Barry McVay's FEDERAL CONTRACTS DISPATCH
DATE: May 9, 2000
FROM: Barry McVay, CPCM
SUBJECT: United States Trade Representative; Annual Report on Trade Expansion Priorities
SOURCE: Federal Register, May 5, 2000, Vol. 65, No. 88, page 26262
AGENCIES: Office of the United States Trade Representative (USTR)
SYNOPSIS: Executive Order 13116 of March 31, 1999, Identification of Trade Expansion Priorities and Discriminatory Procurement Practices, requires the USTR to prepare an annual report identifying foreign country practices which, if eliminated, would be most likely to significantly increase U.S. exports. Though the USTR did not identify any "priority foreign government practice" in this report, the USTR has "focused on a number of practices which may warrant future enforcement action."
EDITOR'S NOTE: For more on the USTR's request for information on alleged discriminatory procurement practices of foreign governments, see the February 1, 2000, FEDERAL CONTRACTS DISPATCH "Identification of Foreign Countries Engaging in Discriminatory Procurement Practices."
The USTR's February 1, 2000, request also asked for information on foreign countries that engage in discriminatory government procurement practices. For more on the USTR's findings, see the May 9, 2000, FEDERAL CONTRACTS DISPATCH "United States Trade Representative; Annual Report on Discrimination in Foreign Government Procurement."
DATES: This report was submitted to the Committees on Finance of the United States Senate and the Committees on Ways and Means of the United States House of Representatives on May 1, 2000.
FOR FURTHER INFORMATION CONTACT: Demetrios Marantis, Associate General Counsel, Office of the U.S. Trade Representative, 600 17th Street, NW, Washington, DC 20508, 202-395-9626.
SUPPLEMENTAL INFORMATION: Executive Order 13116 requires the USTR to "review United States trade expansion priorities and identify priority foreign country practices, the elimination of which is likely to have the most significant potential to increase United States exports, either directly or through the establishment of a beneficial precedent." The executive order requires the USTR to submit a report on the identified practices to several Congressional committees.
In the report, the USTR identifies the following as "the top trade expansion priorities for 2000":
- Complete China's accession to the World Trade Organization (WTO) and secure approval of permanent Normal Trade Relations (NTR) status for China.
- Secure enactment of legislation promoting trade in Africa, the Caribbean, Central America, and Southeast Europe.
- Advance negotiations for the Free Trade Area of the Americas (FTAA)
- Pursue multilateral negotiations to open world markets to U.S. exports, particularly in agriculture and in a "wide range of sectors, including energy services, environmental services, audiovisual services, express delivery, financial services, telecommunications, professional services, private education and training, private healthcare, travel and tourism, and other sectors of great importance to the U.S. economy in particular, its high-tech sectors."
- Enhance monitoring and enforcement efforts of the various trade agreements to which the U.S. is a party.
The following are the "trade practices of significant concern" which the USTR will continue to monitor:
- European Union -- Airbus: The Airbus governments (Great Britain, France, Germany, and Spain) continue to subsidize their member companies by reimbursing 75% to 100% of all development costs and providing equity infusions, debt forgiveness, debt rollovers, and marketing assistance.
- India -- Textiles: India is not living up to its commitments under the December 31, 1994, memorandum of understanding (MOU) on textile products.
- Japan -- Automotive Sector: The Japanese government has been reluctant to take meaningful steps to actively deregulate and fully open its automotive sector, or to create an environment that would help promote a more competitive market in this sector.
- Japan -- Flat Glass: While the Japanese government's own data show that most Japanese distributors believe that foreign flat glass manufacturers offer equal or better prices, quality, and service than Japanese manufacturers, the world's four leading non-Japanese flat glass manufacturers, including two U.S. firms, still sell an insignificant amount of glass to Japan -- about 5% of the market. "The highly oligopolistic market structure and the tight control exerted by three Japanese manufacturers over the domestic glass distribution system though majority ownership, equity and financing ties, employee exchanges, and purchasing quotas remain the key barriers to market access in this sector."
- Korea -- Motor Vehicle Policies: While a December 1998 MOU between the U.S. and Korea was intended to improve U.S. manufacturers' access to the Korean automobile market, "anti-import activity continues, and negative perception of foreign motor vehicles persists, including, for example, the perception that buying a foreign car is an unpatriotic act that could lead to tax audits."
- Korea -- Treatment of Foreign, Research-Based Pharmaceuticals: U.S. concerns center on "(1) discrimination in the reimbursement pricing system; (2) lack of protection of intellectual property rights (IPR), particularly with respect to clinical data and patents; and (3) burdensome and non-science-based Korean regulatory requirements, particularly on the acceptance of foreign clinical test data, testing, and approval of new drugs."
- Malaysia -- Trade and Investment in Motor Vehicles: Malaysia imposes local content requirements on producers of motorcycles, automobiles, and commercial vehicles (45% to 60% for passenger and commercial vehicles, and 60% for motorcycles). Malaysia was to remove these local content requirements measures by January 1, 2000, unless additional time was granted by the WTO. On December 29, 1999, Malaysia made a formal request for an additional two years, but approval of this request has not occurred. "The United States hopes to receive increased interest from Malaysia in resolving this issue in a timely fashion."
- Mexico -- Customs Valuation: Mexico uses "reference prices" for a wide range of imported products, including foods, distilled spirits, chemicals, paper, textiles, apparel, footwear, steel, hand tools, and appliances. Companies importing the affected products below the government's minimum reference price must deposit cash in a designated Mexican financial institution to cover the difference in duties and taxes.
- Mexico -- Nutritional Products: To sell nutritional products, such as low-dosage vitamins, in Mexico, Mexican Health Ministry regulations require the inspection and approval of manufacturing facilities. However, Mexican authorities refuse to inspect U.S.-based manufacturing facilities, so U.S. exporters cannot sell their nutritional products in Mexico.
FOR FURTHER INFORMATION CONTACT: Barry McVay at 703-451-5953 or by e-mail to BarryMcVay@FedGovContracts.com.
Copyright 2000 by Panoptic Enterprises. All Rights Reserved.
Return to the Dispatches Library.
Return to the Main Page.