Embassy of the United States

Economics

Foreign Trade & Investment Archive

THE GLOBAL COMPETITIVENESS REPORT 2009-2010.
World Economic Forum. Xavier Sala-i-Martin. September 8, 2009.
Full Text [PDF format, 492 pages]

Switzerland tops the overall ranking in The Global Competitiveness Report 2009-2010. The United States falls one place to second position, with weakening in its financial markets and macroeconomic stability. Singapore, Sweden, and Denmark round out the top five. European economies continue to prevail in the top 10 with Finland, Germany and the Netherlands following suit. The United Kingdom, while remaining very competitive, has continued its fall from last year, moving down one more place this year to 13th, mainly attributable to continuing weakening of its financial markets.

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U.S.-AFRICA TRADE: OPTIONS FOR CONGRESSIONAL CONSIDERATION TO IMPROVE TEXTILE AND APPAREL SECTOR COMPETITIVENESS UNDER THE AFRICAN GROWTH AND OPPORTUNITY ACT.
U.S. Government Accountability Office. August 12, 2009.
Full Text [PDF format, 47 pages]

According to U.S. government officials, sub-Saharan Africa's (SSA) textile and apparel industry has not achieved the growth anticipated under the African Growth and Opportunity Act (AGOA). Despite the tariff reductions under AGOA, after an initial surge, U.S. imports of these products from beneficiary countries have declined in recent years (see figure). In view of this outcome, the 2008 Andean Trade Preference Extension legislation required GAO to prepare a report identifying changes to U.S. trade preference programs "to provide incentives to increase investment and other measures necessary to improve the competitiveness of [SSA] beneficiary countries in the production of yarns, fabric, and other textile and apparel inputs.

TRADE POLICY IN A TIME OF CRISIS: SUGGESTIONS FOR DEVELOPING COUNTRIES.
Centre for Economic Policy Research. Gary Hufbauer and Sherry Stephenson. May 2009.
Full Text [PDF format, 26 pages]

The world is enduring the worst economic setback since the Great Depression. Real estate and share prices have fallen sharply; major firms are failing; credit conditions are extremely tight; manufacturing production has dropped like a stone; commodity prices have plunged; and unemployment is rising everywhere. Poor countries are especially hard hit. According to the World Bank, slower economic growth in 2009 will add an additional 53 million people to those living on less than $1.25 a day and 64 million to those living with less than $2 a day (World Bank, 2009).

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SUB-SAHARAN AFRICA: EFFECTS OF INFRASTRUCTURE CONDITIONS ON EXPORT COMPETITIVENESS, THIRD ANNUAL REPORT.
U.S. International Trade Commission. Web posted May 8, 2009.
Full Text [PDF format, 195 pages]

Poor infrastructure conditions in the land transport, maritime transport, and electricity sectors undermine significantly the export competitiveness of many sub-Saharan African (SSA) industries, according to the report. SSA governments and the private sector are pursuing government reform, increased investment, new applications of technology, and other strategies to improve infrastructure conditions. Many of these strategies have been implemented in cooperation with neighboring countries, SSA regional organizations, multilateral institutions, and development agencies.

AUDACIOUSLY HOPEFUL: HOW PRESIDENT OBAMA CAN HELP RESTORE THE PRO-TRADE CONSENSUS.
Cato Institute. Daniel Ikenson and Scott Lincicome. April 28, 2009.
Full Text [PDF format, 40 pages]

The authors show how restoring the pro-trade consensus must be a priority of the Obama administration. If the United States indulges misplaced fears, restrains economic freedoms, and attempts to retreat from the global economy, the country will suffer slower economic growth and have greater difficulty facing future economic and foreign policy challenges. The determination of the president to arrest and reverse America's misguided and metastasizing aversion to trade could dramatically improve prospects for restoring the pro-trade consensus, says the report.

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TRADE PROFILES 2008.
World Trade Organization. Web posted on February 27, 2009.
Full Text [PDF format, 196 pages]

The Profiles gives quick references on national and trade statistics of World Trade Organization (WTO) members and countries which are in the process of negotiating WTO membership. It combines information on trade flows and trade policy measures of members, WTO observers and other selected economies.

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INFORMAL CROSS-BORDER TRADE AND TRADE FACILIATION REFORM IN SUB-SAHARAN AFRICA.
Organisation for Economic Co-operation and Development. Caroline Lesser and Evdokia Moise-Leeman. February 18, 2009.
Full Text [PDF format, 54 pages]

The informal sector still constitutes an important part of developing country economies. In Africa, it is estimated to represent 43 percent of official gross domestic product (GDP), thus being almost equivalent to the formal sector. The study reports that, while this phenomenon may provide short-term solutions to poor households, in the long term, it can seriously challenge the economic development of African countries. The study explores one particular aspect of the informal economy, namely informal cross-border trade in selected Sub-Saharan African countries, and identifies which trade facilitation measures, such as those currently negotiated at the World Trade Organisation, have the potential to encourage traders to switch from informal to formal trade.

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INTRODUCTION TO “CHINA’S GROWING ROLE IN WORLD TRADE.”
Working Paper, National Bureau of Economic Research. Robert C. Feenstra and Shang-Jin Wei. February 2009.
Full Text [PDF format, 41 pages]

Over the last three decades, the value of Chinese trade has approximately doubled every four years. The rapid growth has transformed the country from a negligible player in world trade to the world's second largest exporter, as well as a substantial importer of raw materials, intermediate inputs, and other goods. The paper provides an overview of the microstructure of Chinese trade, its macroeconomic implications, trade disputes with other WTO member countries, and the role of foreign firms.

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U.S. EXPORT FACT SHEET.
International Trade Administration, U.S. Department of Commerce. February 11, 2009.
Full Text [PDF format, 1 page]

The December 2008 U.S. International Trade in Goods and Services report by the Department of Commerce’s U.S. Census Bureau and the Bureau of Economic Analysis, U.S. exports of goods and services grew by 12.0% in 2008 to $1.84 trillion, while imports increased 7.4% to $2.52 trillion. In December 2008, the U.S. goods and services trade deficit ($39.9 billion) was the lowest monthly deficit since February 2003. This led to a 3.3% improvement in the annual goods and services deficit for 2008. Exports comprised 13.1% of U.S. GDP in 2008. To put in historical terms, exports were 9.5% of U.S. GDP five years earlier (2003), and 5.3% 40 years ago (1968).

NFTC CAUTIONS AGAINST GLOBAL PROTECTIONISM IN RESPONSE TO FINANCIAL CRISIS.
National Foreign Trade Council. Jennifer Cummings.  January 28, 2009.
Full Text [HTML format, various paging]
Report to the TPRB from the Director-General on the Financial and Economic Crisis and Trade-Related Developments. [PDF format, 14 pages]

In response to a report released late last week by the World Trade Organization (WTO), which revealed that key U.S. trading partners are imposing higher tariffs on exports, National Foreign Trade Council issues a response statement.

HEALTH AND SAFETY CONCERNS OVER U.S. IMPORTS OF CHINESE PRODUCTS: AN OVERVIEW.
Congressional Research Service, RS22713, Library of Congress. Wayne M. Morrison. Web posted January 29, 2009.
Full Text [PDF format, 10 pages]

China is a major source of United States imports of consumer products, such as toys, and an increasingly important supplier of various food products. Reports of unsafe seafood, pet food, toys, tires, and other products imported from China over the past year or so have raised concern in the U.S. over the health, safety, and quality of imported Chinese products. The report provides an overview of this issue and implications for U.S.-China trade relations and will be updated as events warrant.

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AA09010
Christy, David BOOTSTRAPPING TRADE (World Policy Journal, Vol. 25, no. 4, Winter 2008/2009, pp. 127-131)
Full Text [PDF format, 5 pages]

The lessons of the Smoot-Hawley tariff act make it easy to advocate free trade, says the author, a Washington trade lawyer. However, he notes that U.S. policies must recognize both the benefits and the costs of free trade, and that it must be supported as a matter of smart politics in a time of economic trouble. More needs to be done, however, to avoid unacceptable social costs. The WTO will remain an important institution despite its detractors, says Christy; signaling U.S. continued support for trade liberalization would give it a boost. However, he argues that there is little that any U.S. administration could do to speed the Doha Round, and that the U.S. should not take anything off the table because any retrenchment would have a negative impact on the talks. He praises the G20’s pledge not to erect trade barriers for at least a year, but he raises a possibility that the U.S. and other WTO members may have to cut a few corners on trade to find the way out of the crisis despite this pledge. He also argues against opening NAFTA in an attempt to renegotiate it as the U.S. “would have to pay Canada and Mexico dearly for every change we were to seek.”

2008 REPORT TO CONGRESS ON CHINA’S WTO COMPLIANCE.
U.S. Trade Representative. December 2008.
Full Text [PDF format, 115 pages]

The report is the statutorily-mandated annual report on China’s compliance with its World Trade Organization accession obligations. The report highlights the status of China’s ongoing efforts in such areas as intellectual property rights, industrial policy, agriculture, and services.

OUTLOOK FOR U.S. AGRICULTURAL TRADE.
Economic Research Service, U.S. Department of Agriculture. Web posted December 2, 2008.
Full Text [PDF format, 19 pages]

The Outlook offers the latest value and volume of U.S. agricultural exports, by commodity and region, as well as the agricultural trade balance and the import and export outlook.

USCC 2008 ANNUAL REPORT.
U.S.-China Economic and Security Review Commission. Web posted November 20, 2008.
Full Text [PDF format, 405 pages]

China relies on heavy-handed government control over its economy to maintain an export advantage over other countries. The result: China has amassed nearly $2 trillion in foreign exchange and has increasingly used its hoard to manipulate currency trading and diplomatic relations with other nations. These are among the conclusions in the report. “Rather than use this money for the benefit of its citizens, by funding pensions and erecting hospitals and schools, for example, China has been using the funds to seek political and economic influence over other nations,” said Larry Wortzel, chairman of the Commission.

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WORLD TARIFF PROFILES 2008.
World Trade Organization and United Nations Conference on Trade and Development and the International Trade Centre. Web posted November 5, 2008.
Full Text [PDF format, 235 pages]

Numbers play a fundamental role in key areas of trade negotiations. Perhaps more than in any previous multilateral round of negotiations, tariffs and formulas are at the core of the Doha negotiations. World Tariff Profiles provides detailed data on the bound and applied tariffs of WTO members.

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GLOBAL BEEF TRADE: EFFECTS OF ANIMAL HEALTH, SANITARY, FOOD SAFETY, AND OTHER MEASURES ON U.S. BEEF EXPORTS.
U.S. International Trade Commission. John Giamalva et al. Web posted October 8, 2008.
Full Text [PDF format, 279 pages]

U.S. beef processors and beef cattle ranchers lose billions of dollars in export opportunities each year because of animal health and food safety measures in other countries that are inconsistent with international standards and vary by country, according to the study. Animal health and food safety regulations in Japan and Korea accounted for most of the export losses over the period. The study provides an overview of the U.S. and global beef markets and information on animal health and food safety measures facing U.S. and other major beef exporters in major destination markets.

THE 19TH U.S. – CHINA JOINT COMMISSION ON COMMERCE AND TRADE (JCCT): FACT SHEET.
U.S. Trade Representative. Web posted September 19, 2008.
Full Text [PDF format, 3 pages]

U.S. Commerce Secretary Carlos M. Gutierrez and U.S. Trade Representative Susan C. Schwab, together with Chinese Vice Premier Wang Qishan, convened the 19th U.S. – China Joint Commission on Commerce and Trade (JCCT). The highlights of the topics discussed, include agreements in intellectual property rights, healthcare, agriculture, procurement and services.

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THE YEAR IN TRADE 2007.
U.S. International Trade Commission. Web posted August 6, 2008.
Full Text [pdf format, 229 pages]

The report provides a practical review of U.S. international trade laws and actions in 2007, a summary of the operation of the World Trade Organization (WTO), and an overview of U.S. free trade agreements and negotiations and of U.S. bilateral trade relations with major trading partners. It also includes complete listings of antidumping, countervailing duty, safeguard, intellectual property rights infringement, and section 301 cases undertaken by the U.S. government in 2007.

GLOBAL TRADE AND THE MARITIME TRANSPORTATION REVOLUTION.
National Bureau of Economic Research. David S. Jacks and Krishna Pendakur. June 2008.
Full Text [pdf format, 42 pages]

What is the role of transport improvements in globalization? The study argues that the nineteenth century is the ideal testing ground for this question: freight rates fell on average by 50% while global trade increased 400% from 1870 to 1913. The study estimates the first indices of bilateral freight rates for the period and directly incorporates these into a standard gravity model. The results are striking as there is no evidence that the maritime transport revolution was the primary driver of the late nineteenth century global trade boom. Rather, the most powerful forces driving the boom were those of income growth and convergence.

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WORLD TRADE REPORT 2008: TRADE IN A GLOBALIZING WORLD.
World Trade Organization. Web posted July 18, 2008.
Full Text [pdf format, 204 pages]

Trade and globalization have brought greater prosperity to hundreds of millions as well as greater stability among nations, according to the report. Trade has allowed nations to benefit from specialization and economies of scale to produce more efficiently. It has raised productivity, supported the spread of knowledge and new technologies, and enriched the range of choices available to consumers. But deeper integration into the world economy has not always proved popular, nor have the benefits of trade and globalization necessarily reached all sections of society. The report is devoted to an examination of the gains from international trade and the challenges arising from higher levels of integration.

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HOW CHANGES IN THE VALUE OF THE CHINESE CURRENCY AFFECT U.S. IMPORTS.
Congressional Budget Office. July 2008.
Full Text [pdf format, 24 pages]

Rapid growth in imports of merchandise from the People’s Republic of China over the past decade has posed a challenge for competing U.S. manufacturers. Some observers believe that the Chinese government has contributed to growth in U.S. imports by maintaining an undervalued currency, and there have been calls for China to revalue its currency, the renminbi, that is, to raise its value (or allow it to rise) relative to the dollar as a way to level the playing field for U.S. manufacturers.

THE BUFFETT PLAN FOR REDUCING THE TRADE DEFICIT.
Levy Economics Institute, Bard College. Dimitri B. Papadimitriou et al. July 2008.
Full Text [pdf format, 40 pages]

The paper examines a plan proposed by Warren Buffett, in which importers would be required to obtain certificates proportional to the amount of non-oil goods and possibly also services they brought into the country. These certificates would be granted to firms that exported goods. Exporting firms could then sell certificates to importing firms on an organized market. Starting from a relatively neutral projection of all major variables for the U.S. economy, the report estimates that the plan would raise the price of imports by approximately 9 percent, quickly reducing the current account deficit to about 2 percent of GDP. The possible instability in the price of certificates and retaliation by U.S. trade partners are included in the paper.

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HOW MUCH OF CHINESE EXPORTS IS REALLY MADE IN CHINA?: ASSESSING DOMESTIC VALUED ADDED WHEN PROCESSING TRADE IS PERVERSE.
National Bureau of Economic Research. Robert Koopman et al. June 2008.
Full Text [pdf format, 28 pages]

As China's export juggernaut employs many imported inputs, there are many policy questions for which it is crucial to know the extent of domestic and foreign value added in its exports. According to the report, the share of foreign content in China's exports is at about 50%. There are also variations across sectors and firm ownership. Those sectors that are likely labeled as relatively sophisticated such as electronic devices have particularly high foreign content (about 80%). Foreign-invested firms also tend to have higher foreign content in their exports than do domestic firms.

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GLOBAL FDI POLICY: CORRECTING A PROTECTIONIST DRIFT.
Council on Foreign Relations. David M. Marchick and Matthew J. Slaughter. June 2008.Full Text [pdf format, 56 pages]

Foreign investment has been a principal engine of global economic growth in recent years. Both developed and developing countries have reaped substantial gains. This investment offers direct benefits to host countries, including job creation and increased tax revenue. It also helps source countries, where multinational firms are based, by allowing these firms to compete and earn profits abroad. However, foreign investment is not immune to the resistance in respect to the movement of goods and services. Calls to restrict investment are growing in many countries, with potentially significant adverse political and economic consequences. Acknowledging governments’ legitimate national security interests, the report lays out principles for host countries to follow in regulating foreign investment.

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WORLD TRADE INDICATORS 2008.
World Bank. Roumeen Islam and Gianni Zanini. Web posted June 29, 2008.
Full Text [pdf format, 150 pages]

Over the last decade, countries have improved many aspects of policy relevant for trade. The most recent estimates indicate that all regions and income groups have witnessed substantial real growth in trade during this time. In 2007, average real growth in trade, 7.7 percent for the world as a whole, is within the 7–9 percent growth range of the last decade. Groups that have the best policies and institutions overall also tend to have stronger and more consistent trade performance. The trade reform agenda going forward is about rationalizing substantial tariff peaks, particularly in agriculture, reducing overall tariff levels in some groups or countries, reducing tariff escalation aimed at protecting special goods, liberalizing services trade, and improving the other behind-the-border factors that affect trade expansion and the gains from it.

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POLICY AND RISK PROCESSES OF TRADE-RELATED BIOLOGICAL INVASIONS.
Economic Research Service, U.S. Department of Agriculture. Michael Springborn et al. June 2008.
Full Text [pdf format, 24 pages]

The report summarizes the insights on the risk involved in trade-related introduction of non-indigenous species (NIS). The report analyzes the theoretical relationships between trade, trade policy, in the form of tariffs, and NIS-related damage. The authors characterize the optimal mix of tariffs and inspections and show how the balance depends on trading partner attributes, such as the infection rate of shipments and the marginal NIS damage level. Overall, this collection of research on trade-related NIS introductions highlights the welfare and biological implications of both broad and differentiated policy instruments, and the challenge of empirically supporting the latter.

AA08229
Bergsten, C. Fred A PARTNERSHIP OF EQUALS: HOW WASHINGTON SHOULD RESPOND TO CHINA'S ECONOMIC CHALLENGE (Foreign Affairs, Vol. 87, No. 4, July-August 2008)
Full Text [html format]

According to Bergsten, director of the Peterson Institute for International Economics, China has become one of the world economic superpowers even though it has an authoritarian government and most of the population remains poor. While the U.S. and the European Union strive to bring China into the world economic order they have built and defended for 60 years, China is increasingly challenging that order without offering a real alternative. Even though China has the biggest stake in the global trading system, its refusal to participate constructively in WTO negotiations almost guarantees disastrous failure for the round. Possibly even worse, China’s challenge to the international monetary system by intervening massively in the foreign-exchange markets to maintain a hugely undervalued yuan, contrary to IMF rules, has created imbalances that could trigger a crash in the U.S. dollar and wreck economies around the world. China is similarly acting uncooperatively in commodity markets, environmental negotiations, and foreign aid. “China continues to act like a small country with little impact on the global system at large and therefore little responsibility for it,” Bergsten writes. What the U.S. should do is approach China to provide joint leadership of the global economic system. China’s own interests should lead it to accept an invitation to accept increasing responsibility for the functioning of the world economy.

AA08230
Hirst, David IMF FINALLY KNOCKS ON UNCLE SAM'S DOOR (The Age / Australia, June 30, 2008)
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The reported forthcoming investigation of the U.S. Federal Reserve by the International Monetary Fund (IMF) signals a loss of the Fed's credibility and a blow to the integrity of the U.S. financial system. David Hirst, writing a column in The Age of Australia, quoted Der Speigel as writing that the IMF investigation "is nothing less than an x-ray of the entire U.S. financial system" in which the Fed has bailed out profligate U.S. financial institutions. But Hirst holds little hope that the IMF investigation will help reform the U.S. financial system. Rather, he predicts that it will "be buried in the United States by pom-pom waving on CNBC telling all what a great time it is to buy." Hirst reports that other financial groups have similarly dim assessments of the Fed's performance in dealing with the financial scandals during the current administration. He notes, however, that other leading members of the IMF such Canada, Britain, and Italy have undergone similar investigations. "Meanwhile, the U.S. markets have entered bear territory, the economy has done likewise and we are at the beginning of a long and tortuous process before rebuilding can even commence," Hirst writes.

TRADE, THE ECONOMY AND SMALL BUSINESS.
Small Business & Entrepreneurship Council. Web posted June 6, 2008.
Full Text [pdf format, 12 pages]

The study explains the economics of free trade, the ills of protectionism, and corrects mistaken thinking on such issues as imports and trade deficits. It also reveals the tremendous economic benefits that have resulted from NAFTA, including a 236% increase in U.S. goods exports to Mexico from 1992 to 2007, compared to inflation running at 39% over the same period. The report highlights the economic benefits of expanded trade with the three nations, Colombia, South Korea and Panama, the U.S. has pending free trade deals. [Note: contains copyrighted material]

THE ANATOMY OF CHINA’S EXPORT GROWTH.
Policy Working Paper, World Bank. Mary Amiti and Caroline Freund. Web posted June 8, 2008.
Full Text [pdf format, 29 pages]

The working paper analyzes China's real export growth, 500 percent since 1992. Within that period, China's export structure changed dramatically, with an incline in export shares in electronics and machinery and a decline in agriculture and apparel. The export growth was accompanied by increasing specialization and was mainly accounted for by high export growth of existing products rather than in new varieties. In consistent with an increased world supply of existing varieties, China's export prices to the United States fell by an average of 1.5 percent per year between 1997 and 2005, while export prices of these products from the rest of the world to the United States increased by 0.4 percent annually over the same period.
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FOREIGN DIRECT INVESTMENT IN THE UNITED STATES: AN ECONOMIC ANALYSIS.
Congressional Research Service, RS21857, Library of Congress. James K. Jackson. Web posted May 20, 2008.
Full Text [pdf format, 6 pages]

Foreign direct investment in the United States declined sharply after 2000, when a record $300 billion was invested in U.S. businesses and real estate. In 2006, according to Department of Commerce data, foreigners invested $184 billion. Foreign direct investments are highly sought after by many State and local governments that are struggling to create additional jobs in their regions. While some in Congress encourage such investment to offset the perceived negative economic effects of U.S. firms investing abroad, others are concerned about foreign acquisitions of U.S. firms that are considered essential to U.S. national and economic security.

MAKING TRADE WORK FOR DEVELOPING COUNTRIES.
Organisation for Economic Co-Operation and Development. May 2008.
Full Text [pdf format, 8 pages]

Adapting to change is vital for success in the modern global economy, for individuals, companies, industries and regions. New technologies breed new industries, and freer trade leads to new markets as well as global competition. An adaptation to structural change is necessary for economies to reap the benefits of new technologies and emerging market opportunities. Discussion of economic gains and costs from increased trade liberalization often focuses on developed countries, but developing countries have also undertaken significant trade liberalization in the past 20 years as they saw that it could boost economic growth. Some counties have benefited more than others from trade reforms, however, and there are lessons to be learnt from these experiences.

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GLOBAL COMPETITION AND EUROPEAN COMPANIES’ LOCATION DECISION.
European Foundation. Web posted May 17, 2008.
Full Text [pdf format, 20 pages]

This background paper for the upcoming Eurofound conference in Poznan, Poland outlines some of the main issues concerning global competitiveness and the location of firms in Europe. It provides the fundamental ideas of geographical economy, presents relevant data, and defines key concepts. The conference brings together representatives from companies, the social partners and policymakers, in order to contribute to a deeper understanding of what is required from all parties to ensure a competitive and socially cohesive Europe.

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U.S.-FRENCH COMMERCIAL TIES.
Congressional Research Service, RL32459, Library of Congress. Raymond J. Ahearn. Web posted May 14, 2008.
Full Text [pdf format, 16 pages]

U.S. commercial ties with France are extensive, mutually profitable, and growing. With over $1.2 billion in commercial transactions taking place between the two countries every day of the year, each country has an increasingly large stake in the health and openness of the other’s economy. France is the 9th largest merchandise trading partner for the United States and the United States is France’s largest trading partner outside the European Union. While some public opinion polls at the time suggested support for economic boycotts as a way of expressing opposition to France’s position on Iraq, an economic backlash appears not to have materialized. Effective boycotts would jeopardize thousands of jobs on both sides of the Atlantic.

INTERNATIONAL ILLEGAL TRADE IN WILDLIFE: THREATS AND U.S. POLICY.
Congressional Research Service, RL34395, Library of Congress. Liana Sun Wyler, et. al. March 3, 2008.
Full Text [pdf format, 49 pages]

Global trade in illegal wildlife is estimated to be worth at least $5 billion annually. Some of the most lucrative illicit wildlife commodities include tiger parts, caviar, ivory, rhino horn, and exotic birds and reptiles. Demand for illegally obtained wildlife is growing. International wildlife smuggling presents several potential environmental and national security threats to the United States.

EUROPEAN UNION-U.S. TRADE AND INVESTMENT RELATIONS: KEY ISSUES.
Congressional Research Service, RS34381, Library of Congress. Raymond Ahearn, et. al. February 14, 2008.
Full Text [pdf format, 39 pages]

The United States and EU share a mutually beneficial economic relationship. Not only are trade and investment ties between the two partners huge in absolute terms, but the EU share of U.S. global trade and investment flows has remained high and relatively constant over time, despite the rise of Asian trade and investment flows. Washington and Brussels currently are working to resolve a number of issues, including a dispute between the aerospace manufacturers and conflicts over hormone-treated beef, bio-engineered food products, and protection of geographical indicators.

INDIA'S TRADE POLICY CHOICES: MANAGING DIVERSE CHALLENGES.
Institute of Development Studies and Indira Gandhi Institute of Development Research, Carnegie Endowment for International Peace. Sandra Polaski, et. al., Web posted January 29, 2008.
Full Text [pdf format, 103 pages]

As India’s 1.1 billion people more deeply engage the global economy, the country’s policy makers face the challenge of devising trade policies that take into account the diversity of its economy and overall poverty of its people, some 800 million of whom live on less than $2 per day. There are opportunities offered by increased economic integration, but they bring political, economic and cultural challenges to this largely rural economy.

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TRADE REMEDY LEGISLATION: APPLYING COUNTERVAILING ACTION TO NONMARKET ECONOMY COUNTRIES.
Vivian C. Jones. Congressional Research Service, Library of Congress. Updated December 6, 2007.
Full Text [pdf format, 27 pages]

Due to the mounting U.S. trade deficit with China and China’s refusal to let its exchange rate float, Congress has introduced legislation to make China and other nonmarket economy countries more responsive to countervailing duty laws. This legislation would provide for additional duties on imports when imports have been subsidized by the country of origin or if these imports could be injurious to a U.S. producer.

This report discusses the legislation as well as recent Administration actions.

DEVELOPING COUNTRIES AND ENFORCEMENT OF TRADE AGREEMENTS: WHY DISPUTE SETTLEMENT IS NOT ENOUGH.
Chad P. Bown and Bernard M. Hoekman. Development Research Group, Policy Research Working Paper, World Bank. Web posted December 18, 2007.
Full Text [pdf format, 33 pages]

Poor countries are rarely challenged in formal World Trade Organization (WTO) trade disputes. “This paper examines the political-economic causes of the failure to challenge poor countries, and discusses the static and dynamic costs and externality implications of this failure. Given the weak incentives to enforce World Trade Organization rules and disciplines against small and poor members, bolstering the transparency function of the World Trade Organization is important for making trade agreements more relevant to trade constituencies in developing countries.” These arguments can also be applied to reciprocal trade agreements.

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ECONOMIC SANCTIONS: AGENCIES FACE COMPETING PRIORITIES IN ENFORCING THE U.S. EMBARGO ON CUBA.
U.S. General Accountability Office (GAO). Web posted December 18, 2007.
Full Text [pdf format, 96 pages]

In 2001, the Department of Treasury’s Office of Foreign Assets Control (OFAC) and the Department of Commerce’s Bureau of Industry and Security (BIS) loosened embargo restrictions on some trade with Cuba. In 2004, however, OFAC tightened rules on travel, cash transfers, and gift parcels to Cuba. BIS, on the other hand, processed twice as many export license applications to Cuba in 2006 than in 2001.

GAO was asked to examine rule changes and their impact on U.S. exports, travel, cash transfers, and gift parcels from 2001 to 2005. This report outlines GAO’s findings and recommendations.

INTEGRATION AND TRADE SECTOR BRIEFS: LATIN AMERICA ANNUAL TRADE ESTIMATES FOR 2007.
Rafael Cornejo, Mauricio Mesquita Moreira, and Matthew Shearer. Integration and Trade Sector, Inter-American Development Bank. December 2007.
Full Text [pdf format, 7 pages]

Latin American exports grew 11 percent in 2007. This is the fifth consecutive year of growth, although the pace slowed from the previous three years. Intra-regional trade increased to 17.3 percent from 16.2 percent in 2006. The region’s strong export performance has been driven by two favorable factors: a robust U.S. economy and growth in demand from China.

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INTERNATIONAL TRADE STATISTICS 2007.
International Trade Statistics Section, World Trade Organization (WTO). Web posted November 12, 2007.
Full Text [pdf format, 262 pages]

This edition provides a more user-friendly set of statistical tables including information on international trade in services. The publication has five chapters. Chapter I describes world trade trends; Chapter II focuses on trade in merchandise; and Chapter III covers trade in commercial services. Chapter IV explains the metadata (sources and definitions of the data); and Chapter V (Appendix) provides detailed time series tables.

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2007 REPORT TO CONGRESS ON CHINA’S WTO COMPLIANCE.
U.S. Trade Representative. December 11, 2007.
Full Text [pdf format, 116 pages]

After six years, most of China’s WTO commitments have been implemented. The U.S. has tried to hold China fully accountable to these commitments; and over the past year, the U.S. has had frank bilateral discussions with China and has taken enforcements actions at the WTO where dialogue has not resolved concerns. Nonetheless, the U.S. and China continue to work together to find pragmatic solutions to their problems.

WORLD TRADE REPORT 2007: SIX DECADES OF MULTILATERAL TRADE COOPERATION: WHAT HAVE WE LEARNT?
Economic Research and Statistics Division, World Trade Organization (WTO). Web posted December 4, 2007.
Full Text [pdf format, 436 pages]

This report reviews lessons learned over the past 60 years of international trade cooperation and identifies future challenges. The report draws from economics, political economy, political science, and international relations perspectives. It examines the multilateral trading system of GATT/WTO and the evolution of market access and the dispute settlement system.

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RUSSIAN WTO ACCESSION: WHAT HAS BEEN ACCOMPLISHED, WHAT CAN BE EXPECTED.
David Tarr. Policy Research Working Paper, World Bank. Web posted December 4, 2007.
Full Text [pdf format, 20 pages]

“This paper summarizes the principal reform commitments that Russia has undertaken as part of its World Trade Organization (WTO) accession negotiations, providing detailed assessments in banking, insurance, and agriculture. The paper assesses the gains to the Russian economy from these commitments. . .” The author compares Russia’s WTO commitments to those of other countries that recently acceded to the WTO and discusses the remaining issues and the time frame for Russian accession.

[Note: Contains copyrighted material.]

BRAZIL AND TRADE DEVELOPMENTS.
Moana Erickson. Center for Strategic and International Studies (CSIS). Web posted November 27, 2007.
Full Text [pdf format, 4 pages]

This report provides an overview of Brazil’s economy and offers projections for 2008. Brazil’s current status as 10th largest economic power in the world “is remarkable in the context of its highly bureaucratic layers of government,” excessive regulations, ineffective law enforcement, and high tax and interest rates. However, Brazil has a stable democratic system with opposition parties, has strong macroeconomic policies making it an attractive market for regional and direct foreign investment, and its exports and trade surplus are at record highs.

[Note: Contains copyrighted material.]

U.S. CLOTHING IMPORTS FROM VIETNAM: TRADE POLICIES AND PERFORMANCE.
Michael F. Martin. Congressional Research Service (CRS), Library of Congress. November 27, 2007.
Full Text [pdf format, 40 pages]

U.S. clothing imports from Vietnam grew from nothing in 2000 to $3.2 billion in 2006. Vietnam is now the fifth largest source of clothing imports to the U.S. Much of this trade is due to liberal U.S. trade policies with Vietnam, but these policies have raised concerns about possible dumping by Vietnamese clothing exporters. This report looks at the Department of Commerce’s monitoring program and antidumping actions Congress could take.

HELP OR HINDRANCE? THE IMPACT OF HARMONIZED STANDARDS ON AFRICAN EXPORTS. Witold Czubala, Ben Shepherd, and John S. Wilson. Policy Research Working Paper, World Bank. November 1, 2007.
Full Text

This study tests “the hypothesis that product standards harmonized to de facto international standards are less trade restrictive than ones that are not.” The authors found that non-harmonized standards reduce African exports and that EU standards harmonized to ISO (International Standards Organization) standards are less trade restricting. The study also found that efforts to harmonize national standards with international norms would probably produce benefits through trade expansion.

INTERNATIONAL TRADE: AN OVERVIEW OF USE OF U.S. TRADE PREFERENCE PROGRAMS BY BENEFICIARIES AND U.S. ADMINISTRATIVE REVIEWS. U.S. General Accountability Office (GAO). Web posted October 29, 2007.
Full Text [pdf format, 80 pages]

“Goods imported into the United States under trade preference programs, which extend unilateral tariff reductions to over 130 developing countries to assist their economies, totaled approximately $92 billion in 2006. The United States offers four primary trade preference programs—the Generalized System of Preferences (GSP), the Caribbean Basin Initiative (CBI), the Andean Trade Preference Act (ATPA), and the African Growth and Opportunity Act (AGOA).” Since Congress has authority to renew these programs, it asked GAO to identify and compare key features, analyze their use, and examine agency reviews.

SENDING MONEY HOME: WORLDWIDE REMITTANCE FLOWS TO DEVELOPING COUNTRIES. International Fund for Agricultural Development (IFAD), United Nations. Web posted October 19, 2007.
Full Text [pdf format, 20 pages]

Remittances are defined as the portion of migrant workers’ earnings that are sent home. During 2006, it was estimated that 150 million migrants sent more than $300 billion to their families in developing countries. This report includes a remittance map that shows migrant populations, percentage of migrants sending remittances, average annual amounts remitted, and the average frequency of transfers. The report covers 162 developing countries and includes an analysis and data tables.

WORLD INVESTMENT REPORT 2007: TRANSNATIONAL CORPORATIONS, EXTRACTIVE INDUSTRIES AND DEVELOPMENT. United Nations Conference on Trade and Development (UNCTD), United Nations. Web posted October 16, 2007.
Full Text [pdf format, 323 pages]

“Foreign direct investment represents the largest share of external capital flows to developing countries.” In 2006, more than $380 billion of foreign direct investment went to developing countries. This report focuses on the “role of transnational corporations in extractive industries, and documents their presence in many of the world’s poorest economies.”

CLOTHING AND EXPORT DIVERSIFICATION: STILL A ROUTE TO GROWTH FOR LOW-INCOME COUNTRIES? Paul Brenton and Mombert Hoppe. Policy Research Working Paper, Poverty Reduction and Economic Management Network, International Trade Department, World Bank. Web posted September 1, 2007.
Full Text: [May need to cut and paste URL]

“Can the clothing sector be a driver of export diversification and growth for today’s low-income countries as it was in the past for countries that have graduated into middle income?” The authors assessed this issue taking into account the changes in the clothing markets. They then estimated the exports from developing countries to E.U. and U.S. markets. The results showed that there is a general bias against apparel from African countries that is only partially overcome by trade preferences.

ANNUAL REPORT: 2007. World Trade Organization (WTO). Web posted August 27, 2007.
Full Text [pdf format, 132 pages]

This report presents the current status and developments of the Doha Development Round, which as been the main focus of the WTO this past year. The members and the secretariat also worked to advance “sustainable development” rejecting trade that would lead to depletion of natural resources. This effort includes negotiations to reduce trade distorting agricultural subsidies that lead to overproduction and fisheries subsidies that encourage over-fishing. A new focus for the WTO in 2006 was the Aid for Trade initiative. This initiative is aimed at helping developing countries participate more effectively in the global trading system.

ANNUAL DEFICITS CONTINUE FOR U.S. TRADE IN ADVANCED TECHNOLOGY PRODUCTS. Lawrence M. Rausch and Derek Hill. InfoBrief, Science Resources Statistics, National Science Foundation. August 2007.
Full Text [pdf format, 10 pages]

During the 1990s, the U.S. trade in advanced technology products typically produced trade surpluses; but beginning in 2001, the trade balance for these products began to erode. In 2006, the trade deficit in technology products was $38.3 billion. This paper provides an overview of the growing trade imbalance in 11 major technology areas. This information and data were gleaned from the U.S. Census Bureau, Foreign Trade Division.

U.S. CLOTHING AND TEXTILE TRADE WITH CHINA AND THE WORLD: TRENDS SINCE THE END OF QUOTAS. Michael F. Martin. Congressional Research Service (CRS), Library of Congress. July 10, 2007.
Full Text [pdf format, 32 pages]

The last set of quotas on the Agreement on Textiles and Clothing (ATC) were eliminated on January 1, 2005. Many analysts expected an increase of the clothing and textiles trade once these quotas were terminated. Although this market grew faster than before, there has not been a significant shift in production; and there is no clear evidence that the elimination of the quotas has led to a reduction of textile jobs in the U.S. However, Congress has concerns about the post-ATC clothing and textile trade industry. This report examines these issues and possible options.

TRADE DEFICIT IN FOOD SAFETY: PROPOSED NAFTA EXPANSIONS REPLICATE LIMITS ON U.S. FOOD SAFETY POLICY THAT ARE CONTRIBUTING TO UNSAFE FOOD IMPORTS. Mary Bottari, Erica Maharg, Todd Tucker, Lori Wallach and Sandra Zhao. Public Citizen's Global Trade Watch, Public Citizen. July 2007.
Full Text [pdf format, 32 pages]

This report analyzes the seafood import safety problems in the new free trade agreement (FTA) countries. The authors assert that current policies to protect consumers from dangerous or potentially deadly imported food products are failing. Existing trade rules limit safety standards on imported products to foreign governments’ regulations. Under the proposed free trade agreements (FTAs) with Peru and Panama, safety standards and inspections will be limited to “what safety standards the United States can require for imported foods and how much inspection is permitted.” 

THE YEAR IN TRADE 2006: OPERATION OF THE TRADE AGREEMENTS PROGRAM: 58th Report. U.S. International Trade Commission. July 2007.
Full Text [pdf format, 210 pages]

The trade agreement program report is the primary method Congress has of receiving factual information on trade policy and its administration. “The trade agreements program includes ‘all activities consisting of, or related to, the administration of international agreements which primarily concern trade and which are concluded pursuant to the authority vested in the President by the Constitution’ and congressional legislation.”

MILK MADNESS. Chris Edwards. Tax & Budget Bulletin, Cato Institute. July 2007.
Full Text [pdf format, 2 pages]

The U.S. government has subsidized and regulated the dairy industry since the 1930s through price support, income support, import barriers, and export subsidies. These subsidies result in a dairy industry that is the “most rigidly controlled of all agricultural markets.” The author argues that the 2007 farm bill should repeal many of these special interest subsidies.

FREE TRADE AGREEMENTS: IMPACT ON U.S. TRADE AND IMPLICATIONS FOR U.S. TRADE POLICY. William H. Cooper. Congressional Research Service (CRS), Library of Congress. Updated July 10, 2007.
Full Text [pdf format, 19 pages]

“Free trade areas (FTAs) are arrangements among two or more countries under which they agree to eliminate tariff and nontariff barriers on trade in goods among themselves.” The U.S. has engaged or proposed negotiations to establish bilateral or regional free trade arrangements with a number of trading partners. These agreements have increased significantly under the Bush Administration. 

Congressional leaders and the Administration have agreed on policy priorities that are to be included in all pending FTAs. These priorities are: (1) five core labor standards; (2) seven multilateral environmental agreements; (3) affordable generic pharmaceuticals; (4) port security; and (5) foreign investor rights.

FOOD AND AGRICULTURAL IMPORTS FROM CHINA. Geoffrey S. Becker. Congressional Research Service (CRS), Library of Congress. Updated July 17, 2007.
Full Text [pdf format, 18 pages]

U.S. food and agricultural imports have increased significantly in recent years especially from China, which increased 346% from 1996 to 2006. Recent incidents of imported food products have raised questions in Congress concerning the current U.S. food safety system. Congress has held hearings, requested reports, and introduced bills on food safety oversight with the possible creation of a new food safety administration.

AA07295
Jacoby, Ulrich. GETTING TOGETHER (Finance & Development, vol. 44, no. 2, June 2007, pp. 34-35)
Full text [html format]

China is fast becoming a major player in the economies of sub-Saharan Africa (SSA), offering trade and investment in a drive to secure oil and minerals needed for its own development, writes Ulrich Jacoby, a senior economist in the IMF’s African Department. Jacoby’s figures indicate that from 2000-2005, SSA’s exports to China surged nearly 400 percent, accounting for about one-fifth of the region’s total export growth. In 2005 China received 25 percent of SSA’s raw materials exports and 17 percent of its fuel exports.

Conversely, China’s exports to SSA, mostly manufactured goods, rocketed 370 percent during the same period to more than $13 billion, accounting for almost 15 percent of the region’s imports. On the investment front, Jacoby wrote that China has launched multi-billion projects to build an oil refinery in Angola, and a railway, a port and a hydroelectric power station in Gabon in return for exclusive rights to extract iron ore from a Gabonese mine. The major beneficiaries of China’s loans and credit lines to SSA, totaling about $19 billion, are Angola, Equatorial Guinea, Gabon, Republic of Congo and Nigeria, all of which are endowed with abundant resources.

SHADOW SOVEREIGN RATINGS FOR UNRATED DEVELOPING COUNTRIES. Sanket Mohapatra and Prabal De, and Dilip Ratha. Policy Research Working Paper, World Bank. Web posted June 21, 2007.
Full Text [pdf format, 37 pages]

“The authors attempt to predict sovereign ratings for developing countries that do not have risk ratings from agencies such as Fitch, Moody's, and Standard and Poor's.” Ratings can affect capital flows to developing countries through bond, loan, and equity markets, and they can act as a ceiling for the foreign currency rating for borrowers. Of the 70 developing countries surveyed, most have never been rated. The results of this study show that unrated countries are not always at the bottom of the rating scale, and several unrated poor countries have a "B" or higher rating.

Based on the findings, helping poor countries obtain credit ratings can influence borrowing and gain access to international debt and equity capital.

THE POTENTIAL IMPACT OF THE AID FOR TRADE INITIATIVE. Sheila Page. G-24 Discussion Paper Series, Intergovernmental Group of Twenty-Four on International Monetary Affairs and Development, United Nations. April 2007.
Full Text [pdf format, 54 pages]

The Aid for Trade initiative was a product of the Doha Round. "The general case for aid for trade is that while trade can be a tool for development, countries need infrastructure, institutions, technical capacity, investment, etc., in order to trade, and in particular to respond to new liberalization under the WTO." Since the Doha Round stalled and the priorities of the international trading system can not ensured, leadership of Aid for Trade has shifted to the World Bank and the International Monetary Fund.

TRADE ADJUSTMENT IN THE WTO SYSTEM: ARE MORE SAFEGUARDS THE ANSWER? Chad P. Bown and Rachel McCulloch. Global Economy and Development Working Paper, Brookings Institution. Web posted June 18, 2007.
Full Text [pdf format, 33 pages]

In order for countries to successfully engage in the international trading system, their industries must respond to new competition conditions such as commitments to trade liberalization. The political response to these adjustments is called a safeguard. “This paper examines the range of adjustment problems confronting the current and future international trading system, the economic arguments for intervention to deal with these problems, the adjustment environment as set out in the current WTO Agreements, and proposals for reform.” 

CHEMICAL REGULATION IN THE EUROPEAN UNION: REGISTRATION, EVALUATION, AND AUTHORIZATION OF CHEMICALS. Linda-Jo Schierow. Congressional Research Service (CRS), Library of Congress. June 7, 2007.
Full Text [pdf format, 4 pages]

On June 1, 2007, the European Union (EU) implemented a new law: Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH). REACH is intended to safeguard human health and the environment from hazardous chemicals while protecting European competitiveness. 

The final regulation reduces and coordinates EU regulatory requirements for chemicals, and shifts responsibility for safety from government to the industrial sector. It also encourages the use of less toxic chemicals in various chemical applications. However, the U.S. chemical industry believes that REACH is “impractical” while several public-interest groups urge Congress to adopt similar legislation.

AA07238
Beattie, Alan AVOIDING THE EXPORT CRUSH (Financial Times, June 13, 2007)
Full text available from your nearest American Library

Financial Times writer Beattie reports that economies such as the Philippines, Indonesia, Brazil, and Egypt, having achieved some middle-income status through industrialization, now find expansion threatened by competition from China. Low-wage China has started exporting more sophisticated manufactured goods. Business people in the Philippines and similar economies now have to spend more time figuring out the niche in the global economy where they have a relative advantage. After letting low-cost factory jobs go to China, Hong Kong has developed its services sector and South Korea has turned to product development and design. China's emergence has revived the debate about the value of industrial policy. Opponents view businesses as best suited to seize niche market openings. Even supporters recognize that traditional industrial policy -- tariffs on imports and subsidies to domestic producers -- is no longer adequate.

WTO COMPLIANCE STATUS OF THE CONSERVATION SECURITY PROGRAM (CSP) AND THE CONSERVATION RESERVE PROGRAM (CRP). Randy Schnepf. Congressional Research Service (CRS), Library of Congress. May 21, 2007.
Full Text [pdf format, 13 pages]

The Uruguay Round Agreement on Agriculture limited and reduced most distortive domestic support subsidies as identified in Annex II. Several of these subsidies were identified as causing minimal distortion. These subsidies are also called “Green Box” exemptions. One of the Green Box policies for conservation is the Conservation Security Program (CSP) that makes payments to landowners who use methods to conserve natural resources. Another Green Box exemption is the Conservation Reserve Program (CRP) that compensates producers for removing environmentally sensitive land from production for ten years or more. This report describes both programs, the WTO Annex II provisions, and issues involved in evaluating compliance.

DOES ‘GOOD GOVERNMENT’ DRAW FOREIGN CAPITAL? EXPLAINING CHINA’S EXCEPTIONAL FOREIGN DIRECT INVESTMENT INFLOW. Joseph P.H. Fan, Randall Morck, Lixin Colin Xu, and Bernard Yeung. World Bank Policy Research Working Paper, World Bank. April 2007.
Full Text [pdf format, 40 pages]

China is the world’s largest destination of Foreign Direct Investment (FDI). This paper reviews the FDI inflow to China of a predicted FDI inflow based on government quality indicators and controls. “If government quality is measured by constraints on executive power, China receives somewhat more FDI than the model predicts.” This might be a reflection of constraints in China, its FDI operations, possible institutional improvements, or “a unique Chinese model of development.” The authors also note that the FDI may be higher because Chinese institutions protect foreign firms better than domestic ones.

AVIAN FLU PANDEMIC: POTENTIAL IMPACT OF TRADE DISRUPTIONS. Danielle Langton. Congressional Research Service (CRS), Library of Congress. Updated February 14, 2007.
Full Text [pdf format, 6 pages]

“The possibility of an avian flu pandemic with consequences for global trade is a concern that has received more attention recently, although some experts believe there is little cause for alarm. Experts disagree on the likelihood of an avian flu pandemic developing at all. This report considers possible trade disruptions, including possible impacts on trade between the United States and countries and regions that have reported avian influenza infections.”

COMPREHENSIVE REPORT ON U.S. TRADE AND INVESTMENT POLICY TOWARD SUB-SAHARAN AFRICA AND IMPLEMENTATION OF THE AFRICAN GROWTH AND OPPORTUNITY ACT (AGOA): 2007. Office of the U.S. Trade Representative. May 18, 2007.
Full Text [pdf format, 140 pages]

The African Growth and Opportunity Act (AGOA) provides duty-free access to the U.S. market for most products exported from 38 Sub-Saharan African countries. In 2006 that amounted to approximately $71.3 billion or an increase of 17 percent over 2005. AGOA promotes free markets, expands U.S.-African trade and investment, stimulates economic growth, and facilitates Sub-Saharan Africa’s integration into the global economy. In December 2006, the Africa Investment Incentive Act (AGOA IV) was signed. AGOA IV will enhance trade benefits and strengthen economic ties between the U.S. and Sub-Saharan Africa.

CHINA-EUROPE RELATIONS GET COMPLICATED.
David Shambaugh. Center for Northeast Asian Policy Studies, The Brookings Institution. Web posted May 7, 2007.
Full Text [html format, various pagings]

Since 1995 China-Europe relations have been steadily improving; however, recently the relationship has changed. In October 2006, the European Commission (EU) issued a Communication along with a policy paper that raised concerns about China’s trade and investment. The EU ratified this Communication in December. These documents surprised the Chinese government, but the People’s Republic of China (PRC) “understood” the EU’s concerns. The two parties plan to move ahead with negotiations on a new EU-PRC Partnership & Cooperation Agreement.

UNITED STATES’ TRADE REMEDY LAWS AND NON-MARKET ECONOMIES: A LEGAL OVERVIEW.
Todd B. Tatelman. Congressional Research Service (CRS), Library of Congress. April 23, 2007.
Full Text: [pdf format, 18 pages]

The U.S. has two major forms of trade remedy laws: antidumping law (AD) (the sale of goods at less than their fair market value) and countervailing duty law (CVD) (assess duties on imported goods to offset government or public subsidization). Both of these remedies are available on imported goods from competitor countries.

This report provides background and an overview on AD and CVD. It also provides an analysis of the pending legislative activity on CVD laws to non-market economies.

FOREIGN DIRECT INVESTMENT IN U.S. ENERGY 2004.
Energy Information Administration, U.S. Department of Energy. Web posted April 18, 2007.
Full Text [pdf format, 10 pages]

This report provides an assessment of foreign ownership of energy assets in the United States. The U.S. Department of Energy is required to submit this report to Congress each year. The report is “a summary of activities in the United States by companies which are foreign owned or controlled and which own or control United States energy sources and supplies ….” The Energy Information Administration (EIA) prepares this information to be used by the Congress, government agencies, industry analysts, and the general public.

EVALUATING THE TRADE EFFECT OF DEVELOPING REGIONAL TRADE AGREEMENTS: A SEMI-PARAMETRIC APPROACH.
Souleymane Coulibaly. Policy Research Working Paper, The World Bank. Web posted April 23, 2007.
Full Text [pdf format, 23 pages]

This paper looks at the trade effects of developing regional trade agreements (RTAs), and their impacts on members’ trade flows. The author focused on seven agreements: Sub-Saharan Africa (ECOWAS and SADC); Asia (AFTA and SAPTA); and Latin America (CACM, CAN, and MERCOSUR). “The results indicate that except for SAPTA, these RTAs have had a positive impact on their members’ intra-trade over the estimation period (1960-99).” AFTA appears to be the most successful while SAPTA is the least successful; which, the author suggests, is probably due to the India-Pakistan tensions.

NATIONAL TRADE ESTIMATE REPORT ON FOREIGN TRADE BARRIERS: 2007.
Office of the U.S. Trade Representative. Web posted April 2, 2007.
Full Text [pdf format, 650 pages]

This report surveys significant trade barriers to U.S. exports. The report provides quantitative estimates of these foreign practices on the value of U.S. exports, and it includes actions taken to eliminate these barriers. The report is arranged in alphabetical order by country.

INTERNATIONAL PUBLICS STRONGLY FAVOR LABOR AND ENVIRONMENTAL STANDARDS IN TRADE AGREEMENTS.
World Public Opinion.org., Program on International Policy Attitudes (PIPA). Web posted March 21, 2007.
Full Text [html format, var. pagings]

According to this survey, a majority of the populations in developing and middle income countries around the world support trade agreements that include minimum labor and environmental standards. Additionally, ninety percent of the Americans polled support these protections. However, leaders of less developed nations generally oppose trade agreements that include mandating minimum standards for working conditions and environmental protections.

THE UNITED STATES AND THE WTO DISPUTE SETTLEMENT SYSTEM.
Robert Z. Lawrence. The Bernard and Irene Schwartz Series on American Competitiveness, Council on Foreign Relations. Web posted March 30, 2007.
Full Text [pdf format, 51 pages]

The author reflects on the effectiveness of the World Trade Organization (WTO) especially the dispute settlement system. He argues that any radical change to the system could be detrimental. However, he offers some reforms in the multilateral negotiations sector such as enhancing transparency and improving steps for multilateral negotiations.

NAFTA AT 13: IMPLEMENTATION NEARS COMPLETION.
Steven Zahniser. Outlook Report, Economic Research Service, U.S. Department of Agriculture. Web posted March 29, 2007.
Full Text [pdf format, 49 pages]

After 13 years, implementation of the North American Free Trade Agreement (NAFTA) is drawing to a close-- transitional restrictions on agriculture will be removed next year. During this implementation period, the agricultural sectors in the U.S., Mexico, and Canada have become more integrated and have grown dramatically. 

This report on NAFTA’s effects on U.S. agriculture covers trade data through 2005 and economic and policy developments through 2006.

WORLD TRADE ORGANIZATION: CONGRESS FACES KEY DECISIONS AS EFFORTS TO REACH DOHA AGREEMENT INTENSIFY.
U.S. General Accountability Office (GAO). Web posted March 8, 2007.
Full Text [pdf format, 70 pages]

President Bush has identified the Doha Agreement as a trade policy priority, but the talks “remain deadlocked.” World Trade Organization (WTO) members are at odds over barriers that distort production and trade such as tariffs and government payments for domestic support such as farm support. The members are also divided over how to promote economic growth and reduce poverty in the developing counties. The consequences of not reaching a successful conclusion of the Doha agreements could mean a weakened global trading system; i.e., a difficult trading environment for the U.S. The 110th Congress faces renewal of the Trade Promotion Authority and the Farm Bill. Both bills could spur movement for the Doha Agreement.

AA07081
Faux, Jeff. FREE TRADE BLUES
(International Economy, vol. 21, no. 1, Winter 2007, pp. 10-13)
Full text available from your nearest American Library

Over the next two years, U.S. congressional and administration efforts to move forward a trade agenda are likely to end up in stalemate, says Faux, a distinguished fellow with the Economic Policy Institute. Faux says that at least seven new Senate seats and 30 new House seats once occupied by supporters of free trade and investment are now occupied by critics of the Bush administration’s trade policies. Congressional Democrats, he says, are frustrated that global economic integration has led to stagnating real incomes and rising trade and current account deficits, while the salaries and bonuses of the richest Americans continue to climb. Faux says that none of the free-trade agreements with Peru, Columbia, and Panama contain the worker protections that many Democrats want and that the administration doesn’t currently have the votes for reauthorization of trade negotiating authority. With the administration occupied with Iraq and the war on terror, Faux doesn’t see how the administration will be able to muster the will to modify its trade agenda to deal with Democratic concerns.

WTO DISPUTE SETTLEMENT: ONE-PAGE CASE SUMMARIES: 1995-SEPTEMBER 2006.
Legal Affairs Division, World Trade Organization (WTO). Web posted January 28, 2007.
Full Text [pdf format, 160 pages]

This first edition of the World Trade Organization (WTO) case summaries was produced in response to a number of requests “for a simple, straightforward explanation of the key points emanating from the ever-growing body of WTO jurisprudence.” This report summarizes on a single page panel core facts and findings on significant procedural matters. An index arranged by articles and WTO agreements is provided.

IS FREE TRADE “FREE?” IS IT EVEN “TRADE?”: OPPRESSION AND CONSENT IN HEMISPHERIC TRADE AGREEMENTS. 
Frank J. Garcia. Boston College Law School Faculty Papers, Boston College Law School. Web posted January 29, 2007.
Full text [pdf format, 28 pages]

Trade must be free which means that it “requires that global economic relations be structured through agreements which reflect the consent of those subject to them.” The author examines the role of consent through free trade agreements such as CAFTA and argues that many aspects of current trade law and policy mix can be “exploitation, coercion or predation.”

“DON’TS” AND “DO’S”: INSIGHTS FROM EXPERIENCE IN MITIGATING RISKS OF WESTERN INVESTORS IN POST-COMMUNIST COUNTRIES. Charalambos A. Vlachoutsicos and Paul R. Lawrence. Harvard Business School Working Paper, Harvard Business School. January 22, 2007.
Full Text [pdf format, 42 pages]

“Cultural and other misunderstandings between westerners and locals in post-communist countries are very costly, and western investors grossly underestimate how damaging ineffective interaction really is. This article shows that such interaction constitutes a major stumbling block to effective risk management and stands in the way of the enterprise fully taking advantage of opportunities for profit in these product-hungry, fast-expanding, and dynamic economies. Ultimately, effective communication between westerners and locals is the necessary condition for the success of western investments in transition countries.”

CHINESE ECONOMIC GROWTH: HOW WILL IT AFFECT THE U.S. GAINS FROM TRADE?
Craig K. Elwell. Congressional Research Service, Library of Congress. December 6, 2006.
Full Text [pdf format, 19 pages]

The size and source of the U.S. gains from trade with emerging markets like China are not static--economic growth and economic circumstances change constantly. “China’s main impact on the U.S. terms of trade over the last decade has been through the falling price of U.S. imports from China, transmitting a favorable impulse to the U.S. terms of trade. It also seems likely that the impact of the economic growth of China on the U.S. terms of trade over the near term will continue to be dominated by the favorable effects of a falling price for imports from China.” Several factors point to a favorable outcome for the U.S over the long term.

FOREIGN AFFAIRS, DEFENSE, AND TRADE: KEY ISSUES FOR THE 110TH CONGRESS.
Clare M. Ribando and Bruce Vaughn. Congressional Research Service (CRS), Library of Congress. December 20, 2006.
Full Text [pdf format, 80 pages]

“This report identifies major issues most likely to be on the legislative agenda, discusses critical policy choices at stake, and summarizes some of the major alternatives that Congress may consider.” This report also identifies CRS reports that address these issues. Some of the issues confronting the new Congress are: (1) what to do with Iraq; (2) Afghanistan’s progress, (3) defense spending, and (4) trade issues.

SUBSIDIES ENFORCEMENT ANNUAL REPORT TO THE CONGRESS.
Office of the United States Trade Representative and the U.S. Department of Commerce. Web posted February 1, 2007.
Full Text [pdf format, 59 pages]

Factsheet [text format, 1 page]

Subsidies and other unfair trade-distorting practices continue to challenge the American workers and industries, but the U.S. government is committed to eliminating or neutralizing these practices. This report describes how the U.S. Trade Representative, the Department of Commerce, and other agencies monitor foreign government subsidy practices.

BREAKING THE DOHA DEADLOCK: CONGRESS COULD PLAY A PIVOTAL ROLE.  Sandra Polaski. 
Policy Outlook 31, Carnegie Endowment for International Peace.  Web posted January  8, 2007.
Full text [pdf format, 8 pages]

World Trade Organization (WTO) talks are stalemated over agricultural trade primarily due to an impasse over perceived trade-distorting subsidies to the U.S. farm sector.  The majority of the countries participating in the Doha Round “have been unwilling to agree to what they see as maximum concessions by themselves in return for minimal concessions by the United States.”  More significantly, other countries have refused to open their markets for goods and services until the agricultural deal has been outlined.

AA07052
Smith, Jeremy N. THE PERILS OF PREDICTION: HOW THE FATHER OF GLOBALIZATION GOT IT (PARTLY) WRONG
(World Trade, January 2007, pp. 40-44)
Full text

Smith says Theodore Leavitt, an economist famous for predicting the future of globalization, got some things right, despite some glaring miscalculations about how global businesses should be managed. Leavitt made bold predictions that globalization would lead to such a degree of standardization that companies would not need to adjust their practices to succeed in other countries. However, companies that have taken this advice too literally have invited failure, notes Smith. Wal-Mart Germany, for instance, did not adjust its operations to suit the local culture, local attitudes about organized labor dealings, or local shopping habits. Consequently, Wal-Mart lost hundreds of millions of dollars, and ultimately shut down its German operations. Pankaj Ghemawat, another economist, takes a much more nuanced approach to a globalized business world, and asserts four dimensions of market “distance” will continue to matter: cultural, administrative, geographic and economic. Despite the shortfalls of Leavitt’s predictions, he is still widely read and studied because he did successfully demonstrate how managers ought to begin the think about global markets, writes Smith.

AA07051
Lister, Tom REPEALING MURPHY’S LAW: USING RESEARCH TO REDUCE THE RISKS OF INTERNATIONAL TRADE
(Searcher, vol. 15, no. 1, January 2007, pp. 14-27)
View article on ProQuest (password required)

Lister, an expert in international trade research, says research is essential to reducing the risks of international business. Companies embarking on international trade need detailed information on everything from transportation and customs requirements to international product marketability and credit ratings for customers worldwide. Lister provides overviews of many government and commercial key resources for trade data, country research and market research. He also provides a nice explanation of the “Harmonized System” for classification of trade goods. He particularly stresses the importance of seeking out local language information from the researched market, and says in many cases that may be the only way to find the necessary answers. International company research is very complex, notes Lister, and he recommends some resources for those wishing to go more in-depth.

AA07050
Kerr, William A.; Hobbs, Jill E. BILATERALISM: A RADICAL SHIFT IN U.S. TRADE POLICY: WHAT WILL IT MEAN FOR AGRICULTURAL TRADE?
(Journal of World Trade, vol. 40, no. 6, 2006, pp. 1049-1058)
Full text available from your nearest American Library

The authors say that the shift in U.S. trade policy away from an exclusive reliance on multilateral institutions to a multifaceted approach that includes multilateral, regional and bilateral initiatives has the potential to produce greater liberalization. However, they caution, these types of arrangements may also be a way to strategically use the economic advantages that come from being a large economic power. Agricultural trade, with its history of selective protectionism, has long been an area of contention in multilateral negotiations. And, they write, since the U.S. is generally a proponent of agricultural trade liberalization, the U.S. may simply see bilateral/regional arrangements as an avenue for overcoming the frustrations of its market access ambitions at the multilateral level. But, given that moving away from the multilateral rules could lead to abuse of economic power and geopolitical pressures, they suggest the role of bilateral and regional agreements in the multilateral system should be revisited.

AA07035
Gupta, Sanjeev; Yang, Yongzheng
UNBLOCKING TRADE (Finance & Development, vol. 43, no. 4, December 2006, pp. 22-25)
Full text (HTML format)

Gupta and Yang, both with the International Monetary Fund, say sub-Sahara Africa needs to adopt a comprehensive approach to boosting trade. Africa’s share of world trade has fallen from four percent in the 1970s to 2 percent today, they note. Some of the trade problems discussed include lack of diversification, domination of primary commodities, unfavorable business environments, and high indirect costs. For sub-Saharan African countries wishing to improve trade, their recommendations include: taking measures to maintain macroeconomic stability, increase liberalization, simplify customs procedures, and reduce costs of doing business. For the international community, they recommend increasing “aid for trade” in the form of technical assistance, project finance and adjustment support for trade reforms.

THE RECENT INTERNATIONAL AND REGULATORY DECISIONS ABOUT GEOGRAPHICAL INDICATIONS.
Stephan Marette, Roxanne Clemens, and Bruce A. Babcock. Midwest Agribusiness Trade Research and Information Center (MATRIC), Iowa State University. January 2007.
Full Text [pdf format, 37 pages]

“As worldwide consumer demand for high-quality products and for information about these products increases, labels and geographical indications (GIs) can serve to signal quality traits to consumers. However, GI systems among countries are not homogeneous and can be used as trade barriers against competition. Philosophical differences between the European Union and the United States about how GIs should be registered and protected led to the formation of a WTO dispute settlement panel. In this paper we discuss the issues behind the dispute, the World Trade Organization (WTO) panel decision, and the EU response to the panel decision leading to the new Regulation 510/2006. Given the potential for GI labels to supply consumer information, context is provided for the discussion using recent literature on product labeling. Implications are drawn regarding the importance of panel decision and the EU response relative to GI issues yet to be negotiated under the Doha Round.”

U.S. INTERNATIONAL TRADE: TRENDS AND FORECASTS.
Dick K. Nanto. Congressional Research Service, Library of Congress. November 22, 2006.
Full Text [pdf format, 28 pages]

“This report provides an overview of the current status, trends, and forecasts for U.S. international trade. The purpose of this report is to provide current data and brief explanations for the various types of trade flows along with a short discussion of particular trends and points of contention related to trade policy.”

The U.S. is currently running a trade deficit at record levels--$766 billion on a census basis and $783 billion on a balance-of-payments basis (BoP). The trade deficits are a concern because they generate trade friction and pressures on the government. As the deficit increases, there is a risk of a drop in the dollar which would cause a disruption in financial markets.

CAN AMERICA STILL COMPETE OR DOES IT NEED A NEW TRADE PARADIGM?
Martin Neil Baily and Robert Z. Lawrence. Policy Briefs in International Economics, Peterson Institute for International Economics. Web posted December 20, 2006.
Full Text [pdf format, 9 pages]

Since the early 1990s, the trade deficit has continued to rise which causes concern for America’s ability to compete in international markets. In particular, the emergence of China and India as major players has raised fears and has given rise to call for new methods to handle international competition and ways to respond to the U.S. trade deficit. However, the authors feel that the exchange rate of the dollar is the major factor leading to this trade deficit and that there is no need for a new trade paradigm.

The paper focuses on why the demand for American goods and services has grown more slowly than the U.S. demand for foreign goods and services. The authors state that the rising trade deficits can not be sustained over the long term, and they feel that appropriate macroeconomic policies in the U.S. and globally would provide for the needed adjustment process. The authors believe that protectionist trade policies are costly and usually ineffective.

AA06443
Cuervo-Cazurra, Alvaro WHO CARES ABOUT CORRUPTION?
(Journal of International Business Studies, no. 37, 2006, pp. 807-822)
Full text

Cuervo-Cazurra, a professor of international business at the University of South Carolina, analyzes the relationship between corruption and foreign direct investment (FDI). Many empirical studies support the premise that corruption in a host country has a negative relationship with FDI, he writes. However, he adds, some scholars argue that corruption can have a positive impact on investment by facilitating transactions in countries with excessive regulation. His analysis compared countries that had signed the OECD Convention on Combating Bribery of Foreign Public Officials versus those countries that did not sign it. Countries that signed the OECD Convention attracted more FDI from other countries with strong anti-corruption laws, he says. And, the composition of FDI from non-signers of the OECD Convention primarily came from countries with weaker anti-corruption regulation.

COMPLETING THE DOHA ROUND.
Jeffrey J. Schott. Peterson Institute for International Economics. October 2006.
Full text [pdf format, 8 pages]

The Doha Round of multilateral trade negotiations in the World Trade Organization (WTO) was suspended indefinitely in late July 2006 after a succession of failed attempts to reach agreement on the modalities for cutting farm subsidies and tariffs. Trade ministers are now consulting on how to put the WTO talks back on track. This report warns that without a rapid return to active negotiations, U.S. officials may be relegated to the sidelines in Geneva due to the expiration of U.S. trade promotion authority (TPA)-leaving the Doha Round adrift possibly until the next US administration takes office in 2009 or even longer.

To complete the Doha Round, U.S. officials will have to request that Congress extend TPA for at least a year or two, but to do so the Bush administration will need to demonstrate progress in the trade talks to justify congressional support. U.S. officials, and the world trading system more broadly, face a real "chicken and egg" problem: The Doha Round cannot be revived without new U.S. concessions, but U.S. officials cannot make new offers and garner congressional support to renew TPA without new proposals from other major trading nations. The author examines the causes of the ongoing negotiating problems and what needs to be done to restart the WTO talks.

WORLD INVESTMENT REPORT 2006. FDI [FOREIGN DIRECT INVESTMENT] FROM DEVELOPING AND TRANSITION ECONOMIES: IMPLICATIONS FOR DEVELOPMENT.
United Nations Conference on Trade and Development (UNCTAD) October 16, 2006.
Full Report [pdf format, 366 pages]

Overview [pdf format, 51 pages]

The 2006 World Investment Report focuses on the rise of foreign direct investment (FDI) by transnational corporations (TNCs) from developing and transition economies. New sources of FDI are emerging among developing and transition economies. This phenomenon has been particularly marked in the past decade, and a growing number of TNCs from these economies are emerging as major regional and even global players. According to this report, the new ties these TNCs are forming with the rest of the world will have far-reaching repercussions in shaping the global economic landscape of the coming decades.

The report examines the magnitude of this phenomenon and examines its drivers. For low-income countries, FDI from developing countries can be of great importance. In some of them, it accounts for a significant share of all FDI flows. The report also discusses the development implications of the rise of these new sources of FDI, along with policy responses, for both home and host developing countries. At the end of the document is a Statistical Annex with data on FDI flows and stock for more than 200 economies.

GENERALIZED SYSTEM OF PREFERENCES: BACKGROUND AND RENEWAL DEBATE.
Vivian C. Jones. Library of Congress, Congressional Research Service. September 26, 2006
Full report [pdf format, 52 pages]

The Generalized System of Preferences (GSP) provides duty-free tariff treatment to certain products imported from designated developing countries. The United States, the European Union, and other developed countries implemented such programs in the 1970s in order to promote economic growth in developing countries by stimulating their exports. In previous years when the GSP was set to expire, its subsequent renewal was generally considered non-controversial. This year, however, due in part to the present impasse in multilateral trade talks in the World Trade Organization Doha Development Agenda (DDA) and congressional concerns regarding the inclusion of certain more advanced developing countries such as India and Brazil in the program, renewal of the preference seems more tenuous. The Bush Administration favors GSP renewal, but also appears willing to review and modify the program in order to respond to congressional concerns.

First, this report presents a brief history, economic rationale, and legal background leading to the establishment of the Generalized System of Preferences. The author also provides a brief comparison of GSP programs worldwide, especially as they compare to the U.S. system. Second, the report addresses the U.S. implementation of the GSP, along with the present debate surrounding its renewal and legislative developments to date. Third, an analysis of the U.S. program's effectiveness and the positions of various stakeholders are presented. Fourth, the report reviews the possible implications of the expiration of the U.S. program and discusses other possible options for Congress.

REPORT BY THE OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE ON TRADE-RELATED BARRIERS TO THE EXPORT OF GREENHOUSE GAS INTENSITY REDUCING TECHNOLOGIES.
Executive Office of the President, Office of the U.S. Trade Representative (USTR). October 2, 2006.
Full report [pdf format, 36 pages]

The Energy Policy Act of 2005 calls on the Administration to integrate into U.S. foreign policy the goal of reducing greenhouse gas (GHG) emissions in developing countries. This report identifies trade barriers that U.S. exporters of greenhouse-gas-intensity reducing technologies (GHGIRTs) face in the top 25 GHG emitting developing countries - China, India, South Africa, Mexico, Brazil, Indonesia, Thailand, Kazakhstan, Malaysia, Egypt, Argentina, Venezuela, Uzbekistan, Pakistan, Nigeria, Algeria, Philippines, Iraq, Vietnam, Colombia, Chile, Libya, Turkmenistan, Bangladesh and Azerbaijan. The report also describes the steps the United States is taking to reduce these and other barriers to trade in GHGIRT products and services.

AA06361
Mastel, Greg; Shapiro, Hal FAST TRACK FOREVER?
(International Economy, vol. 20, no. 3, Summer 2006, pp. 50-55)
View article on ProQuest (password required)

The authors note that there has been a nearly five-fold increase in Free Trade Agreements (FTAs) since fast-track negotiating authority was reestablished in 2002 by the Trade Promotion Authority Act. Fast-track authority is due to expire in 2007, and historically there have been long breaks before being reinstated, they state. Although it is possible to negotiate FTAs without fast-track authority, say the authors, it is much more difficult and prone to delays -- which discourages trade and is detrimental to both U.S. trade policy and global growth. Therefore, they recommend that some form of permanent fast-track authority be established. A permanent fast track would need to include mechanisms to improve the balance of powers between the President and Congress, they write; additionally, it should provide more guidance on determination of specific authority to negotiate.

CONFLICT DIAMONDS: AGENCY ACTIONS NEEDED TO ENHANCE IMPLEMENTATION OF THE CLEAN DIAMOND TRADE ACT.
United States Government Accountability Office (GAO). September 27, 2006.
Download [pdf format, 68 pages]

In 2003, the United States and other countries began implementing the Kimberley Process Certification Scheme (KPCS) to curtail the trade of rough diamonds that had fueled severe conflicts in Africa, known as "conflict diamonds." The Clean Diamond Trade Act (CDTA) [see: http://uscode.house.gov/download/pls/19C25.txt

] provides the statutory framework for U.S. implementation of the KPCS. This report:

1. Describes the institutional framework established to implement the act
2. Examines implementation of the act's domestic provisions and challenges it faces
3. Examines how the United States has helped to strengthen the KPCS and the challenges it faces

The Department of State has led the U.S. efforts to curtail trade in conflict diamonds abroad. Domestically, the Departments of State, the Treasury, Homeland Security, and Commerce, and a private entity called the U.S. Kimberley Process Authority (USKPA), have been responsible for controlling U.S. imports and exports of rough diamonds. Internationally, State, the U.S. Agency for International Development (USAID), and the U.S. Geological Survey have helped to strengthen the KPCS.

This report contains recommendations to the Secretaries of the Departments of State, the Treasury, Homeland Security, and Commerce. It recommends improvements in the:

1. Accuracy of U.S. rough diamond trade data;
2. Processes for importing and exporting rough diamonds, including conducting periodic physical inspections, and confirmation of rough diamond import receipts with foreign exporting authorities;
3. Oversight of the activities of USKPA and its licensees who issue Kimberley Process certificates; and
4. Approach for providing some of the U.S. diamond-related assistance.

The departments reviewed a draft copy of this report and concurred with GAO's recommendations.

THE YEAR IN TRADE 2005: OPERATION OF THE TRADE AGREEMENTS PROGRAM.
United States International Trade Commission (ITC) August 2006; Web-posted September 5, 2006.
Download [pdf format, 197 pages]

The Year in Trade 2005 features complete listings of antidumping, countervailing duty, safeguard, intellectual property rights infringement, and section 301 cases undertaken by the U.S. government in 2005. Statistical tables highlight U.S. bilateral trade with major trading partners and trade under U.S. trade preference programs.

The 2005 report also covers:

1. The operation of the U.S. Generalized System of Preferences (GSP), the African Growth and Opportunity Act (AGOA), the Andean Trade Preference Act (ATPA), and the Caribbean Basin Economic Recovery Act (CBERA).
2. U.S. textile and apparel imports and developments in textile and apparel trade with selected partners.
3. Significant activities in the: World Trade Organization (WTO), including its dispute settlement mechanism; Organization for Economic Cooperation and Development (OECD); and the Asia-Pacific Economic Cooperation (APEC) forum.
4. Developments in U.S. free trade agreements, including agreements concluded in 2005 with Oman, Peru, and Colombia; negotiations for the Free Trade Area of the Americas; and activities under the North American Free Trade Agreement.
5. Bilateral trade issues with major U.S. trading partners -- the European Union, Canada, China, Mexico, Japan, Taiwan, Korea, India, and Brazil.

U.S. TRADE STRATEGY: FREE VERSUS FAIR.
Daniel W. Drezner. Council on Foreign Relations (CFR). Web-posted September 2006.
Download [pdf format, 146 pages]

This report presents two distinct approaches that the United States could take on trade policy. The "Free Trade" approach argues that American prosperity and security are best served by aggressively seeking to lower trade barriers, even if it means that some industries lose out. The second, or "Fair Trade" approach, contends that the economic benefits of freer trade are overstated and that the U.S. government should slow or even halt efforts to lower trade barriers, in order to promote goals such as community stability and income security. The policy options in this book are accompanied by four white papers that examine the major issues in the trade debate and explore the relevant challenges in greater detail.

In addition to analyzing these two alternatives, the book includes background papers on four recurring challenges to U.S. trade policy:

1. Balancing America's trade and current account deficits
2. Managing the intersection of trade policy and issues such as intellectual property and labor standards
3. Supporting workers adversely affected by trade and
4. Harmonizing the multiple tracks of trade diplomacy

AA06264
Kalaitzandonakes, Nicholas CARTAGENA [BIOSAFETY] PROTOCOL: A NEW TRADE BARRIER?
(Regulation, vol. 29, No. 2, Summer 2006, p. 18-25)
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Kalaitzandonakes, Director of the Economics and Management of Agrobiotechnology Center, analyzes the implications of the Biosafety Protocol (BSP) -- an international agreement for regulating the transfer, handling and use of genetically modified organisms. He focuses particularly on approaches to mandatory labeling, the details of which have yet to be agreed upon. Seemingly small changes in labeling requirements can lead to significantly different trade impacts and compliance costs, he notes. The logistics of agricultural trade, he explains, efficiently move grains worldwide, from producer to consumer, through practices such as commingling, blending and strict grading standards which allow for anonymous exchanges and free flow of crops. This system provides no immediate mechanism for easy identification of a cargo's origin or its DNA makeup, says Kalaitzandonakes. So, the current system will have to change to comply with whatever labeling provisions come to pass. He estimates costs for sample crops using alternative labeling requirements and finds compliance costs change markedly depending on approaches. He recommends costs be fully analyzed -- both for total cost and distribution of costs -- before finalizing the details of mandatory labeling for the BSP.

CAN DOHA STILL DELIVER ON THE DEVELOPMENT AGENDA?
Kimberly Ann Elliott. Institute for International Economics (IIE). June 2006.
Download [pdf format, 8 pages]

This brief presents the argument that poorer countries have the most to lose if the Doha Round of trade discussions is delayed or postponed. The author states: "A deal on agriculture is critical to the round's success...but many developing countries are more interested in access for labor-intensive manufactured goods, such as clothing." According to Elliott: "While the numbers are small, World Bank scenarios of possible outcomes from the Doha Round suggest that sub-Saharan Africa could gain more from meaningful agricultural liberalization, as a share of national income, than any developing region outside Latin America."

If the Doha Round does not move towards successful negotiations, developing countries may be the losers in the bilateral and regional trade negotiations that will follow. And there are further dangers if negotiations stagnate. The French elections in 2007 and the U.S. Congressional elections in 2006 may make negotiations more difficult, depending on the outcomes. Moreover, in the U.S., trade promotion authority (TPA) expires in June 2007.

[Note: Contains copyrighted material.]

WORLD TRADE ORGANIZATION NEGOTIATIONS: THE DOHA DEVELOPMENT AGENDA.
Library of Congress, Congressional Research Service. Ian F. Fergusson. Updated May 15, 2006.
Download [pdf format, 20 pages]

With the backdrop of a sagging world economy, terrorist action, and a growing number of regional trade arrangements, trade ministers met in Doha in November 2001. At that meeting, they adopted three documents that provided guidance for future actions. The Ministerial Declaration includes a preamble and a work program for the new round and for other future action. This Declaration folded the on-going negotiations in agriculture and services into a broader agenda. That agenda includes industrial tariffs, topics of interest to developing countries, changes to WTO rules, and other provisions. The Declaration on the TRIPS Agreement and Public Health presents a political interpretation of the WTO Agreement on Trade-Related Intellectual Property Rights (TRIPS). A document on Implementation-Related Issues and Concerns includes numerous decisions of interest to developing countries.

Negotiations have proceeded at a slow pace and have been characterized by lack of progress on significant issues, and persistent disagreement on nearly every aspect of the agenda. Some issues have been resolved, notably in agriculture. However, the first order of business for the round, the negotiation of modalities, or the methods and formulas by which negotiations are conducted, still remain elusive four years after the beginning of the round.

U.S. TRADE DEFICIT AND THE IMPACT OF RISING OIL PRICES.
James K. Jackson. Library of Congress. Congressional Research Service. Updated June 9, 2006.
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Petroleum prices have risen sharply since early 2004. At the same time the average amount of imports of energy-related petroleum products has fallen slightly. The combination of sharply rising prices and a slightly lower level of imports of energy-related petroleum products translates into an escalating cost for those imports. This rising cost added an estimated $70 billion to the nation's trade deficit in 2005 and could add $80-$100 billion in 2006, depending on how sustainable is the rate of recent price increases.

This report provides an estimate of the initial impact of the rising oil prices on the nation's merchandise trade deficit, and will be updated as warranted by events.

AGRICULTURE POLICY AND TRADE REFORM: POTENTIAL EFFECTS AT GLOBAL, NATIONAL, AND HOUSEHOLD LEVELS.
Organisation for Economic Co-Operation and Development (OECD), Joint Working Party on Agriculture and Trade. June 2006.
Download [pdf format, 157 pages]

This study by the OECD stresses the importance of reducing market access barriers in agriculture for the achievement of economic benefits for both developed and developing countries. Among the data presented in the report:

• Of the total welfare gain generated from freer trade in all types of goods, agricultural liberalization accounted for 59% of all gains on a global basis, generating 69% of gains to OECD countries and 28% of gains to non-OECD countries.
• Gains to developing countries from agricultural trade reform come almost entirely from tariff cuts, versus cuts in domestic support. Increased market access (that is, tariff cuts) accounts for the largest share - nearly 79% - of the global welfare gains from agricultural trade liberalization.
• The global welfare gain from goods trade liberalization splits 76% for OECD countries, 24% for non-OECD countries. However, relative to the size of their economies, non-OECD countries gain twice as much as OECD countries (0.2% of GDP versus 0.1% of GDP).

[Note: Contains copyrighted material.]

AA06203
Bartlett, Bruce THE PRESIDENT'S ROTTEN RECORD ON TRADE (Reason, Vol. 38, No. 2, June 2006, pp. 48-55)
View on publisher's website

Bartlett says that Bush is the most protectionist president since Hoover. Bush's repeated use of protectionist measures (steel tariffs, farm subsidies, Canadian lumber tariffs, Chinese textile restrictions) and preference for bilateral trade agreements has probably placed free trade in its weakest position since the 1920s, he asserts. The dangers associated with protectionism -- such as retaliatory protectionist moves and economic inefficiency -- will likely lead to future trade skirmishes and wars that will lower the living standards for all U.S. citizens, he writes.

WTO: ANTIDUMPING ISSUES IN THE DOHA DEVELOPMENT AGENDA. Vivian C. Jones. Library of Congress, Congressional Research Service. Updated April 20, 2006.
Download [pdf format, 24 pages]

This three-part report analyzes the issue of antidumping (AD) in the context of negotiations in the Doha Development Agenda (DDA). The first section provides background information and contextual analysis for understanding why the issue is regarded as controversial. It briefly discusses the Antidumping Agreement, U.S. antidumping laws and how they have worked in practice. Some U.S. stakeholders, including many U.S. industries and workers, believe that U.S. laws are effective and should not be changed or weakened. Others, including many foreign exporters to the U.S. market, U.S. exporters to international markets, U.S. manufacturers dependent on lower-cost inputs for their products, and other domestic importers of goods subject to AD actions, want to change the ways in which they are implemented.

The second section focuses on how antidumping issues fit into the DDA. The author explains the mandate to negotiate and negotiating activity to date. She also describes in general terms the nature of the reforms being considered.

Section three provides a more specific overview of major reform proposals. Many proposals attempt to regulate the manner by which countries assess dumping margins. Other submissions call for tightening rules or providing more specific definitions for terminology used in the WTO Antidumping Agreement. These proposals, if implemented, could significantly reduce the number of permissible AD investigations and/or the amount of duty margins assessed, thus reducing significantly the protective impact of the remedies.

FREE TRADE AGREEMENTS: IMPACT ON U.S. TRADE AND IMPLICATIONS FOR U.S. TRADE POLICY. William H. Cooper. Library of Congress, Congressional Research Service. April 19, 2006.
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In the last few years, the United States has engaged or has proposed to engage in negotiations to establish bilateral and regional free trade arrangements (FTAs) with a number of trading partners. Such arrangements are not new in U.S. trade policy. The United States has had a free trade arrangement with Israel since 1985 and with Canada since1989, which was expanded to include Mexico and became the North American Free Trade Agreement (NAFTA) effective in January 1994.

U. S. participation in free trade agreements can occur only with the concurrence of the Congress. FTAs are now a significant U.S. trade policy tool. The rapid emergence of FTAs raises some important policy issues for the second session of 109th Congress as it considers implementing legislation and monitors negotiations as part of its oversight responsibilities: Do FTAs serve or impede U.S. long-term national interests and trade policy objectives? Which type of an FTA arrangement meets U.S. national interests? What should U.S. criteria be in choosing FTA partners? Are FTAs a substitute for, or a complement to, U.S. commitments and interests in promoting a multilateral trading system via the World Trade Organization (WTO)? Experts differ sharply over these questions.

2006 COMPREHENSIVE REPORT ON U.S. TRADE AND INVESTMENT POLICY TOWARD SUB-SAHARAN AFRICA AND IMPLEMENTATION OF THE AFRICAN GROWTH AND OPPORTUNITY ACT. Executive Office of the President. Office of the United States Trade Representative (USTR). May 16, 2006.
Download [pdf format, 151 pages]

This report from the USTR describes the increase in the two-way trade between the United States and sub-Saharan African since the launch of the African Growth and Opportunity Act (AGOA) in 2000. It also describes the wide range of U.S. programs that are assisting African countries to bolster economic growth and development through trade.

Included in the report are the following highlights:

• Since its inception in 2000, AGOA has helped increase U.S. two-way trade with sub-Saharan Africa by 115 percent.
• In 2005, U.S. total exports to sub-Saharan Africa rose 22 percent from 2004, to $10.3 billion.
• U.S. total imports from sub-Saharan Africa increased by 40 percent to $50.3 billion.
• In 2005, over 98 percent of U.S. imports from AGOA-eligible countries entered the United States duty-free.

WORLD TRADE ORGANIZATION: LIMITED PROGRESS AT HONG KONG MINISTERIAL CLOUDS PROSPECTS FOR DOHA AGREEMENT. (GAO-06-535) United States General Accounting Office (GAO). April 26, 2006.
Report [pdf format, 47 pages]

Given the importance of the World Trade Organization (WTO) Doha Round to the United States, GAO was asked to provide an update on the status of the negotiations. In this report, the latest in a series on the negotiations, GAO (1) provides the status of the Doha negotiations on the eve of the Hong Kong ministerial, (2) reviews the outcome of the Hong Kong ministerial, and (3) discusses the prospects for concluding the Doha Round before TPA expires in July 2007.

GAO found that WTO members made little progress in 2005 toward their goal of completing the steps needed to set the stage for finalizing the Doha Round of global trade talks. The key milestones for progress through July were missed. Despite new proposals on agricultural subsidy and tariff cuts submitted in October 2005, it was clear by November that key players were too far apart to achieve the major decisions planned for the December ministerial. To avoid a failure, members agreed to lower expectations for the meeting.

2006 SPECIAL 301 REPORT. Executive Office of the President. Office of the United States Trade Representative (USTR). Web-posted April 28, 2006.
View report on the publisher's site

According to Section 182 of the Trade Act of 1974, as amended by the Omnibus Trade and Competitiveness Act of 1988 and the Uruguay Round Agreements Act (enacted in 1994), USTR must identify those countries that deny adequate and effective protection for Intellectual Property Rights (IPR). Placement of a trading partner on the Watch List indicates that particular problems exist in that country with respect to IPR protection, enforcement, or market access for persons relying on intellectual property. Countries placed on the Priority Watch List are the focus of increased focus concerning the problem areas. For each country, the USTR notes specific areas of IPR concern.

China and Russia continue to be on the Priority Watch List. The report notes some progress with both countries, but adds that "rampant counterfeiting and piracy problems continue to plague both China and Russia, indicating a critical need for stronger intellectual property protection in China and Russia." Also included on the Priority Watch List are: Argentina, Belize, Brazil, Egypt, India, Indonesia, Israel, Lebanon, Turkey, Ukraine and Venezuela.

The Watch List comprises Bahamas, Belarus, Bolivia, Bulgaria, Canada, Chile, Colombia, Costa Rica, Croatia, Dominican Republic, Ecuador, European Union, Guatemala, Hungary, Italy, Jamaica, Kuwait, Latvia, Lithuania, Malaysia, Mexico, Pakistan, Peru, Philippines, Poland, Republic of Korea, Romania, Saudi Arabia, Taiwan, Tajikistan, Thailand, Turkmenistan, Uzbekistan and Vietnam.

AA06169
Stokes, Bruce DOHA ROUND DEATH SPIRAL (National Journal, Vol. 38, No. 18, May 6, 2006, p. 62)
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National Journal columnist Stokes presents a pessimistic analysis of the status of the Doha Round of trade talks. The U.S. is demanding a 66-percent reduction in the European Union's agricultural tariffs, but Brussels insists that it can offer only 40 percent. The Americans and Europeans are looking for duties on most manufactured goods to be no higher than 15 percent, but Brazil and other developing countries insist on 22-25 percent. If this stalemate cannot be resolved, the expectation is that the round will be extended again to get past the French and American elections in 2007 and 2008. With the Doha Round thus "in the freezer," emphasis will shift to bilateral agreements and both American and European businesses will lose interest in restarting the Doha Round. Stokes notes that there are plans to complete the Doha Round by midsummer, but that "it seems implausible... the more worrisome question is what will happen next."

THE DOHA ROUND AFTER HONG KONG.
Gary Clyde Hufbauer and Jeffrey J. Schott. Institute for International Economics (IIE). February 2006.
Download the document [pdf format, 9 pages]

The IIE Senior Fellows assess the outcome of the December 2005 World Trade Organization ministerial meeting in Hong Kong. They contend that the ministers accomplished only the minimum necessary to keep the Doha Round moving forward -- toward an undetermined and probably distant conclusion. In their view, the meeting achieved more in spirit than in substance, and placed more emphasis on the negotiating process than on policy reform. Moreover, much of the 40-plus-page ministerial declaration confirms policies already being pursued by the major trading nations.

Questions they address about the Doha Round's future include:

• How do negotiations look from the perspective of key players?
• What events are likely to drive negotiators in 2006?
• What are the wildcards?

[Note: Contains copyrighted material.]

AA06089
McDonald, Stephen. THE WORLD BIDS FAREWELL TO THE MULTIFIBER ARRANGEMENT
(Amber Waves, vol. 4, no. 1, February 2006, pp. 20-25)
View article on publisher's website

The author, with the Economic Research Service at the U.S. Department of Agriculture, notes that clothing is one of life's necessities -- and as such, a new trade policy that lowers clothing prices affects everyone. Such a change took place in early 2005, as the U.S., Canada, and the European Union discontinued most of their limits on the imports of yarn, fabric, and clothing from developing countries. Under the Multifiber Arrangement (MFA), signed in 1974, trade in textiles, primarily yarn and fabric, and clothing was managed through quotas. But, January 1, 2005, marked the end of a ten-year phase-out of the MFA quotas under the direction of the World Trade Organization. Most economists analyzing the MFA agree that free trade in textiles and clothing will mean significantly larger exports by China, India and Pakistan, while higher income exporters like Taiwan, Korea and Hong Kong will export less. The same is true of countries with preferential access to the U.S. and EU markets.

AA06022
Small, Andrew GLOBAL TRADE AND THE COMMON GOOD (America, vol. 193, no. 19, December 12, 2005, pp. 8-12)
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The author, a foreign policy advisor to the U.S. Conference of Catholic Bishops and a member of the Holy See's delegation to the to the WTO meeting in Hong Kong, notes that in his 2003 encyclical, ECCLESIA DE EUCHARISTIA, Pope John Paul II repeated the admonition of St. Paul to the early church that a Christian community should not partake of the Lord's Supper amid division towards the poor. The Hong Kong meeting in December 2005 provides such an opportunity to set global trade on the path to sustainable development, Small notes; the poor are getting poorer and the gap between rich and poor gets wider. The World Bank estimates that poor countries are losing $200 billion annually in agricultural trade alone because of current trade rules -- but reforming global agriculture will entail a shake-up of some very entrenched special interests, including elected officials and multinational corporations.

AA05378
Knappe, Matthias EXPORTING TEXTILES & CLOTHING: WHAT'S THE COST FOR LDCs? (International Trade Forum, No. 1, 2005, pp. 19-24)
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Knappe, senior market advisor at the International Trade Centre, says the end of quotas in the textile and clothing industry benefits large Asian producers, but other countries still have a stake in the business. It is not clear, he explains, what will happen in least developed countries (LDCs) and other small, vulnerable countries with low-value products, fragmented industries reliant on quota protection, and little regional cooperation. LDCs will need to change their strategy to survive the higher standards brought on be increased competition, he says. Some of Knappe's recommendations are: take over responsibilities along the textile and clothing value chain, accelerate South-South cooperation to tap into the markets of other developing countries, cooperate regionally to benefit as much as possible from preferential and differential treatment, and address weaknesses in trade facilitation to create the necessary enabling environment for business.

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Polaski, Sandra IN AGRICULTURAL TRADE TALKS, FIRST DO NO HARM (Issues in Science and Technology, Vol. 22, No. 1, Fall 2005, pp. 27-30)
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Polaski, director of the Trade, Equity and Development Project at the Carnegie Endowment, says the economic demise of a poor country's agricultural sector -- brought on by trade liberalization -- before the development of viable alternative sectors for employment will consign poor countries to deeper poverty. She believes developing countries are right in their threat to block progress on trade liberalization for manufactured goods and services unless their concerns in the agricultural sector are addressed. Agricultural subsidies distort market prices and drive down the prices that poor farmers receive for their goods, she notes. The resulting lower prices do benefit consumers, but in places where large portions of the population earn their living in the agriculture sector, this benefit is largely overshadowed by increases in poverty, she explains. WTO negotiators need to acknowledge the pivotal role of farming as a major source of employment in developing countries, Polaski writes, and should give "special product" status to all crops that are cultivated by small-scale farmers to protect them from further reductions in tariffs or increases in import quotas.

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ANTI-DUMPING: THE THIRD RAIL OF TRADE POLICY. Mankiw, N. Gregory; Swagel, Phillip L. Foreign Affairs, vol. 84, no. 4, July-August 2005, pp. 107-119.
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The authors note that few politicians are willing to address the negative impact that U.S. antidumping law has on both competitors and consumers. They add that antidumping tariffs also restrict trade and allow domestic firms to block competition from abroad. U.S. exporters are further hampered by antidumping actions in the rest of the world. Antidumping policies have become a point of contention in international trade negotiations, and threaten to undermine the World Trade Organization (WTO) and the overall expansion of free trade. The authors argue that antidumping policy should be addressed at the Doha Development Agenda talks. They believe that outright repeal of antidumping laws would be the best policy for the U.S. -- but this is not feasible since the Trade Act of 2002, which granted trade promotion authority to the president, requires at least 180 days advance notice before signing a trade agreement that affects U.S. antidumping law or other trade remedies. The authors believe that a better solution might be through the increased use of temporary "safeguard tariffs" but these have received a hostile reaction from WTO.

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Barnes, Fred MEET AMERICA'S TRADE CZAR (International Economy, Vol. 19, No. 3, Summer 2005, p. 6-7, 37)
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Although Rob Portman is the Bush administration's chief trade negotiator (vice Zoellick), there is another player on trade in Washington who is a least as important, says Barnes. Chairman Bill Thomas of the House Ways and Means Committee has become a self-made trade czar. Since World War II, Congress has essentially held firm to a free-trade consensus that is currently edging toward collapse, he notes, so a strong proponent like Thomas may be free trade's best hope. Thomas knows more about trade than anyone else in the federal government, writes Barnes, and he plays a huge and growing role in trade negotiations, such as writing the implementing language and side agreements. Thomas was a key figure in getting the Central America Free Trade Agreement through Congress, and he is currently focused on the Middle East Free Trade Area and Andean Free Trade Agreement, reports Barnes. Thomas's biggest test -- and a test he will win, according to Barnes -- will come if there is an economic downturn, which will increase the drive for protectionism from both parties in Congress.

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Panagariya, Arvind THE PROTECTION RACKET (Foreign Policy, No. 150, September/October 2005, pp. 94-95)
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Panagariya, a professor of economics at Columbia University, asks why so many otherwise knowledgeable people still recommend that developing countries should use trade protectionism. Trade liberalization by poor countries -- even if rich countries do not respond in kind -- increases exports and strengthens developing economies, he writes. It's difficult to find any developing country that has accomplished sustained rapid growth while maintaining high trade barriers, he notes. Today, he adds, some contend that agriculture -- now the critical trade issue -- is somehow different, and therefore needs protection. It is true that liberalization must proceed gradually and with proper safety nets for dislocated farmers, he says, but poor countries need to liberalize their own markets if they want to grow economically -- no matter what the rich countries do.

POLICIES THAT DISTORT WORLD AGRICULTURAL TRADE: PREVALENCE AND MAGNITUDE.
Congressional Budget Office. August 2005.
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This Congressional Budget Office (CBO) paper, which responds to part of a request by the Chairman of the House Ways and Means Committee, presents statistics on policies around the world that distort agricultural trade.

Such policies and the talks to liberalize them fall into three major categories: (1) market access -- policies that restrict or regulate imports; (2) domestic support -- domestic subsidies and other forms of support to domestic producers; and (3) export subsidies.

In broad terms, the statistics indicate that:

• Policies that distort agricultural trade remain much more pervasive and substantial around the world than policies that distort trade in other goods.
• High agricultural tariffs are most prevalent in East Asian countries. The United States has a low average agricultural tariff, and the European Union's average is in the middle.
• The European Union provides the largest amount of the most trade-distorting category of domestic support as measured by dollar value, with the United States a distant second and Japan a distant third.
• The European Union is by far the dominant provider of export subsidies, providing 85 percent to 90 percent of the world's total.

In keeping with CBO's mandate to provide objective, nonpartisan analysis, this paper makes no recommendations.

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Malmgren, Philippa. THE CHINA TEMPTATION (The International Economy, Vol. 19, No. 2, Spring 2005, pp. 44-47)
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Malmgren, President of Canonbury Group in London, questions whether investors should be handing over their capital to China -- where national security interests of the nation dictate the use of balance sheets much more than investors' needs for returns. Investors are throwing billions of dollars at firms in China that are either directly controlled by the Politburo or subject to micro-management by politicians, she says. China has an overwhelming need to secure access to oil, raw materials and even food, she explains, and are using political deals, rather than sound investment strategies, to secure their national interests. U.S. unhappiness with some of these deals -- funded with Western capital -- could lead to a trade war that would ultimately harm both economies, says Malmgren.

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Bremmer, Ian. MANAGING RISK IN AN UNSTABLE WORLD (Harvard Business Review, Vol. 83, No. 6, June 2005, pp. 51-60)
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Bremmer, president of a political risk consulting firm, says emerging markets and politically unstable countries are figuring more than ever into companies' investment calculations. Consequently, business leaders are turning to more political risk analysis to measure the impact of politics on potential markets, minimize risks, and make the most of global opportunities. Political risk is more subjective than economic risk, he explains, because it is influenced by so many factors, such as the passage of laws, weaknesses of government leaders, and the rise of popular movements.

Increasing globalization demands more rigorous assessments of political risk, he writes, and has led to development of tools for measuring and presenting stability data -- one uses 20 composite indicators to rank countries on a scale of 0 (a failed state) to 100 (a fully institutionalized, stable democracy). The rising importance of political risk analysis to company success requires analysts with a strong mix of skills; timely, accurate data on a variety of social and political trends, and a framework for evaluating the impact of individual risks on overall stability, says Bremmer.

THE EXPORT ADMINISTRATION ACT: EVOLUTION, PROVISIONS, AND DEBATE. [RL31832]
Ian F. Fergusson. Library of Congress. Congressional Research Service. Updated May 5, 2005.
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The 109th Congress again may consider legislation to rewrite or to reauthorize the Export Administration Act (EAA). EAA confers upon the President the power to control exports for national security, foreign policy or short supply purposes. It also authorizes the President to establish export licensing mechanisms for items detailed on the Commerce Control List (CCL), and it provides some guidance and places certain limits on that authority. The CCL currently provides detailed specifications for about 2,400 dual-use items including equipment, materials, software, and technology (including data and know-how) likely requiring some type of export license from the Commerce Department's Bureau of Industry and Security (BIS).

In debates on export administration legislation, parties often fall into two camps: those who primarily want to liberalize controls in order to promote exports, and those who believe that further liberalization may compromise national security goals. While it is widely agreed that exports of some goods and technologies can adversely affect U.S. national security and foreign policy, some believe that current export controls can be detrimental to U.S. businesses and to the U.S. economy. According to this view, the resultant loss of competitiveness, market share, and jobs can harm the U.S. economy, and that harm to particular U.S. industries and to the economy itself can negatively impact U.S. security. Others believe that security concerns must be paramount in the U.S. export control system and that export controls can be an effective method to thwart proliferators, terrorist states, and countries that can threaten U.S. national security interests. Controversies have arisen with regard to particular exports such as high performance computers, encryption technology, stealth materials, satellites, machine tools, "hot-section" aerospace technology, and the issue of "deemed exports." The competing perspectives on export controls have clearly been manifested in the debate over foreign availability and the control of technology, the efficacy of multilateral control regimes, the licensing process and organization of the export control system, and the economic effects of U.S. export controls.

DEFENSE TRADE: ARMS EXPORT CONTROL SYSTEM IN THE POST-9/11 ENVIRONMENT [GAO-05-234].
United States Government Accountability Office (GAO). February 16, 2005; Web-posted April 7, 2005.
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The U.S. government controls arms exports by U.S. companies to ensure that such exports are consistent with national security and foreign policy interests. There have been various efforts to change the arms export control system, which is overseen by the State Department (State).

Since the September 2001 terror attacks, the arms export control system has remained essentially unchanged, although new trends have emerged in the processing of arms export cases. The median processing time for export license applications and related cases began increasing in fiscal year 2003. State and the Department of Defense (Defense), which reviews export licenses, have continued to implement, through regulations and guidance, several initiatives primarily designed to streamline the processing of arms export licenses.

According to State officials, they have not evaluated the effects of these initiatives on the export control system or revised the initiatives. However, applications processed under these initiatives have generally not been processed within the time frames established by State and Defense. For example, applications for Operation Iraqi Freedom are to be processed in 4 days if they require interagency review, but the median processing time for these applications in the first 7 months of fiscal year 2004 was 22 days.

State has sought limited coordination with the agencies responsible for enforcing U.S. arms export laws--the Departments of Homeland Security and Justice--regarding the initiatives designed to streamline arms export licensing. The only exceptions have been regarding proposed export licensing exemptions. Enforcement officials have raised concerns regarding licensing exemptions, including difficulties in enforcing the proper use of exemptions and the increased risk of diversion. According to enforcement officials, they face a number of challenges associated with arms export enforcement efforts, such as limited resources to conduct inspections and investigations and other difficulties in obtaining a criminal conviction for export violations.

U.S. DEFENSE ARTICLES AND SERVICES SUPPLIED TO FOREIGN RECIPIENTS: RESTRICTIONS ON THEIR USE [RL30982].
Richard F. Grimmett. Library of Congress. Congressional Research Service. Updated March 14, 2005.
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The Arms Export Control Act (AECA), as amended, authorizes the transfer by sale or lease of United States origin defense articles and services through the government-to-government foreign military sales (FMS) program or through the licensed commercial sales process. Section 3(a) of the Arms Export Control Act sets the general standards for countries or international organizations to be eligible to receive United States defense articles and defense services provided under this act. It also sets express conditions on the uses to which these defense items may be put. Section 4 of AECA states that defense articles and defense services shall be sold to friendly countries "solely for":

• "Internal security"
• "Legitimate self-defense"
• Enabling the recipient to participate in "regional or collective arrangements or measures consistent with the Charter of the United Nations"
• Enabling the recipient to participate in "collective measures requested by the United Nations for the purpose of maintaining or restoring international peace and security"
• Enabling the foreign military forces "in less developed countries to construct public works and to engage in other activities helpful to the economic and social development of such friendly countries."

Section 3(c)(2) of the Arms Export Control Act requires the President to report promptly to the Congress upon the receipt of information that a "substantial violation" described in section 3(c)(1) of the AECA "may have occurred." This Presidential report need not reach any conclusion regarding the possible violation or provide any particular data other than that necessary to illustrate that the President has received information indicating a specific country may have engaged in a "substantial violation" of an applicable agreement with the United States that governs the sale of U.S. defense articles or services. Since the major revision of U.S. arms export law in 1976, neither the President nor the Congress have actually determined that a violation did occur, thus necessitating the termination of deliveries or sales or other penalties set out in section 3 of AECA.

The United States Government has other options under the Arms Export Control Act to prevent transfer of defense articles and services for which valid contracts exist short of finding a foreign country in violation of an applicable agreement with the United States. These options include suspension of deliveries of defense items already ordered and refusal to allow new arms orders. The United States has utilized at least one such option against Argentina, Israel, Indonesia, and Turkey.

U.S.-CHINA TRADE: TEXTILE SAFEGUARD PROCEDURES SHOULD BE IMPROVED [GAO-05-296].
United States Government Accountability Office (GAO). April 4, 2005; Web-posted April 5, 2005.
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U.S. textile and apparel imports from China have more than doubled in value since China became a World Trade Organization (WTO) member in December 2001. When joining the WTO, China agreed to a special textile safeguard mechanism applicable only to that country. The China textile safeguard allows WTO members to place defined limits on particular textile and apparel imports from China through the end of 2008, despite the general elimination of most textile quotas on January 1, 2005.

In this report, GAO:

1. Describes the mechanism,
2. Describes requests for safeguard action filed by U.S. producers and the results of these requests,
3. Evaluates U.S. agency procedures for transparency and accessibility.

The purpose of the China textile safeguard is to limit surging imports and foster the orderly development of trade in textiles and apparel from China. Safeguards are import restrictions, normally of limited duration and extent, which provide an opportunity for domestic industries to adjust to increasing imports. The China textile safeguard permits WTO members, including the United States, to temporarily restrict growth in specific imports from China even though textile and apparel quotas in general have been eliminated.

GAO concludes that in the U.S., procedural shortcomings have impaired effective application of the China safeguard. These shortcomings have lead to, among other things, uncertainty and delay that may weaken safeguard actions on some products that were recently released from quota restrictions. Similarly, lack of production data impaired access to safeguard measures for U.S. sock producers, and may pose similar problems should other producers in similar circumstances seek application of this mechanism.

U.S.-AFRICAN TRADE PROFILE [2005].
United States Department of Commerce, International Trade Administration (ITA). March 2005.
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Two-way trade between the United States and Sub-Saharan Africa rose in 2004, as both exports and imports increased. Two-way trade increased 37 percent from a year earlier to $44.4 billion. U.S. exports to Sub-Saharan Africa rose 25 percent to $8.6 billion, due to increased sales of oil field equipment and parts, aircraft, wheat, vehicles, and electrical machinery (including telecommunications equipment). U.S. imports rose 40 percent from 2003 to $35.9 billion, due to increased imports of crude oil (mainly driven by an increase in oil prices) as well as increased imports of platinum, diamonds, woven and knit apparel, and iron (ferro) alloys. Trade between the United States and Sub-Saharan Africa is highly concentrated, with a small number of African countries accounting for an overwhelming share of the total for both imports and exports.

Among the report's highlights are the following:

• U.S. exports to South Africa grew by 13 percent, to Nigeria by 53 percent, to Angola by 21 percent, to Ethiopia by 12 percent, and Kenya by 100 percent. Aircraft sales to Kenya caused the large increase.
• U.S. imports increased from all of the oil producing countries with imports from Nigeria growing by 56 percent, from Angola by six percent, from Gabon by 25 percent, from Equatorial Guinea by 30 percent, and from the Republic of Congo by 98 percent.
• Imports from Chad increased at a very high rate resulting from the start of oil shipments through the Chad-Cameroon pipeline late last year.
• Imports from South Africa increased by 29 percent, with continued growth in imports of platinum, diamonds, ferroalloys, and vehicles and parts.
• In 2004, African Growth and Opportunity Act (AGOA) imports increased 88 percent to $26.6 billion. The top five AGOA beneficiary countries included Nigeria, Angola, Gabon, South Africa, and Chad. While Lesotho was the fourth largest AGOA beneficiary in 2003, AGOA imports from Angola (a new AGOA beneficiary country) and Chad (a new oil producer) in 2004 surpassed those from Lesotho.

EXEMPTING FOOD AND AGRICULTURE PRODUCTS FROM U.S. ECONOMIC SANCTIONS: STATUS AND IMPLEMENTATION [IB10061].
Remy Jurenas. Library of Congress. Congressional Research Service. Updated February 25, 2005.
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The most significant policy change made by the Trade Sanctions Reform and Export Enhancement Act (TSRA) of 2000 exempts commercial sales of agricultural and medical products to Cuba from the longstanding U.S. trade embargo on that country. At the same time, TSRA made permanent a prohibition on Cuba's access to U.S. private and other public financing to purchase exempted products. Although press coverage suggested that the debate was solely over a Cuba-specific measure, this act in fact codified an exemption for sales of agricultural and medical products in the conduct of U.S. sanctions policy with respect to five countries and the terms under which this exemption operates. In the 109th Congress, S. 328/H.R. 719 respond to an OFAC proposal to elaborate on the "payment of cash in advance" provision governing agricultural sales to Cuba.

The Department of Treasury's Office of Foreign Assets Control (OFAC), which administers the financial rules governing U.S. agricultural export sales to Cuba, on February 25, 2005, published a rule in the Federal Register to clarify the meaning of the term "payment of cash in advance." [Effective March 25, it requires that payment be received by the exporter or the seller's agent prior to the goods being shipped from the U.S. port. Prior to this change, payments were frequently made against the presentation of shipping documents in the Cuban port before title was transferred to the buyer.] The American Farm Bureau Federation has responded that this rule will disrupt and likely cut off U.S. farm product sales to Cuba. The USA Rice Federation stated this step will inhibit rice sales to the sixth largest market in volume in 2004, and along with the Farm Bureau, indicated its support for S. 328 to counter OFAC's action.

FREE TRADE AREA OF THE AMERICAS: MISSED DEADLINE PROMPTS EFFORTS TO RESTART STALLED HEMISPHERIC TRADE NEGOTIATIONS. [GAO-05-166].
United States Government Accountability Office (GAO). March 18, 2005; Web-posted April 18, 2005.
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If completed, the Free Trade Area of the Americas (FTAA) agreement would encompass an area of 800 million people and about $13 trillion in production of goods and services, making it the most significant regional trade initiative presently being pursued by the United States. The 34 democratic nations of the Western Hemisphere formally launched negotiations towards a FTAA in 1998, and set a January 2005 deadline for concluding a FTAA agreement. GAO was asked to analyze (1) progress made in FTAA negotiations since GAO's last (April 2003) report (2) factors that have been influencing the FTAA's progress; and (3) future prospects for the FTAA.

GAO's analysis suggests that three main factors have inhibited progress on the FTAA:

• First and foremost, underlying differences between the United States and Brazil and their respective allies on the depth of rights and obligations on key issues continue.
• Second, negotiations in other forums were given priority over the FTAA, in part because the United States and Brazil deemed that progress there was more possible and could eventually enhance prospects for a mutually advantageous FTAA.
• Third, two mechanisms intended to facilitate compromise, the U.S.-Brazil co- chairmanship and the two-tier structure, have thus far failed to do so.

In a four-page response, the Office of the United States Trade Representative (USTR) disagrees with the GAO's findings. The USTR response, attached as Appendix II to this report, says that the GAO report is a "poorly framed portrayal of progress and problems in the negotiations", that it overemphasizes the role of the United States and Brazil in the current impasse, and that it does not give sufficient weight to U.S. efforts to make progress.