Trade Policy Agenda - Bussiness Law - Notes, Study notes of Commercial Law

Download Trade Policy Agenda - Bussiness Law - Notes and more Study notes Commercial Law in PDF only on Docsity! 2008 Trade Policy Agenda and 2007 Annual Report The 2008 Trade Policy Agenda and 2007 Annual Report of the President of the United States on the Trade Agreements Program are submitted to the Congress pursuant to Section 163 of the Trade Act of 1974, as amended (19 U.S.C. 2213). Chapter II and Annex II of this document meet the requirements on the World Trade Organization in accordance with Sections 122 and 124 of the Uruguay Round Agreements Act. In addition, the report also includes an annex listing trade agreements entered into by the United States since 1984. The Office of the United States Trade Representative (USTR) is responsible for the preparation of this report, which was written by USTR staff. The Office of the U.S. Trade Representative gratefully acknowledges the contributions of the Environmental Protection Agency, the Departments of Agriculture, Commerce, Health and Human Services, Justice, Labor, and State. March 2008 TABLE OF CONTENTS I. The President’s 2008 Trade Policy Agenda .......................................................1 II. The World Trade Organization ........................................................................1 A. INTRODUCTION.................................................................................................................................... 1 B. THE DOHA DEVELOPMENT AGENDA UNDER THE TRADE NEGOTIATIONS COMMITTEE ..................... 1 1. Committee on Agriculture, Special Session .................................................................................... 4 2. Council for Trade in Services, Special Session............................................................................... 5 3. Negotiating Group on Non-Agricultural Market Access................................................................. 7 4. Negotiating Group on Rules............................................................................................................ 9 5. Negotiating Group on Trade Facilitation ..................................................................................... 14 6. Committee on Trade and Environment, Special Session............................................................... 17 7. Dispute Settlement Body, Special Session..................................................................................... 19 8. Council for Trade-Related Aspects of Intellectual Property Rights, Special Session ................... 20 9. Committee on Trade and Development, Special Session .............................................................. 22 C. WORK PROGRAMS ESTABLISHED IN THE DOHA DEVELOPMENT AGENDA ....................................... 23 1. Working Group on Trade, Debt, and Finance .............................................................................. 23 2. Working Group on Trade and Transfer of Technology................................................................. 24 3. Work Program on Electronic Commerce...................................................................................... 25 D. GENERAL COUNCIL ACTIVITIES ....................................................................................................... 26 E. COUNCIL FOR TRADE IN GOODS........................................................................................................ 28 1. Committee on Agriculture ............................................................................................................. 29 2. Committee on Market Access ........................................................................................................ 30 3. Committee on the Application of Sanitary and Phytosanitary Measures...................................... 32 4. Committee on Trade-Related Investment Measures...................................................................... 34 5. Committee on Subsidies and Countervailing Measures................................................................ 36 6. Committee on Customs Valuation ................................................................................................. 39 7. Committee on Rules of Origin ....................................................................................................... 41 8. Committee on Technical Barriers to Trade................................................................................... 43 9. Committee on Antidumping Practices........................................................................................... 46 10. Committee on Import Licensing .................................................................................................. 49 11. Committee on Safeguards............................................................................................................ 52 12. Working Party on State Trading Enterprises .............................................................................. 53 F. COUNCIL FOR TRADE RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS ............................ 54 G. COUNCIL FOR TRADE IN SERVICES ................................................................................................... 58 1. Committee on Trade in Financial Services ................................................................................... 60 2. Working Party on Domestic Regulation........................................................................................ 60 3. Working Party on GATS Rules...................................................................................................... 61 4. Committee on Specific Commitments ............................................................................................. 62 H. DISPUTE SETTLEMENT UNDERSTANDING ......................................................................................... 63 Table of Contents | i F. ANTI-COUNTERFEITING TRADE AGREEMENT ................................................................................. 197 G. IMPORT SAFETY .............................................................................................................................. 198 V. Trade Enforcement Activities ...................................................................... 201 A. ENFORCING U.S. TRADE AGREEMENTS .......................................................................................... 201 1. Overview ..................................................................................................................................... 201 2. WTO Dispute Settlement ............................................................................................................. 202 3. Other Monitoring and Enforcement Activities ............................................................................ 203 B. U.S. TRADE LAWS ........................................................................................................................... 205 1. Section 301 .................................................................................................................................. 205 2. Special 301 .................................................................................................................................. 207 3. Section 1377 Review of Telecommunications Agreements.......................................................... 210 4. Antidumping Actions ................................................................................................................... 211 5. Countervailing Duty Actions....................................................................................................... 212 6. Other Import Practices................................................................................................................. 212 7. Trade Adjustment Assistance ....................................................................................................... 215 8. Generalized System of Preferences .............................................................................................. 217 VI. Trade Policy Development........................................................................... 225 A. TRADE CAPACITY BUILDING (TCB) ................................................................................................ 225 1. Millennium Challenge Corporation ............................................................................................ 226 2. The Integrated Framework.......................................................................................................... 226 3. World Trade Organization-Related U.S. TCB ............................................................................ 227 4. TCB Initiatives for Africa............................................................................................................ 228 5. Free Trade Agreement (FTA) Negotiations ................................................................................ 230 B. CONGRESSIONAL AFFAIRS ............................................................................................................... 231 C. PRIVATE SECTOR ADVISORY SYSTEM AND INTERGOVERNMENTAL AFFAIRS ................................ 232 1. The Advisory Committee System .................................................................................................. 232 2. State and Local Government Relations ........................................................................................ 235 3. Public and Private Sector Outreach ........................................................................................... 236 D. POLICY COORDINATION .................................................................................................................. 237 ANNEX I ANNEX II ANNEX III Table of Contents | iv LIST OF FREQUENTLY USED ACRONYMS AD................................................................................... Antidumping AGOA............................................................................. African Growth and Opportunity Act APEC .............................................................................. Asia Pacific Economic Cooperation ASEAN ........................................................................... Association of Southeast Asian Nations ATC ................................................................................ Agreement on Textiles and Clothing ATPA .............................................................................. Andean Trade Preferences Act ATPDEA......................................................................... Andean Trade Promotion & Drug Eradication Act BIA.................................................................................. Built-In Agenda BIT .................................................................................. Bilateral Investment Treaty BOP................................................................................. Balance of Payments CACM............................................................................. Central American Common Market CAFTA ........................................................................... Central American Free Trade Area CARICOM...................................................................... Caribbean Common Market CBERA ........................................................................... Caribbean Basin Economic Recovery Act CBI.................................................................................. Caribbean Basin Initiative CFTA .............................................................................. Canada Free Trade Agreement CITEL ............................................................................. Telecommunications division of the OAS COMESA………………………………………………. Common Market for Eastern & Southern Africa CTE................................................................................. Committee on Trade and the Environment CTG ................................................................................ Council for Trade in Goods CVD ................................................................................ Countervailing Duty DDA…………………………………………………… Doha Development Agenda DSB................................................................................. Dispute Settlement Body EAI………………………………………………... ....... Enterprise for ASEAN Initiative DSU ................................................................................ Dispute Settlement Understanding EU ................................................................................... European Union EFTA .............................................................................. European Free Trade Association FTAA .............................................................................. Free Trade Area of the Americas FOIA .............................................................................. Freedom of Information Act GATT.............................................................................. General Agreement on Tariffs and Trade GATS ............................................................................. General Agreements on Trade in Services GDP ................................................................................ Gross Domestic Product GEC ................................................................................ Global Electronic Commerce GSP ................................................................................. Generalized System of Preferences GPA ................................................................................ Government Procurement Agreement IFI.................................................................................... International Financial Institution IPR .................................................................................. Intellectual Property Rights ITA.................................................................................. Information Technology Agreement LDBDC........................................................................... Least Developed Beneficiary Developing Country MAI................................................................................. Multilateral Agreement on Investment MEFTA………………………………………………… Middle East Free Trade Area MERCOSUL/MERCOSUR............................................ Southern Common Market MFA................................................................................ Multifiber Arrangement MFN................................................................................ Most Favored Nation MOSS.............................................................................. Market-Oriented, Sector-Selective MOU ............................................................................... Memorandum of Understanding MRA ............................................................................... Mutual Recognition Agreement NAFTA ........................................................................... North American Free Trade Agreement NEC ……………………………………………………. National Economic Council NIS .................................................................................. Newly Independent States NSC................................................................................. National Security Council NTR ................................................................................ Normal Trade Relations OAS…………………………………………………….. Organization of American States OECD.............................................................................. Organization for Economic Cooperation and Development OPIC ............................................................................... Overseas Private Investment Corporation PNTR .............................................................................. Permanent Normal Trade Relations ROU ................................................................................ Record of Understanding SACU.............................................................................. Southern African Customs Union SADC.............................................................................. Southern African Development Community SPS.................................................................................. Sanitary and Phytosanitary Measures SRM ............................................................................... Specified Risk Material TAA ................................................................................ Trade Adjustment Assistance TABD.............................................................................. Trans-Atlantic Business Dialogue TACD.............................................................................. Trans-Atlantic Consumer Dialogue TAEVD…………………………………………………. Trans-Atlantic Environment Dialogue TALD.............................................................................. Trans-Atlantic Labor Dialogue TBT................................................................................. Technical Barriers to Trade TEP ................................................................................. Transatlantic Economic Partnership TIFA................................................................................ Trade & Investment Framework Agreement TPRG .............................................................................. Trade Policy Review Group TPSC............................................................................... Trade Policy Staff Committee TRIMS ............................................................................ Trade Related Investment Measures TRIPS.............................................................................. Trade Related Intellectual Property Rights UAE…………………………………………………….. United Arab Emirates UNCTAD........................................................................ United Nations Conference on Trade & Development URAA ............................................................................. Uruguay Round Agreements Act USDA.............................................................................. U.S. Department of Agriculture USITC............................................................................. U.S. International Trade Commission USTR .............................................................................. United States Trade Representative VRA……………………………………………………. Voluntary Restraint Agreement WAEMU ........................................................................ West African Economic & Monetary Union WTO ............................................................................... World Trade Organization I. THE PRESIDENT’S 2008 TRADE POLICY AGENDA A Legacy of Leadership, Economic Opportunity and Freedom The 2008 Trade Policy Agenda and 2007 Annual Report is the final such report of the Administration of President George W. Bush. In this year’s edition, we look back on seven active years in which the United States provided strong global leadership in international trade and investment and created new opportunities for U.S. farmers, ranchers, manufacturers, service provides, workers, and consumers; a seven-year period during which U.S. exports to the world increased 50 percent, and concluded in 2007 with exports attaining their highest share of GDP in U.S. history, at nearly 12 percent. We also look ahead to the many market-opening, pro-growth trade and investment policy opportunities on the horizon in the coming year and beyond. In the years preceding the Bush Administration, public support for trade had eroded due in part to domestic partisanship and general unease – not only in the United States but also in other countries – about the pace and nature of globalization. In addition, the multilateral trading system struggled to regain its footing following the tumultuous World Trade Organization (WTO) Ministerial meeting that took place in Seattle in 1999. Despite rising protectionist sentiments during the 1990s, Republican and Democratic administrations successfully negotiated – and Congress ultimately approved – two significant trade pacts, the North American Free Trade Agreement and the Uruguay Round Agreement (which created the WTO). In the seven years following the approval of the Uruguay Round, however, there was only limited activity on either the bilateral or multilateral trade fronts. This was due in part to Congress’ failure to extend fast- track negotiating authority, which had previously ensured that trade agreements could be submitted to a straight up-or-down vote. By the beginning of 2001, the United States had implemented only three free trade agreements (FTAs), the last of which entered into force in 1994. Throughout the 1990s, other countries continued to negotiate preferential bilateral and regional trade agreements while the United States remained on the sidelines – at a potential cost to long-term U.S. economic strength and security. President Bush took office with a vision that knocking down barriers to trade could help alleviate poverty, generate prosperity, and promote economic and political freedom around the world. The Administration has acted on the President’s vision. The terrorist attacks on September 11, 2001 dealt a severe blow to the world’s economic health. In an effort to help revitalize the global economy and defy those who advocate political repression and economic isolationism, the United States and other WTO Members joined together to launch the first round of multilateral trade liberalization talks under the auspices of the WTO. Throughout the Doha Development Agenda negotiations, the United States has led efforts to achieve an ambitious, comprehensive, and balanced agreement that will foster continued global economic growth and development and lift millions of people out of poverty. The President also committed early in his Administration to work with Congress to reinvigorate U.S. engagement in the broader trade arena. In 2002, working with Congress, the Bush Administration secured Trade Promotion Authority (TPA), which reinstated the ability of the President to submit trade agreements for a straight up-or-down vote. President Bush quickly put TPA to work for the American people and embarked on an aggressive agenda to negotiate gold standard trade agreements at the I. The President’s 2008 Trade Policy Agenda | 1 multilateral, regional, and bilateral levels, as well as to focus and expand U.S. trade enforcement activities to ensure that our trading partners lived up to their commitments. Today, the United States is party to FTAs with 20 countries in every corner of the world (14 in force, 3 approved by Congress but not yet in force, and 3 concluded but not yet approved by Congress). These agreements bring real benefits to American workers, farmers, ranchers, manufacturers, and service providers. U.S. exports to the 11 trade partners with which the U.S. implemented FTAs between 2001 and 2007 grew over 70 percent faster on average than did U.S. exports to the rest of the world. Moreover, although our FTA-partner countries accounted for only 7 percent of the global economy in 2007 (excluding the United States), they were the destination for 41 percent of total U.S. exports. Increased imports from these countries have provided consumers with more choices and better prices while providing U.S. companies with high-quality, low-cost inputs to increase their production, productivity, and competitiveness. These agreements have also reinforced the U.S. commitment to critical allies and regions of particular geo-strategic importance in the Americas, Middle East, and Asia-Pacific region. The Bush Administration has complemented its ambitious bilateral and multilateral agendas with a rigorous enforcement program designed to ensure U.S. trade partners comply with their various trade agreement commitments. Since the Administration took office in 2001, 25 WTO cases brought by the United States have been concluded, a number that is comparable to other major users of the system following the initial rush of pent up cases launched upon establishment of the WTO. The United States has won or settled favorably 24 of those cases. In addition, several important WTO dispute settlement proceedings are ongoing, involving the commitments of major trading partners such as China, India, and the European Union. While the Bush Administration prefers to resolve disputes by engaging trade partners in robust dialogue, USTR has demonstrated its willingness to use all enforcement tools at its disposal when dialogue fails to yield sufficient results. Working with Congress In 2007, the President reached out to the new Democratic Congressional Leadership in an effort to rebuild America’s bipartisan consensus on trade policy and to continue delivering important trade policy objectives for the American people. Only through a unified bipartisan pro-trade approach can we expect to take on the economic populism and protectionist rhetoric that threatens our economic health and global leadership. The Administration worked with congressional leaders to achieve the Bipartisan Agreement on Trade Policy of May 10, 2007. The strong bipartisan votes in the House and Senate in support of the Peru Trade Promotion Agreement in late 2007 marked the first step in realizing the promise of the May 10th agreement. The Administration will continue to work with Congress to secure prompt consideration of the agreements with Colombia, Panama, and Korea in 2008. Each of the three pending FTAs deserves a vote, and the process should commence without further delay with consideration of the Colombia FTA. Failure by Congress to approve these agreements will not create a single job in the United States, will not promote enhanced labor protections anywhere, and will not prevent the extinction of one endangered species. Furthermore, rejection of these agreements would discredit and undermine staunch allies in Latin America and Asia, two regions of vital national security and economic interest to the United States. In 2008, Congress has an historic chance to build on the bipartisanship that led to overwhelming approval of the FTA with Peru by providing strong votes in support of the FTAs with Colombia, Panama, and Korea. The Bush Administration urges congressional leaders to commence this process in earnest by undertaking consideration of the Colombia FTA as expeditiously as possible. I. The President’s 2008 Trade Policy Agenda | 2 Avoiding Economic Isolationism and Fear in the Years Ahead Despite a reinvigorated trade agenda, a strong record on enforcement, and significant progress in restoring bipartisan support for trade, rising sentiments of protectionism and economic isolationism within the United States threaten the economic well-being both of our country and the rest of the world. The Administration is committed to responding vigorously to these sentiments by working with Congress to advance a pro-trade agenda that promotes economic prosperity and by addressing the changes and disruptions that can follow from increased globalization. The benefits of free and fair trade and of a robust trade policy are shared by the millions of American workers and farmers whose jobs are supported by trade, as well as among the millions of American households reaping the benefits of an increasingly open and transparent global economy. Since completion of the Uruguay Round and NAFTA implementation in 1994, U.S. private sector employment has increased over 21 percent, accounting for more than 20 million net new jobs. The annual rate of unemployment in the United States dropped from 6.1 percent in 1994 to 4.6 percent in 2007. Productivity (real output per hour worked) for U.S. business sector workers increased at a healthy average annual rate of 2.4 percent during those 13 years and real compensation per hour grew by nearly 24 percent. During this same period, U.S. manufacturing output grew 47 percent and our exports of manufactured goods increased over 100 percent. As a reflection of U.S. economic success, data from the World Bank show that per capita real income in the United States in 2005 exceeded that in other high income countries by nearly 47 percent. Such high income countries account for just over 15 percent of the world’s population. In addition, the American consumer has benefited immeasurably from access to a wider assortment of high quality goods attainable at prices that are more competitive than ever. Despite this record of sustained economic progress and prosperity, critics continue to promote the myth that trade is the root of all economic ills. Close scrutiny of the facts, however, does not support their assertions. A recent study conducted by the President’s Council of Economic Advisers revealed that no more than 3 percent of all job disruptions can be attributed to trade. The study pointed to other factors such as productivity increases, new technologies and innovation, and domestic competition as accounting for the remaining 97 percent of job displacement. As international trade is the cause of only a fraction of the jobs lost in this country, protectionist or isolationist approaches cannot address these disruptions nor create the new better jobs of the future. Moreover, to attempt to wall off the United States from foreign competition and “protect” U.S. workers would only serve to cripple the U.S. economy and potentially induce a global trade war and world economic slowdown. Legitimate concerns many Americans have about their economic security are, in fact, rarely related to trade, and we therefore must not embrace policy prescriptions that would injure the vast majority of workers who benefit from trade. To the extent that trade does contribute to economic insecurity, protectionist proposals to address these insecurities made to date do not solve the problems and, likely would exacerbate them. Nevertheless, we can and should address the disruptions directly attributable to trade policy. Together with Congress, the President has pledged to work to improve the Trade Adjustment Assistance (TAA) program and help trade-affected workers and farmers access the training and reemployment services they need to return to work quickly. TAA reform would complement the President’s ambitious American Competitiveness Initiative, which is designed to ensure U.S. competitiveness in innovation through investment that strengthens education and encourages entrepreneurship, and research and development. The continued economic strength of the United States is dependent on the continued competitiveness of its workers, farmers, and businesses. The Administration and Congress must work together to ensure that all Americans have the training and opportunity to compete in the global marketplace. I. The President’s 2008 Trade Policy Agenda | 3 eight global negotiating rounds since the end of World War II, U.S. leadership will be essential to achieving a Doha success. In early 2007, the United States stepped forward, engaging with India, Brazil, and EU in a G4 process aimed at moving the Doha negotiations toward solutions in agriculture, industrial goods, and services that could contribute to the broader multilateral process moving forward into the final phase of the overall negotiations. While some technical results were achieved in agriculture, the G4 process broke down mid- year, primarily over industrial tariff cuts by emerging economies, and the central focus of the Doha Round returned to the multilateral process in Geneva, where, as 2008 begins to unfold, the Doha negotiations face another critical juncture. As President Bush noted in his State of the Union address, the United States is committed to concluding a strong Doha Round in 2008, and will provide the leadership necessary to achieve this objective. We look forward to each of our key trading partners making similar contributions to ensure success. The Americas The United States and many of its neighbors in the Western Hemisphere have entered a new era of economic cooperation and stability in the last seven years. We have concluded a number of free trade agreements that have created real economic opportunity for people throughout the Americas. As a result, deeper and stronger trade and investment relationships are complementing political changes undertaken by courageous leaders in Central and South America. Meanwhile, the North American Free Trade Agreement (NAFTA) continues to benefit the United States and its closest neighbors, as trade flows between Canada, Mexico, and the United States have increased by 210 percent since the agreement entered into force to the benefit of all three nations, and Canada and Mexico represent the largest markets for U.S. exports. The U.S.-Chile Free Trade Agreement was the first concluded under the new Trade Promotion Authority (TPA) obtained by the Bush Administration in 2002. Since the agreement came into force in 2004, U.S. goods exports to Chile have increased by $5.2 billion (193 percent) and U.S. goods imports from Chile have increased by $5.3 billion (143 percent). The United States has created economic opportunity for people in the Caribbean region through the Caribbean Basin Initiative (CBI), which was expanded in 2002 and in 2006 when additional preferences were provided to Haiti through the HOPE Act. In addition, President Bush signed into law the Andean Trade Promotion and Drug Eradication Act (ATPDEA) in 2002, extending and expanding product coverage of trade preferences for Andean countries. Another key accomplishment in the Americas was the conclusion of the Dominican Republic – Central America – United States Free Trade Agreement (CAFTA-DR), which Congress approved in 2005. Many of the signatory countries were in the throes of civil war and economic chaos just 15 years ago. Now, both two-way trade with the United States and intra-regional trade are creating opportunities for people in these six countries and strengthening the establishment of political stability and peace in the region. In 2007, our mutually beneficial commercial relationships in the region continued to expand as Congress approved the U.S.-Peru Trade Promotion Agreement (PTPA) with overwhelming bipartisan support. Reforms Peru has undertaken in the last six years have helped a half million Peruvians escape poverty. The PTPA will build on this success and fortify reforms that Peru’s leaders have put in place. Also, we are working to ensure that agreements with Colombia and Panama will also receive strong bipartisan votes in 2008. I. The President’s 2008 Trade Policy Agenda | 6 The agreements with Peru, Colombia, and Panama will give U.S. products duty-free access to markets with a combined population of 79 million people. Upon entry into force of the agreements, roughly 80 percent of U.S. exports of consumer and industrial goods will enter these countries duty-free immediately, with the remainder to become duty-free over time. In terms of agricultural products, U.S. farm exports to these countries could increase by nearly $1.7 billion per year. The agreements will also remove barriers to U.S. service suppliers, provide a secure, predictable legal framework for investors, and protect intellectual property. For many years, most U.S. imports from these countries have received duty-free treatment thanks largely to preference programs such as the Andean Trade Preference Act (ATPA), Caribbean Basin Initiative (CBI), and the Generalized System of Preferences (GSP). As the benefits of these programs have taken root, the democratically-elected leaders of Peru, Colombia, and Panama embraced the additional benefits that would flow from locking in preferential access to the largest market in the world and making trade a two-way street. The leaders of these countries appreciate how the FTAs will be catalysts for making their countries more attractive to foreign and local investors, create economic opportunity, and help enhance economic competitiveness. The economic arguments for congressional approval and implementation of these agreements are compelling as the agreements level the playing field for American workers, farmers, ranchers, and service providers. Implementing the agreements provide equally compelling foreign policy benefits. Our friends and allies in the region share our belief that democracy and prosperity are best advanced through transparency and open markets. Many of these nations lead by example as their success demonstrates to others in the region that market-oriented economies, political freedom, transparency, and respect for the rule of law will help create a better life for their people. The leaders of Peru, Colombia, and Panama deserve our support for embracing that philosophy and rejecting models of government that restrict political and economic liberty. Colombia is a case in point. Colombia’s courageous leaders, in partnership with the United States through Plan Colombia, have taken bold steps to stem the power of drug cartels and terrorists. By doing so, they have dramatically reduced violence throughout the country. In seven years, Colombia went from the cusp of being a failed state to a place where families can once again live in peace and where investors and entrepreneurs can succeed. Congressional approval of the Colombia Trade Promotion Agreement is vital to continue this positive trend. In Panama, democracy has taken root and foreign investment and U.S. exports are flowing in at a rapid pace. With the canal that links two oceans, Panama occupies a unique place in international trade. Congressional approval of the Colombia and Panama FTAs is among the Administration’s top priorities for 2008. Africa Over the last seven years, the Administration has strengthened the U.S.-African trade and investment relationship on several fronts. The implementation of the African Growth and Opportunity Act (AGOA), approved by Congress with broad bipartisan support in 2000, is the cornerstone of the Bush Administration’s trade and investment policy toward sub-Saharan Africa and has helped increase U.S. two-way trade with sub-Saharan Africa. During the 2001-2007 period, U.S. non-oil imports from AGOA countries more than doubled, from $1.4 billion in 2001 to $3.4 billion in 2007. Several non-oil sectors have experienced sizable increases, including apparel, chemical products, footwear, machinery products, electronics, toys, sportswear, fruits, nuts, and cut flowers. I. The President’s 2008 Trade Policy Agenda | 7 AGOA has also helped spark opportunities for U.S. businesses. Under AGOA, Africans are seeking U.S. inputs, expertise, and joint-venture partnerships, resulting in increased U.S. exports and investment. U.S. exports to sub-Saharan Africa have more than doubled since AGOA was launched, totaling over $14 billion in 2007. Under the annual U.S.-Sub-Saharan Africa Trade and Economic Cooperation Forum, known informally as “the AGOA Forum,” hundreds of U.S. and African businesses and organizations have delved into ways to further expand trade and investment in sub-Saharan Africa. The most recent of the six AGOA Forums was held in Accra, Ghana in July 2007. More broadly, the Administration has given its full support to further integrating African countries into the global economy by encouraging their fuller participation in the WTO and by urging deeper and stronger trade ties with each other. These initiatives include the signing of six Trade and Investment Framework Agreements (TIFA) with African countries and regional organizations: the Common Market for Eastern and Southern Africa (COMESA), Liberia, Mauritius, Mozambique, Rwanda, and the West African Economic and Monetary Union (UEMOA). In 2007, the Administration launched Bilateral Investment Treaty (BIT) negotiations with Rwanda, which concluded with the President’s signature in February 2008. The United States continued to explore the possibility of launching a BIT negotiation with Gabon. In November 2006, the United States and the five Southern African Customs Union (SACU) countries agreed to pursue a Trade, Investment, and Development Cooperation Agreement (TIDCA) that could help lead to a U.S.-SACU FTA in the longer term. For these initiatives to succeed they must coincide with technical assistance in building the infrastructure of commerce. The United States devoted nearly $1.2 billion to trade capacity building (TCB) activities in sub-Saharan Africa over the last seven fiscal years, including $505 million in fiscal year 2007, up 26 percent from 2006. In 2008, USTR will continue its efforts to expand trade and investment with sub-Saharan Africa using the full range of tools described above as well as the Trade Advisory Committee on Africa (TACA), which had its inaugural meeting in March 2007. The TACA advises USTR on trade and economic policy matters with respect to the countries of sub-Saharan Africa. Its members are drawn from distinguished representatives of the private sector and civil society who have expertise in Africa’s trade and development. The Administration is committed to continuing to work with Congress and private sector stakeholders to strengthen U.S.-African trade and investment in 2008 and to lay the foundation for more robust trade in the years ahead. South Asia Since taking office in January 2001, the Bush Administration has made the transformation of the United States-India relationship a top priority in South Asia. The United States and India maintain one of the world’s fastest growing major bilateral trade relationships, and we are on track to meet the goal established by the two leaders in 2005 of doubling bilateral trade to approximately $60 billion by 2008. Following Prime Minister Singh’s historic visit to Washington in July 2005, India and the United States created an Economic Dialogue as a vehicle for enhancing bilateral economic cooperation. Among the elements of the Economic Dialogue is the U.S.-India Trade Policy Forum, co-chaired by the U.S. Trade Representative and India’s Commerce Minister. The Trade Policy Forum (TPF) includes an umbrella I. The President’s 2008 Trade Policy Agenda | 8 The United States and China currently have a robust, mutually-beneficial trade relationship, though that relationship needs to be more balanced. Since 1990, bilateral trade in goods between the United States and China has increased by an astounding 1800 percent. Over the past six years alone, bilateral goods trade has nearly tripled, services trade has more than doubled, and investment flows remain strong. Thanks to its commercial engagement with other countries, China’s economy has grown by nearly 10 percent a year for the past 20 years, and many millions of people have been lifted out of poverty. Meanwhile, China has also emerged as an enormous, rapidly growing market for U.S. goods and services, helping to sustain strong U.S. economic growth rates. U.S. exports of manufactured goods, agricultural products, and services have grown an average of 22 percent per year since China joined the WTO. China became the United States’ third largest export market in 2007 and is among the fastest growing major export markets for the United States in the world. This does not, however, obscure the persistent and significant challenges that have accompanied deeper economic engagement with China. The Administration conducted an interagency top-to-bottom review of trade with China and submitted a report in February 2006 which concluded that, positive developments notwithstanding, the relationship lacked “equity, balance, and durability.” The report signaled U.S. intentions to address what could become an untenable situation. The United States continues to press for more progress by China in fully implementing its WTO obligations in areas such as intellectual property rights enforcement, barriers to market access, persistent government intervention in the economy, and lack of transparency in its legal and commercial procedures. The Administration has used dialogue whenever possible. In December 2007, top Administration officials and their Chinese counterparts participated in the 18th U.S.-China Joint Commission on Commerce and Trade (JCCT) meeting, followed by the Third U.S.-China Strategic Economic Dialogue meeting. During the JCCT meeting, China agreed to take additional steps to ensure market opportunities for U.S. exporters, such as by eliminating redundant testing requirements on medical equipment makers. Prior accomplishments of the JCCT included several commitments relating to IPR protection and enforcement, such as China’s agreement to preload legal operating system software on all computers produced in China, and China’s agreement to accede to the WIPO (World Intellectual Property Organization) Internet Treaties. In previous meetings, China also committed to suspend problematic mandatory national standards on wireless encryption, to finalize biotechnology approvals for U.S. soybeans and corn, and to take steps to improve transparency in its legal regime. But dialogue alone has not been sufficient to address all of our concerns. Since March 2006, the United States has brought four formal WTO cases related to China’s trade practices, for a total of five since the Administration took office. These cases demonstrate the Administration’s resolve not only to discuss issues with China but also to use all available tools to enforce the rules. Far from indicating a failure in our trade relationship with China, these cases illustrate that we have moved into a new, more mature stage as trading partners, using neutral, legal mechanisms to resolve differences. WTO dispute settlement is designed to prevent trade wars rather than fuel them. The first WTO case, brought in March 2004, challenged China’s discriminatory tax treatment of imported semiconductors and, like the prohibited subsidies WTO case discussed below, was resolved through a settlement where China removed the offending measures. (The United States prepared but did not have to bring another case involving a paper product – kraft linerboard – when China dropped unjustified antidumping duties in January 2006.) In March 2006, the United States, together with Canada and the European Union, initiated a WTO case to examine China's regulations imposing local content requirements in the auto sector through discriminatory charges on imported auto parts. WTO panel proceedings in that dispute are underway, and the Administration is optimistic about its outcome. I. The President’s 2008 Trade Policy Agenda | 11 In a case involving China’s continued use of WTO-prohibited subsidies, the United States’ resort to dispute settlement spurred changes in China’s policies. In February 2007, the United States, followed by Mexico, requested consultations with China on China’s use of a dozen illegal subsidies. Most were tied to exports, giving an unfair competitive advantage to Chinese products and denying U.S. manufacturers the chance to compete fairly with them in the United States and in third country markets. The remaining subsidies, known as “import substitution” subsidies, encouraged companies in China to purchase Chinese-made goods instead of imports. These subsidies were designed to give Chinese-made goods a significant edge in the Chinese market over high quality, fairly priced goods from the United States and other countries. Following two rounds of consultations, the case moved to the establishment of a dispute resolution panel in August. In November, however, the United States and China reached an agreement to terminate the subsidies by January 2008. The outcomes of this case and the kraft linerboard case show that President Bush’s policy of serious dialogue and resolute enforcement is delivering concrete results. In April 2007, the United States initiated a WTO case challenging deficiencies in China’s legal regime for protecting and enforcing copyrights and trademarks on a wide range of products, and a case challenging China’s restrictions on the importation and distribution of products from copyright-intensive industries. In 2008, the United States will continue to pursue its rights at the WTO in the cases that are still pending, and will seek additional action, as needed, to ensure China’s compliance with its WTO obligations. The most important goal is one that both countries share and which both must rise to meet: the successful battle against economic retrenchment. In China, economic retrenchment has taken the form of shielding parts of China’s economy from the very market forces that have allowed it to grow so rapidly. The sixth annual report on China’s progress in meeting its WTO accession commitments, issued by USTR in December 2007, noted a potential trend toward a more restrictive trade regime. China continues to use its regulatory and other policies to develop so-called “national champions” in some sectors and tilt the playing field against foreign competitors. This has been evident in the promotion of homegrown technology through biased national standards and the emergence of regulators acting as competitors. The United States also has made clear its concerns with China’s increasingly restrictive investment regime. In addition, the United States has expressed disappointment that China has not yet made a meaningful contribution to the successful conclusion of the Doha Round, even though it has become one of the largest trading nations in the world. In the United States, meanwhile, China has become the chief focus of the economic anxiety many Americans are experiencing at this time of rapid globalization and change. There has been an increase in legislative proposals to impose tariffs on Chinese goods and other “get tough” measures. Many of these proposals are ill-conceived. It is doubtful that any of them would actually assist the American workers, farmers, and entrepreneurs they purport to help, and may in fact harm them. So long as the overall benefit of engaging with China is evident, and the Administration’s mix of serious dialogue and resolute enforcement is producing concrete results, Congress should proceed with caution on legislation aimed at China. From aerospace to financial services to agriculture, the United States must be careful not to abandon future opportunities that come from economic engagement with China because of the current challenges in our relationship. In this time of rapid change and closer integration of participants in the global trading system, it is imperative for the United States, as a veteran trading power, and China, as a major new actor, to champion the benefits of the free and fair flow of commerce. I. The President’s 2008 Trade Policy Agenda | 12 Hong Kong, China is a special administrative region of the People’s Republic of China and is a duty-free port with few barriers to trade in goods and services and few restrictions on foreign capital flows and investment. The Administration continues to engage Hong Kong by seeking needed improvements in intellectual property rights protection, the lifting of Hong Kong’s restrictions on U.S. beef imports and less restrictive food labeling regulations. The United States and Taiwan have continued to engage in robust work under our bilateral trade and investment framework agreement (TIFA) to reduce barriers in our bilateral economic relationship. In particular, we are conducting work in the areas of investment, taxation, intellectual property rights, pharmaceuticals, and customs cooperation related to textiles and apparel trade aimed at expanding our already substantial trade and investment ties. We are also seeking to address obstacles to U.S. agriculture exports, beef and pork in particular, by urging Taiwan to adopt policies that are based on science and consistent with international standards. North Asia, Japan, and APEC Affairs This region is home to some of the United States’ largest and most promising commercial relationships, and the Administration has made great strides in recent years in establishing deeper and stronger ties with countries there. Japan is the world’s second largest economy, with an annual GDP of nearly four and a half trillion dollars. This is about 8 percent of the world’s GDP. Our two countries share a respect for democracy and freedom and both have expanded trade relationships in Asia and around the globe. Japan is the United States’ fourth largest trading partner, with two-way goods trade of $208 billion in 2007. The Administration has steadily worked to promote economic reforms to open this large and prosperous country to more U.S. goods and services. In 2001, the United States and Japan entered into the Economic Partnership for Growth as a comprehensive approach to help aid Japan’s economic recovery after years of low or negative growth and to open and promote economic reform in the Japanese economy. Over the past seven years, the Partnership has proven to be a valuable, flexible vehicle to promote reform measures in a wide range of sectors that are helping create new opportunities for businesses and benefits for consumers in Japan. Also in 2007, the United States signed a Mutual Recognition Agreement (MRA) with Japan for testing and certification of telecommunications equipment, which enters fully into force in 2008. This agreement will lower costs and increase the speed of marketing for equipment traded between the two economies, factors critical for the success of the high-tech industry. In the past year, the Administration also continued to press Japan for additional measures to open its market to competition and increase the transparency of trade and commercial policies. Work remains to be done to establish the kind of robust trade and investment relationship fitting of the world’s first and second largest economies, such as further reforms to open trade in areas such as wireless services and products, information technology, health care, distribution, and in agriculture – including access to Japan’s market for all U.S. beef and beef products from animals of all ages. With regard to beef, the United States will continue to urge Japan and other countries in Asia, notably China and Korea, to fully re-open their markets to U.S. beef. The international scientific body that evaluates these concerns and sets international standards – the World Organization for Animal Health (OIE) – has provided the clear science-based view that U.S. beef is safe. I. The President’s 2008 Trade Policy Agenda | 13 system. Among MEFTA’s key goals are the promotion of greater regional cooperation and the advancement of opportunities to further integrate countries in this part of the world into the international community. Since the United States-Bahrain FTA entered into force on August 1, 2006, U.S. exports to Bahrain in 2007 have increased 64 percent, while U.S. imports from Bahrain in 2007 have increased 48 percent. Since the United States-Morocco FTA entered into force in January of 2006, U.S. exports to Morocco have increased 156 percent, while Moroccan exports to the U.S. increased 45 percent. The United States has been actively engaging other Middle Eastern countries, as well. The Administration cooperated extensively with Saudi Arabia to complete that country’s accession to the WTO in 2005. Including Saudi Arabia, the United States has in place TIFAs with 10 countries in the region (Saudi Arabia, Egypt, Yemen, Kuwait, the United Arab Emirates, Qatar, Algeria, Tunisia, Iraq, and Lebanon). The bilateral TIFA Councils established under these agreements allow the United States to work with trading partners to promote market access, liberalization of investment rules, intellectual property protection, and, where applicable, accession to the WTO. In support of the Administration’s broader efforts to support the stabilization, reconstruction and economic development of Iraq, the United States normalized trade relations with Iraq in 2004, extended GSP benefits, and signed a TIFA in 2005. The United States is also providing technical assistance in Iraq’s bid to accede to the WTO. Under the MEFTA rubric, the United States will continue to utilize FTA Joint Committees, TIFA Councils and other mechanisms (such as Bilateral Investment Treaties and the successful Qualifying Industrial Zone programs between Israel and Jordan, and Israel and Egypt) to enhance bilateral trade and investment relations with countries of this critical region, as well as to support regional economic contact and cooperation. Agriculture The Administration has opened markets for U.S. agricultural exports through bilateral and regional agreements, and multilateral negotiations and dispute settlement. The free trade agreement (FTA) agriculture packages we have negotiated since 2000 offer substantial new access for farmers and ranchers in Western Hemisphere (Chile, CAFTA-DR countries, Peru, Colombia, and Panama), Middle Eastern (Morocco, Bahrain, and Oman), and Asian (Singapore, Australia, and Korea) markets. These packages provide for the elimination of both traditional barriers to agricultural trade, e.g., tariffs and quantitative restrictions, and regulatory obstacles, e.g., non-science-based sanitary and phytosanitary (SPS) measures and unjustified technical standards. Taken together, our most recently negotiated FTAs with Peru, Colombia, Panama, and Korea have the potential to generate over $3 billion in additional farm exports when fully implemented. With respect to regulatory barriers, the Administration has secured recognition of the equivalence of the U.S. meat and poultry inspection systems (by Peru, Colombia, Panama, Vietnam, and Central American countries), as well as import rules consistent with international standards, such as on Bovine Spongiform Encephalopathy (BSE) (in Canada, Peru, Colombia, Panama, Guatemala, Honduras, Jamaica, Barbados, the Philippines, Indonesia, Jordan, Bahrain, Kuwait, Oman, Saudi Arabia, and the United Arab Emirates). We also have advanced agricultural trade goals through World Trade Organization (WTO) negotiations and dispute settlement. The Doha Round has been and remains a top Administration priority. In the context of WTO accessions, the U.S. Government has reached agreements with Russia ($1 billion export market for U.S. agricultural products) addressing long-standing issues, including plant inspections, I. The President’s 2008 Trade Policy Agenda | 16 trichinae, and biotechnology, that have impeded trade in a wide array of U.S. agricultural goods. When Vietnam joined the WTO, tariffs on more than 75 percent of U.S. agricultural exports were bound at rates of 15 percent or less (down from average applied rates of 27 percent), thereby reducing barriers to products ranging from cotton to meat and dairy to horticulture. Ukraine’s accession to the WTO also will provide expanded market access for several U.S. agricultural products, including poultry, pork, and beef. In WTO dispute settlement, we have prevailed in a wide variety of cases, including: Europe’s moratorium on approvals for agricultural biotechnology, and ban on the use of growth promoting hormones in beef; Japan’s unjustified phytosanitary restrictions on U.S. apples; Canada’s grain handling and transportation practices, and export subsidies on dairy products; Mexico’s soft drink tax, and antidumping orders on U.S. rice; and Turkey’s import restrictions on U.S. rice. In addition, the U.S. Government has concluded three agreements on wine, including one with Europe, an understanding with Mexico resolving long-standing issues in sweeteners trade, and an arrangement with Canada on trade in potatoes. We also have negotiated a rice agreement with Korea that provides guaranteed market access for 50,000 metric tons of U.S. rice annually, allows U.S. exporters to compete for additional quantities under the global portion of Korea’s rice quota, and requires Korea to distribute a growing share of U.S. rice to consumers, rather than selling it for industrial use. Looking forward, we remain focused on securing congressional approval of the Colombia, Panama, and Korea FTAs, and on reaching agreement on modalities for the Doha Round agriculture negotiations. At the same time, we are pursuing new market openings for U.S. agricultural exports in bilateral and plurilateral negotiations and high-level dialogues, including with China, Japan, India, Malaysia, and Europe, and working to ensure the full and faithful implementation of agriculture-related commitments in existing agreements such as the NAFTA and other FTAs. Finally, the elimination of non-science-based SPS measures and other unjustified regulatory barriers will remain a centerpiece of our agricultural trade strategy. Manufacturing While the United States remains the largest producer and consumer of manufactured goods, 95 percent of the world’s consumers live outside our borders, many in countries with rapidly growing demand for manufactured goods. Foreign markets are critical to maintaining the strength of U.S. manufacturing and to its future success. Additionally, by expanding opportunities for trade, U.S. citizens and manufacturers enjoy a variety of reasonably-priced products and inputs to production. Manufactured goods account for 61 percent of total U.S. goods and services exports worldwide. The United States exported $982 billion in manufactured goods in 2007, an increase of 10 percent over 2006. Since 2002, U.S. exports of manufactured goods have grown by $376 billion, an increase of 62 percent. Free trade agreements boost U.S. manufacturing exports with partner countries. For example, since the entry into force of the U.S.-Chile FTA on January 1, 2004, U.S. exports of manufactured goods have increased by 190 percent through 2007 (annualized) – from $2.5 billion to $7.2 billion. Since entry into force of the U.S.-Australia FTA on January 1, 2005, U.S. manufactured goods exports to Australia have increased by 32 percent through 2007. In the Doha Round non-agricultural market access (NAMA) negotiations, the United States is seeking an ambitious outcome that lowers tariffs and non-tariff barriers for manufactured goods and results in real market-opening and opportunities for growth for U.S. exporters. In addition to across-the-board reductions in tariff rates for all industrial products, the U.S. is seeking full tariff elimination for chemicals, electronics and electrical products, forest products, health care (pharmaceuticals and medical devices), gems and jewelry, and sports equipment. I. The President’s 2008 Trade Policy Agenda | 17 Ensuring full implementation of U.S. trade agreements is one of the Administration’s strategic priorities. The Administration has held its trading partners fully accountable to WTO and FTA rules by engaging in dialogue to resolve potential disputes. We have also not hesitated to bring legal action under our trade agreements when dialogue does not produce results. Trade enforcement actions brought by the United States in this administration benefit U.S. companies and workers by bringing down barriers to U.S. exports and addressing unfair practices. Among the many manufacturers that have benefited from strong enforcement of our trade agreements are auto parts producers, aircraft producers, steelmakers, textile mills and paper producers. The United States has been pursuing a number of trade initiatives concerning manufactured goods that have lead to increasing U.S. exports. For example, the Information Technology Agreement (ITA) which provides for the elimination of duties on information technology products continues to support growing U.S. exports of these important products. U.S. ITA exports reached $189 billion in 2006, an increase of 54 percent since 2001, and account for 11.4 percent of U.S. manufactured goods exports. The United States continues to actively encourage the addition of new ITA members. Since 2001, 14 additional countries have joined the ITA, which now totals 70 members. Under the 2005 Multi-Chip Packages (MCP) Agreement, Japan, Korea, Taiwan, the European Union and the United States agreed to eliminate tariffs on MCPs (also known as multi-chip integrated circuits). MCPs are an evolutionary new high-tech semiconductor technology used in small computer products such as cell phones, digital cameras and hand-held personal digital assistants (PDAs). The MCP Agreement has expanded opportunities and improved sales for U.S. firms and workers in the $4.2 billion global market (2004), which is expected to almost double by 2008. Services Trade policy under the Bush Administration has reflected the critical importance of the services sector in the U.S. economy. As the largest component of the U.S. economy, private service producing industries account for almost 70 percent of U.S. GDP, and 84 percent of GDP growth. Services are also the largest driver of job creation in the United States, with 8 out of every 10 Americans employed in the sector. Since 1990, the service sector has created nearly 40 million new jobs across a range of sectors and employs more workers and account for more business sales than any other sector. The United States is the world’s leading services supplier, with total exports and sales by foreign affiliates approaching $1 trillion per year. International trade in services is important to the continued expansion of our economy, and international markets offer huge opportunities for U.S. service firms and their employees. Services trade liberalization yields tangible benefits not only for the broader U.S. economy, but for individual Americans – by one estimate, total elimination of global barriers to trade in services would raise U.S. annual income by over $460 billion, or more than $6,000 per family of four. In order to harness these opportunities, the United States has pursued rules-based services trade and investment liberalization in the WTO through WTO accession agreements and ongoing DDA negotiations, through bilateral free trade agreements, and in other regional venues. We have developed a unified market access strategy across all negotiating fora, pressing for the removal of barriers to core infrastructure services – including financial services, telecommunications, computer and related services, express delivery, energy services and distribution – the liberalization of which improves the competitiveness of both the services and goods sectors. As a result, WTO accession agreements, FTAs, and Bilateral Investment Treaties (BITs) concluded during the Bush Administration included provisions to reduce and eliminate barriers to U.S. providers of these core infrastructure services. I. The President’s 2008 Trade Policy Agenda | 18 included an extensive review of IPR issues in China, including efforts being undertaken at the provincial level. Eliminating Barriers to Trade in Other Multilateral Fora The United States worked with its trading partners through the international system over the last seven years to ensure free and fair trade flows affecting many specific sectors. For example, in the steel sector, the United States worked with the Organization for Economic Cooperation and Development (OECD) Steel Committee and the North American Steel Trade Committee (NASTC), in WTO accession negotiations, and with countries bilaterally to reduce inefficient excess steel capacity worldwide and to establish greater disciplines on subsidies and other market distorting practices affecting global steel trade. In 2006, the Administration initiated a cooperative steel dialogue with China, under the U.S.-China Joint Commission on Commerce and Trade (JCCT), in an effort to increase China’s adoption of market- oriented policies regarding the steel sector. The United States also worked within APEC to establish an APEC Chemical Dialogue, in which officials and industry representatives from Member Economies discuss issues including chemical sector liberalization, facilitation, capacity building, regulatory policy, and best practices for the benefit of APEC economies, human health and safety, and the environment. APEC economies also launched the Life Sciences Innovation Forum, which brings together scientific, health, trade, economic and financial considerations to address the key challenges of infectious and chronic disease and aging populations in the APEC region. This activity included assisting economies in developing an environment that attracts investment and supports innovation in life sciences, for both pharmaceuticals and medical devices. Enforcement The Administration believes the United States can compete in any market so long as the rules of international trade are effectively enforced. Public support for trade depends on whether stakeholders are confident that the playing field is even and that the government is standing up for U.S. interests. To that end, resolute enforcement has been a hallmark of U.S. trade policy. The Administration has not hesitated to use the tools at its disposal in cases involving a range of countries. In the first year of the Administration, the United States engaged Canada on such issues as softwood lumber and the fairness of Canadian Wheat Board marketing policies and Mexico on its discriminatory tax on high fructose corn syrup and telecommunications practices. In 2004, the United States challenged Europe’s subsidies for aircraft giant Airbus, its prohibition on agricultural products made from biotechnology, and its customs procedures. In 2003, the United States brought a successful challenge against Europe’s discriminatory regime for geographical indications. Similarly, in 2003 the United States brought a successful challenge against Mexico’s antidumping duties on U.S. rice and a challenge against Egypt’s excessive tariffs on textiles. The following year, the United States prevailed in a WTO case involving Japan’s treatment of U.S. apples, which was brought to the WTO in 2002, and in a case brought by the Administration against Turkey’s import barriers to U.S. rice. These cases produced real results for American exports. In January 2007, we welcomed Mexico's repeal, in response to a successful WTO case brought by the Administration, of its 20 percent tax on soft drinks and other beverages made with sweeteners other than cane sugar. As noted earlier, in November the Administration avoided a drawn out legal battle with China after that country agreed to terminate subsidies prohibited by the WTO. In August, we initiated arbitration proceedings under the 2006 Softwood Lumber Agreement (SLA) to determine Canada’s obligations in applying an import surge mechanism and anti-circumvention provisions. I. The President’s 2008 Trade Policy Agenda | 21 In addition, as noted earlier, the United States brought three new WTO cases against China in 2007, challenging prohibited subsidies, deficiencies in China’s IPR enforcement regime, and market access restrictions affecting products from copyright-sensitive industries. The United States continues to pursue a case that arose over China’s use of discriminatory charges aimed at imported auto parts. And the United States challenged India’s application of excessive duties on a wide range of products. In addition to challenging the policies and actions of our trading partners, the Administration has defended U.S. trade laws at the WTO. For example, in December, a WTO panel again found in favor of the United States in a case involving the “zeroing” method for calculating anti-dumping duties in administrative reviews in a case brought by Mexico. The case marked the third time a WTO panel has found that “zeroing” in assessment proceedings is not prohibited by the WTO Antidumping Agreement. In all, the Bush Administration has won or successfully settled 96 percent of the cases it has taken to the WTO. When it comes to defending cases brought against us, we prevailed or reached productive settlements almost half the time. In 2008, we will continue our resolute pursuit of U.S. interests. Labor The Bipartisan Trade Promotion Authority (TPA) Act President Bush signed in 2002 required for the first time that FTAs have provisions in the core text obligating signatory countries to effectively enforce their labor laws and to subject those provisions to enforceable dispute settlement. This was a major step forward from previous grants of so-called fast-track trade authority with respect to recognizing the trade- related aspects of labor policies. Negotiations of FTAs under TPA led to significant labor reform by U.S. FTA partners. For example, in preparation for negotiation of our FTA, Morocco passed labor reforms that had languished for over 20 years. Bahrain removed bans on labor unions existing since the 1970’s and passed legislation guaranteeing collective bargaining and union organizing rights. In addition, Oman enacted laws that recognized trade union and collective bargaining rights for the first time in its history and raised the minimum age for employment from 13 to 15. In the course of passage and implementation of the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), the ILO conducted a review of laws and practices of the Central American countries and these countries issued Building on Progress: Strengthening Compliance and Enhancing Capacity (better known as the “white paper”) in which each committed to enforce its own labor laws and adhere to international labor standards. The Administration has honored commitments to Congress during consideration of CAFTA-DR to fund labor capacity building programs, devoting $20 million a year to these efforts beginning in FY 2005. The Administration built on this solid record with the Bipartisan Agreement on Trade Policy of May 10, 2007, which established the strongest-ever labor protections in trade agreements. As a result of that bipartisan agreement, FTA partners Peru, Colombia, Panama, and Korea will adopt and maintain in their laws the fundamental labor rights recognized in the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-Up (1998). Under the agreements, they will also be required to enforce effectively their labor laws. These labor obligations will be subject to dispute settlement with the same potential remedies as commercial obligations. In 2008, the Administration will continue to work with Congress and U.S. trading partners to address any concerns with labor rights in Colombia, Panama, and South Korea so that those agreements can receive bipartisan support. I. The President’s 2008 Trade Policy Agenda | 22 Environment In the course of the past seven years, the Administration has taken unprecedented steps to link wise environmental stewardship to trade in bilateral and regional free trade agreements, and in multilateral initiatives. The Trade Act of 2002 established for the first time that enforcement of environmental laws would be among the core objectives in the negotiation of free trade agreements. As a result, the FTAs concluded during this Administration demonstrate that good trade policies can encourage sound environmental policies. In cases where developing country trading partners might lack the resources for robust enforcement of environmental laws, such as the CAFTA-DR countries, the Administration adopted models of cooperation and capacity building to assist them. The Peru FTA includes a groundbreaking environment chapter addressing biodiversity, as Peru is one of the few “mega-diverse” countries. The Environment Chapter also requires the establishment of an independent secretariat to receive public submissions on environmental enforcement matters. The Peru FTA Environment Chapter also includes a first-ever Annex on Forest Sector Governance. This Annex recognizes the environmental and economic consequences of trade associated with illegal logging and illegal trade in wildlife. The Annex lays out concrete steps to enhance forest sector governance in Peru and promote legal trade in timber products. On the multilateral front, the United States endorsed the launch of the Doha Round with the inclusion of first-ever “win-win-win” mandates that promise gains for trade, environment, and development in such areas as fish subsidies, trade liberalization for environmental goods and services, and the WTO’s relationship with multilateral environmental agreements (MEAs). Also in 2007, the United States introduced a groundbreaking proposal to strengthen WTO rules on fisheries subsidies, a key part of the Doha environmental negotiating mandate. Under the U.S. proposal, all subsidies that contribute to marine fishing fleet overcapacity and over-fishing would be prohibited -- a clear “win-win-win” for trade, the environment, and sustainable development. In addition, the United States developed and introduced, with the European Union, a WTO proposal for an innovative new environmental goods and services agreement (EGSA) and a commitment by all WTO Members to remove barriers to trade in a specific set of climate-friendly technologies and services (e.g., solar panels, fuel cells, and wind turbines). The proposal was prompted by President Bush’s initiative earlier in 2007 to seek an agreement with major economies on a new international climate strategy. A recent World Bank study on climate and clean energy technologies suggests that by removing tariffs and non-tariff barriers to key technologies, trade in these products could increase by an additional 7 percent to 14 percent. A corresponding increase in the use of such technologies and services could contribute importantly to global efforts to address climate change and energy security. To build support for our proposal, the Administration will continue to lead work in APEC on environmental goods and services, including hosting another workshop featuring private sector advice, and establishing an APEC environmental goods and services database. APEC Leaders endorsed this work and urged its continuation. Among the bilateral highlights in 2007 were the conclusion of Memoranda of Understanding with both Indonesia and China to combat illegal logging. The interim agreement with China establishes a framework for both immediate cooperation and the negotiation of a more detailed bilateral agreement to be concluded by the Fourth U.S.-China Strategic Economic Dialogue in June 2008. The MOU, and eventually the more detailed agreement, will also provide important support for third countries seeking to manage their forests in a sustainable manner by further closing markets to timber that has been illegally harvested. I. The President’s 2008 Trade Policy Agenda | 23