International Trade:

Revitalizing the U.S. Machine Tool Industry

NSIAD-90-182: Published: Jul 17, 1990. Publicly Released: Jul 17, 1990.

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Pursuant to a congressional request, GAO reviewed the President's plan for revitalizing the U.S. machine tool industry and evaluated voluntary export restraint agreements with Japan and Taiwan, focusing on: (1) Departments of Commerce and Defense implementation of the President's plan; (2) Commerce's program to monitor and ensure compliance with export restraints; and (3) the impact of voluntary export limits on the domestic machine tool industry.

GAO found that: (1) Commerce concluded that imports in certain machine tool markets threatened U.S. national security; (2) in December 1986, the United States concluded 5-year voluntary restraint agreements with Japan and Taiwan to limit their exports in certain categories of machine tools; (3) Commerce's Office of Agreements Compliance did not have documentation of the policies, procedures, or criteria used to monitor Japan's and Taiwan's compliance with export restraints or the import penetration levels of other countries; (4) Commerce did not use the most timely methods available to monitor Japan's and Taiwan's quota compliance; and (5) the domestic industry's share of the restricted machine tool market had improved, but had not reached the levels intended by the President's plan.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Commerce reports that it has developed detailed written policies and procedures. GAO has requested a copy.

    Recommendation: The Secretary of Commerce should direct the Office of Agreements Compliance to strengthen its monitoring system by establishing written policies and procedures to document how it monitors Japan's and Taiwan's compliance with the agreements, changes in other countries' import penetration, and the U.S. share of each restricted market.

    Agency Affected: Department of Commerce

  2. Status: Closed - Implemented

    Comments: The agency reports that it has developed detailed written policies and procedures. GAO has requested a copy.

    Recommendation: The Secretary of Commerce should direct the Office of Agreements Compliance to strengthen its monitoring system by establishing written policies and procedures to document how it monitors Japan's and Taiwan's compliance with the agreements, changes in other countries' import penetration, and the U.S. share of each restricted market.

    Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative

  3. Status: Closed - Implemented

    Comments: Commerce claims that it has criteria for these evaluations.

    Recommendation: The Secretary of Commerce should direct the Office of Agreements Compliance to strengthen its monitoring system by establishing criteria for evaluating the changes in import penetration by other countries.

    Agency Affected: Department of Commerce

  4. Status: Closed - Implemented

    Comments: Commerce claims that it now records adjustments and reports them to the Customs Service and Bureau of Census.

    Recommendation: The Secretary of Commerce should direct the Office of Agreements Compliance to strengthen its monitoring system by recording its adjustments to the Customs Service's documents and Census Bureau data in a format that indicates why adjustments were made and routinely informing Customs and the Bureau of the errors found.

    Agency Affected: Department of Commerce

  5. Status: Closed - Implemented

    Comments: Commerce stated that it uses the most accurate and timely data.

    Recommendation: The Secretary of Commerce should direct the Office of Agreements Compliance to strengthen its monitoring system by adopting more timely methods to monitor Japan's and Taiwan's quota compliance.

    Agency Affected: Department of Commerce

  6. Status: Closed - Implemented

    Comments: Commerce stated that it uses the most accurate and timely data.

    Recommendation: The Secretary of Commerce should direct the Office of Agreements Compliance to strengthen its monitoring system by using the more accurate data and timely methods available to measure other countries' import penetration of the restricted machine tool markets.

    Agency Affected: Department of Commerce

  7. Status: Closed - Implemented

    Comments: Commerce reported that it would seek interagency advice when the need arose in the future.

    Recommendation: The U.S. Trade Representative and the Secretary of Commerce should establish criteria and guidelines for contacting the governments of countries that increase their import penetration of the domestic machine tool markets before their penetration levels can prove harmful.

    Agency Affected: Department of Commerce

  8. Status: Closed - Implemented

    Comments: The agency reported that it would seek interagency advice when the need arose in the future.

    Recommendation: The U.S. Trade Representative and the Secretary of Commerce should establish criteria and guidelines for contacting the governments of countries that increase their import penetration of the domestic machine tool markets before their penetration levels can prove harmful.

    Agency Affected: Executive Office of the President: Office of the U.S. Trade Representative

 

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