Normal-Trade-Relations (Most-Favored-Nation) Policy of the United States
CRS Report for Congress
Policy of the United States
Updated December 15, 2005
Vladimir N. Pregelj
Specialist in International Trade and Finance
Foreign Affairs, Defense, and Trade Division
Congressional Research Service ˜ The Library of Congress
Normal-Trade-Relations (Most-Favored-Nation) Policy
of the United States
In international trade, the term most-favored-nation (MFN) treatment has a
meaning at variance with what it appears to mean: the expression means equal —
rather than exclusively favorable — treatment and is often used interchangeably with
“nondiscriminatory.” To make this distinction clearer and avoid a possibly
misleading interpretation of the most-favored-nation term, legislation was enacted
in 1998 to replace it in U.S. law with the term “normal trade relations,” or NTR. In
this report, both terms are used interchangeably with “nondiscriminatory.” The
United States accords general MFN treatment as a matter of international obligation
as well statutory policy to all trading partners; however, MFN tariff treatment of
several countries has been suspended under specific legislation. Virtually all such
suspensions, initially applied to 21 countries or political entities, took place under the
mandate of the Trade Agreements Extension Act of 1951, and two more under
country-specific legislation. MFN tariff treatment of countries suspended under the
1951 law can be restored and maintained in effect for one-year periods by using the
procedure provided under Title IV of the Trade Act of 1974 for such restoration to
“nonmarket economy” (NME) countries. Under this procedure, an NME country
needs to conclude with the United States a trade agreement containing a reciprocal
MFN clause, and be in compliance with the criteria of the Jackson-Vanik (J-V)
freedom-of-emigration provision of that act. The two countries whose MFN status
was suspended by country-specific legislation could — and did — have it restored
by Presidential action under conditions specified in the suspending law.
Trade agreements with NME countries must be approved by joint resolution,
and are triennially self-renewable, but their renewal is also subject to Presidential
confirmation. To maintain in force the compliance with the J-V criteria (and the
MFN status), such compliance must be either determined semiannually, or waived
annually, by the Secretary of State, and such determinations or waivers are annually
subject to possible disapproval by joint resolution. Repeated past legislative action
to disapprove some waivers, particularly those for China, has been unsuccessful and
NTR treatment contingent on a waiver has invariably remained in effect. Permanent
restoration of NTR status of any country generally requires specific legislation.
Of the 29 countries, today’s successors of countries or areas originally subject
to the 1951 suspension, 15 had their permanent NTR status restored by specific
legislation (five directly and ten after a period of conditional restoration under the
Jackson-Vanik amendment), one (Poland) by the President under then existing
statutory authority, and one (East Germany) administratively through unification with
West Germany. The status of seven of them is still temporary, subject to the
determination of full-compliance with the Jackson-Vanik amendment, and of three
of them under the Jackson-Vanik waiver provision. Two countries (Cuba, and North
Korea) are denied NTR status altogether. The NTR status of two countries,
suspended by individual legislation, has been restored permanently by Presidential
action as authorized by the suspending legislation.
This report will be updated as warranted.
What is Normal-Trade-Relations (Most-Favored-Nation) Treatment?.........1
Evolution of U.S. Most-Favored-Nation Policy..........................2
Procedure for Restoring NTR Treatment to Nonmarket Economy Countries ...3
NTR Action Through the 105th Congress ...............................5
Developments During the 106th Congress...............................9
Developments During the 107th Congress..............................12
Developments During the 108th Congress..............................14
Developments During the 109th Congress..............................17
Appendix A. Legislation...........................................20
Appendix B. Recent Chronologythth
(108 through 109 Congresses).................................21
Appendix C. Congressional Hearings, Reports, and Documents
(108th through 109th Congresses).................................25
Appendix D. For Additional Reading.................................26
of the United States
What is Normal-Trade-Relations
In international trade, the expression “most-favored-nation,” usually abbreviated
“MFN,” status (or treatment) has a specific meaning quite different from what it
appears to mean. While suggesting special and exclusive privileges granted to one
country, it means in reality equal treatment of all countries granted the MFN
treatment. Defined in a more specific detail in Article I of the General Agreements
on Tariffs and Trade (GATT) 1994, an integral part of the World Trade Organization
Agreement, the term denotes the reciprocal extension of any concessions, privileges,
or immunities granted, or yet to be granted, by a country in a trade agreement (or in
some other way) to one country which is, or would be, the “most favored” in this
respect to all countries to which it accords MFN treatment. As a consequence, all
countries to which a country extends MFN treatment are, or would be, treated by the
extending country equally or in a “nondiscriminatory” fashion.
The understandable misinterpretation of the most-favored-nation term in its
literal meaning, particularly in the context of U.S. trade policy of the mid-1990s1
toward China, gave rise to legislation to replace the often misleading term “most-
favored-nation” treatment in the seven instances in the existing and in all future U.S.
legislation with the term “normal trade relations” (NTR) or another appropriate
expression. The MFN term, however, has remained universally in use in international
trade relations, including trade agreements to which the United States is party.
Because of this fact and for reasons of historical continuity both terms (MFN and
NTR) are used in this report with the identical meaning and also interchangeably with
the term “nondiscriminatory,” a term also often used in U.S. trade legislation.
In practice, the principal benefit a country gains from being accorded MFN
status by another country is that the latter’s imports from the former are dutied at
concessional rates (often referred to as “MFN” rates, and listed in the U.S. tariff
schedules as “General”) rather than full rates. Thus, the extension of MFN treatment
to a country can often mean a significantly lower cost and, hence, greater
competitiveness of its products in the extending country’s markets than would
otherwise be the case. In this report, the MFN (NTR) treatment is discussed in the
specific context of tariffs, because of the origins and historical development of the
1 See pp. 7 and 8.
concept in the U.S. law and practice, particularly the denial or restoration of such
treatment to nonmarket economy countries
Evolution of U.S. Most-Favored-Nation Policy
There are three basic, often overlapping, ways in which the United States
accords general MFN treatment to its trading partners. One is by means of a bilateral
compact (e.g., a “friendship, commerce, and navigation” or similar treaty, or an
executive trade agreement) in which MFN status is accorded reciprocally. Another,
much broader in its reach, is through being a member of the World Trade
Organization (WTO), which, as a rule, carries with it the obligation of according
MFN treatment to all other members.
In addition, the United States specifically accords to all foreign countries any
concession on tariffs or other import restrictions agreed to in reciprocal negotiations
with any trading partner by its own law, first enacted in 1934 and now contained in
Section 126 of the Trade Act of 1974 (19 U.S.C. 2136). U.S. legislation provides no
specific procedure for extending MFN status to a country (except in the case of
restoration of the status to “nonmarket economy” countries discussed below) nor is
there an official list of countries with MFN status. All countries other than those to
which MFN treatment is specifically denied by law (as listed in General Note 3(b)
of the Harmonized Tariff Schedule of the United States) have MFN status.
The policy of general application of MFN treatment was modified when the2
President, in 1951 and 1952, suspended the application of MFN tariff rates to the
Soviet Union and to all countries or areas then under the control of international
communism (in practice, the suspension applied to all countries of the then
Sino-Soviet bloc but not to Yugoslavia). This action resulted in the increase of
customs duties assessed on the U.S. imports from the countries involved from the
concessional levels resulting from trade agreements with third countries to
considerably higher levels as enacted by the highly protectionist Tariff Act of 1930.
The Communist countries and areas initially denied MFN tariff treatment under
Section 5 were: Albania, Bulgaria, China (any part under Communist domination or
control), Czechoslovakia, Estonia, Germany (Soviet Zone and Soviet Sector of
Berlin), Hungary, Indochina (any part of Cambodia, Laos, or Vietnam under
Communist domination or control), Korea (any part under Communist domination
or control), Kurile Islands, Latvia, Lithuania, Outer Mongolia, Poland and areas
under Polish domination or control, Rumania, Southern Sakhalin Island, Soviet
Union, Tanna Tuva, and Tibet.3
2 The suspension was required by Section 5 of the Trade Agreements Extension Act of 1951
(65 Stat. 73) and implemented by Presidential Proclamation 2935 (16 F.R. 2635) and
subsequent Trade Agreement Letters, applying it to individual countries.
3 U.S. Congress. Senate. Committee on Finance. Trade Reform Act of 1974; report together
with additional views on H.R. 10710 ... S.Rept. 93-1298. Washington, U.S. Govt. Print. Off.,
November 26, 1974, p. 201.
Subsequently, Poland’s MFN tariff status was restored by the President in
December 1960, while Cuba’s was added to Section 5 suspensions by law in May
1962. Also in 1962, a list of “Communist countries” (all “Section 5” countries except
Poland), to which MFN tariff status was being currently denied, was included in the
newly revised Tariff Schedules of the United States, enacted by the Tariff
Classification Act of 1962, and thereby the denial of MFN treatment to individual
countries became part of the U.S. law rather than of implementing regulations as
Section 231 of the Trade Expansion Act of 1962 (P.L. 87-794; 76 Stat. 876)
applied the Section 5 suspension to “any country or area dominated by Communism”
and thereby placed in jeopardy MFN tariff status of Yugoslavia as well as of Poland.
The implementation of this directive was delayed and the law was later amended by
allowing any country with MFN status at the time of its enactment (December 16,
1963) to retain it if the President determines it to be in the national interest. Such
determination was made on March 26, 1964, for both countries (29 F.R. 4851 or
Procedure for Restoring NTR Treatment to
Nonmarket Economy Countries
The Trade Expansion Act of 1962 also made the restoration of MFN tariff status
to a country subject to Section 5 suspension possible only by legislation. While
restoration of permanent NTR treatment can take place only through legislation
enacted under general legislative procedure, NTR treatment as such can be restored
to a “nonmarket economy” (NME) country subject to Section 5 suspension on a
temporary basis by a specific procedure provided in Title IV of the Trade Act of
1974. While Section 401 of the act requires the continuation in force of the then
existing suspensions of MFN tariff status, it also, in other provisions of its Title IV,
authorizes the President to restore “nondiscriminatory” status to a nonmarket
economy country and maintain it in effect on a temporary basis by a specific
The key elements of the procedure for temporary restoration of the MFN
status to an NME country are (1) conclusion of a bilateral trade agreement,
containing a reciprocal grant of the MFN status and additional provisions required
by law (Section 405, Trade Act of 1974; 19 U.S.C. 2435), and approved by the
enactment of a joint resolution4 considered under a specific fast-track procedure set
out in Section 151 of the Trade Act of 1974 (19 U.S.C. 2191); and (2) compliance
with the freedom-of-emigration requirements (“Jackson-Vanik amendment;” Section
4 Originally, approval of a trade agreement concluded with an NME country was to be
effected by the adoption of a concurrent resolution. The type of approving resolution was
changed — with some delay — to joint by Section 132(b)(2)(C) of P.L. 101-382 of August
Supreme Court in U.S. Immigration and Naturalization Service v. Chadha, which found
legislative vetoes by means of a one-house resolution unconstitutional.
report to Congress that the country is not in violation of (in effect, is in full
compliance with) the freedom-of-emigration criteria of the statute, or by a
presidential waiver of such compliance under specified conditions.
Neither the initial presidential determination of full compliance with the
Jackson-Vanik amendment requirements nor his initial waiver of full compliance
with them requires positive congressional approval. However, the initial presidential
determination of full compliance with such requirements (but not the initial waiver)
is subject to congressional disapproval by a joint resolution5 of either house, enacted
under a specific fast-track procedure, laid out in Section 152 of the Trade Act of 1974
(19 U.S.C. 2432).
Following the main steps of the procedure, the disapproval resolution, whose
language is prescribed by law, is referred, respectively, to the House Ways and
Means Committee or the Senate Finance Committee, and must be reported within 30
days of session, or else the committee considering it is subject to a discharge motion,
the resolution may be amended only with respect to its country applicability, and the
debate on the resolution and any procedural motions is subject to limits. The
resolution must be adopted within 90 days of session after the date the presidential
determination is delivered to Congress, and enters into force — thereby, in effect,
denying the nondiscriminatory treatment and other trade benefits to which it applies
— on the 61st day after its enactment. If the President vetoes the resolution, the veto
must be overridden within the 90 days or within 15 days of session after the receipt
of the veto message, whichever is later. The date of the override is considered as the
date of enactment.
After the enactment of legislation approving the bilateral agreement, restorations
of nondiscriminatory treatment are implemented by presidential proclamation, which,
in the case of permanent restorations, usually sets the date of their entry into force,
whereas temporary restorations enter into force on the date the exchange of notices
of acceptance of the agreement by the two countries takes place.
The continuation in force of an NME country’s temporary MFN status is
contingent on (1) automatic triennial extensions of the underlying trade agreement
and (2) periodic renewal of the authority of the Jackson-Vanik amendment.
The agreement, usually concluded for a three-year initial term, itself provides
for automatic three-year extensions (which do not require congressional approving
action), but is subject to termination by either party upon notice at least 30 days
before the expiration of any three-year term. The continuation in force of the
agreement is also subject to the requirement of Section 405(b)(1)(B) of the Trade Act
of 1974 (19 U.S.C. 2435(b)(1)(B)) under which any trade agreement concluded under
Title IV is renewed triennially if a satisfactory balance of concessions has been
maintained during the life of the agreement and the President determines “that actual
and foreseeable reductions in United States tariff and nontariff barriers ... resulting
from multilateral negotiations [which benefit the country in question unilaterally
5 Before the U.S. Supreme Court decision in Chadha (see Footnote 4), this disapproval
procedure involved a simple resolution.
because of its MFN status] are satisfactorily reciprocated by the other party to the
Periodic renewal of the Jackson-Vanik amendment authority by the President
must take place: (1) in the case of full compliance with the requirements of the
amendment, by semiannual reports (by June 30 and December 31) by the President
to Congress that the country continues to be, in effect, in full compliance with the
freedom-of-emigration requirements of the statute; and (2) in the case of waivers, by
a Presidential recommendation, which must be made by June 3 of every year, that the
overall waiver authority and the existing individual country waivers be extended for
another 12-month period (through July 2 of the following year).
In either case, the renewal is automatic unless the year-end (but not the mid-
year) report of full compliance or the annual recommendation of waiver renewal is
disapproved by the enactment of a joint resolution, considered under specific fast-
track procedures: that under Section 152 (see previous page) for year-end renewals
of the determination of full compliance, and a separate one, under Section 153 of the
Trade Act of 1974 (19 U.S.C. 2433), for mid-year renewals of the waiver authority.
The procedure under Section 153 differs, in its major steps, from that involving year-
end determinations of full compliance only in that the deadline for the committee
report is of 30 calendar days, and that the resolution must be adopted and transmitted
to the President by August 31 of the current year.
NTR Action Through the 105th Congress
Shortly after its enactment (January 3, 1975), Title IV of the Trade Act of 1974
was used to extend MFN treatment an annually renewable basis under the waiver
provision to Romania (August 1975), followed by Hungary (July 1978), China
(including Tibet) (February 1980), and Czechoslovakia (November 1990). Romania,
however, as of July 1988, renounced the continuation of its MFN tariff status subject
to the conditions of Title IV.
With the legislation for conditional restoration of nondiscriminatory tariff
treatment to NME countries already on the books, Poland’s MFN tariff status was
suspended again in October 1982 after the Polish martial-law government increased
its repressive measures, but was restored in February 1987, after most such measures6
had been repealed. In January 1986, Afghanistan’s MFN status was suspended by
specific law which also provided for its eventual restoration, under specified
conditions, by executive action without congressional involvement (Section 118, P.L.
99-190; 18 U.S.C. 2434 note). In 1989, the designation “Communist countries” was
omitted from the title of the list of countries denied MFN tariff treatment in the
newly enacted Harmonized Tariff Schedule of the United States7 (HTSUS) and the
6 Both actions were taken by Presidential proclamations, respectively, Nos. 4991 (47 F.R.
7 General Note 3(b), “Rates of Duty Column 2,” HTSUS (19 U.S.C. 1202). - Duty rates in
Column 2 of the HTSUS are full (non-MFN) rates mostly as set by the Tariff Act of 1930.
designation of the countries themselves was streamlined to reflect the actual post-
World War II international border changes. This streamlining did not affect the Baltic
countries (Estonia, Latvia, and Lithuania), which remained listed individually, since
their incorporation into the USSR had not been recognized by the United States. The
suspension of East Germany’s MFN tariff status automatically ended with the
unification of the two Germanies on October 3, 1990. By the end of 1990, MFN
status had also been restored.
On June 1, 1990, the United States and the Soviet Union signed a bilateral trade
agreement, providing among other benefits, reciprocal most-favored-nation
treatment. Implementing legislation was introduced with some delay (October 1991)
and enacted on December 9, 1991 (P.L. 102-197). Because of the dissolution of the
Soviet Union in late December 1991, the agreement did not enter into force for the
Soviet Union, but became the master agreement for subsequent extensions of MFN
treatment to the 12 individual newly independent republics (the Baltic republics
excepted), formerly constituting the USSR. Appropriately retitled, with the required
technical changes, and signed in each individual instance, it entered into force for
each former Soviet republic upon the exchange of notices of acceptance (see below).
Much activity related to MFN tariff status of U.S. trading partners took place
during the 102nd through 105th Congresses (1991-1998).
MFN status was restored temporarily under the waiver provision of Title IV to
Bulgaria and Mongolia in November 1991; and permanently by law in December
1991 to previously non-MFN countries Estonia, Latvia, and Lithuania, after they
declared their independence from the Soviet Union, and, in April 1992, to
Czechoslovakia (as of January 1, 1993, split into the Czech Republic and Slovakia)
and Hungary (both of which already had MFN status under Title IV). After the
dissolution of the Soviet Union in late December 1991, the suspension of MFN tariff
status continued in force individually with respect to the Soviet Union’s other (than
the three Baltic) 12 former constituent republics. Most of these had their MFN status
restored within the next two years under the waiver provision of Title IV and by
acceding to the U.S.-Soviet trade agreement of June 1, 1990, modified to apply to
each individual republic. Thus annually renewable MFN status was restored to
Armenia in April 1992, Russia and Ukraine in June 1992, Moldova in July 1992,
Kyrgyzstan in August 1992, Belarus and Kazakhstan in February 1993, Georgia in
August 1993, Turkmenistan in October 1993, Tajikistan in November 1993, and
Uzbekistan in January 1994. Azerbaijan was the only former Soviet republic whose
MFN status had not been restored under Title IV by the end of 1994, since the
agreement was still awaiting (since April 1993) the approval by that country.
During the same period, MFN tariff status also was regained under Title IV
waiver provision by Albania (November 1992) and Romania (November 1993,
following the September 1992 refusal, for the second time, of the House to restore
it). MFN status of Bulgaria and the Russian Federation, restored earlier under the
waiver provision (see above), was continued in force by presidential determinations
of full compliance with the freedom-of-emigration requirements (made, respectively,
in June 1993 and September 1994).
Although President Bush issued in October 1992 a notice of intention to restore
MFN status to Afghanistan, suspended in 1986 (see p. 5), the restoration did not take
place until June 2002 (see p. 12).
Also in October 1992, legislation (P.L. 102-420; 19 U.S.C. 2432 note) was
enacted to withdraw MFN tariff status from Serbia and Montenegro (constituent
republics of Yugoslavia in its reduced size). The status could be restored by the
President to either republic 30 days after he certifies to the Congress that such
republic had ceased its warlike activities in the former Yugoslavia. (See also p. 16.)
In the 104th Congress, MFN tariff status was extended in April 1995 to
Azerbaijan under the Jackson-Vanik waiver provision, and permanent and
unconditional MFN tariff status was restored in late 1996 by specific law to three
countries: Bulgaria, and Romania (both of which at the time already had MFN status
under the full-compliance provision of the Jackson-Vanik amendment), respectively,
by P.L. 104-162 and Presidential proclamation 6922, effective October 25, 1996, and
P.L. 104-171 and Presidential proclamation 6951, effective November 12, 1996; and
Cambodia (then still a non-MFN country, but considered as not being subject to Title
IV) by P.L. 104-203, effective October 25, 1996, upon the reciprocal exchange of
notices of acceptance of the bilateral trade agreement of October 4, 1996 (61 F.R.
Measures introduced in the 104th Congress to restore MFN tariff status, either
temporarily or permanently, to a number of other countries were not given further
consideration, nor were measures denying or restricting MFN status of certain
countries in a variety of circumstances. The Senate did, however, approve in
September 1996 a bill to substitute in all U.S. statutes the often misunderstood term
“most favored nation treatment” with “normal trade relations;” a similar House bill,
using the term “standard trade relations,” remained pending (see next page). (Also
suggested during the consideration of this change were other replacement terms,
among them some technically more accurate terms such as “standard tariff relations”
and “standard tariff treatment.”)
In 1996, the President renewed his determinations of full compliance with the
Jackson-Vanik amendment requirements for Bulgaria, Romania (both subsequently
granted permanent MFN status; see above), and Russia, and made, in September, the
initial such determination for Mongolia.
By the end of 1996 (104th Congress), the President, as required by Section
405(b)(1)(B) of the Trade Act of 1974 (see p. 4), also confirmed three-year
extensions of trade agreements with 17 of the 19 NME countries that required such
action (in several instances with considerable delays). No such determinations were
published for two countries upon the lapse of the initial three-year term provided in
the agreement itself, and unconditional nondiscriminatory treatment was accorded
by legislation during the same period to two countries subject to Title IV (thus
eliminating the need for their triennial determinations).
During the105th Congress, several bills affecting the MFN status of U.S. trading
partners were introduced, but none enacted. Most legislative action involved bills to
permanently restore MFN tariff status to Mongolia (passed by the House and
favorably reported in the Senate) and Laos (favorably reported in the Senate).
Introduced but not further considered was a bill granting permanent
nondiscriminatory status to Kyrgyzstan, and one that would grant, under certain
conditions, permanent MFN status to any country still without it. On the other hand,
bills also were introduced (but not acted upon) which would withdraw MFN tariff
treatment from certain countries.
The President, at the appropriate times, extended all the existing Jackson-Vanik
waivers, made the initial determination of full compliance with the free-emigration
requirements by all but two countries (Belarus and China) then still subject to the
waiver8, and subsequently reconfirmed such compliance. The President also issued,
in April 1998, the initial Jackson-Vanik waiver for Vietnam. Joint resolutions to
disapprove this waiver were introduced in both houses and reported unfavorably,
whereupon the House resolution was defeated, allowing Vietnam’s waiver to remain
No Presidential determinations of satisfactory reciprocation of concessions (see
previous page), however, were published during the 105th Congress (nor since, except
for Vietnam in 2004; see p. 16) providing for the triennial renewal of the relevant
trade agreements with six more NME countries whose initial or earlier renewed
agreements had meanwhile lapsed. This lapse, however, has not in practice affected
the NTR status of the countries involved, since they are all still treated as having
NTR status, apparently solely on the basis of the standard provision for automatic
triennial renewal contained in the trade agreements themselves.
During the entire period from mid-1989 to the statutory extension of PNTR in
2001, the most controversial issue of the U.S. MFN policy has been the MFN status
of China. The President’s annual renewals of China’s Jackson-Vanik waiver and
MFN status faced strong opposition in Congress. Nevertheless, joint resolutions
introduced every year in the aftermath of the June 1989 Tiananmen Square incident
to disapprove such renewals were not adopted. Two bills to subject China’s MFN
status to additional restrictions, passed during the 2nd session of the 102nd Congress,
were vetoed by the President, and in both cases the veto was upheld by the Senate.
Similar legislation as well as joint resolutions disapproving China’s waiver in
subsequent Congresses were not enacted.
Without actually affecting the practical effect of MFN treatment, legislation,
first introduced in 1996 (see previous page), was finally enacted in 1998 (Section
8 Armenia, Azerbaijan, Georgia, Moldova, and Ukraine on June 3, 1997, and Albania,
Kazakhstan, Kyrgyzstan, Tajikistan, Turkmenistan, and Uzbekistan on December 5, 1997
9 This waiver did not, of itself, restore nondiscriminatory treatment to Vietnam, since the
other required element of such restoration — the conclusion and congressional approval of
a bilateral trade agreement — was still lacking (p. 10). The waiver did, however, open up
Vietnam’s access to other benefits subject to Jackson-Vanik criteria (credit operations of the
Export-Import Bank, and investment guaranties of the Overseas Private Investment
Corporation), provided the requirements of the agencies’ organic legislation have been
105-206; 19 U.S.C. 2481 note) to replace the term “most favored nation” in seven
specific statutes in which it appeared, with “normal trade relations” or another similar
appropriate term (e.g., nondiscriminatory), and required the new term to be used in
all subsequent trade legislation. The term “most favored nation,” however, continues
to be used in international practice and in U.S. trade agreements with other countries,
occasionally in conjunction with the new term.
In view of the then-prospective accession of the Kyrgyz Republic (Kyrgyzstan)
to the World Trade Organization (which eventually took effect on December 20,
1998) and the obligation of a WTO member to accord permanent and unconditional
most-favored-nation treatment to all WTO members, the United States on October
9, 1998, invoked Article XIII of the WTO Agreement. The article allows the
nonapplication of the entire WTO Agreement (and not merely of one part of it, which
had been possible under the comparable Article XXXV of the GATT 1947) between
any current WTO member and the acceding member, upon written notice to the
WTO by either, before the latter’s accession. Without invoking Article XIII, the
United States would have been in violation of its WTO MFN obligation toward the
Kyrgyz Republic because of the latter’s, at the time, nonpermanent and conditional
MFN status, subject to the Jackson-Vanik amendment. (Identical action had been
taken in similar circumstances on July 11, 1996, with respect to Mongolia, then a
candidate for WTO membership. After Mongolia’s accession to the WTO (January
29, 1997) and the eventual extension of permanent MFN status to Mongolia by the
United States (see below), U.S. recourse to Article XIII with respect to Mongolia was
rescinded by the United States on July 7, 1999.)
Developments During the 106th Congress
In the 106th Congress, legislation was enacted and implemented to extend
permanent nondiscriminatory status to Mongolia, Albania, Kyrgyzstan, Georgia, and
China; and the required semiannual reports of full compliance with the requirements
of the Jackson-Vanik provision by ten former Soviet Union republics were made by
the President, as was the renewal of Jackson-Vanik waivers for Belarus, China, and
Vietnam; joint resolutions to disapprove the latter two extensions, introduced in both
houses, failed to be enacted.
Extensions of permanent nondiscriminatory tariff status were enacted and
implemented as follows:
(1) Mongolia — enacted June 25, 1999, by Section 2424 of the Miscellaneous
Trade and Technical Corrections Act of 1999 (P.L. 106-36) (19 U.S.C.2434 note) and
implemented by Presidential proclamation 7207, effective July 1, 1999 (64 F.R.
(2) Albania, and Kyrgyzstan — enacted May 18, 2000, respectively, by Sections
withdrew the October 9, 1998, invocation of WTO nonapplication Article XIII with
respect to Kyrgyzstan; see p. 9).
(3) Georgia — enacted November 9, 2000, as Title III of the Miscellaneous
Trade and Technical Corrections Act of 2000 (P.L. 106-476) (9 U.S.C. 2434 note)
and implemented by Presidential proclamation 7389, effective December 29, 2000
(66 F.R. 703).
(4) China — enacted October 10, 2000, as Title I of P.L. 106-286 (Normal
Trade Relations for the People’s Republic of China) (19 U.S.C. 2431 note) and
implemented by Presidential proclamation 7516, effective January 1, 2002 (67 F.R.
479). The delayed entry into force of P.L. 106-286 was due to the provision of
Section 102 of the law, which precluded the actual extension of permanent NTR to
China before China’s accession to the World Trade Organization (which eventually
took place on December 11, 2001).
The tie-in between the U.S. grant of permanent NTR treatment to China and
China’s accession to the WTO ran in both directions. On the one hand, although
China’s very comprehensive trade agreement with the United States was negotiated
outside the Working Party for China’s accession to the WTO, it became part of
China’s protocol of accession; on the other hand, most-favored-nation treatment of
China by the United States was required by the WTO Agreement as a reciprocal
obligation of WTO members. Such obligation could have been avoided only by the
United States’ (or China’s) invocation of WTO Article XIII, which allows reciprocal
nonapplication of obligations under the WTO Agreement (including the MFN
treatment) between a current and the acceding WTO member (cf. Kyrgyzstan, p. 9).
Invoking Article XIII would have meant that the United States would be precluded
from benefitting not only from China’s comprehensive concessions in its 1999
bilateral agreement with the United States but also from those in the agreements with
other WTO members. Such action would have meant that the United States’ benefits
from trade with China would have remained limited to those — of very general
nature — contained in the much less comprehensive bilateral agreement concluded
in 1979, provided China did not decide to renounce even that in accordance with the
provisions of that agreement itself.
The bilateral trade agreement with China had been signed on November 15,
1999, after protracted negotiations. Even before the President Clinton transmitted the
agreement to Congress for approval in a message on March 8, 2000 (H.Doc. 106-
207), the House Ways and Means Committee held a hearing (February 16, 2000) on
the U.S.-China trade agreement and China’s accession to the WTO. Shortly
thereafter, legislation approving the agreement (containing in Title I permanent
restoration of NTR treatment) was introduced in both houses (S. 2277, March 23;
H.R. 4444, May 15, 2000). Both bills authorized the President to determine that the
provisions of Title IV of the Trade Act of 1974 (providing for temporary conditional
restoration of nondiscriminatory treatment) should no longer apply to China and to
proclaim the extension of permanent nondiscriminatory treatment to China. Before
making such determination, however, the President was to certify to Congress that
the terms and conditions for China’s accession to the WTO are at least equivalent to
those contained in the U.S.-China agreement of November 15, 1999.
Both bills were reported favorably: H.R. 4444, amended, on May 22, 2000
(H.Rept.106-632, by Ways and Means Committee) and on May 23 (H.Rept. 106-636,
by Rules Committee); and S. 2277, unamended, on May 25 (S.Rept. 106-305, by
Finance Committee). H.R. 4444, as amended, was passed by the House on May 24
in a roll-call vote of 237 to 197, and, in the House-approved version, by the Senate
on September 19, 2000, by a vote of 83 to 15. It was signed by the President on
October 10, 2000 (P.L. 106-286). (S. 2277 was not voted on.) (Entry into force was
delayed until January 1, 2002; see below: Developments during the 107th Congress).
Also signed during the 106th Congress (July 13, 2000) was a comprehensive
trade agreement with Vietnam, which, however, did not enter into force until
December 2001 (see Developments during the107th Congress). The agreement was
in many ways similar to the one with China and contained among many other
provisions a reciprocal grant of nondiscriminatory (MFN; NTR) status.
All required Presidential semiannual determinations of continued full
compliance with the requirements of the Jackson-Vanik amendment — due in mid-
and late 1999 and 2000 — were made, although occasionally with some delay. Since,
in the meantime, several countries had been granted permanent NTR treatment, the
end-of-2000 determination (January 20, 2001) involved only nine countries, all
former republics of the Soviet Union (Armenia, Azerbaijan, Kazakhstan, Moldova,
the Russian Federation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan).
On June 3, 1999, the President recommended one-year extensions of Jackson-
Vanik waivers for Belarus, China, and Vietnam, triggering the introduction of joint
resolutions disapproving the extensions for China and Vietnam. Both resolutions
failed to pass the House, respectively on July 27 and August 3, 1999. Similarly,
Presidential mid-2000 (June 2) recommendations (Presidential determinations Nos.
2000-21, -22, and -23) to extend the waivers, respectively, for Vietnam, Belarus, and
China were followed by the introduction on June 6 of H.J.Res. 99 and S.J.Res. 47 to
disapprove the extension of Vietnam’s waiver and of H.J.Res.103 to disapprove the
extension of China’s waiver. H.J.Res. 99 was reported adversely (H.Rept. 106-794)
and defeated in the House (91- 332) on July 26, 2000; H.J.Res. 103 was reported
adversely (H.Rept. 106-755) and defeated in the House (147-281) on July 18, 2000.
In addition to the trade agreements whose Presidential triennial renewals (see
p. 8) had lapsed earlier, renewal determinations of six more agreements lapsed during
the 106th Congress. During the same period, however, unconditional
nondiscriminatory treatment was restored by law to four NME countries, all with
lapsed renewal determinations.
The earlier invocation of the nonapplication Article XIII of the WTO Agreement
with respect to Kyrgyzstan (see p. 8) was rescinded on September 18, 2000, in view
of the U.S. extension of permanent nondiscriminatory treatment to Kyrgyzstan by
P.L. 106-200 (see p. 9).
Developments During the 107th Congress
During the 107th Congress, two major trade agreements (one with Vietnam, and
one with China), both signed during the preceding Congress, entered into force.
As required by Section 101 of P.L.106-286, the President, on November 9,
2001, transmitted to Congress the report on the equivalency of the terms and
conditions of China’s accession to the WTO to those contained in the 1999 U.S.-
China trade agreement (H.Doc.107-146) (see p. 10), and, subsequent to China’s
accession to the WTO on December 11, 2001, in Proclamation 7516 of December 27,
effective January 1, 2002.
The agreement with Vietnam, together with Presidential proclamation 7449 (66
F.R. 31375) to implement it, was transmitted by the President on June 8, 2001
(H.Doc. 107-85), to Congress for legislative approval. Legislation to approve the
extension of nondiscriminatory status (and thereby also implement the agreement)
(S.J.Res. 16 and H.J.Res. 51) was introduced, respectively, on June 11 and 12, 2001.
A hearing on the U.S.-Vietnam trade relations was held by the House Ways and
Means Trade Subcommittee on June 15, 2001, and on the trade agreement by the
Senate Committee on Finance on June 26, 2001. Both resolutions were reported
favorably (H.Rept. 107-198, September 5, 2001; S.Rept. 107-49; July 27, 2001);
H.J.Res. 51 was passed by the House (by voice vote) on September 6, 2001, and by
the Senate (88-12) on October 3, 2001 (on the same date, S.J.Res. 16 was indefinitely
postponed by unanimous consent), and signed by the President on October 16, 2001
(P.L. 107-52). A resolution ratifying the agreement was approved by Vietnam’s
National Assembly on November 28, 2001, and signed by Vietnam’s President on
December 4, 2001. The agreement and reciprocal nondiscriminatory tariff treatment
entered into effect on December 10, 2001, by an exchange of notices of acceptance
of the agreement (66 F.R. 65019). The agreement is to remain in force by means of
triennial extensions according to its own terms and by Presidential determinations of
satisfactory reciprocation of trade concessions (see p. 4, and also p. 16). Vietnam’s
nondiscriminatory status is still conditional and subject to the Jackson-Vanik
amendment, hence its restoration remains subject to Title IV requirements and
Legislation was introduced, but not acted upon, to extend permanent
nondiscriminatory tariff treatment to Afghanistan (whose PNTR status has since been
restored by Presidential action; see below), Cuba, Kazakhstan, Russia, Ukraine,
Uzbekistan, and Yugoslavia (Serbia and Montenegro).
Under the authority of Section 118(b)(2)(C) of P.L. 99-100 (19 U.S.C. 2434
note), under which Afghanistan’s MFN status was suspended (Pres. Proc. 5437; 51
F.R. 4287) effective February 18, 1982 (see. p. 5), President Bush restored
nondiscriminatory status to Afghanistan by Proclamation 7553 (67 F.R. 30535;
H.Doc. 107-208), effective June 2, 2002.
Semiannual Presidential reports of nonviolation of the Jackson-Vanik
amendment’s freedom-of-emigration criteria were issued with respect to the nine
former Soviet Union republics subject to such reporting, on January 17, 2001
(H.Doc. 107-17), July 2, 2001 (H.Doc. 107-98), January 18, 2002 (H.Doc. 107-169),
and July 3, 2002 (H.Doc.107-240),
China’s and Vietnam’s (but — possibly by an oversight — not Belarus’s)
Jackson-Vanik waivers were extended for another year on June 1, 2001 (Presidential
determinations Nos. 2001-16 and -17) (66 F.R. 30631 and 30633); and resolutions
to disapprove them were introduced, respectively, on June 5, 2001 (H.J.Res. 50) and
June 21, 2001 (H.J.Res. 55). H.J.Res. 50 was reported adversely (H.Rept. 107-145)
and defeated in the House (169-259) on July 19, 2001; H.J.Res. 55 also was reported
adversely on July 23 (H.Rept. 107-154) and defeated in the House (91-324) on July
26, 2001, thus allowing the temporary NTR treatment of both countries to continue
in force. Belarus’ waiver, which had not been extended by the statutory deadline
(June 3, 2001), was issued anew on July 2, 2001 by Executive Order 13220 (66 F.R.
By the time the mid-2001 waiver was issued for China, legislation to approve
the comprehensive bilateral trade agreement with China, containing a reciprocal grant
of permanent nondiscriminatory treatment, had already been enacted (see p. 10).
Nevertheless, a mid-2001 extension of the waiver was necessary to maintain in force
the temporary NTR treatment under Title IV, based on the 1979 Agreement, because
of the statutorily mandated delay in the actual extension of permanent NTR treatment
to China. Section 102(a) of P.L. 106-286 precluded such extension before China’s
accession to the World Trade Organization, which was then being negotiated, but
foreseen as unlikely to take place before the expiration, in mid-2001, of China’s 2000
one-year waiver (cf. p. 9).
Waivers for Belarus and Vietnam were renewed again on June 3, 2002, by
Presidential determinations 02-21 and -22 (67 F.R. 40833 and 48035). H.J.Res. 101,
introduced on June 25, 2002, disapproving the extension of Vietnam’s waiver ,was
reported adversely on July 22, 2002 (H.Rept. 107-602), and defeated (91 - 338) on
the following day.
No action took place regarding the lapsed triennial renewals of trade agreements
with NME countries, based on the President’s determinations of satisfactory
reciprocation of concessions (see p. 4), but one country theretofore subject to the
determination requirement (Mongolia) was meanwhile granted permanent
nondiscriminatory status (see p. 9)
On January 8, 2001, the September 30, 1999, recourse by the United States to
Article XIII with respect to Georgia (whose accession to the WTO took effect June
14, 2000) was rescinded upon the implementation of permanent NTR for that
country. In view of the impending accession of Moldova to the WTO (eventually
approved by the WTO General Council on May 8, 2001, and taking effect on July 26,
2001), the United States, on May 2, 2001, invoked the application of Article XIII
with respect to Moldova. The invocation is still in effect since Moldova is still
subject to the conditional MFN treatment under Title IV of the 1974 Trade Act.
Similarly, on December 9, 2002, the United States invoked WTO Article XIII with
respect to Armenia, at the time in the last stage of accession to the WTO, but not a
beneficiary of unconditional MFN treatment by the United States (see also p. 17).
Based on a determination by the U.S. Trade Representative under Section 301
of the Trade Act of 1974 that Ukraine failed to adequately protect U.S. intellectual
property rights, prohibitive imports duties of 100 percent — in addition to an earlier
suspension of Ukraine’s designation as a beneficiary developing country for duty-free
imports under the generalized system of preferences — were imposed as of January
23, 2002, on imports under 23 tariff items in total annual value of approximately $75
million, many of them normally free of duty (67 F.R. 120). This action, in effect,
rescinded in part the nondiscriminatory treatment applicable to Ukraine under the
provisions of Title IV of the Trade Act of 1974, it did not, however, affect the U.S.
general MFN obligation under the WTO since Ukraine is not a WTO member. (See
also p. 17).
Developments During the 108th Congress
A great deal of legislative activity to restore PNTR to a number of countries
took place in the 108th Congress, but in a few instances NTR-adverse action also was
initiated. Except for two PNTR-granting measures (in favor of Armenia, and Laos),
all proposed legislation died in the relevant committees.
As a move apparently preliminary to some of the pending and prospective
extensions of PNTR, the chairman of the House Trade subcommittee, on March 5,
Laos, and Moldova. The received comments were published on April 21, 2003, as
Ways and Means Committee Print 108-8 (Written comments on extension of
permanent normal trade relations status to Armenia, Moldova, and Laos, 218 p.).
On February 4, 2003 — one day before Armenia acceded to the WTO — H.R.
An identical bill (S. 1557) was later (August 1, 2003) introduced also in the Senate;
a provision with identical operative language was contained in Section 3601 of H.R.
3521, introduced on November 19, 2003, and passed by the House on the following
day, but not considered in the Senate. Armenia’s PNTR status was eventually enacted
by Section 2001 of the Miscellaneous Trade and Technical Corrections Act of 2004
(P.L. 108-429; H.R. 104710; December 3, 2004) and implemented by Presidential
Proclamation 7860, effective January 7, 2005 (70 F.R. 2321) (see p. 17).
PNTR-restoring legislation was introduced, but not further considered, with
regard to: Belarus (H.R. 3823; February 24, 2004), Cuba (Section 8 of the United
States-Cuba Trade Act of 2003; S. 403; February 13, 2003); Kazakhstan (H.R. 3708;
January 20, 2004); Laos (H.R. 3195, September 29, 2003; H.R. 3943 and S. 2200,
March 11, 200411); Russia (S. 580, March 10, 2003; companion bills H.R. 1224 and
10 Prior to its conference version, H.R. 1047 contained also a provision — originally
included in S. 671, which had been incorporated in H.R. 1047 as an amendment — restoring
PNTR to Serbia and Montenegro, but left out in P.L. 108-429, since such restoration had
meanwhile already taken place by executive action (see p. 16).
11 All three measures would extend PNTR treatment to Laos on the effective date of a notice,
S. 624, March 12 and 13, 2003, in which PNTR status would not be extended if a
joint resolution were enacted disapproving the bilateral U.S.-Russia trade agreement
to be negotiated as part of Russia’s accession to the WTO); and Ukraine (H.R. 3906,
H.R. 3958, and H.R. 4619, and S. 2205, introduced, respectively, March. 4, and 11,
June 18, and March 11, 2004).
While separate bills to restore PNTR status to Laos died in their respective
committees, the restoration of nondiscriminatory treatment to Laos was provided for
in Section 2005 of P.L. 108-429 (see above), added during the conference on that
measure. Its operative provisions are identical to those of the three measures referred
to in footnote 11. The provision entered into force on February 4, 2005, pursuant to
a USTR’s Federal Register notice, published on February 11, 2005 (70 F.R. 7319).
As an NTR-adverse action, H.R. 3228, introduced on October 2, 2003, would
rescind China’s NTR treatment and prohibit its restoration in the future. Moreover,
S. 1586 and H.R. 3364, introduced respectively on September 5 and October 21,
2003, would, in effect, nullify China’s NTR status by imposing on any import from
China a 27.5-percent ad valorem duty in addition to any other duty, unless the
President certifies to Congress that China no longer manipulates the exchange rate
between the U.S. dollar and Chinese yuan and that the latter is valued in accordance
with accepted market-based trading policies.12 In the same context, H.R. 3058 and
S. 1758, introduced respectively on September 10 and October 20, 2003, would
require the Secretary of the Treasury to determine whether China manipulates its
yuan/dollar exchange rate, compute the rate of manipulation, and submit a report
thereon to Congress; the Secretary would be authorized to impose on all imports
from China an additional duty at the rate equal to the rate of manipulation.13
NTR-adverse action also was initiated against Laos. H.R. 3000, prohibiting the
United States to enter with Laos into a trade agreement providing for reciprocal
extension of most-favored-nation treatment, was introduced on November 18, 2004.
By that date, however, such agreement had already been long signed (see footnote
In the general context, Section 4(1)(B)(iv) of S. 1861 (Sanctions Policy Reform
Act, introduced November 14, 2003) listed the imposition of increased tariffs,
including the denial, revocation, or conditioning of nondiscriminatory trade
treatment, as a sanction falling within the scope of the legislation.
published by the U.S. Trade Representative in the Federal Register, that the comprehensive
U.S. trade agreement (containing a reciprocal extension of unconditional most-favored-
nation treatment), concluded on August 13, 1997, and signed on September 18, 2003, has
entered into force.
12 Despite recent minor adjustments, the value of the yuan is maintained in an arbitrary
exchange rate to the dollar rather than floating freely in response to the situation on the
foreign exchange market.
13 The enactment and implementation of any of these measures would, in normal trade
circumstances, be likely to open the United States to accusations of violating the WTO
Agreement and the U.S.-China bilateral trade agreement.
Except as indicated above (concerning Armenia, and Laos), all of these bills
died in the committees of referral.
On January 29, 2003, the President transmitted to Congress the 2002 year-end
report on full compliance with the freedom-of-emigration requirements of the
Jackson-Vanik amendment by nine former Soviet republics (H.Doc. 108-28), and on
May 29, 2003, extended the waivers for Belarus and Vietnam (Pres. Determinations
2003-25 and -24; 68 F.R. 35527 and 35525; H.Docs. 108-81 and 108-80), thereby
continuing in force these countries’ temporary nondiscriminatory tariff treatment by
the United States. Legislation disapproving Vietnam’s waiver (H.J.Res. 64) was
introduced on July 9, 2003, but died in committee.
On July 31, 2003, the full-compliance reporting function was delegated by the
President to the Secretary of State by Executive Order 13313 (68 F.R. 46073; August
5, 2003), and the last full-compliance report by the President was transmitted to
Congress on August 8, 2003, for nine former Soviet republics (H.Doc. 108-111). On
the same date, Turkmenistan’s full-compliance determination was rescinded (Pres.
Det. 2003-31; 68 F.R. 49325; August 18, 2003), and its Jackson-Vanik status (and
temporary NTR treatment) reverted to one based on the waiver, which was issued on
the same date (E.O. 13314, 68 F.R. 48249; August 13, 2005).
On November 4, 2003, the Secretary of State, under delegation of Presidential
authority contained in the statute suspending the PNTR treatment of Serbia and
Montenegro (formerly Yugoslavia) (P.L.102-420) (see p. 7), notified to Congress his
certification of that country’s compliance with the statute’s requirements for
executive restoration of PNTR status, which took effect on December 4, 2003 (Public
Notice 4526; 68 F.R. 64410; November 13, 2003).
The 2003 year-end full-compliance report was submitted to Congress — for the
first time under the Presidential delegation of function (see above) — by the
Assistant Secretary of State for Legislative Affairs, with a positive determination for
eight former Soviet republics. On June 3, 2004, the President renewed the Jackson-
Vanik waivers for Belarus (H.Doc.108-190; Pres. Det. 2004-33, 69 F.R. 32431),
Turkmenistan (H.Doc. 108-189; Pres. Det. 2004-32, 69 F.R. 32429), and Vietnam
(H.Doc. 108-191; Pres. Det. 2004-34, 69 F.R. 32433); and on July 1, 2004, a full-
compliance determination was submitted to Congress for the eight former Soviet
Similarly to the mid-2003 delegation of full-compliance-reporting function
under the Jackson-Vanik amendment, the President delegated, effective July 8, 2004,
to the Secretary of State also the functions of making waivers, determinations,
certifications, recommendations, and reports in connection with the Jackson-Vanik
waiver provision (19 U.S.C.2432(d)(1)) (E.O.13346, 69 F.R. 41905, July 13, 2004).
As required by 19 U.S.C. 2435(b)(1)(B)), the President, on December 10, 2004,
made the determination of satisfactory reciprocation of trade concessions with
Vietnam, provided in the bilateral trade agreement with that country (see p. 12) (Pres.
Det. 2005-11; 69 F.R. 76587, December 21, 2004), and thereby renewed that
agreement for the following three years.
The 2004 year-end report on full compliance with the amendment’s
requirements (technically due by December 31, 2004) was submitted by the Assistant
Secretary of State for Legislative Affairs on January 11, 2005, for the eight former
Developments During the 109th Congress
In the 109th Congress, legislative activity to extend permanent normal trade
relations treatment has focused on Ukraine. Operationally identical as to the
termination of application of the Jackson-Vanik provision and proclamation of the
extension of permanent nondiscriminatory treatment (although in several instances
differing from each other in Congressional findings and additional trade-related
provisions) are (with their respective 2005 dates of introduction): H.R. 885 (February
17), H.R. 1053 (March 2), H.R. 1170 (March 8), S. 46 (January 24), S. 410 (February
Also pending are two NTR-adverse measures: H.R. 728 (February 9, 2005),
which would terminate NTR treatment of China and prohibit its restoration under any
circumstance, and H.R. 967 (February 17, 2005), which would deny NTR treatment
to any country that, based on the Secretary of State’s report to Congress, denies or
violates basic human rights of its citizens.
On the executive side, the President by Proclamation 7860, effective January
7, 2005 (70 F.R. 2321; January 12, 2005), extended permanent nondiscriminatory
trade treatment to Armenia pursuant to Section 2001(b) of P.L. 108-429 (see p. 14);
and subsequently (on February 2, 2005) the United States rescinded the invocation
of WTO Article XIII with respect to Armenia (see p. 13) and effected full application
of the WTO Agreement between the two countries.
On June 1, 2005, the Secretary of State issued Public Notice 5120, extending
the overall Jackson-Vanik waiver authority and the waiver for Vietnam for one year
(70 F.R. 36998). In addition, the Acting Assistant Secretary of State for Legislative
Affairs transmitted to Congress reports continuing in force the Jackson-Vanik
waivers for Belarus, Turkmenistan, and Vietnam, and, on July 7, 2005, also the
semiannual report on full compliance with the Jackson-Vanik requirements by seven
former Soviet republics (omitting Armenia, which in the meantime had been
extended permanent nondiscriminatory treatment), thereby continuing in effect for
one year their conditional NTR status.
With effect on August 30, 2005, the U.S. Trade Representative terminated the
100-percent ad valorem duties placed in early 2002 on imports of products under 23
tariff items from Ukraine (see p. 13), thereby restoring to Ukraine full — if still
conditional — nondiscriminatory trade treatment (70 F.R. 53410, September 8,
In view of the statutory general applicability of permanent MFN status to U.S.
trading partners under Section 126 of the Trade Act of 1974, there is no official
specific list of countries with MFN status: all countries other than those to which
MFN tariff status has been specifically denied by law or extended conditionally under
Title IV of the Trade Act of 1974, have permanent and unconditional MFN status.
The United States also extends permanent MFN treatment to member-countries of
the World Trade Organization on the basis of the obligation of general most-favored-
nation treatment under Article I of GATT 1994. Excepted from this obligation are
WTO members with regard to which the invocation of the nonapplication Article
XIII of the WTO Agreement is in effect (at present: Moldova; see next page)
Countries to which MFN tariff status is denied altogether are: Cuba, and North
Korea, and its restoration requires congressional action through either direct
legislation (for permanent NTR status) or use of Title IV of the Trade Act of 1974
(for conditional NTR status).
Countries to which MFN tariff status is at present being extended after having
been conditionally restored temporarily under the provisions of Title IV are:
(1) under the waiver of Jackson-Vanik amendment requirements, which must
be renewed annually and the renewal of which is subject to disapproval by joint
resolution of Congress: Belarus, Turkmenistan, and Vietnam (see p.17); and
(2) under the determination of continued “nonviolation” (i.e., full compliance
with) the Jackson-Vanik amendment criteria, which, after the initial one, must be
renewed semiannually and is subject to disapproval by joint resolution of Congress
at the time of year-end renewal: Azerbaijan, Kazakhstan, Moldova, Russia,
Tajikistan, Ukraine, and Uzbekistan (see p. 16).
Permanent or temporary nondiscriminatory treatment can normally be restored
to any country by direct legislation enacted under regular legislative procedure or, if
qualifying for Title IV procedure, under that procedure, likewise requiring legislative
action. Legislation is pending for direct restoration of unconditional and permanent
nondiscriminatory treatment to Ukraine. A recent exception to this norm, effective
as of December 4, 2003), has been executive restoration of PNTR status to (formerly
Yugoslavia) under the already existing specific authority (see p. 15).
Presidential determinations of satisfactory reciprocation of concessions, which
the law requires for renewing the triennial terms of bilateral trade agreements with
NME countries (see p. 4), have in the past been published with delays or, in recent
years, not at all. At present, renewal determinations regarding agreements with all
NME countries still subject to the renewal requirement (other than the recently
renewed agreement with Vietnam; see p. 16) have technically lapsed. This lapse,
however, has not in practice affected the NTR status of these countries, since they are
all still treated as having NTR status, apparently solely on the basis of the standard
provision for automatic triennial renewal contained in the trade agreements
Although Moldova has been a member of the WTO since July 26, 2002, the
WTO agreement does not apply between it and the United States because the United
States has invoked the nonapplication Article XIII of the WTO with respect to
Moldova, due to the still conditional and temporary NTR treatment of Moldova by
the United States, subject to the Jackson-Vanik amendment. In similar circumstances,
Article XIII had been invoked also with respect of Armenia, which acceded to the
WTO on December 9, 2002, and was disinvoked on February 4, 2005, after the
legislative extension by the United States of PNTR to Armenia.
PNTR treatment of China would be either rescinded or, in effect, nullified by
legislation to impose additional duty on all imports from China to counteract China’s
manipulation of the U.S. dollar/Chinese yuan exchange rate . In one measure, a 27.5-
percent duty would be imposed, unless the President certifies that China no longer
manipulates the U.S. dollar/Chinese yuan exchange rate; in another, the Secretary of
the Treasury would be authorized to impose the duty at a rate equal to the percentage
rate of exchange manipulation (see p. 15).
The term “most favored nation” has been replaced in U.S. legislation by law in
all seven instances in which it appeared with the expression “normal trade relations”
or another appropriate term and is to be so replaced in all future legislation. The
MFN term, however, is still being used in practice internationally and in U.S. trade
agreements; in some of the latter, both terms are used in parallel (see pp. 8-9).
Appendix A. Legislation
Note: All measures authorizing the extension of permanent normal-trade-
relations treatment to Ukraine contain functionally identical operative provision
(application of NTR treatment itself), but are listed separately due to variations in
their other provisions (findings, additional provisions).
H.R. 728 (Sanders)
Terminates China’s NTR treatment and prohibits its restoration. Introduced
February 9, 2005; referred to Committee on Ways and Means.
H.R. 885 (Hyde)/S. 410 (McCain)
Authorize the extension of nondiscriminatory treatment to products of Ukraine.
Introduced, respectively, February 17 and 16; referred, respectively, to Committees
on Ways and Means, and Finance.
H.R. 967 (Saxton)
Prohibits extension of NTR treatment to any country that engages in violation
of certain human rights. Introduced February 17, 2005; referred to Committee on
Ways and Means.
H.R. 1053 (Gerlach)
Authorizes the extension of nondiscriminatory treatment to products of Ukraine.
Introduced March 2, 2005; referred to Committee on Ways and Means.
H.R. 1170 (Levin)
Authorizes the extension of nondiscriminatory treatment to products of
Ukraine. Introduced March 8, 2005; referred to Committee on Ways and Means.
H.R. 1575 (Myrick)
Provides for the imposition of 27.5-percent additional duty on all imports from
China, if negotiations on China’s currency undervaluation and manipulation are not
successful. Introduced April 12, 2005; referred to Committee on Ways and Means.
S. 46 (Levin)
Authorizes the extension of nondiscriminatory treatment to products of Ukraine.
Introduced January 24, 2005; referred to Committee on Finance.
S. 295 (Schumer)
Provides for the imposition of 27.5-percent additional duty on all imports from
China, if negotiations on China’s currency undervaluation and manipulation are not
successful. Introduced February 3, 2005; referred to Committee on Finance.
S. 632 (Lugar)
Authorizes the extension of nondiscriminatory treatment to products of Ukraine.
Introduced March 16, 2005; referred to Committee on Finance.
Appendix B. Recent Chronology
(108th through 109th Congresses)
08/31/05 — The U.S. Trade Representative lifted the 100% additional tariff on
certain imports from Ukraine (imposed as of January 23, 2002, as a
sanction for violation of intellectual property rights), thereby restoring
full — but still conditional — NTR treatment.
07/07/05 — The Assistant Secretary of State for Legislative Affairs reported to
Congress that eight former Soviet republics are in full compliance
with the requirements of the Jackson-Vanik amendment,
06/??/05 — The Acting Assistant Secretary of State for Legislative Affairs
extended the waivers for Belarus, Turkmenistan, and Vietnam for a
06/01/05 — The Secretary of State extended the waiver authority and Vietnam’s
waiver for a year (see 06/03/04).
02/17/05 — H.R. 885 (identical with S. 410) introduced to extend permanent NTR
— H.R. 967 introduced to prohibit extension of NTR treatment to any
country that engages in violation of certain human rights..
02/09/05 — H.R. 728 introduced to withdraw NTR treatment from China and
prohibit its reinstatement.
02/05/05 — The United States disinvoked recourse to nonapplication Article XIII
of the GATT 1994 with regard to Armenia (invoked December 12,
02/04/05 — Permanent NTR treatment extended to Laos pursuant to U.S. Trade
Representative’s notice (70 F.R. 7319) (see 12/03/04).
02/03/05 — S. 295 introduced to impose an additional 27.5-percent duty on all
imports from China unless China takes action to revalue its currency
upward to or near its fair value.
01/11/05 — Assistant Secretary of State for Legislative Affairs reported to
Congress that eight former Soviet republics are in full compliance
with the requirements of the Jackson-Vanik amendment. (Since the
report was due by December 30, 2004, it reflected the status as of that
date and, hence, still included Armenia).
01/07/05 — The President extended permanent nondiscriminatory treatment to
Armenia (Pres. Procl. 7860, 70 F.R. 2321, January 12, 2005).
12/10/04 — The President renewed for three years the trade agreement with
Vietnam (Pres. Det. 2005-11; 69 F.R. 76587, December 21, 2004).
respectively, extending permanent NTR treatment to Armenia and to
year extension of Jackson-Vanik waiver authority and wavers in force
(E.O. 13346, 69 F.R. 41905, July 13, 2004).
07/01/04 — The President reported to Congress that eight former Soviet republics
are in full compliance with the requirements of the Jackson-Vanik
amendment, thereby continuing in force their NTR treatment by the
06/03/04 — The President extended for one year the Jackson-Vanik overall
waiver authority, and waivers for Turkmenistan, Vietnam. and
Belarus (Pres. Determinations. 2004-32, -33 and -34 (69 F.R. 32429,
— H.R. 3958 to extend nondiscriminatory treatment to Ukraine
12/31/03 — The President reported to Congress that eight former Soviet republics
are in full compliance with the requirements of the Jackson-Vanik
12/04/03 — Permanent NTR treatment restored to Serbia and Montenegro by
Executive action (Notice by Secretary of State under delegated
Presidential authority of P.L. 102-420; 68 F.R. 64410).
11/19/03 — H.R. 3521 introduced, in Section 3601 authorizing extension of
permanent nondiscriminatory treatment to Armenia.
10/02/03 — H.R. 3228 introduced to rescind China’s NTR treatment and prohibit
its restoration in the future.
09/29/03 — H.R. 3195 introduced to extend permanent nondiscriminatory
treatment to Laos.
09/18/03 — U.S.-Laos bilateral trade agreement, containing reciprocal extension
of most-favored-nation treatment, signed.
09/10/03 — H.R. 3058 was introduced, requiring the Secretary of the Treasury to
analyze China’s exchange rate policies and impose additional duties
on imports from China at a rate equal to the rate of China’s
manipulation of the U.S. dollar/Chinese yuan exchange rate.
09/05/03 — S. 1586 was introduced to impose an additional 27.5-percent duty on
imports from China, unless the President certifies that China no
longer manipulates the U.S. dollar/Chinese yuan exchange rate.
08/08/03 — The President reported to Congress (H.Doc. 108-111) that nine
former Soviet republics are in full compliance with the requirements
of the Jackson-Vanik amendment, but terminated Turkmenistan’s
full-compliance determination (Pres. Det. 2003-31; 68 F.R. 49325)
and instead issued a Jackson-Vanik waiver for Turkmenistan (E.O.
13314; 68 F.R. 48249), thereby continuing in force their NTR
treatment by the United States.
08/01/03 — S. 1557 (identical with H.R. 528; see 02/04/03) was introduced to
grant permanent nondiscriminatory treatment to Armenia.
07/31/03 — The President delegated to the Secretary of State the function of
reporting on continued full compliance with the provisions of the
Jackson-Vanik amendment (E.O. 13313, 68 F.R. 46073).
05/29/03 — The President extended for one year the Jackson-Vanik waiver
authority and waivers for Vietnam and Belarus (Pres. Determinations.
03/13/03 — S. 624 (identical with H.R. 1224) was introduced to extend
permanent nondiscriminatory treatment to Russia.
03/12/03 — H.R. 1224 was introduced to authorize extension of permanent
nondiscriminatory treatment to Russia, unless the U.S.-Russia
agreement negotiated as part of Russia’s accession to the WTO is
disapproved by joint resolution.
03/10/03 — S. 580 was introduced to authorize extension of permanent
nondiscriminatory treatment to Russia.
03/05/03 — — Chairman Crane of the House Trade Subcommittee announces
request for written comments on extension of permanent
nondiscriminatory treatment to Armenia, Laos, and Moldova.
02/13/03 — “United States-Cuba Trade Act of 2003” (S. 403) was introduced, in
Section 8 authorizing the extension of permanent nondiscriminatory
treatment to Cuba.
02/05/03 — Armenia acceded to the World Trade Organization, but the WTO
Agreement did not apply between it and the United States because of
the invocation by the United States (on December 9, 2002) of WTO
“nonapplication” article XIII, until permanent MFN treatment is
granted to Armenia by the United States (see 01/07/05 and 02/05/05).
02/04/03 — H.R. 528 was introduced to grant permanent nondiscriminatory
treatment to Armenia..
01/29/03 — The President reported to Congress (H.Doc. 108-28) that nine former
Soviet republics are in full compliance with the requirements of the
Jackson-Vanik amendment, thereby continuing in force their NTR
treatment by the United States.
Congressional Hearings, Reports, and Documents
(108th through 109th Congresses)
U.S. Congress. House. Committee on Ways and Means. Subcommittee on Trade.
Written comments on extension of permanent normal trade relations status to
Armenia, Moldova, and Laos. April 21. 2003. (WMCP: 108-8). Washington,
U.S. Govt. Print. Off, 2003. 218 p.
U.S. President, 2001- (Bush). Continuation of waiver under the Trade Act of 1974
with respect to the Republic of Belarus; communication from the President of
the United States... Washington, U.S. Govt. Print. Off., 2003. 5 p. (108th
Congress, 1st Session. H. Doc. 108-81.) Communication dated May 29, 2003.
Continuation of waiver under the Trade Act of 1974 with respect to Vietnam;
communication from the President of the United States... Washington, U.S.
Govt. Print. Off., 2003. 7 p. (108th Congress, 1st Session. H. Doc. 108-80.)
Communication dated May 29, 2003.
Emigration laws and policies; message from the President of the United States...
Washington, U.S. Govt. Print. Off., 2003. 6 p. (108th Congress, 1st Session.
H.Doc. 108-28). Message dated January 29, 2003.
Emigration laws and policies of Armenia, Azerbaijan, Kazakhstan, Moldova, the
Russian Federation, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan;
communication from the President of the United States...Washington, U.S.
Govt. Print. Off., 2003. 6 p. (108th Congress, 1st Session. H.Doc. 108-111).
Communication dated August 8, 2003).
Extension of waiver authority for the Republic of Belarus; communication from the
President of the United States ... Washington, U.S. Govt. Print. Off., 2004. 5 p.
(108th Congress, 2d Session. H.Doc. 108-190). Communication dated June 3,
Extension of waiver authority for Turkmenistan; communication from the President
of the United States ... Washington, U.S. Govt. Print. Off., 2004. 5 p. (108th
Congress, 2d Session. H.Doc. 108-189). Communication dated June 3, 2004.
Extension of waiver authority for Vietnam; communication from the President of the
United States ... Washington, U.S. Govt. Print. Off., 2004. 7 p. (108th Congress,
Appendix D. For Additional Reading
CRS Report 96-463. Country Applicability of the U.S. Most-favored-nation Status,
by Vladimir N. Pregelj.
CRS Report 96-317. Extension, Renewal, or Denial of Most-favored-nation Status
to Nonmarket Economy Countries, by Vladimir N. Pregelj.
CRS Report 98-545. The Jackson-Vanik Amendment: A Survey, by Vladimir N.
CRS Report RS21123. Permanent Normal Trade Relations (PNTR) Status for Russia
and U.S.-Russian Economic Ties, by William H. Cooper.
CRS Report RS20717. Vietnam Trade Agreement: Approval and Implementing
Procedure, by Vladimir N. Pregelj.
CRS Report RL30416. The Vietnam-U.S. Bilateral Trade Agreement, by Mark E.