Report by the Secretariat - SICE the OAS Foreign Trade …€¦ · Web view · 2013-11-26trade...

United States WT/TPR/S/160Page 84

IV. TRADE POLICIES BY SECTOR

(1) OVERVIEW

1. The United States is one of the world's largest producers, exporters, and importers of agricultural products. In 2004, the average MFN applied tariff for agriculture was 9.7% (the corresponding average for other products was 4%, see Chapter III). Government payments to agricultural producers as a share of net farm income fell from 48% in 2000 to 16% in 2004. This decline occurred despite an increase in the share in total government payments of counter-cyclical and loan programme payments since the enactment of the Farm Security and Rural Investment Act of 2002. Ad hoc emergency payments continue to supplement other government payments and government-sponsored crop insurance.

2. In July 2005, the Department of Agriculture announced that it had sent to Congress proposed statutory changes to comply with the panel and Appellate Body decisions on the WTO compatibility of a number of U.S. agricultural support measures for upland cotton. The Department of Agriculture also announced that from 2005 it would use a "risk-based fee structure" in its export credit guarantee programmes, in response to a finding by the WTO that such programmes had been provided "at premium rates".

3. The financial services sector is one of the fastest growing activities in the U.S. economy. There have been only relatively minor changes in U.S. legislation with respect to financial services since its last Review. Among the changes, a new rating system for financial conglomerates that include a bank became effective on 1 January 2005 to enhance the supervision of such conglomerates. The new rating emphasizes risk management and introduces a more comprehensive framework for analysing and rating financial factors.

4. Initial entry into the U.S. market through the establishment or acquisition of a nationally chartered bank subsidiary by a foreign person is permitted in all states. There are limitations to initial entry or expansion by a foreign person through acquisition or establishment of a state-chartered commercial bank in approximately half of the states. Foreign-owned banks, unlike domestic banks, are required to establish an insured banking subsidiary to accept or maintain domestic retail deposits of less than US$100,000. The United States also has a policy at the federal level of granting national treatment to the U.S. branches, agencies, securities affiliates, and other operations of foreign banks. However, there are some market access limitations at the state level for the establishment of branches or agencies, and in about a third of the states for the establishment of foreign bank representative offices.

5. The U.S. insurance services sector is regulated primarily at the state level. Insurance companies, agents, and brokers must be licensed under the law of the state in which the risk they intend to insure is located, but U.S. states have implemented a reciprocal licensing system for insurance agents and brokers, as well as a number of other initiatives to facilitate multi-state operations. A federal tax on insurance policies covering U.S. risks is imposed at a rate of 1% of gross premiums on all reinsurance but at 4% of gross premiums with respect to non-life insurance when the insurer is not subject to U.S. net income tax on the premiums.

6. The U.S. telecommunications market is open to foreign participation and highly competitive. In December 2004, the Federal Communications Commission adopted new regulations that redefine the extent to which incumbent firms are required to make available to other carriers elements of their network.

WT/TPR/S/160 Trade Policy ReviewPage 85

7. No significant policy or legislative changes have taken place with respect to maritime transport since 2004. The Jones Act reserves cargo service between two points in the United States for ships that are registered and built in the United States and owned by a U.S. corporation, and on which 75% of the employees are U.S. citizens. The Jones Act does not prevent foreign companies from establishing shipping companies in the United States as long as they meet the requirements with respect to U.S. employees. Domestic passenger services are subject to similar requirements under the Passenger Services Act of 1886. In contrast, the U.S. international maritime transport market is generally open to foreign competition. There are, however, a number of cargo preferences in place for government-generated cargo, oil, agricultural cargoes under certain foreign assistance programmes, or when a U.S. government agency makes export loans or credit guarantees.

8. There have been no significant legislative changes affecting the air transport sector since 2004. Market access restrictions remain in the form of U.S. ownership and control requirements. Any foreign ownership in a U.S. carrier is limited to a maximum of 25% of voting shares. The provision of domestic air services is permitted only by U.S. carriers. The Fly America Act requires U.S. government-financed transportation to be on U.S.-flag air carriers, but grants authority for the United States to enter into bilateral or multilateral agreements to allow the provision of such services by foreign air carriers. The United States has entered into two such agreements. Financial problems have continued to affect several U.S. airlines, in part because of rising fuel prices, sharp competition, and high pension costs. Four of the major U.S. airlines are in reorganization under Chapter 11 of the U.S. Bankruptcy Code (October 2005).

(2) AGRICULTURE

(i) Legal framework and overall support

9. The Agricultural Adjustment Act of 1938 and the Agricultural Act of 1949 constitute what is known as the "permanent" legal framework governing commodity price and income support in the United States. The U.S. Congress regularly enacts legislation that amends and suspends provisions of the permanent laws. The last such legislation was the Farm Security and Rural Investment Act of 2002 (the 2002 Farm Act), signed by the U.S. President in May 2002. Additionally, Congress provides ad hoc emergency and supplementary assistance under separate legislation.

10. Payments to U.S. agricultural producers amounted to US$13.3 billion in 2004; preliminary estimates by the Department of Agriculture predict government payments for 2005 to increase to close to US$21.4 billion (Chart IV.1). According to these preliminary estimates, the projected increase would be driven largely by an almost four-fold increase in counter-cyclical payments and a seven-fold increase in ad hoc emergency payments with respect to 2004 (see below).

11. The OECD's Producer Support Estimate (PSE) is a broader measure of support that includes government payments to producers and price support. The PSE for the United States was US$35.6 billion in 2003.1 As a share of gross farm receipts, the PSE was 15%, compared with 30% for the OECD as a whole. Provisional data for 2004 suggests an increase in the PSE to US$46.5 billion, or 18% of gross farm receipts, reversing the downward trend registered since 1999. The most heavily supported commodities, as measured by the share of the PSEs in gross receipts for 2004 are sugar, milk, other grains, and wheat.2 The OECD noted that "while support is lower than the 1986-88 average [the last base period measured by the OECD], it is above the levels of the mid-90s,

1 OECD (2005), pp. 142-151.2 OECD (2005), "Summary Tables of Estimates of Support for OECD Countries".


and the most production and trade distorting forms of support are still significant, contributing to depressing world prices".3

0

5

10

15

20

25

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005a0

11

22

33

44

55

Chart IV.1Government payments to agricultural producers, 1993-05 US$ billion

Source: USDA, Economic Research Service online information, "Briefing room-farm income and costs". Available at: http://www.ers.usda.gov/Data/FarmIncome/finfidmu.htm [17 October 2005].

Emergency assistance

%

As a share of net farm income(right-hand scale)

a Forecast.

Direct government payments

12. In March 2003, a WTO panel was established to examine the WTO compatibility of a number of U.S. agricultural support measures for upland cotton. The panel report was issued in September 2004. The United States appealed several of the panel's findings.4 In March 2005, the WTO Appellate Body issued its report, which upheld most of the panel's findings. The Appellate Body upheld the finding that U.S. price-based support measures had contributed to significant suppression of cotton prices in the world market, causing "serious prejudice" to the trade interests of other WTO Members.5 It also upheld the finding that export credit guarantees for unscheduled commodities such as upland cotton and soybeans are prohibited export subsidies.

13. In July 2005, the Department of Agriculture announced that proposed statutory changes to comply with the panel and Appellate Body decisions had been sent to Congress.6 The proposed changes seek to eliminate a support programme for cotton, known as Step 2 programme (section (iii)(c)), remove a statutory cap on the fees charged under export credit guarantee programmes, and terminate one programme involving medium-to long-term export credit guarantees (section (iv)(b)). The Department of Agriculture announced that it would use a risk-based fee structure in its export credit guarantee programmes beginning in July 2005, in response to the finding by the WTO that such

3 OECD (2004).4 WTO document WT/DS267/R, 8 September 2004.5 WTO document WT/DS267/AB/R, 3 March 2005.6 U.S. Department of Agriculture (2005).


programmes had been provided "at premium rates which are inadequate to cover the long-term operating costs and losses of the programmes...".7

14. In October 2005, the United States presented a comprehensive proposal on agricultural trade in the context of the Doha Round.8

(ii) Border measures

15. The average MFN applied tariff for agriculture (WTO definition) in 2004 was 9.7% (including the ad valorem equivalents of non-ad valorem rates). This is almost two and a half times the protection afforded to the non-agricultural sector (Chapter III(2)(ii)).

16. Around 195 tariff lines are subject to tariff quotas (Table AIV.1). The simple average out-of-quota MFN tariff in 2004 was almost 49%; the in-quota average was 9%.9 Close to 91% of out-of-quota tariffs are non-ad valorem, compared with almost 28% of in-quota tariffs. The latest U.S. notification on tariff quotas covers 2003.10

17. Parts of tariff quotas are generally allocated to specific countries. This is the case for most products subject to tariff quotas, including beef, certain dairy products, peanuts and peanut butter, chocolate crumb, and tobacco (Table AIV.1). Apart from the tariff quotas specified in its WTO schedule of commitments, the United States has allocated additional tariff quotas to its preferential trading partners under free-trade agreements (Chapter III(2)(ii)(d)).

18. Access to tariff quotas is on a first come, first served basis, except for dairy products and sugar. Access for dairy is granted to "historical" importers, "preferred" importers designated by the country of origin, and on the basis of a lottery. One or more methods may be used, depending on the particular good. A licensing system is used to administer access. 11 Any importer, including manufacturers of like products, can apply for a licence.

19. Access to the tariff quota for raw sugar is granted to exporting countries, not importers. It is administered through certificates of quota eligibility.12 The Department of Agriculture issues these certificates based on the allocations specified by the USTR. In-quota imports of raw sugar must be accompanied by a certificated of quota eligibility, validated by the certifying authority in the exporting country. Certificates are issued free of charge.

20. Direct government payments to U.S. agricultural producers amounted to US$13.3 billion in 2004, around 16% of net farm income. This is significantly lower than in 2000, when direct government payments amounted to US$22.9 billion or almost 48% of net farm income. Preliminary estimates by the Department of Agriculture predict an increase in government payments for 2005, to close to US$21.4 billion (Chart IV.1). The projected increase in 2005 would be driven largely by an almost fourfold increase in counter-cyclical payments and a seven-fold increase in ad hoc emergency payments with respect to 2004.

7 WTO document WT/DS267/R, 8 September 2004 and U.S. Department of Agriculture (2005a).8 USTR online information, "Facts on Doha Round". Available at: http://www.ustr.gov/assets/

Document_Library/Fact_Sheets/2005/asset_ upload_file919_8128.pdf [7 December 2005].9 These averages were calculated by the WTO Secretariat based on ad valorem equivalents of non-

ad valorem rates provided by the U.S. authorities in the context of this Review.10 WTO document G/AG/N/USA/54, 17 February 2005.11 The licensing system is not a statutory requirement. The authority to allocate tariff quotas through

licences was delegated to the Secretary of Agriculture by Presidential Proclamation 3019 (8 June 1953). The procedures for submitting licence applications and other relevant provisions are contained in 7 CFR 6.20-6.36.

12 The regulations governing the CQE system are contained in 15 CFR 2011.


21. The United States has reserved the right to apply additional tariffs on over-quota imports of products subject to tariff quotas, either if their import prices drop below a trigger price, or if quantities exceed a given threshold, in accordance with the special safeguard provisions of the WTO Agreement on Agriculture. A volume-based safeguard may also be applied on sheep meat products, although the U.S. schedule of concessions defines no tariff quotas for such products. In January 2004, the United States notified the WTO that it had applied volume-based safeguards to imports of American-type cheese during the last two months of 2002.13 The U.S. authorities indicated that the United States had not applied volume-based safeguards in 2003 and 2004.

22. The United States invokes price-based safeguards automatically on a shipment-by-shipment basis. During 2003 and 2004, price-based safeguards were applied to imports of bovine meat, dairy products, peanuts, sugar, and food preparations.14

(iii) Domestic programmes

23. The latest U.S. notification on domestic support covers the marketing years 2000 and 2001. 15

According to this notification, the total current Aggregate Measurement of Support (AMS) for the United States was US$16.8 billion in 2000, and US$14.4 billion in 2001. The applicable WTO ceiling since 2000 is US$19.1 billion per year. Around US$50 billion of domestic support provided in each of these two years was classified as "green box", and was not subject to reduction commitments in the WTO.

24. In the context of the latest U.S. notification on domestic support WTO Members raised several issues in the Committee on Agriculture.16 These included: the increase in expenditures under state programmes for agriculture and the emergency feed programme; the high level of specific support for cotton, rice, and soybeans, and the rise in non-product specific support; and the scope of government guarantees under U.S. crop insurance programmes. Several Members also questioned the classification of crop market loss assistance payments under the non-product-specific category.

25. The latest U.S. notification on domestic support does not include support granted under any of the programmes encompassed by the 2002 Farm Act. In order to pre-empt a breach of WTO commitments, under section 1601(e) of the Act, the Secretary of Agriculture must, "to the maximum extent practicable", adjust expenditures if they exceed U.S. commitments in the WTO. 17 Before making any adjustment, the Secretary of Agriculture must submit a report describing "the extent of the adjustment to be made" to the relevant committees in Congress.18 The U.S. authorities have indicated that a determination by the Secretary of Agriculture under section 1601(e) would be "final and conclusive".19 These provisions have never had to be used.

26. The main instruments of domestic support reauthorized or established by the 2002 Farm Act are direct and counter-cyclical payments, and loan programmes (Table IV.1). These accounted for 62% on average of total government payments to agricultural producers in 2003-04. In addition, the United States supports its agricultural sector through emergency assistance and crop insurance.

13 HTS 04.06.30.71.00 and 04.0690.84.00, WTO document G/AG/N/USA/49, 23 January 2004.14 WTO document G/AG/N/USA/49, 23 January 2004.15 WTO document G/AG/N/USA/51, 17 March 2004.16 WTO document G/AG/R/39, 16 July 2004.17 Section 1601(e), 2002 Farm Act.18 Section 1601(e), 2002 Farm Act.19 WTO document G/AG/R/31, 27 August 2002.


Table IV.1Government payments, 2001-05(US$ million)

2001 2002 2003 2004 2005a

Production flexibility contract paymentsb 4,040.4 3,499.8 -280.0 -3.9 0.0Direct payments 0.0 367.1 6,703.6 5,242.4 5,045.0Counter-cyclical payments 0.0 203.4 2,300.7 1,122.0 4,100.0Loan deficiency payments 5,464.2 1,196.7 576.3 2,859.9 3,207.0Marketing loan gains 707.7 459.7 198.1 130.4 457.0Net value certificates .. .. 1,242.8 813.9 1,114.0Peanut quota buyout payments 0.0 983.0 237.6 24.7 4.0Milk income loss program payments 0.0 859.6 913.0 206.0 20.0Tobacco Transition Payment Program 0.0 0.0 0.0 0.0 962.3Conservation program payments 1,933.7 2,004.6 2,198.9 2,345.5 2,549.6Ad hoc and emergency program payments 8,508.1 1,616.2 3,111.3 557.2 3,915.0Miscellaneous program payments 73.3 46.1 6.8 5.4 6.0Total direct payments 20,727.5 11,236.3 17,209.2 13,303.6 21,379.9

.. Not available.

a Forecast.b Enactment of the 2002 Farm Act terminated the authority for production flexibility contract payments.

Source: U.S. Department of Agriculture, Economic Research Service [Online]. Available at: http://www.ers.usda.gov/Data/FarmIncome/Finfidmu.htm [17 October 2005].

(a) Direct payments

27. Following the adoption of the 2002 Farm Act, direct payments replaced production flexibility contract payments, which were in place until 2002. The commodities covered under the direct payments programme are: wheat, corn, barley, sorghum, oats, upland cotton, rice, soybeans, other oilseeds, and peanuts. Payments are based on historical acreage and yields. They do not depend on current commodity prices. The 2002 Farm Act sets fixed payment rates on a per unit basis for 2002-07.

28. In general, producers receiving direct payments for one crop are permitted to plant any other crop (or no crop at all) on land eligible for direct payments. However, if producers plant and harvest fruit, vegetables, or wild rice, direct payments are eliminated or reduced.20 The U.S. authorities note that this limitation has been a feature of farm programmes since 1990, and that its intention is to discourage additional planting of horticultural products.

(b) Counter-cyclical payments

29. The counter-cyclical payments programme covers the same commodities as the direct payments programme. Payments are also based on historical acreage and yields. However, they depend on current prices. Counter-cyclical payments are triggered when the higher of the loan rate (see below) or the season average price plus the direct payment rate is below the target price set by the 2002 Farm Act for each commodity covered. The amount of a counter-cyclical payment equals the difference between the target price and the higher of the loan rate or the season average price plus the direct payment rate. Under the programme, payments are also eliminated or reduced if producers plant fruit, vegetables, or wild rice on land eligible for counter-cyclical payments.

20 7 CFR 1412.407.


(c) Loan programmes

30. Loan programmes are available for producers of wheat, rice, corn, sorghum, barley, oats, extra-long staple and upland cotton, soybeans, other oilseeds, sugar, peanuts, mohair, wool, honey, small chickpeas, lentils, and dry peas.

31. Under commodity or marketing assistance loans, producers can obtain a government loan by pledging production as collateral. The amount of the loan is determined by the "loan rate", which is expressed in U.S. dollars per unit of output. Loan rates are fixed by the 2002 Farm Act. When market prices fall below the loan rate, producers can forfeit the crop pledged as collateral to the Commodity Credit Corporation in full settlement of the loan.21 As indicated in past Reviews of the United States, forfeitures support prices as they remove crops from the marketplace.22

32. Alternatively, under the marketing loan programme, producers can repay a government loan at a "repayment rate". This rate is the lower of the adjusted world market price for rice and cotton or a local market price for other commodities.

33. Another alternative available to producers under the loan deficiency payments programme, is to collect the subsidy available under the marketing loan programme without having to take out and subsequently repay a commodity loan. The amount of the subsidy is expressed in U.S. dollars per unit of output and is the amount by which the loan rate exceeds the loan repayment rate. Under the loan deficiency payments programme, producers sell their crops on the market.

34. In early February 2006, Congress passed legislation eliminating, as from August 2006, the user marketing certificate or "Step 2" programme, a special payment provision for upland cotton. Under the programme, domestic users and exporters of upland cotton received payments when certain market conditions prevailed.

(d) Emergency assistance and insurance programmes

35. Ad hoc emergency payments to farmers complement programmed payments. In addition, the Government offers subsidized insurance against losses resulting from natural disasters and price fluctuations. Farm insurance programmes are provided under the Federal Crop Insurance Act, as amended.23 Insurance policies are available for more than 100 crops.

36. Producers may select between yield or revenue insurance. Insured producers receive a payment when actual yield or revenue fall below a target due to an insured cause. The shortfall in revenue may be caused by low prices or low production levels. The basic level of coverage is catastrophic risk coverage, which is available for an administrative fee of US$100. The premium is fully subsidized. Producers with catastrophic risk coverage who suffer losses in excess of 50% of yield receive a payment equal to 55% of the estimated market price of the insured crop. Producers may purchase higher levels of coverage, but the portion of the premium that is subsidized declines as coverage increases. The Department of Agriculture reinsures the companies that sell farm insurance, thereby covering underwriting costs, and defrays some of their administrative costs.

21 The Commodity Credit Corporation is a financing institution for the Department of Agriculture's support programmes.

22 WTO (2004).23 Two major amendments have been the Federal Crop Insurance Reform Act of 1994 and the

Agricultural Risk Protection Act of 2000.


37. In 2004, premium subsidies totalled nearly US$2.5 billion and accounted for nearly 60% of total premium costs.24 Total crop insurance outlays rose by an average of nearly 14% per year between 1995 and 2003.25

(e) Other support programmes

38. The Fair and Equitable Tobacco Reform Act of 2004 terminated all production quotas and other price support mechanisms for tobacco beginning with the 2005 crop year. The Act establishes a levy on producers and importers of tobacco products to fund compensation payments to tobacco quota holders and producers.26 The amount of the levy will be determined by the Commodity Credit Corporation on the basis of annual estimated expenditures under the Act and producer and importer market shares for each product subject to the levy. Compensation payments are based on historical quota allotments and production, and will be paid in ten annual instalments. Total expenditures under the Act are estimated at US$10 billion.27

39. The 2002 Farm Act establishes incentive payments for producers of hard white wheat during the 2003 through 2005 crop years. The incentives are paid at a rate of US$0.20 per bushel. Payments cannot exceed US$12 per acre. An additional payment of US$2 per acre is provided for each acre planted with certified seed.

(f) Other programmes

40. The Agricultural Marketing Agreement Act of 1937 authorizes the Secretary of Agriculture to issue binding marketing orders. Marketing orders can be issued for fruit, vegetables, specialty crops, and milk. They are targeted to a specific geographic area and are binding on "handlers", i.e., individuals who receive the commodity from producers, grade, pack, transport, and make it available for sale. The process leading to the adoption of a marketing order is always initiated by producers.

41. Marketing orders may establish minimum prices, fix output levels, or provide for the creation of reserve pools of covered commodities. They may set minimum product requirements such as grade, size, quality, and maturity. Thirty-three marketing orders for fruit and vegetables were in force in 200428; supply management provisions were in effect for four of these orders, affecting tart cherries, hazelnuts, spearmint oil, and raisins. There are 11 regional milk marketing orders, which establish minimum prices for milk depending on its use by processors.

42. The Agricultural Marketing Agreement Act of 1937 requires that imported commodities meet the same or comparable grade, size, quality, and maturity requirements as those established for domestic commodities under federal marketing orders.29 Imports of the following commodities are subject to such requirements (September 2005): avocados, dates (other than for processing), hazelnuts, grapefruit, table grapes, kiwifruit, olives (other than Spanish-style), onions, oranges, Irish potatoes, plums, raisins, tomatoes, and walnuts.30

24 U.S. Department of Agriculture (2005b).25 Glauber (2005), pp. 1179-1195.26 Section 625(b), Fair and Equitable Tobacco Reform Act of 2004. The regulations governing the

application of the levy are contained in Federal Register, 70 FR 7010, 10 February 2005.27 USDA online information, "Announcing Preliminary Tobacco Transition Payment Program

Provisions". Available at: http://price.house.gov/UploadedFiles/TPPP.pdf.28 Agricultural Marketing Service, "List of Federal Marketing Orders". Available at:

http://www.ams.usda.gov/fv/moabmotab.htm [12 June 2005].29 Section 8(e), Agricultural Marketing Agreement Act of 1937.30 USDA online information, "Import Requirements for Fruits, Vegetables and Specialty Crops".

Available at: http://www.ams.usda.gov/fv/moab-8e.html [12 June 2005].

United States WT/TPR/S/1602

43. Eligible farmers can apply for up to US$10,000 per year under the Trade Adjustment Assistance for Farmers programme, adopted as part of the Trade Act of 2002. 31 Support under this programme is available when a commodity's average annual domestic price falls to less than 80% of the average domestic price for the preceding five years. Increased imports of like or directly competitive products must be found to have "contributed importantly" to the price decline. Cash payments are made per unit of production, at a rate of half of the difference between 80% of the average domestic price of the commodity for the preceding five years and the average annual domestic price for the most recent crop year. There were no payments under the Trade Adjustment Assistance programme in 2003. Payments in 2004, amounted to US$11 million.

(iv) Export subsidies, credit, insurance, and guarantees

(a) Export subsidies

44. The United States scheduled export subsidy reduction commitments under the WTO Agreement on Agriculture for 13 product groups. The final bound ceiling since 2000-01 on export subsidy outlays for these commodities is US$594 million per year. During the period under review, the United States made one notification on export subsidies, which covers 2002.32 Total outlays for export subsidies in 2002 amounted to US$31.5 million. The commodities that received export subsidies were butter and butter oil, skim milk powder, and cheese.

45. The United States may grant export subsidies under the Export Enhancement Program (EEP) and the Dairy Export Incentive Program (DEIP). The 2002 Farm Act extended both programmes until 2007. Export subsidies are provided in the form of a cash payment, which is based on the quantity exported. The commodities eligible under the EEP are wheat, wheat flour, rice, frozen poultry, barley, barley malt, table eggs, and vegetable oil. Under the DEIP, the eligible commodities are milk powder, butterfat, and various cheeses.

46. The U.S. authorities note that the EEP has not been used since 1995, except for small shipments of frozen poultry totalling US$15 million. Between October 2003 and September 2004, total cash bonuses under the DEIP amounted to slightly less than US$2.7 million.33 Almost two thirds of the total was for exports of non-fat dry milk (skim milk powder).

(b) Export credits, insurance, and guarantees

47. The United States has three main export credit guarantee programmes: the Export Credit Guarantee Program (known as GSM 102), Intermediate Export Credit Guarantee Program (GSM 103), and Supplier Credit Guarantee Program. In mid 2005, applications for the GSM 103 programme, which operates in a similar fashion to GSM 102, were no longer being accepted.34

48. GSM 102 and the Supplier Credit Guarantee Program are operated by the Commodity Credit Corporation. The Corporation does not provide financing but guarantees payments due from the importer's bank to a U.S. bank. Until mid 2005, premiums payable under credit guarantee programmes did not necessarily reflect actual country risk. The Department of Agriculture announced that it would use a "risk-based fee structure" for GSM 102 and the Supplier Credit Guarantee Programme beginning in July 2005.

31 The relevant regulations are contained in 7 CFR 1850.32 WTO document G/AG/N/USA/53, 2 June 2004.33 Foreign Agricultural Service online information, "Dairy Export Incentive Programme: Summary

Data for Fiscal Year 2004". Available at: http://www.fas.usda.gov/excredits/quarterly/2004/04%20DEC%20 DEIP%20table.pdf [12 June 2005].

34 USDA online information, "USDA Proposes Legislative Changes to Cotton and Export Credit Programs to Comply with WTO Findings", 5 July 2005. Available at: http://www.usda.gov [11 July 2005].


49. Under GSM 102, the Commodity Credit Corporation is authorized to guarantee the repayment of credit made available to finance U.S. exports of agricultural goods on credit terms between 90 days and three years. The Corporation generally guarantees 98% of the principal and a portion of the interest. It determines the eligibility of agricultural products based on market potential. The exporter pays a fee that is calculated on the basis of the amount guaranteed; the fee cannot exceed the statutory cap of 1% of the guaranteed value of the transaction.35

50. Under the Supplier Credit Guarantee Program, the Commodity Credit Corporation issues guarantees for the repayment of credit made available by a U.S. exporter to an importer for the purchase of U.S. commodities on credit terms not exceeding 180 days. The Corporation generally guarantees 65% of the principal and none of the interest. There is a statutory cap on the fee charged to the exporter equal to 1% of the guaranteed value of the transaction.

51. In addition to the programmes describe above, the Commodity Credit Corporation extends credit guarantees to U.S. banks for financing export sales of U.S. manufactured goods and services that improve agriculture-related facilities in emerging markets, including storage, processing, and handling facilities. These credit guarantees are issued under the Facility Guarantee Program. The export credit guarantee for sales of manufactured goods and services is only extended to projects that are expected to benefit the export of U.S. agricultural products. The U.S. authorities note that the Commodity Credit Corporation has issued one guarantee under this programme since 1997.

52. The total value of exports covered by officially supported export credit guarantees amounted to US$3.7 billion in fiscal 2004, up from US$3.2 billion in fiscal 2003. Almost 80% of the 2004 total were guarantees under GSM 102.36

(v) Food aid

53. The United States provided 56% of global food aid (by volume) delivered in 2004.37 The total value of food aid delivered between October 2003 and September 2004 amounted to US$1.1 billion.38

54. The United States provides food aid through various programmes, including the P.L. 480 programme, Food for Progress, Section 416(b) of the Agricultural Act of 1949, and the McGovern-Dole International School Feeding programme. Around 70% of food aid provided was between October 2003 and September 2004, through P.L. 480, and 14% through the Food for Progress programme. P.L. 480 governs the donation of food to meet emergency and non-emergency needs abroad (Title II), and provides for both food donations under grant agreements and sales of food under long-term concessional loans to developing countries (Title I). In 2004, approximately 65% of Title I resource allocations funded grant agreements; the remainder supported long-term concessional loan agreements.

55. The Food for Progress programme allows for the purchase and donation of U.S. food products to developing countries that have food needs, are considered emerging democracies, and are fostering the expansion of private enterprise. Section 416(b) covers the donation of surplus agricultural commodities owned by the Commodity Credit Corporation.

35 7 USC 5641(b).36 Foreign Agricultural Service online information, " Monthly Summary of Export Credit Guarantee

Program Activity". Available at: http://www.fas.usda.gov/excredits/Monthly/ecg.html [12 June 2005].37 WFP online information, INTERFAIS: "2004 Food Aid Flows". Available at: http://www.wfp.org/

interfais/index2.htm# [12 June 2005].38 FAS online information. Available at: http://www.fas.usda.gov/excredits/FoodAid/Reports/reports.

html [12 June 2005].


56. Food donated under any U.S. food aid programme cannot have a "disruptive impact upon production, prices, and marketing of the same or like products within the importing country."39 A portion of the donated food under both Section 416(b) and the non-emergency provisions of Title II of P.L. 480 may be "monetized", that is, sold in the recipient country. Between October 1998 and September 2000, the latest year for which data are available, around 30% of food aid under Title II of P.L. 480 was monetized; the corresponding figure for Section 416(b) was around 40%.40

57. Several WTO Members have raised concerns over aspects of U.S. food aid, including the effect of monetization requirements on domestic markets, and the use of proceeds from monetization.41 In the context of these discussions, the United States has pointed out that it adheres to the FAO Principles of Surplus Disposal and Consultative Obligations. The United States has noted that its laws and regulations require monetized commodities to be sold at "reasonable local market prices".42

(3) FINANCIAL SERVICES

(i) Recent market developments

58. The financial services sector, comprising banking, insurance, and securities, remains one of the fastest growing activities in the U.S. economy. Its share of GDP increased to 8.3% in 2004; about half was generated by banking activities, some 30% by insurance, and 20% by securities trading activities. The financial sector in the United States is estimated to have employed some 6 million people in 2003, or some 4.4% of total employment.43 Both exports and imports of financial (including insurance) services have continued to expand rapidly; exports amounted to US$33.5 billion and imports to US$41.1 billion in 2004. Affiliate transactions are significantly larger than cross-border transactions; receipts amounted to US$122.2 billion and payments to US$98.8 billion in 2003, the last year for which data were available (these figures exclude affiliate trade from commercial banks). 44

The period under review was characterized by a widening in the financial services and insurance balance deficit, mainly due to an increase in insurance payments abroad.

59. At 31 December 2004, there were 1,469 commercial banks in the United States with assets of US$300 million or more. Total U.S. assets of these banks were US$7.74 trillion, representing some two-thirds of GDP; 87.5% were domestic assets.45 Foreign banks from 60 countries and territories operate in the United States. The U.S. offices of foreign banks account for approximately 20% of the total assets of the U.S. commercial banking system.

60. The United States has the largest securities markets in the world. The market value of equity and options sales on U.S. exchanges at end April 2005 was some US$23.3 trillion, of which US$16.2 trillion were in domestic stocks (over 130% of GDP), some US$6.8 trillion in stocks of foreign companies, and the rest was closed-ended funds. Some 84.5% of the value traded was on the New York Stock Exchange (NYSE); the American Stock Exchange (AMEX) is the second largest,

39 See, for example, 7 CFR 1499.5(a).40 Foreign Agricultural Service (2001).41 WTO documents G/AG/R/35, 26 August 2003; G/AG/R/38, 28 May 2004; G/AG/R/39, 16 July

2004; and G/AG/R/40, 26 October 2004.42 WTO document G/AG/R/39, 16 July 2004.43 BEA online information, "Industry Economic Accounts". Available at: http://www.bea.gov/bea/pn/

GDPbyInd_VA_NAICS.xlsSecurities Industry Association (2002).44 U.S. Department of Commerce, BEA (2005), and BEA online information "International Economic

Accounts", U.S. International Services. Available at: http://www.bea.gov/bea/.45 Federal Reserve online information. Available at: http://www.federalreserve.gov/releases/lbr/

current/lrg_bnk_lst.pdf.


with 15% of the value traded.46 In May 2005, there were 2,779 listed companies in the NYSE, of which 452 were foreign.

61. The U.S. insurance market is the world's largest, with gross insurance premiums of US$1.06 trillion in 2003 (35.9% of the world market); approximately US$481.5 billion were in life and health insurance, and US$576 billion in property and casualty insurance.47 The United States ranks fourth in the world with respect to insurance premiums per capita, with US$3,651 per head in 2003; it is eighth with respect to premiums as a percentage of GDP; premiums for the whole insurance business account for some 9.6% of GDP in 2003. Some US$64.2 billion in premiums were paid through cross-border trade to foreign-based insurers to cover risks in the United States in 2004. They consisted mostly of reinsurance. Some US$14.6 billion were paid to U.S.-owned insurers established abroad. In 2004, losses paid to U.S. firms continued to show a steep increase, reaching US$40.2 billion, more than twice as much as in 2000.

(ii) Legislative and regulatory framework

(a) Consolidated financial sector regulation

62. Under the Gramm-Leach-Bliley (GLB) Act (Financial Services Modernization) of 1999 domestic and foreign banks may affiliate with entities that engage in other activities that are financial in nature or incidental to a financial activity, provided that certain capital and managerial standards are met. A U.S. bank wishing to affiliate with insurance or other financial services companies generally must first set up a bank holding company (BHC) under the Bank Holding Company Act; foreign banks may, but are not required to set up holding companies. Qualifying BHCs are referred to as financial holding companies or FHCs. They may control banking, securities, or insurance firms, and may engage in financial activities and activities incidental to financial activities. FHCs may also own non-financial companies, through the merchant banking provisions of the GLB Act, subject to certain conditions.48 However, the GLB Act does not alter the U.S. policy generally separating banking from commerce. In its last Review, the United States stated that it did not foresee any immediate changes to this policy.49 In July 2005, 648 financial organizations had effectively become or were being treated as FHCs, up from 550 reported at the time of the last U.S. Review. 50 These included 37 foreign financial organizations (26 in May 2003). The authorities indicate that most FHCs are set up by smaller U.S. banks seeking to engage in insurance brokerage activities.

63. The Federal Reserve Board (FRB) is the umbrella regulator for financial conglomerates that include a bank. Securities and insurance companies can become FHCs, by acquiring a bank, provided they meet certain prudential criteria. The activities of subsidiaries of FHCs are regulated by the appropriate regulator: the Office of the Comptroller of the Currency (OCC) in the case of national banks; a state banking agency and the Federal Reserve or Federal Deposit Insurance Corporation (FDIC) in the case of state-chartered banks; the Securities and Exchange Commission (SEC) in the case of securities firms; and a State insurance commission in the case of insurance companies.

64. Under the GLB Act, U.S. bank subsidiaries of foreign banks are treated as domestic banks. With respect to a foreign bank operating a branch or agency in the United States, under the GLB Act, "well capitalized" and "well managed" standards comparable to those applied to U.S. banks must be

46 New York Stock Exchange online information. Available at: http://www.nyse.com/marketinfo/ p1020656068262.html?displayPage=%2 Fmarketinfo%2Fmarketinfor.html.

47 Swiss Re, Sigma, No. 6/2004. Available at: http://www.swissre.com.48 The aggregate assets of all financial subsidiaries must not exceed 45% of the parent bank's assets or

US$50 billion, whichever is less.49 WTO document WT/TPR/M/126/Add.3, 22 November 2004, p. 214.50 The list of institutions is available online at: http://www.federalreserve.gov/generalinfo/fhc/.


applied "giving due regard to the principle of national treatment and equality of competitive opportunity".51 Branches and agencies have similar powers and are subject to similar supervision; agencies, however, may not accept deposits from U.S. citizens or residents.

65. In December 2004, the Federal Reserve approved a new rating system for BHCs, including FHCs.52 The revised rating system, which became effective 1 January 2005, emphasizes risk management, introduces a more comprehensive framework for analysing and rating financial factors, and provides a framework for assessing and rating the potential impact of the parent holding company and its non-depository subsidiaries on the subsidiary depository institution(s). Under the new system, a composite rating and the risk management component forms the basis to classify a BHC or FHC as "well managed".

66. Some statutory restrictions apply with respect to transactions between banks and their affiliates; they are contained in sections 23A and 23B of the Federal Reserve Act, and are implemented through FRB's Regulation W, effective 1 April 2003. In general, section 23A limits a bank's covered transactions with any single affiliate to no more than 10% of the bank's capital stock and surplus, and transactions with all affiliates combined to no more than 20%, and requires all transactions between a member bank and its affiliates to be on terms consistent with sound banking practices. Section 23B requires that certain transactions between a bank and its affiliates occur on market terms. Regulation W implements these statutory restrictions and the FRB's exemptions from sections 23A and 23B.53

(b) Banking services

67. The FRB shares responsibility for banking supervision in the United States with the OCC, the FDIC, the Office of Thrift Supervision (OTS), as well as with state regulators who regulate financial institutions chartered or licensed in their respective states. The FRB regulates and supervises all bank holding companies, including FHCs, as well as state-chartered banks that are members of the Federal Reserve system and state-licensed branches and agencies of foreign banks. The OCC charters, regulates, and supervises all national banks, and supervises the federal branches and agencies of foreign banks. The FDIC insures bank deposits and regulates and supervises all state-chartered banks that are not members of the Federal Reserve system. The OTS regulates and supervises federally-chartered and many state-chartered thrift institutions and their holding companies.

68. The International Banking Act of 1978 (IBA) is the main legislation governing the operation of foreign banks in the United States. The IBA provides for the granting of national treatment to foreign banks and offers them the option of establishing federally licensed branches and agencies in addition to state-licensed offices. The Riegle-Neal Interstate Banking and Branching Act (RNIBBA) of 1994 allows interstate branching by merger or by de novo establishment of branches. All states have introduced legislation to give effect to the branching by merger provisions of the RNIBBA. Inter-state branching by de novo establishment is permitted in 21 States and the District of Columbia.

69. The United States maintains a general policy of national treatment towards the U.S. branches, agencies, securities affiliates, and other operations of foreign banks. Bound commitments have been made by the United States in market access and national treatment for all subsectors included in the Annex on Financial Services in the GATS, and in line with the Understanding on Commitments in

51 Final rules implementing the financial holding provisions of the GLB Act are accessible in FRB online information. Available at: http://www.federalreserve.gov/regulations/defaukt.htm#y.

52 Federal Reserve Board (2004a).53 Covered transactions include purchases of assets from an affiliate, extensions of credit to an affiliate,

investments in securities issued by an affiliate, guaranteed on behalf of an affiliate, and certain transactions that expose a bank to an affiliate's credit or investment risk.


Financial Services.54 Foreign banks may establish a commercial presence in the U.S. market either by establishing federal or state-licensed branches or agencies, by establishing representative offices, or by establishing or acquiring a national or state-chartered subsidiary bank. A foreign bank is required to establish an insured banking subsidiary (except for foreign bank branches engaged in insured deposit-taking activities as of 19 December 1991) in order to accept or maintain domestic retail deposits of less than US$100,000. Branches of foreign banks are generally not required to commit organizational capital at the federal level and in some States that allow branches.

70. Exceptions to national treatment have been reserved as market access restrictions in the GATS.55 For example, all directors of a national bank must be U.S. citizens unless the bank is an affiliate or subsidiary of a foreign bank, in which case only a majority of the board need be U.S. citizens; approximately half of the states also require all or the majority of the board of directors of depository financial institutions to be U.S. citizens. Interstate expansion by a foreign bank through the establishment of branches by merger with a bank located outside the "home state" of a foreign bank is granted national treatment. Foreign banks, not incorporated in the United States, are required to register under the Investment Advisers Act of 1940 to engage in securities advisory and investment management services in the United States, while domestic banks, including foreign banks incorporated in the United States, are exempt from registration unless they advise registered investment companies.

71. Initial entry into the U.S. market through the establishment or acquisition of a nationally chartered bank subsidiary by a foreign person is permitted in all states. Additionally, there are relatively few limitations on the establishment of an initial federal branch or agency by a foreign bank. Initial entry or expansion by a foreign person through acquisition or establishment of a state-chartered commercial bank subsidiary is subject to limitations in approximately half of the states. The authorities note that most of the states that set limitations are of limited commercial interest to foreign banks, and that, despite these limitations, there is very significant overall participation of foreign banks through state-chartered affiliates. As of 31 March 2005, 41 of the 67 U.S. banks majority-owned by foreign banks were state chartered and 178 of the 228 U.S. branches of foreign banks were state-licensed. Foreign banks may establish representative offices in approximately two thirds of the states.

72. The Nationwide State and Federal Supervisory Agreement of 1996 established a series of principles to promote coordination in the supervision of interstate banks. New recommended practices incorporating procedures and techniques used by the Federal Reserve in working with the states in supervising state-chartered banking organizations, were introduced in June 2004.56 The recommended practices are expected to assist in continued implementation of the principles and goals of the Agreement and to enhance the overall coordinated state-federal supervision of state-chartered banks.

73. The USA PATRIOT Act established new and enhanced measures to prevent, detect, and prosecute money laundering and terrorism, generally through amendments to the Bank Secrecy Act that require financial institutions, such as banks, savings associations, and credit unions, to have customer identification programmes. New Bank Secrecy Act examination procedures were introduced in October 2003 and July 2004.57 The Fair and Accurate Credit Transactions Act (P.L. 108-159 of 2003), amended the Fair Credit Reporting Act (15 USC 1681 et seq.), to increase the accuracy of credit reports, prevent identity theft, and restrict the marketing of financial products using

54 WTO document GATS/EL/90/Suppl.3, 26 February 1998.55 WTO document TN/S/O/USA, 9 April 2003.56 Federal Reserve Board (2004c).57 Federal Reserve Board (2004b).


sensitive information that is shared with affiliates.58 In June 2005, the Federal Financial Institutions Examination Council issued the Bank Secrecy Act/Anti-Money Laundering (BSA/AML) Examination Manual. The manual is a compilation of existing regulatory requirements, supervisory expectations, and sound practices in the BSA/AML area.

74. The four federal banking agencies were expected to publish in the first quarter of 2006 a notice of proposed rulemaking with respect to the U.S. implementation of the Basel II Framework, by which banking organizations subject to the framework would begin to operate beginning in January 2008.59

(c) Securities services

75. Securities services in the United States are governed by the Securities Act of 1933, the Securities Exchange Act of 1934, the Trust Indenture Act of 1939, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and the Sarbanes-Oxley Act of 2002. The Securities Exchange Act of 1934 grants the Securities and Exchange Commission (SEC) regulatory authority over U.S. securities markets and dealers. The Act gives the SEC broad authority over all aspects of the securities industry, including the power to register, regulate, and oversee securities self-regulatory organizations (SROs), such as the various stock exchanges. SROs must create rules that allow for disciplining members for improper conduct and for establishing measures to ensure market integrity and investor protection. The SEC reviews and approves SRO proposed rules.

76. Foreign and domestic broker-dealers who wish to solicit business with U.S. persons, are generally required to register with the SEC although foreign broker-dealers are exempt from registration requirements under certain circumstances. National treatment is granted to foreign broker-dealers regarding registration with the SEC. Most states require broker-dealers to register with the state regulatory authorities. Transfer agents and clearing agencies must also register with the SEC.

77. The Securities Act of 1933 and the Securities Exchange Act of 1934 generally require registration of securities with the SEC prior to their offer or sale; however, foreign issuers can opt to use different registration and periodic reporting forms than those used by domestic users. These forms generally allow foreign issuers to submit periodic reports to the SEC according to home country requirements.

78. Pursuant to the Investment Company Act (ICA) of 1940, the SEC also has regulatory authority over domestic and foreign investment companies, both of which must register with the SEC before selling shares to the U.S. public. A foreign investment company may not publicly offer its shares in the United States unless the SEC issues an order, on a case-by-case basis, permitting the company to register under the ICA, based on a finding regarding enforcement feasibility and public interest, and protection of investors considerations.

79. Under the Investment Advisers Act of 1940, registration with the SEC is generally required for persons or firms, whether foreign or domestic, engaged in the business of providing advice on securities for compensation. Foreign investment advisers registered with the SEC are not required to have a U.S. place of business or set up a U.S. subsidiary or branch, but are subject to certain requirements, such as record keeping, to enable the SEC to monitor compliance with the Investments Advisers Act.60 Foreign investment advisers may register with the SEC regardless of the amount of

58 http://www.consumersunion.org/pub/core_financial_services/000745.html.59 Federal Reserve Board (2005e)60 For purposes of the rule amendment, the adviser to a hedge fund that does not permit its owners to

redeem any portion of their ownership interests in the fund within two years of purchase, would not be subject to registration under the Investment Advisers Act.


assets under management, while domestic advisers generally must register with state regulators if they manage less than US$25 million and do not advise an SEC-registered investment company. In addition, U.S. banks must register as investment advisers only if they advise an investment company registered with the SEC under the ICA, whereas foreign banks generally must register as investment advisers if they provide investment advice for compensation. The United States scheduled a national treatment reservation in the GATS for this different treatment.

80. In December 2004, the SEC adopted a new rule and rule amendments requiring the registration of certain advisers to hedge funds under the Investment Advisers Act. An offshore hedge fund adviser must register with the SEC if it has more than 14 clients who are resident in the United States regardless of the amount of assets the adviser has under management, while U.S. advisers of hedge funds must register if they have more than US$30 million in assets and more than 14 investors.61 In general, SEC-registered foreign advisers to offshore hedge funds are not subject to as many substantive requirements of the Investment Advisers Act as their U.S. counterparts.

81. The Primary Dealers Act of 1988 provides for national treatment of foreign-owned dealers of U.S. government securities, as long as U.S. firms operating in the government debt markets of the foreign country are accorded "the same competitive opportunities" as domestic companies operating in those markets. The United States scheduled an MFN exemption for this reciprocity provision in its GATS Schedule for participation in issues of government-debt securities. The authorities note that, in practice, more foreign institutions have been designated as primary dealers than domestically owned institutions.

82. The Sarbanes-Oxley Act of 2002 (P.L. 107-204) introduced regulatory changes to reinforce supervision of the securities industry, and introduced a number of reforms to enhance corporate responsibility, and financial disclosures, and combat corporate and accounting fraud. In April 2004, the SEC issued final rules for qualified foreign banks to obtain an exemption from the insider lending prohibition under Section 13(k) of the Securities Exchange Act of 1934, as added by Section 402 of the Sarbanes-Oxley Act.62 Until then, only domestic banks insured under the Federal Deposit Insurance Act were permitted, under certain conditions, to obtain an exemption. In March 2005, the SEC amended its rules relating to Section 404 of the Sarbanes-Oxley Act, extending the date by which foreign private issuers must begin to comply with the internal control provisions of Section 404 of the Sarbanes-Oxley Act. Section 404 requires issuers to include in their annual reports a report of management on the company's internal control over financial reporting and an accompanying auditor's report. Section 404 has already been implemented by large U.S. issuers, while smaller U.S. and foreign private issuers must begin to comply with Section 404 requirements for the first fiscal year ending on or after 15 July 2007.

83. Under the Commodity Exchange Act (CEA) and the Commodity Futures Modernization Act of 2000 (CFMA), the Commodity Futures Trading Commission (CFTC) has regulatory authority over futures and options trading in the United States. Generally, persons or entities that solicit or accept orders from persons located in the United States, its territories or possessions, and that accept money, securities or property to margin, guarantee or secure any futures or options contract, must register as Futures Commission Merchants (FCM), or obtain exemption from registration. National treatment is

61 Generally, U.S. advisers of hedge funds with less than US$25 million in assets under management must register with state securities authorities. U.S. advisers of hedge funds with US$25 million or more, but less than US$30 million, in assets under management may register with the SEC.

62 17 CFR Parts 240 and 249, Foreign Bank Exemption from the Insider Lending Prohibition of Exchange Act Section 13(k). The full text is available online at: http://www.sec.gov/rules/final/34-49616.htm.


granted to foreign FCMs.63 A revised minimum net capital requirement was set in August 2004, at the greater of US$250,000 or a computed merchant's risk-based capital requirement.64

84. Rule 30.10 of the CFTC's regulations allows the CFTC to exempt a foreign FCM from compliance with registration requirements if, among other things, the firm's home-country regulator demonstrates that it provides a comparable system of regulation and enters into an information-sharing agreement with the CFTC. Some 18 regulatory and self-regulatory authorities from ten countries currently benefit from Rule 30.10 relief.65 CFTC Rule 30.5 provides similar relief for non-domestic introducing brokers, commodity pool operators, or commodity trading advisors.

85. In August 2004, the CFTC published a rule to clarify when foreign futures and options brokers who are members of a foreign board of trade must register or obtain an exemption from registration. In general, registered or exempt persons may offer or sell foreign exchange-traded futures and option products to persons located in the United States, its territories or possessions without additional approvals, although special procedures apply in some cases, e.g., security index and foreign government debt futures and option products. Foreign Government debt instruments issued by 21 countries have been designated as exempted securities.66

(d) Insurance services

86. The U.S. insurance services sector is regulated primarily at the state level. Insurance companies, agents, and brokers must be licensed under the law of the state in which the risk they intend to insure is located, and are authorized to offer insurance services only in the state where they are licensed. In addition, in some states, for some types of insurance, insurers must submit rate filings to receive approval from state regulators for the premium rates they may charge. Licensing requirements differ among states and by line of insurance, although all states accept a Uniform Certificate of Authority (UCAA) form (see below). The authorities note that, although a licence is required in each state where an insurer does business, primary responsibility for company oversight remains with the state regulator where the insurer is domiciled and, in practice, once an insurer establishes operations in its state of domicile, other states rely on that state regulator for primary oversight responsibilities, facilitating licensing in other states.

87. As listed in the U.S. GATS Schedule, a federal tax on insurance policies covering U.S. risks is imposed at a rate of 1% of gross premiums on all life insurance and reinsurance, and at 4% of gross premiums with respect to non-life insurance when the insurer is not subject to U.S. net income tax on the premiums.

88. The U.S. insurance market is open to foreign direct investment through acquisition of an insurance company licensed in a given state. Market access for foreign companies may also take place through incorporation in a given state as a subsidiary of a foreign insurance company, or as a branch of a foreign insurance company. Minnesota, Mississippi, and Tennessee do not have a mechanism for licensing initial entry of a non-U.S. insurance company as a subsidiary; the authorities indicate that they could, however, accord such rights if the company has been licensed in another U.S.

63 As at 30 September 2004, 95 foreign brokers were registered with the CFTC (out of 8,699 brokers); 31 foreign floor traders (out of 1,522); and 1,948 foreign associated persons (out of 50,757). Six foreign firms were registered as FCMs, out of a total of 215 (CFTC, 2004).

64 The CFTC has proposed to amend these requirements (Federal Register Vol. 69, No. 155, pp. 49784-49800, 12 August 2004. Available online at: http://www.cftc.gov/files/foia/fedreg04/foi040812a. pdf.

65 Australia, Brazil, Canada, France, Germany, Japan, New Zealand, Singapore, Spain, and the United Kingdom. Information available online at: http://www.cftc.gov/cftc/cftcreports.htm.

66 Argentina, Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Germany, Ireland, Italy, Japan, Mexico, the Netherlands, New Zealand, Spain, Sweden, Switzerland, the United Kingdom, and Venezuela.


state. Thirteen states do not have a mechanism for licensing initial entry of a non-U.S. insurance company as a branch; however, they could accord such rights if the company has been licensed in another state.67 For branches, operations are limited in principle to writing premiums based on the capital deposited in each state where it intends to do business. In practice this requirement is often waived, particularly if the applicant has a qualifying deposit in another state.

89. Although companies must be licensed in a particular state to conduct insurance business within its borders and across its borders by mail, telephone, or over the Internet, some residency requirement exceptions are in place; they vary according to the state. For example, several states exempt certain large industrial placements, MAT (marine, aviation, or transport insurance) or "surplus lines" insurance. Under certain specific conditions and with some exceptions, foreign reinsurers may write insurance in the United States even when not licensed in a particular state. Some states apply residency requirements to brokers and suppliers of other services auxiliary to insurance; a few states apply U.S. citizenship requirements.

90. Pursuant to the Gramm-Leach-Bliley Act, and in an effort to streamline the licensing of insurance agents and brokers, a majority of states have implemented a reciprocal licensing system. As of August 2004, all states except New Mexico, plus Guam, had passed the Producer Licensing Model Act (PLMA) or other licensing laws with the intent of satisfying the reciprocity licensing mandates of GLB Act.68 Also, 42 states had been certified by the NAIC as meeting the requirements for producer licensing reciprocity under the GLB Act. Pursuant to the Declaration of Reciprocity and the PLMA, a system of reciprocal licensing is being implemented whereby a resident producer may obtain a non-resident licence through a uniform application process.

91. The NAIC has implemented the Uniform Treatment Project through which participating states agreed to license non-resident producers, who are in good standing in their resident states, without imposing restrictions or qualifications additional to those required of resident producers. To this end, the NAIC developed a Uniform Application for Individual Non-Resident Licence and a Uniform Certificate of Authority Application (UCAA), currently accepted in all states, allowing foreign and domestic insurers to file copies of the same application for admission in all states. The NAIC has also been involved in other uniformity initiatives, such as the System for Electronic Rate and Form Filing (SERF)69; the Coordinated Advertising, Rate and Form Review Authority (CARFRA)70; and the Interstate Insurance Product Regulation Compact.71 A non-profit affiliate of the NAIC, the National Insurance Producer Registry implements an electronic producer database to streamline the producer licensing process.72 In the previous Review of the United States, Members noted the NAIC's efforts toward achieving uniformity among the states' regulatory regimes, but requested further deregulation regarding inter-state insurance businesses. The United States replied that it did not find that state level regulation posed a barrier to trade, and that the U.S. states were welcoming towards foreign investment in insurance.73

67 Arkansas, Arizona, Connecticut, Georgia, Hawaii, Kansas, Maryland, Minnesota, Nebraska, New Jersey, North Carolina, Tennessee, Vermont, and Wyoming.

68 NAIC online information. Available at: http://www.naic.org/GLBA/narab.htm.69 As of June 2005, 49 states and the District of Columbia accepted filings under the SERF.70 As of June 2005, 22 states had accepted filings under the CARFRA.71 As of end 2005, 19 states had enacted into law the Interstate Insurance Product Regulation Compact:

Colorado, Hawaii, Idaho, Indiana, Iowa, Kansas, Maine, Maryland, Nebraska, New Hampshire, North Carolina, Pennsylvania, Rhode Island, Texas, Utah, Vermont, Virginia, Washington, and West Virginia. Puerto Rico has also enacted the compact.

72 As of end 2005, 30 states participated. See NAIC online information, available at: http://www.naic.org.

73 WTO document WT/TPR/M/126/Add.3, 22 November 2004, p. 222.


92. The Terrorism Risk Insurance Act of 2002 (TRIA, P.L. 107-297), introduced a three-year programme, from 1 January 2003 to 31 December 2005, to pay the federal share of compensation for insured losses resulting from acts of terrorism.74 The federal share of compensation for insured losses of an insurer is 90% of the portion of such losses exceeding the insurer's deductible up to an aggregate maximum of US$100 billion. As of mid 2005, no benefits had been paid nor claims been made under the TRIA.75 On 30 June 2005, the U.S. Treasury released a report that found that TRIA had achieved its goals of stabilizing the private insurance market, but recommended that any extension should expand the role of private insurance systems. A modified two-year TRIA extension until 31 December 2007, the Terrorism Risk Insurance Extension Act of 2005, P.L. 109-144, was passed by Congress in late 2005. The new Act introduced various changes to the TRIA, including a reduction in the federal share of compensation, increases in the aggregate retention limits and the deductible, and the introduction of a programme trigger of aggregate industry insured losses.

(4) TELECOMMUNICATION SERVICES

(i) Institutional framework and market access

93. The Federal Communications Commission (FCC) regulates the entry and operations of telecommunications carriers on the basis of the Communications Act of 1934, as amended by the Telecommunications Act of 1996.76 The FCC rules and regulations are codified in Title 47 of the Code of Federal Regulations. Pursuant to the Communications Act, the FCC has broad authority to regulate in the public interest. Accordingly, the FCC has authority to adopt rules and regulations, to adjudicate disputes, to grant and revoke licences, and to impose penalties and fines for violations of the law.

94. Individual state commissions have the authority to regulate the rates, terms, and conditions of intra-state, non-radio-based basic telecommunications services. At the previous U.S. Trade Policy Review, Japan was concerned that the lack of uniform reporting standards across states was a burden on carriers.77

95. U.S. commitments on basic telecommunications attached to the Fourth Protocol of the GATS cover most services.78 Excluded from the commitments are one-way satellite transmissions of direct to home (DTH) and direct broadcast satellite (DBS) television services, and of digital audio services. The U.S. commitments also include a restriction on granting common carrier radio licences to: (1) foreign governments; (2) non-U.S. citizens; (3) corporations not organized under the laws of the United States; and (4) U.S. corporations of which more than 20% of the capital stock is owned of record or voted by a foreign government, non-U.S. citizens, or a corporation not organized under the laws of the United States. Indirect ownership of common carrier radio licensees by these entities through a U.S. holding company is not subject to limitations. The United States has reserved the right under GATS Article II to discriminate between WTO Members "due to application of reciprocity measures or through international agreements guaranteeing market access or national treatment" for DTH, DBS, and digital audio services.79

96. Under Section 310 of the Communications Act of 1934, common carrier radio licences cannot be granted to or held by non-U.S. citizens, corporations not organized under the laws of the

74.TRIA potential beneficiaries are companies licensed in a U.S. state, and non-licensed companies that are eligible surplus line carriers listed on the Quarterly Listing of Alien Insurers of the NAIC, or that have been approved to offer property and casualty insurance by a federal agency in connection with MAT activities.

75 Congressional Budget Office (2005c).76 47 USC 151 et seq.77 WTO document WT/TPR/M/126/Add.3, 22 November 2004.78 See WTO document GATS/SC/90/Suppl.2, 11 April 1997.79 WTO document GATS/EL/90/Suppl.2, 11 April 1997.


United States, or foreign governments.80 Nor can licences be granted to U.S. corporations of which more than 20% of the capital stock is owned of record or voted by any of these entities. 81 However, licences may be granted to companies set up in the United States that are controlled by holding companies set up in the United States and in which foreign individuals, corporations, or governments own of record or vote more than 25% of the capital stock, unless the FCC finds that such ownership is inconsistent with the public interest (see below).

97. The United States implemented its WTO commitments for satellite services through the DISCO II Order adopted in November 1997.82 These commitments allowed foreign satellite operators to provide satellite services to the U.S. market. In 1999, the FCC streamlined the process by which foreign satellite operators may serve the U.S. market. Foreign operators may request that their satellites be considered for inclusion in the Permitted Space Station List. 83 Satellites on this list may be accessed by any licensed earth station operating in specific bands and consistent with the FCC's technical requirements without further regulatory approval. Exceptions are satellites that provide services excluded from the U.S. commitments at the WTO (DTH, DBS, and digital audio services). There are 24 satellites on the Permitted Space Station List (November 2005). According to the U.S. authorities, several U.S. earth stations have been authorized to communicate with an additional 21 non-U.S.-licensed satellites that are not on the Permitted Space Station List.

98. The FCC requires that foreign satellite operators on the Permitted Space Station List wishing to provide satellite services that are excluded from the U.S. commitments, perform an ECO-SAT analysis. In this analysis, the applicant must show that there are no barriers to entry in the applicant's country for U.S.-licensed satellite operators.84 In the context of this Review, the U.S. authorities noted that at least one satellite, Horizons I at 127 W.L., licensed by Japan, has met the ECO-SAT test. The authorities also noted that the FCC has allowed non-U.S-licensed satellite operators (including the operators of four Canadian-licensed satellites) to enter the U.S. market even though they did not meet the ECO-SAT test, in cases where it found that entry would further the public interest.

(ii) Selected regulatory issues

(a) Public interest analysis and regulatory safeguards

99. Under the Communications Act of 1934, the FCC must conduct a public interest analysis when evaluating applications to: obtain authority to provide facilities-based or resold international services under Section 214; receive authorization to exceed the 25% foreign-ownership benchmark of Section 310(b)(4); or obtain submarine cable landing licences. The public interest analysis conducted in the context of an application by a supplier from a WTO Member relies on an "open entry" standard, whereby the FCC starts from a presumption (subject to rebuttal) that foreign entry does not threaten competition in the U.S. telecommunications market.85 According to Canada, incorporating explicitly

80 47 USC 310.81 47 USC 310.82 Amendment of the Commission’s Regulatory Policies to Allow Non-U.S.-Licensed Space Stations to

Provide Domestic and International Fixed Satellite Services in the United States, Report and Order, IB Docket No. 96-111 (1997) (DISCO II Order).

83 Amendment of the Commission's Regulatory Policies to Allow Non-U.S.-Licensed Space Stations to Provide Domestic and International Satellite Service in the United States, First Order on Reconsideration, IB Docket No. 96-111 (1999) (DISCO II First Reconsideration Order).

84 For more on the ECO-SAT test, see DISCO II Order, paragraph 40.85 Rules and Policies on Foreign Participation in the U.S. Telecommunications Market, Market Entry

and Regulation of Foreign-Affiliated Entities, Report and Order and Order on Reconsideration, IB Docket Nos. 97-142 and 95-22 (1997) (Foreign Participation Order), paragraph 50.


the open entry standard into legislation would provide "the full security of law" to suppliers from WTO Members.86

100. The public interest analysis of applications, including from WTO Members, also involves a consideration of policy concerns raised by federal government agencies in relation to national security, law enforcement, foreign policy, or trade policy issues.87 According to the authorities, no licence has been denied on the basis of such concerns since 1997. The U.S. authorities also note that between September 2000 and May 2004, the FCC granted approximately 700 authorizations to provide international services in the United States to companies with 10% or greater foreign ownership.

101. The FCC maintains several regulatory safeguards to deter conduct by a foreign carrier that would harm competition in the U.S. telecommunications market. These safeguards include the "no special concessions" rule, the international settlements policy, and benchmark and dominant carrier requirements. The no special concessions rule prohibits U.S. international carriers from agreeing to enter into exclusive arrangements with foreign carriers that have sufficient market power to affect competition adversely in the U.S. market. The types of arrangements covered by the no special concessions rule are those that affect traffic or revenue flows to or from the United States. The Foreign Participation Order adopted a presumption (subject to rebuttal) that carriers with less than 50% market share in the foreign market lack such market power.88

102. The FCC's international settlements policy (ISP) governs negotiations between U.S. and foreign carriers for the exchange of international switched traffic. The ISP requires all rate agreements between U.S. and foreign carriers to provide for: an equal division of accounting rates between foreign and U.S. carriers89; the non-discriminatory treatment of U.S. carriers; and a share to U.S. carriers of U.S. inbound traffic proportionate to their share of U.S. outbound traffic. Since March 2004, the FCC has applied its ISP only to routes on which benchmark rates exceed those specified by the FCC (see below).90 ISP-exempt routes are not subject to the no special concessions rule with respect to the terms and conditions under which traffic is settled.

103. The FCC's Benchmarks Order of August 1997 requires U.S. carriers to negotiate the international settlement rates paid to foreign carriers for terminating calls at a level no higher than the specific rates tied to the economic development of the country where calls terminate. 91 Benchmark rates range from US$0.15 per minute for upper-income countries to US$0.23 per minute for lower income countries. A U.S. carrier with an affiliate that has market power in a foreign market will only receive FCC authorization to provide facilities-based switched international services to that market if its affiliate agrees to offer all U.S. carriers a settlement rate that is not higher than the benchmark rate.92 On ISP-exempt routes, FCC rules permit a foreign carrier to offer to its affiliated U.S. carrier a settlement rate that is different from the rate offered to unaffiliated U.S. carriers; however, the foreign carrier must offer all U.S. carriers a settlement rate that is not higher than the benchmark rate.

86 WTO document WT/TPR/M/126/Add.3, 22 November 2004.87 Foreign Participation Order, paragraph 63.88 Foreign Participation Order, paragraph 17.89 The accounting rate system refers to the pricing principles used in interconnection agreements

between international operators, to enable the revenue for international calls to be shared between the operator in the country that originates traffic and the operator in the country that delivers the traffic.

90 International Settlements Policy Reform, International Settlement Rates, Report and Order, IB Docket Nos. 02-324 and 96-261 (2004). The list of international routes that are not subject to the ISP is available at: http://www.fcc.gov/ib/pd/pf/isp_exempt.html.

91 International Settlement Rates, Report and Order (1997) (Benchmarks Order).92 Report and Order on Reconsideration and Order Lifting Stay (1999) (Benchmarks Reconsideration

Order).


104. U.S. carriers classified as dominant due to their affiliation with a foreign carrier that has market power on the foreign end of a U.S. international route are subject to specific requirements in the provision of U.S. international service on that route, including separation and quarterly reporting requirements.93 In 2003, the most recent year for which annual data exist, approximately 14 U.S. carriers reported operating as dominant U.S. international carriers.

105. The Foreign Participation Order foresees the possibility that the FCC's regulatory safeguards would be inadequate in preventing a foreign carrier from harming competition in the U.S. market. Accordingly, the FCC reserves the right to attach other conditions to an authorization or licence. Such conditions could entail additional reporting requirements and prior approval for circuit additions. The U.S. authorities indicated that the FCC has exercised this right only once, in the context of an authorization to provide facilities-based service on the U.S.-Jamaica and U.S.-St. Kitts and Nevis routes.94 In addition, the FCC reserves the right to deny an application in cases where an application poses a "very high risk" to competition in the U.S. market.95 The U.S. authorities have indicated that no specific criteria exist for determining whether an application poses a very high risk, due to the highly fact-specific nature of such a determination.96

106. Under Section 1377 of the Omnibus Trade and Competitiveness Act of 1988, the United States annually reviews trading partners' compliance with their obligations under agreements covering telecommunications entered into with the United States. The 2005 report lists a number of country-specific complaints.97

(b) Unbundled access to network elements

107. Section 251 of the Communications Act of 1934 requires that all "incumbent local exchange carriers" provide requesting carriers with “non-discriminatory access to network elements on an unbundled basis at any technically feasible point on rates, terms, and conditions that are just, reasonable, and non-discriminatory…".98 Section 251 network elements must be priced "based on the cost (determined without reference to a rate-of-return or other rate-based proceeding) of providing interconnection or network element" and "may include a reasonable profit".99 The Act further authorizes the FCC to determine the elements that are subject to unbundling pursuant to Section 251, directing it to consider, “at a minimum”, whether access to proprietary network elements is “necessary”, and whether failure to provide a non-proprietary element on an unbundled basis would “impair” a requesting carrier’s ability to provide service.100 In addition to Section 251, which applies to all incumbent local exchange carriers, Bell Operating Companies must provide unbundled access to the list of network elements specified in Section 271(c)(2)(B) of the Act, known as the “competitive checklist”.

108. In December 2004, the FCC adopted its most recent rules addressing the extent to which incumbent local exchange carriers must to make available elements of their network to other carriers

93 Foreign Participation Order, paragraphs 215-292.94 Cable & Wireless, Inc., Order, Authorization and Certificate (1998), paragraph 19.95 Foreign Participation Order, paragraph 51.96 WTO document WT/TPR/M/126/Add.3, 22 November 2004.97 The report is available online at: http://www.ustr.gov/Trade_Sectors/Telecom-E-commerce/Section_

1377/Section_Index.html.98 47 USC 251 et seq.99 47 USC 252(d)(1). See also Implementation of the Local Competition Provisions in the

Telecommunications Act of 1996; Interconnection between Local Exchange Carriers and Commercial Mobile Radio Service Providers, CC Docket Nos. 96-98, 95-185, First Report and Order (1996) (Local Competition Order).

100 47 USC 251(d)(2).


(usually referred to as "competitive local exchange carriers").101 The rules respond to a March 2004 decision by the U.S. Court of Appeals for the D.C. Circuit that overturned portions of the FCC's unbundling rules as specified in the Triennial Review Order of August 2003.102

109. According to the FCC, the new rules impose unbundling obligations only where the Commission finds that "carriers genuinely are impaired without access to particular network elements and where unbundling does not frustrate sustainable, facilities-based competition. It further notes that this approach ensures the right incentives" for both incumbent and competitive local exchange carriers to invest rationally in the telecommunications market in the way that best allows for innovation and sustainable competition".103

110. Following the adoption of the new rules, unbundling obligations continue to apply to dedicated inter-office transport on routes connecting all but the largest markets, and certain high capacity loops (subject to caps) in all but the largest markets. Incumbent local exchange carriers are not required to provide requesting carriers with unbundled access to mass market local circuit switching. Consequently, the unbundled network element platform or UNE-P (i.e., the combination of an unbundled loop, unbundled local circuit switching, and shared transport), is no longer required, although the pre-existing unbundling obligations associated with local loops remain in place.

111. It has been observed that the unbundled network element platform became carriers' preferred entry strategy after the collapse of the information and communication technology stocks in 2000. 104

The FCC found, however, that reliance solely on UNE-P deterred investment in competing carriers’ own facilities.105 According to the U.S. authorities, this finding partly led the FCC to eliminate unbundled local circuit switching. In making this finding, the FCC also relied on the state of intermodal competition for broadband service, particularly from cable modem services. 106 The authorities also noted that, as a result, the FCC has pursued a policy of creating incentives to broadband deployment since 2003, by not requiring the incumbent local exchange carriers to unbundle new facilities that are designed to provide broadband services to residential customers, such as fiber-to-the-home loops, fiber-to-the-curb loops, the high-frequency portion of the loop used for line sharing, and hybrid loops.107 The FCC has expanded these policies to the unbundling requirements for Bell Operating Companies under Section 271 of the Communications Act of 1934.

112. Carriers using network elements that are no longer required to be made available under the new rules have to migrate their services to alternative facilities within 12 or 18 months, depending on the element involved. During the transition, carriers will retain access to UNE-P, dedicated inter-

101 Unbundled Access to Network Elements, Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, WC Docket No. 04-313, CC Docket No. 01-338, Order on Remand (2004-2005) (Triennial Remand Order).

102 Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, Implementation of the Local Competition Provisions of the Telecommunications Act of 1996, Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Dockets Nos. 01-338, 96-98, 98-14, Report and Order and Order on Remand and Further Notice of Proposed Rulemaking, (2003) (Triennial Review Order).

103 Federal Register, 70 FR 8941, 24 February 2005.104 Bauer (2005).105 Triennial Remand Order, paragraph 220.106 See, for example, Triennial Review Order, paragraph 292.107 See Triennial Review Order, paragraphs 273-97, and Review of the Section 251 Unbundling

Obligations of Incumbent Local Exchange Carriers; Implementation of the Local Competition Provisions of the Telecommunications Act of 1996; Deployment of Wireline Services Offering Advanced Telecommunications Capability, CC Docket Nos. 01-338, 96-98, 98-147, Order on Reconsideration, paragraphs 7-9.


office transport, and high capacity loops, for which unbundling obligations were eliminated, but at a higher ceiling rate.108

(c) Inter-carrier compensation

113. Since 2001, the FCC has been considering measures to reform its inter-carrier compensation regime.109 Inter-carrier compensation is governed by a complex system of rules that differentiate between types of carriers and services.110 Generally, these rules can be classified as "reciprocal compensation" rules, which govern compensation related to local traffic, and "access charge" rules, which apply to long-distance calls. At the previous U.S. Trade Policy Review, Japan called on the FCC to eliminate or reduce "the disparity and inconsistencies" among access charges.111

114. According to the FCC, there is a need to replace the existing "patchwork" of inter-carrier compensation rules with a "unified" approach.112 The FCC also notes that the distinctions between types of traffic, carriers, and communication end points create both opportunities for regulatory arbitrage, and incentives for inefficient investment and deployment decisions.113

115. In March 2005, the FCC issued a "further notice of proposed rulemaking" related to its plans to introduce a unified inter-carrier compensation regime.114 In the context of the reform, the FCC has identified "bill and keep" as a possible alternative approach to inter-carrier compensation. Under this approach, neither of the interconnecting networks charges the other for terminating traffic. Instead, carriers recoup all of the costs of originating and terminating traffic from their customers.

(5) MARITIME TRANSPORT

(i) Main features and competition policy considerations

116. Foreign-flag participation in U.S. water-borne trade continued to increase in volume terms in the period under review, reaching 55.5% in 2003, compared with 53.9% of the total in 2001, and 45.1% in 1991; this includes domestic water-borne transport, reserved for U.S. flag vessels. Considering only foreign water-borne traffic, the share of trade transported in foreign vessels was 97.9%. Water-borne imported cargo was worth reached US$604.6 billion in 2003, while water-borne exports totalled US$202.5 billion; total water-borne cargo accounted for over 40% of the value of U.S. trade. The traditional U.S. trade deficit in freight and port services reached US$17.2 billion in 2004.115

117. Domestic water-borne cargo (on routes covered by the Jones Act) totalled 921.7 million tonnes in 2003, or 43.3% of the U.S. cargo carried by water down from 44.8% in 2001 and 51.6% a decade earlier.116 The U.S.-flag fleet, at 13 million deadweight tons (dwt) and with 412 vessels, was the twelfth largest merchant marine feet in the world as at 1 July 2004. On an ownership basis, the

108 Triennial Remand Order, paragraph 228.109 The term "inter-carrier compensation" refers to the payments among telecommunications carriers

with interconnecting networks for the transport and termination of traffic.110 Developing a Unified Intercarrier Compensation Regime, Further Notice of Proposed Rulemaking,

CC Docket No. 01-92 (2005), paragraph 5.111 WTO document WT/TPR/M/126/Add.3, 22 November 2004.112 CC Docket No. 01-92 (2005), paragraph 3.113 Regulatory arbitrage arises when entities subject to regulation rearrange their transactions to exploit

a more advantageous regulatory treatment, even though such actions, in the absence of regulation, would be viewed as costly or inefficient.

114 Federal Register, 70 FR 15030, 24 March 2005.115 Exports totalled US$37 billion, while imports were US$54.2 billion. BEA online information.

Available at: http://www.bea.doc.gov/bea/international/bp_web/simple.cfm?anon=240&table_id=3&area_id=3.116 MARAD online information. Available at: www.marad.dot.gov/MARAD_statistics.


U.S. fleet is the world's sixth largest, with 931 vessels (at 39.6 million dwt).117 Only 2% of international cargo was carried under the U.S. flag in 2003.

118. The United States did not table an offer in the WTO Negotiations on Maritime Transport Services, suspended in June 1996. It has not tabled an offer with respect to maritime transport services in its initial offer on services in the Doha Development Agenda.118

119. The Maritime Administration (MARAD) of the Department of Transportation promotes the "development and maintenance of an adequate, well-balanced U.S. merchant marine, sufficient to carry the U.S. domestic waterborne commerce and a substantial portion of its waterborne foreign commerce, and capable of serving as a naval and military auxiliary in time of war or national emergency".119 The Federal Maritime Commission (FMC), an independent agency, regulates ocean-borne transport, including ocean transportation intermediaries, and oversees the collective activities of shipping lines (which are not subject to U.S. antitrust laws for both U.S. and foreign operators of liner shipping services with fixed-schedules).120 The FMC is also responsible for regulating rates of government-owned or -controlled carriers. The FMC also investigates and prosecutes malpractice including market-distorting activities. Most of these investigations result in compromise settlement of civil penalties; these amounted to US$3.13 million in FY 2003. The FMC also operates an Alternative Dispute Resolution programme.

(ii) Domestic water-borne trade

120. Section 27 of the Merchant Marine Act of 1920, commonly referred to as the Jones Act, reserves cargo service between two points in the United States (including its territories and possessions), either directly or via a foreign port, for ships that are registered and built in the United States and owned by a U.S. corporation, and on which 75% of the employees are U.S. citizens. The Jones Act does not prevent foreign companies from establishing shipping companies in the United States as long as they meet the requirements with respect to U.S. employees. Domestic passenger services are subject to similar requirements under the Passenger Vessel Services Act of 1886.

121. There are certain exemptions to the application of the Jones Act and the Passenger Vessel Services Act. For example, the Secretary of Transportation may waive the U.S.-built requirements for vessels authorized to carry no more than 12 passengers in a specified area provided certain criteria are met.121

(iii) International water-borne trade

122. Approximately 98% of U.S. ocean-borne foreign trade is carried on foreign-flag vessels. The Shipping Act of 1984, as amended by the Ocean Shipping Reform Act of 1998 (OSRA), is aimed at enhancing competition in the international shipping sector by allowing shipping lines to enter into individual service contracts with importers and exporters without carrier groups being able to restrict this function. The United States has negotiated bilateral maritime agreements with four countries. One such understanding was reached with Brazil in 2005.

117 MARAD online information. Available at: http://www.marad.dot.gov/MARAD_statistics/Country-MFW-7-04.pdf.

118 WTO document, TN/S/O/USA, 9 April 2003.119 MARAD online information. Available at: http://www.marad.dot.gov/welcome/mission.html.120 FMC online information. Available at: http://www.fmc.gov.121 MARAD online information. Available at: http://www.marad.dot.gov/programs/small vessel/

small_vessel_waivers.html.


123. U.S. and foreign operators of liner shipping services and marine terminal operators in the United States benefit from exemptions to antitrust laws, including the Sherman and Clayton Acts (see Chapter III(4)(ii)), with respect to their operations in U.S.-foreign ocean-borne trade. Under the Shipping Act of 1984, agreements among liner operators and marine terminal operators (MTOs) to discuss, fix, or regulate transportation rates, and other conditions of service, or cooperate on operational matters must be filed with the FMC, which is responsible for reviewing the arrangements to avoid anti-competitive behaviour. The FMC has the authority to seek to enjoin agreements it finds substantially anti-competitive. After a fact-finding investigation held in 2002-03, the FMC entered into a settlement agreement with 14 carrier members of the Transpacific Stabilization Agreement, resulting in limitations placed on the matter carriers may coordinate under the Agreement.122

124. Under the OSRA, which introduced competition-enhancing amendments to the Shipping Act of 1984 promoting the use of service contracts with importers and exporters, the FMC is charged with ensuring that common carriers' tariff rates and charges for carriage in U.S.-foreign trade are published electronically and are accessible to the public. The FMC also maintains an electronic system containing service contracts between ocean common carriers and shippers, which are required by law to the filed with the FMC. The FMC granted an exemption in January 2005 from the otherwise-applicable tariff adherence requirements for non-vessel operating common carriers (NVOCCs) that enter into service arrangements with their shippers on an individual basis. The exemption requires NVOCCs to file these rates with the FMC and to publish their essential terms. The FMC also holds the authority to review the rates of government-owned and-controlled ocean common carriers to ensure that the commercial carriers with whom they compete are not unfairly disadvantaged.

125. Under the Foreign Shipping Practices Act of 1988 (FSPA), the FMC is empowered to investigate and address conditions adversely affecting U.S. carriers in foreign trade, where such conditions do not exist for foreign carriers in the United States. The FMC is authorized to investigate and address general or specific conditions adverse to shipping in U.S.-foreign trade under section 19 of the Merchant Marine Act, 1920. In FY 2004, the FMC monitored shipping practices by a number of foreign governments but no action was taken.123 Under the Shipping Act of 1984, the FMC exercises special regulatory oversight on "controlled carriers", i.e., ocean common carriers operating in U.S.-foreign trade that are owned or controlled by foreign governments. In May 2005, the FMC published an updated list that included eight controlled carriers, from Algeria, China (four), India, Singapore, and Sri Lanka.124

126. A number of programmes are in place to allow for the eventual use of the U.S. commercial fleet for defence purposes. The Maritime Security Program (MSP) supports the U.S.-flag merchant marine by providing a fixed payment to U.S.-flag vessel operators. The ten-year MSP provides funding for 47 vessels to ensure that a certain number of militarily useful vessels from the commercial fleet are available to meet U.S. sealift requirements in time of war or national emergencies. Funding of up to US$98.7 million per year is authorized through FY 2005, but must be appropriated by the U.S. Congress every year. In FY 2004, direct payments of US$98.7 million were made by MARAD for the MSP.125 The current MSP expires at the end of FY 2005.

127. A new ten-year programme begins 1 October 2005 and provides funding for 60 ships receiving MSP assistance subject to annual Congressional appropriations. The authorized funding for FY 2006 through FY 2008 is US$2.6 million per vessel annually; it increases to US$2.9 million per vessel annually for FY 2009-11, and US$3.1 million during FY 2012-15.

122 Federal Maritime Commission (2002).123 Federal Maritime Commission (2005).124 Federal Maritime Commission, Controlled Carriers Under the Shipping Act of 1984, Notice, 5 May

2005. http://www.fmc.gov/Dockets/FR%20Notice%202005%20Controlled%20Carrier%20List.htm.125 MARAD (2003a).


128. The Voluntary Intermodal Sealift Agreement (VISA) programme, introduced in January 1997 and sponsored by MARAD, provides the Department of Defense (DOD) with assured access to commercial intermodal capacity during time of war or national emergency. As of 1 March 2005, there were 59 participants in the VISA. MSP participants' vessel capacity makes up to 69% of the VISA capacity. VISA participants receive priority consideration for award of DOD peacetime ocean freight contracts.126

129. The Cargo Preference Act of 1904 requires all items (end products and component parts) procured for or owned by U.S. military departments and defence agencies to be carried exclusively on U.S.-flag vessels. The Cargo Preference Act of 1954 (P.L. 83-664), as amended, requires that at least 50% of the gross tonnage of all government-generated cargo be transported on privately owned, U.S.-flag commercial vessels to the extent such vessels are available at fair and reasonable rates. 127 Under the 1954 Act, ships built or rebuilt abroad must be registered under the U.S. flag for three years to be eligible to carry preference cargoes covered by the Act. This eligibility requirement does not apply to U.S.-flag vessels carrying cargoes under the 1904 Act or Public Resolution 17 (see below). All U.S.-flag vessels that carry preference cargoes participate in the VISA programme. The Cargo Preference Act of 1954 also applies to the Strategic Petroleum Reserve, administered by the Department of Energy, which is required to use U.S.-flag tankers for at least 50% of oil transport.

130. The Food Security Act of 1985 amended the Cargo Preference Act of 1954 to increase the minimum U.S.-flag requirement to 75% of shipments of agricultural cargoes under certain foreign assistance programmes of the USDA and the Agency for International Development. The Food Security Act of 1985 also established the Ocean Freight Differential (OFD) Programme.128 MARAD reimburses the USDA for its share of such costs above 50% of the gross tonnage. OFD payments in FY 2004 totalled US$61 million, down from US$113 million in FY 2003.

131. The Food Security Act of 1985 also foresees an additional reimbursement to the USDA, termed "Excess 20%", applicable if total obligations incurred by the USDA for ocean freight and OFD on exports of agricultural commodities and products under certain agricultural programmes exceed 20% of the value of the commodities exported under these programmes; the reimbursement is made on the excess over 20%. In cargo preference year (CPY, 1 October-30 September) 2003-04, 75% of food aid commodities were transported on U.S.-flag vessels; agricultural cargo preference laws generated US$460 million in revenue for U.S.-flag vessel owners, and employed 113 U.S.-flag vessels. MARAD estimates that most of the 113 participating vessels would probably not be U.S.-flag without the revenues generated by cargo preference cargos.129

132. Public Resolution No. 17 of 1934 provides that where a government agency makes export loans or credit guarantees, the exported products must be carried exclusively in U.S. vessels. The Resolution is applicable to credits of the Ex-Im Bank or other government instruments. Applications for statutory waivers may be made when U.S. vessels are not available within a reasonable time or at reasonable rates. Waivers may be granted for partial use of national-flag vessels of recipient countries, even if U.S.-flag vessels are available, but the ocean carriage of the recipient country may not exceed 50% of the total movement under the credit. Waivers are subject to reciprocal treatment for U.S.-flag vessels on the part of the recipient country.

126 Maritime Administration Office of Statistical and Economic Analysis.127 Agencies may opt for higher preference percentages. See MARAD (2004), p. 35.128 The ocean freight differential (OFD) is defined as the difference between the cost of shipping cargo

on a U.S.-flag vessel as compared with shipping the same cargo on a foreign-flag vessel.129 MARAD (2003a).


(iv) Port services

133. The United States has 361 public ports, which handle most U.S. overseas trade. In 2003, the top 50 ports accounted for 90% of total U.S. cargo tonnage; the 25 top container ports account for over 98% of all U.S. container shipments. Vessel calls to U.S. ports represent 10% of world vessel calls. The volume of traffic into U.S. west coast ports has been increasing rapidly, due mainly to increased loads carried by vessels, stretching the capacity of some ports.130 In mid 2004 as a result of container terminal congestion at the ports of Los Angeles and Long Beach in California, it took between 6-8 days to unload the cargoes from a vessel, twice the normal time. The authorities indicate that port congestion causes many problems, including higher shipping costs and significant cargo transit delays. Port congestion also affects New York and New Jersey.

134. MARADS's Port Development Program has been designed to address the problem of port congestion in the medium run, aiming to double, at least, the volume of cargo handling capacity in every major U.S. port by 2020 to meet growing trade demand.131 MARAD has several initiatives to address the problem, including the Short Sea Shipping programme; the Marine Transportation System (MTS) initiative; the Port Co Conveyance Program; and the Cargo Handling Cooperative Program.132

135. U.S. port services are available on a non-discriminatory basis. The United States does not grant preferential treatment with respect to the use of port and harbour facilities. Vessels from Cambodia, Cuba, Iran, Iraq, Libya, North Korea, and Syria may not enter U.S. ports on national security grounds. The United States maintains an MFN exemption covering restrictions on performance of longshore work by crews of foreign vessels owned and flagged in countries that similarly restrict U.S. crews on U.S.-flag vessels from longshore work.133 The Immigration and Nationality Act of 1952, as amended, prohibits non-U.S.-national crewmembers from performing longshore work in the United States, but provides a reciprocity exception.

136. Under Title I of the Maritime Transportation Security Act of 2002 (P.L. 107-295), commercial vessels arriving in the United States from a foreign port are required to transmit electronically, in advance, information on passengers, crew, and cargo (Chapter III(2)(i)(b)). The Maritime Transportation Security Act of 2004 amended federal shipping law to grant U.S. district courts jurisdiction to restrain violations of certain port security requirements, and authorized the Secretary of Transportation to refuse or revoke port clearance to any owner, agent, master, officer, or person in charge of a vessel that is liable for a penalty or fine for violation of such requirements.

137. Under the Port Security Grants (PSG) Program, owners and operators of U.S. ports and terminals, U.S. inspected passenger vessels and ferries, as well as port authorities and state and local agencies, may benefit from grants from the U.S. Department of Homeland Security, Office of Domestic Preparedness, to improve security for operators and passengers through physical security enhancement.134 In FY 2005, 66 U.S. ports were eligible for funding and US$140.9 million were allocated for the programme.135

130 Vessel capacity calling at U.S. Pacific ports increased by over 30% between 1999 and 2003. (MARAD, 2004).

131 MARAD online information. Available at: http://www.marad.dot.gov/Headlines/factsheets/ PDF%20Versions/Port%20Development-FS.pdf.

132 MARAD online information. Available at: http://www.marad.dot.gov/programs/port.html.133 WTO document S/C/W/71, 24 November 1998.134 Transport and Security Administration online information. Available at: http://www.tsa.gov/

public/.135 U.S. Department of Homeland Security (2005).


(v) Shipbuilding and ship repairs

138. Under the Jones Act, only U.S. shipbuilders may supply ships on domestic routes; the United States was granted an exemption from GATT rules for measures prohibiting the use, sale, or lease of foreign-built or foreign-reconstructed vessels in commercial applications between points in national waters or the waters of an exclusive economic zone. There are no restrictions on foreign investment in U.S. shipyards or ship-repair facilities, but benefits under certain programmes may be contingent upon nationality requirements.

139. MARAD provides financial assistance to ship-owners and U.S. shipyards through the Federal Ship Financing Program (Title XI), established pursuant to Title XI of the Merchant Marine Act, 1936, as amended. This programme, consists of federal government guarantees of private-sector financing or refinancing obligations for ship construction or reconstruction of U.S. and foreign-owned vessels in U.S. shipyards. The guarantee is based on the "actual cost" of the vessels or the technology used in shipbuilding, which generally includes the cost of construction, reconstruction, or reconditioning of the vessel, together with construction period interest and the guarantee fee. 136 The guarantees are up to 87.5% of the value of the project, for up to 25 years depending on the type of project. In FY 2004, new applications from two companies for projects totalling US$178 million were approved, representing US$152 million in guarantees. Three applications were approved in FY 2003 for projects costing US$446.6 million with guarantees of US$345.4 million. On 30 September 2004, Title XI guarantees totalling US$3.5 billion were outstanding, and applications totalling over US$1.5 billion were pending approval.

140. Under the Capital Construction Fund (CCF) and Construction Reserve Fund (CRF), U.S. citizens owning or leasing vessels may obtain tax benefits to construct qualified vessels. The CCF provided tax-deferral benefits to vessel operators in U.S.-foreign commerce, Great Lakes operations, non-contiguous domestic trade, and U.S. fisheries. CCF vessels must be built in the United States and documented under the laws of the United States.137 The stated purpose of the CCF is to make up for the competitive disadvantage operators of U.S.-flag vessels face in the construction and replacement of their vessels relative to foreign-flag operators whose vessels are registered on countries that do not tax shipping income. The CRF is a financial assistance scheme that provides tax-deferral benefits to U.S.-flag operators with respect to gains attributable to the sale or loss of a vessel, provided the proceeds are used to expand or modernize the U.S. merchant fleet.

141. Under the Manufacturing Extension Program, section 8062 of P.L. 108-87, approved 30 September 2003, U.S. naval shipyards are eligible to participate in any manufacturing extension programme financed by funds appropriated by any Act.138

142. At end 2004, there were 135 shipyards and ship-repair facilities in the United States; the major shipyards employed approximately some 78,200 persons. The order book at the end of 2004 was estimated at US$1.2 billion; it comprised seven commercial vessels eligible under the Jones Act, financed under Title XI or the CCF.139 U.S.-flag vessels repaired abroad face a 50% ad valorem duty, assessed on the cost of equipment and non-emergency repairs in foreign countries. U.S.-owned foreign-flag vessels are not subject to the duty, and under the NAFTA and the Chile and Singapore FTAs, this duty was eliminated.

136 MARAD online information. Available at: http://www.marad.dot.gov/TitleXI/crf.html.137 MARAD online information. Available at: http://www.marad.dot.gov/TitleXI/crf.html.138 U.S. Department of Transportation (2005a), Maritime Administration, Compilation of Maritime

Laws, April 2005. Available at: http://www.marad.dot.gov/Publications/05%20reports/MaritimeLaws(2005) qxd.pdf.

139 MARAD (2003b).


143. The Maritime Security Act of 2003 provides for the establishment of a programme to grant financial assistance for the construction in the United States of a fleet of up to five privately owned U.S.-flag product tank vessels, to be operated in foreign trade and capable of carrying militarily useful petroleum products and potentially available for national defence purposes. Assistance is for up to 75% of the actual construction cost of the vessel but no more than US$50 million per vessel; it is contingent upon meeting U.S.-content requirements, i.e. that foreign components of the hull and superstructure do not constitute more than 5% of the total steel weight of the vessel individually or of 10% in aggregate. Applicants for construction assistance must either be a shipyard located in the United States or a U.S. citizen.140 The authorities indicate that no contracts have been awarded to date for new tank vessel construction under the programme, and no funds have been disbursed.

(6) AIR TRANSPORT SERVICES

(i) Main features

144. Over a quarter of U.S. trade, by value is moved via air cargo. U.S. air traffic accounts for about one third of the world aviation market, and over half of the world's 30 busiest airports are located in the United States. Most U.S. airports with commercial services are owned by state or local governments, although some airports are operated through outsourcing and management contracts; this type of arrangement is common in the provision of more limited scope airport services such as terminal and parking area operations, ground transport, building maintenance, advertising, baggage handling, and construction and engineering.

145. There are 78 U.S. domestic scheduled air passenger carriers (14 major, 17 national and 47 regional). U.S. air carriers were severely affected by the 11 September 2001 attacks and the airlines have continued to face financial difficulties during the period under review, affected by rapidly rising fuel prices and sharp competition. In particular, four of the major U.S. airlines (Delta, Northwest, US Airways, and UAL Corporation (United Airlines' parent) were in reorganization under Chapter 11 of the U.S. Bankruptcy Code in October 2005. A low cost airline, ATA Airlines also filed a Chapter 11 petition in October 2004.

146. The Department of Transportation (DOT) publishes statistics on the performance of 31 selected carriers, the major group carriers and the national carriers group. The major passenger carriers have reported a net loss in every year since 2001, and posted a US$3.4 billion loss in the first quarter of 2005. With the exception of 2003, the national passenger carriers have also reported a net loss every year, but reported a US$57 million profit in the first quarter of 2005.141

(ii) Regulatory framework

147. The Office of the Secretary of Transportation (OST) at the DOT has responsibility for air transport policy in the United States. The Federal Aviation Administration (FAA) at the DOT oversees the safety of certified air carriers, and monitors foreign air carriers operating in U.S. territory.142 Anyone who wishes to provide air transport services as a U.S. air carrier must obtain two separate authorizations from the DOT: "economic" authority from the OST and "safety" authority from the FAA. The OST reviews applications to ensure that the carrier is fit, willing, and able to provide air transport. The DOT can take action under its statutory authority to preserve competition.

140 National Defense Tank Vessel Construction Program. Available at: https://voa.marad. dot.gov/ndtvc/.

141 Department of Transportation (2005b).142 Federal Aviation Administration (FAA) online information. Available at: http://www.faa.gov.


148. By statute, U.S. airlines must be under actual control of U.S. citizens.143 Any foreign ownership in a U.S. carrier is limited to a maximum of 25% of voting shares. In addition, the president and at least two thirds of the board of directors and other managing officers must be U.S. citizens. However, on a case-by-case basis, the DOT has allowed foreign citizens to own up to 49% of an airline's stock by using non-voting shares above 25%, provided that actual control remains in the hands of U.S. citizens and an open-skies agreement exists between the United States and the homeland of the foreign investor (e.g. KLM's investment in Northwest in the early 1990s).

149. The provision of domestic air services is permitted only to U.S. carriers. Crews engaged in domestic air passenger and freight service must be U.S. nationals or resident aliens. The "wet" leasing of aircraft (with crew and, typically, maintenance, and insurance) to U.S. carriers is restricted to U.S. companies and U.S. citizens. The Fly America Act (49 USC 40118) requires U.S. government-financed transportation of passengers and cargo to be on U.S.-flag air carriers (a U.S. carrier code-share on a foreign airline is considered as a U.S. carrier service for these purposes), but grants authority for the United States to enter into bilateral or multilateral agreements to allow the provision of such services by foreign air carriers, if such agreement is consistent with U.S. international aviation policy objectives and provides for the exchange of rights or benefits of similar magnitude.

150. Until 31 August 2005, the FAA's Aviation Insurance Program provided coverage for the insurance needs of the U.S. domestic airline industry that could not be met on reasonable commercial terms. The Program is providing war risk hull loss, and passenger, crew, and third-party liability insurance as required by the Homeland Security Act of 2002 as amended by the Consolidated Appropriations Act, 2005.

151. The DOT manages federal support programmes for services to remote areas. The main programmes are the Essential Air Service (EAS) Subsidy Program, under which approximately US$100 million are spent per year144, and the Small Community Air Service Development Pilot Program, under which funds were appropriated for the first time in FY 2002. Under the small community Programme US$19.8 million was available for grant awards in FY 2004 and US$20 million in FY 2005. No limits are set on the amounts of individual awards; since the beginning of the programme, they have ranged from US$85,000 to nearly US$1.6 million. Apart from support at the federal level, incentives may be granted at the state and local level, especially for airports in small and mid-size cities.145

152. The FAA has slot regulations in place at three U.S. airports: New York’s Kennedy and La Guardia airports and Washington's Reagan National Airport. The slot regulations at Kennedy and La Guardia are set to expire on 1 January 2007. The slot restrictions at Ronald Reagan Airport remain in effect with no scheduled expiry date; however, in April 2004, the DOT issued two orders granting 20 slot exemptions, following the requirements of the Vision 100-Century of Aviation Reauthorization Act of 2003, P.L. 108-176.146 Slot administration is handled by the FAA, although the DOT's Office of Aviation Analysis is responsible for allocation and exemptions.

153. The authorities note that, due to delays that occurred at Chicago's O'Hare International Airport after slots were lifted there on 1 July 2002, the FAA reached agreements with U.S. airlines serving O'Hare to reduce or adjust their scheduled operations. The agreements were incorporated in a FAA order issued 16 august 2004 and the airlines have been operating in accordance with its terms.

143 49 U.S.C. 40102 (a)(15).144 DOT, Office of Aviation Analysis, Essential Air Service Program, http://ostpxweb.dot.gov/

aviation/X-50%20Role_files/EAS.htm#Reports.145 GAO (2003).146 USDOT Order 2004-4-1 and 2004-4-2, 1 April 2004. Available online at: http://ostpxweb.dot.gov/.


Foreign airlines are exempt from the order, but must comply with the FAA's designation of O'Hare as a Schedules Facilitated Airport. The FAA is undertaking a rulemaking proceeding to address the issue of future limitations on scheduled operations at O'Hare.

154. Air navigation services are supplied mainly by the FAA, but the FAA contracts out to private companies to staff air traffic control towers at small airports. In 2004, out of 522 control towers in the United States, 231 were operating under a contract.147 The Air Traffic Organization (ATO), a performance-based organization within the FAA, was established in February 2004 to oversee the U.S. air traffic system.148 In its first Annual Performance Plan, the ATO noted that it had lowered operational unit costs while increasing the arrival capacity at 35 targeted airports and enhancing safety.149

(iii) International agreements

155. The United States has GATS commitments with respect to aircraft repairs and maintenance, and has scheduled MFN exemptions with regard to the sale and marketing of air transport services and the operation and regulation of CRS services. In its bilateral air-transport agreements the United States has inserted clauses on ground handling.

156. The United States has bilateral aviation agreements with 100 countries. Many are open-skies agreements (OSAs); the United States has negotiated 74 such agreements.150 The DOT believes that OSAs provide an environment that produces the most competitive and price-sensitive service for consumers; OSAs are also viewed by the DOT as a necessary, although not the only, prerequisite for antitrust immunity to be granted to alliances with foreign airlines. The United States participates, together with Brunei, Chile, New Zealand, Samoa, Singapore, and Tonga in the APEC Multilateral Open Skies Agreement, signed in May 2001.

147 Air Traffic Organization (2005).148 ATO online information. Available at: http://www.ato.faa.gov/DesktopModules/PrintArticle.aspx ?

Itemid=224&srcid=0.149 Air Traffic Organization (2005).150 The list of Open-Skies Agreements entered into by the United States is available online at:

http://ostpxweb.dot.gov/aviation/intav/avtnintl.htm.


REFERENCES

Air Traffic Organization (2005), Annual Performance Report 2004, March. Available at: http://www.faa.gov/library/reports/media/APR_year1.pdf.

APHIS (2004), Process for Foreign Animal Disease Status Evaluations, Regionalization, Risk Analysis, and Rulemaking. Available at: http://www.aphis.usda.gov/vs/ncie/pdf/region-memo0504 final.pdf.

Bauer, J. M. (forthcoming), "Unbundling Policy in the United States: Players, Outcomes and Effects". Communications & Strategies 2005(1). Available at: http://quello.msu.edu/wp/wp-05-02.pdf.

Bureau of Industry and Security (2004), BIS Annual Report 2004. Available at: http://www.bis.doc.gov/news/2005/AnnualRept/index.htm.

CFTC (2004), Annual Report 2004. Available at: http://www.cftc.gov/files/anr/anr2004.pdf.

Congressional Budget Office (2005a), Budget for the Fiscal Year 2006. Available at: http://www.gpoaccess.gov/usbudget/fy06/pdf/budget/budget.zip.

Congressional Budget Office (2005b), CBO's Current Budget Projections, 15 August. Available at: http://www.cbo.gov/showdoc.cfm?index=1944&sequence=0.

Congressional Budget Office (2005c), CBO Testimony: Statement of Douglas Holtz-Eakin, Director, Federal Terrorism Reinsurance, before the Committee on Banking, Housing, and Urban Affairs, United States Senate, 14 April. Available at: http://banking.senate.gov/_files/ACF1F2C.pdf.

Congressional Budget Office (2005d), Monthly Budget Review, September. Available at: http://www.cbo.gov/ftpdocs/66xx/doc6632/09-2005-MBR.pdf.

Congressional Budget Office (2005e), The Budget and Economic Outlook: Fiscal Years 2006 to 2015, January. Available at: http://www.cbo.gov/showdoc.cfm?index=6060&sequence=2.

Customs and Border Protection (2004), What Every Member of the Trade Community Should Know About: Entry. Available at: http://www.cbp.gov/xp/cgov/toolbox/legal/informed_compliance_pubs/.

Customs and Border Protection (2005), "Future ACE Features" in ACE Modernization Monitor, Vol. 5 (Spring). Available at: http://www.cbp.gov/xp/cgov/toolbox/about/modernization/newsletters/ mod_monitor/.

Daly, Michael (2005), "The WTO and Direct Taxation", WTO Discussion Paper No. 9. Available at: http://www.wto.int/english/res_e/reser_e/discussion_papers_e.htm.

Department of Commerce (2003), International Trade Administration, Notice of Final Modification of Agency Practice Under Section 123 of the Uruguay Round Agreements Act, 68 FR 37125, 23 June.


Dismukes, Robert, and Joseph Glauber (2005), "Why Hasn't Crop Insurance Eliminated Disaster Assistance?", Amber Waves, June. Available at: http://www.ers.usda.gov/AmberWaves/ June05/Features/WhyHasntCropInsurance.htm.

Executive Office of the President (2005a), Office of Management and Budget, Statement of Administration Policy. H.J. Res. 27 – Withdrawing Support for the WTO Agreement, 8 June. Available at: http://www.whitehouse.gov/omb/legislative/sap/109-1/hjr27sap-h.pdf.

Executive Office of the President (2005b), Report to the Congress on the Extension of Trade Promotion Authority Consistent With Section 2103(c)(2) of the Trade Act of 2002, Washington, D.C., 30 March.

Export-Import Bank of the United States (2004), Competitiveness Report for 2003. Available at: http://www.exim.gov/about/reports/compet/index2003.htm.

Federal Maritime Commission (2002), Fact Finding Investigation No. 25, Practices of Transpacific Stabilization Agreement Members Covering the 2002-2003 Service Contract Season, 12 September. Available at: www.fmc.gov.

Federal Maritime Commission (2005), 43rd Annual Report for Fiscal Year 2004.

Federal Procurement Data System (2004a), Federal Procurement Report. Available at: http://www. fpdc.gov/fpdc/FPR2003a.pdf.

Federal Procurement Data System (2004b), FY 2004 Federal Awards by Department. Available at: http://www.fpdsng.com/downloads/top_requests/total_federal_spending_by_dept.pdf.

Federal Reserve Board (2004a), Division of Banking Supervision and Regulation, SR 04-18, 6 December, Bank Holding Company Rating System. Available at: http://www. federalreserve. gov/boarddocs/srletters/2004/sr0418.htm.

Federal Reserve Board (2004b), New Bank Secrecy Act Examination Procedures Relating to Section 326 of the USA PATRIOT Act., SR 04-13, 28 July. Available at: http://www.federalreserve. gov/boarddocs/srletters/2004/sr0413.htm.

Federal Reserve Board (2004c), Supervision of State-Chartered Banks, SR 04-12, 30 June. Available at: http://www.federalreserve.gov/boarddocs/srletters/2004/sr0412.htm.

Federal Reserve Board (2005a), Remarks by Chairman Alan Greenspan, Current Account, at Advancing Enterprise 2005 Conference, London, England. 4 February. Available at: http://www. federalreserve.gov/boarddocs/speeches/2005/20050204/default.htm.

Federal Reserve Board (2005b), The Federal Reserve System: Purposes and Functions. Available at: http://www.federalreserve.gov/pf/pf.htm.


Federal Reserve Board (2005c), U.S. Current Account Deficit: Causes and Consequences. Remarks by Vice Chairman Roger W. Ferguson, Jr. to the Economics Club of the University of North Carolina at Chapel Hill, Chapel Hill, North Carolina, 20 April. Available at: http://www.federalreserve.gov /boarddocs/speeches/2005/20050420.

Federal Reserve Board (2005d), Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Office of Thrift Supervision, Banking Agencies to Perform Additional Analysis Before Issuing Notices of Proposed Rulemaking Related to Base II, Joint Press Release, 29 April. Available at: http://www.federalreserve.gov/boarddocs/press/bcreg/2005/20050429/default.htm.

Federal Reserve Board (2005e), Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency, Office of Thrift Supervision, Banking Agencies Announce Revised Plan for Implementation of Basel II Framework, Joint Press Release, 30 September. Available at: http://www.federalreserve.gov/boarddocs/press/bcreg/2005/20050930/default.htm.

Federal Trade Commission/Department of Justice (2004), Annual Report to Congress: Fiscal Year 2004. Available at: www.ftc.gov.

Federal Trade Commission (2003), To Promote Innovation: The Proper Balance of Competition and Patent Law and Policy, October. Available at: http://www.ftc.gov/os/2003/10/innovationrpt.pdf.

Foreign Agricultural Service (2001), Report to Congress on Food Aid Monetization. Available at: http://www.fas.usda.gov/excredits/pl480/monetization.pdf.

Foreign-trade Zones Board (2005), 65th Annual Report of the Foreign-trade Zones Board to the Congress of the United States, January. Available at: http://ia.ita.doc.gov/ftzpage/annual-report.html.

GAO (2003), Commercial Aviation: Factors Affecting Efforts to Improve Air Service at Small Community Airports, No. GAO-03-330, Washington, D.C., January.

GAO (2005a), Enhancements to the Implementation of Exon-Florio Could Strengthen the Law's Effectiveness. Report to Congressional Requesters, GAO-05-686, September. Available at: http://www.gao.gov/new.items/d05686.pdf.

GAO (2005b), Issues and Effects of Implementing the Continued Dumping and Subsidy Offset Act , GAO-05-979, September. Available at: http://www.gao.gov/new.items/d05979.pdf.

Glauber, Joseph W. (2005), "Crop Insurance Reconsidered", American Journal of Agricultural Economics 86(5).

IMF (2003), United States of America, Selected Issues, Country Report No. 03/245, Washington D.C., August.

IMF (2005a), United States of America, Selected Issues, Washington D.C., 1 July.


IMF (2005b), United States of America, Staff Report for the 2005 Article IV Consultation, Washington D.C., 30 June.

IMF (2005c), World Economic Outlook, Washington D.C., April.

IMF (2005d), World Economic Outlook, September. Available at: http://www.imf.org/external/ pubs/ft/weo/2005/02/pdf.

MARAD (2003a), Annual Report 2003. Available at: http://www.marad.dot.gov/ Publications/AnnualReport/AR%2003/MARAD%20ANNUAL%20REPORT03.pdf.

MARAD (2003b), Report on Survey of U.S. Shipbuilding and Repair Facilities. Available at: http://www.marad.dot.gov/.

MARAD (2004), Vessel Calls at U.S. Ports, 2003, July. Available at: http://www.marad. dot.gov/MARAD_statistics/vcalls2003.pdf.MARAD (2005), Compilation of Maritime Laws, April. Available at: http://www.marad.dot.gov/ Publications/05%20reports/MaritimeLaws(2005)qxd.pdf.

McIntyre, Kevin, and Michael B. Moore (2004), Seventh Annual Report on Federal Agency Use of Voluntary Consensus Standards and Conformity Assessment. Available at: http://standards. gov/NTTAA/index.cfm?do=NTTAAReports.main.

Merrill, Stephen A., Richard C. Levin, and Mark B. Myers (Editors), (2004) Committee on Intellectual Property Rights in the Knowledge-Based Economy, Board on Science, Technology, and Economic Policy, Policy and Global Affairs Division, National Council of the National Academies, A Patent System for the 21st Century, The National Academies Press, Washington, D.C.

OECD (2004), Agricultural Policies in OECD Countries: At a Glance, Paris.

OECD (2005a), Agricultural Policies in OECD Countries: Monitoring and Evaluation 2005, Paris.

OECD (2005b), Annual Report on Competition Policy Developments in the United States, 2003-2004 (DAF/COMP(2005)18/07), May. Available at: http://www.oecd.org/dataoecd/51/41/351113 34.pdf.

OECD (2005c), Economic Outlook, Paris, May.

OECD (2005d), Economic Survey - United States 2004, Paris.

OECD (2005e), United States – Report on Competition Law and Institutions (2004) (DAF/COMP(2005)13), 20 January.

Office of Management and Budget (2004), "Final Information Quality Bulletin for Peer Review". Available at: http://www.whitehouse.gov/omb/inforeg/peer2004/peer_bulletin.pdf [18 August 2005].


Office of Management and Budget (2005), Statement of Administration Policy. H.J. Res. 27 - Withdrawing Support for the WTO Agreement, 8 June. Available at: http://www.whitehouse.gov/ omb/legislative/sap/109-1/hjr27sap-h.pdf and http://www.gop.gov/Committeecentral/bills/hjres27. asp.

SBA (2004), Performance and Accountability Report: Fiscal Year 2004. Available at: http://www.sba.fov/PAR.pdf.

U.S. Department of Agriculture (2000), Guidelines for Pathway-Initiated Pest Risk Assessments. Available at: http://www.aphis.usda.gov/ppq/pra/commodity/cpraguide.pdf.

U.S. Department of Agriculture (2003), Process for Evaluating the Equivalence of Foreign Meat and Poultry Food Regulatory Systems, October. Available at: http://www.fsis.usda.gov/OPPDE/IPS/ EQ/EQProcess.pdf.

U.S. Department of Agriculture (2005a), "USDA Proposes Legislative Changes to Cotton and Export Credit Programs to Comply with WTO Findings", 5 July. Available at: http://www.usda.gov [11 July 2005].

U.S. Department of Agriculture (2005b), "Why Hasn't Crop Insurance Eliminated Disaster Assistance?" Amber Waves, June. Available at: http://www.ers.usda.gov/AmberWaves/June05/ Features/WhyHasntCropInsurance.htm.

U.S. Department of Commerce, BEA (2005), Survey of Current Business, various issues.

U.S. Department of Homeland Security (2005), Fiscal Year 2005 Port Security Grant Program. Available at: http://www.passengervessel.com/downloads/2005/round_5/port_security_grants_05. pdf.

U.S. Department of Transportation (2005a), Maritime Administration, Compilation of Maritime Laws, April. Available at: http://www.marad.dot.gov/publications/05%20reports/MaritimeLaws(2005)qxd. pdf.

U.S. Department of Transportation (2005b), Quarterly Financial Review – System Majors, and Passenger Financial Review – Passenger Nationals. Available at: http://ostpxweb.ost.dot.gov/ aviation/index.htlm.

USITC (2003), The Impact of Trade Agreements: Effect of the Tokyo Round, U.S.-Israel-FTA, U.S.-Canada FTA, NAFTA, and the Uruguay Round on the U.S. Economy, Investigation No. TA-2111-1, Washington, D.C.

USITC (2004a), Import Injury Investigations Case Statistics (FY 1980-2003), November. Available at: http://www.usitc.gov/trade_remedy/USITC_Stat_Report-11-04-PUB.pdf.

USITC (2004b), Section 337 Investigations, Frequently Asked Questions, Publication No. 3,708, July. Available at: http://www.usitc.gov/trade_remedy/int_prop/pub3708.pdf.


USPTO (2004), Annual Report 2004. Available at: http://www. uspto.gov/web/offices/com/annual/ 2004/2004annualreport.pdf.

USTR (2005a) 2005 Trade Policy Agenda and 2004 Annual Report of the President of the United States on the Trade Agreements Program, March. Available at: http://www.ustr. gov/Document_Library/Reports_Publications/2005/2005_Trade_Policy_Agenda/Section_Index.html?ht=trade%20policy%20agenda%20trade%20policy%20agenda.

USTR (2005b), 2005 Comprehensive Report on U.S. Trade and Investment Policy Toward Sub-Saharan Africa and Implementation of the African Growth and Opportunity Act, Washington D.C., May. Available at: http://www.ustr.gov/assets/Trade_Development/Preference_Programs/ AGOA/asset_ upload_file215_7746.pdf.5.

USTR (2005c), Facts on Textiles, Benefits from Establishing Quotas on Certain Chinese Apparel Exports to the United States, Policy Brief, November. Available at: http://www.ustr.gov/assets/ Document_Library/Fact_Sheets/2005/asset_upload_file813_8339.pdf.

USTR (2005d), Special Section 301 Report. Available at: http://www.ustr.gov/Document_ Library/Reports_Publications/2005/2005_Special_301/Section_Index.html.

USTR (2005e), State Government Procurement and Free Trade Agreements: A New Sub-Federal Reciprocity Approach That Preserves State Sovereignty and Provides Direct Benefits to States, Trade Facts, 24 February. Available at: http://www.ustr.gov/assets/Document_Library/Fact_Sheets/ 2005/asset_upload_file46_7283.pdf.

USTR online information, "Facts on Doha Round". Available at: http://www.ustr.gov/assets/ Document_Library/Fact_Sheets/2005/asset_upload_file919_8128.pdf [7 December 2005].

WTO (2004), Trade Policy Review: United States, Geneva.

WTO (1996), Trade Policy Review: United States, Geneva.

Report by the Secretariat - SICE the OAS Foreign Trade …€¦ · Web view · 2013-11-26trade...

Documents

Transcript of Report by the Secretariat - SICE the OAS Foreign Trade …€¦ · Web view · 2013-11-26trade...