The United States has already begun negotiating four more  bilateral or subregional FTAs with Central America, the Southern Africa  Customs Union (SACU), Australia, and Morocco. FTAs.) Country readiness. Economic/Commercial benefit. Benefits to the broader trade liberalization strategy. Compatibility with U.S. interests. Congressional/Private-sector support. U.S. government resource constraints. As illustrated below, the FTA selections made to date in 2002-03 primarily  reflect U.S. trade strategy, foreign policy, and foreign economic goals. Central American Free Trade Agreement. The Administration Has Enhanced Its Interagency Process for Assessing Potential FTA Partners

The selection of FTA partners has evolved from a limited high-level  consultation to a more systematic and deliberative process involving more  U.S. officials. USTR keeps the Congress apprised of potential FTA partners  and routinely considers the Congress’s views in making selections. Each group in  turn is to use decision papers to assess potential FTA partners and make  recommendations for consideration at the next level, all the way up to the  President. Recommendation for Executive Action

In light of USTR’s limited resources and management systems to track  those resources, we recommend that the Office of the U.S. Trade  Representative work with other key trade agencies to develop more  systematic data and plans for allocating staff and resources across the full  U.S. trade agenda, including FTAs and other negotiating priorities. State and Treasury did not provide  comments. In response, we (1) provided information about the  factors that influence the selection of FTA partners and described how they  were developed; (2) analyzed the interagency process for selecting FTA  partners, including how the Office of the U.S. Trade Representative (USTR)  coordinates the views of key agencies and consults with the Congress and  business and nongovernmental groups; and (3) assessed how the executive  branch makes decisions regarding the availability and allocation of  resources to FTAs and other trade priorities, such as the regional talks of  the Free Trade Area of the Americas (FTAA) and the multilateral talks at  the World Trade Organization (WTO). Considerations in FTA Partner Selection in FTA Partner Selection

USTR highlighted several reasons why Australia was selected as an FTA  partner in 2002.
Why GAO Did This Study

Free trade agreements (FTA) involve trade liberalization between the United States and selected countries or regions and are also expected to provide economic and other benefits. GAO was asked to review how potential FTA partners are selected, in view of the increased number of FTAs and their growing importance to U.S. policy. Specifically, GAO (1) provided information about the factors influencing the selection of FTA partners, (2) analyzed the interagency process for selecting FTA partners, and (3) assessed how the executive branch makes decisions about the availability and allocation of resources to FTAs.

What GAO Found

The Trade Representative used 13 factors in selecting four potential FTA partners in 2002 (Australia; the Central American Free Trade Area, a subregional group of five Central American countries; the Southern Africa Customs Union of five countries; and Morocco). Subsequently, selected executive branch agencies decided to use six broad factors--country readiness, economic/commercial benefit, benefits to the broader trade liberalization strategy, compatibility with U.S. interests, congressional/private-sector support, and U.S. government resource constraints. These decisions are not mechanical, and the factors cited most often regarding the selected FTA partners primarily reflect U.S. trade strategy, foreign policy, and foreign economic development goals. The interagency process for selecting FTA partners now involves four interagency groups that use decision papers to assess potential FTA partners and make recommendations that eventually go to the president. This new process is more systematic and inclusive than the process previously used. The Office of the U.S. Trade Representative (USTR) reports that it routinely considers the Congress's views in making selections. Decisions about FTA partners are made with little systematic data or planning regarding trade-offs with other trade priorities, even though FTAs are resource intensive. USTR staff and travel funds are heavily committed to FTAs, and USTR relies on specialists at other agencies as well. As more FTAs are contemplated, existing mechanisms may prove inadequate to the task of aggressively pursuing a bilateral FTA agenda while remaining engaged in regional and multilateral forums.