ITC Issues Report on Potential Effects of Oman FTA on U.S. Economy and Selected Sectors (Part II - Final)

This is Part II of a two-part series of summaries and provides information on issues of interest other than textiles and apparel. (See ITT's Online Archives or 02/09/06 news, 06020920, for Part I of BP's summary, which focused on textiles and apparel, including tariff reduction schedules for textiles and apparel, yarn forward rules, etc.)

Oman FTA Would Provide Duty Free Access for Most Consumer, Industrial Goods

The ITC states that under the market access provisions of the free trade agreement (FTA), the U.S. and Oman will provide each other immediate duty-free access for tariff lines covering almost all consumer and industrial goods and 87% of all agricultural tariff lines; both countries will phase out all tariffs on the remaining eligible goods within 10 years.

The ITC notes that the expected growth in U.S. trade with Oman would likely have a small but positive impact on the U.S. economy, as the majority of U.S. imports from Oman already enter duty-free or at low tariffs and 91% of U.S. exports to Oman faced a tariff of 5%.

The following are highlights of the ITC's anticipated effects of the Oman FTA (partial list):

Elimination of duties. The ITC states that Oman would eliminate duties on most U.S. exports immediately, guarantee existing duty-free access given in most-favored-nation (MFN) trade, and phase out duties on other U.S. goods annually over periods of 5 or 10 years or, for some goods, eliminate duties on January 1 of year 10.

The U.S. would grant immediate duty-free access for most eligible exports of Oman, taking into account its status as a beneficiary of the U.S. Generalized System of Preferences (GSP) and existing U.S. normal trade relations (NTR) rates of free on many tariff categories. Other originating goods would receive phased duty reductions over periods of 5 or 10 years. Table 2-1 in the ITC's report contains a summary of tariff commitments under the FTA, including information about certain tariff rate quotas (TRQs).

Effects on U.S. exports. The ITC states that U.S. exports to Oman are very small, accounting for less than 1% of total U.S. goods exports by value in 2004. The leading U.S. exports to Oman in 2004 were concentrated in machinery, transportation, equipment, and measuring instruments, including parts for boring or sinking machinery, heat exchange units, passenger vehicles, and parts of gas turbines. For the majority of these exports, duties would be eliminated immediately upon implementation of the FTA.

Customs administration and express shipments. According to the ITC, the Oman FTA would facilitate the clearance process through greater use of information technology, improve risk management and cooperation among parties, and establish procedures for resolving disputes. It requires each party to adopt separate customs administration measures for express shipments. These measures would facilitate express shipment processing to allow: (1) electronic submission of documents, (2) pre-arrival processing of information, and (3) submission of a single manifest covering all goods in an express shipment, as well as to minimize release documentation, where possible. The FTA would require release of express shipments within 6 hours.

Safeguards. The Oman FTA would provide a legal framework to allow each party to impose bilateral safeguards on originating goods of the other party. A party must notify the other party when an investigation is initiated and consult before taking any action under the safeguard provisions. The ITC explains that a safeguard measure may only be taken if a party determines that, as a result of the reduction or elimination of a duty under the FTA, an article is being imported from the other party in such increased quantities as to be a substantial cause of serious injury or threat thereof to domestic production.

IPR enforcement. The ITC report states that full implementation and enforcement of the intellectual property provisions of the Oman FTA would increase the level of protection afforded to intellectual property rights (IPR) holders and, in turn, likely result in increased revenues for U.S. IPR industries dependent on copyrights, trademarks, patents, and trade secrets. However, due to the relatively small size of the Omani economy, any increases in revenues for U.S. IPR industries would likely have a limited effect on the U.S. economy as a whole.

(See ITT's Online Archives or 11/10/05 news, 05111020, for BP summary of the ITC's institution of this investigation.)

ITC Press Release on Report (News Release 06-007, dated 02/03/06) available at http://www.usitc.gov/ext_relations/news_release/2006/er0203dd1.htm

ITC Report (Inv. No. TA-2104-19, ITC Publication 3837, dated February 2006) available athttp://hotdocs.usitc.gov/docs/pubs/2104F/pub3837.pdf