed in WTO rules to ensure adequate transparency for trade-related environmental measures. The CTE established a WTO Environmental Database (EDB) available to WTO members, consisting of all trade-related environmental measures notified to the CTE. With regard to eco-labeling requirements, the CTE has said that such requirements must be non-discriminatory and that the processes for developing and adopting such requirements should be transparent. The CTE is also discussing services and the environment. The CTE also continues to work in special session to negotiate the environmental provisions of the Doha Development Agenda discussed above.

WTO Dispute Settlement

While the United States may not agree with all WTO panel decisions, the WTO dispute-settlement system on balance has been an effective mechanism in enforcing U.S. rights. The United States has made aggressive use of the dispute-settlement process, bringing more complaints than any other WTO member. It has prevailed in the majority of the cases that it has filed and successfully defended America’s ability to enforce its rights under international trade agreements under Section 301 of the Trade Act of 1974 from a challenge brought by the EU.

Since the establishment of the WTO, 373 complaints have been filed. While many involve the United States, EU and other developed countries, there are also a significant number of cases involving developing country challenges to barriers in other developing countries.

Through March 2008, the United States brought 85 complaints, of which 59 have been fully or partially concluded. Of those resolved, the United States has:

won 29 on the core issue;
successfully resolved 26 complaints without completing litigation; and
lost four cases on the core issues.

The United States has been the subject of 120 complaints filed by other countries (including multiple complaints involving the same underlying matter), of which 67 have been resolved. Of those resolved, the United States has:

successfully negotiated resolutions in 19 cases without completing litigation;
successfully defended 15 completed panel proceedings on the core issues; and
lost 33 cases.

As explained by the 2004 Economic Report of the President, “these statistics suggest that WTO complaints are not brought frivolously, in the sense that complaints, whether by or against the United States, have a high probability of success.”

Foreign Trade Barriers Addressed through the WTO Dispute-Settlement System

Through numerous complaints regarding measures in many different countries, the United States has been able to address barriers in other countries. For example, WTO dispute settlement has resulted in:

China’s elimination of discriminatory tax policies on semiconductors.
Canada’s elimination of dairy export subsidies.
Korea’s elimination of unnecessary shelf-life restrictions.
Resolution of intellectual property issues with Portugal, Pakistan, India, Sweden, Brazil, Greece, Ireland, and Denmark.
Changes to Romania’s customs valuation barriers.
Korea’s elimination of barriers to certain beef imports.
Mexico’s opening of its telecommunications market to allow the negotiation of interconnection rates and the resale of international and long-distance services.
Canada’s termination of discriminatory practices in grain handling and its rail transport system.
China’s improper imposition of antidumping dumping duties on U.S. kraft-liner board imports.

With recent WTO decisions finding for the United States, it is hoped that the following issues will also be resolved:

Mexico’s taxes on high fructose corn syrup.
Mexico’s antidumping orders on rice and beef.
Japan’s import restrictions on apples.

The WTO dispute settlement system is currently being tested in several disputes between United States and the EU on the EU’s ban on hormone-treated beef, aircraft issues, and U.S. trade remedy cases, which are discussed in more depth in sections III.2 and IV.2. In a number of cases, the United States and EU have failed to implement the WTO’s rulings. While several of these cases are politically sensitive, it is critically important for the United States and the EU to set a positive example for other WTO members that decisions of the WTO will be respected. ECAT strongly supports efforts by the United States and EU to address these differences in a mutually agreeable manner and find solutions that liberalize trade and ensure that the competitiveness of U.S. companies is not undermined. Other dispute settlement cases are discussed in sections III.2 (trade-remedy cases) and IV.3 (lumber).

Despite the fact that the United States was the chief architect of the WTO dispute-settlement system and one of its largest beneficiaries, concern has grown in the United States over a number of WTO decisions against the United States. This led to a number of legislative proposals to establish a commission to review WTO dispute decisions. It is not clear, however, that a review body of judges or retired judges is either necessary or appropriate to review WTO cases. While the goal of depoliticizing this issue is important, such a review body, particularly with its narrow focus on cases adverse to the United States, could just as easily heighten, not diminish, political sensitivities. If such a review body were formed, it is extremely important that it look at WTO decisions broadly, including perhaps decisions in which the United States is not even a party, rather than focus primarily or exclusively on cases with rulings adverse to the United States. Focusing only on cases adverse to the United States would necessarily result in a slanted view of the activities of WTO dispute settlement. Furthermore, unlike current proposals, the members of any review body must have expertise in the area of trade and international law, in particular relating to the WTO, in order to ensure the highest-possible caliber review. While federal judges, whether active or retired, may have considered a wide range of issues when on the Federal Court, it is a different matter entirely to engage in a systematic review of a multitude of highly technical, complex cases decided under WTO – not U.S. – jurisprudence. To provide a thorough report that is respected and will address these issues appropriately, expertise in this field is required. To ensure impartiality and objectivity, the members of any such body must be chosen in a non-political manner, unlike the current proposals. Finally, ECAT strongly opposes any effort to link such reports to resolutions of disapproval or withdrawal. Congress already enjoys the authority to review the WTO. The creation of an additional expedited process would only serve to undermine U.S. participation in the WTO.

ECAT Position: ECAT believes that the WTO dispute-settlement mechanism has been effective in resolving many disputes, but has had difficulty in addressing a few highly political disputes, particularly those between the United States and EU. ECAT supports efforts by the United States and EU to address these issues quickly and in a trade-liberalizing manner.

ECAT does not believe that the formation of a body to review WTO decisions adverse to the United States is either necessary or appropriate. If established, any such mechanism should require a review of all relevant cases, not just those adverse to the United States, include only members who are impartial and experts in trade and international law, and provide a thorough, objective and non-political review of WTO cases.