USTR PRAISES WTO’S FIRST FIVE YEARS

  
In March, the US Trade Representative sent a report to Congress reviewing the first five years of the World Trade Organization (WTO) and its effect on US interests. As was expected, the report—required by Article 125 of the Uruguay Round Agreement Act—stressed the importance to the US economy of the WTO and the major role played by all US administrations since 1948 in creating a more open international trading system.

The US government could hardly be expected to say anything different, given its past and present stance on free trade. Such policies have been incredibly successful, generating higher standards of living for all nations that adopt them. This is not to say that the current WTO is the best of all possible free trade worlds. Labor and environmental groups have serious constructive criticisms that should be taken into account with the aim of improving the WTO and its organization, policies and processes.

The gains from free trade have been substantial. The report to Congress states that “the WTO is a crucial vehicle for maximizing the advantages from, and managing our interests in, a global economy. To ensure that Americans receive fair treatment in the global economy, the United States has negotiated a framework of clear, transparent rules that: prohibit discrimination against American products; safeguard Americans against unfair trade; and afford commercial predictability. As the world’s largest importer and exporter, we need such a system more than any other country.”

US exports have increased by more than $200 billion annually over the last five years. Several key accomplishments have contributed to this growth:

1) Market access. Tariffs were cut by one-third and agricultural protections were lowered.

2) Intellectual property rights protection. A broad set of rules was enacted to foment ingenuity in the twenty-first century.

3) Dispute settlement. Procedures were created to settle trade disputes promptly.

4) Expansion of the rule of law. Specific rules have been established that apply to all members.

5) Forum for trade liberalization. Since 1995, the WTO has made agreements in the areas of financial services, basic telecommunication services and information technology. More agreements in other areas are expected.

6) High technology and telecommunications. The WTO has kept the trading system at the forefront of technological developments and has lowered prices to consumers through competition.

7) Global membership. WTO membership has grown from 115 to 135 countries since 1995. Major economies such as China as well as smaller economies are seeking membership.

8) Force for global economic stability. The WTO has strengthened the international community’s ability to address economic crises.

9) Greater openness and accountability. The WTO has taken steps to increase the transparency of its operations.

The USTR rejected common criticisms of the WTO: that it erodes the sovereign right of the US to pass its own laws; limits the ability of the US to set high environmental and health standards; relegates US interests to a bloated, faceless international bureaucracy; and hinders the development prospects of poorer countries.

The WTO and a freer international trade regime have contributed to strong economic growth in the US economy. Growth has averaged 3.9% annually over the past five years, accompanied by the creation of 14.4 million new jobs and low inflation. A stronger and more efficient international economic system was able to absorb the shock of major adjustments in the Far Eastern and Latin American economies. The countries involved made the adjustments required and are experiencing renewed growth. The Information Technology Agreement, the Agreement on Basic Telecommunications and the Financial Services Agreement opened up new opportunities for US exports and stimulated efficiency in these markets.

The WTO has a busy work schedule for 2000 and beyond, including Built-in Agenda negotiations focusing on agriculture and services. Preparatory work in the Committee on Agriculture has allowed negotiators to concentrate on reducing export subsidies and tariffs, expanding market access for products subject to tariff rate quotas, making state trading companies more market oriented, and ensuring access for biotechnology products.

In services trade, the US objective is to remove all restrictions and ensure non-discriminatory treatment. The US is developing negotiation proposals in such areas as energy services, environmental services, audiovisual services, financial services, professional and education services, health care, travel and tourism.

The US is also seeking to expand into other areas of non-mandated negotiations, including trade and the environment, electronic commerce and trade facilitation. Along with other member countries, the US aims to maximize public confidence in the WTO’s ability to address the impact of free trade on the environment and labor. US concern led to the creation of the Committee on Trade and the Environment in 1995, and the US has encouraged continued collaboration between the WTO and the International Labor Organization.

The USTR concludes its report by stating the administration’s commitment “to pursue a vigorous agenda in the WTO to fashion a trading system that keeps pace with rapid developments in the 21st Century; one that responds to the concerns of citizens about the WTO’s accountability; and its proper role in the global economy.”

More detailed information about the USTR report is available at: www.ustr.gov