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[Page: S3795] GPO's PDF---
The PRESIDING OFFICER. Under the previous order, the Senate will now resume consideration of H.R. 3009, which the clerk will report.
The assistant legislative clerk read as follows:
An act (H.R. 3009) to extend the Andean Trade Preference Act, to grant additional trade benefits under that Act, and for other purposes.
Pending:
Daschle amendment No. 3386, in the nature of a substitute.
Dorgan amendment No. 3387 (to amendment No. 3386), to ensure transparency of investor protection dispute resolution tribunals under the North American Free Trade Agreement.
Mr. BAUCUS. Mr. President, yesterday the Senate began debate on the Trade Act of 2002. This legislation includes three bills reported by the Senate Finance Committee last year: No. 1, an extension of fast track negotiating authority--also known as trade promotion authority; No. 2, an expansion and improvement of the Trade Adjustment Assistance Program and No. 3, the Finance Committee's version of the Andean Trade Preferences Act, or ATPA. As the debate moves forward, I suspect other international trade matters may also appropriately be attached to this bill.
The Trade Act of 2002 will be the first major rewrite of international trade legislation in 14 years. If passed, it will be, as the National Journal has said, ``a historic breakthrough.''
Why are we taking up a trade bill? What does this bill--and the expanded trade that will follow--mean for this country? Trade means jobs. Twelve million Americans--one out of every ten workers--depend on exports for their jobs. These are jobs that pay more--thousands of dollars more per year--than jobs unrelated to trade. Trade supports jobs in all sectors. We often think of trade as helping big multi-national companies. In fact, firms with fewer than 20 workers represent two-thirds of American exporters; and U.S. agriculture exports support more than 750,000 jobs. Trade also means choice. It means more affordable products and more variety for American families. It means that hard-earned paychecks go further.
In many ways, new trade agreements are like a tax cut for working families. Studies have suggested that the average family of four sees annual benefits of between $1,300 and $2,000 because of the agreements we negotiated in the last decade. And according to a recent University of Michigan study, if we complete the next round of negotiations under the World Trade Organization, it could increase that benefit by as much as $2,500--per family, per year.
But trade is about more than simple economics. When we trade with countries, we do not just export corn and cars, we export our ideas, we export our values. We export freedom, in a
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Trade between nations creates opportunities for both parties--it can help lift countries out of poverty, while strengthening our relationships around the world.
I think Adlai Stevenson probably said it best 50 years ago:
It is not possible for this nation to be at once politically internationalist and economically isolationist.
Look at our agreement with Jordan as one example. It has a relatively small effect on our economy--our trade with Jordan is only about $600 million per year. But it has an important impact on Jordan's economy--and it has cemented our relationship with a key Middle East ally.
Similarly, part of this legislation provides trades benefits to Andean countries. The main benefit of this legislation will be to help move workers out of the illegal drug business, and into legitimate lines of work. It is not going to solve the problem entirely, but it will help. But to do that, they need more access to our market.
So that is what's at stake in this debate. Let me turn to the bill itself.
The most talked-about provision of this legislation, of course, is the extension of fast track trade negotiating authority to the President. At its core, the fast track grant in this legislation is very similar to the legislation that first granted fast track to President Ford in 1974.
I am often asked why we need fast track--and why now? In essence, fast track is a contract between Congress and the administration. It allows the President to negotiate trade agreements with foreign trading partners with a guarantee that Congress will consider agreement as a single package--no amendments and a guarantee of an up-or-down vote by a date certain.
In return, the president must pursue a number of negotiating objectives that Congress has outlined in the legislation. And he must make Congress a full partner in these negotiations, fully consulting with Members as the talks proceed.
Now make no mistake, fast track is a significant grant of congressional power to the President. But it is excruciatingly difficult to negotiate the best possible multilateral trade agreements unless our trading partners know that Congress will vote on the agreement negotiated.
Indeed, it was our experience in the 1970s--when the Europeans refused to negotiate with us after Congress failed to implement an agreement--that led to the creation of fast track. Without fast track, our trading partners learned that they could anticipate one round of negotiations with the President and a second with Congress.
The reverse is not true. Other countries, because of their parliamentary forms of government, have a single legislative body where the majority of the legislative body is also the government, so we did not have that problem with them.
Fast track also demonstrates that the President and Congress go into negotiations with clearly defined and unified objectives.
Again, that is critical. If our trading partners are uncertain that the deal will stick, they won't put their best deal on the table.
Is it possible to negotiate some agreements without fast track? It is certainly possible with simple bilateral agreements, as was the case with Jordan. But, while Jordan is a landmark agreement in many areas, it has to be put in context when talking about fast track procedure.
The Jordan Agreement, as I noted earlier, was a relatively easy agreement. It involved only two countries and affects a very small amount of trade--roughly $600 million.
Major multilateral agreements can affect many more countries and billions in trade. The FTAA is an agreement involving 34 countries; the WTO involves nearly 150. For these agreements, fast track remains a necessity.
Even bilateral agreements will go much more smoothly with fast track. In the case of Chile, for example, we are still talking about a much more complex agreement than Jordan. It will affect approximately $6 billion in trade, ten times more than the Jordan Agreement. And improving the chances of agreements like Chile is vital to our economy.
Let me give you one example. Canada has already signed free trade agreements with several countries, including Chile. That has an impact on U.S. competitiveness. As a result of the Canada-Chile agreement, Chile eliminated its tariffs on Canadian wheat. U.S. wheat exports to Chile, on the other hand, still face tariffs as high as 30 percent, making Canadian wheat much more attractive to Chilean buyers. We must negotiate these agreements if we are going to compete, and fast track will make it easier.
People often note that we don't have fast track for treaties, such as nuclear arms treaties. That is true. And while these treaties are important, they are often less complex in the sense that they don't involve literally thousands of interrelating trade-offs and concessions as trade agreements do.
I remember the last arms treaty that came before the Senate. There were two or three annexes in it but not all of the host of other complications involved in trade agreements.
But let me turn to the bill itself, and specifically to the negotiating objectives on a number of topics.
With regard to agriculture, a topic near and dear to many in this body, and certainly one of my highest priorities--the legislation directs the President to seek new markets for American agricultural products and to continue to work to lower the trade-distorting subsidies of our trading partners. That is vitally important for American agriculture.
On a more traditional topic, the legislation also directs the President to continue to negotiate the reduction and elimination of tariffs, while recognizing the sensitivity of tariffs in a few sectors. The United States has already lowered its average tariff rate to about 3 percent. Generally, tariffs are similarly low in major developed countries. In a few important cases, however, such as Japanese tariffs on wood products, and Europe's tariffs on semiconductors, tariffs remain a significant trade barrier. And in many developing countries, tariffs remain at levels that stifle trade, in some cases 100 percent or more.
The bill also directs the President to address some of the new issues, such as e-commerce. By acting to negotiate agreements now, before protectionism has taken root, hopefully trade in e-commerce can remain relatively free.
Each of these objectives is critically important. However, most of the debate in the other body and in the press has focused not on the important issues I have listed, but on three trouble spots in trade negotiations: No. 1, labor rights and environmental issues in trade agreements; No. 2, protection of the right of the U.S. to promulgate environmental and other regulations in connection with so-called investor-state dispute settlement provisions, commonly know as ``Chapter 11 '' provisions; and, No. 3, the integrity of US trade laws.
Let me turn to those difficult issues now.
First, labor rights and environmental protection issues: These issues have now firmly and irreversibly made their way on to the trade negotiating agenda. They are here. The world has changed. Those who continue to ignore that reality are simply burying their heads in the sand.
The appropriate manner to address those issues, however, is not obvious, and it has been the subject of heated debate for more than a decade. The dispute over this issue has kept the Congress deadlocked on fast track for nearly a decade.
Fortunately, U.S. trade negotiators have made some important progress. In negotiating a free trade agreement with Jordan, the United States brought labor rights and environmental protection into the core of the trade agreement.
Two central approaches were taken on these issues. First, both parties agreed to strive for the labor standards articulated by the International Labor Organization, and for similar improvement in environmental protection. Second, both countries agreed to faithfully enforce their existing environmental and labor laws and not waive them to gain a trade advantage. That is in the agreement.
In addition, both parties to the Jordan Agreement agreed to pursue a number of cooperative efforts to improve labor rights and environmental protection. In my opinion, these provisions of the Jordan Agreement provide a concrete demonstration of the way to
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Last year, I encouraged some of my colleagues in the other body to pursue Jordan-like provisions as the basic model for a fast track bill. In drafting the fast track legislation, the House New Democrats and Republicans wisely agreed to use those provisions as a model for the language in the fast track legislation.
In the Senate bill, we accepted the legislation on this topic and made clear in the report that the legislation fully adopts the Jordan standard on labor and environment matters.
Unfortunately, some in the House opposed this language as not going far enough and urged legislation to force compliance with ILO labor standards. I support the ILO, and I believe the Jordan-based approach moves the trading regime in the right direction; that is, looking to the ILO for guidance on appropriate labor standards.
With due respect, however, I believe that those who advanced this proposal and those who may later advance it in the Senate debate are simply going too far. The ILO standards are a starting point, but they were not meant to be used in this manner.
It may be that through experimentation we can strengthen the linkages between trade agreements and the ILO. Indeed, that is the ultimate goal of this legislation. But trying to accomplish this in one fell swoop will only set back both agreements and the ILO.
Quite frankly, whatever the intentions of the authors, proposals like this are likely to be fatal both to fast track and future trade negotiations.
Another environment-related issue that has arisen in recent months pertains to investor-state dispute settlement, also known as ``Chapter 11 ,'' in reference to the provisions of this topic in NAFTA .
The genesis of Chapter 11 is the legitimate concern of some U.S. investors that other countries often do not provide adequate protections of their investments. Investors have had many experiences of being poorly treated and having little recourse to air their legitimate concerns.
NAFTA's Chapter 11 , and similar provisions in other agreements, are designed to address this problem. They define a basic set of investor rights under international law. The concepts are comparable to basic rights under U.S. law. They include the right to just compensation when the government takes your property, and the right to be treated fairly and equitably by the government.
Significantly, Chapter 11 provides an alternative to local courts for the adjudication of complaints about a government's actions. Investors are allowed to challenge such actions before special arbitration panels. It is appropriate to pursue such provisions in trade agreements. But investor rights are not the only concern. Unfortunately, some of the complaints brought under chapter 11 have clearly been aimed at stifling legitimate regulations. The challenge by the Canadian company Methanex against a legitimate California regulation on a gasoline additive is the most visible case in point.
Defenders of Chapter 11 note that most of these cases have not resulted in panel rulings against regulatory authorities. This is correct. But it is also part of the problem.
Chapter 11 panels have demonstrated no ability to rapidly dismiss frivolous cases. This results in extended litigation on claims that should simply be thrown out, such as the Methanex case.
These legitimate concerns must also be addressed. The bill before us today attempts to balance the needs of U.S. investors with the legitimate needs of regulatory agencies, and the concerns of environmental and public interest groups.
The bill directs trade negotiators to seek provisions that keep Chapter 11 -type standards in line with the standards articulated by U.S. courts on similar matters. It urges the creation of a mechanism to rapidly dispose of and deter frivolous cases. And it urges the creation of a unified appellate body to correct legal errors and ensure consistent interpretation of key provisions.
I know some would like to go further in striking a new balance on investor-state issues. As the debate proceeds, I look forward to working with them on the issue.
But I urge my colleagues to keep in mind there are several legitimate interests that need to be balanced; that if we go too far in one direction, it is going to upset the balance in another. But I very much want to work with Senators who have other amendments on this issue.
The second difficult issue within fast track is how we ensure fair trade. After being involved in international trade policy for more than two decades, I am struck by how often the issues that shape congressional thinking on trade are not trade negotiations but rather are the administration's effort to enforce trade laws.
Although the point is often lost, the United States is the most open market in the world. That has to be remembered. Our tariffs are quite low, and there are very few nontariff barriers to trade in the United States. There are some, but they are few. We do not wear white hats. We are not totally pure. Other countries do not wear dark hats. They are not Darth Vaders. But it is true the shade of gray of our hat is a lot lighter than the shade of gray of other countries; that is, we are more open compared to other countries.
Despite complaints from some of our trading partners, the U.S. market is clearly far more open than that of our major trading partners, such as Japan and Europe--both of which cast stones at the United States from behind titanic barriers of their own to agricultural trade.
To keep the playing field relatively equal and battle foreign protectionism in the form of subsidies and dumping--selling at cut-throat prices--the United States and most other developed countries maintain antidumping and countervailing duty laws.
Another critical U.S. law is section 201. It aims to give industries that are seriously injured by import surges time to adapt. Section 201 was recently employed to good effect to provide the steel industry with that breathing room, but it has previously been used on a range of other products, from lamb meat to motorcycles. Indeed, that is why Harley-Davidson is doing well today. They were given a breather.
Although the exact percentages can vary from year to year, over the last two decades, these laws collectively have applied duties to less than 1 percent of total imports; that is, our trade laws, when enforced, when in action, have applied duties to less than 1 percent of total imports. And they are completely consistent with U.S. obligations under the WTO--a point that must be remembered by all Americans who are a little concerned about some of these actions our Government, I think in most cases, legitimately takes to protect the United States of America because other countries' trade laws and barriers are so heinous by comparison and so unfair to Americans.
Yet somehow the United States has lost the public relations war on this topic. Somehow our trading partners and importers have convinced some editorial writers that these laws are protectionist. Nothing could be further from the truth. They are not protectionist.
Antidumping and countervailing duty laws combat trading practices that have been condemned for a century. Subsidies and dumping are too frequently used by foreign countries and companies to devastate U.S. industries. Consider the U.S. semiconductor industry in the mid-1980s and the U.S. lumber industry today. Rather than being protectionist, these laws are the remedy to protectionism. That dumping, those subsidies, are trade barriers. They are trade barriers. They are barriers to free trade. So our trade laws are meant to
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