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Monday, February 22, 2010

CRS Issue Statement on Southeast Asia, Australasia, and the Pacific Islands

Bruce Vaughn, Coordinator
Specialist in Asian Affairs

The United States has many interests in Southeast Asia, Australasia, and the Pacific Islands, in keeping with the wide variety of countries in the region. It includes U.S. allies (Australia, Thailand, and the Philippines) and key strategic friends (including Singapore), two ideologically moderate, majority-Muslim democracies (Malaysia and Indonesia, the world's most populous Muslim country), one of the world's busiest waterways (the Straits of Malacca, through which half the world's oil shipments pass), sites of deadly terrorist attacks, a former adversary in the process of transforming itself into a quasi-market economy (Vietnam), and a "rogue" state whose human rights record and foreign policy have triggered extensive U.S. sanctions (Burma, or Myanmar). 

Southeast Asia has emerged as the hub for discussions of Asian economic and security architectures. Proximity to China, India, and Japan has increasingly made the region a center for strategic and economic rivalry. In the past several years China has significantly increased foreign aid, trade, and its diplomatic presence in the region. Some believe these ties may serve as a basis for China's cultivation of security relationships in Southeast Asia at the expense of U.S. interests in the future. Other observers argue that China's rise in the region does not threaten the position of the United States and may be of growing concern to some regional states.


Date of Report: January 15, 2010
Number of Pages: 3
Order Number: IS40388
Price: $7.95

Friday, February 19, 2010

Agriculture in Pending U.S. Free Trade Agreements with Colombia, Panama, and South Korea

Remy Jurenas
Specialist in Agricultural Policy

The 111th Congress could consider free trade agreements (FTAs) signed by the Bush Administration with Colombia, Panama, and South Korea under trade promotion authority, or fast-track rules, designed to expedite congressional consideration of these agreements. Liberalizing trade in agricultural products, particularly the pace of expanding market access for the more sensitive agricultural commodities, was one of the more difficult areas that trade negotiators faced in concluding each of these FTAs. In each instance, issues dealing with food safety and animal/plant health matters (technically not part of the FTA negotiating agenda) were not resolved until later. 

While U.S. negotiators sought to eliminate high tariffs and restrictive quotas imposed on U.S. agricultural exports to these three country markets, they also faced pressures to protect U.S. producers of import-sensitive commodities (beef, dairy products, and sugar, among others). FTA partner country negotiators faced similar pressures. One Bush Administration policy objective was for FTAs to be comprehensive (i.e., cover all products). For the more import-sensitive agricultural commodities, negotiators agreed on long transition periods, temporary additional protection in the case of import surges, or indefinite protection of a few commodities. To illustrate the latter, because of political sensitivities for the United States or its partners, negotiators agreed to retain in perpetuity quantitative import limits and prohibitively high tariffs on some of the most import-sensitive commodities. In one exception, though, the United States agreed to Korea's insistence that rice be completely excluded from their FTA. 

Of these three, the FTA with South Korea would be the most commercially significant one for U.S. agriculture since the North American Free Trade Agreement (NAFTA) took effect with Mexico in 1994. Because Colombia is a large market that imposes a high level of border protection on agricultural imports, the Colombia FTA has the potential to significantly increase U.S. agricultural exports. Though Panama represents a relatively small market, U.S. exporters would have numerous opportunities for additional sales. 

Conversely, each pending FTA partner would have additional access to the U.S. market for those agricultural commodities that are now protected by restrictive U.S. import quotas. Of these, the U.S. sugar sector would face some competition from increased imports of sugar from Colombia and Panama. The small increase in additional imports from South Korea would likely be in the form of primarily ethnic foods. Also, because these three countries consume most of the beef and dairy products that they produce, any additional export sales to the United States would likely be accommodated by the large U.S. market with little effect. 

The Obama Administration has signaled its intent to address outstanding issues of concern to some Members of Congress before submitting these FTAs to Congress for consideration. Officials during 2009 stated their intent to work with Members of Congress to develop "benchmarks" to use to determine when these agreements might be sent to Capitol Hill for debate, but little apparent movement occurred. With the White House pursuing health care and financial sector reforms (among other issues) as its legislative priorities, indications are that these FTAs might not be submitted to Congress until after the 2010 fall elections or sometime during 2011. 



Date of Report: February 4, 2010
Number of Pages: 21
Order Number: R40622
Price: $29.95

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International Trade: Rules of Origin

Vivian C. Jones
Specialist in International Trade and Finance

Michael F. Martin
Analyst in Asian Trade and Finance


Determining the country of origin of a product is important for properly assessing tariffs, enforcing trade remedies (such as antidumping and countervailing duties) or quantitative restrictions (tariff quotas), and statistical purposes. Other commercial trade policies are also linked with origin determinations, such as country of origin labeling and government procurement regulations. 

Rules of origin (ROO) can be very simple, noncontroversial tools of international trade as long as all of the parts of a product are manufactured and assembled primarily in one country. However, when a finished product's component parts originate in many countries—as is often the case in today's global trading environment—determining origin can be a very complex, sometimes subjective, and time-consuming process. 

U.S. Customs and Border Protection (CBP) is the agency responsible for determining country of origin using various ROO schemes. Non-preferential rules of origin are used to determine the origin of goods imported from countries with which the United States has most-favored-nation (MFN) status. Preferential rules are used to determine the eligibility of imported goods from certain U.S. free trade agreement (FTA) partners and certain developing country beneficiaries to receive duty-free or reduced tariff benefits under bilateral or regional FTAs and trade preference programs. Preferential rules of origin are generally specific to each FTA, or preference, meaning that they vary from agreement to agreement and preference to preference. 

CBP has periodically proposed implementing a more uniform system of ROO as an alternative to the "substantial transformation" rule that currently in place. In July 25, 2008, CBP's latest proposal suggested that a system known as the North American Free Trade Agreement (NAFTA) rules system "has proven to be more objective and transparent and provide greater predictability in determining the country of origin of imported merchandise than the system of case-by-case adjudication they would replace." The NAFTA scheme that would be applied has already been used for several years to determine the origin of imports under the NAFTA, and for most textile and apparel imports (about 40 percent of U.S. imports). The CBP proposed to apply the NAFTA rules to all country of origin determinations made by CBP, unless otherwise specified (e.g., unless the import enters under a preferential ROO scheme already in place). Such changes in rules of origin requirements are often opposed by some importers due to costs involved in transitioning to new rules, or because they believe that certain imported products might be at a disadvantage under new ROO methodology. As of this writing, the proposal has not been implemented. 

This report deals with ROO in three parts. First, we describe in more detail the reasons that country of origin rules are important and briefly describe U.S. laws and methods that provide direction in making these determinations. Second, we discuss briefly some of the more controversial issues involving rules of origin, including the apparently subjective nature of some CBP origin determinations, and the effects of the global manufacturing process on ROO. Third, we conclude with some alternatives and options that Congress could consider that might assist in simplifying the process. 



Date of Report: February 5, 2010
Number of Pages: 21
Order Number: RL34524
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CRS Issue Statement on the Korean Peninsula and Japan

Mark E. Manyin, Coordinator
Specialist in Asian Affairs

The Korean Peninsula and Japan represent a study in contrasts for U.S. foreign policy interests: the established democracies of Japan and the South Korea are long-standing U.S. military allies, while totalitarian North Korea represents one of the United States= biggest challenges through its production of nuclear weapons and missiles and its record of serious human rights abuses. Issues for Congress with respect to the three states relate to strategy and policies to maintain U.S. interests in security, stability, human rights, and trade and financial relationships both with and within the region. 

The most prominent issue is North Korea's nuclear weapons program. For Congress, the major policy question is to what extent it should support a policy of engagement through diplomacy and incentives or a policy of coercion through additional pressure and confrontation, or a combination of the two. A challenge for the United States is balancing its desire to achieve a full dismantlement of North Korea's nuclear weapons program and prevent proliferation with concerns about: North Korea=s willingness to stick with any deal, the continued evolution of its long-range missile capabilities, and the interests of the four other parties (China, South Korea, Japan, and Russia) in the Six-Party Talks over North Korea's program.


Date of Report: January 15, 2010
Number of Pages: 3
Order Number: IS40341
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Wednesday, February 17, 2010

The 2009 Asia Pacific Economic Cooperation (APEC) Meetings and U.S. Trade Policy in Asia

Michael F. Martin
Specialist in Asian Affairs

Congress and the Executive Branch have historically identified the Asia Pacific Economic Cooperation forum (APEC) as potentially important in the promotion of liberalized international trade and investment in Asia, and possibly the rest of the world. APEC's commitment to the goal of trade and investment liberalization is embodied in its Bogor Goals, in which APEC members pledged to free and open trade and investment in the Asia-Pacific by 2010 for industrialized economies and 2020 for developing economies. 

The 2009 APEC Leaders' and Ministerial Meetings focused on balanced growth, resisting protectionism, fostering trade and investment liberalization, accelerating regional economic integration, and enhancing human security. In the Leaders' Declaration, APEC presented a new "growth paradigm" based on balanced, sustainable, and inclusive growth. In the Ministerial Meeting, one of the main topics was efforts to be taken at, behind, and across borders to promote regional economic integration. 

The next two years may be a critical period for APEC and its achievement of the Bogor Goals. The 2010 meetings are to be held in Yokohama, Japan—the target year for APEC's industrialized members to achieve the Bogor Goals. The United States will host the 2011 meetings. The Obama Administration has chosen Honolulu as the host city for the 2011 Leaders' Meeting, but has not given a clear indication of APEC's role in U.S. trade policy. 

Several alternative avenues for the promotion of trade integration in Asia have emerged, challenging the past U.S. focus on APEC. The Association of Southeast Asian Nations (ASEAN) is promoting the creation of various forms of an all-Asian free trade association that could exclude the United States. In November 2009, the Obama Administration announced it would to enter into negotiations with the Trans-Pacific Strategic Economic Partnership Agreement (TPP), a free trade agreement between Brunei Darussalam, Chile, New Zealand, and Singapore. 

Critics of APEC have referred to the association as a "talk shop," that has produced few results. However, studies conducted by APEC reveal a substantial drop in members' average tariff rates, the elimination of a number of non-tariff trade barriers, and a major reduction in the transaction costs associated with international trade—all of which is likely attributable at least in part to APEC initiatives. 

Historical trade data is consistent with the premise that APEC has been successful in promoting greater trade within its member economies and with the rest of the world. Both the exports and imports of APEC members have grown faster than global trade since the creation of APEC. However, APEC's greater trade growth may be attributable to other factors than the liberalization of trade and investment policies among its members. 

The 111th Congress may reexamine U.S. policy towards APEC. It has already increased APECrelated funding in FY2009, in part to provide for the preparations for the 2011 APEC meetings to be held in the United States. In addition, there are other actions Congress may choose to take with respect to APEC, depending on its determination of APEC's role in relation to trade promotion initiatives in Asia. Congressional attitudes and actions may also be influenced by the Obama Administration's trade policies in Asia—and the role APEC plays in those policies. 

This report will be updated as circumstances warrant.


Date of Report: February 4, 2010
Number of Pages: 27
Order Number: R41071
Price: $29.95

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Friday, February 12, 2010

Human Rights in China: Trends and Policy Implications

Thomas Lum
Specialist in Asian Affairs

Hannah Fischer
Information Research Specialist

Human rights has been a principal area of U.S. concern in its relations with the People's Republic of China (PRC), particularly since the violent government crackdown on the Tiananmen democracy movement in 1989. Some policy makers contend that the U.S. policy of engagement with China has failed to produce meaningful political reform. Others argue that U.S. engagement has helped to accelerate economic and social change and build social and legal foundations for democracy and human rights in the PRC. This report analyzes China's mixed record on human rights – major human rights issues, PRC human rights legislation, and the development of civil society, legal awareness, and social and political activism. This report discusses major areas of interest but does not provide an exhaustive account of all human rights abuses or related incidents. 

Fear of social unrest appears to be a large factor behind the PRC government's resistance toward major political reform. The PRC government has attempted to respond to public grievances and popular calls for redress while subduing activists who attempt to organize mass protests and dissidents who openly call for fundamental change. This approach has both produced incremental improvements in human rights conditions and allowed for continued, serious abuses. Major, ongoing problems include excessive use of violence by security forces or their proxies, unlawful detention, torture, arbitrary use of state security laws against political dissidents, coercive family planning policies, state control of information, and religious and ethnic persecution. Tibetans, ethnic Uighur (Uygur) Muslims, and Falun Gong adherents have been singled out for especially harsh treatment. 

China's leadership has addressed rising public expectations through a combination of economic growth policies and carrot-and-stick political tactics. In so doing, it has planted seeds of potential change. China's developing legal system, while plagued by corruption and political interference, has provided activists with new means of defending rights. Although generally supportive of the status quo, the urban middle class has begun to engage in narrowly targeted protests against local government policies, following over a decade of social unrest among wage laborers and farmers. Despite a massive censorship effort, the Internet and other communications technologies have made it impossible for the government to clamp down on information as fully as before. 

On July 5, 2009, a peaceful demonstration involving hundreds of Uighur residents in Urumqi, Xinjiang region, turned into an anti-government and inter-ethnic riot after armed police attacked the demonstrators. The state media reported over 200 deaths and nearly 1,700 injuries, mostly ethnic Han Chinese, while Uighur residents claimed that many Uighur deaths were not reported. PRC authorities reportedly arrested 400 people, predominantly Uighur, and imposed death sentences upon 17. 

The U.S. government's efforts to promote human rights and democracy in China have included open or formal criticisms of PRC human rights conditions, bilateral dialogue, sanctions, and congressionally sponsored legislation, hearings, and investigations. Members of the 111th Congress have called upon the PRC leadership to release political prisoners, cease persecution of Falun Gong and "house churches," and respect the rights of ethnic minorities; introduced various resolutions supporting human rights in China; and passed legislation upholding Tibetan rights, commemorating the 1989 democracy movement, and supporting human rights activists. The U.S. government also provides funding for rule of law, civil society development, participatory government, labor rights, Tibetan culture, Internet access, and other programs in the PRC. 
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Date of Report: January 25, 2010
Number of Pages: 44
Order Number: RL34729
Price: $29.95

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U.S.-South Korea Beef Dispute: Agreement and Status

Remy Jurenas
Specialist in Agricultural Policy

Mark E. Manyin
Specialist in Asian Affairs

South Korea's commercial significance for U.S. beef is reflected in the position taken by several Members of Congress, who have stated that congressional consideration of, and support for, the Korea-U.S. Free Trade Agreement (KORUS FTA) depends on South Korea fully opening its market to U.S. beef. In 2003, South Korea was the third-largest market for U.S. beef exports, prior to the ban its government imposed after the first U.S. cow infected with mad cow disease, or BSE (bovine spongiform encephalopathy), was discovered. 

On April 18, 2008, U.S. and South Korean negotiators reached agreement on the sanitary rules that Korea is to apply to beef imports from the United States. It allows for imports of all cuts of U.S. boneless and bone-in beef and other beef products from cattle, irrespective of age, as long as specified risk materials known to transmit mad cow disease are removed and other conditions are met. However, both sides revised this deal on June 21, 2008, to limit sales of U.S. beef to cattle less than 30 months old. Within a few days of the revised agreement, South Korea published rules to put this agreement into effect, and quickly began to inspect U.S. beef sitting in cold storage. The U.S. Department of Agriculture similarly began to implement a new program to verify that the beef sold is processed from cattle under 30 months old. 

While the U.S. beef industry and U.S. policymakers welcomed the initial April deal, Korean TV coverage of the issue and Internet-spread rumors that questioned the safety of U.S. beef resulted in escalating protests and calls for the beef agreement to be renegotiated or scrapped. U.S. officials countered that measures already in place to prevent the introduction of BSE in U.S. cattle herds meet international scientific standards. To address rising public pressure, the Korean government twice pursued talks with the United States to find ways to defuse these concerns without "renegotiating" the beef agreement. In late June 2008, both governments confirmed a "voluntary private sector" arrangement that allows Korean firms to import U.S. beef produced only from cattle less than 30 months old. Both governments view this as a transitional step until Korean consumer confidence in the safety of U.S. beef improves. 

U.S. beef exporters have since worked to recapture this key overseas market. Exports of U.S. beef (including bone-in cuts) to South Korea resumed in mid-July 2008, and by year-end reached almost $300 million, slightly more than one-third of the record 2003 sales level. For 2009, despite a drop-off in beef sales worldwide due to the economic recession, sales to Korea may still reach the 2008 level. Though Australia is the main competitor, U.S. beef exporters have gained noticeable market share since the Korean market reopened to U.S. beef. The U.S. share (in quantity terms) rose from 15% in 2008 to 27% in 2009. Future sales will depend on the price competitiveness of U.S. beef compared to Australian beef (largely influenced by changes in their respective exchange rates relative to the Korean won), and signs that Korean consumers are more willing to eat beef away from home as the country's economy begins to recover. 

The anti-beef agreement protests in South Korea have subsided. However, their size and intensity likely have eroded the Korean President's willingness and ability to accept the changes the Obama Administration has said would be necessary before it will consider submitting the KORUS FTA to Congress. Presidents Obama and Lee Myung-bak met in November 2009, and the two presidents agreed to "move the agreement forward." However, the prospect of congressional action on the KORUS FTA in 2010 appears slim. 
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Date of Report: January 26, 2010
Number of Pages: 14
Order Number: RL34528
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CRS Issue Statement on China and Taiwan

Thomas Lum, Coordinator
Specialist in Asian Affairs

The U.S.-China bilateral relationship is one of the world's most important, touching on a wide range of issues, including global security threats, trade and economics, the environment and climate change, energy, and human rights. The emergence of the People's Republic of China (PRC) as a global economic power has added considerably to the complexity of U.S. policy toward China. The United States and the PRC are becoming increasingly interdependent, which means that the two countries must cooperate in many areas even when they disagree in others. 

Ongoing U.S. interests regarding its relationship with China include promoting bilateral trade, economic liberalization, and human rights in China as well as helping to defend Taiwan. Increasingly, the United States has sought cooperation with the PRC, a permanent member of the U.N. Security Council, on global and regional issues, such as sanctions against North Korea and Iran, the international financial crisis, and climate change, often with mixed results. The two countries also have engaged in limited cooperation on counterterrorism efforts. The Strategic and Economic Dialogue (S&ED), established in 2009, is a flexible diplomatic mechanism that brings together senior officials from the United States and China on an annual basis to maintain dialogue and build trust on an array of issues.


Date of Report: January 15, 2010
Number of Pages: 3
Order Number: IS40306
Price: $7.95

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Thursday, February 11, 2010

Taiwan: Major U.S. Arms Sales Since 1990

Shirley A. Kan
Specialist in Asian Security Affairs

This report, updated as warranted, discusses U.S. security assistance to Taiwan, or Republic of China (ROC), including policy issues for Congress and legislation. Congress has oversight of the Taiwan Relations Act (TRA), P.L. 96-8, which has governed arms sales to Taiwan since 1979, when the United States recognized the People's Republic of China (PRC) instead of the ROC. Two other relevant parts of the "one China" policy are the August 17, 1982, U.S.-PRC Joint Communique and the "Six Assurances" to Taiwan. U.S. arms sales to Taiwan have been significant. The United States also has expanded military ties with Taiwan after the PRC's missile firings in 1995-1996. However, there is no defense treaty with Taiwan. 

At the U.S.-Taiwan arms sales talks on April 24, 2001, President George W. Bush approved for possible sale diesel-electric submarines, P-3 anti-submarine warfare (ASW) aircraft (linked to the submarine sale), four decommissioned U.S. Kidd-class destroyers, and other items. Bush also deferred decisions on Aegis-equipped destroyers and other items, while denying other requests. Afterward, attention turned to Taiwan, where the military, civilian officials, and legislators from competing political parties debated contentious issues about how much to spend on defense and which U.S. weapons systems to acquire, despite the increasing threat (including a missile buildup) from the People's Liberation Army (PLA), as described in the Pentagon's reports to Congress on PRC military power. In February 2003, the Administration pointed Taiwan to three priorities for defense: command and control, missile defense, and ASW. Some in the United States questioned Taiwan's seriousness about its self-defense, level of defense spending, and protection of secrets. The Pentagon broadened its focus from Taiwan's arms purchases to its regular defense budget, readiness for self-defense, and critical infrastructure protection. Blocked by the Kuomintang (KMT) party in the Legislative Yuan (LY) that opposed the Democratic Progressive Party (DPP)'s president (2000-2008), the Special Budget (not passed) for submarines, P-3C ASW aircraft, and PAC-3 missile defense systems was cut from $18 billion in 2004 to $9 billion (for submarines only) in 2005. In March 2006, Taiwan's defense minister requested a 2006 Supplemental Defense Budget (not passed) in part for submarine procurement, P-3Cs, and PAC-2 upgrades (not new PAC-3 missiles). In June 2007, the LY passed Taiwan's 2007 defense budget with funds for P-3C planes, PAC-2 upgrades, and F-16C/D fighters. In December 2007, the LY approved $62 million to start the sub design phase. After the KMT's Ma Ying-jeou became President in May 2008, Taiwan retained the requests but has cut the defense budget. 

Also, attention turned to U.S. decisions on pending arms sales. In 2008, congressional concerns mounted about a suspected "freeze" in President Bush's notifications to Congress on eight pending arms sales as well as his refusal to accept Taiwan's request for F-16C/D fighters. On October 3, 2008, Bush finally notified Congress. However, he submitted six of the eight pending sales (not a "package") for a combined value of about $6.5 billion. The Administration did not submit for congressional review the pending programs for Black Hawk utility helicopters or the submarine design. Moreover, the sale of PAC-3 missile defense systems was broken up into two parts (with notification of one part). Other pending programs include the Osprey-class minehunters that Congress authorized for sale in P.L. 110-229 and follow-on technical support for the Posheng command and control program. Congress might further assert its legislated role in any objective determinations of Taiwan's needs (including for new fighters) and oversight of President Obama's adherence to the TRA. The Administration argues that it has been reviewing pending arms sales but did not notify Congress of any such programs in 2009. Legislation in the 111th Congress include: National Defense Authorization Act for FY2010, P.L. 111-84; H.Res. 733 (Gingrey); H.Con.Res. 200 (Andrews); H.R. 4102 (Ros-Lehtinen); and H.Res. 927 (Barton).


Date of Report: January 26, 2010
Number of Pages: 65
Order Number: RL30957
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Tuesday, February 9, 2010

Chinese Tire Imports: Section 421 Safeguards and the World Trade Organization (WTO)

Jeanne J. Grimmett
Legislative Attorney

On April 20, 2009, the United Steel, Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial and Service Workers International Union filed a petition with the U.S. International Trade Commission (ITC) requesting that it initiate an investigation under Section 421 of the Trade Act of 1974, a trade remedy statute addressing import surges from China, to examine whether Chinese passenger vehicle and light truck tires were causing market disruption to U.S. tire producers. Market disruption will be found to occur under Section 421 whenever imports of a Chinese product that is "like or directly competitive with" a domestic product "are increasing rapidly ... so as to be a significant cause of material injury, or threat of material injury, to the domestic industry." The ITC initiated the investigation (TA-421-7) on April 24, 2009. 

As a result of its investigation, the ITC in June 2009 voted 4-2 that imports of the subject tires were causing domestic market disruption and recommended that the President impose an additional duty on these items for three years at an annually declining rate. The ITC also recommended expedited consideration of trade adjustment assistance applications filed by affected firms or workers. On September 11, 2009, President Obama proclaimed increased tariffs on Chinese tires for three years effective September 26, 2009, albeit at lower rates than those recommended by the ITC. The tariff increase is 35% ad valorem in the first year, 30% in the second year, and 25% in the third year. The President also directed the Secretaries of Labor and Commerce to expedite applications for trade adjustment assistance and to provide other available economic assistance to affected workers, firms, and communities. The President may review the tariffs in six months and, after receiving an ITC report on the probable effects of any change, may modify, reduce or terminate them. Although six petitions were filed under Section 421 in the past and the ITC found that market disruption existed in four out of six of its investigations, President Bush decided against providing import relief under the statute in these earlier cases. 

Section 421 was enacted as one element of 2000 legislation that permitted the President to grant most-favored-nation (MFN) tariff treatment to Chinese products upon China's accession to the World Trade Organization (WTO). Section 421 authorizes the President to impose safeguards— i.e., temporary measures such as import surcharges or quotas—on Chinese goods if domestic market disruption is found. The statute implements a China-specific safeguard mechanism contained in China's WTO Accession Protocol that may be utilized by WTO Members through December 2013. The Protocol provision is separate from Article XIX of the General Agreement on Tariffs and Trade (GATT) 1994 and the WTO Agreement on Safeguards, which allow WTO Members to respond to injurious import surges generally but on a stricter basis than under the Protocol. A major difference is that the Protocol provision permits a safeguard to be applied only to Chinese products while the Safeguards Agreement requires that a safeguard be applied to a product regardless of its source. 

China filed a WTO complaint against the United States on September 14, 2009, and requested a dispute panel on December 21, 2009, claiming that the Section 421 tariffs violate U.S. GATT obligations to accord Chinese tires MFN tariff treatment and not to exceed negotiated tariff rates, that the United States imposed tariffs under China's Accession Protocol without first attempting to justify them under general GATT and WTO safeguard provisions, and that Section 421 and its application in this case violate U.S. obligations under the Protocol. A dispute panel was established on January 19, 2010. Assuming that panelists are seated, this would be the first WTO dispute panel to consider the obligations of other WTO Members under the China-specific safeguard.


Date of Report: January 26, 2010
Number of Pages: 29
Order Number: R40844
Price: $29.95

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Sunday, February 7, 2010

China-U.S. Poultry Dispute

Renée Johnson
Specialist in Agricultural Policy

Geoffrey S. Becker
Specialist in Agricultural Policy

In April 2006, the U.S. Department of Agriculture's (USDA's) Food Safety and Inspection Service (FSIS) published a final rule allowing certain poultry products processed in China to be imported into the United States. However, USDA appropriations measures for recent years have prohibited FSIS from using funds to implement the rule. In October 2009, Congress enacted the FY2010 Agriculture appropriations bill (P.L. 111-80), which contains language that seeks to address this issue. Instead of continuing this prohibition, the FY2010 Agriculture appropriations bill allows USDA to use appropriated funds to implement the FSIS rule permitting U.S. imports of certain processed poultry and poultry products from China, if specified preconditions are met

The appropriations language is intended not only to ensure the safety of Chinese poultry imports but also to address trade concerns. The Chinese government has strongly criticized the ban on implementation of the rule as a violation of trade rules and, on April 17, 2009, formally requested World Trade Organization (WTO) consultations on the issue. The consultation period, which has expired, is considered the first step toward referral to a dispute settlement panel. 

Many food safety advocates have supported the ban on the poultry rule, arguing that China—the third leading foreign supplier of food and agricultural imports into the United States—lacks effective food safety protections. They have noted that China has experienced outbreaks of highly pathogenic avian influenza, and have argued that USDA's determination that Chinese-processed poultry was appropriately regulated was flawed. These advocates have argued, among other things, that China has been the source of a number of unsafe consumer products, including dairy products, infant formula, and wheat gluten (used in pet and animal feeds) intentionally contaminated with melamine to heighten measurable protein levels, and farmed seafood with illegal levels of antibiotics. 

A coalition of U.S. animal product exporters has opposed the appropriations language banning the China poultry rule. This group has argued that continuation of the ban has fueled trade retaliation by China, where a rising quantity of U.S. poultry products are now being marketed and where U.S. beef exporters are seeking re-entry for their products. China announced on September 14, 2009, that it was launching anti-dumping and anti-subsidies investigations into chicken meat (and automobile parts, after the United States imposed import safeguard tariffs on Chinese tires) produced in the United States, which Chinese manufacturers allege have harmed them domestically due to unfair competition. U.S. meat and poultry exporters believe that such trade disputes threaten an estimated $1.5 billion in livestock and poultry exports to China annually, including $774 million in poultry product sales. China has reported that over 70% of its poultry imports are from the United States. 



Date of Report: January 20, 2010
Number of Pages: 11
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Friday, February 5, 2010

Thailand: Background and U.S. Relations

Emma Chanlett-Avery
Specialist in Asian Affairs

U.S.-Thailand relations are of interest to Congress because of Thailand's status as a long-time military ally and a significant trade and economic partner. However, ties have been complicated by deep political and economic instability in the wake of the September 2006 coup that displaced Prime Minister Thaksin Shinawatra. After December 2007 parliamentary elections returned many of Thaksin's supporters to power, the U.S. government lifted the restrictions on aid imposed after the coup and worked to restore bilateral ties. Meanwhile, street demonstrations rocked Bangkok and two prime ministers were forced to step down because of court decisions. A new coalition headed by Prime Minister Abhisit Vejjajiva that assumed power in December 2008 has proven surprisingly durable, but anti-government forces remain active and organized. Many questions remain on how relations will fare as Bangkok seeks political stability. With Thai nationalism apparently on the rise, some analysts see a risk of drift in the U.S.-Thai relationship, although no major shift in overall cooperation. 

Despite differences on Burma policy and human rights issues, shared economic and security interests have long provided the basis for U.S.-Thai cooperation. Thailand contributed troops and support for U.S. military operations in both Afghanistan and Iraq and was designated as a major non-NATO ally in December 2003. Thailand's airfields and ports play a particularly important role in U.S. global military strategy, including having served as the primary hub of the relief effort following the 2004 Indian Ocean tsunami. 

Since 2006, Thai politics have been dominated by a fight between populist forces led by Thaksin (now in exile) and his opponents: a mix of conservative royalists and military figures, and other Bangkok elites. Like Thaksin, none of the successive governments has been able to stem the violence of an insurgency in the southern majority-Muslim provinces. A series of attacks by insurgents and counter-attacks by security forces has reportedly claimed around 4,000 lives since January 2004. 

With its favorable geographic location and broad-based economy, Thailand has traditionally been considered among the most likely countries to play a major leadership role in Southeast Asia and has been an aggressive advocate of increased economic integration in the region. A founding member of the Association of Southeast Asian Nations (ASEAN), Thailand maintains close ties with China and is pursuing FTAs with a number of other countries. Given its ties with the United States, Thailand's stature in the region may affect broader U.S. foreign policy objectives and prospects for further multilateral economic and security cooperation in Southeast Asia. This report will be updated periodically.


Date of Report: January 22, 2010
Number of Pages: 24
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Tuesday, February 2, 2010

Guam: U.S. Defense Deployments

Shirley A. Kan
Specialist in Asian Security Affairs

Larry A. Niksch
Specialist in Asian Affairs

Since 2000, the U.S. military has been building up forward-deployed forces on the U.S. territory of Guam to increase deterrence and power projection for possible responses to crises and disasters, counter-terrorism, and contingencies in support of South Korea, Japan, the Philippines, Taiwan, or elsewhere in Asia. The defense buildup on Guam has been moderate. Nonetheless, China has concerns about the defense buildup, suspecting it to be directed against China. Guam's role has increased with plans to withdraw some U.S. forces from Japan and South Korea. 

In 2006, the United States and Japan agreed on a "Roadmap" to strengthen their alliance, including a buildup on Guam to cost $10.3 billion, with Japan contributing 60%. The goals are to start the related construction on Guam by 2010 and to complete relocation of 8,000 marines and their 9,000 dependents from Okinawa to Guam by 2014. 

On February 17, 2009, Secretary of State Hillary Clinton visited Tokyo and signed the bilateral "Agreement Between the Government of the United States of America and the Government of Japan Concerning the Implementation of the Relocation of the III Marine Expeditionary Force Personnel and Their Dependents From Okinawa to Guam" that reaffirmed the "Roadmap" of May 1, 2006. The two governments agreed that of the estimated $10.27 billion cost of the facilities and infrastructure development for the relocation, Japan will provide $6.09 billion, including up to $2.8 billion in direct cash contributions (in FY2008 dollars). The United States committed to fund $3.18 billion plus about $1 billion for a road. 

However, on September 16, 2009, Yukio Hatoyama of the Democratic Party of Japan became Prime Minister. This political change raised a question about whether Japan would seek to renegotiate the agreement, even while the United States seeks its implementation. This dispute has implications for the relocation of marines from Okinawa to Guam. In a meeting in Honolulu on January 12, 2010, with Secretary of State Clinton, Japan's Foreign Minister conveyed Hatoyama's promise to decide by May on the location of Okinawa's Futenma Replacement Facility for the U.S. Marine Corps, on which depends the relocation of marines to Guam. 

The National Defense Authorization Act for FY2010 (H.R. 2647, enacted as P.L. 111-84 on October 28, 2009) authorized the first substantial incremental funding for the relocation of marines from Okinawa to Guam, but conditioned upon the Defense Department's submission to Congress of a Guam Master Plan. Among a number of provisions related to Guam in the legislation and conference report, Congress designated the Deputy Secretary of Defense to lead a Guam Executive Council and coordinate interagency efforts related to Guam. Congress also required a report on training, readiness, and movement requirements for Marine Forces Pacific, with a sense of Congress that expansion of Marine Corps training should not impact the implementation of the U.S.-Japan agreement on relocation from Okinawa to Guam. 

Updated as warranted, this CRS Report discusses major developments and policy issues. On appropriations related to military construction on Guam, see CRS Report R40731, Military Construction, Veterans Affairs, and Related Agencies: FY2010 Appropriations


Date of Report: January 19, 2010
Number of Pages: 11
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