Negotiation of Sectoral Market Opening Agreements

OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE

Negotiation of Sectoral Market Opening Agreements

AGENCY: Office of the United States Trade Representative.

ACTION: Notice of negotiation of sectoral market opening agreements,

and of goods and services that might be affected by such negotiations.

-----------------------------------------------------------------------

SUMMARY: The United States is participating in discussions with member

economies of the Asia Pacific Economic Cooperation (APEC) forum and

negotiations with Members of the World Trade Organization (WTO) to

enhance market opening in fifteen sectors, including possible

elimination, modification or continuance of U.S. tariffs and non-tariff

measures, opening of certain service sectors; and certain other

sectoral and structural issues. Public comment is being sought on

issues associated with these discussions and negotiations.

FOR FURTHER INFORMATION CONTACT:

Jane C. Earley, Director, APEC Affairs, Office of Asia Pacific and

APEC, USTR (202-395-6813).

SUPPLEMENTARY INFORMATION: In their 1996 Subic Bay Declaration, APEC

Leaders directed trade ministers to identify sectors where ``early

voluntary liberalization would have a positive impact on trade,

investment and economic growth in the individual APEC economies as well

as the region.'' In May 1997, APEC trade ministers affirmed that APEC

should continue to act as a catalyst to promote the global opening of

markets, as it had with the Information Technology Agreement. They

therefore directed officials to conduct an intensive process for

selecting such sectors, for review and final action by the time of the

APEC

[[Page 27114]]

ministers and leaders meetings in November 1977. In selecting such

sectors, ministers instructed officials to have regard for three

factors: the possibility of encompassing both tariff and non-tariff

issues, as well as elements of facilitation and economic and technical

cooperation; ensuring the fullest possible private sector input and

support; and consideration of ``critical mass'' by developing

initiatives supported by significant groups of APEC members, and where

appropriate for incorporation in the WTO.

In November 1997, APEC ministers received information on over 40

potential sectors that had been proposed and reviewed by officials.

From this list, ministers recommended 15 sectors to APEC leaders for a

program of early liberalization. The proposals for liberalization in

these sectors are described in detail in the Annex to this notice.

Of the 15 selected sectors, ministers identified nine for early

action in 1998: Environmental goods and services, chemicals, energy,

medical equipment, forest products, fish and fish products, toys, gems

and jewelry, and conclusion of a mutual recognition agreement on

telecommunications. In these nine sectors, it was agreed that detailed

proposals defining parameters, such as scope of product coverage,

phasing of liberalization, and measures covered (i.e., tariffs and/or

other measures) would be completed by the date of the APEC trade

ministerial meeting in June 1998, with a view toward beginning

implementation, in the WTO context where appropriate, in 1999. In

addition, ministers directed that work to develop proposals proceed in

six additional sectors: oilseeds and oilseed products, food,

automotive, civil aircraft, fertilizer, and natural and synthetic

rubber. In these sectors, officials were directed to further develop

proposals for review and assessment by ministers at the June trade

ministers meeting, for possible recommendation to leaders in November

1998.

In accordance with this guidance, APEC officials will work

intensively in 1998 to complete plans for early liberalization in the

identified sectors. APEC officials meetings are currently scheduled for

June, September and November 1998 in Malaysia.

Advice From the U.S. International Trade Commission

On March 18, 1998, the United States Trade Representative (USTR)

requested, pursuant to section 332(g) of the Tariff Act of 1930 (19

U.S.C. 1332(g), that the U.S., International Trade Commission (USITC)

provide advice concerning trade liberalization among APEC countries in

the nine sectors listed above. On March 25, the USITC initiated an

investigation, Inv. No. 332-392, pursuant to section 332(g) of the

Tariff Act of 1930 and published a notice requesting public comment and

providing notice of a public hearing in connection with the

investigation. (63 FR 15861, April 1, 1998). The notice included a list

of harmonized tariff system (HTS) numbers that comprise goods under

consideration in the nine sectors. The USITC's report will include (1)

profiles of the industry sectors (including a description of U.S. and

foreign sectors and their competitive positions); (2) an assessment of

patterns of U.S. sector imports and exports to APEC trading partners

and other trading partners; (3) summaries of U.S. and foreign tariff

rates and reported non-tariff barriers affecting the sectors; and (4)

information about increased market access opportunities resulting from

liberalization. The USITC plans to transmit its report to USTR by June

16, 1998.

Public Comments

In conformity with the regulations of the Trade Policy Staff

Committee (``TPSC'') (15 CFR Part 2003), the Chairman of the TPSC

invites written comments from interested persons on the desirability,

the scope, and the economic effects of these proposals for sectoral

liberalization. Comments in particular are invited on: (a) Economic

costs and benefits to U.S. producers and consumers of the removal of

tariff barriers to trade between and among APEC economies in the above-

listed product and service sectors; (b) economic effects and benefits

to U.S. producers and consumers of removal of non-tariff barriers to

trade between and among APEC economies, and of other aspects of the

above-described proposals, including their provisions for economic and

technical cooperation, (c) existing barriers to trade in services

between and among APEC economies, and economic costs and benefits to

removing such barriers; and (d) any other measures of practice within

these sectors among APEC economies that should be addressed in sectoral

market opening negotiations. In addition, comments are invited on other

aspects of these sectoral market opening initiatives, including the

possible labor and environmental effects.

Interested persons may submit written comments, in five (5) typed

copies or less, no later than noon, June 15, 1998, to Gloria Blue,

Executive Secretary, TPSC, Office of the U.S. Trade Representative,

Room 503, 600 17th Street, N.W., Washington, D.C. 20508. Comments

should state clearly the position taken and should describe with

particularity the information supporting that position. Any business

confidential material must be clearly marked as such on the cover page

(or letter) and succeeding pages. Such submissions must be accompanied

by a non-confidential summary thereof.

Non-confidential submissions will be available for public

inspection at the USTR Reading Room, Room 101, Office of the United

States Trade Representative, 600 Seventeenth Street, N.W., Washington,

D.C. An appointment to review the file may be made by calling Brenda

Webb at 202-395-6186. The Reading Room is open to the public by

appointment only from 9:30 a.m. to 12:00 noon and from 1:00 p.m. to

4:00 p.m., Monday through Friday.

Frederick L. Montgomery,

Chairman, Trade Policy Staff Committee.

Annex--Description of Sectoral Market Opening Initiatives

Environmental Goods and Services: Elimination of tariffs on

environmental goods and liberalization of trade in environmental

Services based on the General Agreement on Trade in Services, to be

agreed by consensus by June 1998, and to be bound in the WTO.

Implementation of commitments would begin six months after the date on

which the agreement is concluded. A proposal for addressing non-tariff

measures in APEC economies that impede trade will be included. On

economic and technical cooperation, economies are encouraged to develop

proposals for projects such as seminars to achieve the objective of

liberalizing trade.

Medical Equipment. Tariffs would be eliminated in a short period,

e.g., 3 years. Proposed schedule and method of implementation would be

based on the approach of the Information Technology Agreement. Specific

non-tariff measures would be identified and addressed. Economies would

be prepared to explore a program of technical assistance in cooperation

with the private sector.

Forest Products. Includes pulp and paper products (HS Chapters 47

and 48), wood products (HS Chapter 44), printed materials (HS Chapter

49); wood furniture and pre-fabricated housing (parts of HS Chapter

94), certain vegetable and rattan mats and baskets (parts of HS Chapter

46), and certain rosin products (parts of HS Chapter 38). The proposal

has four components: elimination of tariffs on theses products in the

2000-2004 timeframe; a study of

[[Page 27115]]

non-tariff barriers and other trade distorting policies which may

impeded market access in these products; development and adoption of

performance-based building standards; and, development of economic and

technical assistance measures designed to enable members to develop

their industries and to achieve early trade liberation in these

industries.

Fish and Fish Products. The objective of the proposal would be to

eliminate tariffs no later than December 31, 2005. Tariffs currently

applied at 20% or less would be phased out more quickly. There would

also be flexibility for economies to phase out tariffs over a longer

period on a limited number of products. Officials would be directed to

present a plan for eliminating non-tariff measures for approval at the

APEC's November 1998 Trade Ministerial meeting, with the objective of

eliminating non-tariff measures no later than December 31, 2007. APEC

economies would recommit to elimination of WorldTrade Organization

(WTO)-inconsistent subsidies and sanitary and phytosanitary measures,

of which there would also be studies, and commit to some of many

suggested ecotech proposal. An annual report to Ministers would also be

done within APEC on fisheries management cooperation in the Pacific

Ocean, and adjacent regions.

Toys. The proposal is for progressive reduction of tariffs on

targeted, toys, beginning from 1998 and completed by a date to be

determined by participating economies (2000, and no later than 2005).

It would comment to identification of existing technical, regulatory,

and other unnecessary non-tariff measures by the end of 1998 and to

consultation on actions and a scheduled for elimination of NOMS by the

end of 1999. Progressive elimination of all identified non-tariff

measures would be determined, preferably by 2000 and no later than

2005.

Gems and Jewelry. This proposal would reduce tariffs to 0-5% by

2005 on products in HTS Chapter 71m, which includes pearls, diamonds,

precious stones, silver, gold, platinum, ``fine'' jewelry, silverware

made of silver and silver plate, gold articles, imitation jewelry, and

commemorative coins. The proposal would also address non-tariff

measures in the same time period and include economic and technical

cooperation on education and training.

Mutual Recognition Agreement for Telecommunications servicers.

Proposes that interested APEC economies work to implement an Agreement

for Mutual Recognition of Test Results and Certifications, and to

complete work on a Mutual Recognition Agreement and Phase Agreements by

June 1998.

Chemicals. This is a proposal for tariff liberalization, starting

with a commitment to bring tariffs into conformity with rates

established in the Uruguay Round Chemical Tariff Harmonization

Agreement (CTHA) in two tranches: starting from applied rates, by 2001

for tariffs up to and including 10%, and by 2004 for tariffs over 10%,

and to bring these rates in the WTO. Requests for longer staging would

be considered for sensitive products. Once a critical mass has

committed to the CTHA, further tariff liberalization would be

undertaken starting with subsectors (e.g., fertilizer, cosmetics) where

there is interest in moving ahead on an expedited basis. This process

would lead to the eventual elimination of all chemical tariffs.

Participants would initiate a work program on non-tariff measures. They

would also compile a list of customs and regulatory barriers faced by

chemical exporters to give to APEC's Committee on Customs Procedures

for simplifying and harmonizing customs procedures and facilitating

trade. The proposal would also task APEC's Investment Experts Group to

undertake a review of investment policy and practices with respect to

the chemical industry, which would be used to derive a list of

liberalization options that could be selected either for individual

action plans, or for collective action. It would additionally encourage

economies to participate in international work already ongoing on

chemical standards and testing. In cooperation with the private sector,

it would develop a program of economic and technical assistance,

including but not limited to workshops, seminars, and training

activities.

Energy. This proposal includes certain primary energy commodities,

electricity, energy products, technologies, services, and equipment. It

would progressively remove tariffs on coal and gas and energy-related

equipment by 2005, and identify and address existing technical,

regulatory, and other non-tariff barriers, including standards and

certification. It would establish a work program to identify and remove

barriers to trade in services, to commence March 1998. Additionally it

would review work of the APEC's Group of Experts on Government

Procurement (GPEG) on principles of transparency in government

procurement and work with GPEG in any areas where the generic elements

and principles of transparency need to be developed to ensure full

transparency in this sector. Finally, it would extend the investment

facilitation work of APEC's Energy Working Group and develop a linked

database on mining and energy-related investment opportunities, and

reduce costs through cooperation on energy standards between 1998 and

2000.

Autos. This proposal calls for a four part work program aimed at

establishing a more integrated and competitive auto industry in the

region: (1) Standards harmonization, including obtaining APEC

endorsement of the ``global agreement'' on automotive standards; (2)

identification of customs issues and barriers, and development of steps

to address them; (3) development of an economic and technical

cooperation program; and (4) establishment of a regional dialogue of

automotive issues, which would discuss trade and investment policy

issues, and develop means of addressing them. Industry would

participate in parts of the dialogue.

Food. The proposal calls for tariff reductions on a number of 4-

digit H.T.S. categories in three food subsectors (fresh fruits and

vegetables, processed foods and beverages) and other trade facilitation

and ecotech activities, as well as market research studies. The

proposal calls for tariff reductions on more than 50 H.T.S. 4-digit

categories in three food subsectors: (1) fresh fruits and vegetables;

(2) processed foods; and (3) beverages. The initiative proposes a

reduction in tariff and other non-tariff measures from 1999 to 2004 to

bring applied tariffs to 5% or less by 2004 with the aim of eliminating

all tariffs in these subsectors by 1010/2020. An annex contains some

additional H.T.S. categories of food products for possible future

consideration.

Oilseeds and Oilseed Products. During the Uruguay Round, the United

States proposed a ``level playing field'' initiative on oilseeds and

oilseed products. The APEC proposal, which is jointly sponsored by the

United States, Canada and Malaysia, exactly tracks this Uruguay Round

initiative. The proposal covers basic oilseeds in H.S. 1201, 1203-1207

(e.g., soybeans, rapeseed, sunflowerseed, cottonseed), meals and

vegetable oils derived from those rapeseed oil, safflower oil) and soy

protein concentrates and isolates. There would be no exceptions on

product coverage. The proposal calls for elimination of tariffs, non-

tariff measures, export subsidies and other trade-distorting policies

on all products by 2002, allowing for limited flexibility for extended

staging on a product-by-product, economy-by-economy basis that would be

agreed to by consensus of participants.

Rubber. The proposal would establish details for gradual reductions

and/or

[[Page 27116]]

elimination of tariff and non-tariff measures. It would also call for

economic and technical cooperation to cooperate in the development of

domestic industries in rubber-producing economies through the transfer

of production and manufacturing technology in order to reduce the risk

of price fluctuations.

Civil Aircraft. All tariffs would be eliminated in two equal cuts

on January 1, 1999 and January 1, 2000 and bound in WTO Schedules at

zero. Commitments by non-WTO members could be made on an autonomous

basis until WTO accession is complete. There would also be commitments

by APEC economies to eliminate all customs duties and other charges of

any kind levied on civil aircraft and related products and services

(e.g., manufacture, repair, maintenance, etc.).

Fertilizer. This is a proposal to eliminate tariffs by 2002 and

bind them in the WTO. It would also call for, by January 1, 2000,

collective implementation of national transportation regulations

governing the shipment of sulfur and fertilizers in accordance with the

International Maritime Dangerous Goods Code, and encourage the

development of technical assistance projects that would facilitate

trade liberalization in this sector.

[FR Doc. 98-12908 Filed 5-14-98; 8:45 am]

BILLING CODE 3190-01-M