WORLD TRADE
ORGANIZATIONWT/L/327
22 October 1999
(99-4613)
General Council
3, 4 and 8 November 1999Original:  English
UNITED STATES - FORMER TRUST TERRITORIES OF THE PACIFIC ISLANDS
Report of the Government of the United States
under the Decision of 14 October 19961
The following communication, dated 21 October 1999, has been received from the Permanent
Mission of the United States.
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1. Introduction
On 14 October 1996, the United States was granted a renewal of the waiver (WT/L/183) from
its obligations under paragraph 1 of Article I of the GATT 1994 to the extent necessary to permit theUnited States Government to provide preferential tr eatment for eligible imports into the United States
from the Marshall, Caroline and Mariana Islands (oth er than Guam), formerly part of the Trust
Territories of Pacific Islands (TTPI).  This waiver was extended until 31 December 2006.
Under the terms of this waiver, the United States is required to submit to the General Council
an annual report on the implementation of the trad e-related provisions of the programme with a view
to facilitating the annual review provided for in  paragraph 4 of Article IX of the WTO Agreement.
This report covers calendar year 1999.  Trade data has been provided for calendar year 1998, the most
recent year for which full-year data is available.
2. Preferential Treatment for the Former Trust Territories of the Pacific Islands
With the entry-into-force in 1986 of the Cove nant establishing the Commonwealth of the
Northern Mariana Islands, and the Compacts of Free Association with the United States for the
Republic of the Marshall Islands, the Federated States of Micronesia, and in 1994 of the Compact of
Free Association with the United States for the Republic of Palau, the Trusteeship of the Pacific
Islands, established on 2 April 1947, was terminated.  US law provides for the continuation of the
preferential trade treatment granted these islands under the Trusteeship.  These preferences are similarto historical preferences the United States provides the US Virgin Islands, Guam and American
Samoa, which were US possessions on 1 July 1939 and which are included in Annex D to Article I of
the GATT 1994.  The primary purpose of this preference system has been to promote the expansion of
trade and the economic development of the beneficiaries in a manner consistent with the objectives of
the GATT and with the trade, financial and development needs of the beneficiary countries.
Under General Note 3(a)(iv) of the Harmonized Tariff Schedules of the United States,
duty-free treatment is accorded to all products of the former TTPI, with some exceptions.  Watches
                                                     
1 WT/L/183.WT/L/327
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and watch movements, and certain fishery products are subject to quantity limitations, and buttons,
certain textile, apparel, footwear and luggage produc ts are subject to duty in some or all of former
TTPI.  Duty-free treatment is only accorded to the in-quota quantity of agricultural products subject to
a tariff-rate quota.
3. Performance
A very small volume of production and trade involved in this programme.  Taken together,
US imports from the Republic of the Marshall Islands, the Republic of Palau, the Federated States of
Micronesia and the Commonwealth of the Northern Mariana Islands total about $1 billion or about
one tenth of 1 per cent of US imports:  about 20 per cent is eligible for tariff preferences.  However,
the US is an important market for these islands, as the destination of nearly 50 per cent of total
exports.
The Commonwealth of the Mariana Islands, with a far larger economy than its three island
neighbours, is far and away the largest exporter, responsible for more than 95 per cent of total exports
to the United States from the former Trust Territories.  The Republic of Palau was the second largest
exporter in 1997, followed by the Federated States of Micronesia and the Republic of the MarshallIslands.
The annex to this document provides summary information on US imports from the former
Trust Territories of the Pacific Islands from 1993-1998.WT/L/327
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TABLE 1
US Imports from the Former Trust Territory of the Pacific
(Values in millions of dollars)
 US Imports
Source 1993 1994 1995 1996 1997 1998
Total U.S. Imports581 663 744 795 871 1,013
Republic of the Marshall Islands 11 8 1 3476
Federated States of Micronesia 14 13 13 11 12 13
Republic of Palau 1369 1 3 1 4
Commonwealth of the Northern
Mariana Islands308  332 428 556 799 980
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