Economic Report of the President 1994 - The American Presidency ...

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development, and environmental cleanup, provided they are subjectto conditions designed to limit their distorting effects.Negotiators were able to agree on comprehensive GATT rulesgoverning trade and investment in services (the so-called GeneralAgreement on Trade in Services, or GATS), such as telecommunications,professional, and financial services. The agreement containsa strong national-treatment provision: Member countriesmust accord to service suppliers of other countries treatment noless favorable than that accorded their own suppliers. GATS alsoincludes a market access provision that incorporates disciplines ondiscriminatory measures that governments frequently impose tolimit competition. These measures include restrictions on the numberof firms allowed into the market, "economic need" tests, andmandatory local incorporation rules. Because of the breadth andcomplexity of these issues, not as much progress was made as wasdesirable. To realize additional progress, GATS establishes a proceduralframework for further negotiation.The Uruguay Round negotiations also yielded systematic prohibitionson trade-related investment measures. For example, theagreement prohibits so-called local content requirements, whichforce foreign firms to use a set amount of locally produced inputsas a condition for investment. It also prohibits "trade balancing" requirements,under which a foreign affiliate must export as much ofits production as it imports for use as inputs. These requirementshave bedeviled U.S. firms operating abroad in the past.Lastly, the Uruguay Round agreement prohibits so-called voluntaryexport restraints and other, similar measures that are oftenused as safeguards outside GATT rules. It also provides specifictime limits for the formation and operation of dispute settlementpanels and requires the automatic adoption of panel reports (exceptin the case of unanimous veto). Previously, any country, includingthe country against which the complaint was lodged, could effectivelyblock the implementation of a panel's decision. The new procedureswill greatly expedite the resolution of international tradedisputes. The members of GATT agreed to establish a new multilateralorganization, to be called the World Trade Organization(WTO), to enforce these new agreements.In summary, the U.S. negotiators in the Uruguay Round weresuccessful in negotiating broad-ranging multilateral trade liberalization.This was accomplished by reducing existing barriers andbringing areas of trade that had been largely outside the GATTsystem, such as agriculture, textiles, intellectual property, andservices, under the GATT rubric. At the same time, GATT procedureshave been strengthened to ensure that signatories meet theirobligations, without compromising our ability to implement our nationaltrade or other laws (Box 6-6). The liberalization of global236
trade resulting from these substantive and procedural achievementswill raise real incomes in the United States by billions ofdollars annually in the coming years.Box 6-6.—-The Uruguay Round and U.S. Trade LawsThe Uruguay Round final agreement contains a number ofprovisions that will enhance dispute resolution and facilitatebetter enforcement of U.S. rights. The agreement both movesGATT procedures closer to U.S. laws and complements U.S.laws for dealing with unfair foreign trade practices.Section 301 of the Trade Act of 1974 provides the basis foractions to enforce U.S, rights under trade agreements and torespond to foreign practices that impede or restrict U.S. exports.When disputes arise in areas covered by GATT* Section301 requires the United States to use GATT dispute resolutionprocedures before undertaking unilateral action. The UruguayRound brings agriculture, textiles, and services under GATTrules for the first time and enhances the speed and effectivenessof GATT dispute resolution procedures. As a result, theUnited States can now use GATT to accomplish objectives thatformerly required unilateral action. When disputes arise inareas outside the GATT framework, the United States can stilluse Section 301 to combat unfair foreign trade practices.The Uruguay Round brings GATT closer to U.S. practices inother areas. For example, in dealing with food safety measures,the Uruguay Round agreement allows countries to choose theirown levels of safety but requires that each country's standardshave a scientific basis and not be used as disguised trade barriers.Because U.S. laws already have a scientific basis, it isunlikely that they will be susceptible to challenge. Other countries,however, have used food safety regulations in an arbitrarymanner to block imports. The agreement adopts similarprovisions for dealing with technical barriers to trade, such asso-called conformity assessment procedures (registration, inspection,and laboratory accreditation procedures, among others)used to evaluate conformance with technical regulations.Antidumping is another area in which the post-UruguayRound GATT will become more like U.S. trade laws. The UnitedStates has a transparent process for implementing its antidumpinglaws. The Uruguay Round agreement will make foreignantidumping actions more transparent, which should helpU.S. exporters by improving the fairness of other countries'antidumping procedures.237
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unitedminds
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Economic Report of the PresidentTo
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the Technology Reinvestment Project
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formed health care system, increase
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CONTENTSPageCHAPTER 1. A STRATEGY F
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PageProviding Comprehensive Benefit
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LIST OF CHARTS—CONTINUEDPage3-5 L
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CHAPTER 1A Strategy for Growth and
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which have left consumers and busin
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that growth in both real compensati
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for inflation was on average roughl
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Box 1-2.—Saving, Investment, and
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investments in human capital; inves
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of the income distribution (Table 1
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Box 1-3.—Credible Deficit Reducti
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Chart 1-7 Correlation of Investment
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Box 1~4*~-A Balanced Budget Amendme
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This educational record is not good
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fallen markedly since the 1960s (Ch
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The development and deployment of n
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Earlier rounds of GATT talks had fo
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Chart 1-10 Projected Real Growth Ra
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are therefore on the public dole. M
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prise communities and be granted sm
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ingredient that should allow the ec
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Chart 2-2 National Defense Purchase
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Chart 2-3 Growth of U.S. Merchandis
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Chart 2-5 Households: Credit Market
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THE HEADWINDS ARE MOSTLY CALMINGAs
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1993, real consumer spending increa
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RESIDENTIAL INVESTMENTResidential i
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smallest annual increase in 20 year
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ments with the Internal Revenue Ser
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safe-harbor rules for underpayment
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Chart 2-9 Alternative Measures of t
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Meanwhile, the Mountain States were
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inflation is measured by the Blue C
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Saving, Investment, and Capital Acc
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the future should be reflected in l
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Chart 2-15 Dynamic Effects of Defic
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joyed healthy average real GDP grow
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Chart 2-16 Personal Income Taxes as
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TABLE 2-2.— Administration Foreca
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TABLE 2-3.— Accounting for Growth
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CHAPTER 3Trends and Recent Developm
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first quarter of 1991, nonfarm payr
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cause defense cutbacks have caused
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UNEMPLOYMENT AND NONEMPLOYMENTThe U
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Chart 3-3 Civilian Unemployment Rat
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Chart 3-6 Employment-to-Population
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Chart 3-8 Ratio of White-Collar to
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than would be expected given its hi
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that the natural rate is falling? M
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SLOW INCOME GROWTHIncome trends hav
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Chart 3-10 Average Annual Growth of
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Box 3-3.—Consequences of Producti
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likely that immigration could expla
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We do, however, know how many worke
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size. No data are available on vola
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BENEFITSOne of the concerns raised
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edented partnership to develop a nu
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CHAPTER 4Health Care ReformTHE UNIT
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make cost-conscious decisions. In a
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A third rationale for universal cov
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Box 4-1.—Moral Hazard and Adverse
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ies depending on one's health statu
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than people in other countries do,
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sumers are ill equipped to bring st
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By itself, the aging of the populat
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TABLE 4-3.- Sources and Uses of Hea
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about 65 to 70 cents for a typical
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THE ARCHITECTURE OF THE HEALTHSECUR
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etary savings for the Federal Gover
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contribution, within limits. Outsid
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salary income, payments from the em
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TABLE 4-6.—Caps on Premiums by Fi
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An example will illustrate the proc
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TABLE 4-9.—Sources and Uses of Fe
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Chart 4-9 Business Spending on Heal
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Health care reform should set the s
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and private sectors, addressing env
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Box 5-1.—Selected National Perfor
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Box 5-2*—Market PowerFirms are sa
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ate regulation. For example, State
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competitiveness of U.S. industry, a
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Box 5-4.—ExternalitiesAn external
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in the habitat of the spotted owl r
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CLIMATE CHANGE ACTION PLANCertain g
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Page 194 and 195: The Administration's proposal seeks
Page 196 and 197: vances in technical know-how have a
Page 198 and 199: Investments in R&D are risky. Like
Page 200 and 201: 1950s and 1960s, and American compa
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Page 204 and 205: of industry. MOCs will be affiliate
Page 206 and 207: tiveness. Again, the hoped-for resu
Page 208 and 209: forts to cut the massive Federal bu
Page 210 and 211: TECHNOLOGY POLICY, GROWTH, ANDCOMPE
Page 212 and 213: mitment to an open international tr
Page 214 and 215: ses, which take such intersectoral
Page 216 and 217: An important sectoral development i
Page 218 and 219: TABLE 6-3.—Stock of U.S. Outward
Page 220 and 221: technical change has been offered a
Page 222 and 223: ent account is a broader measure of
Page 224 and 225: TABLE 6-6.—Intrafirm Trade as Sha
Page 226 and 227: greater access to the Japanese mark
Page 228 and 229: the transparency of its trade regim
Page 230 and 231: that if the states of the former So
Page 232 and 233: Box 6-3.—Mexican Economic Reforms
Page 234 and 235: 1998, while nontariff barriers on a
Page 236 and 237: ward convergence in environmental a
Page 238 and 239: Box 6-4.—The Asian "Miracle"Per c
Page 240 and 241: Box 6-5.—The Economic Impact of t
Page 244 and 245: THE TRADE POLICY AGENDABy lowering
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Page 248 and 249: The dollar ended 1993 roughly where
Page 250 and 251: Box 6-7.—Exchange-Rate Volatility
Page 252 and 253: Chart 6-5 French Franc-Deutsche Mar
Page 254 and 255: Besides bringing these endeavors to
Page 257 and 258: LETTER OF TRANSMITTALCOUNCIL OF ECO
Page 259 and 260: Report to the President on the Acti
Page 261 and 262: duction budget package, the North A
Page 263 and 264: Working Group studying cost-benefit
Page 265 and 266: prepares the Economic Indicators an
Page 267: Appendix BSTATISTICAL TABLES RELATI
Page 270 and 271: POPULATION, EMPLOYMENT, WAGES, AND
Page 272 and 273: AGRICULTURE:PageB-96. Farm income,
Page 274 and 275: NATIONAL INCOME OR EXPENDITURETABLE
Page 276 and 277: TABLE B-2.—Gross domestic product
Page 278 and 279: TABLE B-3.—Implicit price deflato
Page 280 and 281: TABLE B-4.—Fixed-weighted price i
Page 282 and 283: TABLE B-5.—Changes in gross domes
Page 284 and 285: TABLE B-7.—Cross domestic product
Page 286 and 287: TABLE B-9.—Gross domestic product
Page 288 and 289: TABLE B-ll.—Gross domestic produc
Page 290 and 291: TABLE B-13.—Gross domestic produc
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TABLE B-15.—Personal consumption
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TABLE B-17.—Gross and net private
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TABLE B-19.—Inventories and final
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TABLE B-21.—Foreign transactions
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TABLE B-23.—Relation of gross dom
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TABLE B-25.—National income by ty
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TABLE B-26.—Sources of personal i
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TABLE B-27.—Disposition of person
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TABLE B-29.—Gross sating and inve
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TABLE B-31.—Median money income (
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TABLE B-33.—Population and the la
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TABLE B-34.—Civilian employment a
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TABLE B-36.—Unemployment by demog
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TABLE B-38.—Civilian labor force
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TABLE B-40.—Civilian unemployment
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TABLE B-42.—Unemployment by durat
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TABLE B-44.—Employees on nonagric
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TABLE B-45.—Hours and earnings in
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TABLE B-47.—Productivity and rela
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PRODUCTION AND BUSINESS ACTIVITYTAB
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TABLE B-51.—Industrial production
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TABLE B-53.—New construction acti
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TABLE B-54.—New housing units sta
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Year or monthTABLE B-56.—Manufact
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TABLE B-58.—Manufacturers' new an
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TABLE B-60.—Consumer price indexe
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TABLE B-61.—Consumer price indexe
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TABLE B-63.—Changes in consumer p
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TABLE B-64.—Producer price indexe
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TABLE B-66.—Producer price indexe
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TABLE B-67.—Changes in producer p
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TABLE B-69.—Components of money s
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TABLE B-70.—Aggregate reserves of
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TABLE B-72.—Bond yields and inter
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TABLE B-73.—Total funds raised in
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TABLE B-74.—Mortgage debt outstan
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TABLE B-76.—Consumer credit outst
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TABLE B-78.—Federal receipts, out
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TABLE B-79.—Federal budget receip
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TABLE B-81.—Federal and State and
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TABLE B-83.—State and local gover
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TABLE B-85.—Interest-bearing publ
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TABLE B-87.—Estimated ownership o
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TABLE B-89.—Corporate profits by
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TABLE B-91.—Sales, profits, and s
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TABLE B-93.—Sources and uses of f
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TABLE B-95.—Business formation an
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19481949195019511952195319541955195
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TABLE B-99.—Indexes of prices rec
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TABLE B-101.— Farm business balan
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TABLE B-103.—U.S. international t
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TABLE B-104.—U.S. merchandise exp
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TABLE B-106.—U.S. merchandise exp
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TABLE B-108.—Industrial productio
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TABLE B-110.—Foreign exchange rat
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NATIONAL WEALTHTABLE B-l 12.—Nati
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SUPPLEMENTARY TABLETABLE B-114.—S
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