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Report to the Congress on the Extension of Trade Promotion Authority

Bush seeks extension of authority to negotiate trade agreements

Posted: March 31, 2005

President Bush has requested that Congress extend for two years his authority to negotiate trade agreements, and at the same time the Office of the U.S. Trade Representative (USTR) has published its annual report on foreign trade barriers.

In the 2005 Report to the Congress on the Extension of Trade Promotion Authority (TPA) released March 30, the president seeks to extend TPA, otherwise known as fast track to July 2007. It is currently scheduled to expire July 2005.

"Extending TPA until July 1, 2007, is critical to maintaining U.S. global leadership on trade, furthering the Administration's successful 'competitive liberalization' strategy, and concluding negotiations already underway," the report says.

It cites a number of trade negotiations the administration wants to conclude in the World Trade Organization (WTO) and with Panama, Andean countries, Thailand, the Southern African Customs Union, Oman and the United Arab Emirates, as well as the Free Trade Area of the Americas (FTAA).

"The Administration considers that the progress that has been made in each of these negotiations in achieving TPA objectives justifies continuing -- and completing -- the negotiations," it says.

Under TPA, Congress restricts itself only to approve or reject a negotiated trade agreement, within strict time limits and without amendments. Bush signed TPA into law in 2002.

TPA would be extended two years automatically unless Congress votes to block extension. Republican leaders of Congress have indicated they might try to prevent any disapproval resolution from advancing beyond committee consideration to the floor of the House of Representatives or the Senate.

Not yet submitted to Congress are two trade agreements already negotiated: one with Bahrain and the other with five Central American countries and the Dominican Republic (CAFTA-DR), the latter facing strong opposition in Congress. Because they were signed before July 2005, those agreements are already covered by TPA.

Also released March 30 was the 2005 National Trade Estimate (NTE) Report on Foreign Trade Barriers.

A USTR press release cites a few of the major trade problems the United States faces from the 61 countries and regions covered by the 684-page NTE Report:

-- "Epidemic levels of counterfeiting and piracy in China;"

-- Japan's continued ban on imports of U.S. beef and beef products; and

-- Mexico's imposition of a 20 percent tax on beverages and syrups made with sweeteners other than cane sugar.

In a teleconference with reporters following release of the report, a U.S. trade official mentioned two more notable trade problems: unfair regulation by China of direct selling in that country and an unfair customs regime in the European Union (EU).

The trade official said that USTR attempts to resolve trade problems in a number of ways, occasionally bringing a case for dispute settlement in the WTO. USTR has filed a case on the EU customs practices.

Thirty days after release of the NTE Report -- on April 29 -- USTR will make determinations under what is called the Special 301 provision of U.S. trade law concerning what actions it plans to take against foreign countries' failure to protect U.S. copyrights, patents and other intellectual property rights (IPR).

USTR has already begun what it calls an "out-of-cycle" review of China's enforcement of IPR. The trade official said no date has been set for concluding that review.

Following is the text of the USTR press release:

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OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE
Executive Office of the President
Washington, D.C.
20508

USTR Press Releases are available on the USTR website at www.ustr.gov
2005-12

For Immediate Release:
March 30, 2005

Contact:
Richard Mills / Neena Moorjani
(202) 395-3230

USTR Releases 2005 Inventory of Foreign Trade Barriers

WASHINGTON -- The Office of the United States Trade Representative today released its 2005 National Trade Estimate Report on Foreign Trade Barriers (NTE), an annual report documenting foreign trade and investment barriers and U.S. efforts to reduce and eliminate those barriers.

"Eliminating trade barriers so that American workers, farmers, and businesses can have increased access overseas for our goods and services is one of USTR's core missions," said Acting U.S. Trade Representative Peter F. Allgeier. "The NTE report highlights many of the barriers, large and small, that Americans face around the world. Every day, USTR works closely with other U.S. Government agencies to press our foreign trading partners to eliminate their barriers.

"Consultations, negotiations and litigation are among the tools at our disposal, and we are using them aggressively to make sure that Americans are treated fairly," added Allgeier.

The NTE provides an account of barriers and unfair trade practices to American exports of goods, services, and farm products. Besides limiting opportunities for U.S. businesses and farmers, such barriers also undermine the benefits that foreign countries, particularly developing countries, see from trade liberalization. The NTE covers 61 major trading partners in each region of the world and profiles policies restricting market access.

While the NTE report itself details successful efforts to reduce barriers to Americans around the world, some noteworthy examples of success in the past year include:

-- The agreement with China that ensured that U.S. semiconductor manufacturers can maintain and expand their $2 billion export business to China. The agreement followed the filing of the first and to date the only WTO dispute against China in an effort to eliminate China's discriminatory value-added tax policies on semiconductors.

-- A resolution with Korea over its plan to mandate a domestic standard (the Wireless Internet Platform for Interoperability standard, or WIPI) for mobile phone applications, shutting out competing systems already operating in the market, including a U.S. system with over 7 million Korean subscribers. However, as a result of extensive negotiations with the United States concluding in April 2004, the Korean government will allow other applications platforms to co-exist in the market.

-- An agreement with Mexico to re-open its market to U.S. beef and related products. Following the finding of one imported cow with BSE in December 2003, Mexico had closed its border to approximately $1.3 billion of U.S. beef and related products. In the Spring of 2004, Mexico removed its prohibitions on most products, equating to approximately $1.2 billion of the former trade value.

Major ongoing problems include:

-- The epidemic levels of counterfeiting and piracy in China, which cause serious economic harm to U.S. businesses in virtually every sector of the economy. The United States is currently conducting an out-of-cycle review under the Special 301 provisions of U.S. trade law to assess China's IPR regime. We will take the appropriate action necessary at the conclusion of that review to ensure that China develops and implements an effective system of IPR enforcement, as required by the TRIPS (Trade Related Intellectual Property Rights) Agreement.

-- The reopening of Japan's market to U.S. beef and beef products after Japan banned imports when one BSE-infected imported cow was found in the United States in late 2003. Although the United States has addressed all science and safety concerns about U.S. beef, Japan still has not permitted the resumption of trade in this roughly $1.7 billion annual export market.

-- The imposition of a 20 percent tax by Mexico on beverages and syrups made with sweeteners other than cane sugar. This beverage tax violates Mexico's WTO obligations because it discriminates against U.S. products such as high fructose corn-syrup (HFCS), a corn-based sweetener that directly competes with sugar in many applications. The United States, after extensive attempts to negotiate a solution, filed a WTO case, which is currently in the litigation stage.

Background

The USTR works closely with the rest of the U.S. Government, including American Embassies, to prepare the NTE report, a document required by the Omnibus Trade and Competitiveness Act of 1988. The information in the report is gathered from the Administration's monitoring program and from the public and private sector trade advisory committees. These issues are also discussed in detail in meetings with Members of Congress throughout the year.

Later this week, the USTR will announce the results of the 1377 Review, a report that focuses on the barriers facing U.S. telecommunications services and equipment providers, and lays out the specific telecommunications-related issues on which USTR will focus its efforts this year. Thirty days after the NTE report is submitted to Congress, the USTR will issue its "Special 301" annual report on the adequacy and effectiveness of intellectual property rights (IPR) protection in trading partners around the world. The information gathered for the NTE report plays a key role in the decision making process in both of these reports.

A copy of the report is available at www.ustr.gov

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