Order Code IB10123
CRS Issue Brief for Congress
Received through the CRS Web
Trade Negotiations in the 108th Congress
Updated September 25, 2003
Ian F. Fergusson
Foreign Affairs, Defense, and Trade Division
Lenore M. Sek
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress

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CONTENTS
SUMMARY
MOST RECENT DEVELOPMENTS
BACKGROUND AND ANALYSIS
U.S. Negotiating Strategy
Notification and Implementing Bills
Notification Requirements
Before the Start of Negotiations
During Negotiations
Before Signing the Agreement
Entering Into the Agreement
Implementing Bill
Submission of Draft Implementing Bill
“Trade Authorities” or “Fast-Track” Procedures
Status of Agreements and Negotiations
Multilateral Trade Negotiations
Regional Negotiations
Free Trade Area of the Americas
U.S.-Central American FTA
U.S.-Southern African Customs Union FTA
Bilateral Negotiations and Agreements
U.S.- Chile FTA
U.S.- Singapore FTA
U.S.-Moroccan FTA
U.S.-Australian FTA
Bahrain
Dominican Republic
Other Potential Trade Agreements
Middle East - North African Free Trade Agreement
Enterprise for ASEAN
Taiwan
LEGISLATION
CHRONOLOGY
FOR ADDITIONAL READING
CRS Products
Other Reading

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Trade Negotiations in the 108th Congress
SUMMARY
On September 3, 2003, President Bush
The Chile and Singapore free-trade
signed legislation implementing bilateral free-
agreements are among at least eight trade
trade agreements (FTA) with Chile (P.L. 108-
initiatives underway. The broadest initiative
77) and Singapore (P.L. 108-78). This legis-
is the multilateral trade negotiations in the
lation (Chile–H.R. 2738/; Singapore–H.R.
World Trade Organization (WTO). In No-
2739) was passed by the House on July 24 and
vember 2001, trade ministers from 142 mem-
by the Senate on July 31. On August 4, 2003,
ber countries of the WTO agreed to launch a
the Administration notified Congress of its
new round of trade talks covering market
intent to begin negotiations for an FTA with
access, WTO institutional rules, and
the Dominican Republic and Bahrain. The
developing-country issues. The WTOs 5th
Bush Administration is making these and
Ministerial at Cancún, Mexico on September
other bilateral and regional FTAs more impor-
10-14, 2003 ended without agreement on
tant elements of U.S. trade policy, a strategy
negotiating modalities, and has put in doubt
known as “competitive liberalization.” This
the deadline for final agreement of January 1,
strategy is designed to push forward trade
2005.
Another major initiative is the Free
liberalization simultaneously on bilateral,
Trade Area of the Americas. In April 1998,
regional and multilateral fronts. It is meant to
34 Western Hemisphere nations formally
spur trade negotiations by liberalizing trade
initiated negotiations to tariffs and nontariff
with countries willing to join FTAs, and to
trade barriers in the hemisphere. Negotiators
pressure other countries to negotiate
have released two drafts of an agreement-in-
multilaterally. Some argue, however, that the
progress. Trade ministers will meet again in
accent on regional and bilateral negotiations
Miami on November 20-21, 2003. The dead-
undermines the multilateral forum and in-
line for a final agreement is January 2005.
creases the risk of trade diversion away from
The United States is also participating in
competitive countries that are not in the trade
regional free-trade negotiations with the
bloc.
Central American Common Market (CACM)
and with the Southern African Customs Union
Most of the current trade negotiations
(SACU). The U.S.-CACM talks began on
began after trade promotion authority (fast-
January 8, 2003, and both sides have said the
track authority) legislation was enacted in
talks can be completed by year-end. The U.S.-
2002. Under that legislation, if the President
SACU negotiations began on June 3, 2003. In
meets notification requirements and other
addition to the Chile and Singapore FTAs, the
conditions, Congress will consider a bill to
Administration is negotiating on FTAs with -
implement a trade agreement under an expe-
Morocco and with Australia. The Morocco
dited procedure (no amendment, deadlines for
talks began on January 21, 2003, and the
votes). The notification requirements include
Australia talks began on March 17, 2003.
a minimum 90-day notice before starting
There are several other trade initiatives under
negotiations and a minimum 180-day notice
discussion but not underway. These include a
(90 days for Chile and Singapore) before
U.S. -Middle East FTA and an FTA with
signing a trade agreement.
countries in southeast Asia.
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MOST RECENT DEVELOPMENTS
! The seventh round of U.S.-CAFTA talks were held in Managua, Nicaragua
on September 15-19, 2003.
! On September 14, 2003, the WTO 5th Ministerial meeting at Cancún,
Mexico adjourns after failing to reach agreement on agriculture and
‘Singapore’ issues.
! On September 3, 2003, President Bush signed the U.S.- Chile (P.L.108-77)
and U.S.- Singapore (P.L. 108-78) Free Trade Agreement Implementation
Acts.
! The second round of U.S.- SACU FTA talks were held in South Africa on
August 4-6, 2003.
! On August 4, 2003, the Administration notified Congress of its intent to
begin negotiations for an FTA with the Dominican Republic and Bahrain.
BACKGROUND AND ANALYSIS
For over 50 years, U.S. trade officials have negotiated multilateral trade agreements to
achieve lower trade barriers and rules to cover international trade. In the past two decades,
U.S. officials also negotiated four free-trade agreements with neighboring countries or
strategic partners.1 Currently, the Bush Administration is making bilateral and regional free-
trade agreements more important elements of its trade policy. The multilateral arena is no
longer the only means, or perhaps even the principal means, by which the United States is
pursuing the benefits of trade.2
U.S. Negotiating Strategy
U.S. negotiating strategy is based on a concept known as “competitive liberalization.”
As explained by the Administration, this strategy is designed to push forward trade
liberalization on multiple fronts: bilateral, regional and multilateral. It is meant to further
trade negotiations by liberalizing trade with countries willing to join free trade agreements,
and to put pressure on other countries to negotiate in the WTO. As United States Trade
Representative (USTR) Robert B. Zoellick has written,
1 The four agreements are the U.S.-Israel Free Trade Agreement (effective 1985), the Canada-U.S.
Free Trade Agreement (effective 1989), the North American Free Trade Agreement (effective 1994)
and the U.S.-Jordan Free Trade Agreement (effective 2001).
2 For further information, see CRS Report RL31356, Free Trade Agreements: Impact on U.S. Trade
and Implications for U.S. Trade Policy, by William H. Cooper.
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we want to strengthen the hand of the coalition pressing for freer trade. It would be fatal
to give the initiative to naysayers abroad and protectionists at home. As we have seen in
the League of Nations, the UN, the IMF and the World Bank, international organizations
need leaders to prod them into action.3
However, others argue that the accent on regional and bilateral negotiations will
undermine the World Trade Organization (WTO) and increase the risk of trade diversion.
Trade diversion occurs when the lower tariffs under a trade agreement cause trade to be
diverted away from a more efficient producer outside the trading bloc to a producer inside
the bloc. What results from the plethora of negotiated FTAs, according to one recent article,
“is a ‘spaghetti bowl’ of rules, arbitrary definitions of which products come from where, and
a multiplicity of tariffs depending on source.”4 Nonetheless, in the aftermath of the failure
of the WTO Ministerial meeting in Cancún, Mexico, USTR Zoellick indicated that the
United States would more aggressively pursue bilateral and regional free trade agreements.
“We are going to keep trying to open markets one way or the other,” he said.5
The manner in which the Administration chooses potential partners has been the subject
of scrutiny by some Members of Congress. Traditionally, regional and bilateral trade
agreements have been negotiated for a mixture of economic, political, and development
reasons. The U.S.-Canada Free-Trade Agreement (FTA) was primarily economic in nature:
recognizing the largest bilateral trade relationship in the world between two countries at a
similar stage of development. The partnership with Mexico to create NAFTA brought in a
country at a different stage of development and gave attention to trade as a lever to encourage
economic advancement. It also had a geopolitical rationale of encouraging stability in the
U.S. neighbor to the south. The FTA with Israel is seen as an affirmation of U.S.
commitment to the Jewish state, while the FTA with Jordan can be seen as a reward for
Jordan’s cooperation in the Middle East peace process.
USTR Zoellick recently enumerated several criteria prerequisite for negotiating trade
agreements with the United States. In a speech to the Institute of International Economics,
he referred to several criteria he used to make a determination of a country’s worthiness to
negotiate an FTA with the United States. However, he said there were no formal rules or
procedures to make the determination. According to USTR Zoellick, the Administration
sought countries that cooperate with the United States in its foreign and security policies.
Other considerations enunciated by the USTR include country support for U.S. positions in
the Free-Trade Area of the Americas (FTAA) and the WTO; the ability of a trade agreement
to spur internal economic or political reform in the target country or region; the ability to
counteract FTAs among other countries or trading blocs that disadvantage American firms;
the presence of congressional interest or opposition to an FTA; support among U.S. business
and agricultural interests; the ability of a country to anchor broader trade agreements to spur
3 Robert B. Zoellick, “Unleashing the Trade Winds,” The Economist, December 7, 2002, p.29.
4 Jagdish Bhagwati and Arvind Panagariya, “Bilateral Trade Treaties Are a Sham,” Financial Times,
July 14, 2003.
5 “U.S. Plans to Accelerate Own Trade Agreements Talks,” Congress Daily, September 14, 2003.
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regional integration; the willingness of a partner to negotiate a comprehensive agreement
covering all economic sectors; and the capacity constraints of the Office of the USTR.6
Some Members of Congress have questioned the manner in which potential FTA
partners are chosen. Representative Calvin Dooley has called for the establishment of a
“strategic roadmap” to help define potential FTA partners that would advance the U.S.
economic, geopolitical, and multilateral agenda, given the limited resources of the Office of
the USTR.7 Senator Baucus and Representative Dooley have requested a study from the
General Accounting Office on the selection progress for FTA partners. In addition, some
business groups have expressed a desire to concentrate more on the multilateral negotiations
of the WTO, which potentially could yield greater commercial gains.8
In the aftermath of the failed WTO Cancun Ministerial in September 2003, some
legislators have urged reconsideration of FTAs currently under negotiation for allegedly
obstructing the progress of WTO negotiations. The focus of the talk of retaliation has
centered on the ‘G-21 countries’ a negotiating bloc whose demands centered on deep
reductions in developed country agricultural subsidies, but who reportedly resisted opening
their own markets. The United States currently is conducting FTA negotiations with G-21
countries such as South Africa, Guatemala, and Costa Rica. Potential FTAA partners
Argentina, Bolivia, Brazil, Colombia, Ecuador, Paraguay, Peru, and Venezuela also signed
on to G-21 negotiating positions, and the United States has FTAs with two other G-21
participants, Chile and Mexico.
The Administration has also equated the concept of free trade with national security. It
cites the negotiation of free trade agreements in multilateral, regional, and bilateral settings
as an integral part of its strategy to enhance prosperity and freedom for the rest of the world.
In the September 2002 National Security Strategy, the Administration elevated the concept
of ‘free trade’ to a moral principle, “the freedom for a person or a nation to make a living.”
According to this document, free-market economic and trade policies, more than
development assistance, provides nations with the ability to lift themselves out of poverty
and to insure stability.9
While the Administration is pursuing trade agreements on multiple fronts, some
question whether the United States should be negotiating trade agreements at all. They
charge that jobs are lost because of cheaper imports, and that relocation of U.S. production
to other countries has been facilitated by trade agreements. Some argue that trade
agreements do not adequately address the problem of countries with lower labor and
6 “Following the Bilateral Route?, Washington Trade Daily, May 9, 2003; “Zoellick Says FTA
Candidates Must Support U.S. Foreign Policy,” Inside U.S. Trade, May 16, 2003.
7 “Business Treads Carefully in Assessment of Administration Trade Policy,” Inside U.S. Trade,
June 20, 2003.
8 “Filling Up with Appetizers,” Congress Daily AM, June 11, 2003.
9 National Security Council, National Security Strategy of the United States, September 2002,
[http://www.whitehouse.gov/nsc/nss.pdf], pp. 17-21.
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environmental standards that are able to produce at lower cost. Some critics believe that the
U.S. economy will be harmed by the Administration’s pursuit of free-trade agreements.
The result of the competitive liberalization strategy is that the United States is involved
in an unprecedented number of trade negotiations. Multilaterally, the United States and over
140 countries are participating in the Doha Development Agenda under the auspices of the
World Trade Organization. Regionally, the United States is meeting with 33 other countries
in the western hemisphere to create a Free Trade Area of the Americas, and is beginning
free-trade negotiations with countries in central America and in southern Africa. Bilaterally,
it is seeking FTAs with Australia, Bahrain, and Morocco, and concluded agreements with
Singapore and Chile. Furthermore, the President has recently proposed initiatives that could
lead to free-trade agreements with the countries of southeastern Asia and the Middle East.
Notification and Implementing Bills
The next section discusses these trade proposals in more detail. Since the next section,
however, includes references to formal notifications by the Administration, it might be
helpful to first explain more about what those notifications mean and when they are given.
Congress approved notification requirements in the trade promotion authority (TPA)
legislation passed in 2002 (Title XXI, P.L. 100-210). These requirements apply to trade
agreements entered into (signed) before June 30, 2005 (or June 30, 2007, if a two-year
extension is allowed). If the Administration meets these notification requirements, consults
as required, and satisfies other conditions in the TPA legislation, Congress will consider
implementing legislation for a trade agreement under expedited (“trade authorities” or “fast-
track”) procedures, which prohibit amendments and set deadlines for committee and floor
action. Since most trade agreements, including those in the next section, are nontariff trade
agreements, this section discusses the notification requirements for those agreements (and
excludes tariff agreements).
The following is in two parts: (1) the notification and consultation requirements of the
TPA legislation; and (2) the TPA/fast-track procedures for an implementing bill.
Notification Requirements
Before the Start of Negotiations. Before starting negotiations, the Administration
must notify Congress at least 90 calendar days in advance. (This requirement is waived for
certain negotiations that were underway before enactment of the TPA legislation.) Before
and after submitting this notice, the Administration must consult with the relevant
congressional committees and the Congressional Oversight Group (COG).10 The
10 Members of the COG are the chairman and ranking member of the House Ways and Means
Committee and the Senate Finance Committee, three other members from each of those committees
(no more than two from the same party), and the chairman and ranking member from any other
committees with jurisdiction. COG members are official advisers to the U.S. delegation in trade
negotiations. They consult with and provide advice to the USTR on the formulation of objectives,
(continued...)
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Administration must comply with certain additional consultation and assessment
requirements for agricultural, textile and apparel, and fish and shellfish negotiations.
During Negotiations. In the course of negotiations, the USTR must consult closely
and on a timely basis with the COG and all committees of jurisdiction. Guidelines developed
by the USTR, in consultation with the House Ways and Means Committee and the Senate
Finance Committee (the revenue committees), cover briefings of the COG, access by COG
members and staff to documents, and coordination between the USTR and the COG at
critical periods of the negotiations.
Before Signing the Agreement. At least 180 calendar days before signing a trade
agreement (at least 90 calendar days for an agreement with Chile or with Singapore), the
President must report to the revenue committees on proposals that might require amendments
to U.S. trade remedy laws. At least 90 calendar days before entering into a trade agreement,
the President must notify Congress of the intention to enter into the agreement. No later than
30 days after this notification, the private sector advisory committees must submit their
reports on the agreement to Congress, the President, and the USTR. Also at least 90 calendar
days before entering into a trade agreement, the President must provide the International
Trade Commission (ITC) with the details of the agreement and request an assessment.
The USTR must consult closely and on a timely basis (including immediately before
initialing an agreement) with the revenue committees, the COG, and other congressional
advisers, and with the agriculture committees in the case of an agreement relating to
agricultural trade.
Entering Into the Agreement. Within 60 days of entering into the agreement, the
President must submit a list of required changes to U.S. law that likely would be necessary
to bring the United States into compliance with the agreement. Not later than 90 calendar
days after the President enters into an agreement, the ITC must report to the President and
to Congress on the likely impact of the agreement on the U.S. economy and on specific
industrial sectors.
Implementing Bill
Submission of Draft Implementing Bill. There is no deadline for submission of
a bill to implement a trade agreement. The TPA legislation requires that after entering into
a trade agreement, the President must submit to the Congress a copy of the final legal text
of the agreement, a draft of an implementing bill, a statement of any administrative action
proposed to implement the trade agreement, and other supporting information. Expedited
procedures for consideration of an implementing bill are set out in Section 151 of the Trade
Act of 1974 (19 U.S.C. 2191). (The TPA legislation provides for withdrawal of expedited
procedures if the House and Senate, within 60 days of each other, agree to resolutions stating
that the President did not meet notification and consultation requirements.)
10 (...continued)
negotiating strategies, and other trade matters.
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“Trade Authorities” or “Fast-Track” Procedures. Any implementing bill
submitted by the President is to be introduced by the majority leader of each house or their
designees. The bill is then referred jointly to the committees of jurisdiction.
Each committee has up to 45 days after introduction to report the measure or be
automatically discharged. Committee amendments are prohibited. If the implementing bill
is a revenue measure (which is usually the case because of tariff changes), Senate committees
have an additional 15 days, since a revenue measure must originate in the House.
The bill is to be called up in each chamber under a non-debatable, highly privileged
motion. Floor amendments are prohibited. Floor debate in each chamber is limited to no
more than 20 hours, equally divided. A vote on final passage must be taken in each chamber
on or before the 15th day of session after the bill is reported or discharged from the
committees of jurisdiction. Given these deadlines, the implementing bill could be in the
House up to 60 days of session, and if the House takes that full period, the bill could be in
the Senate up to 90 days of session. There would be no conference to resolve differences,
because the identical bill is introduced in each chamber and no amendments are allowed.
Status of Agreements and Negotiations
Multilateral Trade Negotiations
At the 4th Ministerial meeting of the World Trade Organization (WTO) in Doha, Qatar
on November 9-14, 2001, trade ministers from over 140 member countries of the World
Trade Organization agreed to launch a new round of multilateral trade negotiations.11 The
negotiations became known as the Doha Development Agenda, because of the increased
participation of developing-country members, which now account for about four-fifths of all
WTO members.
The work program set out in the Doha declaration incorporated the “built-in agenda”
(ongoing negotiations on agriculture and services liberalization) with negotiations on trade
barriers for industrial products, WTO rules on dumping and subsidies, and the WTO dispute
settlement understanding. It included several topics that developing countries had sought,
such as easier access to medicines under the existing WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPS). The agenda also directed that negotiations
be undertaken at the 5th ministerial meeting on the so-called “Singapore issues”(investment,
competition, transparency in government procurement, and trade facilitation), if consensus
could be reached.
WTO members agreed on a negotiating structure in early 2002. Since then, negotiators
have missed most major deadlines, including a March 31, 2003 deadline for agreement on
“modalities” for commitments on agriculture (e.g., formulas for reducing barriers). They
missed a year-end 2002 deadline on the TRIPS-medicine issue, but later agreed to a text on
that issue in late August 2003, just weeks before the 5th ministerial meeting. That meeting
11 For further information, see CRS Report RL32060, World Trade Organization Negotiations: The
Doha Development Agenda, by Lenore Sek.
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was held September 10-14, 2003 in Cancun Mexico. It was intended to take stock of
progress and provide guidance for the on-going negotiations; however, it ended
unsuccessfully. For several reasons, including a rift between developed and developing
countries on agriculture and the Singapore issues, the Cancun ministerial ended abruptly and
without a guiding framework.
Several observers say that the failure of the Cancun meeting will lead to an increase in
preferential arrangements such as free-trade agreements. They also question whether the
WTO is too large and diverse for countries to reach decisions. Others, though, emphasize
that the negotiations begun at Doha have not stopped and will continue. At the start of the
negotiations, trade ministers had agreed on a final deadline of December 31, 2004, but trade
officials are now more doubtful this deadline can be met.
Regional Negotiations
Free Trade Area of the Americas. In April 1998, at the second Summit of the
Americas in Santiago, Chile, 34 Western Hemisphere nations formally initiated negotiations
to create a Free Trade Area of the Americas (FTAA).12 The United States traded $686 billion
worth of goods with the FTAA countries in 2002: $274.5 billion in exports and $411.5
billion in imports.
The United States has focused on reducing overall tariff rates as the primary negotiating
goal in market access discussions. Latin American countries, by contrast, are focusing on
other issues, specifically U.S. trade remedy laws, U.S. domestic agricultural support, and
peak tariff rates. Brazil in particular, a major player in the negotiations, is interested in
opening U.S. markets in agriculture, steel, and textiles.
In April 2001, negotiators met in Québec City and unveiled the first draft of the
agreement. In November 2002, they met in Quito and released the second draft of the
heavily bracketed text. At the Quito meeting, Brazil and the United States took over as co-
chairs of the Trade Negotiating Committee through the completion of the negotiations. The
Trade Negotiating Committee is scheduled to meet three times in 2003. The next meeting
of trade ministers is scheduled for November 20-21, 2003 in Miami. The scheduled deadline
for completing the final agreement is January 2005. Negotiations have recently centered
around which issues can be pursued to completion in the FTAA process. The United States
has maintained that certain sensitive issues such as agricultural subsidies and U.S. trade
remedy laws- issues important to Brazil and other Mercosur nations- must be negotiated in
the WTO. In response, the Mercosur nations have countered that negotiations over service
provisions, intellectual property and government procurement, issues of interest to the United
States, should be treated in the same manner. The question of how comprehensive any
FTAA will be is currently unresolved.
U.S.-Central American FTA. On January 8, 2003, negotiations formally began on
an FTA between the United States and the five nations composing the Central American
Common Market (CACM) – Costa Rica, El Salvador, Guatemala, Honduras, and
12 For further information, see CRS Report RS20864, A Free Trade Area of the Americas: Status of
Negotiations and Major Policy Issues, by J. F. Hornbeck.
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Nicaragua.13 Both sides have expressed optimism that an agreement can be concluded by
year-end. Three months earlier, on October 1, 2002, the Administration had given notice to
Congress of the intent to begin the negotiations. For CACM countries, an FTA potentially
would permit greater access to the U.S. market, make permanent current tariff preferences
provided by the Caribbean Basin Initiative, and provide an environment more conducive to
foreign investment. For the United States, proponents of the agreement see it supporting
U.S. exports and providing less expensive imports, advancing the movement toward an
FTAA agreement, and solidifying deeper regional political and economic reforms that
strengthen democracy and promote stability. However, critics of a potential CAFTA point
to labor conditions and workers’ rights in the CACM as a major problem, and there are
industry concerns over textiles and agriculture. U.S. trade with the region totaled $21.2
billion in 2002. The United States imported $11.8 billion (primarily apparel items, bananas,
coffee, and assembled electronic equipment) and exported $9.4 billion (led by apparel,
textiles, electrical generating equipment, and electrical components for assembly).
U.S.-Southern African Customs Union FTA. On November 4, 2002, the USTR
notified Congress that talks to negotiate an FTA would begin with the Southern African
Customs Union (SACU).14 The first round of negotiations began in Johannesburg on June
3, 2003. SACU is a customs union composed of South Africa, Botswana, Lesotho,
Namibia, and Swaziland. A large degree of economic integration exists among the SACU
states led by South Africa, the dominant economic power. U.S. exports to SACU totaled
$2.5 billion in 2002, led by aircraft, vehicles, construction and agricultural equipment, and
computers. U.S. imports from SACU totaled $4.8 billion, composed of minerals such as
platinum, diamonds, and titanium, textiles and apparel, vehicles, and automotive parts.
Potential problems relating to an FTA with SACU include competition issues related to the
South African telecommunications industry and government procurement, U.S. textile tariffs
and quotas, and intellectual property rights especially with regard to access to HIV/AIDS
medicines. While all the SACU states are eligible for the tariff preferences under the Africa
Growth and Opportunity Act (Title I, P.L. 106-200), the negotiation of an FTA would
“lock-in” and potentially expand such tariff advantages.
Bilateral Negotiations and Agreements
U.S.- Chile FTA. On September 3, 2003, President Bush signed the U.S.-Chile Free
Trade Agreement Implementation Act (P.L. 108-77) in Washington D.C. The United States
and Chile commenced formal negotiations on a bilateral FTA on December 6-7, 2000 in
Washington, D.C.15 After two years of negotiations, an agreement was announced in
Washington on December 11, 2002. On January 30, 2003, President Bush notified Congress
of his intent to sign the agreement. The Agreement was signed on June 6, 2003 in Miami,
13 For further information, see CRS Report RL31870, The U.S.-Central America Free Trade
Agreement (CAFTA): Challenges for Sub-Regional Integration, by J.F. Hornbeck.
14 For further information, see: CRS Report RS21387, United States-Southern African Customs
Union (SACU) Free Trade Agreement Negotiations: Background and Potential Issues, by Ian F.
Fergusson.
15 For further information, see CRS Report RL31144, A U.S.-Chile Free Trade Agreement:
Economic and Trade Policy Issues, by J. F. Hornbeck.
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after a delay some attributed to the Administration’s irritation over Chile’s refusal to support
U.S.- sponsored resolutions on Iraq in the United Nations earlier in the year. Implementing
legislation was passed by the House on July 24, 2003 by 270-156 and by the Senate on July
31, 2003 by 66-31. Negotiation with Chile was offered by U.S. Trade Representative
Zoellick as a template for the CAFTA negotiations and an FTAA agreement. This
concerned some Members of Congress. Debate on the Chile FTA focused on the future use
of the agreement’s labor and environmental provisions, capital controls, and immigration.
(See S.Res. 211 in the section on Legislation.)
Total trade between the United States and Chile was approximately $5.9 billion in 2002;
imports accounted for $3.6 billion, and exports totaled $2.3 billion. Leading U.S. imports
from Chile are fish, grapes, wine, copper, and wood products, and significant U.S. exports
to Chile are mining equipment and machinery, aircraft, computers, and telecommunications
equipment.
The agreement, described by USTR Zoellick as a “win-win, state-of-the-art FTA for the
modern economy,”16 features comprehensive liberalization of service trade, protections for
intellectual property rights, labor and environmental protection provisions similar to those
of the Jordan FTA, and new transparent procedures for customs and investor-state disputes.
Eighty-seven percent of two-way trade will become tariff-free immediately, with the
remainder phased out over four years or, mostly in the case of sensitive agricultural products,
over 12 years.
U.S.- Singapore FTA. On September 3, 2003, President Bush signed the U.S.-
Singapore Free Trade Agreement Implementation Act (P.L. 108-78) in Washington D.C.
The United States and Singapore launched negotiations on a bilateral FTA in December
2000.17 The agreement was completed on January 15, 2003 after the two parties resolved
outstanding differences related to capital controls. On May 6, 2003, President Bush signed
the agreement with Singapore’s Prime Minister Goh Chok Tong at the White House .
Implementing legislation was passed by the House on July 24 by 272-155 and by the Senate
on July 31 by 66-32. Debate centered around the future use of the agreement’s labor and
environmental provisions as a template for other FTAs and some members’ dissatisfaction
with the immigration provisions of the legislation. (See Legislation, p. 14 on H.R. 2739,
S.Res. 211).
Singapore and the United States are major trading partners, and the USTR has indicated
an FTA with Singapore would facilitate further Pacific regional integration. The agreement
would phase-in tariff elimination on all goods, cover trade in services, and protect
intellectual property rights. Two-way trade between the two nations totaled $28.8 billion
in 2002. U.S. exports to Singapore totaled $14.7 billion and were comprised of aircraft,
computers, integrated circuits telecommunications equipment and petroleum; imports of
$14.1 billion included computer equipment and circuitry, radio and televisions receivers, and
medical equipment.
16 Office of the U.S. Trade Representative. “U.S. and Chile Conclude Historic Free Trade
Agreement. Press Release,” December 11, 2002.
17 For further information, see CRS Report RL31789, Singapore-U.S. Free Trade Agreement, by
Dick K. Nanto.
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U.S.-Morocco FTA. On January 21, 2003, negotiations formally began on a U.S.-
Morocco FTA18. Four rounds of negotiations have been held to date, and the fifth round is
scheduled to be held this October in Morocco. While proposed with a strong national
security and foreign policy rationale, the FTA would also seek to support U.S. economic
objectives. These include allowing U.S. agricultural products to compete more effectively
against those of the European Union, which currently benefit from preferential access. From
Morocco’s perspective, the FTA could lead to an increase in U.S. foreign direct investment
and provide preferences for textile and apparel exports to the United States. U.S.-Morocco
trade totaled $970 million in 2002, composed of $560 million in U.S. exports and $410
million in imports. Leading U.S. exports are corn, wheat, soybeans, aircraft parts, and coal;
leading imports include electrical equipment, apparel, calcium and chalk phosphates, mineral
oil, processed fish, and processed vegetables. Issues involving agriculture and textiles and
apparel are expected to be the most sensitive.
U.S.-Australia FTA. On November 13, 2002, the Bush Administration notified the
Congress of the intent to begin FTA negotiations with Australia.19 Formal talks began in
Canberra on March 18, 2003. While the U.S. business community strongly supports the
negotiations, the American agricultural community has expressed concern about Australian
sanitary and phytosanitary standards that it believes act as a barrier to U.S. exports. For its
part, Australia has called for greater agricultural liberalization in the U.S. market. It has
denounced U.S. farm subsidies and U.S. import restrictions on beef, sugar, and dairy
products. A desire to cement the U.S.-Australian strategic relationship, and Australia’s
cooperation in the war against terrorism, may also influence these negotiations. Two way
trade between the United States and Australia totaled $18.7 billion in 2002. Livestock, wine,
minerals, vehicles, and vehicle parts were leading imports from Australia, which totaled $6.4
billion in 2002. U.S. exports amounted to $12.3 billion, led by computer equipment, aircraft,
vehicles, heavy machinery, and medical equipment.
Bahrain. On August 4, 2003, the USTR notified Congress of its intention to negotiate
an FTA with Bahrain beginning in 2004. The Administration has praised the economic and
commercial environment of the sheikhdom. The proposed FTA is touted by the
Administration as a first step in the creation of the Middle East Free Trade Area by 2013 and
foresees the possibility that other nations in the gulf region could link in to this agreement
as they reform their economies and develop their trade potential. Bahrain is a kingdom of
640,000 persons, 40% of whom are guest workers, with a GDP of $7.9 billion in 2001 (2001,
current $). Bahrain was a founding member of the WTO in 1994 and signed a Bilateral
Investment Treaty (BIT) with the United States in 2001 and a Trade and Investment
Framework Agreement (TIFA) in 2002. The nation has diversified its economy away from
dependence on petroleum and has created a services hub for information technology,
telecommunications and health care. U.S. merchandise trade with Bahrain totaled $802.6
million in 2002: imports of $395.1 million included apparel, textiles, fertilizers, chemicals,
and aluminum and exports of $407.5 million were led by aircraft and aircraft parts, military
equipment, passenger vehicles, machinery, and, not surprisingly, air conditioning equipment.
18 For further information, see CRS Report RS21464, Morocco- U.S. Free Trade Agreement, by
Raymond L. Ahearn.
19 For further information, see CRS Report RS21476, U.S.- Australia FTA Negotiations, by William
H. Cooper.
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Dominican Republic. On August 4, 2003, the Administration notified Congress of
its intent to begin negotiations for an FTA with the Dominican Republic. The
Administration announced that it seeking to negotiate an agreement that it can then join with
the CAFTA agreement, thus sending Congress one agreement for consideration.20 The DR
is the 31st largest trading partner of the United States conducting trade valued at $8.3 billion,
composed of $4.2 billion in imports and $4.1 billion in exports. Leading exports include
electrical circuitry, ignition and generating parts, computers, heavy construction equipment,
cotton, and apparel; leading imports are composed of apparel, medical instruments, circuit
breakers, electrical equipment, and jewelry. Since 1985, the Dominican Republic has
received preferential access for many goods under the Caribbean Basin Initiative. The
Dominican Republic is the largest economy in the Caribbean with a population of 8.7 million
and a GDP of $21.2 billion (2001, current $) .
Other Potential Trade Agreements
Middle East - North African Free Trade Agreement. On May 9, 2003, President
Bush announced an initiative to create a U.S.- Middle East Free Trade Agreement by 2013.
According to reports, this initiative would begin a multi-stage process to prepare countries
in the region for an FTA with the United States. Countries would begin the process by
negotiating accession to the World Trade Organization21 and subsequently concluding
Bilateral Investment Treaties (BIT) and Trade and Investment Framework Agreements
(TIFA) with the United States.22 As domestic reforms progress, countries would then
negotiate FTAs with the United States, possibly linking to other existing or planned FTAs,
such as with Jordan, or potentially with Morocco or Bahrain.
The Administration’s rationale for this regional FTA is to provide the incentive for the
transformation of the economies of the Middle East and their integration into the world
economy. One study reports that, since 1980, the share of world exports emanating from
middle eastern countries has dropped from 13.5% to 4%, and that per capita income has
fallen by 25% in the Arab world.23
On May 22, 2003, the Middle East Trade and Engagement Act (S. 1121-Baucus/H.R.
2267- Smith) was introduced to provide duty-free access for import-sensitive goods that are
currently excluded from the U.S. Generalized System of Preferences (GSP). According to
Senator Baucus, this legislation would be modeled on the existing African Growth and
Opportunity Act (AGOA) and Andean Trade Preference Act, and that the legislation could
serve as an interim step before these countries join FTAs with the United States.24 The
proposal includes a declaration by Congress that bilateral free trade agreements should be
20 USTR Press Release, August 4, 2003 (http://www.ustr.gov/releases/2003/08/03-51.htm)
21 In the Middle East region, Afghanistan, Algeria, Iran, Iraq, Libya, Lebanon, Saudi Arabia, Syria,
and Yemen remain outside the WTO.
22 “President Bush Lays Out Broad Plan for Regional FTA with Middle East by 2013,” International
Trade Reporter, May 15, 2003.
23 Edward Gresser, “Blank Spot on the Map: How Trade Policy Is Working Against the War on
Terror,” Progressive Policy Institute Policy Report, February 2003.
24 Remarks of Senator Baucus, Congressional Record, May 22, 2003, S.7005.
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negotiated, where feasible, with interested countries or political entities in the greater Middle
East, in order to increase U.S. trade with the region and increase private sector investment
in the region. The Administration has not taken a position on the legislation.
Enterprise for ASEAN. This initiative, announced by President Bush on October 26,
2002, provides the impetus for the negotiation of bilateral FTAs with individual countries
of the Association of Southeast Asian Nations, or ASEAN (Brunei, Cambodia, Indonesia,
Laos, Malaysia, Myanmar, Philippines, Singapore, Thailand, and Vietnam). The first stage
of this process is expected to be the negotiation of a region-wide trade and investment
framework agreement (TIFA), which is seen as the first step in the process of negotiating
individual FTAs with ASEAN member states. Malaysia and Thailand are seen as likely
candidates for FTAs under this program. As stated by the Administration, the principal
benefits to the United States of FTAs with ASEAN member states are the potential to reduce
high tariffs on agricultural products and to eliminate restrictive tariff-rate quotas on other
U.S. exports, while the major benefit to ASEAN countries would be improved access to the
U.S. market. The initiative is also seen as a way of countering growing Chinese influence
in the region. Two-way trade with ASEAN reached $116.4 billion in 2002, with exports of
$38.8 billion and imports of $77.6 billion.
Taiwan. A free trade agreement with the Republic of China on Taiwan has been
advanced by proponents in the last several years. In the 108th Congress, H.Con.Res. 98
(Ramstad) has been introduced calling for a free trade agreement with Taiwan, and House
Majority Leader Delay lent support to an FTA with Taiwan in a speech to the American
Enterprise Institute on June 2, 2003.25 Taiwan is the 8th largest trading partner of the United
States with total two-way trade in 2002 equal to $48.8 billion in 2002; the United States is
Taiwan’s largest trading partner. The U.S. imported $32 billion in merchandise from
Taiwan with computers, circuitry, vehicle parts, television transmission, and
telecommunications equipment leading. U.S. exports to Taiwan, which totaled $16.8 billion,
include integrated electronic circuits, electrical machinery, aircraft parts, corn, and soybeans.
While the Bush administration has indicated support for the concept of a U.S.-Taiwan FTA,
several outstanding trade disputes remain including Taiwan’s enforcement of intellectual
property rights, the imposition of excessive standards, testing, certification and labeling
requirements, and the Taiwanese rice import quotas.26 In addition, the negotiation of an FTA
with Taiwan likely would encounter the ire of the mainland Chinese government, which
considers Taiwan to be a province of China. Taiwan acceded to the WTO on January 1, 2002
and signed a Trade and Investment Framework Agreement with the United States in 1994.
LEGISLATION
P.L. 108-77, H.R. 2738
United States-Chile Free Trade Agreement Implementation Act. To implement the
United States-Chile Free Trade Agreement. House and Senate bills introduced July 15,
25 Available at [http://www.aei.org/include/news_print.asp?newsID=17544].
26 U.S. Trade Representative, 2003 National Trade Estimate Report on Foreign Trade Barriers,
p. 358.
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2003; H.R. 2738 reported by House Ways and Means Committee July 21 (H.Rept. 108-224-
I) and by the House Judiciary Committee on July 22 (H.Rept. 224-II); passed by the House
270-156 on July 24. S. 1416 was reported by Senate Finance Committee and by Senate
Judiciary Committee (S.Rept. 108-116) on July 21; H.R. 2738 passed by the Senate on July
31 by a vote of 66-31; signed into law on September 3, 2003 (P.L. 108-77).
P.L. 108-78, H.R. 2739
United States-Singapore Trade Agreement Implementation Act. House and Senate bills
introduced July 15, 2003; H.R. 2739 reported by House Ways and Means Committee July
21 (H.Rept. 108-225-I) and by the House Judiciary Committee (H.Rept. 108-226) on July
22; passed by the House 272-155. S. 1417 reported by the Senate Finance Committee and
by the Senate Judiciary Committee on July 21 (S.Rept. 108-117); H.R. 2739 passed by the
Senate on July 31 by a vote of 66-32; signed into law September 3, 2003 (P.L. 108-78)
H.Con.Res. 98 (Ramstad, et. al.)
Expressing the sense of Congress relating to a free trade agreement between the United
States and Taiwan. Introduced Mar. 18, 2003. Referred to Committee on Ways and Means,
Subcommittee on Trade, March 20, 2003.
H.R. 2267 (A. Smith)/S. 1121 (Baucus, et. al.)
Middle East Trade and Engagement Act of 2003. To extend certain trade benefits to
countries of the greater Middle East. H.R. 2267 introduced May 22, 2003; referred to House
Committee on Ways and Means. S. 2212 introduced May 22, 2003; referred to Senate
Committee on Finance.
S.Res. 211 (Sessions, et al)
Introduced in conjunction with Senate debate of Chile and Singapore FTAs, passed by
unanimous consent, July 31, 2003. Expressed the sense of the Senate that (1) trade
agreements are not the appropriate vehicle for enacting immigration-related laws or
modifying current immigration policy; and (2) future trade agreements to which the United
States is a party and the legislation implementing the agreements should not contain
immigration-related provisions.
CHRONOLOGY
04/19/98 –
Leaders from 34 countries in the Western Hemisphere meet in Santiago,
Chile and agree to launch negotiations on a Free Trade Area of the Americas.
12/04/00 –
Negotiations begin on a U.S.-Singapore FTA.
12/06/00 –
Negotiations begin on a U.S.-Chile FTA.
12/17/01 –
The U.S.-Jordan FTA enters into force.
11/14/01 –
Trade ministers from WTO member countries agree at the end of their
meeting in Doha, Qatar to start a new round of multilateral trade negotiations.
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08/06/02 –
President Bush signs the Trade Act of 2002 (P.L. 107-210), which includes
expedited legislative procedures for bills implementing trade agreements
(“fast-track authority” or “trade promotion authority”).
01/08/03 –
Negotiations begin on a U.S.-Central America FTA.
01/21/03 –
Negotiations begin on a U.S.-Morocco FTA.
03/17/03 –
Negotiations begin on a U.S.-Australia FTA.
05/06/03 –
President Bush signs the U.S.-Singapore FTA.
05/09/03 –
President Bush proposed the negotiation of a free trade area between the
United States and the nations of the Middle East by 2013.
06/03/03 –
Negotiations begin on a U.S.-SACU (Southern African Customs Union)
FTA.
06/06/03 –
President Bush signs the U.S.-Chile FTA.
07/24/03 –
House passes implementing bills for the Chile (H.R. 2738) and Singapore
(H.R. 2739) FTAs. Senate passes implementing legislation for the Chile (S.
1416) and Singapore FTAs (S. 1417) on July 31.
09/03/03 –
President Bush signs implementing legislation for the U.S.-Chile (P.L.108-
77) and U.S.- Singapore (108-78) FTAs.
09/14/03 –
The WTO Ministerial in Cancún, Mexico ends after failing to reach
agreement on agriculture and ‘Singapore issues.’
FOR ADDITIONAL READING
CRS Products
The WTO
CRS Report RL32053. Agriculture in WTO Negotiations, by Charles E. Hanrahan.
CRS Report RL32060. The World Trade Organization: The Doha Development Agenda, by
Lenore M. Sek.
CRS Report RS20448. Foreign Investment Issues in the WTO, by James K. Jackson.
CRS Report RS21492. Services Negotiations at the WTO: An Overview of the U.S. Offer,
by James K. Jackson.
CRS Report RS21569. Geographical Indications and WTO Negotiations, by Charles E.
Hanrahan.
CRS Report RS21609. The WTO, Intellectual Property Rights, and the Access to Medicines
Controversy, by Ian F. Fergusson.
CRS Report RS21610. WTO: Trade Remedies in the Doha Round, by Vivian C. Jones.
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Free Trade Area of the Americas
CRS Report RL30935. Agricultural Trade in the Free Trade Area of the Americas, by Remy
Jurenas.
CRS Report RS20864. A Free Trade Area of the Americas: Status of Negotiations and
Major Policy Issues, by J. F. Hornbeck.
Proposed Regional and Bilateral FTAs
CRS Report RS21464. Morocco - U.S. Free Trade Agreement, by Raymond J. Ahearn.
CRS Report RS21387. United States - Southern African Customs Union (SACU) Free Trade
Agreements Negotiations: Background and Potential Issues, by Ian F. Fergusson.
CRS Report RL31870. The U.S.-Central America Free Trade Agreement (CAFTA):
Challenges for Sub-Regional Integration, by J. F. Hornbeck.
CRS Report RL31144. The U.S.-Chile Free Trade Agreement: Economic and Trade Policy
Issues, by J. F. Hornbeck.
CRS Report RL30652. U.S.-Jordan Free Trade Agreement, by Mary Jane Bolle.
CRS Report RL31789. The U.S.-Singapore Free Trade Agreement, by Dick K. Nanto.
General
CRS Report RS21554. Free Trade Agreements, Developing Country Preferences and the
WTO, by Jeanne J. Grimmett.
CRS Report RL31974. Trade Agreements: Requirements for Presidential Consultations,
Notices, and Reports to Congress Regarding Negotiations, by Vladimir N. Pregelj.
CRS Report RL31932. Trade Agreements: Impact on the U.S. Economy, by James K.
Jackson.
CRS Report RL31844. Trade Promotion Authority (Fast-Track Authority for Trade
Agreements): Background and Developments in the 107th Congress, by Lenore Sek.
Other Reading
U.S. International Trade Commission. U.S.-Chile Free Trade Agreement: Potential
Economywide and Selected Sectoral Effects. Publication 3605. June 2003.
—— U.S.-Singapore Free Trade Agreement: Potential Economywide and Selected Sectoral
Effects. Publication 3603. June 2003.
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Current U.S. Negotiations on Trade Agreements
Agreement
U.S.
Status
Sensitive
Total
Areas
Trade*
($ bill.)
Free Trade Area
$686.0
Formal negotiations began in 1998. The first draft
Agriculture,
of the Americas
of the agreement was adopted in Québec in April
antidumping,
2001; the second was adopted at Quito in Nov.
textiles and
2002. Trade ministers will meet in Miami in late
apparel, worker
2003. A final agreement is due by Jan. 2005.
rights
Doha
$1,738
A work program was produced at the trade
Agriculture,
Development
ministerial meeting in Doha in Nov. 2001. In
antidumping,
Agenda of the
September 2003, trade ministers at the Cancún
pharmaceuticals
WTO
Ministerial failed to agree on the future course of
negotiations, thus putting the Jan. 1, 2005 deadline
for final agreement in doubt.
U.S.-Chile FTA
$5.9
President Bush signed the agreement on June 6,
Capital flows,
2003. Implementing legislation passed by the
agriculture
House on July 24 and by the Senate on July 31,
2003. President Bush signed the Implementing
legislation (P.L. 108-77) on September 3, 2003.
U.S.-Singapore
$28.8
President Bush signed agreement on May 6, 2003.
Capital flows
FTA
Implementing legislation passed by the House on
July 24 and by the Senate on July 31, 2003.
President Bush signed the Implementing legislation
(P.L. 108-78) on September 3, 2003.
U.S.-Central
$21.2
Talks were formally launched on Jan. 8, 2003.
Textiles and
America FTA
Officials anticipate negotiations will conclude by the
apparel, rules of
end of 2003.
origin, capital
flows, worker
rights
U.S.-Morocco
$0.97
Talks formally began on Jan. 21, 2003. Officials
Agriculture,
FTA
anticipate negotiations will conclude by the end of
textiles &
2003.
apparel
U.S.-Southern
$7.3
Talks began on June 3, 2003 and are expected to
Telecommuni-
African Customs
conclude in 2004.
cations, textiles,
Union FTA
pharmaceuticals
U.S.-Australia
$18.7
On Nov. 13, 2002, the Administration gave
Agriculture,
FTA
Congress notice of intent to begin negotiations.
investment,
Talks began in March 2003.
transportation
services
U.S -Dominican
$8.3
On August 4, 2003, the Administration gave
agriculture,
Republic FTA
Congress notice of intent to begin negotiations.
intellectual
property rights,
linkage to
CAFTA.
U.S.-Bahrain
$0.8
On August 4, 2003, the Administration gave
serve as hub for
FTA
Congress notice of intent to begin negotiations.
Middle East FTA
* Domestic exports (Fas value) plus imports for consumption (Customs value) with countries of the proposed
agreement in 2002.
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