Copyright 1999 Federal News Service, Inc.
Federal News Service
FEBRUARY 11, 1999, THURSDAY
SECTION: IN THE NEWS
LENGTH:
9096 words
HEADLINE: PREPARED STATEMENT BY
CHARLENE
BARSHEFSKY
UNITED STATES TRADE REPRESENTATIVE
BEFORE THE
HOUSE COMMITTEE ON WAYS AND MEANS
SUBCOMMITTEE ON TRADE
SUBJECT - TRADE AND AMERICAN PROSPERITY IN 1999
BODY:
Thank you, Mr. Chairman, for inviting my
testimony on the role of trade in our economy, and the state of American trade
policy today. I am grateful to you and to the Subcommittee as a whole for
offering us this opportunity to discuss our trade policy record and agenda for
the future, and I look forward to continuing the close working relationship we
have had with the Subcommittee. And let me say that you have called this hearing
at an opportune time, because we are opening a year in which every part of our
trade agenda will be ambitious and will hold great promise for our country.
Three weeks ago, President Clinton called for the initiation of a new
multilateral negotiating Round able to meet the demands of the 21st century.
This will begin at the World Trade Organization's Third Ministerial Conference,
chaired by the United States -- and the largest trade event ever held in the
United States -- and it will shape world trade in the next century. Our
multilateral agenda will be accompanied by the regional, bilateral and sectoral
negotiations we have underway in each part of the world and by enforcement of
our rights under WTO dispute settlement, the North American Free Trade Agreement
and through our domestic trade laws.
We hope and expect to carry out this
agenda in the tradition of bipartisanship and close consultation between the
Executive and Legislative branches which have characterized many years of
American trade policy. My testimony will touch on each of these points,
including trade negotiating authority, which we believe will help us achieve our
goals. But let me begin by discussing the context in which we develop and
execute our policy agenda.
TRADE POLICY PRINCIPLES
Trade policy forms
part of both our national economic policy and our approach to the world beyond
our borders.
At home, engagement in world trade, based on fair rules and the
rule of law, offers American firms, agricultural producers and workers larger
markets. Almost 80 percent of world economic consumption takes place outside the
U.S., and if America is to continue to grow and remain competitive in the
future, trade policy must ensure that Americans have fair access to these
markets. Trade also offers American consumers a greater choice of products at
competitive prices and higher quality.
Overseas, trade helps increase world
prosperity, advances the rule of law, and helps to strengthen international
peace. As President Franklin Roosevelt said in 1944:
"A basic essential to
peace, permanent peace, is a decent standard of living for all individual men
and women and children in all nations. Freedom from fear is eternally linked
with freedom from want. (And) it has been shown time and time again that if the
standard of living in any country goes up, so does its purchasing power -- and
that such a rise encourages a better standard of living in neighboring countries
with whom it trades."
These principles have formed the basis of American
trade policy since the end of World War II. We have advanced them on a
bipartisan basis through a strong working partnership between the Executive
Branch and Congress through ten Administrations, ever since the creation of the
General Agreement on Tariffs and Trade in 1948. The Clinton Administration's
trade policy, we believe, is firmly in this tradition, such advances as the
passage of the North American Free Trade Agreement; the Uruguay Round, our 35
bilateral trade agreements with Japan -- a total of 270 trade agreements --
would not have happened without the advice, support and contribution of the
Trade Subcommittee and Congress as a whole.
TRADE AND THE US ECONOMY The
results of these policies have contributed immeasurably to the peace and
prosperity America now enjoys. We have the most dynamic, creative and
competitive economy in the world, and are ideally placed to succeed in the next
century.
Since 1992, we have had uninterrupted growth -- our economy has
expanded from $7.1 trillion to $8.5 trillion in real terms (1998 dollars) and
last month, the present economic expansion became America's longest in history.
We have created jobs. Employment in America has risen from 109.5 to 127.2
million jobs, a net gain of nearly 18 million, as unemployment rates fell from
7.4 percent to 4.3 percent.
And we have raised wages. Since 1992, average
wages have reversed a twenty-year decline and have grown by 6.0 percent in real
terms, to $449 a week on average. This family prosperity is reflected, for
example, in record rates of home ownership.
Altogether, we have achieved an
historic combination of high growth, low unemployment, low inflation, low
interest rates and rising wages unmatched in decades. The reasons for this are
many. They include improved support for education and job training and an
uninterrupted reduction in the federal deficit beginning in 1993 and culminating
with the budget surpluses we now enjoy. But trade and participation in the world
economy have played an irreplaceable role.
And overseas, as trade has grown
and international trade rules have strengthened, the hopes of the wartime
generation have been in many ways realized.
Peace among the world's great
nations has grown more secure.
Prosperity has blossomed -- as world exports
have grown from $60 billion to $6.5 trillion in constant dollars since 1960,
world economic production has quadrupled and real per capita income has more
than doubled, from under $3100 to over $6300 last year.
As a consequence,
people have better lives. In 1955, the world average life expectancy at birth
was 48 years; now it is 65. Where the worldwide infant mortality rate was 148
per thousand, today it is 59.
And faith in markets under the rule of law has
been vindicated: those nations which shut off the free flow of goods, services
and information have tended to stagnate while those which remained open to the
world have tended to prosper. One need only examine the ghastly experiment which
has taken place on the Korean peninsula -- as South Korea has risen to become
one of the world's leading industrial powers, while North Korea is afflicted by
chronic hunger to show how stark is the contrast. And there is no stronger
vindication of our work than the fact that Russia, China and 16 other economies
have abandoned central planning and seek WTO membership. Our
Administration has had the good fortune to build upon this foundation. Since
1992, we have negotiated 270 separate trade agreements which have helped open
markets and create opportunity for ,Americans.
These include five which
have fundamentally transformed world trade: the North American Free Trade
Agreement, which cemented our strategic trade relationship with our immediate
neighbors; the Uruguay Round, which created the World Trade Organization with a
binding dispute settlement mechanism and extended international trade rules to
new areas through agreements on agriculture, services, intellectual property;
and three multilateral agreements on information technology, financial services
and basic telecommunications
US TRADE TODAY
As a result, America's trade
has flourished. Last year we exported $932 billion in goods and services -- a 51
percent increase from the 1992 level of $617 billion, despite a slowing in
export growth due to the financial crisis. Our goods exports were very evenly
divided among four major markets, meaning that we have critical trade interests
in each part of the world:
Canada Asia-Pacific $156 billion $166 billion
Latin America European Union $143 billion $150 billion
Measured by
country, our largest five goods export markets were Canada at $156 billion,
followed by Mexico at $71 billion, Japan at $57 billion, the United Kingdom at
$40 billion and Germany at $25 billion.
Service export figures are only
partially available for 1998. Our full-year 1997 service exports, divided
regionally, were more heavily weighted to Asia and Europe but still indicate
critical interests in each region:
Canada Asia-Pacific Latin America
European Union $20.5 billion $73.6 billion $34.2billion $74.8 billion
In
1997, our six largest service export markets were Japan with $34 billion, the
United Kingdom with $23.7 billion, Canada at $20.5 billion, Germany at $13.5
billion, France at $9.4 billion and Mexico at $9.3 billion.
Altogether, the United States was the world's largest exporter in 1998. We
were also the largest exporter of the goods and services supporting the
highest-wage jobs: agricultural products, advanced technology products and
capital goods. Our goods exports now support 11.6 million American jobs.
The
United States was also the world's largest importer, at $1.1 trillion in goods
and services imports in 1998. Imports play an important role in our economy, by
raising living standards for consumers (especially lower-income Americans),
dampening inflation, ensuring the widest possible choice of products at the best
prices, and providing essential inputs for U.S. industries, many of which then
export their goods at competitive prices. However, open markets depend on fair
trade rules, and we are and will be vigilant in enforcing our laws against
import surges, subsidies, dumping,, or other measures intended to artificially
boost exports or protect foreign markets.
TRADE AGENDA IN 1999
This
brings me to our agenda for the years to come. As in the past, we hope to base
our work on the foundation of a bipartisan consensus and a strong working
relationship between the Administration and Congress. Generally speaking, our
trade policy seeks the following goals.
Address the trade effects of the
financial crisis which now directly affects nearly 40 percent of the world.
Continue our progress toward open and fair world markets through a new
negotiating Round, as well as our role as host and Chair of the WTO's Third
Ministerial Conference, regional negotiations and bilateral talks.
Advance
the role of law and defend US rights by ensuring full compliance with trade
agreements and strongly enforcing our trade laws.
Encourage the full
participation of all economies, including economies in transition and developing
nations, in the world trading system on a commercially meaningful basis;
Ensure that the trading system helps lay the foundation for the 21st-century
economy by offering maximum incentives for scientific and technological
progress.
Ensure that trade policy complements our efforts to protect the
world environment and promote core labor standards overseas; and
Advance
basic American values including transparency and accessibility to citizens and
involvement of civil society in the institutions of international trade.
TRADE NEGOTIATING AUTHORITY
As we pursue this agenda, the
Administration will consult with the Subcommittee and Congress on the renewal of
traditional trade negotiating authority. The President, in his State of the
Union address, called for a new consensus on trade. He said we must find the
common ground on which business, workers, farmers, environmentalists and
government can stand together. This commitment to common.ground has been a
hallmark of the Subcommittee's approach to trade policy over the years. I want
to personally thank you, Mr. Chairman, along with each member of the
Subcommittee, for your commitment and hard work toward this goal in the last
Congress.
Consistent with that approach, we believe negotiating authority
should bolster the traditional bipartisan support for trade policy and allow us
to pursue an agenda that reflects consensus goals. It is a tool which can help
us negotiate with greater credibility and effectiveness on behalf of American
economic interests, and thus contribute to our goal of opening markets,
increasing growth and raising living standards.
TRADE EFFECTS OF FINANCIAL
CRISIS
Let me now address our agenda in detail. I will begin with the trade
effects of the financial crisis affecting Asia, Russia and parts of Latin
America.
This crisis has now lasted a year and a half, and its effects on
our trade interests have been severe. Countries which have implemented IMF
reform programs have seen a number of good results, including currency stability
and returning investor confidence. However, real economies continue to suffer.
Six major economies - Hong Kong, Indonesia, Malaysia, South Korea, Russia and
Thailand -- are likely to have contracted by 6 percent or more last year.
As
a result of this crisis, the American trade imbalance has widened. This reflects
largely a sharp drop of about $30 billion in American exports to the Pacific
Rim, and a consequent break with the pattern of rapid U.S. export growth of the
past few years. Our overall import growth last year (with the principal
exception of the steel sector, in which imports rose very rapidly in the second
half of 1998, affecting thousands of jobs) remained consistent with growth rates
in previous years. Thus the larger deficit largely reflects predictable
macroeconomic factors.
Our trade policy response begins by ensuring that our
trading partners continue to live by commitments at the WTO and in our regional
and bilateral agreements. The strength of the trading system is an enormous
advantage here -- despite the worst financial crisis in fifty years, the world
has resisted the temptation to relapse into protectionism. This has greatly
reduced the potential damage to our economy, and particularly to American
manufacturing exporters and agricultural producers. In addition, other markets
-- particularly our NAFTA partners Canada and Mexico, to whom U.S. goods exports
grew by $13 billion last year -- have in part compensated, thanks to the more
open North ,American market NAFTA has created, for some but not all of these
lost exports. An ambitious trade agenda will further strengthen our effort to
ensure that the crisis does not cause the world to move backward.
We
continue with a policy response covering several areas:
IMF Recovery
Packages -- We have supported reform packages with the IMF at the center in
affected countries. Several of these contain trade conditionalities which we
vigorously monitor.
Restored Growth in Japan -- A return to growth in Japan,
Asia's largest economy, is essential for the economic health of the region.
The Administration's view is that this will require fiscal stimulus
that. continues until solid growth is restored, financial reform, and
deregulation and market-opening. USTR's responsibilities lie in this last area.
In addition to an aggressive bilateral agenda, the agreement we reached in Japan
last May sets out concrete deregulatory measures in telecommunications, housing,
medical devices, pharmaceutical and financial services sectors, and measures to
strengthen competition policy enforcement and transparency. When fully
implemented, these will create opportunities for exporters and workers in
America, other Pacific economies and Japan. We are now discussing new measures
in these sectors and energy as well.
Steel -- The President's January 7
Steel Report to the Congress lays out a seven point action plan on the steel
import surge. Among other points, the plan projects a roll-back of imports from
Japan - the key cause of the import surge - to pre-crisis levels, and states
that the Administration is prepared, if necessary, to self-initiate trade cases
to ensure that this roll-back takes place. The plan also outlines actions taken
by the Commerce Department to expedite ongoing dumping investigations and apply
any dumping margins retroactively. In addition, the Administration expresses
strong support for an effective safeguards mechanism; and commits us to continue
to assess the effectiveness of steps taken to date, and working closely with the
industry, labor, and members of Congress, to assess additional steps. To assist
in this ongoing review, we also announced that preliminary steel import data
will be released, thus enabling the industry's business planners to react to
imports on a more timely basis.
GROWTH AND HIGHER LIVING STANDARDS
Let
me now turn to our negotiating agenda. In this agenda, we seek enduring goals
-growth, higher living standards, the rule of law, a rising quality of life,
better protection of health, safety and the environment, and the advance of
basic values. As President Clinton said in the State of the Union address, we
need to find new methods of negotiating and address a broader array of issues to
secure these goals in the next century.
1. New Round and WTO Ministerial
Conference
This is the basis of President Clinton's call for a new,
accelerated negotiating Round for the 21st century.'. The Round would begin at
the WTO's Third Ministerial Conference, which I will chair and which will be
held in Seattle from November 30th to December 3rd. This will be the largest
trade event ever held in America, bringing government leaders, Trade Ministers,
business leaders, non- governmental organizations and others interested in trade
policy from around the world. It is an extraordinary opportunity for us to shape
at least the next decade of multilateral trade negotiations and to highlight our
economic dynamism to the world.
The Round President Clinton has called for
would be somewhat different from previous Rounds, in that we should be able to
pursue three dimensions simultaneously: first, a negotiating agenda to be
completed on an accelerated timetable; second, institutional reforms and
capacity-building at the WTO; and third, ongoing results in priority areas.
To begin with, we would hope to advance a number of important initiatives in
the months leading up to the Ministerial Conference and at the event itself.
They include:
An "Information Technology Agreement II" adding new products
to the sectors already covered by the-first ITA.
Extension of last May's
multilateral declaration not to assess customs duties on electronic commerce, to
make sure that the Internet remains an electronic duty-free zone.
An
agreement on transparency in procurement to create more predictable and
competitive bidding, reducing the opportunity for bribery and corruption and
helping ensure more effective allocation of resources.
Build consensus on
the sectoral liberalization initiative begun in the Asia-Pacific Economic
Cooperation forum. This would eliminate tariffs and in some cases liberalize
services in chemicals;, energy, equipment and sea, vices; environmental goods
and services; fish and fishery products; gems and jewelry; medical and
scientific instruments; toys; and forest products. Meaningful participation by
Japan in the fishery and forest products sectors would be essential to success.
The second dimension of institutional reform would promote transparency,
allow the WTO to facilitate trade and participation for less developed nations,
help it coordinate more effectively with international bodies in other fields,
and continue to strengthen public confidence in the WTO as an institution. Here
we would hope to take up such issues as:
Trade facilitation. Most of the
world's regional trading arrangements -- ASEAN, APEC, the European Union,
Mercosur, NAFTA, the proposed FTAA -- contain a critical element of trade
facilitation, often beginning with customs reform to reduce transaction costs
and make trade more efficient. The WTO can help accomplish this on a much
broader scale. Capacity-building.
We need to narrow the growing disparity
between the rich countries and the poor countries. We have to ensure that the
WTO can work effectively with member economies and other international
institutions, particularly with respect to the least developed nations, to
ensure that they have both access to markets and technical assistance to meet
the kinds of obligations that 11 help them grow. This and other issues will be
addressed at a High-Level Meeting on Trade and Development this March.
Addressing the intersection between trade and environmental policies. As
trade promotes growth overseas, we must at the same time ensure clean air, clean
water and protection of our natural heritage, as well as effective approaches to
broader questions like biodiversity and climate change. We have already
scheduled a High-Level Meeting of trade and environment experts in March, which
we anticipate will provide fresh and valuable input to our work in this area and
help frame a vision for future work.
Addressing the intersection between
trade and labor. Again, as in our domestic economy, growth can and should be
accompanied by safer workplaces, elimination of exploitive child labor and
respect for core labor standards. The WTO in particular can work in more
coordination.with the International Labor Organization on some of these issues.
As the President has announced, the US will provide funds for a new multilateral
program in the ILO to provide technical assistance for international labor
rights initiatives, and through our own Department of Labor will help our
trading partners strengthen labor law enforcement. These and other such efforts
should be a focus of renewed cooperation with the ILO.
Coordination with the
international financial institutions, in a world where the separation of trade
from financial policy has become entirely artificial. The WTO must work more
effectively with the IMF and World Bank to achieve their common goals of a more
stable, predictable and prosperous world.
Transparency. We will also seek
reform, openness and accountability in the WTO itself. Dispute settlement must
be transparent and open to the public. Citizens must have access to panel
reports and document Civil.society must be able to contribute to the work of the
WTO, to ensure both that, the WTO can hear from many points of view including
labor, environment, consumer and other groups, and that is work will rest on the
broadest possible consensus.
With respect to the expedited negotiating
agenda of this Round, we are now consulting with Congress, industry, and other
interested parties on a detailed negotiating agenda for talks which would begin
after the Ministerial, "While the full scope of the agenda is yet to be
determined, we believe that at a minimum they should include such issues as:
Agriculture, where we envision broad reductions in tariffs, the elimination of
export subsidies, and further reductions in trade- distorting domestic supports
linked to production. We must seek transparency and improved disciplines on
state trading enterprises, seek reform of the EU's Common Agricultural Policy,
and ensure that the world's agricultural producers can use safe, scientifically
proven biotechnology techniques without fear of trade discrimination.
Services, in which we hope to sec specific commitments for broad
liberalization and market access in a range of sectors, including but not
limited to audiovisual services, construction, express delivery, financial
services, professional services, telecommunications, travel and tourism, and
others.
Government procurement, in which purchases are over $3.1
trillion per year, much of it in sectors where America sets the world standard:
high technology, telecommunications, construction, engineering, aerospace and so
forth. At present, only 26 of the 133 WTO Members belong to the plurilateral WTO
Government Procurement Agreement. We thus look to bring more countries under
existing disciplines.
Intellectual property, where our efforts to ensure
full compliance with the existing provisions of the Uruguay Round will be
combined with campaigns against piracy in newly developed optical media
technologies such as CDs, CD-ROMs, digital video discs and others, and end user
piracy of software.
Industrial tariff and non-tariff barriers, where we will
seek to continue our progress in reducing bound and applied tariff levels, and
continue to address non tariff measures in industrials sector.
A forward
work-program on newer issues for the multilateral system to consider, including
considering how competition and investment policies meet the test of assuring
fair and open trade and how the WTO can help to create an international
pro-competitive regulatory climate, particularly in services, and further
advance our efforts against bribery and corruption.
Outside the context of
the Round, we are pursuing the accession of 31 economies to the World Trade
Organization: .l-Latvia, whose accession is complete and awaiting ratification;
and Albania,, Algeria, Andorra, Armenia, Azerbaijan, Belarus, Cambodia, China,
Croatia, Estonia, FYR of Macedonia, Georgia, Jordan, Kazakhstan, Laos,
Lithuania, Moldova, Nepal, Oman, Russia, Samoa, Saudi Arabia, Seychelles, Sudan,
Taiwan, Tonga, Ukraine, Uzbekistan, Vanuatu and Vietnam. In all cases we seek a
commercially meaningful accession with the greatest possible commitments to all
WTO agreements, including the most recent ones.
We are also exploring ways
to more fully integrate the least developed countries, particularly in Africa,
into the system. This includes both seeking deeper commitments, and technical
assistance in fulfilling those commitments, and legislation to improve trade
relations with Africa. Finally, we will shortly be deciding on entry into force
of the 1997 WTO financial services negotiations. As you may recall, these
extended negotiations concluded on an interim basis in 1995 because we were
dissatisfied with offers from important trading partners, especially in
developing and emerging markets. In contrast, in the negotiations that concluded
in December 1997, we obtained broader and deeper commitments, in banking,
insurance, and securities, from a wide range of developed and developing
countries, including the key emerging markets of primal- interest to U.S.
industry. These countries had until January 29, 1999, to complete any necessary
domestic procedures and formally notify the WTO of their acceptance of the
protocol for bringing their commitments into force. Fifty-three countries,
including the United States, met the deadline, and these'53 are now empowered to
decide whether to allow their commitments to enter into force, on an MFN basis,
from March 1. We have been consulting with your staff, staff of other relevant
committees, and the U.S. private sector to determine a strategy that is in the
best commercial interest of the United States and that will demonstrate our view
that all WTO Members must live up to their commitments.
2. Regional Trade
Agenda
At the same time, we are pursuing an active agenda in each region of
the world. A brief review is as follows:
Canada -- With Canada, our largest
trade partner, we have serious concerns on a range of agriculture matters. We
took an important step on these last December by concluding a market access
package opening opportunities for American gram farmers, cattle ranchers and
other agricultural producers. We will continue our work in these areas this
year. We will also address major market access impediments to our magazine
publishers (as I note in the section on enforcement) and other media and
entertainment industries. We will also continue to enforce our bilateral
sectoral agreements. At the same time, we intend to work with Canada on
bilateral issues of mutual interest, and on negotiations toward the Free Trade
Area of the Americas and at the WTO where we share many goals.
Mexico --
Trade with Mexico has expanded very rapidly since passage of the North American
Free Trade Agreement. Last year, Mexico passed Japan as both our second largest
goods exports market and our second largest overall goods trade partner. We will
continue to monitor implementation of Mexico's NAFTA commitments, scheduled to
be complete by 2008, and address bilateral issues including land transportation,
corn syrup and sugar, and telecommunications barriers as well as piracy in
intellectual property rights. We have also stepped up our efforts in the
trilateral work program now underway in more than 25 Committees and Working
Groups, with the intention of maximizing our gains under the NAFTA.
Western
Hemisphere -- The Miami and Santiago Summits of the Americas have called on us
to complete work on a Free Trade Area of the Americas no later than the year
2005. This year, in accordance with Summit directions, we intend to achieve
"concrete progress" toward the FTAA in our nine Negotiating Groups and through
business facilitation and other measures. At the same time, we will seek
approval from Congress of an expanded and improved Caribbean Basin Initiative
with benefits similar to those now accorded Mexico and Canada.
Europe -- We
are working to remove barriers and strengthen trade relations with the EU
through the Transatlantic Economic Partnership begun last year. This includes
negotiations on seven separate agenda items: technical trade barriers,
agriculture (including biotechnology and food safety), intellectual property,
government procurement, services, electronic commerce and advancing shared
values such as transparency and participation for civil society. We are also
working to ensure the protection of American interests as the EU expands to
include Central and Eastern European nations. At the same time, we are enforcing
European compliance with dispute settlement decisions and will address problems
in our trade relations both bilaterally and through the new negotiating Round
President Clinton has proposed.
Asia -- Under the Asia-Pacific Economic
Cooperation (APEC) forum we are looking long-term toward flee and open trade in
the region. This year, as I noted earlier, we will seek WTO consensus on the me-
sector liberalization package begun in APEC, and begin work on six additional
sectors. We will also address bilateral issues with Korea, the ASEAN nations and
other Asian trade partners. This will include seeking Normal Trade Relations
with Kyrgyzstan, Mongolia and Laos, and negotiating a broad trade and commercial
agreement with Vietnam.
Japan -- In trade relations with Japan, our largest
overseas trade partner, we will continue our intense and sustained effort to
open and deregulate the Japanese market. We have concluded 35 bilateral trade
agreements with Japan since 1993; we will monitor their implementation closely
and enforce them vigorously. We will also address sectoral issues including
flee, steel, insurance, glass, film and other topics. And as I noted earlier, we
are pursuing an ambitious set of goals under the Enhanced Initiative on
Deregulation and Competition Policy, both in individual sectors and in broader
structural issues. We hope to see substantial progress on these issues as Prime
Minister Obuchi's spring visit approaches.
China -- We will monitor and
strictly enforce our agreements on intellectual property and market access with
China, and address bilateral trade problems in agriculture, direct marketing and
other areas. At the same time, we will continue to seek broad market- opening
through our negotiations toward China's accession to the World Trade
Organization, which I address more fully below.
Africa -- USTR is
implementing the President's Partnership for Economic Growth and Opportunity in
Africa, which owes a great deal to the work of the Trade Subcommittee, by
supporting economic reform, promoting expanded trade and investment ties, and
encouraging Africa's full integration into the world trading system by
negotiating bilateral agreements, technical assistance mad other measures.
A
sound policy framework in African countries that opens economies to private
sector trade and investment offers the greatest potential for growth and poverty
alleviation as well as trade opportunities for the U.S. Last month, for example,
we signed a Bilateral Investment Treaty with Mozambique and over the next few
months we expect to sign Trade and Investment Framework Agreements, or TIFAs,
with South Africa, Ghana, and the West African Economic and Monetary Union.
We also place a very high priority on Congressional approval of the
African Growth and Opportunity Act. I want to state my personal appreciation for
the work of Chairman Crane, Congressman Rangel and Congressman McDermott to
secure its early passage in this Congress.
Broader efforts to encourage full
integration of developing countries into the trading system will also bolster
our Africa policy. In this regard, we will seek renewal of the Generalized
System of Preferences.
Middle East -- Building upon our Free Trade Agreement
with Israel, we have inaugurated a program that aims to bolster the peace
process, while advancing American interests. Starting with a framework of
bilateral trade and investment consultations in the region and a newly
inaugurated industrial zones program, we will help the Middle Eastern countries
work toward a shared goal of increased intra-regional trade.
OECD - We
strongly support passage of the OECD Convention on Shipbuilding Subsidies and
will work with you to ensure its success.
II. ENFORCING THE RULE OF LAW
Second, US trade policy will support and advance the role of law
internationally by ensuring the enforcement of trade agreements and U.S. rights
in the trading system.
Much of our enforcement work takes place at the World
Trade Organization. We have filed more complaints in the WTO -- 41 cases to date
-- than any other WTO member, and our record of success is strong. 'We have
prevailed on 19 of the 21 American complaints acted upon so far, either by
successful settlement or panel victory. In almost all eases, the losing parties
have acted rapidly to address the problem. We will insist that this remain the
case in all our disputes, including those with the European Union on beef
hormones and bananas, and with Canada on magazines. At the same time, the U.S.
has complied fully with all panel rulings it has lost, although these are few in
number. And we will, of course, use our rights under the NAFTA to ensure open
markets to our goods and services in Canada and Mexico.
We are also
monitoring implementation Of WTO commitments. All WTO developing country members
are scheduled to fully implement their intellectual property commitments, and
all members are required to implement customs valuation commitments by January
1, 2000. We will insist on strict compliance with these deadlines.
Likewise,
we are vigilant to ensure enforcement of textile quotas and implementation of
textile market access requirements overseas. A number of our trading partners
clearly have further work to do in market access, including some of our largest
and fastest growing textile suppliers. We have and will continue to aggressively
pursue our rights, whether through the consultation process or ultimately
through the WTO dispute settlement regime.
U.S. trade laws are also a
vitally important means of ensuring respect for U.S. rights and interests in
trade. We will continue to challenge aggressively market access barriers abroad
using laws such as Section 301, "Special 301" and Section 1377, to open foreign
markets and ensure fair treatment for our goods and services, ensure
nondiscrimination in foreign government procurement and ensure compliance with
telecommunications agreements.
To ensure that we have the maximum advantage
of domestic trade laws, the Administration will reauthorize by Executive Order
two laws for which authority has lapsed: "Super 301" and Title VII. We wish to
work with the Subcommittee to include these laws in your legislative agenda.
The Administration is also, of course, committed to full and vigorous
enforcement of our laws addressing dumping and subsidies, and on injurious
import surges.
III. INTEGRATING TRANSITION ECONOMIES
Third, our trade
policy will continue our progress toward integrating China, Russia and other
economies in transition into the trading system. This will both advance specific
American trade interests, and contribute to our larger goal of a more secure
peace in the next century.
This task is the last great step in the process
which began with the formation of the GATT and continued with the admission of
Germany and Japan: the integration of China, Russia and sixteen other economies
in transition from communist planning into the trading system. These economics
and a number of Middle Eastern nations are the two largest groups remaining
outside the trading system. Their entry will make membership in the trading
system nearly universal; and the accession of the transition economies will be a
fundamentally important step in their domestic reforms as well. This would
remove large distortions in world markets, dramatically enhance market access
for American producers, and bolster international stability by giving these
nations a greater stake in world prosperity beyond their borders
To support
rather than undermine both domestic reform in these economies and the rules of
the trading system, these countries must be brought into the WTO on commercially
meaningful terms. The result must be enforceable commitments to open markets in
goods, services and agricultural products; transparent, non-discriminatory
regulatory systems; and effective national treatment at the border and in the
domestic economy.
This is an ambitious task, but not an impossible task.
Central European countries like Poland, Hungary and the Czech Republic have
succeeded, and their experience shows that WTO membership has
assisted their domestic economic reform policies. The most recent successful WTO
applications, Latvia and Kyrgyzstan, have had the same experience.
In the
months to come, we will negotiate intensely with all acceding economies,
including China -- the largest prospective WTO member. We have made important
progress with China in the past two years, and the visit of Premier Zhu Rongji
in April offers China a chance to make a decisive advance. We will consult
closely with the Subcommittee and with other members of Congress as negotiations
proceed.
Likewise, at the most recent summit with Russia (September 1998),
President Yeltsin agreed to work to intensify Russia's WTO accession efforts.
Russia's current economic difficulties clearly present challenges and Russian
Cabinet reshuffling has slowed the process, but we will continue to consult with
the Russians toward a commercially viable accession package.
IV. THE
21ST-CENTURY ECONOMY
Fourth, trade policy will help lay the foundation for
the 21 st- century economy by ensuring that the trading system is compatible
with rapid advances in civilian science and technology.
In medicine,
environmental protection, agriculture, entertainment, transportation, materials
science, information and more, science is advancing at extraordinary speed. This
offers the world tremendous potential to increase wealth, raise productivity,
improve health care, reduce hunger, protect the environment and promote
education. These are also areas in which the United States has a significant
comparative advantage.
Under President Clinton, our trade policy has made
high technology a strategic priority. Consistent with national security, we have
aimed to ease the development and commercialization of new technologies, and
ensure strong incentives for scientific and technological progress. We have
negotiated far-reaching new. agreements, in sectors like computers,
semiconductors, information technologies and many other areas. This work
continues in multilateral, sectoral and regional negotiations.
In the
multilateral system, the rapid advance of technology requires us to improve, the
trading system's institutions and negotiating methods. In a world where
successive generations of new products arise in a matter of months, and both
information and money move instantaneously, we can no longer take seven years to
finish a negotiating Round, or let decades pass between identifying and acting
on trade barriers. We will have to move faster and more efficiently, which is a
significant reason for the President's call for an accelerated Round.
We
must also ensure that trade policy, both in the WTO and in our regional and
bilateral negotiations, helps ensure that we can take advantage of our
comparative advantage in knowledge industries and other newer technologies.
Three broad issues cut across many sectors:
Intellectual Property
Rights -- Our success in this field over the past decade owes a great deal to
the work of Congress, both in the Trade Act of 1988 with its creation of
"Special 301," and on the Uruguay Round. Today, the vast majority of our trading
partners have passed modem intellectual property laws and are improving levels
of enforcement. In this area, we will spend a great deal of time ensuring that
all WTO members comply with their obligation to introduce full intellectual
property protection by January 1, 2000. (For countries, like China, which are
not WTO members, we will vigorously monitor compliance with bilateral
agreements.)
We have also launched campaigns against worldwide piracy of new
optical media technologies, and against end-user piracy of software. These
issues are integral parts of our regional negotiating agenda in Asia, Latin
America, Europe, Africa and the Middle East. Looking ahead, we must extend
protection of intellectual property rights beyond basic laws and enforcement to
protect new technologies like genetically engineered plant varieties.
Global
Electronic Commerce -- In accordance with the President's Global Electronic
Commerce initiative, USTR seeks to preserve electronic trade over the Internet
as duty-free. At the last WTO Ministerial Conference, in May of 1998, we won
agreement to a "standstill" for tariffs on electronic transmission. As I noted
earlier, we will seek to extend that agreement this year. Likewise, in our
negotiations toward the Free Trade Area of the Americas, at APEC and in the
Transatlantic Economic Partnership; we have created special committees to advise
us on ways to ensure all participants can take maximum advantage of electronic
commerce.
Biotechnology -- A third top priority for us in this area is
biotechnology. Among the chief sources of innovation in this field are American
agriculture and medicine. USTR will seek to ensure that pharmaceutical
companies, farmers and ranchers can use safe, scientifically proven techniques
like biotechnology to make agriculture both more productive and friendly to the
environment, without fear of encountering trade discrimination. This is a
priority for us in the Transatlantic Economic Partnership negotiations and in
developing our agenda for future WTO negotiations.
We also have
an active sectoral high-tech agenda. This includes, for example, the ITA II
agreement I discussed earlier. We are also working closely with our civil
aircraft industry to ensure its future and combat foreign, particularly
European, subsidies and other unfair practices. This work extends into many
other fields.
V. RISING QUALITY OF LIFE
Fifth, US trade policy seeks to
ensure that worldwide as in the United States, trade and growth go together with
a rising quality of life, including setting high standards of environmental
protection, the observance of core labor standards, and high levels of consumer
protection.
As in our domestic economy, we regard environmental quality and
protections for workers as essential parts of economic policy. Trade policy has
an important role to play, in coordination with our efforts in other fora, to
ensure growing respect for internationally recognized core labor standards and
sustainable development worldwide.
1. Trade and the Environment
Our
Administration believes that prosperity through open trade and the protection of
health, safety and the environment need not conflict, and should be mutually
supportive. This is the case in our domestic economy, where in the past three
decades our GDP has risen in real terms from $3.7 to $8.5 trillion -- while our
percentage of fishable and swimmable rivers and streams doubled, the number of
citizens living in cities with unhealthy air fell by half, and many endangered
or threatened species, including the bald eagle, are recovering.
The
Preamble of the WTO recognizes this in the international settingx stating that
sustainable development is a central objective of its work. Where there are
potential conflicts, we should strengthen our ability to resolve them in a
manner that protects the environment, health and safety and does not undermine
the trading system. This includes working to ensure that the proper expertise is
brought to bear on complex technical and scientific issues, particularly those
with environmental, health and safety dimensions.
In many cases elimination
of trade barriers will also contribute to a cleaner environment and the
conservation of natural resources. For example, this can help countries gain
access to cost-effective equipment and technology. APEC's work toward an
agreement to liberalize trade in environmental goods and services, part of which
has now moved to the WTO, can help countries monitor, clear up and prevent
pollution, and ensure clean air and water. Likewise, the APEC initiative on
energy equipment and services can promote rapid dissemination of efficient power
technologies, thus allowing production of power with reduced carbon emissions
and contributing to international efforts to address climate change.
At the same time, as the trading system ensures that members avoid using
environmental standards as disguised trade barriers, in eliminating barbers to
trade we must not compromise on the achievement and maintenance of high levels
of environmental, health and safety protection. And the system must work
together with multilateral environmental institutions.
At our suggestion,
the WTO is convening a High-Level Meeting on trade and the environment this
spring to more fully address these questions. This marks a new level of
awareness and interest in the world trading community on trade and environmental
issues. We anticipate that it will provide fresh and valuable input to our work
in this area and help frame a vision for future work.
We will also continue
to support the effective implementation of the North American Agreement on
Environmental Cooperation in conjunction with the NAFTA. Cooperative activities
that have occurred as a result of this agreement have improved environmental
protection in a number of different areas -- for example, an agreement on the
conservation of North American birds; the creation of a North American Pollutant
Release Inventory; an agreement on regional action plans for the phase-out or
sound management of toxic substan0es, including DDT, chlordane, PCBs and
mercury; and the creation of a trilateral working group that has improved the
enforcement of environmental protection laws. Benefits have also resulted from
the implementation of the Border Environment Cooperative Commission (BECC) which
was also entered into in conjunction with the NAFTA. The BECC has fifteen
environmental infrastructure projects under construction today, funded in part
by the North American Development Bank, including the first wastewater treatment
plants in Juarez.
2. Trade and Core Labor Standards
Likewise, the trade
system must help to assure the dignity and safety of workers. Here again, we can
draw lessons from our experience at home, where since 1970, as manufacturing
production doubled, the number of workplace deaths fell 60 percent. Our efforts
here include seeking closer cooperation between the WTO and the International
Labor Organization, bolstering ILO capabilities to address exploitative child
labor and other violations of internationally recognized labor rights as well as
ensuring safe and healthy workplaces, and working with individual trade partners
to advance our goals.
At the Singapore WTO Ministerial Conference in 1996,
the WTO for the first time recognized the importance of labor standards and
cooperative work with the International Labor Organization, while clearly
separating advocacy of labor rights from protectionist trade policies. We wish
to build on this to ensure that the trading system works more effectively with
the International Labor Organization, with businesses and with citizen activists
to ensure observance of internationally agreed core labor standards -- banning
forced labor and exploitive child labor, guaranteeing the freedom to associate
and bargain collectively and eliminating discrimination in the workplace. We
have thus proposed in Geneva that the WTO establish a forward work-program to
address trade issues (e.g., abusive child labor, the operation of export
processing zones) related to labor. We also have raised labor standards in
country policy reviews under the Trade Policy Review Mechanism. In these reviews
each WTO member's trade regime is examined, and other members are provided an
opportunity to raise questions. We have used this opportunity, for example in
the recent Swaziland review, to seek clarifications about labor practices that
we believe are inadequate.
To bolster these efforts, the President
recently announced a $25 million program to help the ILO work with developing
countries to put in place basic labor protections, safe workplaces and guarantee
worker fights and enforce their own laws so that workers everywhere can enjoy
the benefits of a strong social safety net. (The US has already funded ILO child
labor programs in Bangladesh, Thailand,the Philippines, Africa, and Brazil.)
These are fundamental human rights and common concerns, and trade policy has a
place in addressing them.
We are also taking steps in a number of other
areas directly related to trade policy. The Administration has directed the
Customs Service to step up its efforts to ensure that items made by forced or
indentured child labor are not imported into the United States. USTR is
enforcing provisions of existing law that impose penalties for clear violations
of worker rights. For example, we partially removed GSP trade preferences from
Pakistan over child labor concerns. At the same time, however, the
Administration has worked through the Labor Department to develop long-term
solutions to the problem, by addressing specific Pakistani industries. As a
result, 7,000 children have been removed from jobs stitching soccer balls and
30,000 children from jobs knotting carpets.
Likewise, we are finding ways to
address core labor standards as we advance our trade policy goals. The North
American Agreement on Labor Cooperation under NAFTA is one example. Another is
our most recent trade agreement - the textile agreement with Cambodia -which
includes provisions requiring Cambodia to improve the enforcement of its labor
laws in the garments sector.
VI. ADVANCING AMERICAN VALUES
Sixth, in
1999 we will seek to advance basic American values and concepts of good
governance, by making the institutions of trade more transparent, accessible and
responsive to citizens.
As the President has said, as trade grows, the rules
of trade do more to ensure that markets are open to our goods and services, and
the trading system coordinates more fully with environmental, labor and
financial institutions, the need for transparency, accessibility and
responsiveness grow. This is natural and a development which we both support and
are working to realize. One principal forum here is the WTO, where we are
seeking agreements on more rapid release of documents, ensuring that citizens
and citizen organizations can file amicus briefs in dispute settlement
proceedings, and that dispute settlement proceedings be open to public
observers. In the interim, President Clinton has made a standing offer to open
any dispute panel involving the United States to the public, if our dispute
partner agrees.
A second forum is the FTAA negotiations, in which -- for the
first time in any trade negotiation -- we have created a Civil Society Committee
to give business associations, labor unions, environmental groups, student
associations, consumer representatives and others a formal means of conveying
concerns, and ideas, to all of the governments involved in the talks.
A
third is our encouragement of new Transatlantic Dialogues with the European
Union for consumers, labor and environment as part of the Transatlantic Economic
Partnership. Through this effort we are promoting our shared values with Europe
in the activities and negotiations we are undertaking as part of the TEP and
multilaterally.
CONCLUSION
This is an ambitious and far-reaching agenda.
We plan to work closely with the Subcommittee and Congress as a whole to realize
it, and look forward to the benefit of your thoughts and advice at this heating
and in the months ahead. This includes the renewed negotiating authority that
will help us bring our negotiations to a successful conclusion.
In
conclusion, Mr. Chairman, much has changed in the international economy in the
fifty-one years since the United States led 23 countries in creation of the
GATT. Our national interest in economic events beyond our borders has grown, our
people have found new opportunities and new challenges in trade,, and many new
nations have become active in trade.
These developments in many ways are the
result of America's commitment to a vision of open and fair trade under the rule
of law, and to the bipartisan policies we have pursued for many years to realize
it. As a result of this success, we now face some new and complex challenges.
The President's State of the Union Address outlined these challenges and the
need for a new consensus to meet them.
But as deeply changed as today's
world may be, the vision President Roosevelt laid out in one of the darkest
moment of human history -- an open world, prosperous and governed by the rule of
law-- remains valid in a world more prosperous, healthy and hopeful than ever
before. And the necessity for a bipartisan consensus on our goals, and a strong
partnership between the Executive and Legislative branches of government, remain
essential to achieve this vision. With your advice and your help, as we open a
new Round of negotiations and embark on a highly ambitious agenda for the next
century, we hope to bring it closer to realization than ever.
Thank you very
much, Mr. Chairman and Members of the Subcommittee.
END
LOAD-DATE: February 12, 1999
