U.S. International Trade Commission COMMISSIONERS Daniel R. Pearson, Chairman Shara L. Aranoff, Vice Chairman Jennifer A. Hillman Stephen Koplan Deanna Tanner Okun Charlotte R. Lane Robert A. Rogowsky Director of Operations Robert B. Koopman Director of Economics Address all communications to Secretary to the Commission United States International Trade Commission Washington, DC 20436 U.S. International Trade Commission Washington, DC 20436 www.usitc.gov The Year in Trade 2005 Operation of the Trade Agreements Program 57th Report Publication 3875 August 2006 This report was principally prepared by: Country and Regional Analysis Division James Stamps, Project Leader Alexander Hammer, Deputy Project Leader Nannette Christ, Justino De La Cruz, William Greene, Joanne Guth, Magdolna Kornis, Selamawit Legesse, Walker Pollard, Zhi Wang, and Edward C. Wilson Office of the General Counsel William Gearhart and Robin Turner Office of Tariff Affairs and Trade Agreements David Beck, Naomi Freeman, Donnette Rimmer, and Dan Shepherdson Office of Investigations Barbara Bryan and Mary Messer Office of Unfair Import Investigations Jeffrey Whieldon Office of Industries Kimberlie Freund, Brad Gehrke, Jackie W. Jones, and Laurie Koran Office of Information Technology Services Barbara V. Bobbitt Supporting assistance was provided by: Cecelia N. Allen PREFACE This report is the 57th in a series of annual reports submitted to the U.S. Congress under section 163(c) of the Trade Act of 1974 (19 U.S.C. 2213(c) and its predecessor legislation. Section 163(c) of the Trade Act of 1974 states that “the International Trade Commission shall submit to the Congress at least once a year, a factual report on the operation of the trade agreements program.” This report is one of the principal means by which the U.S. International Trade Commission provides Congress with factual information on trade policy and its administration for calendar year 2005. 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. iii ABSTRACT This annual report to Congress provides factual information on U.S. trade policy and its administration for calendar year 2005. Chapter 1 provides an overview of the U.S. economy in 2005 and describes major trends in U.S. trade during the year. Chapter 2 summarizes activities relating to the administration of U.S. trade laws and regulations, including import relief laws, laws against unfair trade practices, and other import administration laws and programs. Chapter 3 focuses on the activities of the World Trade Organization, the Organization for Economic Cooperation and Development, and the Asia-Pacific Economic Cooperation forum. Chapter 4 provides an overview of activities with respect to U.S. free trade agreements (FTAs) and FTA negotiations during 2005. Chapter 5 addresses selected trade-related activities between the United States and selected major trading partners—the European Union, Canada, China, Mexico, Japan, Taiwan, Korea, India, and Russia. v TABLE OF CONTENTS Page Preface ......................................................................... iii Abstract ........................................................................ v Abbreviations and Acronyms ...................................................... xiii Executive Summary .............................................................. xv Chapter 1. Introduction ........................................................... 1-1 Scope and approach of the report ................................................. 1-1 Overview of the U.S. economy in 2005 ............................................ 1-1 Exchange rate trends........................................................ 1-3 Balance of payments........................................................ 1-4 U.S. trade in 2005 ............................................................. 1-5 U.S. merchandise trade by product category ..................................... 1-5 Exports ................................................................ 1-6 Imports................................................................ 1-7 U.S. merchandise trade with leading partners..................................... 1-8 Chapter 2. Administration of U.S. Trade Laws and Regulations ......................... 2-1 Import relief laws ............................................................. 2-1 Safeguard actions .......................................................... 2-1 Adjustment assistance ....................................................... 2-2 Trade adjustment assistance for workers ...................................... 2-2 Trade adjustment assistance for farmers ...................................... 2-4 Trade adjustment assistance for firms ........................................ 2-4 Laws against unfair trade practices................................................ 2-5 Section 301 investigations ................................................... 2-5 Active cases in 2005 ..................................................... 2-5 Special 301............................................................. 2-7 Antidumping investigations .................................................. 2-9 Countervailing duty investigations .......................................... 2-10 Reviews of outstanding antidumping and countervailing duty orders/suspension agreements........................................................... 2-11 Section 337 investigations ................................................. 2-11 Other import administration laws and programs...................................... 2-13 U.S. preferential trade programs............................................... 2-13 Generalized System of Preferences.......................................... 2-13 African Growth and Opportunity Act ........................................ 2-15 Andean Trade Preference Act .............................................. 2-17 Caribbean Basin Economic Recovery Act ..................................... 2-19 Textile and apparel imports under AGOA, ATPDEA, and CBTPA ................. 2-20 vii TABLE OF CONTENTS–Continued Page Chapter 2. Administration of U.S. Trade Laws and Regulations–Continued Textile and apparel developments in 2005 ....................................... 2-21 U.S. textile and apparel imports in 2005 ...................................... 2-21 U.S.-China textile agreement ............................................... 2-24 Qualifying industrial zones program for Israel, Egypt, and Jordan .................. 2-26 Chapter 3. Selected Trade Developments in the WTO, OECD, and APEC ................. 3-1 World Trade Organization....................................................... 3-1 Doha trade negotiations and 2005 Hong Kong ministerial ........................... 3-1 Background ............................................................ 3-1 2005 “first approximation” efforts ........................................... 3-2 WTO sixth ministerial conference at Hong Kong .................................. 3-2 Agriculture ............................................................... 3-3 Nonagricultural market access ................................................ 3-5 Services ................................................................ 3-6 Trade rules ............................................................... 3-7 Intellectual property ........................................................ 3-8 Environment.............................................................. 3-8 Trade facilitation ........................................................... 3-9 Dispute settlement negotiations ............................................... 3-9 Special and differential treatment.............................................. 3-9 Regular activities .......................................................... 3-11 Membership............................................................ 3-11 Dispute settlement ....................................................... 3-11 Organization for Economic Cooperation and Development ............................. 3-14 Trade committee ........................................................... 3-14 Antibribery convention ...................................................... 3-15 Steel subsidy negotiations.................................................... 3-16 Counterfeiting and piracy project .............................................. 3-17 Asia-Pacific Economic Cooperation (APEC) ........................................ 3-17 The mid-term stocktake ..................................................... 3-18 The Busan roadmap to Bogor ................................................. 3-19 Anti-counterfeiting and piracy initiative ......................................... 3-19 Chapter 4. U.S. Free Trade Agreements ............................................. 4-1 FTAs in force during 2005 ...................................................... 4-1 FTA negotiations during 2005 .................................................... 4-1 U.S.-Oman Free Trade Agreement............................................. 4-3 U.S.-Peru Trade Promotion Agreement ...........................................4-4 U.S.-Colombia Trade Promotion Agreement..................................... 4-5 Textile and Apparel provisions of agreements with Oman, Peru, and Colombia .......... 4-6 U.S.-Oman FTA........................................................