International Trade:

Implementation of the U.S.-Canada Free Trade Agreement

GGD-93-21: Published: Oct 27, 1992. Publicly Released: Dec 22, 1992.

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Pursuant to a congressional request, GAO reviewed the implementation of the United States-Canada Free Trade Agreement (FTA), focusing on: (1) what U.S. and Canadian agencies have done to implement the agreement; (2) the agreement's effect on U.S.-Canada trade; (3) U.S. businesses' view of the agreement's rules of origin and related requirements; (4) how federal agencies coordinated trade activities, and the need to establish an Office of Free Trade Ombudsman; and (5) what projects are underway to settle problems under the agreement.

GAO found that: (1) U.S. and Canadian agencies conducted training and educational programs for staff, Customs brokers, and interested businesses, and worked together on technical standards, accreditation and licensing standards, border-crossing procedures, and rules of origin to implement FTA; (2) FTA implementation has accelerated elimination of duties and established effective dispute resolution systems, but some problems remain; (3) although FTA effects were difficult to isolate from other economic factors, FTA implementation was successful, and trade increased more than 15 percent; (4) traffic congestion, poor infrastructure, and inadequate customs staffing at primary inspection booths caused border-crossing delays; (5) U.S. and Canada Customs expanded automated cargo-processing systems to prevent delays; (6) the United States and Canada have been slow in developing uniform product standards; (7) many businesses believed that the rule of origin and exporters' certificate requirements and documentation are too restrictive, and that complying with them imposes a costly administrative burden; (8) because many federal agencies share responsibility for implementing FTA, several agencies have attempted to improve coordination and availability of services by establishing a full-service, comprehensive information source for small- and medium-sized companies; (9) there was no consensus among agency officials and the private sector on the need for an ombudsman; and (10) Customs has established its own trade ombudsman to deal with the trade community and ensure operational consistency among Customs districts, and initiated Project North Star to monitor FTA implementation.

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