OVERVIEW

During the course of 2002–2004, the United States remained fully engaged in the work of multilateral financial institutions. The Bush Administration evinced interest in reducing the debt of developing states and initiated a unique program for extensive foreign aid to those states identified as best likely to use the aid wisely, a program known as the “Millennium Challenge Account.” In the area of trade, the United States concluded many bilateral free trade agreements, several of which contained important new provisions on protections for foreign investment. These new approaches to foreign investment were then captured in a new “model” U.S. bilateral investment treaty, which was used for the first time with Uruguay. The United States also concluded a regional free trade agreement with Central American states (known as CAFTA), and continued its efforts to achieve a Free Trade Agreement of the Americas (FTAA). The existing North American Free Trade Agreement (NAFTA) continued to operate among Canada, Mexico, and the United States, and led to several decisions by dispute resolution panels on issues relevant to the law of state responsibility. With respect to global trade, the United States experience with World Trade Organization dispute settlement continued to prove largely favorable, although on certain occasions the United States incurred sanctions or was forced to alter its laws when found noncompliant with U.S. obligations under WTO agreements.