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trade policies by sector 1 Overview The United States is one of the world's largest producers, exporters, and
importers of agricultural products. As measured by the OECD, overall
support to agriculture, including through border measures and government
payments, accounted for 11% of gross farm receipts in 2006, down five
percentage points from 2004. This decline largely reflects higher
commodity prices. Certain commodities, including sugar and milk, continue
to receive high levels of assistance. Moreover, payments under some
commodity programmes (e.g., marketing assistance loans) provide incentives
for resource use that may be inconsistent with market signals and may
affect trade when supported output finds its way into world markets.
Certain aspects of domestic support programmes were challenged under
multilateral rules during the period under review. The expiration of the
2002 Farm Act, and the current environment of high commodity prices, would
offer an opportunity to introduce policy changes aimed at further improving
the market orientation of the agriculture sector in benefit of both
consumers and taxpayers. The United States is a major producer and consumer of minerals and energy.
U.S. energy policy places emphasis on domestic energy production and
provides tax and other incentives for the supply of alternative and
renewable fuels. Assistance for domestic ethanol production includes tax
incentives and import duties; these measures could have a significant
impact on global production patterns. The Energy Policy Act of 2005
contains provisions to address shortcomings in the regulatory framework
governing electricity markets. In computing fuel economy standards, NAFTA-
produced automobiles are treated differently from other vehicles. The United States is the world's leading producer of manufactured goods.
Multifactor productivity and output in the sector have expanded but the
sector's share in total U.S. value added and employment has declined.
Manufacturing tariffs are generally low, but tariff peaks have sheltered a
few industries from international competition, for example textiles,
clothing, and footwear and leather. The financial services sector accounts for some 8% of GDP and 12% of trade
in services. During the period under review, there have been no major
changes in U.S. legislation with respect to financial services. However,
the sector has been considerably affected by the sub-prime mortgage turmoil
(see Chapter I), suggesting the need for improvements in financial
supervision. In this respect, changes to existing regulations are under
consideration to restrict certain mortgage practices. Initial entry into the U.S. market through the establishment or acquisition
of a nationally chartered bank subsidiary by a foreign person is permitted
in all states. U.S. bank subsidiaries of foreign banks are granted
national treatment. However, foreign-owned banks, unlike domestic banks,
are required to establish an insured banking subsidiary to accept or
maintain domestic retail deposits of less than US$100,000. Branches and
agencies of foreign banks have similar powers to banks but agencies may not
accept deposits from U.S. citizens or residents. At the state level, there
are limitations to the acquisition or establishment of a state-chartered
bank, and for the establishment of branches or agencies. Regulation for the insurance services sector is done primarily at the state
level. Insurance companies, agents, and brokers must be licensed under the
law of the state in which the risk they intend to insure is located, but
U.S. states have taken steps to facilitate multi-state operations.
Foreigners may acquire an insurance company licensed in any state,
incorporate subsidiaries in 47 states, or operate as branches in 36 states
and the District of Columbia. A federal tax on insurance policies covering
U.S. risks is imposed at a rate of 1% of gross premiums on all reinsurance
but at 4% of gross premiums with respect to non-life insurance when the
insurer is not subject to U.S. net income tax on the premiums. The U.S. telecommunications market, the world's largest by revenue, is open
to foreign participation and is highly competitive. During the period
under review the Federal Communications Commission eliminated certain
unbundling requirements to level the regulatory playing field between
broadband internet access providers. A comprehensive intercarrier
compensation reform plan is under consideration. The United States
maintains several media ownership restrictions, with the objective of
promoting competition, diversity, and "localism" in media production. The
FCC approved a relaxation of one of these restrictions in late 2007. It
has adopted rules to facilitate entry into the video services market. No significant policy or legislative changes have taken place with respect
to maritime transport since 2006. The Jones Act reserves cargo service
between two points in the United States for ships that are registered and
built in the United States and owned by a U.S. corporation, and on which
75% of the employees are U.S. citizens. Domestic passenger services are
subject to similar requirements. However, waivers may be granted and
foreign companies may establish shipping companies in the United States
under certain conditions. In contrast, the U.S. international maritime
transport market is generally open to foreign competition although some
cargo preferences are in place. Cargo preference laws are estimated to
have redirected significant volumes of cargo to U.S. ships although in
practice the lion's share of international maritime transport is still
carried out by foreign vessels. No significant legislative changes have affected the air transport sector
since 2006. The profitability of U.S. airlines has improved, and by end
2007 all major U.S. airlines had emerged from bankruptcy protection.
Market access restrictions remain in the form of U.S. ownership and control
requirements, with foreign ownership in a U.S. carrier limited by statute
to 25% of the voting shares. The provision of domestic air services is
permitted only by U.S. carriers. The Fly America Act generally requires
government-financed transportation to be on U.S.-flag air carriers, but
foreign participation is possible under international agreements. The
United States has bilateral aviation agreements with 97 countries, of which
79 are open skies agreements. The U.S.-EU Air Transport Agreement, applied
provisionally since 30 March 2008, introduced a number of liberalization
measures. All public-use U.S. airports with commercial services are
currently owned by state or local governments. A law was passed in 1996
establishing an Airport Privatization Pilot Program. So far, one airport
has participated, but it was subsequently returned to public ownership. There have been no major changes in professional services regulation in the
past few years. States have responsibility for the regulation, licensing,
and oversight of the professions practiced within their jurisdictions. The
absence of a national regulatory regime creates different market access
conditions among the states. Foreign market access in some states is
affected by local presence, domicile, nationality, or legal form of entry
requirements.
2 Agriculture
1 Introduction The United States is among the world's largest producers, exporters, and
importers of agricultural products. The value of agricultural production
was approximately US$292 billion in 2007.[1] The value of crop production,
which accounts for around 51% of the total value of agricultural
production, is forecast to reach a record level in 2008 (US$176 billion),
primarily as a result of higher commodity prices. Agricultural exports
were US$90 billion in 2007, around 9% of total U.S. exports.[2] Main
exports were grains and feeds, soybeans, and red meats and their products.
Agricultural imports were US$72 billion, around 4% of total imports. Main
imports were vegetables, fruits, and grains and feeds. The Agricultural Adjustment Act of 1938 and the Agricultural Act of 1949
constitute what is known as the "permanent" legal framework governing
commodity price and income support in the United States. The U.S. Congress
regularly enacts legislation that amends and suspends provisions of the
permanent laws. The last such legislation was the Farm Security and Rural
Investment Act of 2002 (the 2002 Farm Act), signed into law in May 2002.
Additionally, Congress provides ad hoc emergency and supplementary
assistance under separate legislation. The 2002 Farm Act provided support for commodities harvested through 2007.
For other programmes, the 2002 Farm Act provided support until September
2007, and was extended to 15 March 2008. In the absence of new farm
legislation, payments for commodities harvested in 2008 will be made as
provided under the permanent legal framework governing farm support. In
early 2008, Congress was working on a new farm bill. The OECD's Producer Support Estimate (PSE) is a broad measure of support
that includes government payments to producers and price support. The
average annual PSE for the United States was US$42.5 billion in 2004 and
2005.[3] As a share of gross farm receipts, the PSE was 16% in both years,
compared with around 30% for the OECD as a whole. Provisional data for
2006 suggest a sharp decrease in the PS