WTO questions US trade measures

The US is the world's biggest importer and exporter

The US has been warned by the World Trade Organisation (WTO) to live up to its pledge of free trade.

A WTO report raised concerns about rising trade deficits, new security measures, and subsidies to industries.

It criticised barriers to US market access through subsidies and tariffs which protect the agriculture, steel, textiles and clothing sectors.

The WTO also warned that the "large bilateral trade imbalances could give rise to protectionist pressures".

The US has recently been forced to abandon protectionist tariffs on imported steel after a ruling by the WTO.

But the WTO said that "its uneven record of compliance with WTO rulings" is still of concern to its members.

Future of world trade talks

The WTO urged the US to maintain its commitment to free trade and, in particular, the negotiations aimed at liberalising world trade, known as the Doha Development Agenda.

Trade in textiles is one of several contentious topics

After the failure of the world trade talks in Cancun, Mexico, in September, US officials indicated that they would be taking a more bi-lateral approach, negotiating individual trade deals with "can-do" nations.

But the WTO pointed out that "while (this) could help draw partners into the multilateral system, care should be taken to avoid distracting resources away from it and that vested interests are not created which complicate multilateral negotiations".

It said that achieving free trade through multilateral negotiations "offers the US unique advantages in view of the distinctive global reach of its trade and investment interests".

And it warned that the increasing number of preferential tariff schemes "have resulted in an increased set of different rules of origin, adding to the complexity of the US trade regime".

It also noted that the requirement for US input content may "possibly be at the expense of lower-cost third country suppliers".

Security concerns

The WTO also expressed concern that new security measures imposed by US authorities may impede trade.

Measures taken have included advance notification of shipments to US ports, prior inspection of cargo containers in foreign ports, and prior notice of shipment of foodstuffs to the US.

The WTO implicitly criticised the additional subsidies paid to US airlines after September 11, and the Farm Bill of 2002 which increased counter-cyclical payments to farmers when commodity prices fall, pointing out that "domestic support although not targeted at exports may significantly affect trade".

The huge agricultural subsidies paid by rich countries to their farmers remains the biggest stumbling block to the resumption of trade talks.

In its own submission to the WTO, the US said it was "steadfast" in its support of a rules-based multilateral trading system.

But it called for changes in how the WTO is run, including increased openness in WTO operations, negotiations and trade practices.

"The WTO needs to expand public access to dispute settlement proceedings... and to encourage more exchange with outside organisations," the US government said.