[House Hearing, 105 Congress]
[From the U.S. Government Publishing Office]



 
              IMPLEMENTATION OF FAST TRACK TRADE AUTHORITY

=======================================================================

                                HEARING

                               before the

                         SUBCOMMITTEE ON TRADE

                                 of the

                      COMMITTEE ON WAYS AND MEANS
                        HOUSE OF REPRESENTATIVES

                       ONE HUNDRED FIFTH CONGRESS

                             FIRST SESSION

                               __________

                           SEPTEMBER 30, 1997

                               __________

                             Serial 105-65

                               __________

         Printed for the use of the Committee on Ways and Means

                               ----------

                     U.S. GOVERNMENT PRINTING OFFICE
55-492 cc                    WASHINGTON : 1999



                      COMMITTEE ON WAYS AND MEANS

                      BILL ARCHER, Texas, Chairman

PHILIP M. CRANE, Illinois            CHARLES B. RANGEL, New York
BILL THOMAS, California              FORTNEY PETE STARK, California
E. CLAY SHAW, Jr., Florida           ROBERT T. MATSUI, California
NANCY L. JOHNSON, Connecticut        BARBARA B. KENNELLY, Connecticut
JIM BUNNING, Kentucky                WILLIAM J. COYNE, Pennsylvania
AMO HOUGHTON, New York               SANDER M. LEVIN, Michigan
WALLY HERGER, California             BENJAMIN L. CARDIN, Maryland
JIM McCRERY, Louisiana               JIM McDERMOTT, Washington
DAVE CAMP, Michigan                  GERALD D. KLECZKA, Wisconsin
JIM RAMSTAD, Minnesota               JOHN LEWIS, Georgia
JIM NUSSLE, Iowa                     RICHARD E. NEAL, Massachusetts
SAM JOHNSON, Texas                   MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
MAC COLLINS, Georgia                 JOHN S. TANNER, Tennessee
ROB PORTMAN, Ohio                    XAVIER BECERRA, California
PHILIP S. ENGLISH, Pennsylvania      KAREN L. THURMAN, Florida
JOHN ENSIGN, Nevada
JON CHRISTENSEN, Nebraska
WES WATKINS, Oklahoma
J.D. HAYWORTH, Arizona
JERRY WELLER, Illinois
KENNY HULSHOF, Missouri

                     A.L. Singleton, Chief of Staff

                  Janice Mays, Minority Chief Counsel

                                 ______

                         Subcommittee on Trade

                  PHILIP M. CRANE, Illinois, Chairman

BILL THOMAS, California              ROBERT T. MATSUI, California
E. CLAY SHAW, Jr., Florida           CHARLES B. RANGEL, New York
AMO HOUGHTON, New York               RICHARD E. NEAL, Massachusetts
DAVE CAMP, Michigan                  JIM McDERMOTT, Washington
JIM RAMSTAD, Minnesota               MICHAEL R. McNULTY, New York
JENNIFER DUNN, Washington            WILLIAM J. JEFFERSON, Louisiana
WALLY HERGER, California
JIM NUSSLE, Iowa


Pursuant to clause 2(e)(4) of Rule XI of the Rules of the House, public 
hearing records of the Committee on Ways and Means are also published 
in electronic form. The printed hearing record remains the official 
version. Because electronic submissions are used to prepare both 
printed and electronic versions of the hearing record, the process of 
converting between various electronic formats may introduce 
unintentional errors or omissions. Such occurrences are inherent in the 
current publication process and should diminish as the process is 
further refined.


                            C O N T E N T S

                               __________

                                                                   Page

Advisory of September 25, 1997, announcing the hearing...........     2

                               WITNESSES

Office of the U.S. Trade Representative, Hon. Charlene Barshefsky    31

                                 ______

Agriculture for Fast Track, Alan Tank............................   118
America Leads on Trade, Joseph Gorman............................    57
American Farm Bureau Federation, Bob Vice........................   111
American Federation of Labor and Congress of Industrial 
  Organizations, Richard C. Trumka, as presented by Thea Lee.....    82
Blumenauer, Hon. Earl, a Representative in Congress from the 
  State of Oregon................................................    26
California Farm Bureau, Bob Vice.................................   111
Cohen, Calman J., Emergency Committee for American Trade.........    85
Democratic Leadership Council, Edith R. Wilson...................    89
Destler, I.M., Institute for International Economics, and 
  University of Maryland.........................................   107
Donohue, Thomas J., U.S. Chamber of Commerce.....................    74
Dooley, Hon. Calvin M., a Representative in Congress from the 
  State of California............................................    23
Emergency Committee for American Trade, Calman J. Cohen..........    85
Gephardt, Hon. Richard A., a Representative in Congress from the 
  State of Missouri..............................................    10
Gorman, Joseph, TRW, Inc., and America Leads on Trade............    57
Institute for International Economics, I.M. Destler..............   107
Kolbe, Hon. Jim, a Representative in Congress from the State of 
  Arizona........................................................    17
Lee, Thea, American Federation of Labor and Congress of 
  Industrial Organizations, presenting statement of Richard C. 
  Trumka.........................................................    82
Meinert, James L., Snider Mold Co., and Society of the Plastics 
  Industry, Inc..................................................    93
Moran, Hon. James P., a Representative in Congress from the State 
  of Virginia....................................................    29
National Pork Producers Council, Alan Tank.......................   118
National Wildlife Federation, Steven J. Shimberg.................   122
Progressive Policy Institute, Edith R. Wilson....................    89
Shimberg, Steven J., National Wildlife Federation................   122
Snider Mold Co., James L. Meinert................................    93
Tank, Alan, National Pork Producers Council, and Agriculture for 
  Fast Track.....................................................   118
Trumka, Richard C., American Federation of Labor and Congress of 
  Industrial Organizations, as presented by Thea Lee.............    82
TRW, Inc., Joseph Gorman.........................................    57
U.S. Chamber of Commerce, Thomas J. Donohue......................    74
Vice, Bob, California Farm Bureau, and American Farm Bureau 
  Federation.....................................................   111
Visclosky, Hon. Peter J., a Representative in Congress from the 
  State of Indiana...............................................    21
Wilson, Edith R., Democratic Leadership Council, and Progressive 
  Policy Institute...............................................    89

                       SUBMISSIONS FOR THE RECORD

Beckman, Steve, International Union, United Automobile, Aerospace 
  and Agricultural Implement Workers of America-UAW, statement...   145
California Cling Peach Growers Advisory Board, statement.........   133
Cargill, Inc., statement.........................................   136
Crawford, Bob, State of Florida Department of Agriculture and 
  Consumer Services, Tallahassee, FL, statement..................   139
Dorgan, Hon. Byron L., a U.S. Senator from the State of North 
  Dakota, statement..............................................   140
Fire, Edward, International Union of Electronic, Electrical, 
  Salaried, Machine and Furniture Workers, AFL-CIO, statement....   143
Florida Department of Agriculture and Consumer Services, 
  Tallahassee, FL, Bob Crawford, statement.......................   139
International Dairy Foods Association, National Milk Producers 
  Federation, and U.S. Dairy Export Council, joint statement.....   142
International Union of Electronic, Electrical, Salaried, Machine 
  and Furniture Workers, AFL-CIO, Edward Fire, statement.........   143
International Union, United Automobile, Aerospace & Agricultural 
  Implement Workers of America-UAW, Steve Beckman, statement.....   145
McCanless, Bryan, National Business Association, Greenville, SC, 
  statement......................................................   158
National Association of Manufacturers, M. Dianne Sullivan, letter 
  and attachments................................................   148
National Business Association, Greenville, SC, Bryan McCanless, 
  statement......................................................   158
National Farmers Union, statement................................   160
National Milk Producers Federation, joint statement (see listing 
  under International Dairy Foods Association)...................   142
National Oilseed Processors Association, statement...............   164
Public Citizen, statement and attachment.........................   165
Quinn, Hon. Jack, a Representative in Congress from the State of 
  New York, statement............................................   174
Stewart and Stewart, Washington, DC, Terence P. Stewart, 
  statement......................................................   175
Sullivan, M. Dianne, National Association of Manufacturers, 
  letter and attachments.........................................   148
U.S. Dairy Export Council, joint statement (see listing under 
  International Dairy Foods Association).........................   142
Wine Institute, statement........................................   178


              IMPLEMENTATION OF FAST TRACK TRADE AUTHORITY

                              ----------                              


                      TUESDAY, SEPTEMBER 30, 1997

                  House of Representatives,
                       Committee on Ways and Means,
                                     Subcommittee on Trade,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:03 a.m., in 
room 1100, Longworth House Office Building, Hon. Philip M. 
Crane (Chairman of the Subcommittee) presiding.
    [The advisory announcing the hearing follows:]

ADVISORY

FROM THE 
COMMITTEE
 ON WAYS 
AND 
MEANS

                         SUBCOMMITTEE ON TRADE

                                                CONTACT: (202) 225-6649
FOR IMMEDIATE RELEASE

September 25, 1997

No. TR-17

                       Crane Announces Hearing on

              Implementation of Fast Track Trade Authority

    Congressman Philip M. Crane (R-IL), Chairman, Subcommittee on Trade 
of the Committee on Ways and Means, today announced that the 
Subcommittee will hold a hearing on the extension of fast track 
negotiating authority to the Administration for use in negotiating 
trade agreements, and on the report required under section 108 of the 
North American Free Trade Agreement (NAFTA) (P.L. 103-182). The hearing 
will take place on Tuesday, September 30, 1997, in the main Committee 
hearing room, 1100 Longworth House Office Building, beginning at 10:00 
a.m.
      
    Oral testimony at this hearing will be from invited witnesses only. 
These witnesses will include United States Trade Representative 
Charlene Barshefsky. Any individual or organization not scheduled for 
an oral appearance may submit a written statement for consideration by 
the Committee and for inclusion in the printed record of the hearing.
      

BACKGROUND:

      
    Certain trade agreements cannot enter into force as a matter of 
U.S. law unless implementing legislation approving the agreement and 
any changes to U.S. law is enacted into law. In order to implement a 
number of trade agreements, including most recently the Uruguay Round 
Agreements and NAFTA, Congress enacted certain ``fast track'' 
procedures.
      
    The purpose of the fast track approval process is to preserve the 
constitutional role and fulfill the legislative responsibility of 
Congress with respect to trade agreements. The process assures that 
Congressional views and recommendations with respect to provisions of 
the proposed agreement and possible changes to U.S. law are fully taken 
into account. At the same time, the process is designed to ensure 
certain and expeditious action on the results of the negotiations and 
on the implementing bill.
      
    Now expired with respect to any new trade agreements, the fast 
track provisions required the President, before entering into any trade 
agreement, to consult with Congress as to the nature of the agreement, 
how and to what extent the agreement will achieve applicable purposes, 
policies, and objectives, and all matters relating to agreement 
implementation. In addition, the President was required to give 
Congress at least 90 calendar days advance notice of his intent to 
enter into a trade agreement. After entering into the agreement, the 
President was required to submit to Congress the draft agreement, 
implementing legislation, and a statement of administrative action. 
Subsequently, the House committees of jurisdiction had 45 days to 
report the bill to the House, which was required to vote on the bill 
within 15 legislative days after being reported from the committees. 
Fifteen days were provided for Senate consideration (assuming the 
implementing bill was a revenue bill), and the Senate floor action was 
required within 15 additional days. Accordingly, the maximum period for 
Congressional consideration of an implementing bill from the date of 
introduction was 90 days. Amendments to the legislation were not 
permitted once the bill was formally introduced; the committee and 
floor actions consisted only of ``up or down'' votes on the bill as 
introduced. However, before formal introduction, the committees of 
jurisdiction would hold informal hearings and mark-ups in order to 
develop a draft implementing bill, together with the Administration 
before formal introduction.
      
    Because the fast track authority used for the Uruguay Round 
Agreements and the NAFTA has expired, the Committee is now considering 
the extension of additional fast track authority for future trade 
initiatives, including the Free Trade Agreement of the Americas, 
multilateral agreements under the auspices of the World Trade 
Organization, and possible further sectoral initiatives. Negotiations 
with Chile began on June 7, 1995, and have been suspended pending 
passage of fast track legislation. The President transmitted a proposal 
to the Congress on September 16, 1997, to renew fast track trade 
agreement authority.
      
    This hearing is the fourth in a series which began on March 18, 
1997, to consider major U.S. trade initiatives. In addition, during the 
104th Congress, the Subcommittee held two hearings on fast track 
negotiating authority: the first on May 11, 1995, and the other on May 
17, 1995. Also during the 104th Congress, the Committee on Ways and 
Means approved H.R. 2371, the Trade Agreements Authority Act of 1995. 
However, the Administration announced that it did not support H.R. 
2371, and it was not considered on the House Floor.
      
    In announcing the hearing, Chairman Crane stated: ``Because future 
trade agreements will offer essential opportunities to expand and 
ensure the success of U.S. businesses and workers in the international 
economy, I believe it is critical for Congress to move ahead with fast 
track legislation in the next few weeks. However, in order to achieve 
broad support in the House, fast track must be well defined so that its 
use is limited to those matters that are directly related to trade.''
      

FOCUS OF THE HEARING:

      
    The focus of the hearing is to discuss the extension of fast track 
authority to negotiate and implement trade agreements, including the 
elements that should be included within fast track rules, the scope of 
the negotiating objectives for trade agreements, and the nature and 
extent of the consultation requirements between the Administration and 
Congress. In addition, the hearing will focus on the President's report 
under section 108 of P.L. 103-182, which requires the President to 
identify those countries with which the United States should seek to 
negotiate free trade agreements.
      

DETAILS FOR SUBMISSION OF WRITTEN COMMENTS:

      
    Any person or organization wishing to submit a written statement 
for the printed record of the hearing should submit at least six (6) 
single-space legal-size copies of their statement, along with an IBM 
compatible 3.5-inch diskette in ASCII DOS Text or WordPerfect 5.1 
format only, with their name, address, and hearing date noted on a 
label, by close of business, Tuesday, October 7, 1997, to A.L. 
Singleton, Chief of Staff, Committee on Ways and Means, U.S. House of 
Representatives, 1102 Longworth House Office Building, Washington, D.C. 
20515. If those filing written statements wish to have their statements 
distributed to the press and interested public at the hearing, they may 
deliver 200 additional copies for this purpose to the Subcommittee on 
Trade office, room 1104 Longworth House Office Building, at least one 
hour before the hearing begins.
      

FORMATTING REQUIREMENTS:

      
    Each statement presented for printing to the Committee by a 
witness, any written statement or exhibit submitted for the printed 
record or any written comments in response to a request for written 
comments must conform to the guidelines listed below. Any statement or 
exhibit not in compliance with these guidelines will not be printed, 
but will be maintained in the Committee files for review and use by the 
Committee.
      
    1. All statements and any accompanying exhibits for printing must 
be typed in single space on legal-size paper and may not exceed a total 
of 10 pages including attachments. At the same time written statements 
are submitted to the Committee, witnesses are now requested to submit 
their statements on an IBM compatible 3.5-inch diskette in ASCII DOS 
Text or WordPerfect 5.1 format. Witnesses are advised that the 
Committee will rely on electronic submissions for printing the official 
hearing record.
      
    2. Copies of whole documents submitted as exhibit material will not 
be accepted for printing. Instead, exhibit material should be 
referenced and quoted or paraphrased. All exhibit material not meeting 
these specifications will be maintained in the Committee files for 
review and use by the Committee.
      
    3. A witness appearing at a public hearing, or submitting a 
statement for the record of a public hearing, or submitting written 
comments in response to a published request for comments by the 
Committee, must include on his statement or submission a list of all 
clients, persons, or organizations on whose behalf the witness appears.
      
    4. A supplemental sheet must accompany each statement listing the 
name, full address, a telephone number where the witness or the 
designated representative may be reached and a topical outline or 
summary of the comments and recommendations in the full statement. This 
supplemental sheet will not be included in the printed record.
      
    The above restrictions and limitations apply only to material being 
submitted for printing. Statements and exhibits or supplementary 
material submitted solely for distribution to the Members, the press 
and the public during the course of a public hearing may be submitted 
in other forms.
      

    Note: All Committee advisories and news releases are available on 
the World Wide Web at `HTTP://WWW.HOUSE.GOV/WAYS__MEANS/'.
      

    The Committee seeks to make its facilities accessible to persons 
with disabilities. If you are in need of special accommodations, please 
call 202-225-1721 or 202-226-3411 TTD/TTY in advance of the event (four 
business days notice is requested). Questions with regard to special 
accommodation needs in general (including availability of Committee 
materials in alternative formats) may be directed to the Committee as 
noted above.
      

                                


    Chairman Crane. The Subcommittee will come to order.
    Good morning. This is a meeting of the Ways and Means 
Subcommittee on Trade to consider the extension of fast track 
trade negotiating authority for the President. Because future 
trade agreements will offer essential opportunities to expand 
and ensure the success of U.S. businesses and workers in the 
marketplace of the 21st century, we must do all we can to reach 
a prompt agreement on the specifics of fast track legislation. 
I hope this hearing will spell out clearly the direct 
connection that exists between increasing international trade 
and creating jobs and economic activity at home.
    First, it should be noted that one-third of the economic 
growth that has occurred in the United States since 1994 is 
directly attributable to expanding imports and exports. Second, 
I believe many of the witnesses will agree with me that this 
should be a good time for Congress to vote on expanding trade. 
The economy is strong and unemployment is at its lowest level 
in many years, and mercifully, we are not yet into another 
election cycle.
    The administration recently transmitted its fast track 
legislative proposal to Congress. I want to acknowledge this 
effort as a good start which has allowed us to move forward in 
crafting a bipartisan bill.
    Since fast track is an exception to normal legislative 
procedures, the legislation to grant fast track authority to 
the President must be limited and well defined in order to 
attract broad support in the House. Specifically, we should 
define the use of fast track to assure only those matters that 
are directly related to trade may be included in an 
implementing bill qualifying for fast track procedures. That is 
not to say the President cannot use his executive authority to 
negotiate other agreements. However, the President should use 
the regular legislative procedures to implement those 
agreements.
    I sincerely believe the administration shares this view. 
Accordingly, I am hopeful we can reach a bipartisan consensus 
quickly on a fast track bill which mirrors the understanding we 
have with respect to what matters are appropriate for 
consideration under fast track.
    We must look at the four corners of the bill to make sure 
there are no loopholes that would permit implementation of 
extraneous provisions under fast track procedures. A fast track 
implementing bill should not be a vehicle to pass special 
interest legislation, matters that are not directly related to 
trade or other matters, even trade matters, that are not part 
of the agreement being implemented. In addition, we must assure 
the fast track procedures provide adequate opportunity for 
meaningful consultations with Congress throughout the 
negotiation process.
    Because expanding exports is key to creating new, high-
paying jobs, our future will not be secure if the President 
does not have the tools he needs to open foreign markets and to 
shape trade agreements in our favor. Put simply, this 
legislation is about strengthening our position in the world. 
Success must not be measured in partisan terms.
    I look forward to today's hearing, which will give Members 
the opportunity to raise their concerns, and for the 
administration and the private sector to discuss their views on 
the essential elements of fast track legislation.
    Today, also, we will discuss the administration's report 
submitted to Congress under section 108 of the NAFTA, North 
American Free Trade Agreement, implementing bill concerning 
recommendations for future free trade area negotiations. I note 
that this report was due on July 1, but it was not submitted to 
us until September 25. I am disappointed there was such a 
delay, particularly at such a key time in the debate on fast 
track. It is important for us to have a strong understanding 
with the administration on the importance of communication and 
consultation with Congress concerning these trade policies if 
we are to build the trust that is necessary for the fast track 
process to work.
    As I read the report, the President's list of countries 
with whom we should negotiate free trade agreements is limited 
to Chile at the present time. I hope we can expand our sights 
by seeking talks with additional countries that are well 
qualified, including those in Africa and Asia, as well as 
Australia, New Zealand, and Latin America.
    I would now like to recognize the Ranking Member, Mr. 
Matsui, for any statement he would like to make.
    Mr. Matsui. Thank you very much, Mr. Chairman, for holding 
these hearings. I have a written statement which I will submit 
for the record. I would only like to point out a few things.
    One, I think the fast track proposal, as many of the 
Members who have been working on this know, is in deep trouble 
at this particular time. I think the business community doesn't 
understand the significance of fast track, because it is a 
procedural issue. Unlike NAFTA or unlike MFN, most-favored-
nation, trade for China, in which immediate, tangible results 
occur once the legislation becomes law, fast track is 
procedural; it gives the President authority to act, and as a 
result of that, in some ways, before you actually get some 
results out of it--I think as a result of that--you are not 
seeing the kind of effort that the private sector should put 
into this matter.
    I spoke with a chief executive officer at one of the 
Business Roundtable companies, and I mentioned to them that 
fast track may not become law before the end of this year. He 
was astonished; in fact he said, I can't even imagine the 
United States not having fast track authority. Unfortunately, 
only if in fact we don't get fast track, I think, will the 
private sector come to realize what the dangers of not having 
it are.
    Second, I would like to just make this observation. There 
is a lot of discussion now over labor and the environment as it 
relates to trade or as it relates directly to trade language 
that we have been debating over the last 4 years or so. In my 
opinion, a lot of this discussion is irrelevant, it is 
ideological, it has very little meaning at all. As the Chairman 
says, the only major bilateral agreement we might enter into 
under fast track would be with Chile, 13 million people. It 
would have absolutely no impact on the U.S. economy, no matter 
what we did with the Chileans in terms of trade issues.
    The real issue of the global trade agreements that this 
administration and USTR, U.S. Trade Representative, need to 
enter into, their agreements under the WTO, World Trade 
Organization, they deal with government procurement contracts, 
they deal with intellectual property, they deal with financial 
services, and they deal with the agriculture. You don't need 
labor and environmental discussions on those bases, and so this 
discussion is academic. It is great for scholars, but the 
reality is that the President needs this authority; and it is 
my hope that we can get moving on this after today's hearing 
and mark up a piece of legislation and somehow get it to the 
President so it becomes law.
    Thank you, Mr. Chairman.
    [The opening statement follows:]

Opening Statement of Hon. Robert T. Matsui, a Representative in 
Congress from the State of California

    Thank you, Mr. Chairman, for holding today's hearing on the 
extension of fast track trade negotiating authority. Such 
authority is essential for any President, whether Democrat or 
Republican, to be able to negotiate and implement trade 
agreements successfully. Indeed, since 1974 Presidents from 
both Parties have used previous grants of fast track authority 
to implement five major trade agreements on a bipartisan basis.
    Several unsuccessful efforts have been made since the 
latest grant of fast track authority expired in 1994 to renew 
such authority. These efforts have faltered in part because of 
a disagreement over how future fast track authority should be 
structured. There are some who argue that such authority should 
be more constrained than previous grants of authority. Others 
believe that such authority should be sufficiently flexible to 
enable the President and the Congress to continue to address 
legitimate issues that may arise during the course of future 
trade negotiations. Still others argue that the President 
should be given no new authority and that trade agreements 
should be considered by the Congress under normal legislative 
procedures.
    In a good faith effort to reconcile these conflicting 
views, the President, after many months of consultation by the 
Administration with the Congress and the private sector, 
transmitted a proposal to the Congress on September 16. This 
proposal has been criticized from all sides. Some believe it 
gives the President too much flexibility and others believe it 
gives him too little flexibility. The nature of the response to 
the proposal suggests to me that the President and the 
Administration have done a good job in crafting a balanced and 
well-reasoned proposal that takes into account the various 
concerns that have been raised.
    One thing is certain--until such time as we resolve our 
disagreements and pass new authority, it will be virtually 
impossible for the President to conduct a constructive trade 
policy agenda with the rest of the world. That would not only 
be unfortunate, it would be contrary to the economic and 
foreign policy interests of this country.
    The country and the world will be carefully watching how 
the Congressional debate on fast track proceeds in the coming 
weeks. It is my hope that Members and the Administration will 
approach this subject with flexible attitudes and creative 
minds. It is also my hope that a proposal is developed than can 
gain bipartisan support. It will take no less if we are going 
to be able to craft legislation for new fast track authority 
that can be enacted into law.
    I welcome today's witnesses and look forward to their 
contribution to this debate.
    Thank you, Mr. Chairman.
      

                                


    Chairman Crane. Thank you very much, and I would now like 
to proceed----
    Mr. Rangel. Mr. Chairman.
    Chairman Crane. Oh, yes, Mr. Rangel.
    Mr. Rangel. I don't think that this thing is so academic. I 
think that we, as a Congress, owe it to the American people to 
share with them exactly what we are doing and what authority we 
are giving the President. Almost every district is unaware as 
to really what fast track means. The American people really 
don't know what we are talking about. And I think we agree that 
America should maintain its leadership, the Congress should 
support the President, we should expand our ability to trade 
with other nations. I don't think it is enough to say that we 
expect to get high tech, high-paying jobs, just avoiding the 
fact that we are going to have to pay for that; and the 
American people should know that we are going to lose some jobs 
in order to do it, and I assume that is what progress is all 
about.
    But we can't just avoid this and say it is academic, we 
can't avoid it and say it is not related, we can't avoid it and 
say it has nothing to do with the trade agreement. For some of 
us, trade means just one thing, jobs and a better quality of 
life. And if there is going to be an adverse effect on jobs for 
some people merely because they don't have the skills, well, we 
should be strong enough to do something about it; and if we are 
going to concentrate on high tech, as a country, we should make 
certain that all of our citizens are prepared to make this 
transition together, but it is not going to be just an engine 
as to which companies can find a better way of life for their 
firms and their profit and loss sheets in a foreign country.
    So I have all the trust in the world in the President. If 
these things aren't relevant, we can get language in there, and 
the President will have no problem in implementing it. But no 
matter what comes out, I don't want us just to pass over the 
fact that high-paying jobs, high-tech jobs, and increased jobs 
for America--you are not talking about all Americans; you know 
it and I know it. And so we might as well see what the wins and 
losses are, because ultimately we are not going to stop 
progress, but we have to find out what pain is going to be 
caused, so that we can ease it. And I hope that the President, 
when he talks about the great rewards that we are going to 
receive, at least acknowledges that not everybody is going to 
participate in these great rewards of expanded trade.
    Mr. Matsui. Will the Chairman yield to me?
    Chairman Crane. Certainly.
    Mr. Matsui. In view of the fact the Ranking Member referred 
to my observations, I think it is only appropriate I have an 
opportunity to respond.
    First of all, I would not make a reference to academic and 
scholarly words with reference to what the gentleman has just 
mentioned. I think there is no question that when it comes to 
the issue of displacement, we of the government--local, State, 
and Federal Government--have a responsibility, and whether that 
is a job training program, a consolidation of the various 
programs we have in America today, it remains to be seen, but I 
do agree with that.
    I would also point out to say that most of the job 
displacement is because of technology, not because of trade. 
The reason you don't have telephone operators anymore isn't 
because we are trading with China or Mexico; it is because 
technology has changed telecommunications, so you don't have 
telephone operators anymore. So most of these changes are the 
result of technology, but we do need to do something about 
that.
    What I was referring to is the fact that we are talking 
about labor standards, labor rights, and environmental issues, 
and the only country that you might want to discuss that with 
is Chile because that is the only country we are going to have 
a trade agreement with over the next 3 years; the rest are 
going to be global, sectorial trade agreements which really do 
not need language in terms of environment, in terms of labor 
standards, in terms of labor rights. So the gentleman and I are 
not disagreeing, but the academic aspect of this is only with 
respect to these global issues.
    Mr. Rangel. Thank you.
    [The opening statement of Hon. Jim Ramstad follows:]

Opening Statement of Hon. Jim Ramstad, a Representative in Congress 
from the State of Minnesota




      

                                


    Chairman Crane. Well, thank you very much, gentlemen. And I 
would now like to proceed with our colleagues, and before we 
get underway here, if you have any written statements that are 
rather lengthy, they will be made a part of the permanent 
record. So you can fire at will, but we would like to proceed 
with our colleagues, beginning with Mr. Gephardt from Missouri. 
He will be followed by Mr. Kolbe from Arizona, Mr. Visclosky 
from Indiana, Mr. Dooley from California, Mr. Blumenauer from 
Oregon, and Mr. Moran.
    And we will now proceed with House Minority Leader 
Gephardt.

  STATEMENT OF HON. RICHARD A. GEPHARDT, A REPRESENTATIVE IN 
CONGRESS FROM THE STATE OF MISSOURI; AND MINORITY LEADER, U.S. 
                    HOUSE OF REPRESENTATIVES

    Mr. Gephardt. Thank you, Mr. Chairman. It is always good to 
be back at the Ways and Means Committee. I appreciate this 
opportunity, and I would ask that my prepared testimony be made 
a part of the record.
    Chairman Crane. Without objection.
    Mr. Gephardt. I would first say, I would hope we would deal 
with this complex issue with a procedure that allows full and 
free discussion and debate of all of its ramifications. I don't 
think we should fast track fast track, I think we should put it 
on a deliberate course so that we can understand what we are 
doing.
    First, let me say that I believe in giving the President 
fast track authority; I think it is important that he have that 
authority, but in giving that broad authority up, I think the 
Congress should be very clear in the legislation about what we 
expect and want there to be in the agreements that come from 
it.
    And I would say that the President's recent request for 
fast track is a step backward, in my view, from what we had in 
1991 with President Bush. As the CRS, Congressional Research 
Service, stated, the language in the bill contrasts with the 
previous fast track authorization which provided for fast track 
consideration and provisions that are necessary and appropriate 
in the President's discretion to negotiate trade agreements 
that include areas that are not specified in the fast track 
authorization. The purpose of the proposed changes was to limit 
the President's discretion to negotiate trade agreements that 
include areas that are not specified in the fast track 
authorization.
    In this case, President Clinton's request does not include 
an objective requiring that labor and environmental provisions 
be included in the core of future trade agreements with the 
ability to enforce these provisions like any other trade issue. 
So I would hope that we could add that and some other language 
that Charles Rangel, and I, and others are working on as a 
floor amendment, that would improve dramatically on what this 
fast track authorization would take into account.
    Again, let me remind Members that in 1991, I and a lot of 
other Members negotiated with the Bush administration. I voted 
for fast track in 1991, based on putting labor and 
environmental provisions into the fast track authorization.
    The question is no longer whether we should have free trade 
agreements; it is a question of, on what terms and who benefits 
from those agreements. A recent United Nations report said, as 
trade and foreign investment have expanded, the developing 
world has seen a widening gap between winners and losers. The 
greatest benefits of globalization have been garnered by a 
fortunate few.
    It is worth noting that our friends in the Republican Party 
and in the business community legitimately and rightly ask that 
intellectual property and capital be protected, specifically in 
free trade agreements like NAFTA, with trade sanctions in order 
to enforce the laws of Canada, Mexico and the United States in 
this area. What we are really asking for is equal and similar 
treatment for workers' rights, environment, drugs, food safety, 
transition, and financial flows. These are all as relevant to 
the trading relationship as is intellectual property protection 
and capital protection.
    In my view, our trade policy is rooted in the past. Many of 
us here on both the Republican and the Democratic side, in the 
eighties brought the issue of access into trade negotiations. 
We had the 301 and super 301, which are now well accepted by 
thinkers on both sides of the aisle. And what we are really 
saying now is that we want labor, environment, worker rights, 
food safety, these other issues to be integrated into trade 
negotiations so that we can get the enforcement of national 
laws.
    A lot in the press have said that we want to have 
international standards imposed, that we want American 
standards imposed on other countries for labor and environment. 
Not so. We are simply asking, as we have in the case of 
intellectual property, that national laws be enforced and we 
have trade sanctions in order to push for progress in that 
area.
    Finally, let me say, if you go to the border today and 
review the progress with NAFTA, with side agreements that did 
not have the force of trade sanctions, you can see that we are 
not making proper progress. People are being paid lower wages 
than they were in 1993. The environment has not been cleaned 
up; in fact, it has been much further degraded as the number of 
workers at the border has increased, which in one sense is 
good, but in the sense of having adequate infrastructure to 
support this activity is really wrong.
    It is time for America to improve its trade policy; it is 
time for us to insert in these negotiations the proper topics.
    And finally, I would say, if we are going to give this 
power to the President--and I am very much for doing that--it 
must be done with a clear exposition of what we expect to be 
accomplished in these trade negotiations.
    I thank the Subcommittee for allowing me to be here. I will 
submit, of course, my testimony in full, and I look forward to 
this debate as we go forward.
    [The prepared statement follows:]

Statement of Hon. Richard A. Gephardt, a Representative in Congress 
from the State of Missouri; and Minority Leader, U.S. House of 
Representatives

    Mr. Chairman, Members of the Committee, I appreciate your 
willingness to allow me to testify to you today on the 
important matter of fast track trade negotiating authority. 
It's always good to return to the Committee on which I served 
for 12 years.
    The issue before this Subcommittee and, indeed, before this 
Congress is much more than a question of some esoteric 
Congressional procedure. It is a question about national 
policy. It is a question of what our nation's trade policy is 
and how it will be conducted in the future.
    Let us never forget that Article I, Section 8 of our 
Constitution vests authority over international commerce in the 
legislative branch of our government. As such, we have a 
tremendous responsibility: Before delegating that authority to 
the Administration, we must carefully articulate what Congress' 
goals and objectives are. We must not abdicate our 
responsibility to our constituents.
    The President doesn't deserve fast track authority--he's 
got to earn it.
    I have supported fast track authority in the past. I worked 
closely with President Bush and his Administration in 1991 to 
grant him this authority. I was prepared to support President 
Clinton's request as well.
    The only compromise forged by the Administration's proposal 
is a compromise of our future. It's a policy that is rooted in 
the past, that will simply continue the status quo. The 
question is can we build a bridge to the 21st Century rather 
than another tunnel to the past.
    President Clinton's proposal is unacceptable. Rather than 
improving our nation's trade policy and posture, it would 
severely limit what can be accomplished. That's not a question 
of trust--it's a matter of law. The language in the President's 
proposal limits his ability to deal with the full breadth of 
trade issues that are necessary to achieving the progress we 
want for our citizens and those in other countries. The issues 
I am talking about, which are at the center of today's debate, 
are the questions of workers rights and the environment.
    These issues are trade issues. As such, they must not be 
relegated to second-class status, they must be integral 
components of any trade agreement and they must be enforced 
just like any other trade issue.
    In some ways, I have to say that I and others who have 
argued the centrality of these issues have accomplished a great 
deal in moving these issues to center stage. The traditional 
issues--tariffs, investments and the like--all are assumed to 
be vital to the success of any trade agreement.
    Today's national trade debate is about larger questions: 
how do we deal with the acceleration of the globalization? How 
do we ensure that trade is truly a force for progress for all 
concerned, rather than simply a validation of the status quo? 
How do we continue to lead the world rather than simply become 
another player on the stage?
    In 1985 I joined with then Senator Bentsen and former 
Chairman Rostenkowski in offering legislation to focus 
attention on the critical issue of market access--later known 
as the ``Gephardt Amendment.'' This legislation was designed to 
pry open foreign markets, to eliminate foreign unfair trade 
barriers that restricted exports of competitive U.S. goods and 
services.
    This legislation was roundly criticized by my Republican 
colleagues, the Reagan Administration and much of the press. 
These people saw my approach as an affront to the theory of 
free trade. They believed that we should respond to foreign 
protectionist policies simply with the quality of our arguments 
and rely on the beneficence of our trading partners.
    They completely misunderstood what I was trying achieve. 
The bottom line is that in trade policy, when we stand up, our 
trading partners open up. By leveraging access to our market--
exactly what our trading partners were doing to our farmers, 
workers, and businesses--we could get other countries to reduce 
their barriers. For, as we all know, without pressure, there is 
simply no reason for these countries to respond.
    My amendment became the basis for Super 301 which was 
included in the 1988 Trade Act. Today, support for leveraging 
market access is broadly accepted by Democrats and Republicans 
and by many of those in the business community who opposed our 
efforts at the time. Think about this: when China refused to 
respect our intellectual property, our Administration--at the 
urging of our business community--threatened to raise our 
tariffs. Our industry was urging the threat of retaliation as a 
way of getting action.
    I supported their efforts. Not to impose tariffs, but to 
get results. That's what we're all after.
    Today's debate is about a larger issue. Its about the terms 
of trade and who benefits.
    And, let me emphasize, the debate involves many questions. 
Some argue that the trade debate is being weighed down by all 
of these issues. They argue that, over time, these issues can 
be resolved.
    The time to address these issues is now. The ability to 
achieve progress, the ability to widen and deepen the benefits 
of trade, is dependent on our ability to leverage our trade 
policy and trade benefits. No one in the business community 
would argue that we should leave progress on intellectual 
property to some later time and rely on the tender 
sensibilities of our trading partners.
    What we've been doing, our current trade policy, isn't good 
enough.
    So far, the benefits of more open trade have not trickled 
down to middle class citizens and workers struggling to get 
into the middle class. The profits of trade will not simply 
``trickle-down'' to everyone. The experience with NAFTA bears 
this out. The income gap in Mexico is increasing, not 
decreasing. A United Nations report describes the same 
phenomenon on a wider stage: ``As trade and foreign investment 
have expanded, the developing world has seen a widening gap 
between winners and losers...The greatest benefits of 
globalization have been garnered by a fortunate few.''
    In part the fast track debate is a referendum on NAFTA. 
Fast track advocates say that this is unfair--indeed, one 
senior Administration official said that ``you're never going 
to hear the word NAFTA'' during the debate. That's like a used 
car salesman saying that its unfair to ask to look under the 
hood or to test drive a car.
    Well, unfortunately, no matter how much they object, it is 
fair to talk about NAFTA. We've taken it for a test drive. And, 
it's a lemon.
    Recently I visited Juarez, Mexico to see--firsthand--
whether NAFTA has helped to make a difference in people's 
lives.
    It has. For the worse. I visited families living in the 
packing boxes of the very products they produce. Ramshackle 
houses of cardboard, scrap wood, bottle caps--whatever they 
could find--standing against a backdrop of sparkling factories 
built by some of America's finest corporations.
    I met workers forced into the workforce as little more than 
children to help their families subsist. When I asked one young 
woman her name, she asked me which name I wanted: her real name 
or the one that she uses on falsified work papers that allowed 
her to work at age 14. Robbed of her childhood, she hopes for 
an education and a future.
    I visited a kindergarten where bright-faced young children 
hid in their mothers skirts. They often come to school hungry 
or with stomach maladies--from the water that even the local 
population is scared to drink.
    I saw a river of human and industrial waste that was 
overpowering in its magnitude and stench. Juarez, a city of 1.2 
million has no wastewater treatment. Each day, the environment 
dies another death.
    NAFTA was promoted as helping to right these wrongs. To 
promote change. Just the contrary has happened. NAFTA validated 
the status quo.
    Maquiladoras--the plants set up in Mexico with the primary 
purpose of exporting their products to the U.S.--were supposed 
to cease to exist once NAFTA passed. The proponents of NAFTA 
argued this as did former President Salinas in a direct 
conversation with me.
    Yet today there are more Maquiladoras--and almost double 
the number of workers in these plants than when NAFTA began. 
And these workers are making 25% less than they did at the 
time. The average workers I met take home about $30 a week. 
This is not a living wage virtually anywhere in the world.
    Last year we saw our trade deficit with our NAFTA 
partners--Canada and Mexico--reach more than $35 billion. Half 
of that was with Mexico. Let's remember that we had a trade 
surplus when NAFTA started.
    Again, we're told that this analysis is unfair. But for the 
peso crisis, everything would be fine. Here, they're wrong. 
These trends were in place prior to NAFTA. And, as I and others 
argued, the peso crisis was looming on the horizon during the 
negotiations. Financial issues should have been dealt with just 
like drugs and other issues that were either inadequately 
addressed or swept under the rug.
    But the question today is how do we learn from our 
mistakes? How do we reach new agreements that improve upon 
NAFTA not just expand it?
    The President's request only continues the status quo.
    We can, and must, do better. We've figured out the supply 
side of trade. And, just like Reaganomics, a trickle-down trade 
policy won't work. We've got to figure out the demand side of 
trade as well.
    Henry Ford knew that unless he paid his workers a decent 
wage, they couldn't afford the products they were producing. We 
need to take this lesson and apply it to our trade policy.
    During my trip last week to Juarez, workers laughed at the 
question of whether their unions would help them. Unions, if 
they exist, are sham organizations--like the company unions 
that once existed in this country. Our companies who set up 
shop there are given a sham union contract at the same time--a 
union contract that they can show the workers who complain 
about unsafe working conditions or inadequate pay.
    A central component of our trade policy must be the 
enforcement of workers rights. In most cases I'm talking about 
the enforcement of the laws that a country has on its books. In 
Mexico, for instance, the law is quite good--it's just rarely 
enforced. And the failure to enforce workers rights should be 
treated just like the violation of our intellectual property 
rights. Workers rights is a trade issue as well.
    And I'm talking about the entire body of a country's laws 
and commitments: Constitutional, statutory, regulatory, 
treaties. We should know that the rule of law will be followed 
and that a country will live by its word.
    It's the right thing to do. It's also in our deep self 
interest. If worker pay rises they can afford to buy their 
products and ours. And, as a study done for the Department of 
Labor documented earlier this year, low pay in Mexico is being 
used as a tool to dampen our wages and income. More and more of 
our companies are using the threat of going to Mexico or 
elsewhere to keep wage demands down.
    The enforcement of environmental laws--and the fight for 
environmental protection--must be a central component of our 
trade policy as well. Environmental degradation must not be the 
comparative advantage of the 1990s. We've got to protect the 
world's environment and the health and safety of people all 
around the globe. And, to put it in terms for those who only 
look to the bottom line, lax environmental laws and enforcement 
are an enticement to those firms looking to cut their costs. We 
must not allow our companies--or those from any other country--
to engage in a shopping expedition to locate their facilities 
in places with the lowest pay and environmental quality. We 
must be a force for progress or we will import the lowest 
standards that exist elsewhere.
    We also need a trade debate that's honest with the American 
people. Food safety is an issue of health, not protectionism. 
Our people deserve to know that their food supply is safe. We 
must not risk another incident like the tainted strawberries 
that reached schoolchildren in Michigan last year.
    The Administration this week is rushing out a proposal to 
address this issue. Why is it that we have to wait for a 
political problem to arise with fast track for a problem 
affecting the American people to be addressed?
    We also need to recognize that, as we open our borders, the 
threat of increased drug trade must be addressed. Now, more 
than 70% of the drugs coming into the U.S. come through Mexico. 
As we've opened our borders, we've failed to provide the 
resources to examine the products coming in. As a Customs 
Inspector at the border told me, ``we weren't prepared for 
NAFTA.''
    I've argued for some time that as we reach new trade 
agreements with drug producing and transit countries that we 
need to put drug interdiction on the agenda as well.
    And, we learned last week, the Customs Service is going to 
apply more resources to border inspections. But, they're going 
to examine exports, not imports. Our government is worried 
about whether our export statistics are correct. With limited 
resources, we should be putting money into examining imports--
imports of drugs, unsafe food, pirated products.
    We risk exporting our standard of living and importing the 
standard of living of other countries.
    There are a host of other issues that must be addressed--
not to weigh the agenda down, but to lift our people up.
    We must address financial flows in trade negotiations as 
well. Prior to the completion of negotiations on NAFTA, I and 
other members raised concerns about Mexico's currency policies. 
It was clear to us that a major peso devaluation was just 
around the corner.
    Our pleas fell on deaf ears. And we all know that currency 
instability has increased as the world's financial markets have 
integrated. Japan and other countries had to rescue the Thai 
baht earlier this year. Latin American currencies and markets 
were put at risk, as were those of many other countries. Rudy 
Dornbusch, earlier this year, argued that the potential for 
another Mexican peso devaluation existed.
    We must not expose the American taxpayer to another 
possible bailout.
    As we further integrate the U.S. economy into the world 
trading system, we also must address the transitional costs. 
Many Americans see themselves as victims of our trade policy, 
rather than its beneficiaries. We've got to make everyone a 
winner.
    It's the right thing to do. And it will build support for 
an internationalist, activist approach to the world economy.
    When the European Union integrated Spain, Portugal, and 
Greece into the EU, it understood that it had to deal with the 
structural adjustment problems with integration. They developed 
a holistic view to trade. Our current policy, on the other 
hand, is simply piecemeal.
    And, we've seen what the impact of the failure to 
adequately address this important issue is: public support for 
fast track has declined. That's because they wonder whether 
they'll be the next victims.
    And we've seen a number of important groups 
disproportionately affected by the current policies. Low-wage 
workers, minorities, minority women. A Latino report card was 
issued earlier this Summer on the impact of NAFTA and gave it a 
D-. In my book, that's a failing grade.
    Again, transition assistance can and must be dealt with. 
Not as an afterthought or as the political grease to gain a 
couple of extra votes. It must be integral to our efforts.
    Trade Adjustment Assistance is part of the answer. But it 
needs to be made more effective. It needs dramatically higher 
funding levels. We also need to look to the European model that 
provides structural adjustment for communities, for regions. We 
must to provide assistance to companies that need to engage in 
new lines of business because of the pressures of international 
competition.
    Rather than protect against change, we need to prepare for 
it.
    We also need to expand the model offered by Congressman 
Torres and others, embodied in the North American Development 
Bank and the Border Environmental Cooperation Commission. 
Congressman Torres provided the vision for addressing many of 
the problems plaguing our border with Mexico--problems that he 
and I reviewed on our recent trip to Juarez.
    Although Congressman Torres and I voted differently on the 
NAFTA, I respected his decision. I knew that he was committed 
to trying to improve the conditions of the people along the 
border and, indeed, all our peoples. His vision was clear, the 
implementation has been myopic, shortsighted. Only a handful of 
projects have actually been funded by the NADBank. Sure, we'll 
probably see a flood of projects funded in the next couple of 
weeks as the vote approaches. But, the people expect more than 
politics. They want someone to care.
    It's important to point out that many of these issues 
aren't new. They've been raised before. And, commitments were 
given by this and previous Administrations as to how these 
problems would be dealt with. The NADBank hasn't been 
implemented properly. The Wine Equity Act has basically been 
gathering dust on the shelf. Transition assistance hasn't 
seriously been addressed. Worker rights and environmental 
issues have been swept under the rug. Chile continues to ban 
U.S. wheat from entering its market.
    The list goes on and on. Before Members and the public 
accept new commitments, the old ones must be fulfilled.
    And, we need to carefully outline our goals and objectives 
for each trade agreement. What is in industry's best interests? 
How will agriculture be impacted--citrus, tomatoes, wheat, 
other products. What will be the impact on our labor markets?
    Last year, I asked the International Trade Commission to 
conduct a study--just a study--of what the issues are involved 
in the potential for Chinese accession to the World Trade 
Organization. The ITC rejected my request.
    I then requested that Ambassador Barshefsky use her legal 
authority to request just such a study. I believe that if we're 
going to negotiate trade deals, we should have an idea of what 
the impact could be.
    To date--almost a year later, I'm still waiting on a 
response. I've been told, never directly, that my questions 
were too broad, that the issues were too sensitive.
    Well, at the end of next month, Chinese President Zemin 
will be here to meet with President Clinton. On the agenda will 
be the issue of China's accession to the WTO. Many want the two 
Presidents to announce a deadline for action.
    Where's the deadline for studying what our national 
interest is? Is success the number of agreements we reach, or 
the quality of those agreements?
    These issues, these questions are complex ones. They won't 
be fully addressed at today's hearing and they won't be 
addressed if we try to fast track fast track.
    The American people know that we're in a world economy. 
They want us to reach new trade agreements. But, they want them 
to be the right kind of trade agreements.
    They know that the issues are complex and they trust their 
elected public representatives to carefully examine what the 
issues are, what our opportunities are, and deal with them 
honestly and as best we can.
    I don't share the fear that many have that the world will 
pass us by. I'm concerned about damage that will be done if we 
do this the wrong way. The U.S. is the most open economy in the 
world--and it's the best performing. Every other country wants 
to sell its products here. We don't have to rush to meet some 
arbitrary deadline.
    We need to fully examine how the authority is to be used--
that's Congress' role under the Constitution. The President's 
fast track approach would short circuit Congress' review of 
negotiations with Chile as if it was too small a country to be 
concerned with. The Multilateral Agreement on Investment would 
receive fast track under the President's bill--has Congress 
really taken a look at it?
    And, let's understand that as the Administration has touted 
the more than 200 separate trade agreements that have been 
signed, only 2 were reached with the benefit of fast track 
authority. The Uruguay Round began without fast track 
authority.
    Many have convinced themselves and our trading partners 
that fast track is the key. I want the President to have fast 
track authority. But, more important, I want the American 
people to have a trade policy that works for them--all of them.
    Mr. Chairman, Members of the Subcommittee, you have an 
important task ahead of you--outlining the future of U.S. trade 
policy. That's Congress' role under the Constitution. I urge 
you to carefully examine this important issue and to do what is 
right.
    Thank you.
      

                                


    Chairman Crane. Next, Mr. Kolbe from Arizona.

STATEMENT OF HON. JIM KOLBE, A REPRESENTATIVE IN CONGRESS FROM 
                      THE STATE OF ARIZONA

    Mr. Kolbe. Thank you very much, Mr. Chairman. I was pleased 
to hear my colleague and distinguished Minority Leader say that 
he favored fast track. Maybe we could vote and get this over 
with real fast here. But I do appreciate what he had to say 
here.
    And I want to commend you, Mr. Chairman, and the Ranking 
Member, Mr. Matsui, for the leadership both of you have shown 
on this very important piece of legislation.
    Earlier this month, President Clinton asked Congress to 
renew his international trade negotiating authority, so-called 
fast track, which expired 4 years ago in 1993. As we know, fast 
track is not new authority for the President, nor are many of 
the myths about international trade, which are being 
perpetuated by opponents of fast track to defeat it. While I am 
not going to address all those myths, I would like to try to 
raise just a few of the issues today.
    First, on the trade deficit itself. Mr. Chairman, we hear a 
lot of talk about the trade deficit. In fact, many of the 
opponents of economic liberalization continue to use the U.S. 
trade deficit as the ultimate measure of the success or failure 
of our trade policy. To them, a trade surplus signifies success 
while a trade deficit equals failure.
    That is both deceptive and it is wrong, I think. First, the 
country's trade balance is determined by macroeconomic factors, 
including savings and consumption rates, currency values, and 
growth rates. It is natural for the U.S. economy to be running 
a trade deficit when our economy is as strong as it is right 
now; employment is high, consumers and businesses have more 
money to spend on domestic and imported goods.
    Second, trade deficits don't reflect lost jobs. Look at 
Mexico and NAFTA as an example. In 1995, our bilateral trade 
balance with Mexico shifted from a $1.4-billion surplus to a 
$15.4-billion deficit. That has narrowed very substantially, 
since then. By the way, that deficit equaled at that point two-
tenths of 1 percent of our GDP, gross domestic product.
    If trade deficits caused job loss, we would have expected 
to see a drop in U.S. employment during this time and a rise in 
Mexican employment; instead, exactly the opposite happened. Our 
employment has increased 1.7 million jobs since 1995; Mexico's 
employment dropped by 1.6 million.
    How do you explain this apparent inconsistency? Well, trade 
deficits don't reflect lost jobs; again, trade balances are 
caused by macroeconomic factors. The Mexican economy slid into 
a recession in 1995, while the U.S. economy continued to boom. 
Because of the devaluation-driven recession, Mexicans had less 
money to spend on consumer goods, both imported and domestic, 
while Americans had more. So Americans were purchasing more 
Mexican goods and Mexicans were purchasing fewer U.S. goods.
    Finally, let's put the trade deficit into perspective. Our 
total trade deficit is equal to about 1.7 percent of our GDP; 
that is down from a high of about 3 percent in 1987. In the big 
economic picture, it is really a very small blip on the screen.
    Let me turn to the issue of labor and environment, which 
Mr. Gephardt talked about some. Opponents have said that we 
should require other countries to harmonize their environmental 
and their labor laws with our own, make that a precondition to 
trade. It is argued if we don't, we are going to lose job after 
job to low-wage countries that have lax environmental laws or 
lax labor laws. But if this theory were valid, we would expect 
to see the vast majority of new United States investment in the 
low-wage regions of the world, like Africa. But these countries 
account for very little of new investment; in fact, the United 
States is by far the largest recipient of new investment in the 
world.
    Protection of labor rights and the environment are 
certainly worthy goals, they are principles which I support, 
but they ought not to be pursued in the context of trade 
agreements. The temptation to use them as protection barriers 
is just too strong and the dangers of doing so too high. 
Nontrade tariff barriers erected under the guise of worker 
rights and environmental protection, are going to lead to 
similar retaliatory action against American exports; and as in 
any other war, both sides lose in a trade war. One need only 
look at the Smoot-Hawley Act of 1930 to know that these acts 
are a sure path to economic stagnation, unemployment, and lost 
opportunity.
    I think this Subcommittee, better than I, knows what fast 
track is. Congress does not cede its constitutional 
prerogatives under fast track; instead, it agrees to work with 
the President to liberalize foreign markets and to tear down 
protectionist trade barriers. Any agreement that is reached 
with our foreign trading partners using the fast track process 
is going to be reviewed by Congress within a set amount of 
time, will be voted on by Congress without amendment, and our 
trading partners know that congressional views have to be taken 
into account with this.
    So make no mistake, decisions made about the rules of 
international trade in the next few years are going to be 
critical to our continued economic progress, to growth, 
prosperity, and the international influence we have. The debate 
over renewal of the fast track authority comes down to a simple 
question: Do we want to use our economic and political 
influence to help shape the rules of trade that will dominate 
the 21st century, or do we want to sit on the sidelines and 
watch as other nations define the trading rules of tomorrow?
    In conclusion, Mr. Chairman, let me just say, after 50 
years of peace, prosperity, and economic growth, we should not 
turn to the protectionist policies which have crippled such 
countries in the past, as Argentina, India, and Japan. Our 
commitment to liberalize trade helped to make America what it 
is today, a land of innovation, of opportunity, of prosperity; 
and only if we move forward with fast track authority to 
negotiate more trade arrangements are we going to ensure a 
similar future for Americans tomorrow.
    Thank you.
    [The prepared statement follows:]
      

Statement of Hon. Jim Kolbe, a Representative in Congress from the 
State of Arizona

                              Introduction

    Thank you very much for the opportunity to testify today. I 
would like to commend Chairman Crane for his leadership on this 
very important piece of legislation.
    Last month, President Clinton asked Congress to renew his 
international trade negotiating authority--so called ``fast 
track''--which expired in 1993. Such power to negotiate trade 
agreements is not new. Nor are many of the myths about 
international trade which are being perpetuated by the 
opponents of fast track to defeat it. While I cannot address 
every issue that has been raised here today, I would like to 
take the opportunity to help set the record straight on a few 
issues.

                           The Trade Deficit

    Mr. Chairman, we have heard a lot of talk today about the 
trade deficit. In fact, many opponents of economic 
liberalization continue to use the U.S. trade deficit as the 
ultimate measure of the success or failure of our trade policy. 
To them, a trade deficit signifies success while a trade 
deficit equals failure. I think such an analysis is both 
deceptive and wrong.
    First, a country's trade balance is determined by 
macroeconomic factors, including savings and consumption rates, 
currency values, and growth rates. It is natural for the U.S. 
economy to be running a trade deficit when our economy is 
growing, employment is high, and consumers and businesses have 
more money to spend on domestic and imported goods.
    Second, trade deficits do not reflect lost jobs. Take our 
economic relationship with Mexico as an example. In 1995 our 
bilateral trade balance with Mexico shifted from a $1.4 billion 
surplus to a $15.4 billion deficit--which by the way equaled 
about two-tenths of one percent of our GDP in 1995. If trade 
deficits caused job loss we would expect to see during this 
period a drop in U.S. employment and a rise in Mexican 
employment. Instead, the exact opposite happened. Since 1995 
employment in the U.S. increased by 1.7 million jobs while 
employment in Mexico, with its so-called favorable surplus, 
fell by 1.6 million jobs.
    How do you explain this seeming inconsistency? Simply, 
trade deficits do not reflect lost jobs. Again, trade balances 
are caused by macro-economic factors. While the Mexican economy 
slid into recession in 1995 the U.S. economy continued to boom. 
Because of the devaluation-driven recession, Mexicans had less 
to spend on consumer goods--both imported and domestic--while 
Americans had more. Thus Americans purchased more Mexican goods 
while Mexicans purchased fewer U.S. products.
    Finally, let's put the total trade deficit in perspective. 
Our trade deficit is equal to about 1.7% of our GDP, down from 
a high of approximately 3% in 1987. In the big economic 
picture, it is nothing more than a blip on the screen.

                       Labor and the Environment

    Opponents of fast track insist that we should require other 
countries to harmonize their environmental and labor laws with 
our own as a pre-condition to trade. It is argued that if we do 
not, the U.S. will lose job after job to low wage countries 
with lax environmental laws. If this theory were valid, we 
would expect to see the vast majority of new U.S. investment in 
the lowest wage regions of the world like Africa. But these 
countries account for very little new investment. In fact, the 
United States is by far the largest recipient of new 
investment.
    Protection of labor rights and the environment are 
certainly worthy goals and they are principles which I support. 
But they should not be pursued in the context of trade 
agreements. The temptation to use them as protectionist 
barriers is just too strong and the dangers of doing so too 
high. Non-tariff trade barriers erected under the guise of 
worker rights and environmental protection will lead to similar 
retaliatory action against American exports. And, as in any 
other war, both sides lose in a trade war. One need only to 
look back to the Smoot-Hawley Act of 1930 to know that such 
acts are a sure path to economic stagnation, unemployment, and 
lost opportunity.

                           What Fast Track Is

    Opponents of renewed international trade authority insist 
that fast track is an unconstitutional delegation of authority 
from Congress to the President. Let me see if I can make this 
clear--in granting President Clinton fast track authority, 
Congress cedes none of its constitutional prerogatives. 
Instead, it agrees to work with the President to liberalize 
foreign markets and tear down protectionist trade barriers. Any 
agreement reached with our foreign trading partners using the 
fast track process will be reviewed by Congress within a set 
amount of time and will be voted on by Congress without 
amendment. This cooperative procedure gives the President an 
important edge in international negotiations because other 
countries know that any trade agreement reached will not be 
taken apart by protectionist special-interest lobbying and 
amendments. At the same time, our trading partners know they 
must take Congressional views into account since Congress 
retains the exclusive authority to accept or reject the 
agreement and the ultimate power to repeal fast track authority 
at any time. Fast track authority embodies the spirit of 
cooperation and bi-partisanship needed to put America's future 
economic prosperity ahead of political posturing.
    Make no mistake. Decisions made about the rules of 
international trade in the next few years will be critical to 
America's continued economic growth, prosperity and 
international influence. The debate over renewal of fast track 
authority really comes down to a simple question: Do we want to 
use our economic and political influence to help shape the 
rules of trade that will dominate the 21st century? Or, do we 
want to sit on the sidelines and watch as other nations define 
the trading rules of tomorrow?

                   Economic Opportunities of Tomorrow

    In the next few years America will be called upon to 
provide the political leadership needed to ensure the opening 
of markets to American products and services throughout the 
world. Our future economic growth will depend upon our ability 
to sell goods and services to other countries. The rules which 
will govern this trade will soon be written--with or without 
our participation. Next year, negotiations in the World Trade 
Organization on intellectual property will begin. Rules 
governing worldwide trade in agriculture, a very important 
sector for the United States, will begin in 1999. Multilateral 
negotiations in the services sector will begin in the year 
2000, with or without the United States.
    Opportunities will be lost regionally as well. Economic 
liberalization in the Asia Pacific Economic Cooperation (APEC) 
forum is scheduled to be completed by the year 2010. 
Negotiations for the Free Trade Area of the Americas will be 
completed by 2005. But America will not be able to cut our best 
trade deals in either forum if we can't negotiate with the full 
range of options afforded by fast track. And industry sectors 
where America is most competitive--like computer software, 
information technology, medical equipment, and environmental 
technology--remain closed to many American exports because we 
bring very little to the table without fast track negotiating 
authority. It is simple common sense--you don't put your best 
offer on the table unless you know the person you're talking to 
has the power to accept that offer.
    The ironic part of our inability to fully participate in 
these negotiations is that we have by far the most to gain from 
them. The U.S. market is already the world's most open. In 
contrast, many emerging markets in Asia, Latin America, and 
Africa still retain high tariff and non-tariff barriers to our 
exports. Because of this reality we gain substantially more 
from our negotiating partners than we give up. Perhaps just as 
important, we gain firm commitments from other nations to keep 
their markets open to U.S. products, ensuring that U.S. 
industry will enjoy secure and growing markets for years to 
come.

                               Conclusion

    After 50 years of peace, prosperity and economic growth due 
in large part to our pursuit of open markets and free trade, we 
should not now turn to the protectionist policies which 
crippled such countries in the past as Argentina, India and 
Japan. Our commitment to liberalized trade helped to make 
America what it is today--a land of innovation, opportunity and 
prosperity. Only if we move forward with fast track today, can 
we ensure a similar future for Americans tomorrow.
    Thank you.
      

                                


    Chairman Crane. Thank you, Mr. Kolbe.
    Mr. Visclosky.

   STATEMENT OF HON. PETER J. VISCLOSKY, A REPRESENTATIVE IN 
               CONGRESS FROM THE STATE OF INDIANA

    Mr. Visclosky. Mr. Chairman, thank you very much. I want to 
thank you, Mr. Matsui and the Members of the Subcommittee for 
allowing me to testify today. I am here because I have a 
profound belief that economic growth in this country should 
include real growth in the wage rate of all of the people that 
we represent.
    I do not come before the Subcommittee today as a trade 
ideologue. In 1988, I voted for the Omnibus Trade and 
Competitiveness Act. I also voted in 1991 to give President 
Bush additional fast track negotiating authority. I supported 
the Uruguay round of the General Agreement on Tariffs and 
Trade. I am here today, however, given my belief that since 
1981, what we have seen consistently in the United States of 
America is pressure on the average wage rate for the people 
that we represent. And I am very concerned that the fast track 
bill before us today will only exacerbate that trend.
    There were 38,000 jobs that were lost in my district from 
1977 to 1987; we have more than made those jobs up. The 
unemployment rate in my congressional district is under 3.5 
percent, but the average wage rate that people are taking home 
in those new jobs is less than it was in 1981.
    As far as the experience we have had with NAFTA, in 1993, 
we had a trade surplus in steel of about 100,000 tons. Last 
year, the most recent figures available, we had almost a 2-
million ton deficit with the country of Mexico after NAFTA. 
That is not an academic experience; and a study by Public 
Citizen group has indicated that of the people who have gone on 
to new jobs after losing their decrease of NAFTA, 65 percent 
are making less than they made in their original job.
    And I must tell you, in all good faith--and job training 
was mentioned once here already--I am tired, I am sick and 
tired of voting for new job training programs for people 
because they have lost their job because of something we have 
done in the U.S. Congress.
    I am here because I am very concerned about sections 
3(b)(2) and 3(b)(3)(A) of the administration's fast track 
proposal that essentially fences off our ability to have 
serious bilateral negotiations with countries over their 
enforcement of the labor laws on their books. I am not looking 
for an arbitrary increase of labor standards, I am not looking 
for an arbitrary increase of wage rates overseas, but I am 
looking for these countries' and our country's ability to 
enforce the laws that they have on the books.
    Mr. Kolbe talks about the theory of corporations going to 
the country with the lowest wage rate, and if that were true, 
they would be in Africa. My understanding is that the wage rate 
today in Mexico is about $3.30 a day. I think that is low 
enough. I think many of the companies that have invested in 
Mexico since the advent of NAFTA don't need to go any further. 
And from my personal experience, when I have talked to 
employers in my district, people who have businesses, and who 
are considering overseas investment, I have pleaded with them 
to join in a serious discussion of how to negotiate 
international labor standards. However, the light went on in my 
head about 6 months ago that I have wasted my time because 
investment dollars and money are fungible and they can move to 
the lowest common denominator. The 551,000 people I represent 
in my district cannot do that. If they are not going to make 
workers rights a priority, if they are going to work to protect 
only their intellectual property and other rights, which I 
fully support them on, then we have an obligation to step up 
and protect the people who work for those companies.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]

Statement of Hon. Peter J. Visclosky, a Representative in Congress from 
the State of Indiana

    Thank you, Mr. Chairman, Mr. Matsui, and the other 
subcommittee members, for giving me this opportunity to testify 
today regarding the President's proposal for fast-track 
negotiating authority. I voted for the 1988 Omnibus Trade and 
Competitiveness Act, which contained fast-track negotiating 
authority, and, in 1991, I voted to give President Bush 
additional fast-track negotiating authority. Further, as a 
supporter of the Uruguay Round of the General Agreement on 
Tariffs and Trade (GATT), which was negotiated and implemented 
under fast-track procedures, I have demonstrated my willingness 
to support market-opening trade agreements that are designed to 
give American workers and companies a chance to compete and win 
in the global economy. However, I am forced to oppose President 
Clinton's recent request for fast-track negotiating authority 
because it does not adequately protect worker rights and 
internationally-recognized labor standards or permit the 
enforcement of these fundamental rights through trade 
sanctions.
    Over the past several years, I have clearly seen how U.S. 
efforts to promote worker rights, first through the GATT and 
then in the World Trade Organization (WTO), have been fiercely 
resisted by many of our trading partners. What this experience 
has shown me is that we need to take a more hard-nosed 
approach, and show our trading partners that we are serious 
about promoting worker rights. Simply put, if our trading 
partners want to take advantage of the benefits of open 
markets, they need to respect basic worker rights. This 
approach would not only eliminate some of the most egregious 
abuses, such as child and slave labor, but it would protect 
American workers and their jobs in the process. With trade 
sanctions as an incentive to respect worker rights, we could 
put the brakes on a race to the bottom in search of maximum 
profits.
    I appeared before the subcommittee in March to focus on the 
importance of linking respect for internationally-recognized 
worker rights to the conduct of international trade. The 
specific rights I discussed included the freedom of 
association, the right to organize and bargain collectively, 
and the prohibition of forced or compulsory labor. These should 
not be controversial issues. In fact, many of the countries who 
have ardently resisted linking worker rights to trade, 
including Mexico, have established worker rights laws on the 
books--they just aren't being enforced. It is important to 
reiterate that I was not talking about the imposition of 
uniform labor standards, such as wages and hours.
    While worker rights are mentioned as a negotiating 
objective in the President's fast-track proposal, they are 
limited to policies and practices ``directly related to trade'' 
and can be promoted only through the WTO and the International 
Labor Organization (ILO). While this might sound like a step in 
the right direction, during the WTO's Ministerial Conference in 
Singapore last year, the U.S. was unable to convince our 
trading partners to establish a working party on worker rights 
and labor standards. Although I strongly supported such a 
working party, the reluctance to even talk about worker rights 
in the WTO leaves me very pessimistic that the circumstances 
would be any different with respect to the negotiating 
objectives in the President's fast-track proposal. I truly 
believe that the time has come to require that worker rights be 
included as a core objective of future trade agreements, where 
they could be enforced through meaningful trade sanctions.
    Although the President's fast-track request would cover a 
wide range of trade negotiations and implementing agreements, I 
am very concerned about the Administration's stated intention 
to expand the North American Free Trade Agreement (NAFTA) to 
Central and South American countries, including Chile. NAFTA 
has hurt American workers, and, frankly, it should be 
repealed--not expanded.
    Fast-track negotiating authority was used to negotiate and 
implement NAFTA. I voted against NAFTA when it first came 
before the Congress because I felt that it would end up costing 
tens of thousands of Americans their jobs, and because it did 
not contain adequate protections for worker rights. More than 
three years later, these grim predictions have been borne out 
by the facts. Since NAFTA was ratified, our $1.7 billion trade 
surplus with Mexico has turned into a $16.2 billion trade 
deficit. This growing trade deficit has taken with it many 
good, high-paying American jobs. One U.S. Department of Labor 
program has certified more than 124,000 workers as having lost 
their jobs directly as a result of NAFTA. Public Citizen, a 
non-partisan, public-interest group, estimates that number to 
be closer to 500,000. The Public Citizen study goes on to say, 
that of the workers who lost their jobs because of NAFTA, 65 
percent are now in lower-paid positions.
    These trends are reflected in steel trade, which is vitally 
important to the economy of Northwest Indiana. In 1993, the 
U.S. had a steel trade surplus with Mexico of about 100,000 
tons. After the passage of NAFTA that surplus quickly turned 
into a deficit, which last year reached almost 2 million tons.
    Just as troubling are reports that NAFTA is being used as a 
weapon against labor unions. Indeed, some American corporations 
are telling their workers that they will move their jobs to 
Mexico if they attempt to unionize. According to a study by 
Cornell University, in those shops that are already unionized, 
companies are threatening to move their plants to Mexico in 
order to gain the upper hand in contract negotiations. Clearly, 
even those U.S. workers who have managed to keep their jobs are 
seeing lower pay and fewer benefits as a result of NAFTA.
    While worker rights and labor standards were addressed as 
part of a NAFTA side agreement, this side agreement is weak and 
unenforceable. Forcing Mexico to adhere to minimum standards on 
worker rights would have helped to drive up wages and raise the 
standard of living for the average Mexican worker. This, in 
turn, would have put Mexican and American workers on a more 
equal economic footing, making employers think twice about 
moving to Mexico. Unfortunately, just the opposite has 
happened, resulting in a minimum wage in Mexico of about $3.30 
per day--less than one-third in real terms what it was in 1980.
    The situation in Chile, which is the next country slated to 
enter NAFTA, is not much better. In Chile, workers have no 
right to organize unions or enter into collective bargaining 
agreements, and they currently make an average of only $5.50 
per day. Furthermore, the military is still run by a former 
dictator of that country. This is not the type of country to 
which we should be giving expanded trade privileges or for 
which we should be sacrificing good-paying American jobs.
    Given NAFTA's track record over the past three and a half 
years, I believe that extending this agreement without making 
fundamental changes would be a huge mistake. We cannot stand 
idly by while American workers are asked to forfeit their jobs 
in the name of global prosperity. Passage of the President's 
fast-track proposal would simply hasten the expansion of NAFTA 
and other trade agreements that have little regard for American 
workers or their foreign counterparts. Therefore, until more 
can be done to protect against job losses in the U.S., and 
promote international worker rights, I will continue to oppose 
the expansion of NAFTA and renewal of fast-track negotiating 
authority.
      

                                


    Chairman Crane. Thank you.
    Our next witness is Mr. Dooley from California.

    STATEMENT OF HON. CALVIN M. DOOLEY, A REPRESENTATIVE IN 
             CONGRESS FROM THE STATE OF CALIFORNIA

    Mr. Dooley. Thank you, Mr. Chairman and Members of the 
Subcommittee, for giving me this opportunity to appear before 
you today.
    As a farmer and a Congressman, I strongly believe that this 
vote will be the most important of the 105th Congress. A 
failure to provide this authority to the President will result 
in a giant step backward for the U.S. economy and the American 
people. President Clinton requested that Congress renew fast 
track negotiating authority for trade agreements. The President 
is requesting the same authority that every Democrat and 
Republican President since 1974 has had, and the arguments for 
granting this authority are as compelling today as they have 
ever been. Trade negotiations are crucial to the continued 
economic vitality of our Nation.
    The United States is, without question, the leading 
economic power in the world today and, clearly, expanded trade 
has been a major component in the growth of our economy. And it 
has been our President's use of fast track authority that has 
contributed to the increased trade.
    The facts are irrefutable. In 1970, exports were about 13 
percent of our gross domestic product. Today, exports account 
for nearly 30 percent of the gross domestic product of this 
country. Since 1978, almost 70 percent of the growth of the 
U.S. economy has been derived from exported goods and services, 
and exports support 12 million American jobs, and over the last 
4 years have created 1.4 million new jobs, which, on average, 
are paying higher than, 16 percent, than most jobs in this 
country.
    Today, the United States is the world's largest total 
exporter, but without an aggressive, proactive trade policy, 
the United States stands to lose ground in the international 
marketplace. Even now, our competitors and trading partners are 
developing trade agreements that don't include the United 
States.
    In January of this year, I had the opportunity to travel 
with the Agriculture Committee to Argentina and Chile, and one 
cannot help but to be impressed by the democratic and the 
economic reforms that are spreading across Latin and South 
America. But one must also be concerned by the formation of 
MERCOSUR, which is the trading union of Argentina, Brazil, 
Paraguay, and Uruguay. The efforts of MERCOSUR are basically to 
bring together a common group of nations there that will reduce 
the tariff barriers between them, but maintain common external 
tariffs. What is concerning us is that MERCOSUR is now adding 
Chile as an associate member and they are currently planning 
free trade talks with Peru, Colombia, Ecuador, and Venezuela. 
Even more concerning is MERCOSUR has recently had discussions 
with Canada about joining and is pursuing further agreements 
with Asian and European nations.
    The threat to the United States is very clear, and our 
economic interests are what is at stake. As the countries of 
MERCOSUR reduce and eliminate tariffs between themselves, they 
maintain that common external tariff that U.S. products face, 
placing our workers, our farmers, and our companies at a 
competitive disadvantage.
    All this progress between other nations will continue with 
or without action on fast track. The United States must be an 
active participant in international trade agreements to ensure 
our continued progress in reducing trade barriers and opening 
new markets. Fast track authority is our ticket to the 
negotiating table.
    The most compelling arguments supporting fast track are the 
simplest. Ninety-six percent of the world's consumers live 
outside the United States. The global economy will grow three 
times the rate of the U.S. economy. We need to be a player in 
this expanding world market, and denying this President fast 
track authority will only hurt American workers and American 
families.
    This vote, more than any other taken by Congress this year, 
will pave the way for a bright and prosperous future for the 
United States. Passage of fast track will assure greater 
economic opportunities for U.S. businesses to generate more and 
higher paying jobs for the U.S. workers.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]

Statement of Hon. Calvin M. Dooley, a Representative in Congress from 
the State of California

    Mr. Chairman and members of the Subcommittee, thank you for 
giving me the opportunity to appear before you today. As a 
farmer and a Congressman, I strongly believe that this vote 
will be the most important of the 105th Congress. A failure to 
provide this authority to the President will result in a giant 
step backwards for the U.S. economy and the American people.
    President Clinton has requested that this Congress renew 
fast-track negotiating authority for trade agreements. The 
President is requesting the same authority that every 
Democratic and Republican President since 1974 has had. And the 
arguments for granting him this authority are just as 
compelling today. Trade negotiations are crucial to the 
continued economic vitality of our nation. The United States is 
without question the leading economic power in the world today 
and clearly expanded trade has been a major component in the 
growth of our economy. And it has been our President's use of 
the fast track authority that has contributed to that increased 
trade. The facts are irrefutable. In 1970, exports were about 
13 percent of the Gross Domestic Product. Now, exports account 
for nearly 30 percent of GDP. Since 1978, almost 70 percent of 
the growth of the U.S. economy has been derived from exported 
goods and services. Exports support 12 million American jobs, 
and over the last four years have created 1.4 million new jobs.
    Today the United States is the world's largest total 
exporter, but without an aggressive, proactive trade policy the 
United States stands to lose ground in the international market 
place. Even now, our competitors and trading partners are 
developing trade agreements that don't include the United 
States. In January of this year I traveled with the Agriculture 
Committee to Argentina and Chile. One cannot help but be 
impressed by the democratic and economic reforms that are 
spreading across Latin and South America. But one must also be 
concerned by the formation of Mercosur (a union of Argentina, 
Brazil, Paraguay, and Uruguay) that will virtually eliminate 
tariffs between these countries, but maintain tariffs against 
the U.S. The countries of MERCOSUR have added Chile as an 
associate member and are planning free trade talks with Peru, 
Columbia, Ecuador and Venezuela. Mercosur has recently had 
discussions with Canada about joining and they are pursuing 
further agreements with Asian and European nations. The threat 
to United States economic interests should be clear. As the 
countries of Mercosur reduce and eliminate tariffs between 
themselves they maintain a common external tariff that U.S. 
products face, placing our workers, our farmers and our 
companies at a competitive disadvantage. All of this progress 
between other nations will continue with or without action on 
fast-track. The United States must be an active participant in 
international trade agreements to ensure our continued progress 
in reducing trade barriers and opening new markets. Fast track 
authority is our ticket to the negotiating table.
    Fast track will allow the President to pursue sectorial 
agreements in areas such as agriculture, medical equipment, 
telecommunications, and environmental technology. These are 
areas where the U.S. is already a leader. Agriculture has been 
one of the greatest success stories of expanded trade, 
increasing by almost 50% since 1990 to $60 billion in exports 
in 1996.
    In my home state of California, the importance of 
international trade can be seen first-hand. Eighty percent of 
the cotton produced in California is exported, 70 percent of 
all the almonds produced are exported and 50 percent of 
California citrus is exported. We need to pass fast track in 
order to continue our leading position in the world.
    Opponents of fast-track authority use the example of NAFTA 
as a reason for opposing further trade negotiations. While they 
point to isolated incidents, NAFTA has actually been very 
successful in expanding exports for the United States. Despite 
the peso crisis in late 1994, NAFTA has increased U.S. exports 
by over 34 percent in just three years. In addition to breaking 
down tariffs between the three member nations, NAFTA has 
ensured that our trading partners adhere to a consistent and 
equal set of trading standards. Without NAFTA and other trade 
agreements, the U.S. would have no impact on the trade and 
economic policies of our trading partners. Through engagement 
and negotiation we will be able to level an unfair playing 
field for the advantage of all Americans.
    The most compelling arguments supporting fast track are the 
simplest. Ninety-six percent of the world's consumers live 
outside the United States. The global economy will grow at 
three times the rate of the U.S. economy. We need to be a 
player in this expanding world market. Denying this President 
fast track authority will only hurt American workers and 
American families.
    This vote, more than any other taken by Congress this year, 
will pave the way for a bright and prosperous future for the 
United States. Passage of fast-track will ensure greater 
economic opportunities for U.S. business to generate more and 
higher paying jobs for U.S. workers.
      

                                


    Chairman Crane. Thank you, Mr. Dooley.
    Mr. Blumenauer

STATEMENT OF HON. EARL BLUMENAUER, A REPRESENTATIVE IN CONGRESS 
                    FROM THE STATE OF OREGON

    Mr. Blumenauer. Thank you. And I appreciate the cautious 
and careful way that the Subcommittee is approaching this 
issue, because frankly one of the concerns I have had is that 
we have been caught up in rhetorical excesses, most graphically 
illustrated by the discussion surrounding NAFTA, where both 
sides oversold the case; and I fear that we really create a 
problem for ourselves in terms of perception. Your being 
careful and thoughtful in allowing the case to be made is going 
to serve a great purpose for the American people.
    Fast track itself is not going to have any negative impacts 
on labor rules or environmental protection. It, in fact, gives 
the President a chance to negotiate trade agreements with other 
countries which historically have proven to be the best way to 
improve other countries' labor and environmental protections.
    As has been pointed out, this is not new; this is something 
that we have taken for granted over the course of the last 25 
years to great effect for our country and for the world's 
economy. The Congress reserves to itself the opportunity to 
turn down an agreement that any administration negotiates that 
we do not feel meets those objectives; and I personally pledge 
to exercise that authority to vote no if there is something 
that I feel is not in the best interest of the country, and I 
am sure my colleagues would do the same.
    I am concerned with people who are advancing the notion 
that somehow we have to use the fast track authority to 
aggressively pursue environmental and labor provisions and 
somehow wanting them to be dictated. Frankly, I support 
progress labor practices and the environment, which could be 
part of trade negotiations, but we need to be able to do this 
in a thoughtful and deliberate fashion.
    There are others in the world who have grounds to criticize 
our performance. What if there are other countries that are 
going to dictate that we have less income inequality and 
dictate minimum wage as a multiple of chief executive officer 
compensation; or those who look at the waste that we have in 
this country in energy, or the fact that we produce 50 times 
the greenhouse emissions as a developing country, and try and 
condition their agreements with us on our having a very high 
gasoline tax, for instance, well, some of the same people who 
are critical of these provisions would absolutely go ballistic 
and understandably so.
    We are not going to dictate to other countries; they are 
not going to dictate to us. We must be able to do this in a 
thoughtful and deliberate process.
    My region of the country stands to lose ground if we do not 
extend fast track authority. In my own district, I am looking 
at one of the largest employers. Freightliner, that has the 
most productive truck building facility in the United States, 
arguably one of the most productive in the world, is going to 
lose production by having to shift productive capacity to other 
parts of the world because we don't have an agreement with 
Chile; and that may be moved to Canada or to Mexico. We see the 
effects in my own region.
    The rest of the hemisphere and the world are reaching trade 
agreements without the United States, as has already been 
referenced. We need to not be the only country in the region 
that does not have a trade agreement with Chile. We have the 
most to gain from these trade agreements.
    As has been referenced, we are only a small minority of the 
world's population; we stand to have a 70 million population 
increase versus a 1.8 billion increase around the world over 
the next 20 years. As the Subcommittee has heard, these 
emerging economies are growing more rapidly than ours; that is 
where our future is.
    We need to give the President the authority to move this 
forward for the future for a more productive economy, and I 
appreciate your efforts in terms of allowing us to maybe 
develop this in a less impassioned and rhetorical fashion. I 
think the country is going to benefit from your efforts.
    Thank you very much.
    [The prepared statement follows:]

Statement of Hon. Earl Blumenauer, a Representative in Congress from 
the State of Oregon

    We begin our deliberation of an important tool for our 
country's Trade Representative amidst unfortunate rhetorical 
excess. This process was greatly accelerated during the debate 
surrounding NAFTA.

The effects of the NAFTA agreement were exaggerated, and the 
same thing is happening to ``fast track.''

    When NAFTA was debated and passed in 1994, both proponents 
and opponents oversold its effects. Although NAFTA has played 
key roles in this decade's economic growth and in blunting the 
effects of Mexico's recession, its employment impacts are 
negligible within the scope of the enormous job creation 
numbers in the U.S. economy every week.
    ``Fast track'' itself will not have any negative impacts on 
labor rules or environmental protection. It will instead give 
President Clinton a chance to negotiate trade agreements with 
other countries, which has historically proven to be the best 
way to help improve other countries' labor and environmental 
protections.
    This process is not some new development, justifying either 
the tone of debate or the tinkering with the mechanism.

Every president, from both parties, all the way back to Richard 
Nixon, has enjoyed ``fast track'' authority.

    ``Fast track'' is a trade tool for the presidency and was 
created to facilitate trade negotiations with other countries 
given today's Congressional realities. Many countries simply 
will not negotiate major trade agreement with us, if they know 
the president does not have ``fast track.''

Congress can still vote no on any trade deal brought before 
it--I will vote no if I feel it is a bad trade deal.

    Congress does not give up its right to approve or 
disapprove a trade deal, and I will not hesitate to vote no if 
I feel any trade deal brought before the Congress hurts the 
interests of the United States. This will provide a natural 
incentive to have the President negotiate a trade deal he feels 
can pass the Congress easily and benefit the United States in 
the long term.

Environmental and labor provisions should be negotiated, not 
dictated.

    I support progress on labor practices and the environment, 
which could be a part of any trade package, but they should not 
be fixed in stone before negotiations even begin. We should 
communicate to the president our concerns and our needs, and 
let him take that to the bargaining table with him, not tie his 
hands behind his back.
    Others in the world have grounds to criticize our own labor 
and environmental practices. We often produce 50 times the 
CO2 of developing countries, waste energy and have 
huge income inequality. If the roles were reversed and foreign 
governments dictated a relationship between our minimum wage 
and CEO compensation, or a $2 increase on our gas tax, some of 
the same critics who demand stricter labor and environmental 
protections would go ballistic.

The Northwest stands to lose ground because of the United 
States' lack of ``fast track'' authority.

    Sectors like agriculture and manufacturing are losing 
ground daily to those in other nations who are crafting trade 
agreements without the United States at the bargaining table. 
96% of the world's mouths lie outside the United States, and 
American and Northwest growers will have a better chance to 
feed those mouths with more trade agreements. China has 1/3 the 
arable land of the United States, but nearly four times the 
population--they and other countries desire American 
agricultural products. By using that leverage to our advantage, 
we can ultimately open other markets.
    Manufacturing will also suffer without fast track. 
Freightliner, a major company in my district, may have to move 
some production from Oregon to Mexico unless we reach a trade 
deal with Chile, simply because Mexico already receives 
preferential treatment from Chile. Freightliner employs over 
3700 people and brings in nearly $250 million to the region 
economically.

The rest of the hemisphere and the world are reaching trade 
agreements without the United States.

    Every major economy in the Western Hemisphere has reached a 
trade deal with Chile--except the United States. This means we 
are in danger of falling behind the rest of the hemisphere, and 
indeed the rest of the world, in forging what the global trade 
rules will be. If we remove ourselves from the global trade 
negotiating table, we will have no influence over how trade 
agreements are reached, and no opportunity to change them for 
the better. We are still going to buy copper from Chile 
regardless of their status as a major supplier.

The United States has the most to gain from trade agreements, 
as future population and economic growth will primarily happen 
outside our borders.

    We have some of the lowest tariffs in the world, so 
entering into trade negotiations has the prospect of lowering 
other countries' barriers more than our tariffs. The United 
States should continue to move aggressively towards opening 
world markets so our products are sold on a level playing field 
with other countries' products. Our potential trading partners 
are interested in enhanced access to the world's richest 
market--we can and should use that leverage to open markets for 
our products.
    The global economy is here. Over the next twenty years, 
global population will increase from 5.8 billion to 7.6 
billion, a growth of 1.8 billion people. Over that same period 
of time, the United States' population is projected to grow 
only 70 million. Not only do 96% of the world's people 
currently live outside our borders, 96% of the population 
growth over the next twenty years will also occur outside our 
borders.
    Economically speaking, the global economic expansion will 
likely continue at 9-10% over the next few years, while our own 
economy, although performing well comparatively speaking, will 
only manage 3-4% growth. Latin America and Asia will grow three 
times as fast as the U.S., Europe and Japan over the next 
fifteen years.
    These facts show clearly future prosperity is to be found 
in these emerging global markets. With the end of the Cold War, 
countries can now focus on bettering the lives of their own 
citizens through increased international cooperation and 
economic growth. The United States must continue to lead, not 
only militarily, but also economically. Giving the president 
traditional trading authority enhances that leadership.
      

                                


    Chairman Crane. Thank you, Mr. Blumenauer.
    Mr. Moran, second bells just went off. Do you want to 
proceed and then we will recess and all run over to vote?

STATEMENT OF HON. JAMES P. MORAN, A REPRESENTATIVE IN CONGRESS 
                   FROM THE STATE OF VIRGINIA

    Mr. Moran. I get the picture, Mr. Chairman. Thank you.
    I do want to emphasize, though, that fast track is not a 
trade agreement. All it does is set out the process by which 
trade agreements will be considered.
    Only Congress has the final say on whether to approve or 
disapprove a trade agreement and its implementing legislation. 
The administration's Export Expansion and Reciprocal Trade 
Agreement of 1997, the administration bill, activates a 
historic partnership that provides an even wider role for 
Congress in trade negotiations, before, during, and after 
agreements are concluded; and at the end of the day, it is only 
Congress that has the final say whether to accept or reject a 
trade deal that is brought back by the administration.
    With fast track trade authority, the administration is 
poised to negotiate strong international agreements in 
telecommunications, information technology, government 
procurement--major agreements, very important to our being able 
to sustain the growth of our economy. But without fast track, 
we are going to continue to face foreign barriers to our trade 
and products and services that include tariffs of up to 30 
percent.
    We have to understand the context here. We have very few 
tariff barriers, we have very little to give up, we are 
virtually a free trade country; but other countries have tariff 
barriers up to 30 percent, and here we are insisting upon 
things that would abrogate their own international laws in 
return for our being able to give up very little.
    The critics of fast track are wrong; they are wrong on 
several counts. First and foremost, there is nothing in 
existing law to preclude this or any other President from 
making labor and environmental conditions an issue in 
international trade agreements. Previous Presidents have done 
so; this President will do so. The question is whether Congress 
should preordain the contents of trade negotiations before the 
President engages in them.
    Beyond that, few nations, including the United States--
particularly the United States--would seriously engage in trade 
negotiations if they knew that the result would require a 
change in or an abrogation of their own domestic laws. We 
wouldn't do it, and we shouldn't expect other countries to do 
it. And those who purport to be concerned about global 
environmental and labor conditions neglect one of history's 
great lessons, that it is free and open world trade that has 
improved global prosperity, that has fostered democracy, that 
has helped to ameliorate poverty and environmental degradation 
that is so common to emerging economies. This is what has done 
it.
    It is free and open trade that has accomplished it more 
than anything else, so the bottom line is clear. If the United 
States is going to take full advantage of the opportunities of 
a global marketplace, where 95 percent of the world's consumers 
live outside our National boundaries, then we have got to open 
up trade to that marketplace; we can't continue to have 5 
percent of the world's population and 20 percent of the world's 
wealth if we are not going to look to that marketplace, which 
represents 95 percent of the world's consumers.
    Extending fast track trading authority to the President is 
necessary if we are going to continue the economy that we enjoy 
today; and without the unfettered authority to strike deals in 
the name of the U.S. Government in good faith, that will stick, 
the President is going to find his hands tied, and that is 
going to tie the hands of our economy and it is going to damage 
the quality of life that all of us are blessed by today.
    We have a great deal at stake, we hope you will do the 
right thing and pass fast track trading authority. Thank you, 
Mr. Chairman.
    [The prepared statement follows:]

Statement of Hon. James P. Moran, a Representative in Congress from the 
State of Virginia

    Mr. Chairman, thank you for holding this hearing on 
extension of traditional trading authority to the President.
    Congress is poised to make a decision that will have an 
enormous impact on trade for our entire nation. In short, will 
we grant this President the same power granted to every 
President since 1974 to negotiate important international trade 
agreements with the knowledge that the resulting pacts will not 
be renegotiated by Congress?
    Dozens of Virginia business leaders have told me that 
renewal of this trading authority is absolutely critical to the 
continuing economic growth across the Commonwealth, including 
the sectors of information technology, financial services, and 
manufactured goods.
    We simply can't afford to tie the hands of America's chief 
negotiators at the global trade table. To do so would allow our 
global competitors in other countries to beat us to the best 
deals and to overtake us in the race for economic progress.
    The debate on this issue has been framed in broad national 
terms, but there is much at stake for individual states--and 
particularly for Virginia--in ensuring the widest access to 
global trade.
    A survey of Virginia's economic landscape provides abundant 
evidence of how the Commonwealth benefits from full 
participation in the international marketplace. Virginia 
exported $11.6 billion in goods last year, much of it moving 
through our port at Hampton Roads. The export of these goods 
employed more than 120,000 Virginians directly, and thousands 
more indirectly. The international market in services is harder 
to measure, but Virginia is home to thousands of young and 
vital service companies whose financial future depends on open 
access to the global marketplace. With fast track trade 
authority, this administration is poised to negotiate strong 
international agreements in telecommunications, information 
technologies, and government procurement, just to name a few. 
Without fast track, the future of these negotiations, and our 
global economic position, is mired in doubt, and we will 
continue to face foreign barriers to our trade in products and 
services, including tariffs of up to 30 percent.
    As with other states that provide friendly business 
environments, Virginia benefits from the ability of the 
President to negotiate effective international trade deals with 
the understanding that Congress won't nit-pick the deals to 
death. All fast track authority means is that the president can 
exercise his executive power to negotiate trade agreements with 
the full knowledge that such a deal, if struck, will stick. 
Under this negotiating authority, the deal would be put to a 
straight up-or-down Congressional vote, with individual members 
unable to derail or dilute the agreement with amendments.
    Some argue that this authority should come with concomitant 
requirements that the President insist on certain environmental 
and labor standards in international trade agreements. These 
critics are wrong on several counts. First and foremost, there 
is nothing in existing law to preclude this or any other 
President from making labor and environmental conditions an 
issue in international trade agreements. Many Presidents have 
done so. The question is whether Congress should preordain the 
contents of trade negotiations before the President engages in 
them. Beyond that, few nations, including the United States, 
would seriously engage in trade negotiations if they knew the 
result would require a change in, or abrogation of, their own 
domestic laws. Finally, those who purport to be concerned about 
global environmental and labor conditions neglect one of 
history's great lessons: that free and open world trade 
improves global prosperity, fosters democracy, and helps to 
ameliorate the poverty and environmental degradation so common 
to closed and emerging economies.
    The bottom line is clear: If the United States is not able 
to take full advantage of the opportunities of the global 
marketplace, the 95 percent of the world's consumers who live 
outside our national boundaries will shop somewhere else, and 
other countries will reap the benefits.
    Closer to home, extending fast track negotiating authority 
to the President is necessary if Virginia hopes to be in the 
best position to lead the way in today's dizzying global 
economy. Without the unfettered authority to strike deals in 
the name of the U.S. government, the President will find his 
hands tied just when they should be free to fashion the best 
deal for the country.
      

                                


    Chairman Crane. Thank you all of you for your testimony and 
the Subcommittee will stand in recess. But this is a motion to 
adjourn; if we all vote aye, we will not have interruptions the 
remainder of the day. Thank you.
    [Recess.]
    Chairman Crane. Will everyone please take seats. Please be 
seated or take conversations out of the Subcommittee room, 
please.
    Since we have an unpredictable day, again not surprisingly, 
we would like to move as quickly as possible; and we now have 
the opportunity to proceed with Hon. Charlene Barshefsky.
    We would like to welcome you back to the Subcommittee. 
Thank you for coming up here to try and dispel some of the 
myths about free trade and to explain the need to renew fast 
track negotiating authority to the President. And you may 
proceed.

       STATEMENT OF HON. CHARLENE BARSHEFSKY, U.S. TRADE 
                         REPRESENTATIVE

    Ms. Barshefsky. Thank you very much, Mr. Chairman. It is a 
pleasure to see you and the Members of the Subcommittee again. 
I ask, of course, that my complete statement be available for 
the record.
    Chairman Crane. Without objection, so ordered.
    Ms. Barshefsky. The Export Expansion and Reciprocal Trade 
Agreements Act of 1997, which the administration has proposed, 
would renew the traditional relationship between Congress and 
the President in defining trade policy and approving trade 
agreements. The administration's proposal would provide a 
critical tool to lower foreign trade barriers, open markets, 
and rebalance trade relationships on more reciprocal terms. 
This legislation is vital to American business, farmers and 
workers, because fast track is fundamentally about U.S. 
exports, which are absolutely critical to our economic 
vitality.
    Since 1993, more than a third of our economic growth has 
come directly from exports, and the number of export-related 
jobs has increased by almost 2 million. Twelve million U.S. 
jobs depend on exports now, and these jobs pay an average of 15 
percent more than nontrade-related jobs, and since 1985, U.S. 
exports have roughly tripled.
    With only 4 percent of the world's population but 20 
percent of the world's wealth, we have to figure out a way of 
holding on to that very advantageous position. That means we 
must have access do the other 96 percent of the world's 
consumers that don't live here.
    Fast track sends a strong signal to our trading partners 
that the United States will continue to lead. It indicates that 
we are determined to set the rules for fair trade.
    We must also recognize, in the post-cold war era, that 
economic relationships are increasingly important in defining 
our strategic alliances. Our trade relationships and economic 
leadership will help shape the longer term economic security of 
this Nation, reinforcing our global leadership. We must not 
diminish our power or our influence in the world. Our strength 
is our leadership, and fast track helps to ensure leadership on 
trade.
    There are serious and immediate consequences if we do not 
renew this authority. In every region of the world, but 
particularly in Latin America and Asia, the two fastest growing 
regions, our competitors are pursuing strategic trade policies 
and, in many cases, creating new, exclusive trade alliances to 
our detriment. There are over 35 free trade agreements 
operating in our hemisphere; we are a party to one. Since 1992, 
over 20 free trade agreements have been negotiated; we are a 
party to none. This causes us to lose ground to our industrial 
competitors, not to mention the loss of leadership in our own 
hemisphere.
    Canada, for example, recently signed a trade agreement with 
Chile, giving Chilean exporters substantial advantages in 
comparison with their United States counterparts. The EU, 
European Union, has concluded a framework agreement with Chile, 
which may also lead to a free trade agreement. Indeed, since 
the President kicked off his fast track initiative, both Canada 
and the European Union have stated their intention to complete 
free trade accords with MERCOSUR, further disadvantaging United 
States exports and dominance in our own region.
    The question for us is, do we move ahead and fight for new 
markets, or do we let others define the rules and reap the 
rewards without us?
    We intend to use fast track authority in three ways. First, 
to complete the so-called ``built-in agenda'' of the World 
Trade Organization. This year, we resumed global negotiations 
on the reform of government procurement. Next year, we restart 
negotiations on intellectual property, followed then by global 
agriculture negotiations, and then services negotiations. We 
must seek enhanced market access in all of these areas, and the 
stakes are very high.
    Government procurement in Asia alone will be about a $1 
trillion market over the next 10 years. Agriculture is a $600 
billion global market; services, a $1.2 trillion market 
annually. We must have this negotiating authority to enter 
these various talks or countries will not put meaningful offers 
on the table.
    Second, we must pursue market access initiatives, in fast-
growing sectors where the United States is a powerful 
competitor. The recent information technology agreement, for 
example, cuts tariffs in 42 countries on a wide array of 
information products. The agreement amounts to a $5-billion 
annual tax cut for the United States. It includes sales of such 
things as telecommunications equipment, computers, 
semiconductors, and so on. The ITA, International Trade 
Administration, has led the consensus among our trading 
partners to pursue ITA-II this fall, which would expand the 
product coverage, address nontariff barriers, and steer 
internet commerce toward free and open trade.
    Other potential sectors we have identified for market 
access include chemicals, environmental products and services, 
medical equipment and services, and other areas where we are a 
leading global competitor, but where foreign market access 
barriers remain quite high.
    Third, new authority is essential if we are to negotiate 
more comprehensive market access agreements with individual 
countries. This administration, consistent with its 
predecessors, has identified Chile as a promising candidate. 
Such an agreement appears to be possible with Chile, including 
with respect to labor and environmental issues.
    Prior to identifying any other specific country, the 
administration would first engage in extensive consultations 
with Congress. The administration's fast track proposal ensures 
that Congress will be a full partner in setting negotiating 
objectives and establishing trade priorities. Fast track, of 
course, does not itself approve any particular trade agreement; 
it is merely the procedural device under which agreements are 
to be considered by the Congress. It is Congress that has the 
final say whether a trade agreement is acceptable or not. Only 
Congress can vote yes or no.
    Let me note a few elements in the administration's 
proposal. First, the legislation would reactivate a 60-year 
partnership between the President and Congress by reinstating 
fast track and tariff cutting authority through October 2001, 
with the prospect of renewal through 2005. The extension to 
2005 would be subject to disapproval by either House of 
Congress.
    Next, our proposal outlines clear trade negotiating 
objectives designed to sustain U.S. economic competitiveness 
and advance fundamental values, such as worker rights, 
including child labor and environmental quality.
    Third, notification requirements and public participation 
have been expanded relative to prior law, and the proposal 
gives Congress an expedited way to revoke fast track authority 
if it so chooses.
    Fourth, the proposal broadens substantially, congressional 
involvement in trade policy at every phase. The President is 
required to confer with Congress before, during, and after the 
trade negotiation, and Congress has the ability to set 
priorities, provide advice, and exercise meaningful oversight.
    And finally, the proposal ensures that we will maintain our 
high health and safety standards and enforce our trade laws.
    In the Congress and among the American people there are 
strongly held views on the issue of trade, but there can be no 
disagreement that increasing our exports, tearing down 
barriers, and opening new markets under tougher trade 
agreements is good for America. We can accomplish none of these 
goals without the ability to bring our trading partners to the 
table and negotiate with them effectively, and that is what 
fast track is all about.
    In conclusion, let me say that we are committed to working 
with the Congress to make sure that this legislation receives 
the full bipartisan support it deserves and the American people 
expect. As President Clinton recently said, walking away from 
this opportunity will not create a single job. Turning away 
from this opportunity will not expand our economy, enhance our 
competitiveness, make the environment better, or empower our 
workers. The world economy is on a fast track, and we must lead 
in shaping our future.
    Thank you, Mr. Chairman.
    [The prepared statement follows:]

Statement of Hon. Charlene Barshefsky, U.S. Trade Representative

    Mr. Chairman and Members of the Committee, I want to thank 
you for the opportunity to appear before you today to address 
an issue that is vital to the future of American farmers, 
businesses, and workers, as well as our position as a leader in 
the global economy: that is, approval of the Administration's 
proposal to renew fast track and the President's tariff 
proclamation authority under the ``Export Expansion and 
Reciprocal Trade Agreements Act of 1997.'' Mr. Chairman, if 
enacted, the President's proposal would renew more than 60 
years of cooperation between the Congress and the Executive 
Branch in the negotiation and implementation of market-opening 
trade agreements for the benefit of American workers and 
companies.
    What is at stake in your consideration of this proposal is 
nothing less than whether the United States will continue to be 
at the forefront of nations seeking the reduction of trade 
barriers and the expansion of more open, equitable and 
reciprocal trading practices throughout the world. As the 
President said recently, the question before you is whether we 
are going to lead the way or follow. This is not the time to 
shrink from the future, but to seize the opportunities it 
holds.
    The President is right. Today, this country is at the 
pinnacle of its influence. Our economy is the strongest in the 
world. In the last four and one half years, the United States 
has once again become the world's number one exporter, the 
world's largest manufacturer of automobiles, the world's 
premier agricultural exporter, and the world's leading producer 
of semiconductors. From the farms of the Midwest to the high-
tech firms of California and Massachusetts, businesses are 
growing, unemployment is declining and inflation is under 
control. America leads the world in a very competitive global 
marketplace. Our economy is the envy of our trading partners.
    Today, international trade is an increasingly vital 
component of our economic strength at home and leadership 
abroad. Exports are more important in our economy than ever. 
Since 1993, more than a third of our economic growth has come 
directly from exports, and the number of export-related jobs 
has increased by 1.7 million. A total of some 11.5 million U.S. 
jobs depend on exports, and these jobs pay an average of 15% 
more than non-trade-related jobs. Since 1985, U.S. exports have 
roughly tripled from about $300 billion to an expected $900 
billion this year.
    But, we cannot rest on our past accomplishments. We must 
find new markets for our goods and services in order to help 
our economy to maintain strong growth. To frame our economic 
challenge clearly: the United States represents four percent of 
the world's population, yet our share of global income is 20%. 
How are we going to maintain our enviable position? We must 
sell to the more than 96% of the consumers that live outside 
our borders, which requires that we further open foreign 
markets to our goods and services. We need fast track if our 
economy is to stay on the fast track.

                      The Importance of Fast Track

    Fast track is critical to increase access to foreign 
markets and shift trade conditions in our favor. Fast track 
sends a strong signal to our trading partners. It tells them 
that when the President negotiates a trade agreement, he has 
the confidence of the Congress behind him. It also indicates 
that the United States is serious about reaching agreements 
that will reduce market barriers and trade distortions.
    This proposal reactivates a partnership between the 
President and the Congress that dates back over six decades. 
Recognizing that the high protective U.S. tariff walls it 
established in 1930 had only served to deepen the Depression, 
Congress four years later enacted the first reciprocal trade 
agreements act. In that act, Congress gave the President 
authority to negotiate mutual tariff reductions with our 
trading partners. Congress renewed that authority repeatedly 
over the years, and successive Presidents used the authority to 
dramatically reduce tariff barriers around the world.
    ``Fast track'' was first put in place under the Ford 
Administration in 1974. Under fast track the Congress and the 
President work together, ensuring that the United States can 
effectively negotiate away foreign tariff barriers as well as 
non-tariff barriers--such as quotas, protectionist product 
standards, and subsidies--which foreign governments have 
increasingly substituted for tariffs to exclude U.S. products. 
It worked well for 20 years, a period over which every 
President had fast track authority with bipartisan support. 
Fast track lapsed along with most of the President's tariff 
reduction authority three years ago.
    With this legislation, we are seeking to reactivate the 
process by which certain trade agreements can come back to the 
Congress for an up or down vote without amendment. We are not 
seeking Congress' approval of a particular trade agreement. 
Congress retains the last word.

                          Dangers of Inaction

    There are serious and immediate consequences if we do not 
renew fast track. Increasingly over the past few years, major 
trade agreements have been negotiated without our 
participation. Our competitors are determined, sophisticated, 
strategic and focused. In every region of the world, but 
particularly Latin America and Asia, the two fastest growing 
regions of the world, governments are pursuing strategic trade 
policies and, in some cases, preferential trade arrangements. 
They are forming relationships around us, rather than with us, 
and they are creating new exclusive trade alliances to the 
detriment of U.S. interests. I can assure you that our trading 
partners are not waiting for us to pass a bill.
    A significant number of bilateral and regional trade 
agreements are already operating here in the Western 
Hemisphere. The United States is party to only one. In fact, 
most U.S. trading partners in the hemisphere have been actively 
forging closer ties with neighboring countries. In Latin 
America and Asia alone, over 20 such agreements have been 
negotiated since 1992--all without us.
    Argentina, Brazil, Paraguay, and Uruguay have formed a 
common market, MERCOSUR, which has a GDP of approximately $1 
trillion and ambitions to expand to all of South America. 
MERCOSUR is the largest economy in Latin America and 
encompasses a population of 200 million. It has struck 
agreements with Chile and Bolivia, and is discussing agreements 
with a number of Andean countries (Colombia, Venezuela), as 
well as countries within the Caribbean Basin. There are recent 
reports that Canada is also in discussions with MERCOSUR. And, 
the EU and MERCOSUR already have plans to conclude a reciprocal 
trade agreement by 1999.
    Furthermore, the nations of the Andean Community have 
started meeting with member nations of CARICOM and the Central 
American Common Market to discuss negotiation of free trade 
agreements.
    And, Chile, with one of South America's leading economies, 
has signed trade agreements with Bolivia, Colombia, Ecuador, 
Mexico, Venezuela, Canada and the MERCOSUR states. Indeed, 
Chile has preferential trading relationships with every major 
trading country in our hemisphere but one--the United States.
    In South Asia, the seven members of the South Asian 
Association for Regional Cooperation (SARC)--India, Pakistan, 
Bangladesh, Nepal, Bhutan, Sri Lanka, and the Maldives--have 
set 2001 as the target for the creation of a free trade area. 
SARC now represents only about 1 percent of world trade, but it 
encompasses roughly 20 percent of the world's population. This 
will increasingly be an important market for U.S. goods and 
services.
    Access to markets in such developing nations is especially 
important to America's economic future, particularly those in 
Asia and Latin America which are projected to grow at rates as 
much as three times the U.S. growth rate. As noted, more than 
96 percent of the world's consumers reside outside the United 
States. Of the more than 30 million people who join the world's 
middle class annually, an estimated three quarters are found in 
emerging markets and other low and middle-income countries. 
Latin America alone, if current trends continue, will exceed 
both Japan and Western Europe combined as an export market for 
U.S. goods by the year 2010. Already, Latin America is our 
fastest growing export market, even though the tariff barriers 
within the region average three to four times the average U.S. 
tariff. Similarly, the Asian Pacific Rim has been our second 
fastest growing export market in recent years, but its market 
access barriers are also generally higher than U.S. barriers. 
The elimination of these inequities is in America's fundamental 
interest, as we have the most competitive economy in the world.
    Our lack of fast track procedures also disadvantages us in 
comparison with our industrialized competitors. As mentioned, 
Canada recently signed a new trade agreement with Chile, giving 
Canadian exporters substantial advantages over their U.S. 
counterparts. Perhaps even more disturbing, the EU, already the 
world's largest trading bloc, is poised for major expansion in 
the next few years. The EU has secured for its exporters 
significant advantages in the transition economies of Central 
and Eastern Europe. As noted, the EU also has begun a process 
aimed at reaching a free trade agreement with MERCOSUR and one 
with Mexico. It has also concluded a framework agreement with 
Chile which is expected to lead to a free trade agreement by 
1999 based on recent reports.
    China has targeted Mexico, Argentina, Brazil, Chile and 
Venezuela as ``strategic priorities'' in Latin America. China 
wants to enhance commercial ties and ensure that key Latin 
countries are receptive to its broader global agenda as a 
rising power, both in the WTO and other fora. The Chinese 
leadership has undertaken an unprecedented number of trips to 
Latin America in the last two years, and Latin America is 
China's second fastest growing export market.
    Japan has undertaken high level efforts throughout Asia and 
Latin America to enhance commercial ties through investment and 
financial initiatives. The Prime Minister of Japan recently 
visited Latin America seeking closer commercial ties and a 
greater Japanese commercial presence in all respects.
    The consequences of agreements being reached without us are 
not just theoretical; they are quite real. Many U.S. firms are 
suffering from the competitive disadvantage caused by 
preferential agreements that do not include us. Our companies 
are losing export opportunities. Our past efforts to level the 
playing field will prove futile over the long-term if we begin 
to cede this ground to our competitors. Examples abound:
     A U.S. telecommunications equipment supplier lost 
significant sales to a Canadian competitor in part because of 
an 11% tariff preference favoring Canadian producers.
     A Massachusetts fabric producer recently lost a 
$1.8 million sale in Chile to a Canadian competitor because of 
an 11% tariff preference favoring Canadian producers.
     U.S. apple producers are at risk in their Latin 
American markets due to Chile's preferential tariff free, or 
near tariff-free, access to MERCOSUR, Venezuela, Colombia, and 
other South American markets as a result of the FTAs it has 
negotiated (six since 1991). U.S. producers have to absorb the 
non-preferential tariff cost to enter these growing markets.
     U.S. corn producers are facing competition in 
Chile from Argentinean producers who enjoy a 3.3% tariff 
preference, which will grow to 11% over time. U.S. corn 
producers are facing competition in Chile from Argentinean 
producers who enjoy a tariff preference. Similarly, U.S. corn 
producers could lose half their market share in Venezuela to 
Argentina because of Venezuela's relationship with MERCOSUR.
    In the context of negotiating the MERCOSUR customs union, 
Argentina, Paraguay and Uruguay raised their tariff on imported 
computer products to accommodate Brazil's interests. The net 
result was that the common external tariff is significantly 
higher (from zero to 14 percent ad valorem in the case of 
Argentina, the second largest economy in South America) than 
the original tariff on these items in Argentina and others.
    The United States can only redress these growing trade 
imbalances by concluding similar bilateral and regional 
agreements, as well as negotiating new multilateral agreements 
that level the trade playing field. But no such agreements are 
likely as long as our trading partners believe that any 
agreement the President negotiates will also have to be 
separately negotiated with the Congress.
    Fast track, however, is about more than economics. It is 
about American leadership. As the President said last week, 
fast track ``is about whether other countries will continue to 
look to the United States to lead to a future of peace and 
freedom and prosperity; about whether the world will be growing 
together instead of coming apart; about whether our economic 
ties will lead to cultural ties and ties of partnership, or 
whether we will be viewed as somehow withdrawn from the world, 
not interested in leading it, and therefore, not nearly as 
influential as we might otherwise be for the causes in which we 
so deeply believe.''
    Sidelining ourselves at this critical juncture will have 
repercussions that will be far more than economic. Economic 
prosperity contributes to economic security, which in turn 
supports democracy and stability. We are at the pinnacle of our 
influence and we should use that influence to shape 
international economic rules and transmit our fundamental 
values.

                         The Uses of Fast Track

    The absence of fast track does not only mean that we cannot 
match our competitors when they enter into preferential trade 
arrangements. It also prevents us from achieving our own goals. 
There are three major areas of pressing concern which require 
fast track now.
    First, fast track would allow us to complete the built-in 
agenda of the World Trade Organization: that is, conclusion of 
the major trade negotiations that were deferred at the end of 
the Uruguay Round and participation in negotiations mandated by 
the Uruguay Round agreements in areas ranging from rules of 
origin to services. This year, we resume negotiations to expand 
and improve the government procurement agreement. Next year, we 
begin again the negotiations on intellectual property rights, 
followed by agriculture negotiations in 1999, and then services 
negotiations. We seek enhanced access to global markets in 
these areas, and the stakes are very high. The world's 
government procurement market will be a trillion-dollar market 
over the next decade and bringing more countries into the 
agreement will be critical. Agriculture and services represent 
another almost $2 trillion market, with agriculture 
representing $600 billion globally; and services $1.2 trillion. 
We must have fast track authority to enter these various talks 
or countries will not put meaningful offers on the table.
    Second, fast track would enable us to pursue market-opening 
initiatives in sectors where the United States either leads the 
world or is a powerful competitor, and where there is 
extraordinary potential for growth. A good example of what can 
be achieved in this area is the recently concluded Information 
Technology Agreement (ITA), the United States and 43 other 
nations agreed to the reduction and eventual elimination of 
tariffs on information technology and electronic products, 
including semiconductors, computers, telecommunications 
equipment, faxes, phones, and integrated circuits. This is an 
extraordinarily favorable agreement for the United States, 
since we are a major exporter of these products and our 
applicable tariffs were already quite low. Because other 
countries generally maintained substantially higher duties, 
this agreement provides what amounts to a $5 billion tax cut 
for the U.S., money that can be used for research and market 
development, creating new business opportunities and jobs for 
Americans.
    In fact, the agreement has proven so successful that we 
already have a consensus among our trading partners to pursue 
an ``ITA-II''--in which we are seeking to expand the scope of 
products covered by the agreement, address non-tariff barriers 
in addition to tariff barriers, and increase access to the 
Information Superhighway.
    We also are considering other sectors in which the United 
States is very competitive, but in which global barriers tend 
to be high. In particular, we are focusing on trade in 
chemicals, energy equipment and services, environmental 
technology and services, medical equipment and services, and 
wood and paper products. Within APEC, the United States and its 
Pacific Rim trading partners are working together to identify a 
number of areas that may be the subject of accelerated market 
opening discussions. Renewal of fast track would show APEC that 
the United States intends to fully take part in the 
negotiations and conclude key agreements.
    Third, fast track is essential if we are to negotiate more 
comprehensive market access agreements with individual 
countries, as well as on a regional basis. This Administration, 
consistent with its predecessors, has identified Chile as a 
promising candidate for a comprehensive trade agreement. Chile 
appears in all respects to be prepared to enter into agreements 
with us that achieve our economic objectives, as well as our 
goals with respect to labor and the environment. Chile also 
symbolizes our commitment to proceed towards the conclusion of 
the Free Trade Agreement of the Americas (FTAA) by 2005.
    Prior to the pursuit of other specific free-trade 
arrangements, the Administration would clearly define our 
negotiating objectives and consult closely with Congress.

                       The Fast Track Legislation

    Fast Track is about forging an American consensus on trade 
and negotiating with our trading partners from a position of 
strength and unity. As many members of this Committee know, the 
Administration spent significant time consulting with members 
in both Houses and of both parties to try to develop a proposal 
that would reflect the views of the American people. The 
consultations were invaluable in shaping this proposal, and I 
thank the members of this Committee and their staffs for their 
significant contribution.
    Let me now turn to the specifics of the President's 
proposal.
    The proposal first sets out ``overall'' and ``principal'' 
trade negotiating objectives for the President. The ``overall'' 
objectives call on U.S. negotiators (1) to obtain more open, 
equitable, and reciprocal market access; (2) to obtain the 
reduction or elimination of barriers and other trade-distorting 
policies and practices that are directly related to trade and 
reduce market opportunities for U.S. exports or distort U.S. 
trade; (3) to further strengthen the system of international 
trading disciplines and procedures; (4) to foster economic 
growth, raise living standards, and promote full employment in 
the United States and to enhance the global economy; and (5) to 
address those aspects of foreign government policies and 
practices regarding labor, the environment, and other matters 
which are directly related to trade and decrease market 
opportunities for United States exports or distort United 
States trade.
    The ``principal'' objectives specify that U.S. negotiators 
should seek (1) to reduce or eliminate trade barriers, and 
foreign government policies and practices directly related to 
trade that decrease market access for U.S. exports or that 
distort U.S. trade; (2) to reduce foreign government barriers 
that discriminate against or impose unreasonable regulatory 
barriers on U.S. service providers; (3) to reduce unreasonable 
barriers to U.S. foreign investment; (4) to obtain adequate and 
effective protection for U.S. intellectual property rights and 
increased access to foreign markets for U.S. businesses that 
rely on intellectual property; (5) to make the proceedings of 
international trade bodies more open to public view; (6) to 
secure fairer and more open conditions of trade for U.S. 
agricultural products; and (7) to promote through multilateral 
institutions worker rights and sustainable development.
    These objectives and guidance reflect the President's three 
primary concerns underlying the proposal. The President has 
made clear that his first consideration in proposing this 
legislation is the expansion of American trade opportunities 
abroad and the tearing down of barriers impeding U.S. access to 
foreign markets. However, the President also has made clear 
that we have an obligation to promote the rights of workers and 
the environment. Our commitment to worker rights and the 
environment reflects long-standing, fundamental values of the 
United States. The proposal's objectives properly balance the 
need to open markets with the attention these vital issues 
deserve.
    The proposal next provides that the President may enter 
into certain agreements regarding tariffs and implement them by 
proclamation. For example, the proposal would re-establish the 
President's traditional proclamation authority, under which he 
can reduce U.S. duties up to 50 percent and eliminate duties of 
5 percent ad valorem or less. This authority dates back to 
1934. The proposal adds a new provision that would allow the 
President to harmonize or eliminate tariffs in connection with 
reciprocal tariff agreements in particular sectors, as we did 
in the ITA, as well as to carry out reciprocal tariff 
elimination agreements consistent with WTO rules.
    In order for an agreement to qualify for fast-track 
treatment under the bill, the President must comply with 
extensive notice and consultation requirements. These 
provisions enable the Congress to set priorities, provide 
advice, and exercise oversight at all stages of the 
negotiations. They ensure that Congressional views will be 
reflected both in any final agreement and in the manner in 
which an agreement is carried out.
    The bill expands upon the notice and consultation 
requirements included in earlier trade acts. For example, the 
President must provide notice to Congress before initiating 
negotiations, and he must consult with all congressional 
committees having jurisdiction over relevant issues. Only by 
broadening the circle of consultations and the Members of 
Congress included in them will we ensure that the trade 
agreements we bring home have broad, bipartisan support--
maximizing the benefits fast-track procedures are designed to 
achieve.
    In addition, Members of Congress and their staff are to be 
named as cleared advisers with respect to on-going 
negotiations. These Congressional advisers will be apprised of 
all critical phases of the negotiations, and they will have 
direct input into our strategy and offers. When negotiations 
near completion, the President must notify Congress of his 
intention to enter into an agreement and, once the agreement is 
signed, the President must describe to Congress how he intends 
to implement the agreement. Finally, the President and the 
Congress are to receive advice on any proposed agreement from 
the International Trade Commission.
    To strengthen these provisions, we have added further 
consultation requirements. The bill mandates that, prior to 
entering into negotiations, the President must describe his 
specific negotiating objectives. The President is required to 
consult with Congress both before and after negotiations begin. 
In addition, the President is required to inform Congress of 
any other agreements he intends to conclude with the country or 
countries in question in addition to the trade agreement 
itself. The President must also state whether the fast track 
agreement will require additional implementing legislation that 
can be enacted only outside the fast track process.
    Moreover, Congress must be satisfied that the President has 
met his consultation obligations. Under the proposal, if 
Congress finds that the President has not done so, an expedited 
procedure is available for Congress to withdraw fast track 
procedures.
    The proposal also builds on existing provisions to ensure 
that the public is informed of trade negotiations and that a 
mechanism is available for ensuring that the public can make 
its views known to U.S. negotiators. In addition, the proposal 
calls for the President and Congress to receive advice from 
officially-designated advisory committees covering the full 
range of sectors and policy matters, including manufactured 
goods, agricultural products, services, intergovernmental 
matters, investment, intellectual property, labor, and 
environmental matters. These provisions demonstrate the 
Administration's hope that Americans will not only understand 
our trade agenda, but take an active part in formulating it.
    Under well-established practice, the President collaborates 
with the Congress in drafting fast track implementing 
legislation. Such legislation is subject to informal public 
hearings and ``mark-ups'' by all Congressional committees of 
jurisdiction before its introduction. Under the President's 
proposal, provisions may be included in such legislation only 
if they are necessary or appropriate to implement an agreement 
and are related to trade. This language was designed to provide 
the President and Congress with sufficient flexibility to 
modify domestic law to achieve our trade objectives while 
ensuring that implementing bills will retain their focus on 
trade issues.
    The President's proposal seeks this authority until his 
term is completed, with the possibility for an extension until 
2005, subject to disapproval by Congress. This provides 
Congress and the next President the opportunity to ensure that 
the consensus that we hope can be achieved with this fast track 
proposal endures during the first term of the next President.

                               Conclusion

    Mr. Chairman, if enacted, the President's proposal would 
renew more than 60 years of cooperation between the Congress 
and the Executive Branch in the negotiation and implementation 
of market-opening trade agreements for the benefit of American 
workers and companies. We have had a bipartisan consensus on 
the importance of expanding trade for the American economy and 
creating a trading system as a part of America's leadership for 
peace and freedom. It is now clearly more important than ever 
that we build a new consensus on the framework for the global 
economy of the 21st century. I am committed to working with the 
Congress to make sure that this legislation receives the full, 
bipartisan support it deserves and the American people expect.
    As the President Clinton said recently: ``Walking away from 
this opportunity will not create a single job. No one suggests 
we should throw up greater barriers in our own marketplace. 
Walking away from this opportunity will only leave inequalities 
in place--inequalities that do not work to the advantage of 
either American businesses or American workers.'' The world is 
on a very fast track to the 21st century. America must lead in 
shaping our future.
      

                                


    Chairman Crane. Thank you, Madam Ambassador, and let me 
open up with a reference to some earlier testimony that we 
heard. The fast track opponents, including the Minority Leader, 
who testified just a few minutes ago, charge that trade 
agreements threaten food safety. Could you respond to the 
allegations that we are less able to protect U.S. citizens from 
contaminated food under trade agreements such as NAFTA and the 
Uruguay round than we were without these agreements?
    Ms. Barshefsky. First of all, Mr. Chairman, issues of food 
safety are not trade issues, they are issues of overall concern 
to the United States. Hudson Foods was not a trade issue, for 
example. The important point here is that our market has always 
been relatively open with respect to various foods, 
particularly fruits and vegetables. If we look at vegetables, 
for example, neither the Uruguay round nor NAFTA reduced U.S. 
tariffs to any significant extent here. But U.S. domestic 
demand for fruits and vegetables year round has created growth 
not only in U.S. production, but also in imports.
    As the President recently announced, we intend to ensure 
that our food, which is the safest in the world, continues to 
be so. He has proposed an initiative whereby, first, funding 
would be increased for inspection, and second, the Food and 
Drug Administration would be given power akin to our U.S. 
Agriculture Department to stop imports of fruits or vegetables 
where there was any question of safety and power to prevent 
those from entering our market.
    But the important point to remember here is that all food, 
imported and domestic, is subject to precisely the same 
standards. The only issue is one of inspection, which is a 
systemic issue. We feel this can be cured quite well by the 
President's initiative.
    Chairman Crane. Thank you.
    A part of winning the fast track battle, it seems to me, 
will be putting together a successful education effort, because 
there has been a lot of misrepresentation as to 
constitutionally, whether fast track is an abdication of 
congressional responsibility; and we both know better than 
that. But one of the things that concerned me was a recent poll 
that showed your gender being more adamantly opposed to trade 
than ours. Is it that all of the things that come into this 
country in the way of imports are exclusively consumed by men?
    Ms. Barshefsky. Let me just say that with respect generally 
to the various data we see in polls, if you look at the 
underlying question that was often asked, you see that the poll 
result is very much affected by the particular rhetoric used--
free trade versus fair trade, open trade versus reciprocal 
trade--and depending on the phraseology used, poll results tend 
to differ quite radically.
    I think all Americans would agree that the growth of our 
economy is the number one priority. This is where economic 
opportunity comes from, and this is where economic advancement 
comes from, this is the legacy we leave to our children. There 
is no question, no question, that trade now plays an ever 
important role in our own domestic economic growth.
    That is not to say that everyone necessarily shares 
equally, and this is, I think, an issue deserving great 
attention; but it is to say that, overall, this economy's boom 
and the 13 million new jobs created are due, in very 
significant part, to exports and trade.
    Chairman Crane. And would you concur that the bulk of 
Chinese imports benefit women more than men?
    Madam Ambassador, regarding the section 108 report recently 
submitted by the administration, when do you anticipate being 
able to begin consultations with Congress concerning countries, 
in addition to Chile, that would be appropriate candidates for 
negotiating free trade agreements?
    Ms. Barshefsky. Mr. Chairman, we are always happy to 
discuss with you and Members of the Subcommittee ideas that we 
may have. Certainly there are countries in our own hemisphere, 
there are countries in Asia, and potentially, as well, over 
time, South Africa, that probably deserve some consideration; 
but I think before we proceed, we need to look at all of our 
options, and consider very carefully how to move forward. We 
want to act, and I am sure Congress agrees, in a prudent and 
careful manner as we look at, particularly, the question of 
free trade agreements. We are in no particular hurry, and 
should not be. Instead, thoughtful analysis should always be 
applied.
    Chairman Crane. We are going to be interrupted again by a 
vote shortly, but I just want to inquire, can you stay for us 
to run over and back when we recess.
    Ms. Barshefsky. I certainly can, absolutely.
    Chairman Crane. Please, Mr. Matsui.
    Mr. Matsui. Thank you, Mr. Chairman.
    Thank you very much, Ambassador Barshefsky, for your 
testimony and all the work you have been doing on behalf of the 
effort on fast track. I know you met with over 200 Members of 
the House Democrats; we only have 206, so you met with 
virtually everybody. And certainly I believe the President and 
his entire Cabinet and administration have been doing a 
tremendous job in trying to come to some consensus here, and we 
appreciate it.
    Let me just ask a couple of questions.
    The whole issue of technology has come up. Mr. Visclosky 
from Indiana said that there is a huge wage disparity in this 
country today, and he attributes that to trade. Now, my 
statistics, or my studies, indicate that trade and immigration 
frankly only account for 10 percent of wage disparities, but 
basically the change in disparity is due to education, but most 
importantly, technology. Could you respond to this?
    Ms. Barshefsky. Virtually all of the economic studies, 
including those by the IMF and the World Bank, indicate that 
technology is far and away, the principal contributor to the 
question of wage disparity. Trade is viewed almost universally 
in the economic literature as having anywhere from no to only 
very slight effect.
    I think the maximum projection I have seen, which came 
fairly recently from the IMF, was that, at most, trade might 
account for one-eighth of the disparity, but that the actual 
number is likely to be even smaller.
    Of course, over time, exports tend to shift the locus of 
job creation to higher wage, higher value-added jobs, and in 
that regard, trade is a help to the question of differences in 
income distribution, not the cause of it and not a hindrance to 
it.
    Mr. Matsui. And getting down to specifics from your 
discussion, in terms of Mexico, it was stated in the prior 
panel that Mexico has a low-wage rate now than it did prior to 
NAFTA, and that very well may be; but it was my understanding 
in 1995, when the peso fell--almost had a free fall--that had a 
great deal to do with the issue of Mexican wages prior to NAFTA 
and Mexican wages after NAFTA.
    And what would your projection be in terms of wages in 
Mexico now, given the fact the peso is reasonably stabilized?
    Ms. Barshefsky. Well, you are quite right. The effect of 
the peso crisis on the Mexican economy was quite devastating, 
leading to the worst economic recession in that country in 60 
years. Overall, we saw about a 20-percent decline in wages in 
the country as a whole because of the peso crisis.
    Interestingly, the wage fall was less in export sectors, 
which tended to pay more to begin with and which tended to be 
able to ride the economic depression a little bit better than 
those in occupations not related to trade. We have now seen 
wages going back up. I can't give you a projection, except to 
say the slide was arrested a number of months ago.
    Wages are now on the increase. Again, in export-related 
sectors, wages are rising more rapidly than the overall wage 
increase rate. There is no question that the peso crisis itself 
had virtually nothing to do with the NAFTA; it was, instead, 
the product of fiscal and other decisions made by the Mexican 
Government in the mideighties.
    Mr. Matsui. Thank you. One last question.
    There is some talk about introducing a piece of legislation 
that would require countries that we are negotiating with just 
to maintain their labor and environmental standards; and I 
question what the impact of that would be on the United States. 
We in Sacramento County, my community, my home district, we 
live in the Central Valley of California, and so we are 
recessed and we have a clean air problem. And we have sought 
waivers a number of times over the last 10 years because we 
haven't been able to meet the attainment standards promulgated 
by the EPA.
    Would we be in jeopardy should similar language be imposed 
upon the United States? Let's say in our dealings with Chile, 
we said, you have to enforce all of your labor, all of your 
environmental standards at the local, State, and Federal level; 
and it was similarly imposed on us? What would your 
interpretation be if you could make an interpretation at this 
time?
    Ms. Barshefsky. I think it is hard to know precisely the 
effect on the United States or, for example, on Sacramento. I 
would say generally the point of the administration's policy is 
to ensure three things: First, that we can sustain and increase 
our own economic growth, exports, as a principal vehicle in 
that regard; second, that we have means by which to encourage 
countries to raise their environmental standards to promote 
policies leading to sustainable development--this is absolutely 
critical; and third, a means by which countries over time will 
raise their worker standards, their health and safety 
standards, and all of the core labor standards to which so many 
countries claim they subscribe. These are the critical goals.
    The goal is not to in any way impinge upon U.S. labor or 
environmental standards, to call into question congressional 
right to set standards, or the administration's ability to 
promote and promulgate standards. That is not what these trade 
agreements are about. They are, instead, about seeing the world 
move up in our direction.
    Mr. Matsui. Thank you very much, Ambassador.
    Chairman Crane. Thank you.
    Mr. Camp.
    Mr. Camp. Thank you, Mr. Chairman.
    Ambassador Barshefsky, I note in the administration's fast 
track proposal, unlike the 1988 act, there is no specific 
objective in the statute regarding dispute settlement; and I am 
a little concerned about the lack of emphasis on that 
particular area, particularly regarding the concerns 
surrounding Chile's potential accession to NAFTA.
    But I do want to mention that I think it is--I do 
appreciate the recognition of the importance of U.S. 
agriculture to our trade policy and to our economy as a whole 
by having a section on agriculture. In reading the 
administration's bill, it does seem to me that the negotiating 
objective is focused on commodities that we export, and I 
wonder if you could tell me what I could say to farm families 
that are particularly import sensitive to commodities, what 
fast track will do for them?
    Ms. Barshefsky. Let me first make one comment on the 
dispute settlement issue.
    Certainly, it is not our intent that dispute settlement not 
be the subject of negotiation. I think that we envisioned that 
dispute settlement would be one of the areas encompassed by 
what we called the ``basket category,'' which was the first 
principal objective, but that is certainly something we are 
pleased to take a look at.
    On the agriculture issue, you are quite right that we in 
this administration have a renewed focus on agriculture, the 
critical importance to our economy of sustained high levels of 
agriculture production and, agriculture exports. This is a net 
income earner for the United States. We also know, though, that 
foreign country barriers with respect to agriculture are quite 
problematic. We clearly must go after them.
    I do think, though, that we have to be aware of and find a 
means to deal with agricultural areas that are import sensitive 
here. Obviously, the point of trade agreements is to promote 
overall growth, not to try and disadvantage particular sectors 
in any way. Certainly, we are committed to looking at the 
question of import sensitivity and trying to devise appropriate 
means to deal with that.
    Mr. Camp. I appreciate your answer, and I am going to have 
to run and go vote so I would yield back. Thank you.
    Ms. Barshefsky. Thank you.
    Mr. Nussle. There is the microphone. Hi.
    Ms. Barshefsky. Hi.
    Mr. Nussle. Madam Ambassador, my questions are more 
general. I had an opportunity to listen briefly and then read 
the Minority Leader's arguments about not granting the 
President fast track; and one of his arguments--and other 
opponents, for that matter, argue that the President doesn't 
need fast track in order to conclude the various trade 
agreements. And he cites that 198 of the 200 agreements you 
cite were done without fast track, and why do we need fast 
track, he doesn't deserve fast track--the President, in this 
instance, he is referring to.
    If you don't have fast track, how are you disadvantaged 
vis-a-vis the negotiations with our trading partners? How will 
this affect us as you maneuver through the negotiations?
    Ms. Barshefsky. Fast track is absolutely critical to the 
three areas that I outlined; that is to say, the agreements 
that the administration has negotiated for market access, of 
which we are quite proud, tend to be single-issue agreements 
with single countries. For example, apples to Japan--not global 
agriculture, but apples to Japan--citrus to Brazil or auto 
parts to Korea, all are very specific issue-oriented agreements 
for market access with an individual country. They don't 
require any change in U.S. law; they are very targeted 
agreements.
    The agenda that we have laid out here, though, is something 
rather different with a degree of complexity far beyond those 
agreements and, of course, envisions negotiations with a 
multiplicity of countries all at the same time, not one country 
at a time. So with respect to the WTO, for which fast track has 
always been a necessity--that is to say, in the GATT rounds 
preceding it as well--we are looking at a negotiation on global 
agricultural trade, and on global services trade, covering 
every aspect of agriculture, every aspect of services, with the 
world.
    Similarly, on government procurement; similarly, 
intellectual property rights; standards; sanitary and 
phytosanitary barriers; and rules of origin--these are highly 
complex agreements which will also entail changes to U.S. law.
    Likewise, with respect to the information technology 
agreement on the sectorial side, but for the fact that we had 
residual fast track authority from the Uruguay round, we could 
not have concluded an information technology agreement. We need 
a continuation of that authority, including tariff cutting 
authority as we look at other important sectors of the U.S. 
economy.
    And last, of course, with respect to other comprehensive 
agreements like free trade agreements, fast track has always 
been a necessity, as it was in the United States-Israel 
agreement, the United States-Canada agreement, the NAFTA, and 
any other agreements that might follow.
    Mr. Nussle. How will you handle future trade negotiations 
with regard to labor and environmental issues? It appears that 
that is the sticking point, and no matter what happens in this 
discussion and debate, that will continue to be the sticking 
point. It is your indication from your testimony that those are 
not trade issues, or they are not issues that are part of 
trade--at least that is my understanding of what you said; if 
that is not what you said, I would like you to clarify that and 
how you will handle them.
    And finally, I would like you to touch on the education 
process for the Nation. I want to compliment you and your staff 
for your assistance, the work that you have been doing on 
Capitol Hill in trying to work with Members. They have come by 
my office, answered questions, and so forth; I very much 
appreciated that. But I have to say, it is going to be a 
difficult process, as you know, if the President is not even 
able to convince his own party; and it appears from press 
reports that that has not yet been the case. I think there are 
only two that have come out in favor of it, and that is going 
to be a difficult process if that does not change.
    So I would just like you to touch on those two issues that 
were touched on by the Minority Leader, and finally, the 
education process for the Nation and for Members of Congress, 
how that is continuing; and I will pass on questions at that 
point.
    Ms. Barshefsky. With respect to labor and environmental 
issues, these issues are absolutely critical and they do bear a 
relationship to trade. As a commercial matter, that is 
certainly the case at the minimum. The President, even in 1991 
and 1992, set out three broad goals: Economic growth, including 
breaking down market access barriers; improving global 
conditions and standards with respect to labor rights; and 
improving environmental protection and enhancing sustainable 
development. Those have always been three core goals.
    The proposal that we put forward deals with all three of 
those goals in the following respect. To the extent labor and 
environmental issues are directly related to trade, those can 
be encompassed in a trade agreement. We can talk about directly 
related to trade, but we can come up, I think, with the range 
of examples to which that might pertain.
    Second, the President, as you know, has executive authority 
stemming from the Constitution to negotiate with foreign 
parties. He intends to do so with respect to labor and 
environmental issues. We have been very active on those issues 
with individual countries, as well as on a global basis in 
various international forums. We have been told by the Chileans 
that they will sign on to labor and environmental agreements 
subject to civil fines for enforcement, and we intend to enter 
into those agreements with Chile much the same way as they 
recently did with Canada.
    Third, the proposal sets forth certain goals, which we 
would like to achieve in the WTO and in the ILO, International 
Labor Organization, of course, as well as other multilateral 
forums, like the OECD, Organization for Economic Cooperation 
and Development, and UNCTAD, United Nations Conference on Trade 
and Development. There are a variety of areas where members 
increasingly understand that there is a relationship between 
trade and the environment, as witnessed by, now, the WTO 
Committee on Trade and the Environment.
    There is a relationship between trade and labor standards. 
We were instrumental in the ILO in developing a Committee on 
Labor and Trade to which the WTO secretariat is a member.
    These are very important issues. Obviously, it is critical, 
if we can, to achieve consensus on them because they also bear 
upon not only fundamental U.S. values, but also upon 
fundamental U.S. competitiveness in an increasingly competitive 
world.
    Mr. Nussle. My final point about the education process--and 
I would just point out too, I happened to have an opportunity 
to listen to the President's speech earlier to the AFL-CIO, and 
I have to say, it was very disruptive to the vote-counting 
process up here on Capitol Hill. There were a number of 
Republican colleagues I know on our side of the aisle that were 
very disheartened by the partisanship that it appeared to take, 
and I have to say both in educating the public and working the 
vote up here on Capitol Hill, that it is going to be a 
difficult process if the strategy doesn't make some adjustments 
here in the near future.
    What are you doing, and what can be done, if this process 
is going to be brought to a successful conclusion in what you 
are advocating?
    Ms. Barshefsky. The President has set out his goals. The 
three goals that I have mentioned are his goals. Those were his 
goals in 1991, 1992, 1993, 1994, 1995, 1996, and in 1997, and 
those goals will not change. The issue is, how do we best move 
forward on the economic issues, on labor issues, and on 
environmental issues?
    We believe that under our proposal, the President and the 
Congress, can make progress on all three issues simultaneously. 
There are some proposals that would have us make progress on 
none, simultaneously or otherwise, and obviously, it seems to 
me that those are nonsensical. This proposal that we have put 
forward would allow for progress to be made on all three.
    That is our intention, and we have confidence at the end of 
the day that will be Congress' intention as well.
    Mr. Nussle. Thank you, Ambassador.
    Ms. Barshefsky. Thank you.
    Chairman Crane. Mr. Rangel.
    Mr. Rangel. Let me join with the many who have complimented 
you for the job that you have been doing for the President and, 
therefore, our Nation in trying to get some consensus on this 
important and politically sensitive issue. I gather that all of 
the objections that people have to fast track, as presented by 
the President, you would agree are relevant and important 
issues, but not necessarily related to a trade bill or to fast 
track; so that doing business with a country that is exploiting 
its workers or forcing them to work in conditions that are far 
below human standards, while it is a threat to a great 
industrialized nation like ours in terms of losing jobs, may be 
an issue, you would say not an issue that should be directly 
involved with trade.
    The question as to whether or not going into a trade 
agreement with countries will cause us to lose jobs and cause 
some economic pain to individual families and communities, you 
would say is a very, very important issue to the President, but 
it should not be directly involved in a trade bill.
    The fact that these high-paying jobs that result from 
expanded trade are in highly technical areas, there are many 
communities that the kids and the adults know that you are not 
talking about them; the school system doesn't allow them to 
aspire to these jobs, and they are not going to get them. They 
are not trained for them, and you would say this is a very, 
very important issue and the President's concern, but it is not 
directly related to a trade bill.
    And last, there are people that this period of very, very 
low unemployment and high prosperity that just passed by, 
communities with unemployment from 20, 30, to 35 percent, and 
of course they can't be hurt any more by expanded trade. A lot 
of them now have reached a point that they are unemployable, 
and in certain communities, kids can almost be promised a 
career in jail rather than a career in the private sector; and 
you would say that these things, too, the President is 
concerned with. And it does involve an impediment to our 
competition with foreign countries, having a million and a half 
people in jail while we are trying to have economic growth, but 
that too is not directly related to trade.
    Then comes the question of education, because in my 
community, fast track is considered to be a transportation 
issue; and when people talk about it, they talk about losing 
jobs, they don't talk about prosperity and new jobs. How do you 
deal with education, if not in the trade bill? Where, where do 
we go? Because this is an educational process.
    And I trust the President, and I think this is what we are 
talking about. The President is aware of all of these problems 
and he is saying, trust him, don't write things that are 
unenforceable and cause our country not to be able to compete. 
And so we are out there now in the hustings and the valleys and 
the counties saying, support the President because it means 
jobs. But you are saying, but not in my bill, you won't.
    This bill is for the future; it is not for tomorrow. It is, 
where does America go in the next century? And these are the 
things that I would want to support for my kids and my 
grandkids, but I also have to see, if not in this bill, where 
the rest of the country would be able to say, you bet your 
life, we trust the President, we are working now, we have 
public works, we have infrastructure, our jobs are secure, and 
we only hope that you can improve that. And that is the way it 
should be.
    But how do we educate the people? But not in a trade bill, 
you don't. Where do you go? What do we do so that everyone 
would feel secure and know that expanded trade is no threat to 
their job, expanded prosperity means that they are going to be 
the beneficiary. If not in the fast track, where?
    Ms. Barshefsky. Mr. Rangel, let me say, first of all, that 
the issues that you have raised--that is, job growth, income 
distribution, providing opportunity to those to whom 
opportunity has been limited, and ensuring that all Americans 
can benefit from economic growth--are critical to the 
President, and are reflected in many of the President's 
programs. For example, the budget initiative--with respect to 
educational spending, with respect to doubling assistance for 
dislocated workers, with respect to HOPE scholarships, with 
respect to pension portability--and a number of other 
absolutely critical issues--addresses the economic concerns 
that our people may have.
    There is no question more should be done and more can be 
done, but let me say, first, that the areas that you have 
raised are areas of concern for the President, and he has been 
perhaps the most responsive President in modern times to 
attempt to deal with those issues in an effective way.
    Second, these issues are critical issues regardless of 
trade. We know with respect--as we were talking earlier on the 
question of wage disparity--that technological change has had 
the most profound impact, raising the demand for higher skilled 
workers, relative to lower skilled or undereducated workers. 
This is obviously of concern; that is to say, how to move that 
lower skilled pool toward the higher skilled area.
    Education is certainly an important answer, and more 
critical in the longer run. The question is, what can we do in 
the shorter run for those workers who are not able to get into 
that flow and into that stream? In this regard, adjustment 
assistance programs and transitional assistance programs become 
very, very important.
    As you know, the NAFTA-TAA, Trade Adjustment Assistance 
Programs, are up for reauthorization next year, and I think in 
this context, we need to look at a variety of possible means by 
which to improve economic opportunity for those who are 
currently least advantaged.
    Mr. Rangel. I would just like to conclude by saying, you 
would agree that we have a lot of education to do, because 
certainly America does not feel nearly as secure as you are 
saying that we should, as it relates to job opportunity and job 
loss as a result of fast track; and if not in this bill, I 
think the President will have to direct himself to the fact 
that there is a concern, that there is compassion, and that 
there are solutions.
    Chairman Crane. Mr. Shaw.
    Mr. Shaw. Thank you, Mr. Chairman.
    I think a statement that Charlie Rangel just made deserves 
repeating, that this is not about tomorrow, this is about the 
future; and I think that there is a lot of shortsightedness out 
there, which is exactly what we are talking about.
    The President likes to talk about bridges into the next 
century; in fact, I think sometimes he repeats that slogan too 
much. But I think we are talking about building bridges of 
trade, and they have to be built into the next century if we 
are going to be able to maintain our position in the world. The 
world is walking away and leaving us.
    Madam Ambassador, you made a point of the number of free 
trade agreements that had been signed lately--20, of which the 
United States is party to none; 35 since NAFTA, of which the 
United States is party to only one. These things are going 
forward, whether the United States likes it or not. What is 
happening in Europe is going to have a profound effect upon 
trade, and unless we can put together a trade agreement in this 
hemisphere, the rest of the world is going to walk away from 
us.
    Madam Ambassador, someone made reference to a 
telecommunications contract that we lost to the Canadians 
lately down in Chile because they had a free trade agreement 
with Chile, and we do not. Those are American jobs that we are 
talking about. So free trade will produce American jobs; and 
the high technical jobs, the better paying jobs are going to be 
here in our country.
    I think that all of us have to look at the very structure 
of our government. Politics ends at the ocean's edge--we all 
like to say that, particularly when we are traveling, but I 
think this is another area we need to talk about; and I can 
think of no finer example than that we on the Republican side, 
the majority of us, are willing to give the President fast 
track authority in negotiating a trade agreement.
    With countries that have a parliamentary type of government 
and a Prime Minister from the majority party in that 
parliament, the failure of the President's party or the Prime 
Minister's party to support him on a vote like this would be a 
vote of no confidence, and it would bring down that government 
and create a need for new elections.
    We have got to look at ourselves, and I think--particularly 
speaking to the Members on the other side of the aisle now--
they have to look at this and see, do they want this to be a 
vote of no confidence in this President, or do they want to be 
left behind and leave it with the Republicans, or it is 
necessary for us to push this thing through? I would hope not.
    And the very reason why we don't have more free trade 
agreements at this particular time is simply because the people 
that we would be negotiating with do not have any type of 
guarantee that the U.S. Congress won't take whatever they have 
put on the table and amend it and amend it to death; and those 
of us who have watched what is going on in the Congress for 
years know that the other body over on the Senate side will 
fiddle with it if we don't have fast track authority.
    So the only way that we can guarantee that whatever is 
negotiated will at least be voted on by the Congress is to give 
the President fast track authority.
    I have problems with the Mexican agreement. I wish we had 
started with the Chileans, because their economy is much more 
like ours, their environmental laws and labor laws are much 
more like ours. But nonetheless, I think we can see what has 
happened in Mexico; anything that could have gone wrong, did go 
wrong, whether you are talking about corruption or whether you 
are talking about the collapse of the peso. But can you imagine 
what might have happened in Mexico had we not had NAFTA, had we 
not had a free trade agreement with Mexico and the effect that 
has on the border with illegal immigration coming into this 
country?
    To me, this is a no-brainer. I mean, we have to give this 
President authority to go forward because the President of our 
country does not control matters of trade like the presidents 
of other countries; the Congress does. And the Congress is not 
giving him any authority to negotiate for that Congress; it is 
simply guaranteeing the President and the people we negotiate 
with that whatever they negotiate is going to be voted up or 
down by the Congress. It is as simple as that.
    I can't see why anybody would shy away from this vote, and 
I intend to support fast track, and hopefully, the President 
will come in with a treaty that I can support in the final 
analysis. But this is only the first step. And I think a couple 
of the Democrat witnesses that appeared before you, Madam 
Ambassador, made that point, that they were going to have an 
opportunity then to vote up or down on whatever the President 
negotiates. That is the way our system works and that is the 
way we want it to work.
    Thank you, Mr. Chairman.
    Chairman Crane. Thank you.
    Mr. Ramstad.
    Mr. Ramstad. Thank you, Mr. Chairman.
    Ambassador, let me also commend you for your strong 
leadership on all trade issues and, also, your refreshing 
straight talk. That is a commodity that is in short supply 
sometimes around here, and I admire you for refuting statements 
from those that would lead us to believe that somehow food 
safety is going to be in jeopardy if we pass fast track and so 
forth.
    The next thing we are going to hear from opponents is that 
fast track will cause hemorrhoids. I have never seen such a 
campaign of disinformation and misinformation in my brief 3-
year tenure on this panel than with respect to fast track. 
Hopefully, this will energize those who do understand the 
importance of fast track to the macroeconomy, to job creation, 
to get off their backsides.
    It certainly is not your fault that fast track is in 
trouble. The silence of the business community has been 
deafening on this issue. I was talking to two of my colleagues, 
who are proponents like I am and they have not gotten one 
correspondence from anyone in support of fast track. I have 
gotten three letters. I think everyone who recognizes the need 
for this critical legislation should take the message to heart 
that we need to work harder.
    I talked to several businesspeople back in my district over 
the weekend. They agree with my friend from Kentucky: This a 
no-brainer. They just assumed people would vote for this 
because they understand how important it is.
    Let me just ask you in that context, Madam Ambassador, you 
state in your testimony that 20 free trade agreements have been 
entered into since fast track authority expired, and which the 
United States has not been a party to any of those agreements. 
Is there any way of quantifying that in terms of the lost 
opportunities, in terms of job creation? Specifically, everyone 
from the Midwest is interested in the disadvantage to which 
that puts United States products like wheat and grains in the 
Chilean market, in comparison to Mexico and Canada, which have 
obviously gone ahead in negotiating some of those agreements 
with Chile.
    Please comment on the effect on job creation and the 
macroeconomy, and then specifically, wheat and grains.
    Ms. Barshefsky. Certainly we know that our own job 
creation, particularly shifting the locus of that creation to 
higher wage jobs, is hurt by every export we don't get. 
Obviously, in order to keep shifting that locus of job creation 
to higher wage jobs, to keep adding jobs, we absolutely must 
embark upon a policy of: Make it here, sell it there, which is 
what fast track, the way we conceive of it, is designed to do.
    With respect to the agricultural issues, the failure of the 
United States to be in this array of agreements is particularly 
damaging because many agricultural goods are commodities. The 
lowest price commodity gets the sale. What you have now because 
of this web of free trade agreements within our own hemisphere 
is, for example, that wheat going into Brazil, our wheat going 
into Brazil, is less competitive with respect to Argentine 
wheat going into Brazil, or our citrus going into Argentina is 
less competitive than Chilean citrus going into Argentina, or 
our fruits and vegetables going into Venezuela are less 
competitive than Chilean, Brazilian, or Argentine produce going 
into Venezuela; and the reason is, with these other countries, 
there are all sorts of preferential trade and preferential 
tariff deals to which we are not a party, immediately creating, 
a price advantage in those markets, and disadvantaging our 
exports by the same amount.
    So if you are an importer and you can buy U.S. citrus for 
30 and you can buy Chilean citrus for 30 minus 15 percent, 
which would you buy? And this is the problem that we now face.
    Mr. Ramstad. I just have one other question, Madam 
Ambassador.
    I don't think anybody is making light of specific trade 
disputes and the importance of resolving the trade disputes, 
but is it not true, we had these disputes in the past and now 
our trade agreements, really for the first time, give us an 
internationally recognized means to resolve these disputes 
which violate the spirit and letter of the agreements that have 
been made? Doesn't that have a lot of value in making a 
difference in this context?
    Ms. Barshefsky. It absolutely does. If I were to succinctly 
describe administration trade policy, I could do it in two 
words, expansion and enforcement. Fast track has to do with 
both because, of course, any agreements we negotiate under fast 
track will be fully enforceable. Let me take a minute 
separately on the enforcement issue.
    This administration in the last 4\1/2\ years has brought 
more than 70 enforcement actions against our trading partners 
around the world where they have violated rights we acquired 
under trade agreements, or where we believe their 
implementation of their obligations has been lax.
    In that connection, we have, I think, very fully utilized 
and aggressively utilized WTO dispute settlement as a new means 
to help resolve disputes, not relying solely on U.S. unilateral 
action on our trade laws, but also relying on multilateral 
dispute settlement. We have taken five cases all the way 
through dispute settlement in the WTO; we have won all five.
    That is not to say we will win every case. Certainly we 
won't, any more than one would win every court case one 
brought; but we do think the system seems to function fairly 
efficiently and fairly effectively.
    We are now plaintiffs in 31 WTO dispute settlement cases. 
We are third-party plaintiffs in another 21. We are defendants 
in 15, so this works both ways. We have a very active 
litigation program with respect to the WTO and, in general, a 
very active enforcement program--as the 70 figure shows--with 
respect to our other trade laws under USTR jurisdiction; and of 
course the 70 does not include actions taken under our dumping 
or countervailing duty law, the jurisdiction of which resides 
with the Commerce Department.
    Mr. Ramstad. Thank you again, Madam Ambassador. Keep the 
faith. I read the last chapter on fast track, and we win, but 
it is going to be tough getting there.
    Chairman Crane. Mr. McNulty.
    Mr. McNulty. Thank you, Mr. Chairman.
    I just have one quick question for the Ambassador; it is a 
telecom question.
    Chile imposes a telecom access surcharge of about 15 cents 
for inbound only international calls. What approaches are you 
taking or will you take in order to ensure that Chile agrees to 
cease this discriminatory practice?
    Ms. Barshefsky. Certainly we will not tolerate 
discriminatory practices in telecommunications trade or 
otherwise. This is a practice that I think can be rectified in 
part through the WTO telecommunications agreement that we have 
just entered into, to which Chile is a party, but more 
particularly and more directly, through a free trade agreement 
with Chile.
    Mr. McNulty. Thank you, Ambassador.
    Chairman Crane. Ms. Dunn.
    Ms. Dunn. Thank you very much, Mr. Chairman. Ambassador 
Barshefsky, I am very concerned, as Mr. Ramstad was, with the 
opposition we are seeing from some of the union groups; and 
particularly last week, or a few weeks ago in my district, I 
turned on the television set and there was an advertisement on 
that had the speaker saying that she would rather have a fair 
agreement than a fast agreement, and stating that hundreds of 
thousands of jobs had gone to Mexico because of NAFTA, and all 
sorts of misinformation.
    I would like to have you comment on that sort of thing, and 
I just hope somebody over at the White House is going to pick 
up the phone and say to the AFL-CIO, stop lying to the people 
in these advertisements. Because that doesn't do us any good, 
those of us who are strong supporters of fast track and of the 
administration's position on fast track and of you, and I 
wonder if you could comment on this.
    Ms. Barshefsky. I think--I'd simply like to say that 
passions run quite high on this issue, perhaps on both sides. 
Certainly I can't condone misinformation or disinformation from 
anybody-- or from those in favor of fast track, from those 
opposed to fast track. I think on any factually based ground, 
the position that the administration has taken far and away is 
the position that should prevail, and we would hope that the 
debate about this issue can be conducted on fairer terms.
    Ms. Dunn. Well, I am glad to hear you say that, because it 
is a battle that is--it is like fighting with alligators, and 
this is serious business. And when I hear something like an 
advertisement from the AFL-CIO that says, fast track, has 
special powers to rush through flawed trade deals like NAFTA, 
stripping Congress of the right to fix them--I really believe 
it is in the best interest of all of us to think about a 
growth-oriented future that must include our adapting to a 
global market, and I really hope that you will just pass on to 
those folks down at the White House that we would like to see 
them be very forceful in criticizing ads like this. I think 
that would be most helpful to us, and it would also prove to us 
that the White House really does want to put its shoulder to 
the wheel on getting fast track passed. Many of us are doing 
the same thing--I know you are, and Mr. Matsui and many of the 
Democrats are; but this sort of interference that creates a 
lack of understanding, that exacerbates misunderstandings that 
already exist, and that leads toward protectionism hurts our 
cause.
    Thank you very much, Ambassador.
    Chairman Crane. Mr. Jefferson.
    Mr. Jefferson. Thank you, Mr. Chairman. Good to see you 
again, Ambassador. I wanted to ask a question that in some 
respects is related to the one that Mr. Rangel asked, but I 
will ask it under the TAA programs, or the adjustment programs.
    Right now, there are three of these programs that are 
around--one for employees, one for firms, and one for NAFTA-
related issues. The Trade Adjustment Assistance Programs are 
what I am talking about. The President in the budget agreement 
asked for--provided for the extension of all of these in his 
budget authority, and actually the budget authority was vastly 
increased, particularly for employees, and also for the NAFTA-
related jobs, from 30 million in NAFTA to 44, from 80 million 
for employees to 300 million, I believe it was. So it is a 
huge--that is money that is authorized and budgeted for.
    However, when the legislation was proposed by the President 
for fast track, it did not include any provision for the--any 
language that related to these programs. It may be that that is 
a way to deal in some respect with the issues raised by Mr. 
Rangel, to provide in the fast track legislation that where 
these agreements are struck, the provisions are going to be 
made for the Trade Adjustment Assistance issues.
    Right now, it is provided for in NAFTA, which is a trade 
agreement. I understand this is not a trade agreement, but it 
is a procedural device that leads to one, and the issue is 
whether there is some incongruency in providing language such 
as that in the fast track legislation, as a guide as you deal 
with these agreements, as a way of attempting to respond to the 
issues that Mr. Rangel has raised.
    Ms. Barshefsky. Certainly, Mr. Jefferson, we wish to work 
with Congress on these issues, and as you might know, the 
President is very concerned that these adjustment programs of 
various types, of which there are a whole range, operate 
effectively and efficiently and get benefits and retraining 
quickly to people who need them.
    One of the Labor Department's particular programs for 
dislocated workers has worked very, very well; that is to say 
that worker turnaround into new jobs is very rapid, at 95 
percent of previous salary, which is very significant. In other 
words, workers are not going to poorer jobs than the jobs that 
were lost.
    But not all of the adjustment programs tend to work as 
efficiently or as well as that, and as part of our review 
overall of these programs, Alexis Herman, the Secretary of 
Labor, is looking at how to reorient and restructure these 
programs so they all work as effectively as the one I have just 
mentioned.
    We would like to work with you on the range of issues, with 
Mr. Rangel and others on the Subcommittee, because these are 
critical issues to the President and to the country, and the 
manner in which we deal with them, and the timing is certainly 
something that we need to discuss.
    Mr. Jefferson. I think they need to be discussed quite 
closely, and I also think that they do have a place in our 
trade policy, and therefore, it might prevent a ripe 
opportunity, it seems to me, for responding to some of the 
issues that have been raised, particularly by Mr. Rangel and 
perhaps by others.
    The other issue I would like to talk about is whether this 
provision that you have for the determination of the fast track 
authority and the option for extension upon this, unless there 
is disapproval, is this congruent with the provisions in the 
prior fast track legislation, or is this a new feature?
    Ms. Barshefsky. It is fairly consistent. Prior fast track 
legislation has often been authorized for a term, with the 
possibility of an additional term, unless there is disapproval. 
So we followed a similar pattern, for example, that was in the 
1988 act.
    Mr. Jefferson. In the 1991 act, it wasn't a feature of it?
    Ms. Barshefsky. Yes, I believe it had been a feature of the 
1988 act, which allowed the 1988 act to be extended, and 
extended again to finish the Uruguay round.
    Mr. Jefferson. I see. OK.
    The last thing is with respect to enforcement actions, 
the--no, let me ask another one. I think I will let the other 
answer stand on that, the one that someone else asked.
    The business about the restrictions, there is some 
suggestion that this fast track legislative proposal limits the 
President's authority more than previous fast track agreements, 
particularly with respect to issues on worker rights and 
environment. How do you judge that?
    Ms. Barshefsky. No, this agreement does not alter the way 
in which this President can negotiate trade agreements, or in 
any way differs from the way in which fast track has 
traditionally been used by Presidents, both Democratic and 
Republican.
    Mr. Jefferson. So where do they get the notion that it is 
more restrictive?
    Ms. Barshefsky. This goes back to the issues, I suspect, 
generally on labor and environment--perhaps on other matters. 
But we believe that our proposal allows the President to bring 
back the kinds of agreements that traditionally have come back 
under fast track authority. His authority to negotiate with 
respect to labor and environmental issues is in no way, 
impinged upon or lessened by this bill--in no way.
    Mr. Jefferson. So the argument is about whether there is 
positive language that says these things must be, as opposed to 
a limitations authority to engage in them, should he or his 
administrations desire to.
    Ms. Barshefsky. This bill we have put forward allows the 
President to proceed on all three bases--economic, labor, 
environment--simultaneously. There is nothing in the bill that 
interferes with his ability to do that, and of course his 
intent is to do that.
    Mr. Jefferson. Thank you, Madam Ambassador.
    Chairman Crane. Mr. Herger.
    Mr. Herger. Thank you very much, Mr. Chairman, and thank 
you, Madam Ambassador. And I thank you for the work you have 
done, attempting to bring down the trade barriers of our 
trading partners.
    But as you know, many Members of this Subcommittee have 
been working very hard to have specific language pertaining to 
agriculture included in the fast track legislation. Our 
concerns stem from the fact that many of our Nation's 
agriculture groups have not always been encouraged by the 
results of existing agreements. The U.S.-EU canned fruit accord 
is one example. That agreement has been violated in virtually 
every year since it was first negotiated.
    As part of our review of the U.S. negotiating needs, 
shouldn't we be looking closer at how better to enforce the 
trade agreements we already have in order to ensure that the 
interests of the U.S. industry are adequately protected?
    Ms. Barshefsky. First, let me say that the administration's 
bill has put forward a very strong agriculture negotiating 
objective, which includes not only reference to the importance 
of getting down these sanitary and phytosanitary barriers to 
trade, where those barriers are based on phony science, but 
also for the very first time talks about bringing down barriers 
with respect to genetically modified organisms, that is, 
biotechnology, which is becoming increasingly important to our 
corn and wheat producers and others in our agricultural 
community. This is a very big and important issue for the 
United States.
    Certainly we have got to enforce existing agreements, or 
there is no credibility in what we negotiate or bring back; and 
in response to an earlier question, we have been more active on 
enforcement, I believe, than any previous administration.
    The canned fruit issue is one that is particularly 
troubling, because European violation has gone on for some 
time. We have taken, and I have taken, a particular interest in 
this issue--I don't like these lingering issues--and we are now 
in the process of reviewing a very large bunch of material 
given to us by the EU with respect to the way in which EU 
subsidies may flow to Greece, which is the principal offender 
of this agreement. We are in consultation with the industry and 
with the lawyers to determine if we might be able to bring a 
successful WTO challenge and end this matter once and for all.
    Mr. Herger. Just as a followup to that. Are there any time 
periods that we feel that we need to be setting up, again in 
order to enforce these agreements that we already have? And I 
do appreciate that the administration has placed agriculture in 
this, and I want to thank you for that.
    Ms. Barshefsky. My policy is simply to proceed as 
expeditiously as possible. We have, I think, pursued this 
canned fruit issue and will continue to pursue it very 
vigorously. We have to move quickly on these issues of 
violation, and we have tried to do so here.
    Mr. Herger. I want to encourage you to continue doing that, 
and I do thank you for that.
    I also have another concern that, as the President is 
working to achieve the power to enter into new trade 
agreements, the administration is agreeing to deals that place 
the United States at a disadvantage. Specifically, I am 
referring to the Montreal Protocol amendment and its new 
phaseout period for methyl bromide. By requiring a U.S. 
phaseout by 2001 and by allowing less developed countries free 
use until 2015, this protocol puts U.S. producers at a marked 
disadvantage in international markets, which require fumigation 
by this compound.
    Ambassador, how do you and your staff plan to address 
issues of this nature, which place the U.S. producers at a 
competitive disadvantage.
    Ms. Barshefsky. Let me say that I am not sure that I agree 
with the premise of your question on this.
    There is a new phaseout schedule for methyl bromide for a 
phase down beginning in 1999 by OECD countries and a total 
phaseout by 2005. Developing countries are on a somewhat longer 
period, but they also have obligations here. I think, most 
important from the point of view of the agriculture community 
here, is that there are two very important exceptions to this. 
One is the exception for quarantine and preshipment use for any 
crop, for example, Japan's requirements that imported apples be 
stored in methyl bromide. So there is one exception for that.
    There is also a critical use exception. This is very 
important to agriculture, and the administration has promised 
to provide this, should the need arise. So this should 
certainly mitigate quite substantially any adverse competitive 
impact, while at the same time, protect the environment.
    Mr. Herger. Well, I thank you.
    Again, I want to make you aware, as I am sure you are, the 
agriculture community is very concerned about this issue. There 
is not really another alternative to methyl bromide at this 
time, and their big concern is that they can't use it and the 
countries right next door are able to.
    Thank you, Mr. Chairman.
    Chairman Crane. Surely. And we want to thank you.
    Mr. Levin. Mr. Chairman.
    Chairman Crane. Yes.
    Mr. Levin. Could I just have 2 or 3 minutes before we go?
    Chairman Crane. Well, we are down to about 5 minutes.
    Mr. Levin. How much time is there, 8 or 9?
    Chairman Crane. Five-and-a-half minutes.
    Mr. Levin. Let me just take 1 or 2 then.
    Chairman Crane. Quickly.
    Mr. Levin. I just want to say to the Ambassador, welcome; 
and I think you have helped to clarify the issue in one sense 
when you say that ``Fast track sends,'' and I am quoting, ``a 
strong signal to our trading partners. It tells them when the 
President negotiates a trade agreement, he has the confidence 
of the Congress behind him.'' And that is the issue, where the 
President and the administration stand.
    And I just want to mention, as we have discussed over 3 or 
4 months, what is really the burning issue here. There has been 
a changing trend in trade, more and more of it is with low 
wage, tightly controlled economies; and the question is, what 
is the impact of that? It is now up to 45 percent of our 
imports into the United States.
    And what your answers today really say--I will just sum 
them up. In one sense, you minimize it. The studies show trade 
has zero-to-slight impact. I think this is wrong. If you think 
it has slight or no impact, simply say that. Say it publicly 
and we will argue about it, but there are other studies that 
show that that is increasingly untrue.
    There is also the issue of whether it is trade related or 
not--and by the way, ``trade related'' wasn't in the language 
of previous fast tracks, so this is more restrictive. And the 
question is, when a low-wage country keeps its markets, its 
labor markets controlled, is that a trade distortion? And you 
need to say yes or no.
    You have also said, well, we will work at it elsewhere, the 
ILO and the WTO, even though you have had little or no success 
in doing so, and you raised the hackles of some of my 
colleagues on the other side of the aisle who say, we are going 
to turn this over to the WTO.
    And then you say, ``It is academic,'' or Mr. Matsui has, 
because what you are interested in is other things, and you 
spell them out. And there is no disagreement here about fast 
track for services through WTO, there is no disagreement over 
telecommunications. There wouldn't even be disagreement, I 
think, over Chile.
    Chairman Crane. Excuse me for interrupting you. We are down 
to 3 minutes.
    Mr. Levin. I will finish in 30 seconds.
    So the question is--and you don't have time to answer it--
if we limited fast track to those, would it be satisfactory? 
And I think the answer is no, because you want fast track for 
larger negotiations that strike this issue of our relationships 
with low wage, tightly controlled economies. That is what is 
the spark in this, and we need, in this country, to face up to 
it now, not 5 years from now.
    Ms. Barshefsky. May I make one quick comment.
    Chairman Crane. One quickie.
    Ms. Barshefsky. OK. I think what I said with respect to 
wage disparity is that the studies show anything from very 
slight impact to perhaps one-eighth the difference in the 
disparity.
    Second, 47 percent of our exports go to low-wage countries, 
a 270-percent increase, less than half that increase to the 
developed world. We all know where the growth markets are.
    Third, with respect to our imports of goods from low-wage 
countries, we find that something less than 4 percent of U.S. 
spending is spent on goods from developing countries that are 
nonoil, nonpetroleum goods, and that that number, as a percent 
of U.S. spending, has remained almost constant for a decade. I 
am not saying that the points you are making aren't very 
important and that we don't have to look very carefully at the 
question of trade with low-wage countries. I am simply saying 
that we have to look at the total picture, which is also the 
importance of those markets to our economic growth, and the 
fact that as those countries get richer through trade, their 
wages will rise, as seen in Korea and Taiwan, and greater 
prosperity can be had across the board.
    Chairman Crane. Thank you. We are down to 1 minute.
    Mr. Levin. You and I run fast.
    Chairman Crane. Well, you may be a sprinter.
    Thank you so much, Charlene, for your testimony, and we 
look forward to working closely with you on this.
    And the Subcommittee will stand in recess until 1 p.m.
    [Whereupon, at 12:23 p.m., the Subcommittee recessed, to 
reconvene at 1 p.m.]
    Chairman Crane. The Subcommittee will now reconvene and 
welcome before us Joe Gorman, chief executive officer for TRW 
and general chairman for America Leads on Trade.
    Joe, please proceed, and let me remind you that your 
written statement will be inserted in the record and so if you 
could make an oral presentation within roughly 5 minutes before 
our next interruption with a recorded vote, that would be very 
good.

   STATEMENT OF JOSEPH GORMAN, CHAIRMAN AND CHIEF EXECUTIVE 
    OFFICER, TRW, INC.; ON BEHALF OF AMERICA LEADS ON TRADE

    Mr. Gorman. Thank you very much, Mr. Chairman, and Members 
of the Subcommittee. I am appearing today on behalf, as was 
mentioned, of America Leads on Trade, which is a national 
broad-based coalition of businesses, farmers, and consumers 
supporting congressional renewal of the President's trade 
negotiating authority. The coalition is comprised of more than 
500 companies, associations, small- and medium-sized 
businesses, organizations, and individuals.
    I appreciate very much the opportunity to be here today and 
testify in support of fast track authority. I had prepared 
remarks for this 5 minutes or so, but it turns out that during 
the course of the testimony this morning, every key point 
contained in my remarks was, in fact, made and made well. So 
allow me simply to stress three or four key points and then I 
will be happy to respond to whatever questions you might have.
    This really is about leadership, the leadership of America, 
the leadership of the United States leading our global trading 
system to a better future. It is about opening markets and it 
is about leading the world toward the opening of markets. 
Indeed, not to grant the President this fast track authority 
would be to abdicate that leadership role. We dare not do that. 
We must not do that. For the absence of fast track is truly 
tantamount to abdication. This is not a nice to have kind of 
provision. It is a must-have provision.
    Second, let me make the point that this is not being done 
simply to favor big business, not by a long shot. This is for 
economic growth for all of our people. Let's talk 1 minute 
about small business, for example.
    TRW has over 5,000 suppliers, small and large businesses, 
who supply us parts that often get exported, so they are in the 
export business, as we are in the export business. They are in 
the global community as we are. They simply don't do it 
directly. They do it indirectly. So the fact that large 
businesses are involved more in trade, international trade 
particularly than small business does not mean that this 
opening of markets is any less important to the small business. 
Indeed, the opportunities, as was said earlier, are far larger 
outside the United States for economic growth than inside the 
United States.
    A couple of statistics in support. During the last 10-year 
period, the U.S. grew about 26 percent. Europe grew about the 
same, 26 percent. Japan, 33 percent. Yet the emerging, 
developing countries in Asia grew a whopping 109 percent. Those 
kinds of numbers are illustrative of what we are talking about. 
The World Bank tells us that growth outside the United States 
will be twice that of growth within the United States over the 
next 10 years.
    Another point. There will be trade agreements with or 
without U.S. participation. And, indeed, they will be without 
U.S. participation if we do not give the President this 
authority. So it is a question of our leading and helping to 
shape the future or our being left out of the process.
    Finally, I would say that on the labor and environmental 
front, of course it is important to deal with labor issues on a 
global scale, bilaterally and multilaterally. Of course it is 
important to be concerned with the environment. We are and we 
expect all countries to be. But unless those issues are 
directly related to a trade issue, they should be dealt with 
separately on their own merits and, indeed, we have the 
multilateral mechanisms in place to do that.
    So in closing, I would simply urge this Subcommittee and 
all Members of Congress to, in partnership with the 
administration, arrive quickly at some compromise language that 
all can support. Certainly our coalition is out there working 
hard now in support of this authority. And I am astonished by a 
couple of the comments that I heard from Subcommittee Members 
today as to the absence of the business community being 
involved. The fact is we made over 250 visits to congressional 
representatives during the month of September alone, we are out 
there in nearly every congressional district meeting with 
people. We are running ads on television and in print and we 
have got grassroots movements under way. We intend to help the 
advocates of fast track authority win this battle and we are 
prepared to do whatever it takes to do so.
    Thank you.
    [The prepared statement and attachment follow:]

Statement of Joseph Gorman, Chairman and Chief Executive Officer, TRW, 
Inc.; on Behalf of America Leads on Trade

                              Introduction

    Mr. Chairman and members of the subcommittee, I am Joseph 
Gorman, Chairman and Chief Executive Officer of TRW Inc. and 
General Chairman of America Leads on Trade. TRW is a Cleveland-
based manufacturing and service company that provides products 
and services with a high technology or engineering content to 
the automotive, space and defense, and systems integration 
markets. We currently operate in 27 countries around the world 
and employ about 68,000 men and women, including about 38,000 
in the United States. I am appearing today on behalf of America 
Leads on Trade, a national, broad-based coalition of 
businesses, farmers and consumers supporting Congressional 
renewal of the President's trade negotiating authority. This 
coalition is comprised of more than 500 companies, 
associations, small and medium-sized businesses, organizations 
and individuals. I appreciate this opportunity to speak with 
you today about the importance of fast track for our nation.
    My point today is simple: the United States must continue 
its aggressive pursuit of trade agreements to ensure that 
markets around the world are open to American companies, 
workers and farmers. International trade is, more than ever, 
critical for the well-being of the U.S. economy. To keep a 
strong and growing economy, to expand opportunities for all 
Americans, and to increase our standard of living, we have no 
choice--we must compete and win in the global economy. Fast 
track is a critical tool for our success.
    Continued U.S. leadership in world trade negotiations has 
become particularly important because other countries are 
moving forward without us. But they are looking out for their 
own interests--not ours. Now more than ever, the United States 
must be at the head of the table to make sure that the new 
trade agreements that are being reached are fair and allow our 
companies, workers and farmers to compete fairly around the 
world.

 To Win in the Global Economy, the United States Must Reach New Trade 
                               Agreements

    Over the past few decades, successive Congresses and 
Administrations have made significant and admirable progress in 
breaking down foreign trade barriers, benefitting our 
companies, workers, farmers and the country as a whole. 
However, the ever-changing global economy continually presents 
new opportunities and challenges. We must reach out for these 
opportunities and meet these challenges. In order to do so, the 
United States must continue to pursue trade liberalization, 
especially through new international agreements. If we are not 
in the vanguard we risk falling behind other countries that are 
pursuing their own agendas.

International trade agreements are needed to open foreign 
markets for American companies, workers and farmers.

    The United States has been the leader in working for open 
markets because we know that with our market the most open in 
the world, and with our companies, workers and farmers the 
world's most competitive, we have the most to gain from 
removing foreign barriers to our goods and services through 
trade agreements and the most to lose if such barriers persist.
    However, despite recent trade agreements and improvements 
in world trade rules, foreign barriers remain and new ones may 
always be erected. Many countries still impose significant 
tariffs on our exports. In an increasingly competitive global 
economy, these small taxes can make the difference between 
success and failure in foreign markets. Moreover, as tariffs 
and traditional non-tariff barriers to our goods and services 
exports have fallen, new problems have emerged. For example, 
inadequate intellectual property protection, investment 
restrictions, customs and other administrative problems and 
standards-related barriers have emerged as major problems for 
U.S. exporters. Our agricultural exports continue to face a 
range of tariff and non-tariff barriers. Recent agreements have 
gone part of the way toward resolving some of these problems 
but more progress is needed multilaterally, regionally, 
bilaterally and sectorally.

If the United States is not at the table, it can't play and it 
can't win.

    If the United States does not lead in opening up markets 
and expanding global commerce in ways that are fair to our 
companies, workers and farmers, no one else will. For example, 
the WTO telecommunications agreement was reached in February 
only after U.S. negotiators refused to accept an agreement in 
1996 because it was too weak. They fought hard for, and won, a 
better deal. It was only through U.S. leadership that a truly 
good agreement was reached, one that will open significant new 
opportunities for our companies and workers. We cannot hope to 
lead in the absence of fast track authority, and we dare not 
abdicate our leadership position on trade and foreign direct 
investment. For to do so will surely relegate the United States 
to second-class standing on such matters. Such a result should 
be viewed as wholly unacceptable.
    The world is not waiting for us; the last several years 
have seen an increasing flurry of trade negotiations and trade 
arrangements around the world. Our competitors are moving 
toward new trade arrangements to open markets only for their 
own products and services, to benefit their companies, workers 
and farmers. For example:
     Mercosur, comprised of Argentina, Brazil, Uruguay 
and Paraguay, is implementing a common market.
     Mercosur now has association agreements with Chile 
and Bolivia, is expected to reach a trade agreement with Mexico 
next year, and may reach association agreements with Canada, 
Peru, Venezuela and other countries in the future.
     The Andean Community, consisting of Bolivia, 
Colombia, Ecuador and Venezuela, is establishing a free trade 
area.
     Mercosur and the Andean Community are discussing a 
free trade arrangement.
     Chile has trade agreements with Mexico, Canada, 
Ecuador, Venezuela, Colombia and Bolivia.
     Mexico has trade agreements with several Latin 
American countries and is pursuing others.
     Latin American nations have a web of other free 
trade agreements as well as bilateral arrangements that are the 
precursors of future free trade agreements.
     There has been discussion of a Mercosur-ASEAN free 
trade area.
     Japan and China are enhancing their commercial 
ties in Latin America.
     Southeast Asian countries (ASEAN members) are 
implementing a free trade area.
     South Asian nations plan to create a free trade 
area by 2001.
     Several countries, mainly in Central Europe, are 
negotiating entry into the EU.
     Central European nations are pursuing a free trade 
agreement.
    The attached Wall Street Journal article (September 18, 
1997) discusses inroads that the European Union (EU) has been 
making in Latin America. Mercosur countries import more from 
the EU than from the United States, and EU trade with these 
countries is rising more quickly than U.S. trade. In the words 
of Peter Guilford, an EU trade spokesman, ``it can all be 
summed up quite simply: we are stomping all over their 
backyard.'' In an effort to expand this trade, the EU is now 
pursuing its own trade agreements with Latin American nations. 
It expects to conclude reciprocal trade agreements with Chile 
and with Mercosur and has initiated talks with Mexico toward a 
comprehensive trade agreement.
    If we stay on the sidelines as other countries reach their 
own agreements, U.S. companies, workers and farmers will lose 
out. For example, while our exports to Latin American countries 
still face significant tariffs and other trade barriers, trade 
among many Latin American countries (as well as between Canada 
and these countries) is becoming more open due to their own 
trade agreements. As a result, U.S. companies now find it 
harder to compete in Latin American countries against products 
from those countries' free trade partners. Because of the 
Canada-Chile trade agreement, Canada's Northern Telecom 
recently beat out U.S. companies to win a Chilean contract for 
$200 million of telecommunications equipment. A U.S. company 
would have to pay an 11 percent tariff; the Canadian company 
does not. Similarly, Quaker Fabric Company of Fall River, 
Massachusetts--a $200 million a year corporation with 1,750 
employees--recently lost a bid for a $1.8 million a year 
account in Chile to a competitor from Mexico solely because of 
the tariff that Quaker, but not its competitor, would have to 
pay.
    Moreover, local content requirements and rules of origin in 
other countries' trade agreements provide incentives not to 
purchase U.S. inputs. For example, in order to meet the local 
content requirements of Mercosur and benefit from its tariff 
elimination, companies from around the world that produce goods 
in Mercosur member states will have to source more of their 
parts and components from Mercosur countries, cutting down on 
purchases from U.S. suppliers. The end result: a loss for the 
U.S. economy and U.S. workers.
    It's also important to recognize that other countries' 
trade agreements usually do not live up to the high standards 
of liberalization, transparency and fairness demanded by the 
United States in its trade agreements. As more and more trade 
agreements are reached that exclude the United States, other 
countries will increasingly be writing the rules of the game, 
making it difficult for the United States to negotiate good 
agreements in the future.
    In order to ensure that our trading partners don't 
implement agreements and regimes detrimental to our interests 
and that future progress in expanding global trade is not 
compromised, we must remain engaged and maintain the leadership 
role we have exercised so successfully these many years. This 
is not a burden for the United States. It is an unparalleled 
opportunity to shape the world's economic relationships in our 
interests.

Fast track is a critical tool for reaching new trade 
agreements.

    For more than twenty years, Presidents Nixon, Ford, Carter, 
Reagan, Bush and Clinton all used the fast track process 
established by Congress to break open foreign markets for U.S. 
products and services. Expanding trade has always been, and 
should still be, a bipartisan issue--both sides of the aisle 
are in favor of expanding economic growth and creating jobs.
    The reasons for fast track today are even more compelling 
than they were in the past. In the past, fast track authority 
was enacted in the context of an existing or contemplated major 
trade negotiation. Things have changed--important trade 
negotiations no longer wait for U.S. leadership, and other 
countries are reaching their own agreements without us. In 
addition, agreements are being negotiated in a broad range of 
contexts--multilaterally, regionally, bilaterally and 
sectorally. If fast track procedures are not reauthorized, our 
trade negotiators will not be able to pursue effectively 
negotiations that are ongoing or on the immediate horizon, such 
as multilateral negotiations on rules of origin, agriculture, 
services, government procurement and intellectual property in 
the WTO; regional negotiations in Latin America and the Asia-
Pacific region; bilateral negotiations, such as those with 
Chile; and sectoral negotiations, such as those to follow up on 
the recent Information Technology Agreement. Our trade 
negotiators will also not be able to take advantage of targets 
of opportunity that may arise. If we can't continue tearing 
down foreign trade barriers, our companies, workers and farmers 
will suffer.
    The members of America Leads on Trade view fast track as 
guaranteeing a partnership between Congress and the President 
in the trade arena. Future fast track authority should include, 
as it has in the past, very specific requirements for 
consultations between the President and Congress before, 
during, and after negotiations. Putting these consultation 
requirements into law is critical for strengthening the 
Congressional-Presidential trade partnership. Fast track should 
also continue to ensure an effective partnership between the 
government and the private sector by requiring consultations 
with the advisory committees that represent business, farmers, 
consumers, labor and environmental groups.
    Some fast track critics have argued that recent trade 
agreements reached without fast track demonstrate that fast 
track is not necessary. This is just wrong. Not a single trade 
agreement requiring Congressional action--the type of 
agreements that are at issue in the fast track debate--has been 
concluded over the last twenty years without fast track. 
Virtually every major trade agreement in the works will require 
Congressional action; that is why fast track is needed.

Success in the Global Economy is Critical for the American Economy and 
                     Companies, Workers and Farmers

    The United States must lead in promoting trade liberalization 
around the world because the U.S. economy has become internationalized. 
We can't hide from the reality of globalization, and we can't afford to 
turn our backs on the opportunities it presents. The United States is 
the strongest country in the world economically, politically and 
militarily. However, we cannot maintain that strength if we do not 
continue to engage fully the world outside our borders.

The global economy is real, and the United States is part of it.

    International trade is increasingly important for the world as a 
whole. Since 1990, the amount of trade around the world has grown an 
average of six percent a year. This is six times as fast as world GDP 
has grown, and four times as fast as world merchandise production has 
grown.
    And the world at large is more important to the U.S. economy than 
ever before. We remain the world's largest exporter--our total exports 
were $849 billion ($612 billion of goods and $237 billion of services) 
in 1996. Total trade--imports plus exports--accounted for over $1.8 
trillion in business activity, equal in magnitude to nearly 24 percent 
of the size of the U.S. economy as a whole. Over 95 percent of the 
world's consumers--5.5 billion people--live outside the United States, 
and the world's fastest-growing and most promising new markets are 
spread across the globe. There's no way we can have a bright future as 
a nation if we don't actively pursue these foreign customers and 
markets.

Trade is good for our economy, good for business, good for workers, 
good for farmers and good for consumers.

    American companies, workers and farmers have worked hard to compete 
and win in the global economy, and we have seen the positive results. 
U.S. exports continue to rise at an impressive pace--in 1996, exports 
were up 6.8 percent from the year before. These exports are the engine 
driving economic growth and job creation in the United States. Export 
growth has accounted for about one-third of the nation's overall 
economic growth over the past ten years, and export growth continues to 
outpace the growth of the economy as a whole. In 1996, exports of goods 
and services rose by 6.5 percent in real terms, compared to a 2.4 
percent increase in real GDP.
    I have heard a lot of talk that trade is good only for big 
companies. This is just not the case. First of all, a lot of small and 
medium sized companies are active exporters. In 1992 (the latest 
available data) companies employing fewer than 500 employees exported 
$103 billion in goods, about 29% of U.S. goods exports. But just as 
important, many small and medium-sized companies supply large companies 
with products and services that are used in the production of the large 
companies' exports. Big companies recognize that smaller companies are 
the backbone of their business--big companies need smaller companies to 
survive, and vice versa. Trade benefits all in the supply chain.
    Trade is clearly good for the economy and for our companies. But 
just as important, it's good for American workers. Well over 11 million 
U.S. jobs are supported by exports. Export-related jobs accounted for 1 
out of every 8 net jobs created in the United States between 1992 and 
1996. Exports account for about 1 in 10 civilian jobs in the nation and 
about 1 in 5 manufacturing jobs.
    Export-related jobs are also higher-wage jobs. Export-supported 
jobs typically pay 13 percent more than the average U.S. wage. The 
premium is even more striking if you look at the core of export-
supported jobs--those directly supported by goods exports. These jobs 
pay, on average, 20 percent more than the average U.S. wage. And a lot 
of our export growth is in high-wage, high-tech sectors. These are 
clearly the types of jobs we want to promote for this and future 
generations.
    Exports are particularly important for the nation's farmers--our 
agricultural sector is more than twice as reliant on foreign trade as 
the U.S. economy as a whole. U.S. agriculture exports hit a record $60 
billion in 1996, up over 7 percent from 1995 and more than 50 percent 
from 1990. These exports support almost one million American jobs. One 
out of every three farm acres in America, and 50 percent of our wheat 
acres, 57 percent of our rice acres and 37 percent of our soybean 
acres, are dedicated to exports. Last year, U.S. agriculture had a 
trade surplus of over $28 billion--the largest ever.
    Trade also has a tremendous beneficial ripple effect in separate 
communities throughout the entire U.S. economy. As I mentioned, trade 
benefits suppliers, especially small and medium-sized companies. Trade 
also benefits numerous service providers, such as insurance companies 
and banks that finance exporting companies' activities. The benefits 
flow throughout the local community, to the restaurants, stores and 
other establishments near the facilities of exporters and their 
suppliers.
    Let's not forget that imports are also important to maintaining a 
vibrant, competitive economy and high standards of living. Imports give 
consumers a greater choice of goods and services, including those not 
available domestically. They create jobs in areas such as retailing, 
distribution, ports and transportation. Imports allow U.S. companies 
and workers to use the best technology and components from around the 
world, increasing their productivity and competitiveness and therefore 
leading to higher wages and creation of more U.S. jobs. Moreover, 
imports encourage competition and innovation.
International investment is also a crucial part of competing and 
winning in the global economy.

    In order to seize the opportunities presented by the global 
economy, companies must be able to invest in other countries when this 
makes sense for their businesses. And this investment creates new 
markets and customers for U.S. companies and their workers and boosts 
the U.S. economy.
    One of the primary goals of foreign investment is the desire to 
serve businesses and consumers in the country in which the investment 
occurs. In 1994 (the latest available data), about 67 percent of total 
sales by U.S. companies' majority-owned foreign affiliates were sold in 
the affiliate's country of location; another 23 percent were sold in 
other foreign countries. So, a total of 90 percent of U.S. companies' 
foreign-made goods and services are sold outside the United States. 
This makes sense. Customers demand prompt and reliable service from 
their suppliers; it is frequently difficult to meet those needs from 
thousands of miles away. Of course, proximity is even more important 
for services--consumers expect their banks, telephone companies and 
professionals to be nearby.
    Investment abroad brings back significant benefits here at home. 
Because U.S. companies invest overseas to stay competitive and win new 
customers, their foreign investments help boost U.S. exports, creating 
American jobs. Exports follow investment--in 1994 (the latest year for 
which data is available), exports of goods by U.S. companies to their 
foreign affiliates totaled $125 billion, 25 percent of all U.S. goods 
exports. And U.S. companies' trade with their foreign affiliates 
generated a $22 billion trade surplus. The result is jobs here at home. 
According to the latest available figures (1994), U.S. companies that 
invest overseas employed 19 million U.S. workers--18 percent of all 
private sector jobs.
    U.S. companies' overseas operations also generate income that can 
come back here to the United States to be reinvested in U.S. operations 
to the benefit of the local economy and U.S. workers. In 1995, this 
income was almost $117 billion. Moreover, overseas investments are 
often needed to keep U.S. companies competitive. Foreign investment 
allows companies to enjoy greater economies of scale and scope as well 
as access to important foreign technologies.
    I'd also like to point out that foreign investment by U.S. 
companies is concentrated in developed countries. If foreign investment 
were motivated by a search for low cost inputs, developing countries 
would be the predominant location for foreign investment. But 80 
percent of U.S. companies' foreign investment is in developed 
countries; many of which have more stringent labor and environmental 
laws and higher labor costs than the United States.

Because the United States is the world's most competitive nation, we 
have the most to gain from the global economy and from trade 
liberalization.

    Back in the 1980s and early 1990s, conventional wisdom held that 
the United States had been overtaken by Japan and Germany and might 
never regain its place in the sun. Today, the United States is back on 
top. Our economy has been growing faster than those in Europe and 
Japan. We are the world's biggest exporter of both goods and services. 
We have the lowest budget deficit as percentage of GDP of any G-7 
economy. We have created more net jobs in the past few years than all 
other G-7 nations combined, and our unemployment rate is below that of 
every other major industrial economy besides Japan (which keeps 
official unemployment low through artificial means). While we still 
have a trade deficit, it has declined by 40 percent as a percentage of 
GDP, from about 2.7 percent in 1985 to 1.5 percent in 1996.
    We have the world's largest economy, the most productive workers, 
the best technology, and the most innovative people. That's why we are 
considered to be the most competitive country in the world, as recently 
confirmed by the World Competitiveness Yearbook from the International 
Institute for Management Development. We're highly competitive in a 
range of important industries, such as: semiconductors, computers, 
computer software, aerospace equipment, applied materials, 
biotechnology, construction equipment, telecommunications and other 
information-based equipment and services, financial services, 
information services and entertainment. These are the technologies of 
today--and of tomorrow.
    We have done so well as a nation because we have aggressively 
sought out the opportunities presented by the global economy. We have 
the resources and the capability to be winners. All we need to do is 
ensure that our companies and our workers, and the products and 
services they produce, are given the opportunity to compete fairly and 
to win in the global economy.
    We need to do more, of course, to ensure the continued 
competitiveness of the nation, its companies, and its workers. In a 
world of increasing technological innovation, our companies simply 
cannot succeed without educated, trained and skilled workers, 
scientists and technicians. That's why U.S. companies are doing their 
part to help ensure that our workers remain the best in the world.
    Each year, companies in the United States spend about $30 billion 
on formal training and $180 billion on informal on-the-job training of 
their employees. Each year, U.S. companies make huge investments in 
plants, equipment and research & development (over $600 billion on 
capital investments and over $100 billion on research & development) to 
ensure that their workers can benefit from the best technology and 
equipment.
    U.S. companies are also working to improve the quality and 
performance of the nation's K-12 education system, including a state-
by-state initiative to achieve comprehensive education reform across 
the nation. Forty-three states now have business-led education reform 
coalitions that encourage governors, state legislators and state 
departments of education to support fundamental changes in their 
schools.
    With improved education and training and wise governmental policies 
the United States will remain highly competitive. In an open global 
economy, America will come out on top.

Developing countries in particular hold huge promise.

    Our market is one of the biggest in the world, but we have to 
recognize that our greatest opportunities for expanded exports are in 
large developing countries. These are the countries that can grow, and 
are growing, the quickest. For example, between 1985 and 1995, the U.S. 
economy grew 26.4 percent, Europe's, 26.5 percent, and Japan's, 33.7 
percent. Developing countries in Asia grew by a whopping 109.3 percent 
in the same period. The World Bank expects developing countries to grow 
twice as fast as the industrialized countries over the next ten years 
and to account for one-third of the world economy by 2020, nearly twice 
their current share. We ignore these developments at our peril.
    While world imports grew 96.8 percent between 1985 and 1995, 
developing economies' imports jumped 180.4 percent, and imports of 
developing countries in Asia were up 226.1 percent. And these 
developing countries are in particular need of the types of goods and 
services that we are good at producing, in such areas as 
telecommunications, construction, information technology, 
biotechnology, environmental protection and cleanup, and finance.
    Moreover, development builds demand for consumer goods and 
services, again an area of U.S. predominance. By the year 2010, China, 
India and Indonesia combined will have 700 million people with annual 
personal income equal to that of a worker in Spain today. The 
opportunities for the United States are, frankly, mind-boggling.
    We are already seeing significant benefits from trade with these 
markets. Between 1992 and 1996, U.S. goods exports to Pacific Rim 
countries (excluding Japan and China) jumped 57 percent; goods exports 
to Latin America surged by 49 percent. This is much faster than growth 
of our exports to many of our major developed country trade partners--
in the same four years, U.S. goods exports to Europe grew only 18 
percent. Growth of developing country economies and U.S. exports to 
those countries are predicted to keep rising dramatically. If current 
trends continue, by 2010 Latin America will surpass Japan and Western 
Europe combined as a market for U.S. exports.
    There's another important point to make here. Economic 
liberalization in other countries benefits not only the United States 
but the liberalizing country itself, as well as global stability in 
general. Developing countries around the world have recognized the 
benefits of open markets and abandoned, to varying degrees, old 
protectionist policies. The result has been an economic boom in many of 
these countries. This in turn promotes creation of middle classes, 
which, along with openness to the rest of the world, promotes democracy 
and economic and political stability and improved respect for, and 
demand for, human rights and environmental protection. Thus, open 
markets advance important U.S. non-economic goals.

            Critics of Trade and Fast Track Are Off the Mark

    With the opportunities presented by the global economy come 
fears. I think it's important to look closely at some of the 
charges being leveled about international trade and fast track 
and lay these fears to rest.
    There is no simple direct linkage between imports and lost 
jobs. Some have argued that trade costs U.S. jobs because of 
imports. Well, it's obvious that U.S. exports generate U.S. 
jobs because someone has to make those goods or produce those 
services. But if we look at the reality of imports, it's not 
obvious that they translate into lost U.S. jobs and, in fact, 
often they do not. Some imports, such as the $73 billion of 
petroleum and other fuel products and $3 billion of coffee and 
tea we imported in 1996, are products that are simply not 
available or are in short supply in the United States. Other 
imports, by providing a competitive input into a production 
process for example, complement U.S. production and support 
rather than displace U.S. jobs by enabling U.S. companies to be 
competitive at home and abroad. Other imports include U.S. 
components, and production of these components supports U.S. 
jobs. Imports also create jobs in such areas as ports, 
distribution, wholesaling and retailing.
    It is true that some jobs are displaced by imports. 
However, trade is only one factor that impacts the job market; 
technological change, for example, is far more significant. In 
fact, recent studies, including from the Organization for 
Economic Cooperation and Development and the International 
Monetary Fund, find that trade is not a major factor behind any 
trends toward declining wages or wage disparity that may exist 
in industrialized countries. These studies found other factors, 
including technological change, to be much more important. 
Moreover, jobs displaced by imports are more than offset by 
other jobs created by imports and exports and the other 
benefits of trade to the U.S. economy.
    We cannot and should not ignore the real effects of job 
loss for individuals, regardless of the cause. I simply do not 
believe that trying to freeze our economy is in the interest of 
this or future generations of workers. The national and world 
economies are seeing a shift of jobs from low-productivity, 
low-wage jobs to high-productivity, high-wage jobs. These job 
shifts are to be expected and welcomed as we approach the 21st 
century; they will lead to a better future for today's and 
tomorrow's workers. Our work force is one of the most 
diversified and capable in the world, and as a very large and 
flexible economy, we have the ability to absorb workers into 
productive and well-paying jobs. We must, as I stated before, 
ensure that all Americans get the education and learn the 
skills they need in order to be as competitive as individual 
citizens as we are now as a nation. We must also use trade 
negotiations and the resulting agreements to break down foreign 
barriers so that we can win new customers abroad and boost 
American incomes. In general, we need to keep our economy 
dynamic, open and growing. The end result will be better jobs 
and standards of living for all Americans.
    Trade deficits result from many factors and simple linkage 
to trade policies is misleading. Some have pointed to the U.S. 
trade deficit as evidence that trade is bad for the United 
States. Actually, the trade balance is determined by 
macroeconomic factors, such as savings and consumption rates, 
currency values and growth rates. Moreover, trade deficits 
result in part from our growing economy, employment that is on 
the upswing, and our consumers and businesses having more money 
to spend on both domestic goods and imports. At the same time, 
many of our trading partners are in recession or growing only 
slowly.
    We should also recognize that the trade deficit has fallen 
significantly in the last decade when compared to the size of 
our economy. Moreover, a large portion of our trade deficit 
consists of petroleum imports, which is not a job-displacing 
commodity--our deficit in petroleum products was 57 percent of 
the total trade deficit in 1996. Another huge chunk--27 
percent--was in our auto and auto parts deficit with Japan, 
which is due to special, unique bilateral problems. I would 
also note that, compared to the size of its economy, the United 
States imports far less than every other developed country 
except Japan.
    When discussing the trade deficit, we should be addressing 
the macroeconomic factors we can control, such as the low 
savings rate in the United States and government spending, 
while continuing to focus on tearing down foreign barriers to 
our exports. Resorting to isolationism and protectionism to 
``solve'' the trade deficit problem will not help.
    International investment, as with trade, benefits the 
economy and workers. There are also those who argue that 
international investment is bad. The facts I presented earlier 
prove that this is not true. It's important to recognize that 
the decision to invest is a very complex one, involving many 
factors, not just low production costs. The United States is 
endowed with numerous advantages that make it a very attractive 
place for U.S. companies and foreign companies to invest, 
including a highly productive work force, state of the art 
communications networks and computer systems, technologically 
advanced production facilities, a well-developed transportation 
infrastructure, and stable and sophisticated legal and 
financial systems. If low wages were the main determinant of 
investment decisions, our principal foreign direct investments 
would be in less developed countries rather than in highly 
industrialized, developed countries where, in fact, our 
principal investments are made.
    And, contrary to irresponsible statements by some, U.S. 
companies are not pulling up their stakes in the United States. 
U.S. companies' direct investments overseas were $86 billion in 
1996, only 11 percent of non-housing domestic investment in the 
United States. And three-quarters of that foreign investment 
did not even come from the United States, but from the earnings 
of the companies' foreign operations themselves. As for Mexico, 
U.S. companies' investment there is a trickle and has been 
declining. U.S. foreign direct investment in Mexico in 1994, 
1995, and 1996 was $3.7 billion, $3.0 billion, and $2.7 billion 
respectively; this amounted to 0.4 percent, 0.3 percent, and 
0.2 percent of total investment in the U.S. economy itself.
    Fast track does not rush trade agreements or cut Congress 
out of the picture. Critics of fast track persist in 
misrepresenting just what it is. As the members of the 
subcommittee know, fast track is merely a procedural rule that 
sets up a close partnership between the President and the 
Congress to ensure that the United States can reach trade 
agreements to open foreign markets to American companies, 
workers and farmers. Fast track does not rush the country into 
agreements and it does not cut Congress out of the loop. In 
fact, the members of America Leads on Trade want their 
representatives in Congress to be heavily involved in the 
process of reaching and implementing trade agreements. Fast 
track guarantees that role by writing consultation requirements 
into law.
    Fast track is not NAFTA. Critics of fast track also keep 
changing the topic to NAFTA. But the debate over fast track is 
not about NAFTA--it is about the future of U.S. leadership in 
world trade, about whether we will participate in a wide-
ranging series of new negotiations that are about to start with 
or without us. Most of the concerns raised by NAFTA opponents, 
such as illegal immigration, the border environment and 
maquiladoras, are specific to Mexico and are simply not 
relevant to our economic relations with other countries. The 
United States must recognize the importance of being the leader 
in new negotiations and separate the debate over NAFTA from the 
debate over fast track. Our competitors around the globe would 
be overjoyed if we sidelined ourselves to engage in a 
destructive debate about NAFTA while they move ahead with their 
own agreements that will leave us behind.
    Big corporations are hardly the only advocates for fast 
track. Critics of fast track charge that it is only big 
corporations that want fast track. This is just wrong. 
Businesses, farmers and consumers are fighting for fast track 
because the nation as a whole--not just big corporations--
benefits from increased trade spurred by trade agreements. 
These benefits for the nation as a whole explain why the 
President and his Administration are asking for fast track, and 
why the U.S. Conference of Mayors and the National Governors' 
Association have passed resolutions supporting fast track.
    Trade agreements do not threaten health and safety. Another 
favorite of fast track opponents is to raise the specter of 
unsafe food, trucks and drug trafficking. This is nothing but 
scare tactics--trade agreements do not hamper our ability to 
protect ourselves from any of these problems. Trade agreements 
do not result in unregulated trade--we are always able to 
enforce our laws and close our border to any product that could 
legitimately result in harm to our citizens. Recent trade 
agreements such as the WTO and NAFTA not only explicitly dealt 
with the issue of food safety but further strengthen our 
ability to protect ourselves from such dangers. NAFTA does not 
prevent the United States from enforcing drug laws. In fact, by 
improving overall cooperation with Mexico, NAFTA improves the 
likelihood of success in reducing drug smuggling.
    As recent problems with domestically-produced food 
demonstrate, ensuring the safety of the U.S. food supply is not 
a trade issue. Similarly, we need to ensure the safety of all 
trucks, not just those from Mexico. Adequate safety measures 
and inspection are essentially domestic regulation, not trade, 
issues.
    Trade, labor, and environmental goals must be pursued 
separately. Finally, I want to address the contention that fast 
track should be rewritten to bring labor and environmental 
issues into trade agreements. Protecting the environment and 
improving working conditions around the world are important 
goals, but they must be pursued in an effective and achievable 
manner. Confrontational approaches (or those that are perceived 
as confrontational, protectionist, or anti-development) on 
these issues, such as attempting to link labor and 
environmental issues to trade, and especially using trade 
sanctions in an attempt to improve labor and environmental 
conditions, will not work. Such approaches would likely cause 
trade wars, impede international cooperation, and reduce 
economic growth, reversing current promising trends for 
improved working and environmental conditions around the world.
    We must recognize that most developing countries currently 
cannot afford the high level of labor and environmental 
standards that developed countries enjoy. Economic growth is 
needed to create the financial and social foundations for 
better working conditions and environmental protection in 
developing countries. Increased international trade, which is a 
vital engine for economic growth in today's global economy, 
ultimately helps improve working and environmental conditions.
    Consequently, the focus of trade agreements should be on 
liberalizing trade to promote economic growth. Businesses 
recognize the importance of addressing transborder and global 
environmental problems and seeking to improve working 
conditions around the world. But, where these issues are not 
directly related to trade, they must be pursued through 
separate initiatives, particularly cooperative solutions such 
as international environmental and labor agreements. Our goals 
in the separate areas of trade, labor, and environment must 
each be pursued on their own tracks.
    Other countries have made it absolutely clear that they 
will not negotiate trade agreements with the United States if 
we insist on trying to dictate their national policies on 
issues other than trade. The United States would similarly not 
allow other countries to intrude in such a way on our 
sovereignty. Advocates of using trade negotiations and 
sanctions to force improvements in other countries' labor and 
environmental laws and policies ignore the fact that additional 
access to the U.S. market doee United States is already one of 
the world's most open markets with very low barriers to trade. 
The main focus of our trade agreements with other countries is 
to open other countries' markets to U.S. exports, not the other 
way around.

                               Conclusion

    The United States can maintain its economic strength only 
if it competes and wins in the ever-expanding global economy. 
We cannot assert effective global leadership on trade without 
fast track authority for the President. Indeed, fast track 
authority is absolutely vital to the economic well-being of the 
country and of every American citizen. Thus, on behalf of the 
businesses, workers and farmers that comprise the America Leads 
on Trade coalition, I urge that Congress and the President, in 
partnership, renew the President's authority to negotiate trade 
agreements under fast track procedures.
      

                                


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    Chairman Crane. Thank you.
    Your reference to small businesses reminds me of the time 
Charlie came out to my district a couple of years ago for a 
Subcommittee hearing. Illinois is the fifth largest export 
State in the union. In my district are the corporate 
headquarters of Motorola, Ameritech, Sears, United Airlines, 
Kemper Insurance, and Baxter and Abbot are just beyond the 
border. But the thing that was a revelation to me was the input 
that over 90 percent of our State exporters are companies 
employing 500 or fewer. And so small business really makes up 
the lion's share of our State exporters, notwithstanding the 
giants that we have there.
    Something that I would like to ask you about, in your 
written statement, you talked about pursuing these 
environmental and working conditions in an achievable manner, 
that approaches perceived as confrontational, protectionist or 
antidevelopment will not work.
    Would you talk a little bit more about how our trading 
partners have responded thus far to the USTR's efforts to put 
labor and environment on the agenda in the WTO?
    Mr. Gorman. Yes. In general, and few things are universal, 
but in general countries do not wish, other countries do not 
wish us to try and dictate to them on matters of the 
environment, on labor issues, or on any other issue in the 
trade context particularly. They say, look, let's deal with 
trade on its own merits; let's not try to deal with these other 
issues indirectly there. Indeed, I think if we were to persist 
in trying to deal with the labor issues involved and the 
environmental issues involved, we wouldn't enter into a trade 
agreement with anyone. But I do not think that is a likelihood 
because I also don't think that a compromise bill including 
that kind of provision would prevail.
    Chairman Crane. Our Trade Subcommittee attended that 
Singapore ministerial, and at that time the question of labor 
came up and clearly the overwhelming majority of the sentiment 
there was to keep it out of our trade negotiations. That is 
something that I think is important to keep in mind as we 
pursue this.
    Mr. Gorman. One other important point I would make in that 
dimension is that our best hope of lifting the standards on 
both of those subjects with emerging countries is to engage 
with them in commerce, through trade and through international 
investment. In my company, when we build a new plant in a 
foreign land it is exactly like the one we build here, the same 
environmental concerns and standards, the same kind of 
training, the same kind of conditions under which the folks 
work. So we can cause there to be an uplifting of standards 
through engagement, not through disengagement.
    Chairman Crane. I couldn't agree with you more on that. 
Motorola has told me similar stories about their presence on 
the mainland in China.
    Mr. Gorman. Yes.
    Chairman Crane. I have reminded folks of Ben Franklin's 
quote, ``Good example is the best sermon.'' Your presence there 
all over the world is providing that good example.
    Mr. Rangel.
    Mr. Rangel. It is good to see you again, Mr. Gorman. Is 
there any reason for anyone to be concerned about the living 
and working conditions of people working overseas?
    Mr. Gorman. Yes, I think it is a legitimate concern for all 
of us to have----
    Mr. Rangel. I will just bag that.
    If not in the trade bill, that people believe should not 
interfere with the President's ability to negotiate a trade 
agreement, how would it be dealt with? We respect the fact that 
people like you have the same standard and want to improve the 
quality of life for people all over the world, but certain 
people have come back from Mexico with horror stories and 
pictures of high-tech factories and people living in squalor, 
open sewage near outstanding United States-based international 
firms.
    What should a Member of Congress do that has a concern 
about these things happening?
    Mr. Gorman. Well, I think that the United States should, 
working with the Mexican Government, make every attempt to 
cause those conditions to change. I would like to say that some 
of the horror stories are exaggerated, and indeed we have, my 
company has plants in Mexico. One of those plans was named one 
of the top 10 plants in North America by Industry Week magazine 
just 1 year ago.
    Mr. Rangel. We are not talking about those who are 
outstanding leaders in the world. I am just saying that for 
those who believe that there are problems, we have to be able 
to answer some of their questions.
    What about the question of those people who feel that they 
will be losing jobs in the community and they are not prepared 
to take advantage of the ever increasing high-tech jobs that 
would be available? The plants that are in their districts; 
have in the past closed and have in the past gone to Mexico, 
and there is a threat that more would do the same. How would we 
handle that in the Congress?
    Mr. Gorman. Well, there are dislocations that come with 
trade and that come with free trade agreements in particular. 
There is no question about that. But there are dislocations 
that occur for a whole host of reasons.
    What I would argue is that, yes, of course we should 
address those dislocations for whatever reason and address 
those through training programs, retraining programs. I am 
perfectly behind those kinds of efforts. I think we should make 
sure they are effective and cost-effective programs, but 
nevertheless do them.
    Mr. Rangel. I assume, then, that you would think that in 
communities where they don't have the type of educational 
institutions that train young people for these high-tech jobs 
that would be coming, that resources should be made available 
so that they too would be able to meet the challenges of the 
next century?
    Mr. Gorman. Yes. Indeed, I have been an advocate of 
Congress giving tax incentives to the private sector to train 
and educate those in need of such training and education.
    Mr. Rangel. Even though you would not want this to be in 
the same bill, do you see any problem if it were presented to 
the Congress in the same package that we are encouraging 
economic growth abroad, but at the same time we are concerned 
about American workers that would be dislocated and we are 
concerned about communities with high unemployment?
    Do you think it might be easier for us to sell this package 
if we were not only giving the President broad opportunities to 
negotiate and compete, but also to have a package so that 
people at home would not be fearful that they are going to lose 
the little jobs that they do have?
    Mr. Gorman. I think it might be more difficult, frankly, to 
pass that kind of a bill than one that dealt solely with trade 
unless of course those issues and others are directly related 
to trade. I really do believe that trade is so important to the 
United States and to the world that the issues ought to be 
dealt with singularly and that we deal separately with the 
environmental and labor issues.
    Mr. Rangel. I understand. But can we depend on your 
leadership in dealing with the other shoe once it is dropped, 
that is the education of America, the idea that people will be 
working and not doing drugs and crime and violence?
    Mr. Gorman. Absolutely.
    Mr. Rangel. And we hear your voice that is outraged at the 
number of people who are not productive, 1.5 million Americans 
not working, they are in jail. When we compete, how can we 
compete with these type of young people for whatever reason? 
Isn't that a national problem that requires the same type of 
attention as authorizing the President to negotiate a treaty?
    Mr. Gorman. I couldn't agree with you more. In fact, I 
chaired for 4 years for the Business Roundtable, the Task Force 
on Transformational Education Reform. Norm Augustine succeeded 
me. We have committed 10 years and all of our membership to 
bringing about transformational change in our systems of 
education, so that all people are educated and prepared to 
enter the workforce at the kind of levels that new jobs 
require. And so you are preaching to the choir when you talk to 
me about that issue. I, in fact, have been out front leading 
that effort and you can count on that continuing.
    Mr. Rangel. I wish there was some way that I could help so 
that the whole Congress and country would know the effort not 
only you, but I assume that there are thousands of other 
businesspeople that believe it is in our national interest not 
only to expand trade, but to have our young people prepared to 
assume the challenges of the next century. You would have to 
admit that we don't hear that much from the private sector as 
to their concerns about making certain that all of us 
participate.
    Mr. Gorman. We are certainly talking enough about it and 
doing enough. We have coalitions in 46 States. The Rand 
Corporation did a study for us, an independent group. They 
found that we are making a significant difference in 36 States. 
We are not where we want to be, don't get me wrong, but it is a 
difficult, tough task. You have got to transformationally 
change the State laws in order to achieve the objective, but we 
are making some progress.
    Mr. Rangel. Would you share with me that information, 
because we are working together in a task force with many 
multinationals and we have made some changes, we have targeted 
areas that we are going into partnership with.
    Mr. Gorman. We will come see you with that information.
    Mr. Rangel. Thank you.
    Chairman Crane. Gentlemen, we have 6 minutes left.
     Mr. Jefferson, do you want to ask Mr. Gorman a question?
    Mr. Jefferson. I might be able to get one in.
    Past grants of fast track authority have permitted in the 
implementing bill changes in U.S. law that were necessary and 
appropriate to implement that trade agreement. Some Members on 
the Senate side, some Members on the House side would like to 
limit the scope of fast track to cover only those provisions 
necessary to implement the trade agreement and apply normal 
legislative procedures to those including possible amendments 
to everything else. How do you feel about that? Do you agree 
with that view on this particular fast track legislation as 
opposed to other ones that we have had in the past?
    Mr. Gorman. I think it should be unlimited authority 
applicable to all trade agreements, bilateral, multilateral, 
including sectoral trade agreements. Many of the negotiations 
that will take place in the next several years will be, indeed, 
sectoral in nature. Importantly, they would have the same kind 
of fast track authority.
    I think the beauty of fast track and voting up or down is 
that it forces the administration, the President, regularly to 
consult with Congress, to make certain that indeed the 
negotiations are on a path likely to lead to an agreement that 
can be voted up. So I think it is a good process if managed 
well.
    Congress maintains, of course, the ultimate authority to 
turn down any proposed agreement. That is why I would offer 
unlimited authority to the President.
    Mr. Jefferson. Does that square with the notion that you 
can include labor and environmental provisions in fast track so 
long as they are directly related to trade? Does that square 
with the notion of the broadest possible authority?
    Mr. Gorman. Yes.
    Mr. Jefferson. With respect to investment services and 
other topics, there is no provision that they must be directly 
related to trade. That is a little incongruent; don't you 
think?
    Mr. Gorman. Pardon me?
    Mr. Jefferson. In the other provisions of the legislation, 
investment services are covered in the language of the fast 
track legislation but there is no requirement that they be 
directly related to trade for them to be discussed as a part of 
the trade agreements. And so in the one sense we limit the 
labor and environment to them having to have a direct 
relationship to trade, but these other issues you don't limit 
them in that regard, my question is why would you support a 
view like that if you support the broadest possible 
Presidential authority?
    Mr. Gorman. I don't find that an anomaly because when you 
are talking, say, financial services, that in essence is the 
trade in question. It is about trade in financial services, 
about the opening of markets to North American-based financial 
service organizations. That is what that trade issue is all 
about.
    Mr. Jefferson. You can't imagine some cases under which 
services and investment would not be directly related to trade? 
You can't imagine any cases where that would not be done?
    Mr. Gorman. No, because again when you are talking 
financial services, that is the trade that we are talking 
about, the trade in services. Take Japan. They limit, as you 
know, any outsider, not just North American, but any outsider 
providing financial services by not giving them a license. 
There has been discussion on that issue. There has been 
agreement on that issue negotiated by Ambassador Barshefsky.
    Chairman Crane. Joe, we are down to 2 minutes. I think we 
are going to have a repeat vote right on the heels. I won't 
hold you, but I want to express appreciation for what you have 
done and keep the good fight going. It is primarily an 
education battle and once folks understand, I think our 
differences get minimalized.
    Mr. Gorman. We will keep working. I hope with all deference 
that you will keep working to come together with a compromise 
that we all can support.
    Chairman Crane. Absolutely. You betcha. Thank you again. 
The Subcommittee stands in recess.
    [Brief Recess.]
    Chairman Crane. If everyone will please take their seats, 
we will resume again.
    I would now like to welcome Tom Donohue, president and 
chief executive officer of the U.S. Chamber of Commerce. I look 
forward to hearing what the Chamber has done through its 
members to get the word out about the benefit of trade. Please 
proceed, because I know you are on a tight time constraint.

STATEMENT OF THOMAS J. DONOHUE, PRESIDENT, AND CHIEF EXECUTIVE 
               OFFICER, U.S. CHAMBER OF COMMERCE

    Mr. Donohue. I am pleased to be here. This is the first 
appearance that I have made in my new job as head of the 
Chamber. I will try to set the future tone of what they will be 
by being very brief.
    It is my pleasure to be here. I want to state at the outset 
that it is obvious to all the members of the panel that large 
companies, particularly those represented by Mr. Gorman and 
others, are going to figure out a way to do well in the trading 
system around the world and will do better with a fast track 
agreement. But let everyone focus on the fact that small 
companies are going to be major beneficiaries of this agreement 
in two ways. First, as Mr. Gorman indicated, they are going to 
be the subcontractors to the large companies and, as I will 
suggest to you, there is a major increase in trade by small- 
and medium-sized companies all over this country and all over 
this world. We need to do what we can to continue to support 
that, because as you and your colleagues know, the job growth 
in this country have come primarily in small- and medium-sized 
companies and that the great opportunity in the future is going 
to be found there as well.
    I don't need to repeat all of the rhetoric and the fact 
about the benefits that Presidents have had since 1974 or the 
fact that in offering fast track it assumes a consultation 
between the Congress and the administration. I would say, by 
the way, I find that a great comfort, in that the 
administration is apt to negotiate a more targeted and sensible 
agreement with consultation with the Congress.
    I also would like to say that we believe that this should 
be, to use a phrase, a clean bill, and that it ought to leave 
to other venues the very important discussion that Members of 
your Subcommittee have raised about the environment and workers 
rights and other matters. But to put them in this bill is to 
open a Pandora's box that will leave us without time and 
without conclusion on the fast track legislation.
    I think it is also very important to focus on the fact that 
we are already way behind the curve. That there are 
negotiations being held all over the world where people are 
making favorable trade arrangements from which we are being 
excluded and it is absolutely essential for you to rectify that 
situation.
    I have a whole series from my written statement. What I was 
going to say today, using Chile for an example, I can tell you 
how big companies can move their factories to Brazil and then 
avoid the 11 percent fees, and I can tell you how small 
companies cannot. And I could tell you all about the different 
things that are being negotiated and the opportunities that are 
in front of us, but you are familiar with all that. Let me just 
say in a very clear way that this is a piece of legislation 
that will open up the rest of the world for American goods at a 
reasonable and good--and a beneficial trading arrangement. To 
deny it is to say to countries all over the country, don't 
negotiate with our President or with our trade representatives 
because you have no assurance that this is going to be handled 
in a sensible way when it gets to the Congress.
    I would conclude by going back to where I started and 
saying this is a bill that is good for this country. It is a 
bill that is very, very important for large companies but 
unknown to many. It is essential for small companies. I 
encourage your focus on that.
    Let me conclude with one thought. American goods are not 
the only goods being offered for sale around the world. We hold 
no monopoly on our goods. People have to have them. There are 
lots of other places to go and get trading materials. We need 
to keep ourselves in the game. I ask your support, not only 
from this Subcommittee but throughout the Congress to get this 
done. I promise you that we will work very aggressively with 
you to see that it is done.
    I thank you very much, Mr. Chairman.
    [The prepared statement follows:]

Statement of Thomas J. Donohue, President, and Chief Executive Officer, 
U.S. Chamber of Commerce

    Mr. Chairman, thank you for inviting me to appear before 
this panel today. I am Thomas J. Donohue, President and Chief 
Executive Officer of the U.S. Chamber of Commerce. I appreciate 
this opportunity to testify on behalf of the Chamber on 
implementation of fast-track trade authority and its importance 
to America's commercial interests.
    Simply put, under fast-track, Congress agrees to grant the 
President the privilege of an up-or-down vote, within a 
specified period of time, on agreements negotiated between U.S. 
and its trading partners. Every President since 1974 has 
enjoyed this authority. Access to fast-track is a critical 
element to the success of any negotiating strategy. U.S. trade 
negotiators' credibility depends heavily on their ability to 
obtain Congressional approval of legislation to implement trade 
agreements as they were negotiated. As anyone in business 
knows, you do not waste your time making deals with negotiators 
who are not in a position to commit their principals--whether 
they are companies or countries--to an agreement.
    In return for that privilege, Presidents have agreed to 
establish extensive consultation with the Congress so that, 
when the agreement is finally concluded, Congress will have 
enough confidence in the agreement's benefits to the United 
States that it will be willing to approve the changes in U.S. 
laws that are needed to implement the agreement.
    By the same token, if the President fails to consult 
adequately or in good faith, Congress has the power to refuse 
to pass the implementing legislation. Or if it chooses, 
Congress can take an intermediate step, rescind the fast-track 
process, and send negotiators back to the table to seek 
revisions in the agreement.
    Obviously, the Chamber strongly believes that the first 
scenario should prevail. Domestic squabbles between the 
executive and legislative branches--whether or not they are 
controlled by the same party--should stop at the water's edge. 
It does us no good for our President's negotiators to reach 
arrangements with other countries, only to have them amended in 
numerous ways for whatever reason, after the fact. History 
shows that if the President and the Congress work closely 
together to craft a national trade agenda, real progress can be 
achieved. Without it, our trading partners will neither sit at 
the table with us, nor make vital market-opening concessions to 
America's most competitive products. Only the largest U.S. 
companies will be able to overcome the hurdles that remain or 
increase in the absence of pro-U.S. trade agreements generated 
through fast-track. It is no accident that the number of U.S. 
companies benefiting from foreign trade has skyrocketed in the 
fours years since the North American Free Trade Agreement 
(NAFTA) and the Uruguay Round Agreement were implemented. For 
example, between 1993 and 1996, the number of small and mid-
sized business companies who earn at least ten percent of their 
revenues from international trade has doubled.
    In general, Congress should grant fast-track authority to 
Presidents that permit our negotiators to obtain:
     More open, equitable and reciprocal market access;
     The reduction or elimination of barriers and other 
trade-distorting policies and practices;
     Strengthened international trading rules and 
procedures; and
     Increased economic growth and full employment in 
the U.S. and global economies.
    More specifically, ``fast-track'' negotiating objectives 
should include verifiable provisions providing for:
     Expanded competitive opportunities for the export 
of U.S. goods;
     More open and equitable conditions of trade for 
U.S. services, including financial services;
     Reduction and elimination of artificial or trade-
distorting barriers to international direct investment;
     Maximum protection for intellectual property 
rights; and
     Transparent, effective and timely enforcement of 
agreements' rules and implementation of dispute settlement 
procedures.
    The Chamber also believes that fast-track authority should 
be unencumbered by requirements to advance labor, environment 
and other social agenda objectives as part of trade 
negotiations. These issues not only require a considerably 
expanded level of technical expertise at the negotiating table. 
But as the administration's own proposal demonstrates, there 
would be a very real risk that a wide array of domestic labor 
and environmental laws could end up re-written on a fast-track, 
with potentially serious consequences. And finally, twelve of 
our own potential negotiating partners in Latin America 
repeated on August 24 that they want these issues dealt with 
separately. Trade issues are contentious enough, with the well-
being of thousands of American companies and millions of 
American workers dependent on continued new access to foreign 
markets. What is already difficult to achieve could well become 
impossible if trade negotiations become loaded down with non-
trade issues.
    America's stake in the global economy and its need for open 
trading rules is growing too fast for us not to work together 
and be in a position to close deals with our trading partners. 
Trade's share of U.S. gross domestic product (GDP) grew from 
13% in 1970 to 30% by 1995. Between 1985 and 1994, U.S. exports 
rose 112% while U.S. GDP only increased 25%. In that same 
period, exports generated one-third of America's economic 
growth and about five million new jobs. U.S. firms which export 
have greater productivity and wages that are 20% and 15% 
higher, respectively, and are 9% less likely to go out of 
business in an average year. These companies also experience 
almost 20% faster employment growth than those who never 
exported or ceased exporting.
    And this is in a world where our own market is much more 
open than those of our competitors. We must continue to try to 
open other markets if we want to preserve and build on those 
advantages. But we will get nowhere if we don't even try. And 
we need fast-track in order to try.
    Opponents of fast-track continue to try to lock in NAFTA's 
performance as the principal criterion on which to base 
continued U.S. leadership in trade policy. Essentially, they 
argue that (1) NAFTA was a bad mistake, and (2) an even worse 
mistake would be to repeat that mistake in other countries. 
Both these points are seriously wrong.
    First, NAFTA was and is good for the United States. U.S. 
exports to Mexico have risen over 60 percent since NAFTA took 
effect. Despite NAFTA opponents' claims that millions of U.S. 
jobs would move to Mexico (the ``giant sucking sound''), the 
U.S. economy is strong and unemployment is at near-record low 
levels. Despite some continuing serious problems between the 
United States and Mexico, we are clearly better off than we 
were before NAFTA took effect, or we would have been without 
NAFTA. Both U.S. exports to and imports from Mexico are up 
dramatically. While we have a significant trade deficit with 
Mexico as a direct result of the collapse of consumer demand 
during their 1995 economic crisis, now that Mexico is rapidly 
growing again, U.S. exports are rising at a rate of over 20 
percent per year and the trade balance is moving sharply in our 
favor. Moreover, thanks to NAFTA, Mexican barriers to U.S. 
exports fell much farther than the U.S.'s already low barriers 
fell for Mexico's exports. Results include U.S. exports to 
Mexico that--despite Mexico's economic problems--are higher 
than at any time before NAFTA, as well as an increase in the 
U.S. share of Mexico's import market from 69% to over 74%. And 
had NAFTA not been in effect, Mexico would have been free to 
respond to their own domestic economic problems by restoring or 
raising en masse new barriers against U.S. exports.
    Second, if we want to continue to accrue these benefits 
both in the Americas and elsewhere, then we must continue to 
engage the world economy. But we will not be able to do that if 
we don't cooperate with each other. Already, we are seeing the 
adverse consequences of fast-track's lapse. As others have 
pointed out, over twenty agreements either have been or are 
being negotiated without us. The danger--which has already 
begun to manifest itself--is that as other countries negotiate 
preferential trade and investment terms among themselves, U.S. 
companies and their workers will ipso facto find themselves at 
new disadvantages in those markets.
    Chile, for example, has been a leader in moving toward free 
trade in the Western Hemisphere. While Chile is not a large 
economy, Chile is considered a model for how other Latin 
American nations will develop beyond their borders. Chile's GDP 
has increased at an annual average rate of 7.4% over the past 
five years. That figure for the year 1996 is estimated at 6.8% 
or close to $73.4 billion, $5 billion more than in 1995. 
Inflation was close to 6.5% in 1996. Per capita income has 
increased to $4,700 and purchasing power parity to nearly 
$9,000. That nation's increased trade with other countries in 
the region demonstrates the benefits the nation has derived 
from lowering tariffs and investment barriers. But Chile is 
even more important symbolically. A Chile-U.S. Free Trade 
Agreement would mark the first such agreement between the 
United States and a South American country.
    Chile's bilateral and multilateral deals dot the landscape 
of every sub-region within the Americas. Chile signed bilateral 
deals with both of our NAFTA partners. The Chile-Mexico deal 
has lowered the duties on nearly 90 percent of total bilateral 
trade to nearly zero. As a result, 1996 trade jumped between 
the two nations by 48 percent. Chile's free trade agreement 
with Canada, which went into effect on July 1st, eliminated all 
duties on 80% off all Canadian goods entering Chile.
    In the Andean region, Chile has also been actively striking 
deals. Chile and Colombia have agreed to lower the duties on 
333 products traded between the two nations to zero. In 1996, 
trade between those two nations rose 23 percent. Chile and 
Venezuela will have tariff-free trade by 1998. Trade between 
the two nations rose 70 percent in 1995, and 28 percent in 
1996. Furthermore, Chile and Ecuador have signed a deal which 
will lower the tariffs on all items traded between the two 
nations to zero by the end of 1998.
    Chile has also struck a deal with the formidable trade 
group of Mercosur, which includes Argentina, Brazil, Paraguay 
and Uruguay. Brazil alone accounts for over 60 percent of South 
America's GDP, and U.S. exports to Brazil now both exceed and 
are rising faster than U.S. exports to China. While tariff-free 
trade will not be in effect until 2014, significant market 
opening steps are already being taken. Since October 1, the 
Mercosur-Chile deal has led to a 30% tariff reduction on 73 
percent of Chilean exports, and 81 percent of Chilean imports.
    And in 1995, Mercosur and the European Union concluded a 
broad ``framework'' agreement that includes a commitment to 
negotiate a reciprocal trade agreement. Mercosur has proposed 
completing such an agreement by 1999.
    Meanwhile, we have been unable to lower either the 11 
percent duty rate or the numerous other non-tariff barriers 
that U.S. exporters typically face when trying to sell in the 
Chilean market. As a result, the long-term growth of our 
bilateral trade relationship is limited, as are our 
opportunities to beat out our competitors who already have (or 
will soon negotiate) preferential access to the Chilean market.
    If the United States does not jump start negotiations with 
this important trading partner soon, U.S. businesses will find 
their current markets eroding. U.S. competitors will be able to 
institutionalize favorable customer relationships because the 
U.S. can't negotiate the elimination of tariff and non-tariff 
barriers that other competitors don't have to face.
    But this is by no means the only area in which renewed U.S. 
participation requires renewed fast-track authority. The 
Chamber believes such authority is essential if the United 
States is to pursue a variety of legitimate and critical 
national objectives worldwide. These objectives include:
    Unfinished GATT Uruguay Round Business. As important as the 
Uruguay Round agreement (also approved under fast-track) was, 
it did not finish the job. The Uruguay Round also required that 
signatories initiate additional negotiations in a variety of 
areas, including intellectual property rights, agriculture, 
services and government procurement--in many cases within the 
next three years. Market opportunities in these areas total in 
the trillions of dollars.
    Negotiation of a Free Trade Area of the Americas (FTAA). In 
December 1994, thirty-four western hemisphere heads of state 
committed to establishment of a FTAA--a market of over 750 
million consumers--by 2005. A Chile-U.S. FTA was envisioned as 
the first of many steps leading toward that goal. These 
negotiations are scheduled to be launched in April 1998. The 
U.S. needs fast-track to participate credibly in setting the 
rules for trade in this region. The U.S. should include among 
its FTAA objectives agreed-upon standards for consistent 
government rule-making; harmonization of technical standards; 
reduction of existing tariff and non-tariff barriers and the 
avoidance of new ones; investment reforms; and improved 
intellectual property protection. The European Union and others 
clearly find these kinds of initiatives worthwhile. And while 
we stall, they are proceeding along, to our disadvantage.
    Creation of an Asia-Pacific Free Trade Area. While 2020 may 
seem a long way off for some, in 1994 Asia-Pacific area heads 
of state similarly agreed that our combined long-term interests 
require the progressive elimination of trade and investment 
restrictions by that time (23 years from now) in a region with 
over half the world's population. Already, ASEAN nations have 
agreed to reduce tariffs to 5 percent or less on a preferential 
basis--meaning for them but not us--by 2003. But we weren't 
there. And we won't be there for the rest of the negotiations 
without fast-track.
    As both this administration, its recent predecessors, and 
outward-looking businesses all over the United States believe, 
U.S. success in 21st century competition requires that we 
continue working to open global markets to U.S. businesses. And 
with smaller businesses rapidly getting more involved in trade 
in the wake of NAFTA and the Uruguay Round--and at the same 
time continuing to grow most of the new jobs in this country--
America must stay engaged at both business and governmental 
levels. American business is quite capable of competing and 
winning against anyone in the world when doors are open and the 
field is level. But when other governments block the doors and 
tilt the fields against us, it is time for our government--with 
the combined support of the legislative and executive 
branches--to make sure that business has the freedom to do what 
it does best.
    This concludes my testimony. I will be happy to try to 
answer your questions.
      

                                


    Chairman Crane. Thank you, Mr. Donohue.
    In your testimony, you indicated the number of small and 
midsize businesses that earn at least 10 percent of their 
income from exports has doubled since NAFTA and the completion 
of the Uruguay round. Maybe you don't have this information 
available, but do you have any general idea how many of those 
are located in Illinois?
    Mr. Donohue. I would assume a large number and probably 
others are going to move there shortly. Seriously, Illinois has 
a number of reasons to have, and I am going to tell you a small 
story about this, a number of reasons to have many of those 
companies. They have a good university system and some of the 
wonderful research universities there. They have some large and 
very significant companies for which others provide 
subcontracting support. As a matter of fact, our next chairman 
for next year runs a company in the city of Chicago that 
competes worldwide with all minority labor and with a union. It 
is one of the best examples of what can be done if you give 
companies an opportunity. I look forward to bringing him up and 
having you meet him.
    Chairman Crane. I look forward to that. I had an 
interesting experience earlier this year when a fellow that 
does business in the Persian Gulf area asked me if I knew how 
many businesses in my district did business over there, and I 
hadn't the vaguest idea of course.
    Mr. Donohue. I will try to find out for you.
    Chairman Crane. He gave me the breakdown of the list. He 
had it. It was over 150 businesses. I looked back home in a 
little town of 6,000 population, one of those was located in 
that town. I never heard of any one of these 150 businesses. 
They were not even medium sized.
    Mr. Donohue. Mr. Chairman, with the introduction of the 
type of communications technology we have in this country and 
the ability to bypass what has traditionally been the 
impediments to smaller companies being in the trading business, 
the future for small companies doing business around the world 
as fabricators, as technology suppliers is unbelievable. We 
need to take the burden of an uneven trading competition off 
American companies. The only way to get that done is to pass 
this legislation and then by the way to keep the pressure on 
the White House to get it done in a timely basis and within the 
constraints of what the Subcommittee expects.
    Chairman Crane. And then proceed to NAFTA expansion?
    Mr. Donohue. Yes, sir.
    Chairman Crane. Very good. All right, Mr. Matsui.
    Mr. Matsui. Thank you, Mr. Chairman.
    Mr. Donohue, I want to thank you very much for your 
testimony. I would like to ask you, in terms of fast track, the 
business community wants to see--I think you have said you 
wanted a clean bill. I think a lot of us would prefer that. But 
assuming we can't get a clean bill, the U.S. Chamber and 
others, the Business Roundtable, would you still support a fast 
track? Because the concept of fast track is to give the 
President the ability to negotiate a deal and come back to the 
House and Senate for a yes or no vote without amendments.
    Mr. Donohue. And consultation along the way.
    Mr. Matsui. And consultation which is very important.
    If you don't get a clean bill, you could still support 
legislation; is that right? And obviously it depends upon how 
far it goes. But you could still support it. And pending 
getting legislation that comes out of this Subcommittee on a 
bipartisan basis, are your members willing to work this issue 
with the Members of the House and Senate and Democrats and 
Republicans?
    Mr. Donohue. Let me try and answer that question very 
carefully.
    We obviously all need a fast track bill. We will not be 
able to support a bill that has mandates in it that requires 
the President and his representatives to negotiate trade 
legislation that must include environmental and labor 
conditions, for a number of reasons. First of all, it probably 
won't pass. Second of all, our trading partners wouldn't put up 
with it, and third of all, it doesn't belong in trade bills.
    I am a realist and have been around for a while, and I 
understand that in 1988, in that legislation and in others, 
there was rhetoric involved in the bill that suggested that the 
President consider and the Secretary keep in mind, and the 
trade ambassador not forget. That rhetoric, while we wouldn't 
like to have it in there, is not as negative as mandates in the 
bill that would say that if you don't do these things, we won't 
give a positive vote on the bill. So we are going to support 
this vigorously right up to the end because it is going to be a 
very close vote. But if some group of people from the White 
House or the Congress at the last minute, and I am going to use 
this word carefully, load mandates into this bill, it is my 
considered opinion that it will not pass and that we would 
oppose it.
    Mr. Matsui. I think what you are saying is correct. Let me 
say this. One of the problems with mandates or making it a 
core, labor and environment, a core part of the agreement and 
requiring negotiations in those areas, of course, is--take the 
CBI, Caribbean Basin Initiative, for example. That really 
wasn't a trade issue. That was really a foreign policy issue. 
Because the U.S. Government didn't want to actually give 
foreign aid to these countries, the best way to help bring 
these countries up and move them into democracies, which they 
were moving into, I believe, in the early to mideighties, was 
by encouraging economic development in the private sector. If 
you mandate labor and the environment, we would have gotten 
bogged down with the CBI countries.
    One needs to go back to the early eighties and really 
understand what was happening. We had Grenada, Jamaica, and a 
number of others. Now those countries are extremely stable. Not 
only because of CBI but because we took an interest in them.
    To some extent the whole issue of Mexico; the NAFTA was a 
foreign policy issue more than a trade issue. After all, the 
size of the Mexican economy is only 2 percent the size of the 
U.S. economy and so it wasn't going to have an appreciable, 
maybe 4 percent, appreciable impact.
    Mr. Donohue. But it has had a major economic impact.
    Mr. Matsui. A positive economic impact, but the real issue 
was to help stabilize the Mexican economy and obviously the 
political system. So if you mandate certain things like labor 
and the environment you might detract from a President, 
Democrat or Republican's principal goals of both economic well-
being but also foreign policy issues as well. So I take your 
statements as something that I happen to agree with.
    Mr. Donohue. Congressman, may I suggest that your 
discussion is something that those that are concerned about 
labor and conditions of work and about environment should keep 
in mind. Strong trading relationships that develop economies, 
provide better standards of living, and bring more business 
into those countries are going to have some of the most 
desirable results that we can get in terms of opportunity for 
workers in improved standard of living in those countries and 
that could be a foreign policy objective, of course.
    Mr. Matsui. Thank you.
    Mr. Donohue. Thank you, sir.
    Chairman Crane. Mr. Nussle.
    Mr. Nussle. I don't have any questions.
    Chairman Crane. Mr. Neal.
    Mr. Neal. Thank you.
    Mr. Donohue, nice to see you again, sir.
    Mr. Donohue. Nice to see you.
    Mr. Neal. I am starting to hear more and more in my 
district about the WTO. While I know that some of the evidence 
isn't clear either way yet on the WTO, tends to be reflected in 
who has won and who has lost as it relates to WTO, how do you 
view the WTO at this juncture?
    Mr. Donohue. Mr. Neal, I would like to know a lot more 
about the WTO, as you would, but it is very clear that when one 
enters the worldwide global economy and plays under a series of 
rules that are established in any myriad of trade negotiations, 
there needs to be a place where these things are argued, 
debated, and resolved.
    My concern is that none of these organizations, whether it 
is the WTO or the world labor groups or others begin to set 
American domestic policy. While we want to use organizations 
like that to adjudicate and to--differences amongst us under 
our agreements and to advance world trade, we want to be very 
careful that their actions do not take the place of the 
Congress and the administration of setting our domestic 
economic and human resources policies in this country. Of 
course we are going to be major players in those organizations, 
we are going to try and advance our agenda, but I think the 
Congress wants to be careful. That is another reason to keep a 
clean bill, not to give third parties power over the things 
that you should control.
    Mr. Neal. Thank you.
    Chairman Crane. Thanks for all you have done to explain the 
benefit of free trade through your members, and I look forward 
to working closely with the Chamber as we move further into the 
debate about the necessity of extending fast track authority.
    With that, have a safe flight.
    Mr. Donohue. Thank you very much, sir. Have a nice day.
    Chairman Crane. Thank you.
    I would now like to welcome the next panel of agreement. We 
will begin with Thea Lee, representing the AFL-CIO; Calman 
Cohen, president of ECAT, Emergency Committee for American 
Trade; Edith Wilson, trade project director for the Democratic 
Leadership Council; and James Meinert, director for National 
and International Marketing for Snider Mold Co.
    We look forward to hearing your testimony and would ask 
that you try and keep your oral presentations to 5 minutes. 
Your printed documents will be made a part of the permanent 
record. We shall proceed in the order I introduced you with 
Thea Lee leading off.

 STATEMENT OF RICHARD C. TRUMKA, SECRETARY-TREASURER, AMERICAN 
 FEDERATION OF LABOR AND CONGRESS OF INDUSTRIAL ORGANIZATIONS; 
  AS PRESENTED BY THEA LEE, AMERICAN FEDERATION OF LABOR AND 
              CONGRESS OF INDUSTRIAL ORGANIZATION

    Ms. Lee. Thank you very much. Mr. Chairman and Members of 
the Subcommittee, I am delivering this testimony on behalf of 
Richard Trumka who was taken ill this morning. I appreciate 
this opportunity to present the views of the AFL-CIO on the 
current proposal to extend fast track trade negotiating 
authority. I will submit the full testimony for the record and 
summarize it here.
    The AFL-CIO and our 13 million members support American 
leadership in the global economy. But we believe it is critical 
at this historical transition period for that leadership and 
the leverage of the American market to be used to protect the 
rights of working men and women all over the world and to 
safeguard the environment, not just to enhance corporate 
mobility and augment corporate profits. We, therefore, oppose 
the fast track proposal that President Clinton transmitted to 
Congress on September 16.
    Remarkably, this proposal is even more restrictive of the 
President's ability to negotiate and implement strong and 
enforceable worker rights and environmental standards in trade 
agreements than previous fast track authority. At a time when 
working families are looking to make progress on these issues, 
this proposal represents a giant step backward.
    I would take some exception to Ambassador Barshefsky's 
assertion earlier today that this legislation is no different 
from earlier legislation in this particular area. The language 
is very different. It is dramatically different, and it is 
worse in terms of labor and environment. Certainly, as 
Ambassador Barshefsky has made very clear, labor and 
environment provisions would not receive fast track treatment. 
They could be broken off, they could be discarded, even as the 
trade agreement was kept whole. This is a big problem. I will 
talk more about some of the other ways in which it is a step 
backward.
    This is a very different fast track bill from the 1988 and 
1991 bills, even the 1974 bill. It is more restrictive in the 
areas of labor and the environment and it is more expansive in 
terms of the agreements that are grandfathered in, the 
agreement with Chile and the entire built-in agenda of the WTO. 
This is a big departure from previous fast track authority and 
I think a troubling one.
    Worker rights and environmental standards should be at the 
top of our priority list, not relegated to a never never land 
where progress is always promised and never achieved.
    The NAFTA labor and environmental side agreements are too 
weak, not too strong. Labor and environmental protections need 
to be brought into the core of trade agreements, and they need 
stronger enforcement provisions that apply to all the labor 
laws covered and not just a small subset of such laws.
    We need to get off the fast track and onto the right track. 
The proponents of NAFTA and this fast track legislation have 
focused only on the rhetoric and ideology of free trade. They 
are hoping to sell it to the American public on the basis of a 
false sense of urgency, the idea that speed is more important 
than the content of new trade agreements. They aren't willing 
to face up to the concrete costs and unequally shared benefits 
and burdens of past trade policies.
    Increasing the volume of trade brings with it both hidden 
costs and distributional consequences. These costs need to be 
assessed up front, and, as a nation, we need to do a much 
better job redistributing the benefits of freer trade and 
making sure that those hurt by trade liberalization receive the 
training and assistance they need to rebuild their lives.
    This fast track proposal marginalizes worker rights and 
environmental standards in two ways. First, it limits the 
negotiating arena to the World Trade Organization which has 
been consistently hostile to including worker rights and 
environmental protection in trade agreements. Second, it limits 
labor and environmental issues which can be considered under 
fast track authority to those that are directly related to 
trade, and decrease market opportunities for U.S. exports or 
distort U.S. trade.
    This language is likely to be turned against working people 
and used to weaken labor and environmental standards here and 
abroad. Our aim, in contrast, is to use the leverage of trade 
agreements to strengthen and enforce internationally recognized 
worker rights and environmental standards, not negotiate them 
away.
    In order to achieve enforceable labor and environmental 
standards at the WTO, we would need consensus among the 131 WTO 
members, a majority of which are developing countries. At the 
last WTO ministerial meeting in Singapore last December, the 
Clinton administration could not find even half a dozen allies 
to support our demand simply to establish a working party to 
study the link between trade and worker rights. To relegate the 
negotiation of worker rights to the WTO is to admit defeat.
    Trade agreements have an impact on the safety of food in 
our supermarkets, the wages and working conditions of American 
and foreign workers, and the integrity of our environment. 
Let's make sure that when we negotiate new trade treatments, 
all these interests have been given their due.
    I just want to take a moment to clarify one other point 
that Ambassador Barshefsky made and that Congressman Matsui had 
raised about the relative impact of trade and technology on 
wage inequality. Ambassador Barshefsky referred to several 
studies that showed that the maximum impact of trade on wage 
inequality was around one-eighth. In fact, she has ignored 
several excellent studies by scholars from very reputable 
institutions, including Adrian Wood of Sussex University in 
England and William Cline from the Institute of International 
Economics here in Washington, both of whom are free trade 
supporters. Their estimates are that the impact of trade on 
increased wage inequality is around 50 percent. I just wanted 
to add that for the record.
    Thank you very much. I look forward to your questions.
    [The prepared statement follows:]
      

Statement of Richard C. Trumka, Secretary-Treasurer, American 
Federation of Labor and Congress of Industrial Organizations

    Mr. Chairman, members of the Subcommittee, I appreciate 
this opportunity to present the views of the AFL-CIO on the 
current proposal to extend fast-track trade negotiating 
authority.
    The AFL-CIO and our thirteen million members support 
American leadership in the global economy. We believe it is 
critical at this historical transition period for that 
leadership--and the leverage of the American market--to be used 
to protect the rights of working men and women all over the 
world and to safeguard the environment, not just to enhance 
corporate mobility and augment corporate profits. We therefore 
oppose the proposal President Clinton transmitted to Congress 
on September 16th.
    Remarkably, this proposal is even more restrictive of the 
president's ability to negotiate strong and enforceable worker 
rights and environmental standards in trade agreements than 
previous fast track authority. At a time when working families 
are looking to make progress on these issues, this proposal 
represents a giant step backwards.
    Worker rights and environmental standards should be at the 
top of our priority list, not relegated to some murky never-
never land where progress is always promised and never 
achieved.
    Our assessment of the NAFTA labor and environmental side 
agreements--an assessment shared by most Americans--is that, 
although they represent some small progress in the right 
direction, they have failed to protect basic worker rights and 
environmental standards in the three North American countries. 
They have failed even in their modest mission to ensure that 
the U.S., Mexico, and Canada effectively enforce their own 
labor and environmental laws. In order to be more effective, 
labor and environmental protections need to be brought into the 
core of the agreement, and they need stronger enforcement 
provisions that apply to all the labor laws covered (not just a 
small subset of such laws).
    We need to get off the fast track and onto the right track. 
The proponents of NAFTA and this fast-track legislation have 
focused only on the rhetoric and ideology of free trade. They 
are hoping to sell it to the American public on the basis of a 
false sense of urgency, the idea that speed is more important 
than the content of new trade agreements. They aren't willing 
to face up to the concrete costs and unequally shared benefits 
and burdens of past trade policies. Yesterday's New York Times 
(9/29/97, pp. A1, 10) revealed with startling clarity how the 
increased volume of food imports we are experiencing has 
swamped our inadequate domestic and border inspection 
infrastructure, with dire consequences for the health and well-
being of American consumers. These problems are multiplying 
rapidly as trade barriers continue to come down. According to 
the Times, while our food imports have doubled, Food and Drug 
Administration inspections of those imports have fallen to less 
than half their level in the 1980s. In 1996, the FDA inspected 
less than one percent of the 2.2. million food shipments 
imported into this country.
    Dr. David Kessler, former FDA Commissioner, commented: ``We 
built a system back 100 years ago that served us very well for 
a world within our borders. We didn't build a system for the 
global marketplace.''
    Imported food poses problems due to polluted water used to 
grow food in third world countries, faulty safety systems, and 
lack of immunity to microbes not usually found in this country. 
These problems underscore that the goal of trade policy should 
not be simply to increase the volume of trade haphazardly, but 
also to pay attention to how goods are produced. Substandard 
labor and environmental conditions often go hand in hand with 
inadequate hygiene or unregulated use of dangerous pesticides.
    Increasing the volume of trade brings with it both hidden 
costs and distributional consequences. These costs need to be 
assessed up front, and--as a nation--we need to do a much 
better job redistributing the benefits of freer trade and 
making sure that those hurt by trade liberalization receive the 
training and assistance they need to rebuild their lives.

                          The Present Proposal

    Rather than ensuring that future trade agreements contain 
enforceable protections for worker rights and the environment, 
the present fast-track proposal actually guarantees that 
agreements on worker rights and environmental standards will 
NOT be subject to fast-track treatment.
    This fast-track proposal marginalizes worker rights and 
environmental standards in two ways. First, it limits the 
negotiating arena to the World Trade Organization, which has 
been consistently hostile to including worker rights and 
environmental protection in trade agreements. Second, it limits 
the labor and environmental issues which can be considered 
under fast-track authority to those that are ``directly related 
to trade.''
    In the list of overall trade negotiating objectives, the 
Administration's proposal calls for negotiations to address 
labor and environmental standards only insofar as they are 
directly related to trade and ``decrease market opportunities 
for U.S. exports or distort U.S. trade.'' This proposal would, 
in essence, instruct the U.S. negotiating team to try to 
negotiate away other countries' strong labor and environmental 
protections. This language is likely to be turned against 
working people and used to weaken labor and environmental 
standards here and abroad. Our aim, in contrast, is to use the 
leverage of trade agreements to strengthen and enforce 
internationally recognized worker rights and environmental 
standards, not negotiate them away.
    The Administration's fast-track proposal limits the 
principal negotiating objectives on worker rights and the 
environment to those negotiated ``through the World Trade 
Organization.'' The WTO has been a singularly unreceptive forum 
for the advancement of trade-linked worker rights.
    In order to achieve enforceable labor and environmental 
standards at the WTO, we would need consensus among the 131 WTO 
members, a majority of which are developing countries. At the 
last WTO ministerial meeting in Singapore last December, the 
Clinton Administration could not find even half a dozen allies 
to support our demand to establish a working party simply to 
study the link between trade and worker rights. To relegate the 
negotiation of worker rights to the WTO is to admit defeat.
    Furthermore, the negotiating objectives with respect to 
worker rights in the WTO seek only symbolic, rather than 
concrete, results. Our negotiators are instructed to pursue the 
following objectives: ``promote respect,'' ``secure a review,'' 
and ``adopt a principle.''
    Contrast this set of objectives to that regarding 
intellectual property rights, where our objectives are to: 
``provide strong protection,'' ``prevent or eliminate 
discrimination,'' and ``provide strong enforcement,...including 
through accessible, expeditious, and effective civil, 
administrative, and criminal enforcement mechanisms.''
    In the short and medium run, progress on labor and 
environmental provisions is most likely to be achieved in 
bilateral and regional agreements. The current fast-track 
proposal makes this virtually impossible. Unlike previous fast-
track authority, this bill limits trade agreements eligible for 
fast track only to those making progress in meeting the 
principle negotiating objectives, not the overall objectives. 
Since the reference to worker rights in the principle 
negotiating objectives makes no mention of regional or 
bilateral trade agreements, labor or environmental provisions 
negotiated as a part of such agreements (with Chile or Latin 
America, for example) would not be eligible for fast-track 
treatment.
    Trade agreements have an impact on the safety of the food 
in our supermarkets, the wages and working conditions of 
American and foreign workers, and the integrity of our 
environment. Let's make sure that when we negotiate new trade 
agreements, all these interests have been given their due.
    Mr. Chairman, thank you for the opportunity to share our 
views.
      

                                


    Chairman Crane. Thank you.
    Our next witness is Mr. Cohen.

 STATEMENT OF CALMAN J. COHEN, PRESIDENT, EMERGENCY COMMITTEE 
                       FOR AMERICAN TRADE

    Mr. Cohen. Thank you, Mr. Chairman.
    I am Calman Cohen, president of the Emergency Committee for 
American Trade, ECAT, and pleased to have this opportunity to 
appear before you.
    ECAT's membership is comprised of the heads of major 
American companies with international operations representing 
all major sectors of the economy.
    To summarize my statement, I would like to make six basic 
points. First, the members of ECAT believe that fast track 
renewal is critically important for us as a nation if the 
United States is to maintain its leadership role in the world. 
Indeed, if the United States does not have fast track, U.S. 
businesses and workers whose well-being is increasingly 
dependent on international trade, as well as our overall 
national economic interest, will suffer.
    The second point concerns the very major shift that has 
occurred in international trade. In earlier decades, at the 
time of international trade negotiations, the strong push for 
improved market access came from other countries which sought 
access to the U.S. market. Today the situation is quite 
different. If American companies are to prosper, it is they who 
need access to markets outside the United States. Indeed, fast 
track negotiating authority is necessary to ensure that our 
government has the wherewithal to negotiate with other 
governments for improved access for American companies 
overseas.
    Third, the international trade and investment of American 
companies assures high levels of investment by American 
companies in U.S. capital goods, and research and development. 
Most importantly, it allows American companies with global 
operations to pay their American workers higher wages. I want 
to emphasize that. Our investment overseas and international 
trade allows American companies with global operations to pay 
their American workers higher salaries.
    To detail the ways in which these operations of American 
firms make a difference, ECAT will be releasing a major new 
study on the important benefits to the U.S. economy that result 
from expanded trade and foreign direct investment.
    Fourth, ECAT believes that very little progress on fast 
track will be made unless it represents a bipartisan consensus. 
Fast track is too important and should not be buried in 
partisan politics, as it is an initiative that will promote the 
national economic interest.
    As a number of Members on the Subcommittee have indicated, 
there are those in our society who experience dislocation 
during a time of economic expansion, whether fueled by trade 
and investment liberalization, or by technological change. They 
should have available to them cost-effective programs of 
education and retraining.
    Mr. Chairman, you and the other Members of this 
Subcommittee have helped to ensure that America's trade policy 
remains bipartisan and takes into account the needs of all 
Americans. We look to you and the other Subcommittee Members 
once again to fashion a trade policy appropriate for America's 
future.
    Fifth, in terms of the scope of the fast track, we in ECAT 
believe that it should be comprehensive and allow the United 
States to maintain a lead role in shaping the global trade 
agenda into the 21st century through, multilateral efforts, 
regional initiatives, and bilateral agreements. The train has 
already left the station in South America and elsewhere. If the 
United States is to be the locomotor, fast track negotiating 
authority must be enacted into law.
    Last, much has been discussed this morning about labor and 
the environment. We believe that the inclusion in fast track of 
nontrade-related labor and environmental objectives, standards 
on conditions on which there is little or no international 
consensus would impede the achievement of progress in trade and 
investment liberalization. Fast track legislation should allow 
for only those labor and environmental provisions that are 
directly related to trade and should include a provision 
specifying how the standard is to be applied.
    We continue to believe that the best means to secure higher 
standards in these areas abroad is to promote greater economic 
development through increased trade and investment. This very 
goal will be impeded if trade negotiations are conditioned on 
nontrade-related labor and environment issues on which there is 
little or no international consensus.
    In conclusion, Mr. Chairman, we commend you and the other 
Members of the Subcommittee for their efforts in trying to 
fashion a bipartisan fast track proposal. We believe, indeed, 
that there is a great deal of common ground between the various 
proposals that have been introduced and are being developed by 
the Subcommittee and the administration. We urge that every 
effort be made to reach a compromise which both Republicans and 
Democrats in Congress can support. We also urge that this be 
accomplished in sufficient time to enable the Congress to enact 
fast track legislation this year. We commit to work with all of 
you in this regard.
    Thank you.
    [The prepared statement follows:]

Statement of Calman J. Cohen, President, Emergency Committee for 
American Trade

    Mr. Chairman and Trade Subcommittee members, my name is 
Calman Cohen and I am President of the Emergency Committee for 
American Trade, popularly known as ECAT. I am pleased to have 
the opportunity to appear before the Subcommittee today to 
present ECAT's views on the importance of extending the 
President's fast-track negotiating authority. ECAT's membership 
is comprised of the heads of major American companies with 
international operations representing all major sectors of the 
U.S. economy. The annual sales of ECAT member companies total 
over 1 trillion dollars, and the ECAT companies employ 
approximately 4 million people.
    It is critically important for us as a nation that the 
United States maintain its leadership role in pursuing greater 
global trade and investment liberalization. If the United 
States abandons this role, U.S. business and workers, as well 
as our overall national economic interest, will suffer. U.S. 
business risks ceding to their foreign competitors the 
significant new opportunities in emerging markets which are so 
vital to our continued health and expansion, as the U.S. market 
is now mature in many sectors. Over the past decade, U.S. 
business has worked hard to become internationally competitive. 
As a result, American companies across the economic spectrum--
from high technology to agriculture to services--offer that 
which is best globally in terms of products, technology and 
services. American companies cannot maintain this competitive 
edge unless the United States succeeds in securing greater 
access to the rapidly expanding emerging markets.
    If the United States does not retain its leadership role in 
global trade expansion, American workers face the loss of new 
and higher-paying jobs that result from greater exports and the 
growth of the overseas activities of U.S. firms. Instead, 
workers in the markets of our principal foreign competitors 
will benefit from expanded trade and job creation.
    Our overall national economic interest would also be 
jeopardized by the loss of U.S. leadership in global trade, as 
U.S. international trade and investment play an essential role 
in promoting U.S. productivity and economic growth, now 
providing for one-third of the growth in our GDP. The 
international trade and investment of American companies 
ensures high levels of investment by American companies in U.S. 
capital goods and research and development. Most importantly, 
it allows American companies with global operations to pay 
their American workers higher wages. To detail the ways in 
which the international operations of American firms make a 
difference, ECAT will be releasing a major new study in the 
near future on the important benefits to the U.S. economy that 
result from the expanded trade and foreign direct investment of 
American firms.
    ECAT believes that fast-track extension legislation must be 
approved this year if America is to continue to benefit fully 
from trade liberalization that will be going forward around the 
globe with or without the United States. It is not a priority 
that we can afford to set aside until next year. Delay now is 
likely to result in the fast-track debate languishing into the 
twenty-first century with America losing out in global 
competition.
    We also are of the view that little progress will be made 
on fast-track legislation unless it represents a bipartisan 
consensus. Fast track should not be allowed to be buried in 
partisan politics, as it is an initiative that will promote the 
national economic interest. At the same time, it is important 
to recognize that those in our society who experience 
dislocation during a time of economic expansion fueled by trade 
and investment liberalization should have available to them 
cost-effective education and retraining. Mr. Chairman, you and 
the other members of this subcommittee have helped to ensure 
that America's trade policy remains bipartisan and takes into 
account the needs of all Americans. We look to you and the 
other Subcommittee members once again to fashion a trade policy 
appropriate for America's future.
    Having commented on the great importance of fast-track 
legislation, I would now like to make a number of points about 
the substance of the fast-track proposals being discussed.

               Scope and Duration of Fast Track Authority

    Fast-track authority should allow the United States to 
maintain a lead role in shaping the global trade agenda into 
the twenty-first century through multilateral efforts, regional 
initiatives, and bilateral agreements. It should be broad in 
scope. It should allow for the United States to participate 
fully in further liberalization under the WTO through 
completion of the built-in agenda, particularly in negotiations 
on agriculture, services, and intellectual property. On 
services negotiations, fast track should allow for the 
strengthening of the framework and basic obligations under the 
General Agreement on Trade in Services.
    On investment, fast track should promote the negotiation of 
agreements to provide greater protection for U.S. foreign 
direct investment and to spur liberalization of foreign 
investment regimes. Fast track should also provide sufficient 
flexibility to allow for the consideration of a Multilateral 
Agreement on Investment in the event the OECD negotiations 
produce an agreement which provides broad investment protection 
and eliminates foreign barriers to investment.
    Fast track should also authorize the negotiation of 
regional liberalization agreements, such as the expansion of 
NAFTA and the establishment of a Free Trade of the Americas 
agreement and an APEC agreement. It should also authorize the 
negotiation of sectoral liberalization agreements on tariff and 
non-tariff barriers modeled after the Information Technology 
Agreement. On information technology products, the United 
States should have the authority to pursue an agreement which 
addresses non-tariff barriers.
    Finally, ECAT believes that fast-track authority should be 
extended for a multi-year period, at least until the year 2001 
with the possibility of further extension.

                              Consultation

    In pursuing the negotiations described above, fast-track 
legislation should require the Administration to provide 
thorough notification to Congress of its intent to initiate 
negotiations and to enter into agreements. The Administration 
should also be required to consult closely with Congress in 
initiating and conducting trade negotiations authorized under 
fast track. Furthermore, consultation and notification 
requirements should apply to all trade agreements negotiated 
pursuant to its provisions, not just those falling under 
Principal Negotiating Objectives.

               Treatment of Labor and Environment Issues

    We believe the inclusion in fast-track legislation of non-
trade related labor or environmental objectives, standards, or 
conditions on which there is little or no international 
consensus, would impede the achievement of progress in trade 
and investment liberalization. Therefore, fast-track 
legislation should allow for only those labor and environment 
provisions that are directly related to trade and should 
include a provision specifying how this standard is to be 
applied.
    The efforts to include broad labor and environment 
provisions in the fast-track legislation appear to be motivated 
by two separate concerns. The first seems to be perceived 
threats to the integrity and full enforcement of U.S. labor and 
environmental laws. In this regard, we believe it is important 
to point out that the multilateral trading rules do not 
restrict the ability of the United States to fully enforce its 
labor and environmental laws. For example, in negotiating the 
WTO Agreement on Sanitary and Phytosanitary Measures, the 
United States was successful in ensuring that the rules under 
the agreement would not hinder the enforcement of high U.S. 
food safety standards. Health food safety measures are 
consistent with WTO rules as long as they are based on 
scientific principles and do not arbitrarily or unjustifiably 
discriminate against imports. Similarly, to the extent that the 
WTO Technical Barriers to Trade Agreement covers product 
standards which are environment-related, it also maintains the 
United States' ability to enforce high environmental, health 
and safety standards.
    The second objective in including broad labor and 
environment provisions in trade agreements seems to be the 
advancement of stronger protections in these areas abroad. 
While ECAT companies support strong compliance with U.S. labor 
and environmental laws, we believe that real progress in 
achieving stronger labor and environment standards overseas 
cannot be achieved unless these objectives are pursued in the 
appropriate international fora. Moreover, we continue to 
believe that the best means to secure higher standards in these 
areas abroad is to promote greater economic development through 
increased trade and investment. This goal will be impeded if 
trade negotiations are conditioned on non-trade related labor 
and environment issues on which there is little or no 
international consensus.

                               Conclusion

    We commend the Chairman and the other members of the 
Committee on both sides of the aisle for their efforts in 
trying to develop a bipartisan fast-track proposal. We believe 
that there is a great deal of common ground between the fast-
track proposal being developed by the Committee and the 
Administration's proposal. We urge that every effort be made to 
reach a compromise which both Republicans and Democrats in 
Congress can support. We also urge that this be accomplished in 
sufficient time to enable the Congress to enact fast-track 
legislation this year.
      

                                


    Chairman Crane. Thank, Mr. Cohen.
    Ms. Wilson.

     STATEMENT OF EDITH R. WILSON, TRADE PROJECT DIRECTOR, 
 DEMOCRATIC LEADERSHIP COUNCIL; AND SENIOR FELLOW, PROGRESSIVE 
                        POLICY INSTITUTE

    Ms. Wilson. Good afternoon, Mr. Chairman, Mr. Matsui, other 
Members of the Subcommittee. I will summarize my remarks and 
ask that the full statement be entered in the record.
    Mr. Chairman, the Democratic Leadership Council believes 
that President Clinton's request for renewal of traditional 
fast track negotiating authority serves a compelling need of 
U.S. foreign and economic policy and should be approved. It 
must be renewed and it should not be altered in any way that 
would render it less viable as a policymaking mechanism.
    Growth in trade is vital to sustain our country's 
successful economic strategy. Americans cannot be pro-growth 
without being pro-trade, for international trade now accounts 
for fully one-third of our economic growth.
    At this moment, the fast track negotiating arrangement that 
has served this Nation so well for so long is at risk. Partisan 
politics from the left and the right threatens to produce 
legislation that would tie the hands of this President and his 
successors. The result will be an America negotiating with one 
hand tied behind her back in a world where other nations have 
never been tougher or smarter negotiators on behalf of their 
own interests.
    The American people reject special interest politics and 
they dislike partisan politics even more. They want Congress 
and the President to work together to solve problems, seize 
opportunities and expand economic freedom and political 
liberty. That is exactly what fast track authority does in 
facilitating our international trade initiatives, helping the 
American economy grow and carrying our interests and our values 
to every corner of the globe.
    Make no mistake about it. Further delay of fast track 
renewal with all that is ahead on the international trade 
agenda would be a triumph of the new protectionism and of 
economic defeatism that would cost Americans dearly.
    Now that the President has made this request for renewal, 
the world is watching. Legislative rejection, no matter how 
eloquently cloaked in humanitarian or procedural terms, will 
send a message around the globe that the United States has 
abdicated international economic leadership, and, worse, 
abandoned the pursuit of our own economic self-interest at the 
hour of our greatest strength. It would confirm to our trading 
partners that negotiations with the United States are doomed to 
failure in a Congress controlled by special interests.
    Congress needs to come up with a bipartisan bill that can 
pass. Of the various positions being advanced, the one that 
defines the political center also makes the most sense for the 
long-term viability of fast track authority. We call it ``no 
mandates/no new restrictions.'' No mandates from the left on 
how social issues must be connected to trade talks and no new 
restrictions from the right on what interests of the United 
States can be pursued commercially and in trade.
    There should be guidance from Congress in the form of trade 
negotiating objectives and active consultation throughout, but 
President Clinton and his successors should have the same broad 
negotiating authority that other Presidents have had to get the 
best possible deals for the United States. ``No mandates/no new 
restrictions'' is compatible with negotiating on labor and 
environmental issues directly related to trade, an important 
and necessary clarification that should be incorporated in the 
final bill.
    The decision about fast track renewal is not about what 
powers a Republican Congress will give a Democratic President. 
This is about Congress and the President of the United States 
uniting to face formidable challenges from foreign trading 
partners and, using fast track rules of consultation and 
consideration as guidelines, working together to pursue 
enormous opportunities.
    Congress, as a body, should be careful not to give the 
executive branch unusual powers beyond the traditional fast 
track procedures for trade matters. To allow the President to 
negotiate environmental and labor agreements not directly 
related to trade under fast track rules would be an expansion 
of Presidential authority. Members should examine the 
legislation as it goes through markup and ask themselves: How 
would I feel about this proposed arrangement if there were a 
Republican President and a Republican Congress? If it was a 
Republican President and a Democratic Congress? If Democrats in 
Congress faced a conservative Republican President able to 
bring labor and environmental agreements in for a no-amendment, 
yes-or-no vote, what would the attitude of, for instance, 
environmental organizations be? If you are going to mandate 
some kind of negotiations under this fast track bill, you 
should be prepared for the possibility that it will be 
exercised by a President with whose policies you might 
disagree. Caution is in order and that is why we think a middle 
of the road position is the appropriate one.
    There is room in this bill for specificity. But if there is 
no flexibility, America will find itself at a disadvantage 
whether it involves talks about agriculture, information 
services, or free trade.
    I have some comments on labor and environment which I will 
refer to you in my statement.
    I would just like in closing to remark that there is one 
element oddly missing in this congressional debate and I think 
Mr. Rangel has raised a number of these questions today; 
namely, how to expand the winner's circle at home. 
Technological progress and trade liberalization should go hand 
in hand with a domestic agenda that offers all U.S. workers 
lifelong access to career training, more effective public 
support for workers in transition, and the means to manage 
their career security by controlling their own health and 
pension resources. Our paramount goal should be to make trade 
liberalization and economic leadership a winning proposition 
for all Americans.
    Thank you. We will do everything we can to renew fast track 
under these conditions and look forward to working with you and 
other Members of the Subcommittee in this regard.
    [The prepared statement follows:]

Statement of Edith R. Wilson, Trade Project Director, Democratic 
Leadership Council; and Senior Fellow, Progressive Policy Institute

    Mr. Chairman, the Democratic Leadership Council believes 
that President Clinton's request for renewal of traditional 
fast track negotiating authority serves a compelling need of 
U.S. foreign and economic policy and should be approved. Fast 
track serves, overwhelmingly, the national interest. It must be 
renewed, after an unprecedented three year interruption, and it 
should not be altered in any way that would render it no longer 
viable as a policymaking mechanism.
    Growth in trade is vital to sustain our country's 
successful economic growth strategy. Americans cannot be pro-
growth without being pro-trade, for international trade now 
accounts for fully one-third of our economic growth. As the 
world's richest country, largest exporter, and most competitive 
national economy, we have the most to gain from opening new 
markets and enhancing a rules-based trading system.
    At this moment, the fast track negotiating arrangement that 
has served this nation so well is at risk. Partisan politics 
from the left and the right threatens to produce legislation 
that would tie the hands of this President and his successors. 
The result will be an America negotiating with one hand tied 
behind its back in a world where other nations have never been 
tougher or smarter negotiators on behalf of their own 
interests.
    Lawmakers who oppose fast track renewal should heed the 
lessons of the past two elections: the American people reject 
special interest politics and they dislike partisan politics 
even more. They want Congress and the President to work 
together to solve problems, seize opportunities, and expand 
economic freedom and political liberty. That's exactly what 
fast track authority does in facilitating our international 
trade initiatives, helping the American economy grow, and 
carrying our interests and values to every corner of the globe.

                Special Interests vs. National Interest

    Of course special interests, be they regions, industries, 
or groups, strongly oppose fast track negotiating authority: It 
is designed to protect against their domination of our 
international commercial relations--even while offering them 
ample input in negotiations. Approval of major trade agreements 
on an up or down vote allows U.S. presidents to negotiate, by 
assuring our trading partner that any agreement reached will 
not be subject to the death of a thousand unilateral 
amendments. Fast track procedures grew out of bitter 
experience: in 1967, Congress amended and repudiated a trade 
deal worked out by the Kennedy Administration. Other countries, 
not unnaturally, became less interested in negotiating with the 
United States. Fast track procedures were crafted to prevent a 
repeat of this diplomatic and commercial disaster. They are 
designed to ensure that the United States never again becomes 
captive to industries or groups seeking protection from 
international competition by putting their interests above 
those of every American who benefits from steady growth coupled 
with lower unemployment, prices, and inflation.
    Make no mistake about it: Further delay of fast track 
renewal, with all that is ahead on the international trade 
calendar, would be a triumph of the new protectionism and 
economic defeatism that would cost Americans dearly. Now that 
the President has made his request for renewal, the world is 
watching. Legislative rejection, no matter how eloquently 
cloaked in humanitarian or procedural terms, will send a 
message around the globe that the United States has abdicated 
international economic leadership, and worse, abandoned the 
pursuit of our own economic self-interest at the hour of our 
greatest strength. It would confirm to our trading partners 
that negotiations with the United States are doomed to failure 
in a Congress controlled by special interests.

                   Bipartisan Approach to Legislation

    Congress needs to avoid partisan posturing and come up with 
a bill that can pass. Of the various positions being advanced, 
the one that defines the political center also makes the most 
sense for the long-term viability of fast track authority: ``no 
mandates/no new restrictions.'' No mandates from the left on 
how social issues must be connected to trade talks, and no new 
restrictions from the right on what interests can be pursued. 
There should be guidance from Congress in the form of trade 
negotiating objectives, and active consultation as 
circumstances change and opportunities present themselves, but 
President Clinton and his successors should have the same broad 
negotiating authority that other presidents have had to get the 
best possible deals for the United States.
    No mandates/no new restrictions is compatible with 
negotiating on labor and environmental issues directly related 
to trade, an important and necessary clarification that should 
be incorporated into the final bill. No new restrictions means 
the President should not be prohibited from pursuing these 
topics when there is a legitimate issue (such as standards). No 
mandates means that he should not be required to introduce them 
when, in his judgement, they would serve no useful purpose (as 
in many sectoral accords).
    The decision about fast track renewal is not about what 
powers a Republican Congress will give a Democratic President. 
This is about the Congress and the President of the United 
States uniting to face formidable challenges from foreign 
trading partners and, using fast track rules of consultation 
and consideration as guidelines, working together to pursue 
enormous opportunities. This is about the long-term viability 
of an essential arrangement between two branches of our 
government that will let the United States negotiate 
successfully on trade as we enter the 21st century.
    Congress as a body should be careful not to give the 
executive branch unusual powers beyond the traditional fast 
track procedures for trade matters. To allow the President to 
negotiate environmental and labor agreements not directly 
related to trade under fast track rules would be an expansion 
of presidential authority. Members should examine the 
legislation as it goes through mark-up and ask themselves, 
``How would I feel about this proposed arrangement if there 
were a Republican President and a Republican Congress? A 
Republican President and a Democratic Congress?'' If Democrats 
in Congress faced a conservative Republican President able to 
bring back labor and environmental agreements for a no-
amendment, yes-or-no vote, what would the attitude of liberal 
environmentalists be? If you are going to mandate some kind of 
negotiations, you should be prepared for the possibility it 
will be exercised by a president with whose policies you 
disagree. Caution is in order.
    There is room in this bill for specificity, but if there is 
no flexibility, America will find itself at a disadvantage, 
whether it involves talks about agriculture, information 
services, or free trade with Latin America. We will not have 
the leverage we need because we will have told our negotiators 
for the next eight years to pursue only the narrowest of 
objectives that Congress could foresee in 1997. This is wrong. 
Ask Bill Brock, Robert Strauss, Carla Hills, Mickey Kantor, or 
Charlene Barshefsky if this is the best way to negotiate.

                           Labor/Environment

    Those genuinely committed to progress on labor and 
environment issues must not be distracted by the din of 
disinformation over fast track. There are many approaches for 
improving international industrial relations, labor rights, 
pollution prevention, and resource conservation that can and 
are being pursued productively by the United States. None of 
them besides directly trade-related measures requires the 
special device of fast track procedures. The President has 
ample executive authority to enter into agreements in these 
areas, most of the time not changing U.S. law and therefore not 
requiring congressional action.
    Trade is important to improving the global environment. 
Trade increases wealth, and with wealth it is possible to pay 
for smokestack scrubbers, sewers, and other systems to clean up 
pollution and improve public health. Open trade facilitates the 
spread of innovation, such as the environmental technology that 
America now sells around the world. Economic growth helps 
increase the middle classes in developing countries who in turn 
will generate local demand for clean air, clean water, and the 
enforcement of environmental laws. Finally, trade negotiations 
give the United States additional leverage in other labor and 
environmental negotiations. Most of all, we must raise living 
standards here and abroad if we seek higher wages and increased 
protection for the environment. Trade helps us do that.
    The history of trade disputes and protectionism should make 
us pause long and hard as we deal with the environmental issues 
here. At a time when we are finally making progress at a 
multilateral level in dismantling non-tariff trade barriers, 
there is legitimate concern about whether environmental 
standards could become a new kind of non-tariff barrier. 
Caution needs to be exercised both by those who wish to advance 
the cause of environmental protection as well as by those who 
wish to expand trade.
    We must guard against the temptation to dictate to other 
nations what their laws, wages, and standards must be. It won't 
work and already is arousing fierce resentment abroad. We would 
never let other nations dictate to us in a similar manner. 
Instead, we must lead in multilateral and regional efforts to 
share expertise and technology, build necessary institutions, 
work out problems cooperatively, and raise standards by mutual 
agreement.

                 Expanding the Winner's Circle at Home

    In closing, permit me to remark that one element has been 
oddly missing in this congressional debate: namely, how to 
expand the winner's circle at home. Technological progress and 
trade liberalization should go hand-in-hand with a domestic 
agenda that offers all U.S. workers lifelong access to career 
training; more effective public support for workers in 
transition; and the means to manage their career security by 
controlling their own health and pension resources.
    These are all critical elements of a revitalized social 
compact to allow all Americans to compete and win. Now that the 
budget is balanced, Congress must turn its attention to this 
unfinished business. Our paramount goal should be to make trade 
liberalization and economic leadership a winning proposition 
for all Americans.
    Thank you for your consideration of these remarks. I would 
be happy to take questions.
      

                                


    Chairman Crane. Thank you, Ms. Wilson.
    Mr. Meinert.

    STATEMENT OF JAMES L. MEINERT, SNIDER MOLD CO., MEQUON, 
 WISCONSIN; ON BEHALF OF THE SOCIETY OF THE PLASTICS INDUSTRY, 
                              INC.

    Mr. Meinert. Thank you. Mr. Chairman, it is indeed a 
pleasure to speak before you and your distinguished panel today 
on behalf of the Society of the Plastics Industry and my 
company, especially in support of granting fast track trade 
negotiating authority to the President of the United States. I 
appreciate this opportunity to present the views of SPI, 
Society of the Plastics Industry, and my company, Snider Mold, 
which employs 45 individuals near Milwaukee, Wisconsin. We are 
located in Mequon.
    Over the past 30 years, I have personally been an engineer, 
general manager, owner, president, and now the last few years I 
am focusing on international marketing for my company.
    We have served the plastics industry worldwide since 1966. 
Snider Mold combines leading edge technology with the skills of 
highly trained craftsmen and engineers to build quality 
compression and injection molds for plastics. Our customers are 
molding companies and end users located in the United States 
and in many other countries.
    We serve the automobile industry. In the agriculture 
business, we serve John Deere, J.I. Case. Also, Harley Davidson 
is a real good customer of ours. We are in the construction 
industry, a lot of material handling containers. In fact, the 
chairs in this room came out of one of our molds, I noticed 
this morning.
    But Snider Mold has been exporting for more than 30 years, 
and international sales have had a dramatic impact on our 
company, with sales to Mexico, South America, Europe and Asia. 
Thirty percent or more of our employees have jobs because of 
our exporting. Within the last few months, we have acquired a 
large customer in Brazil that will result in even greater 
growth for our company and our employees.
    Among the other activities in the international field, I 
have had the privilege of serving as chairman of SPI's 
international trade Committee on plastics and have been honored 
by being selected the 1993 Small Business Exporter for the 
State of Wisconsin. I served as president of the Milwaukee 
World Trade Association; I have also led and been part of 
numerous trade missions in several countries around the world.
    I have a real passion for exporting and will talk to anyone 
who will listen about exports and the merits of trade and my 
company's successes abroad, within my small business community 
in Wisconsin, as well as the plastics industry. I feel it is my 
mission to encourage small companies to be involved in export 
and to create an international awareness.
    Not only do exports strengthen Snider Mold's employment, 
international business enables us to purchase more new goods 
and services from our local U.S. suppliers and financially 
support our community. Even though my company is very small, 
the increasing global reach of our economy has had a great 
impact on my company's health. While we have been successful at 
building Snider Mold's international presence, I strongly feel 
that we could have done even better, had some trade barriers in 
many markets been lowered.
    High tariffs in South America and Asia have been a 
particular problem for us, as well as nontariff barriers in 
many countries, which prevent growth of my small company. Trade 
barriers hinder the ability of Snider Mold and other U.S. 
plastics companies to compete. Lowering these barriers should 
be a number one priority in this country and the U.S. Congress.
    The U.S. plastics industry, as well as all American 
businesses and schools, must prepare workers and students not 
just to compete, but to lead globally as we approach the next 
century. I have made literally hundreds of international 
business trips over the past several decades, and I know that 
if my company or another United States moldmaker doesn't step 
up to the plate, our competitors from Asia, Europe and 
elsewhere will. My competitors from other nations aren't 
waiting around for fast track; they are out there developing 
markets and seeking business from my possible customers.
    The plastics industry's future and the future of companies 
like Snider Mold is in the newly industrialized and developing 
nations of South America, Asia and Africa. The long-term 
potential of these markets is huge, as you heard earlier today, 
and the U.S. plastics industry needs to be there. But at the 
same time, the trade barriers in those countries also tend to 
inhibit U.S. exports. In addition, while the domestic plastics 
industry is growing, the pace of that growth is dwarfed by the 
exploding growth in these developing countries.
    My company is typical of the many small companies in the 
U.S. plastics industry. The industry has become increasingly 
more dependent on international trade, and in the past decade, 
the trend shows every sign of continuing. More than 120,000 
plastics industry, good paying jobs were dependent on 
international trade last year, in 1996, and that is a 20-
percent increase in 2 years. It is one of the few industries 
with a positive trade balance. We are doing well, but we still 
need some help. Because of this increasing dependency on 
international trade, the SPI board of directors gave a strong 
endorsement to fast track at a recent meeting.
    U.S. plastic sales and employment will be enhanced by trade 
negotiations that remove foreign trade barriers. Trade is good 
for American workers and the U.S. plastics industry employment 
and the employees of Snider Mold Co.
    Mr. Chairman, I honestly can say to you that I don't 
understand the political rhetoric I hear about fast track. 
Maybe I am very simpleminded, but simply put, I think it is a 
bread-and-butter issue to those of us who make our livelihood 
and start to depend on trade. The arguments against fast track 
just don't add up, and I think they are really about 
protectionism and protecting my company from growing or 
protecting my company from hiring more workers, protecting my 
employees from higher wages and better jobs. We do not need 
that kind of protectionism.
    I am the guy with the ``frequent flyer'' miles; I am going 
all over the world looking for these opportunities, and all I 
need to know is what the ground rules are so I can play the 
game. I have been in hundreds of business negotiations in my 
business career and have been successful internationally 
because of my willingness to appreciate international cultural 
differences and to manufacture a good product that is suitable 
for the market. But let's face it, those negotiations would not 
have resulted in sales if the person sitting across from me 
doesn't trust my word, doesn't know where I am coming from.
    The same is true for fast track. Countries that should 
lower their trade barriers won't negotiate with the United 
States if our work can't be trusted. If Congress can amend the 
work of our negotiators, nobody would be fool enough to enter 
the negotiations with us. That is why, Mr. Chairman, the 
country needs fast track.
    Snider Mold needs fast track, and I urge Congress to pass 
fast track and send it to the President. We really need this 
commitment, and I would like to thank you very much for this 
opportunity, letting me present the views of Snider Mold and 
the plastics industry.
    [The prepared statement follows:]

Statement of James L. Meinert, Snider Mold Co., Mequon, Wisconsin; on 
Behalf of Society of the Plastics Industry, Inc.

    Mr. Chairman, it is indeed a pleasure to speak before you 
today on behalf of The Society of the Plastics Industry, Inc. 
(SPI) in support of granting fast-track trade negotiating 
authority to the President of the United States. I appreciate 
this opportunity to present the views of SPI and my company, 
Snider Mold Company, Inc., which employs 45 individuals in 
Mequon, Wisconsin.
    Over the past 30 years, I have been an engineer, general 
manager, owner, president and now international marketing 
director for Snider Mold Company. We have served the plastics 
industry worldwide since 1966. Snider Mold Company combines 
leading edge technology with the skills of highly trained 
craftsmen and engineers to build quality compression, injection 
and structural foam molds. Our customers are molding companies 
and end users located in the United States and many other 
countries.
    Snider Mold has been exporting for more than 30 years. 
International sales has had a dramatic impact on my company, 
with sales to Mexico, South America and Asia. Thirty percent or 
more of Snider Mold's 45 employees have jobs because of 
Snider's exporting. Within the past few months, Snider acquired 
a large customer in Brazil, which will result in even greater 
growth for our company and our employees.
    Among many other activities in the international field, I 
have had the privilege of serving as chairman of SPI's 
International Trade Advisory Committee and have been honored by 
being named the 1993 Small Business Exporter for Wisconsin and 
served as President of the Milwaukee World Trade Association. I 
also have led and been a part of numerous trade missions to 
several countries around the world.
    I have a real passion for exporting and will talk to anyone 
who will listen about the merits of trade and my company's 
success abroad. Within my small business community in 
Wisconsin, as well as within the plastics industry, I feel it 
is my ``mission'' to encourage exporting and international 
awareness. Not only do exports strengthen Snider Mold's 
employment, international business enables us to purchase more 
new goods and services from U.S. suppliers and financially 
support our community.
    Even though my company is small, the increasingly global 
reach of the economy has a great impact on the company's 
health. While I have been successful at building Snider Mold's 
international presence, I strongly feel that Snider could have 
been even more successful had trade barriers in many markets 
been lower. High tariffs in South America and Asia, as well as 
other non-tariff barriers in many countries, prevent the growth 
of my small company. Trade barriers hinder the ability of 
Snider Mold and other U.S. plastics companies to compete. 
Lowering these barriers should be a number one priority for 
this country and the United States Congress. The U.S. plastics 
industry, as well as all American businesses and schools, must 
prepare workers and students not just to compete, but to lead, 
globally, as we approach the 21st century.
    I have made literally hundreds of international business 
trips over the past several decades and I know that if my 
company or another U.S. moldmaker doesn't step up to the plate, 
our competitors from Asia, Europe or elsewhere will. My 
competitors from other nations aren't waiting around for fast-
track; they are out there in developing markets seeking 
business.
    The plastics industry's future and the future of companies 
like Snider Mold is in the newly industrialized and developing 
nations of South America, Asia and Africa. The long-term 
potential of those markets are huge and the U.S. plastics 
industry needs to be there. But, at the same time, the trade 
barriers in those countries also tend to inhibit U.S. exports. 
In addition, while the domestic plastics market is growing, the 
pace of that growth is dwarfed by the exploding growth in 
developing economies.
    My company is typical of the many small companies in the 
U.S. plastics industry. The plastics industry has become 
increasingly more dependent on international trade in the past 
decade and that trend shows every sign of continuing. More than 
120,000 U.S. plastics industry jobs were dependent on 
international trade in 1996, a 20 percent increase just in 2 
years!! Because of this increasing dependency on international 
trade, the SPI Board of Directors gave a strong endorsement of 
fast-track at a meeting last week. U.S. plastics sales and 
employment will be enhanced by trade negotiations that remove 
foreign trade barriers. Trade is good for American workers, 
U.S. plastics industry employment and the employees of Snider 
Mold.
    Mr. Chairman, I honestly can say that I do not understand 
all the complicated political rhetoric that I hear about fast-
track. Simply put, it is a bread and butter issue to those of 
us whose livelihoods depend on trade. The arguments against 
fast-track just don't add up and really are about 
``protectionism.'' Protecting my company from growing, 
protecting my company from hiring more workers, and protecting 
my employees from higher wages and better jobs. We do not need 
that kind of ``protectionism.''
    I have been in hundreds of business negotiations in my 
business career and have been successful internationally 
because of my willingness to appreciate international cultural 
differences and to manufacture a good product. But face it, 
those negotiations would not have resulted in sales if the 
person sitting across the table didn't trust my word. The same 
is true for fast-track. Countries that should lower their trade 
barriers won't negotiate with the United States if our word 
can't be trusted. If Congress can amend the work of our own 
negotiators, nobody would be fool enough to even begin the 
negotiations. That is why, Mr. Chairman, that the country needs 
fast-track and why Snider Mold needs fast-track. I urge the 
Congress to pass fast-track and send it to the President.
    Thank you for the opportunity to express the views of 
Snider Mold Company and The Society of the Plastics Industry.
      

                                


    Chairman Crane. Thank you, Mr. Meinert.
    Ms. Lee, I have a question. If the fast track language does 
not make significant accommodations to the AFL-CIO on labor and 
environmental issues, is it your organization's plan then to 
punish members who vote for it?
    Ms. Lee. Punish is a strong word, but certainly this is an 
issue which is extremely important to our members, and which 
they have strong feelings about, so I can say that this is 
something we care about. And we have communicated that concern 
to Members of Congress, and we are doing the best job we can to 
let them know exactly the basis for our concerns.
    Chairman Crane. So if your language were not adopted, you 
would have rather have no trade negotiating authority given to 
the USTR.
    Ms. Lee. We would rather have no fast track than a bad fast 
track, that is right; and we consider the proposal before us to 
be a bad fast track. We don't consider that to be the end of 
trade. Certainly the United States is exporting very well to 
Latin America without fast track, without a free trade area of 
the Americas; and we don't see any reason why trade has to stop 
just because we don't have a fast track bill.
    Yes, maybe there might be a short period before we get new 
trade agreements in place, but nothing is stopping the United 
States from participating, even without fast track.
    The point we want to make is that before we go ahead and 
sign this sweeping new fast track authority, we want the ground 
rules that Mr. Meinert was talking about to be clear, and the 
ground rules should be exactly what we have talked about, that 
companies that don't respect basic human worker rights and 
environmental standards should not have preferential access to 
the U.S. market. We feel very strongly about that.
    Chairman Crane. Well, to be sure, we are carrying on trade 
with non-NAFTA partners in South America, but I learned 
recently that there is a big difference between a similar 
product, manufactured here and in Canada, since Chile went 
forward with a free trade agreement with Canada. The difference 
is the Canadian product accesses the market with no tariff 
barriers, and the tariffs on ours are 10 to 15 percent; and 
that is not just confined to Chile.
    Ms. Lee. Right. Well, certainly everyone would like to see 
lower tariffs, and I think there are probably a lot of tariff 
lowering agreements that can be done outside of fast track. But 
I think one point that is really important to make too is that 
the relative level of tariffs is not the only concern in terms 
of where products are purchased and where they are sourced. 
Certainly, if you don't have any way in trade agreements to 
take into account dramatic currency movements, as we saw with 
the Mexican peso, small differences in relative initial tariffs 
are totally swamped by the currency movement. Mexico's pre-
NAFTA tariffs fell from about 10 percent down to much less than 
that, but the 50% currency devaluation the year after we signed 
the trade agreement rendered that tariff decrease irrelevant. I 
guess I am a little bit puzzled as to why the negotiating 
objectives on currency stability and exchange rates were 
actually taken out of this fast track bill relative to earlier 
fast track bills.
    Chairman Crane. Are you familiar with the peso devaluation 
of 1982?
    Ms. Lee. Yes.
    Chairman Crane. And its impact?
    Ms. Lee. Yes.
    Chairman Crane. And how long did it take us to recover from 
that?
    Ms. Lee. Well, our exports took several years to recover, 
but we never had a trade deficit of $16 billion back in 1982, 
and one of the reasons is, the whole nature of our trading 
relationship with Mexico is very different in the nineties than 
it was in 1982. The difference is that a lot of our exports to 
Mexico are now composed of intermediate parts and capital 
goods, things that are used to produce goods which are then 
exported back to the United States market. So the fact the 
Mexican consumer market has still not recovered from the 1994 
and 1995 peso crisis is sort of irrelevant because a lot of the 
United States exports to Mexico are fueled by consumer demand 
in the United States, not in Mexico. That is one of the reasons 
we didn't see the same kind of drop in U.S. exports that we saw 
back in 1982, but we did see a massive growth in the U.S. trade 
deficit. That was different from what we saw back in 1982, and 
the drop in Mexican GDP was much greater in 1995 than it was in 
1982.
    Chairman Crane. Well, thanks to NAFTA, it took less than 1 
year for us to get into a bigger export total to Mexico than 
ever in history, and it reached an alltime high.
    I would like to ask you, Edie, a quick question. 
Congressman Visclosky testified earlier that NAFTA is being 
used as a weapon against labor unions. Do you agree?
    Ms. Wilson. Did the Congressman refer to plant relocation, 
that with trade liberalization with Mexico, plants are now 
being able to move, which is an allegation which I would want 
to comment on?
    Chairman Crane. I presume it is the sucking sound argument.
    Ms. Wilson. Well, if the reference was to jobs, there was 
no discernible sucking sound.
    Chairman Crane. Well, they did go to Texas.
    Ms. Wilson. They did go to Texas. The United States economy 
creates, in 1 month, hundreds of thousands of jobs--at the 
moment, more than we have, ``lost,'' with trade with Mexico in 
the 3 years since Mexico--since the agreement has been in 
effect. If the reference is to plant relocation and the 
question of whether a company goes in in a labor negotiation 
and says, unless you give us what we want, we are going to take 
this plant to Mexico, the comment that you have to make is, 
plants move all the time.
    Plants in Illinois have labor negotiations where terms of 
trade and advantages in other States of this Union are 
frequently discussed. Terms of trade and labor situations in 
other countries are frequently discussed, there is no law 
against it; it is not the nicest kind of negotiations in the 
world, but it happens. The question is, have we seen a shift in 
actual trade of plants moving to Mexico; and we have clearly 
seen a movement around North America as it has become more 
integrated economically.
    But we are also seeing this year that the three countries 
of North America have now got impressive economic growth, 
Canada is projected at 3.3 percent this year; Mexico has been 
upgraded to between 5 and 6 percent GDP growth this year. The 
United States, I believe is at 3.7 percent; we are one of the 
fastest growing regions in the world. It seems to me that we 
are benefiting from the effects of this agreement overall.
    Chairman Crane. Thank you very much.
    Mr. Matsui.
    Mr. Matsui. Thank you, Mr. Chairman.
    Ms. Lee, may I ask you a question. Assuming that labor and 
environment were a core part of an agreement, and let's say 
that we didn't have a free trade agreement with Mexico, what 
would you propose in terms of offering--putting on the table 
labor provisions with respect to Mexico? What are some of the 
things you would suggest that would be part of an agreement?
    Ms. Lee. Well, actually, I think the NAFTA labor side 
agreement is a start in the right direction. It is not enough. 
Some of the problems in terms of Mexico and their labor laws 
is, for one, the minimum wage, which has lost about two-thirds 
of its purchasing power over the last decade or so. And so the 
question is whether Mexico is actually adhering to its own 
constitution, which requires a decent minimum wage.
    I think we need to be able to address the problems of 
violation of the freedom of association and the right to 
bargain collectively--which are written into the NAFTA labor 
side agreement; but unfortunately they are written in without 
any enforcement provisions, no arbitration, no dispute 
settlement mechanism and so on. So it is possible to bring 
cases alleging there has been a persistent violation of the 
freedom of association and the right to bargain collectively in 
Mexico, but it is not possible to receive any kind of financial 
penalties or any kind of sanctions, even when that finding has 
been determined.
    We have looked at five internationally recognized labor 
rights, the same ones that are in U.S. trade law in the 
generalized system of preferences, the Caribbean Basin 
Initiative and the OPIC and so on. They are the freedom of 
association, the right to bargain collectively, prohibition on 
forced labor, a minimum age for the employment of children and 
acceptable conditions with respect to minimum wage, hours of 
work and health and safety. These are core ILO conventions that 
are determined at an international level, that we think could 
be enforced through trade agreements. I guess every once in a 
while I feel puzzled about the vehemence with which American 
businesses oppose these core labor standards.
    We are not asking for other countries to have the same 
wages as the United States or even the same labor standards; we 
are asking for a core set of labor standards to be respected 
internationally, and most American companies, I do believe--
certainly they claim this is the case--pay decent wages and use 
environmentally responsible methods of production. This should 
not hurt them; it should help them.
    Mr. Matsui. And I appreciate that. We do have some basic 
standards on the International Labor Organization--obviously, 
prison labor; you know, obviously labor in sweat shops--we do 
have certain requirements now. But what you are suggesting is, 
for example, a minimum wage.
    See, one of the problems with an issue like the minimum 
wage is, that to a large extent it is dependent on factors that 
are even beyond the control of the negotiators. The value 
exchange rate between countries, things of that nature, 
obviously the inflation rate, all of that comes into play here; 
and if you are suggesting that before we do any trading with 
any country, we should have at least the negotiations on 
collective bargaining agreements, one of the problems there 
is--take China for example.
    China doesn't have collective bargaining; we are trying to 
get them to move over from state-owned industries into a 
private sector situation. I think they are--about 60 percent 
now is still state owned, and obviously we are trying to get 
them to move further into the private sector. And so to raise 
collective bargaining with the Chinese Government at this time 
probably would be fruitless.
    And so my concern is, are we really talking about issues of 
labor in the environment, or is this really just a way to say, 
look, we are against any kind of trade agreement, because it 
doesn't seem to me like you are going to be able to negotiate 
these things?
    If we try to negotiate the NAFTA all over again, and we 
raise a minimum wage issue, and I go all the way back to, I 
guess it was the late eighties, the Salinas government, I don't 
think they could have cut that deal. In fact, I know they 
couldn't have cut the deal, given the state of their economy, 
given the political instability that was there at the time that 
we found out later about, even worse than we thought at the 
time, I don't know how you can negotiate those kinds of things 
with a country. Now, maybe a country like Chile, we can do 
that, but I think everyone can see that the Chileans will 
pretty much work with us on what we want and what they want in 
terms of labor and environmental standards.
    I think Mexico might have been a unique situation, but even 
there, I think it would have been difficult to get some of the 
items you are suggesting. You can respond.
    Ms. Lee. We will never know until we try, and we won't 
succeed until we put labor and environmental standards at the 
top of our list of negotiating objectives.
    I think it is true if you go to a country, particularly in 
the developing world, and you say, listen, we need concessions 
on intellectual property rights and financial services and 
agriculture and 17 other things, and they give you those 
concessions; and then you ask for concessions on labor rights, 
you are unlikely to achieve them. I think if this were 
something we could send a consistent message to our trading 
partners about, I think if we had done it from the beginning 
with Mexico, we would have succeeded, we would have prevailed; 
we will never know at this point. But it is not a poison pill 
and it is not a way of stopping trade; it is a way of saying, 
trade has had a disproportionate burden on working people, and 
there are two aspects to it. One is the development aspect, 
about spurring the right kind of development in Third World 
partners so they do have a good, growing consumer market, they 
do have a strong middle class; and the other thing is taking 
the edge off the worst kinds of competition that American 
workers face back home.
    Mr. Matsui. I appreciate it. Let me say this.
    We were citing statistics in terms of what the value of 
trade is in terms of the wage disparity. Now, I understood it 
to be 10 percent, maybe a little higher than that. I know 
Ambassador Barshefsky said one-eighth was maybe related to 
trade, and you indicated it could be up to 50 percent.
    You cited two economists; one is Bill Cline. See, now I am 
going to have to check that because I was under the impression 
that William Cline with the Institute of International 
Economics--I believe it is the same person we are talking 
about--said it was about 10 percent, but he also threw in the 
immigration along with the issue of trade.
    Now, I could be mistaken, but I understood it to be 10 
percent. Perhaps you have some----
    Ms. Lee. I saw a manuscript of his book, which was from 
maybe 6 months ago or so, and in it he said--there were two 
different measures he had; one was the gross impact and the net 
impact. But the net impact, if you look at the 18-percent gap, 
the growth in the wage inequality between 1980 and the present, 
he said, of that gap, about half could be attributed to trade 
and another 15 percent could be attributed to immigration. But 
when you look at the gross growth in inequality, there was more 
than 100-percent growth in inequality.
    So there were many factors that were contributing to 
inequality, and if you take all those factors and lay them out, 
then trade plus immigration came to more like one-eighth of the 
impact. But in terms of looking at that gap, that 18-percent 
growth in wage inequality, half of that gap was due to trade, 
according to the last numbers I saw. And if he has revised them 
since then, then I will stand corrected.
    Mr. Matsui. Well, I appreciate this. Obviously, this is an 
ongoing dialog, and I appreciate your testimony. I appreciate 
the testimony from the other panelists as well. Thank you.
    Chairman Crane. Mr. Herger.
    Mr. Herger. I have no questions at this time, Mr. Chairman.
    Chairman Crane. Mr. Nussle.
    Mr. Nussle. Thank you, Mr. Chairman.
    I was listening with quite a bit of interest to the last 
exchange with Mr. Matsui, because it is a question that I have 
pondered over quite a bit, and I think most everybody--you may 
not agree with this position, but I think most everybody has 
quite a bit of concern over both of the issues of the 
environment and labor. The question is, how do we effect that 
change with a foreign country over which we have no authority?
    All we have is a negotiating position, and this is a 
negotiation, and what we are talking about here today is who 
best can negotiate on behalf of the United States. And I think 
it has been clear, certainly in our modern times, the President 
of the United States--regardless of party, regardless of 
philosophy, regardless of many of the things that get pointed 
out from time to time in more domestic policy, partisan 
discussions--is the best person to do that.
    And so I guess I, too, want to know what is it--and maybe 
you have some experience in knowing what this would be, but 
what will these countries ask for in return if we go in and 
start with number one and number two being environment and 
labor? I mean, obviously we go in and we say, all right, our 
negotiation is this, this is what we want; and they say, OK, 
thank you, this is what we want. What are they going to ask 
for, and are we going to be able to swallow that? That is the 
first part.
    The second part is unenforcement. If, in fact, we do get an 
agreement with any kinds of changes, they are under quite a bit 
of fear, and part of the reason they say this is a poison pill 
is, they don't want to have trade sanctions over some of these 
other issues that are not solely trade-based issues. And so 
part of what concerns me about this is I think there is a 
definite effort to try and figure out ways to improve this.
    But we have seen certainly a President that your 
organization has supported very well over the last 5 years now 
has not been able to effect hardly any changes in that area, so 
I am wondering what it is that anyone could do to satisfy your 
concern, and at the same time, still get an agreement that 
anyone can live with?
    Ms. Lee. I think the main thing we have to offer is access 
to our consumer market, which of course is one of the largest 
and richest consumer markets in the world. And whether 
countries would be willing to make agreements on labor and 
environmental provisions in order to have a trade agreement 
with the United States, I think is not unlikely; it is the----
    Mr. Nussle. But they have that now, and so what we would 
propose is what--saying to them, if you don't fulfill that part 
of the bargain, we are at trade war with you.
    Ms. Lee. No, we don't have a new trade agreement with you. 
We don't have a trade agreement, let's say, with Latin America. 
Let's say we are talking about a free trade area of the 
Americas and we think----
    Mr. Nussle. Well, we are talking about a trade agreement 
and a trade negotiation. Let's assume we have been able to 
effect what you want, you are supporting it. Now there is a 
problem, and you are saying, quid pro quo is access to our 
consumer market; so we say to them, you can't have access any 
more. What do they say, you can't have access to us?
    Ms. Lee. We are talking about negotiating a new trade 
agreement which is lowering trade barriers, let's say, to 
zero--as we did between the United States, Mexico, and Canada 
over the course of 15 years--we take our trade barriers right 
down to zero; and in exchange, is it reasonable to say we need 
some minimum standards on labor and environment, we need 
adherence to these minimum standards, otherwise these goods 
can't cross the borders with----
    Mr. Nussle. But the exchange is, we are both bringing our 
barriers down to zero. That is the exchange; you bring yours 
down, I bring mine down, now they are both down.
    Now we want also to get labor standards and we want 
environmental standards. How do we get that? What is the other 
side of the bargain on that?
    Ms. Lee. As part of a negotiation to agree to bring the 
standards down to zero, we talk about labor and environmental 
provisions, and we come to a mutually agreed upon solution. And 
this is something the labor movement in the United States has 
discussed with our colleagues--labor and environmental 
organizations in other parts of the world. For the most part, 
they are not opposed to working on this kind of consensus.
    They also see a problem in their countries. They would see 
this as something which would be welcomed, where they could 
help empower workers, let's say in Chile or in Brazil, to have 
improvements in their labor code as part of trade agreements.
    But the reason to tie it to trade agreements, the reason it 
is important is simply, that is where the leverage is in 
international agreements; that is why we have tied intellectual 
property rights protection to trade agreements, because that is 
how we have leverage over another country to get them to change 
their own domestic laws, to bring them up to U.S. standards. 
That is what we did under NAFTA; we used the carrot of the 
trade agreement with the United States as a way of forcing or 
convincing Mexico and Canada to change their domestic 
intellectual property rights law so they looked exactly like 
the United States laws.
    Mr. Nussle. That works in some instances with regard to 
trade barriers. But I think the concern the President has been 
expressing, and others, is that there is almost no way to 
negotiate that and then, in the final analysis, to enforce it; 
and that would be the concern that I have.
    I would just like to go on and just--well, my time is up. 
But let me just, point out, you say here that lawmakers who 
oppose fast track renewals should heed the lessons of the past 
two elections. The last report I saw said that there was pretty 
much a vast majority of Republicans supporting the fast track, 
and there are only, I think, two that were willing to go on 
record from the Democratic side. And I guess I would just 
encourage you both on that; and you also mentioned further 
delay of fast track renewal, with all that is ahead in the 
international calendar, would be a triumph for new 
protectionism.
    The President hasn't sent up a bill for 3 years, and we 
have been trying to get him to send up a bill for quite a 
while. I guess all I am pointing out here is, it says here, 
Congress needs to avoid partisan posturing and come up with a 
bill they can pass. I would only suggest, there has been a lot 
of partisan posturing, and I can point out a few partisanships, 
even maybe within your testimony. And I would only ask that I 
think you have a lot of work to do with regard to many of the 
folks you have access to; and I would encourage you, because I 
know you are a strong supporter. It appears all of your 
membership and council is for it; I think they have a lot of 
work to do if we are going to get this done.
    Ms. Wilson. I think your comments are very well taken, sir.
    Chairman Crane. I would just add a footnote.
    The Trade Subcommittee went to the Singapore Ministerial 
Conference last December and thanks to Charlene Barshefsky's 
tireless work, we got the ITA agreement. But she did raise the 
question of labor, and they all totally rejected it and said, 
send it to the ILO. So it is not something that helps you 
leverage in the trade negotiation, there are other vehicles. In 
the next panel, we are going to have a representative from the 
National Wildlife Federation who will testify to environmental 
questions and what is the best way to proceed.
    Mr. Cohen. Mr. Chairman, may I just make one comment with 
regard to some of the dialog on labor and environment? There 
seems to be an assumption here in some of the discussion that 
if there is going to be improvement overseas in the areas of 
labor and environment, it is only going to occur because the 
United States demands it. That assumption is mistaken when we 
look at the way development has occurred around the world. The 
historical record suggests that improvement in a country's 
labor and environment standards is tied to its economic 
development. As many have observed over the years, the 
improvement in the standards in the United States and Europe 
and, elsewhere has come about with the rise in the per capita 
income level. This suggests a different way of moving toward 
the achievement of what all Americans want: Higher standards in 
developing countries in the areas of the environment and labor.
    Chairman Crane. I agree wholeheartedly.
    Mr. Levin.
    Mr. Levin. Thank you, Mr. Chairman, thanks for letting me 
participate as a Member of the Full Committee. I wish, Mr. 
Chairman, that there were more of us listening to this 
discussion in the last half hour, because I think it has 
probably been the most fruitful discussion--and so let me just 
say a couple of words hoping to further it.
    I would hope, from our discussion of the last half hour, 
that nobody would call this a social issue, as is often done 
and is, I think, suggested in some of the testimony from this 
panel. What we have been talking about is an economic issue.
    I also would hope that the people would not say it is 
unrelated to trade. The discussion about direct relationship to 
trade very much worries me, but these are issues that are 
related--that are part of the economic flow between countries.
    Let me just cite a column in the Wall Street Journal of 1 
week ago, where it said--by Mr. Seib, who doesn't agree with my 
position on this, but he says--which isn't to say that labor 
and the environment should be ignored, they shouldn't--
``Ultimately, lax labor and environmental standards become 
comparative advantages, which is a trade issue.'' And I think 
that is simply well put.
    You can argue how much of a trade issue it is, how much of 
an impact that comparative advantage is, but it is a 
comparative advantage. And also let me suggest, when it said 
that we can't dictate, I have been involved with USTR now for 
over a decade and, Mr. Crane, what we have been doing these 10 
years under Republican and Democratic administrations is to try 
to persuade other countries to open their markets, to create 
access for our goods. And you can call that dictation if you 
want, but what we are trying to do is to force other countries 
to adopt the open market system that we have in the United 
States--not carbon copy, but to move in that direction.
    And the issue is, if we are forcing them to move in that 
direction in terms of capital markets and in terms of 
investments, why should we not do it that they move in that 
direction in terms of free labor markets. I think that is the 
issue.
    And to say it is a social issue is wrong, to say that we 
can't dictate is wrong. With support of management and labor--
some of us were over in Geneva talking at the Uruguay round 
about continuation of our laws on dumping. Were we trying to 
dictate to other countries? You're darned right, we were trying 
to dictate: Don't dump your goods in our country, and if you 
do, we want to be able to retaliate.
    So this discussion of the last half hour, I think, has been 
useful to get at what is a basic issue here, which isn't a 
social issue and isn't an issue of irrelevance. I don't know if 
any of you want to comment on that, but I think that this is 
how to focus what the discussion is. It is not just a power 
play; there is a basic issue of concern here, and that is why 
the concern of the American public is----
    Mr. Matsui. Are you asking a question?
    Mr. Levin. Yes, if anybody would like to respond.
    Mr. Cohen. I was going to respond, Mr. Levin, in part by 
saying, I don't believe there is any disagreement with regard 
to the need for advancement in the area of labor and 
environment standards. I think, indeed, the debate, the 
discussion I heard all this morning and into the afternoon is 
how best to achieve it. A number of points have been made. 
Among them is one that I would subscribe to. As I mentioned 1 
moment ago, perhaps the most potent tool to advance labor and 
environment standards is economic development.
    Mr. Levin. OK. Let me just say a word about that as someone 
who has worked on it.
    I don't think you should assume that economic development 
will automatically move up labor conditions when the structure 
of the country works in the opposite direction and when the 
national policies of that country are to suppress working 
conditions in order to stimulate exports. And if you want to 
say that it is automatic, I think you can cite some cases where 
they go together, but I can cite some cases where they don't.
    Mr. Cohen. I would say, over time, when you have market 
forces at work, they are eventually reflected not only in the 
economic realm, but also in the social realm. There have been 
many debates before you and the other Members of this 
Subcommittee with regard to the effect of market forces on 
China. One of the basic arguments of the Americans business 
community is that the growth of market forces in China and 
trade with China is subversive, that is, that it is undermining 
the repression of the Chinese state and increasing individual 
choice for Chinese citizens.
    Mr. Levin. My time is up. Let me just say to you and to 
everybody else who is here, not only does that forfeit any role 
on human rights in terms of the bargaining process, but the 
bottom line is that we will accept WTO accession from China on 
minimal terms; that we will not insist on their moving in 
certain directions because, ultimately, development will move 
them in that direction. And I think that for the business 
community that is a dangerous argument, it is a developing 
country, so give them a free ticket.
    Mr. Cohen. With all due respect, Congressman, we would not 
subscribe to that view. We will work with you. We want see 
China meeting the obligations of WTO membership, the same 
obligations of other countries in the WTO. I do not support 
China's accession on minimalist terms. It must be on 
commercially acceptable terms that the Chinese enter the WTO, 
and we commit to working with you in that regard.
    Mr. Levin. There is an inconsistency there because what we 
are saying, then, is we want, in bargaining with developing 
countries, there also to be on terms that move them, in terms 
of labor markets, toward a free labor market as well as a free 
capital market. That is an economic issue and, I think, a 
reasonable position. How you do it can be legitimately argued, 
but don't dismiss it as irrelevant.
    I appreciate your indulgence, Mr. Chairman.
    Chairman Crane. Well, I am glad to hear you do, since on 
that last panel you took us to less than 60 seconds before the 
vote, and I, unlike Sandy, did not have on my imported Nikes 
from China.
    Mr. Levin. They gave us 5 minutes to spare, Mr. Chairman.
    Chairman Crane. Sure thing.
    I want to thank you all very much for your thoughtful 
insights and observations about international trade, and we 
look forward to working with you, because I think it is 
essential that we get this fast track renewal this year, 
otherwise we could be hanging in limbo for 3 or 4 years, and 
that would be one of the greatest tragedies that I can think of 
in all the years I have served in this place.
    So with that, we will now call our next panel, and I would 
like to introduce them. We will begin with Matt Destler, 
director of the Center of International and Security Studies, 
University of Maryland, and a visiting fellow at the Institute 
for International Economics; followed by Bob Vice, president of 
the California Farm Bureau, on behalf of the American Farm 
Bureau; Alan Tank, chief executive officer of the National Pork 
Producers Council, on behalf of Agriculture for Fast Track; and 
finally, Steve Shimberg, vice president for Federal and 
International Affairs for the National Wildlife Federation.
    And we will begin with Mr. Destler and proceed in the order 
in which you all were introduced.

 STATEMENT OF I.M. DESTLER, DIRECTOR, CENTER OF INTERNATIONAL 
  AND SECURITY STUDIES, UNIVERSITY OF MARYLAND; AND VISITING 
         FELLOW, INSTITUTE FOR INTERNATIONAL ECONOMICS

    Mr. Destler. Thank you very much, Mr. Chairman. I will, 
like others, race through my statement, referring others to my 
full statement for the record.
    Chairman Crane. Let me remind you that if you could just 
try and compress your oral presentations to 5 minutes, all of 
your printed statements will be made a part of the permanent 
record.
    Mr. Destler. Thank you.
    I also would refer people to my new study called Renewing 
Fast Track Legislation. Fast track is one of the great 
innovations of the past quarter century in the congressional 
process. It does for trade policy what the new budget process 
does for taxes and spending. Thus, my basic conclusion is a 
simple one. Fast track should not only be renewed, it should be 
made permanent.
    Since the Trade Act of 1974, it has effectively bridged the 
division of power between the two branches. It gives the 
executive branch negotiators the credibility to negotiate. It 
guarantees a major congressional role in trade policy while 
reducing members' vulnerability to special interests.
    Fast track is a congressional, not an executive branch, 
invention. It was worked out on Capitol Hill the very week 
President Richard Nixon was listening to White House tapes 
whose release would force his resignation.
    As actually carried out, fast track has reinforced the 
congressional role, through the so-called nonmarkup process, 
the sessions that this Subcommittee and its Senate counterparts 
have had with the administration on every major fast track 
implementing bill. At the meetings, Members made 
recommendations as to the specific language of this 
implementing legislation, and Presidents from Carter to Clinton 
have honored these recommendations when they sent down the 
implementing legislation.
    Why does the United States need fast track now? The general 
answer is that market-expanding trade negotiations enable our 
government to shape the terms of globalization to the advantage 
of Americans. Globalization itself is inevitable. Blocking fast 
track will not stop it, just as the absence of fast track has 
not stopped it over the past 3\1/2\ years. The specific answer 
to the question of why now is that there is an important 
negotiating agenda which requires fast track for its effective 
pursuit. This was spelled out this morning by USTR Charlene 
Barshefsky and others, so I will skip over the part of my 
statement dealing with that specific agenda.
    What should be the content of fast track legislation? At 
minimum, it should give the President and USTR a negotiating 
mandate through the current presidential term with provision 
for extension. Both the President and informally this 
Subcommittee have proposed such a time period. I made a more 
ambitious proposal in my book, which I will summarize in a 
second, but to make clear where I stand, I think fast track 
should be extended whether or not the specific refinements I 
suggest are adopted. I find it hard to imagine a proposal that 
the President and the protrade forces in Congress can agree on 
that would not be a major improvement on the present situation.
    Let me now summarize six specific proposals. First, 
Congress should recognize the permanence of U.S. engagement in 
the global economy by making fast track permanent. Congress 
should write fast track into law without a time limit. Sixty-
three years after the Reciprocal Trade Agreements Act of 1934, 
it is time to recognize that trade-expanding negotiations are 
the ongoing policy of the United States.
    Second, Congress should assure effective oversight by 
providing that Congress must authorize in advance the specific 
negotiations to which fast track applies. This is the way the 
procedure worked initially. The two major laws, those of 1974 
and 1988, were written for the multilateral Tokyo and Uruguay 
rounds. Therefore, the bill enacted this year or early next 
should, in my view, not only include a permanent reenactment of 
the fast track process, but explicit authorization for its use 
in a range of negotiations which would be clearly indicated in 
the law. The point is that the administration should make a 
case for what negotiations it wants to initiate under fast 
track, and Congress should review that case and to decide 
whether and to what extent to endorse it.
    Third, we need to find a constructive compromise on labor 
and environmental issues which are important and which lack 
consensus to be dealt with effectively through trade 
negotiations. I think the suggestion by Edith Wilson, in her 
testimony--no mandates, no new restrictions--is an excellent 
formula for a compromise.
    Fourth, we should develop along with fast track, a serious 
program to help American workers make the most of 
globalization. Congressman Rangel has been especially 
interested in this, and I think it is a vital part of the U.S. 
response to globalization. Many workers are helped; many 
workers are not helped. The latter should receive our help.
    Fifth, I think the Congress should, as this Subcommittee 
has suggested, narrow the provision in prior legislation that 
fast track implementing bills can contain any provision 
``necessary or appropriate.'' But I would be reluctant to go as 
far as to limit it to just ``necessary'' or to insist on a very 
tight relationship between negotiating objectives and fast 
track implementing bills. The solution may lie in a combination 
of measures: A further narrowing of the administration's 
proposed language; perhaps adoption of the previous Ways and 
Means Committee proposal that the President submit an advance 
statement of exactly what is strictly necessary for 
implementing an agreement; and an additional requirement that I 
suggest that the President submit, when he puts in his 
implementing legislation, a statement listing all provisions 
that are not strictly necessary so that the Subcommittee and 
the Congress will have an idea what has been added, which may 
be useful, but is not strictly required.
    Finally, I think the fast track timetable could be brought 
up to date to reflect how the process has actually operated in 
the 20 plus years since it was originally enacted. First, I 
think it could require the administration to present draft 
implementing legislation for comment by the Subcommittees; in 
other words, I think it could codify the nonmarkup process as 
it has existed in practice from the agreements from the Tokyo 
round through NAFTA and the Uruguay round.
    Second, I think it would be reasonable to shorten the 
maximum time allowed for consideration of an implementing bill, 
once submitted, from 90 to 45 days, since the legislative 
process and the deliberative process is largely complete by the 
time the President's implementing bill is submitted.
    Let me conclude as I began. Fast track procedures have 
served the Nation well. They need renewal now so that the 
Clinton administration, working with the Congress, can move 
U.S. trade policy forward once again. Thank you.
    [The prepared statement follows:]

Statement of I.M. Destler, Director, Center of International and 
National Security Studies, Univeristy of Maryland; and Visiting Fellow, 
Institute for International Economics

    Fast track is one of the great innovations of the past 
quarter-century in the Congressional process, doing for trade 
policy what the budget process has done for taxes and spending. 
Thus my basic conclusion is a simple one--fast track is should 
not only be renewed; it should also be made permanent. Since 
its inauguration in the Trade Act of 1974, it has effectively 
bridged the division of power between the two branches. It 
gives executive branch (USTR) negotiators needed credibility to 
conclude trade agreements by assuring other nations' 
representatives that Congress won't rework them; it guarantees 
a major Congressional role in trade policy while reducing 
members' vulnerability to special interests.
    The second point is worth elaborating, for as I explain in 
my new study, fast track is a Congressional, not an executive 
branch invention. It was developed when Congress rejected a 
procedure the Nixon administration had proposed and substituted 
one where Congress retained the power of final up-or-down 
action on trade agreements which reduce non-tariff barriers.
    Fast-track in practice, as actually carried out, has 
reinforced the Congressional role. Beginning with the Tokyo 
Round in 1979, members have insisted on playing an active part 
in the drafting of Presidential implementing bills. Your 
committee and its Senate counterpart participate in drafting 
sessions labeled ``non-markups,'' and Presidents from Clinton 
to Carter have included the Congressionally-recommended 
language in their non-amendable implementing legislation.
    But despite the efforts of this committee, President 
Clinton has lacked this trade-negotiating authority for three-
and-a-half years--from April 15, 1994 to the present. The 
longest previous period since 1974 when a President lacked this 
authority was less than eight months, from January 3rd to 
August 23rd 1988. It is past time for the President and 
Congress to agree on a formula for fast-track extension and end 
this very bad situation.
    Why does the United States need fast-track now? The general 
answer is that market-expanding trade negotiations enable our 
government to shape the terms of globalization to the advantage 
of Americans. Globalization itself is inevitable: blocking fast 
track will not stop it, just as the absence of fast track 
hasn't stopped it over the past three-and-a-half years. But in 
an age where the US economy depends more and more on export 
expansion for its dynamism, and where export jobs are 
especially good jobs--paying more, offering benefits superior 
to jobs in import-competing industries--we need to empower our 
trade negotiators to strike deals which bring down foreign 
import barriers, which in most cases are much greater than our 
own.
    The specific answer to the ``why now'' question is that 
there is an important negotiating agenda which requires fast-
track for its effective pursuit: free trade with Chile and 
other steps toward a Free Trade Area of the Americas (FTAA); 
scheduled negotiations under the World Trade Organization 
presenting particular opportunities for the United States (in 
agriculture, services, and other economic sectors); and 
opportunities for market liberalization with East Asia, 
especially with nations in the Asia-Pacific Economic 
Cooperation (APEC) forum.
    What should be the content of the fast-track legislation? 
At minimum, it should give the President and USTR a negotiating 
mandate through the current Presidential term, with provision 
for extension--both the President and this committee have 
proposed such a time period. I have set forth a more ambitious 
proposal in my book, and I will get to this in a minute. But to 
make it clear where I stand, I think fast track should be 
extended whether or not the specific refinements I propose are 
adopted. I find it hard to imagine a proposal that the 
President and the pro-trade forces in Congress can agree on 
that would not be a major improvement on the present situation.
    That being said, I have made several specific proposals in 
my new book, and I will summarize them here. I believe that 
Congress should:
    (1) Recognize the permanence of US engagement in the global 
economy by making fast track permanent. Congress should write 
fast-track into law without a time limit. Sixty-three years 
after the Reciprocal Trade Agreements Act of 1934, it is time 
to recognize that trade-expanding negotiations are the ongoing 
policy of the United States.
    (2) Assure effective Congressional oversight by providing 
that Congress must authorize, in advance, the specific 
negotiations to which fast track applies. This was the way fast 
track worked initially--the two major laws, those of 1974 and 
1988, were written for the multilateral Tokyo and Uruguay 
Rounds. Things grew more complicated, however, when the 
authority was broadened to include free-trade agreements. No 
one anticipated when Congress acted that Mexico would seek a 
such an agreement, and Congress didn't get a truly clean shot 
at that before the agreement was completed. This weakened, I 
believe, the legitimacy of the fast-track process. My proposal 
would prevent a recurrence, and buttress fast track's 
legitimacy.
    When I say Congress should authorize in advance, I don't 
mean that the Clinton administration should have to come back 
later to get approval for its current trade agenda. The bill 
enacted this year, or early next, should in my view include 
both a permanent reenactment of fast-track process and explicit 
authorization for its use for a range of negotiations, which 
would be clearly indicated. This authorization could be very 
specific--free trade with Chile--or more general--any agreement 
advancing free trade with Western Hemisphere countries, if 
Congress wished to endorse that general policy direction. It 
should certainly include the sectoral negotations on the WTO's 
current schedule. The point is that administration should make 
a case for what negotiations it wants to be free to initiate 
under fast track, and Congress should review that case and 
decide whether and to what extent to endorse it.
    My proposal is not without its disadvantages--there are 
problems, in the words of one critic, with having Congress 
``vote twice on everything,'' once at each end of a 
negotiation. It could reduce the administration's negotiating 
flexibility. On the other hand, if Congress had voted 
explicitly to authorize NAFTA--standing alone--in 1991, and I 
believe it would have, the vote in 1993 would probably have 
been a bit easier. And if my proposed formula had been in 
effect since 1994, it is highly likely we'd have negotiated 
free trade with Chile: the administration would have proposed 
it, and Congress would surely have approved. So I think that, 
on balance, a permanent, two-tiered fast-track law is best for 
trade and for democratic process.
    (3) Find a constructive compromise on labor and 
environmental issues. As stated, this may strike you as neither 
brilliant nor helpful. But it reflects a conviction first, that 
these issues are too important to be ruled out and second, that 
there is currently neither national nor international consensus 
in favor of including, in trade agreements, binding provisions 
on labor and environmental standards enforced by the threat of 
trade sanctions.
    Clearly globalization affects US workers and the 
environment, sometimes adversely. The nation and the world need 
to confront these connections if workers are to win an 
equitable share of the gains from trade, and if trade is to 
reinforce, rather than undermine, steps toward a better global 
environment. Hence we should explore whether some problems in 
these spheres that are clearly trade-related can be addressed 
by the trade negotiating process.
    But the short-term yield of any such negotiations, 
particularly on labor standards, is likely to be modest. Nor is 
it clear that trade negotiations are, in most cases, the best 
arena for addressing these problems. The circumstances, 
therefore, demand a compromise. The Clinton administration 
proposal represents one genuine effort in this direction; this 
committee has suggested another. My sense is that, in their 
practical impact, the two are not very far apart. If the 
political will is there, I am sure you can reach common ground 
which recognizes that first, the Clinton administration will 
(and, I believe, should) continue to raise these issues 
internationally and second, that any viable agreements on labor 
and environmental standards will require bipartisan support, 
including some support within the business community.
    (4) Develop, along with action on fast-track, a serious 
program to help American workers make the most of 
globalization. Many workers gain from globalization, but many 
do not. International agreements on labor standards, even if 
achievable, are unlikely to have more than minuscule impact on 
those who are hurt. Much more relevant to their immediate 
situation is actions we can take within the United States. 
Therefore, President Clinton and Congress should complement the 
enormous emphasis he has put on expanding opportunities for 
higher education with a broad new effort to give workers the 
wherewithal to engage in the marketplace even when forced to 
change jobs. Apprenticeship and retraining assistance should be 
available to all in need, specifically including those 
disadvantaged or displaced by trade and globalization.
    (5) Narrow the provision in prior legislation that fast-
track implementing bills can contain any provision ``necessary 
or appropriate'' to carrying out a trade agreement--it is too 
permissive. But I think it would be unfortunate to eliminate 
all flexibility here--either by confining legislation to what 
is clearly ``necessary'' or by drawing a tight connection 
between the implementing bill and statutory negotiating 
objectives. A solution may lie in a combination of measures:
     concerning what provisions can be included in 
implementing legislation, a further narrowing of the 
administration's proposed language;
     adoption of the Ways and Means proposal that the 
President submit an advance statement stating what statutory 
changes are strictly necessary to implement the agreement; and
     an additional requirement that the President 
submit, with the implementing bill, a statement listing all 
provisions not strictly ``necessary,'' together with an 
argument (for each) as to why it is appropriate for fast-track 
rather than ordinary legislation.
    I also suggest opening fast-track implementing bills to 
amendment on the money provisions required under Congressional 
rules to offset the budgetary impact of loss of tariff revenue.
    (6) Finally, bring the fast-track timetable up to date, to 
reflect how the process has operated in practice. Specifically, 
I would suggest:
     requiring the administration to present draft 
implementing language for comment by the committees of 
jurisdiction prior to formal submission of the implementing 
bill (this would codify the non-markup process); and
     shortening the maximum time allowed for 
consideration of an implementing bill, once submitted, from 
ninety to forty-five days.
    Let me conclude as I began. Fast track procedures have 
served the nation well. They have made it possible for the 
executive branch to negotiate credibly on complex, non-tariff 
trade measures that require Congressional action to implement. 
They have protected Congress's democratic, constitutional role. 
They need renewal now so that the Clinton administration, 
working with the Congress, can move US trade policy foward once 
again.
    Thank you.
      

                                


    Mr. Nussle [presiding]. Thank you.
    Mr. Vice, representing the American Farm Bureau, welcome.

 STATEMENT OF BOB VICE, PRESIDENT, CALIFORNIA FARM BUREAU; ON 
           BEHALF OF AMERICAN FARM BUREAU FEDERATION

    Mr. Vice. Thank you, Mr. Chairman, Members of the 
Subcommittee who aren't here but will return, I am sure. I am 
President of the California Farm Bureau, but I am giving this 
statement today for the American Farm Bureau, on whose board of 
directors I serve. I want to thank the Subcommittee for having 
this hearing. I think our membership represents about 85 
percent of all those that farm both here in the United States 
as well as Puerto Rico.
    Higher living standards around the world depend upon 
mutually beneficial trade among the Nations. As living 
standards rise, the demand for high-quality products grows. The 
transition to higher living standards depends on trade 
agreements that protect each nation's ability to exchange goods 
and services freely in an open market atmosphere with minimum 
disruption. Our members agree that free trade is the ultimate 
goal; however, there are disputes with many of our trading 
partners that need to be addressed as the administration moves 
forward in negotiating new treaties to further expand access to 
markets.
    The Farm Bureau is pleased that President Clinton has 
proposed authorization of the fast track, and especially with 
the specific language that is included for agriculture.
    We heard much testimony this afternoon about the regional 
trade agreements, and I won't repeat those, but we have been 
left out, having only signed 1 of those 30 in the last 4 years.
    The Farm Bureau urges the administration to include three 
issues in its proposal, and we are pleased that the 
administration has responded to some of our concerns. However, 
the language does not fully encompass the concerns we 
expressed, and we have been very pleased with the response we 
have had from the administration and Members of this 
Subcommittee to broaden and further define these points.
    Our first concern was addressed with the following 
language: ``The principal negotiating objectives of the United 
States regarding trade barriers and other trade distortions are 
to expand competitive market opportunities for U.S. exports and 
obtain fairer and more open conditions of trade by reducing or 
eliminating tariff and nontariff barriers and policies and 
practices of foreign governments directly related to trade that 
decrease market opportunities for the U.S. exports or distort 
U.S. trade.''
    We strongly support this language and are very familiar 
with the section under agriculture, however, we ask you to go 
one step further as you refine the administration's proposal by 
including that tariffs must be eliminated within a specific 
timeframe. After 11 years of a free trade agreement with 
Israel, we still haven't gotten one box of citrus into Israel. 
We must put our trading partners on notice at the time this 
bill is passed by Congress that the United States is serious 
about reaching zero tariffs. This language would provide 
assurances to agriculture that the administration is serious 
about negotiating away tariffs and tariff inequities, such as 
those that are currently imposed on United States dairy and 
poultry products by Canada.
    The Farm Bureau's second concern is all future negotiations 
bind our trading partners to resolving sanitary and 
phytosanitary issues on the basis of sound science or by using 
recognized specific principles as laid out in the Uruguay round 
agreement for agriculture. The term ``unjustified'' is just too 
vague and unfocused.
    With the removal of the tariff barriers, we have 
experienced growing market disruptions based on health and 
safety claims that cannot be justified by scientific 
principles. The Europeans, China, Russia, many countries are 
very expert at this. We need to be blunt with our trading 
partners. All sanitary and phytosanitary barriers to trade must 
be based on sound scientific principles. Our trading partners 
should expect we will respond immediately when barriers are 
raised.
    The third issue is directly related to this and was 
addressed in the overall negotiating objectives with the 
following language: ``To further strengthen the system of 
international trading disciplines and procedures including 
dispute settlement.''
    Now that several of our major cases have gone through both 
the NAFTA, and GATT, General Agreement on Tariffs and Trade, 
dispute settlement processes, we know that the basic dispute 
resolution systems are good systems, but they were not designed 
to respond quickly to disputes over perishable crops. We market 
many perishable products that encompass a broad range of 
growing and harvesting seasons and processing methods. The 
dispute settlement system is basically well designed, but must 
be made more effective and time sensitive to meet the needs of 
perishable commodities.
    We are delighted that other issues, such as intellectual 
property rights, transparency and state trading have been 
addressed, as well as a broad range of agriculture issues.
    The Farm Bureau is concerned with the extent of labor and 
environmental issues included in this trade proposal, as well 
as actions by the administration that it has taken in support 
of international treaties that will greatly disadvantage U.S. 
agriculture in world markets. These include the actions taken 
at the Montreal Protocol recently concluded in Montreal, 
Canada, to speed up the ban on methyl bromide as proposed by 
the global climate change agreement to be concluded in Japan 
this December.
    Banning the use of methyl bromide would take a critical 
export and production tool away from U.S. farmers while 
continuing to allow its use by our competitors. The proposed 
global climate change treaty will be counterproductive to our 
farmers who are already leading the world in conservation 
practices and efficient use of fuel and fertilizers, while 
leaving many of our competitors exempt from the terms of these 
agreements.
    I wish to submit, by the way, a copy of our statement on 
the global climate change, if I could, with my testimony.
    Mr. Nussle. It will be included in the record.
    Mr. Vice. We believe these issues are best addressed in 
their respective international bodies and not through the World 
Trade Organization. WTO was not designed to address these 
issues, nor does it have the resources to do so. USTR's 
resources are needed to address the growing number of trade 
issues facing industrial countries around the world.
    Mr. Chairman, the U.S. market is already open; many of our 
competitors are not. The United States is the most open major 
market in the world, and we must work together if we are going 
to continue to open our competitors' markets. To do this we 
must have the strongest trade agreements possible. Agreements 
must not jeopardize our industry, our social issues, but must 
move us forward to the global marketplace.
    International trade can and does create significant markets 
for U.S. agriculture commodities. Agreements must ensure trade 
is both free and fair for all products. We need to continue to 
monitor and enforce the accords to make sure that benefits that 
were promised to farmers and ranchers are fully realized and 
move us forward in creating new and stronger markets for U.S. 
products. For this to be accomplished, Congress must be willing 
to commit necessary resources to agencies that are responsible 
for monitoring international trading disciplines and 
procedures.
    In conclusion, Mr. Chairman, our current trade agreements 
have been basically good for agriculture, but adjustments are 
needed for some sectors. Negotiating and modifying existing 
trade agreements and establishing new agreements is critical to 
the competitiveness of U.S. agriculture. In order to do this, 
the President must have the authority, with satisfactory 
safeguards, to go forward and negotiate with our trading 
partners. Without this authority our trading partners will not 
take our negotiations seriously, and the Americans' leadership 
role in the international trade arena will be greatly 
diminished.
    Thank you again for having this hearing and us having an 
opportunity to testify before you. Thank you.
    [The prepared statement and attachments follow:]

Statement of Bob Vice, President, California Farm Bureau; on Behalf of 
American Farm Bureau Federation

    Mr. Chairman and members of the Committee, I am Bob Vice, 
president of the California Farm Bureau. I am here today 
representing the American Farm Bureau Federation as well as the 
California Farm Bureau. I want to thank you for this 
opportunity to testify concerning fast-track and its impact on 
agriculture. The American Farm Bureau represents 4.7 million 
member families in the United States and Puerto Rico. Our 
members produce every type of farm commodity grown in America 
and depend upon export markets for over one-third of our 
production.
    Higher living standards around the world depend upon 
mutually beneficial trade among nations. As living standards 
rise, the demand for our high quality products grows. The 
transition to higher living standards depends on trade 
agreements that protect each nation's ability to exchange goods 
and services freely in an open market atmosphere with minimum 
disruption. Our members agree that free trade is the ultimate 
goal. However, there are disputes with many of our trading 
partners that need to be addressed as the administration moves 
forward in negotiating new treaties to further expand market 
access.
    Farm Bureau is pleased that President Clinton has proposed 
the Export Expansion and Reciprocal Trade Agreement Act of 
1997, especially with the specific language for agriculture.
    We must keep in mind that the President's proposal is not a 
treaty or trade agreement but an authorizing document. This 
legislation enables this administration and the next to 
negotiate trade agreements in consultation with Congress.
    The administration's ability to negotiate good agreements 
is critical to opening doors for U.S. trade. Of the 30 regional 
and bilateral agreements completed over the past four years, 
the United States is only a signatory to one. Other countries 
are forging ahead while the administration has not had the 
authority to negotiate new or renegotiate existing trade 
agreements.
    Farm Bureau urged the administration to include three 
issues in its proposal and we are pleased that each of these 
has been addressed. However, the language does not fully 
encompass the concerns we expressed and we have been very 
pleased with the response we have had from the administration 
and members of this committee to broaden and further define 
these points.
    Our first concern was addressed with the following 
language: ``The principal negotiating objectives of the United 
States regarding trade barriers and other trade distortions are 
to expand competitive market opportunities for United States 
exports and obtain fairer and more open conditions of trade by 
reducing or eliminating tariff and non-tariff barriers and 
policies and practices of foreign governments directly related 
to trade that decrease market opportunities for United States 
exports or distort United States trade.'' We strongly support 
this language as well as the similar language under the section 
on agriculture.
    However, we ask that you go one step further as you refine 
the administration proposal by including that tariffs be 
eliminated within a ``specified time frame.'' We must put our 
trading partners on notice, at the time this bill is passed by 
Congress, that the United States is serious about reaching zero 
tariffs. This language would provide assurance to agriculture 
that the administration is serious about negotiating away 
tariffs and tariff inequities such as those currently imposed 
on U.S. dairy and poultry products by Canada.
    Farm Bureau's second concern is that all future 
negotiations bind our trading partners to resolving sanitary 
and phytosanitary issues on the basis of sound science, or by 
using recognized scientific principles as laid out in the 
Uruguay Round agreement for agriculture. The term 
``unjustified'' is too vague and unfocused.
    With the removal of tariff barriers we have experienced 
growing market disruptions based on health and safety claims 
that cannot be justified on scientific principles. The 
Europeans, China, Russia and many other countries are expert at 
this. We need to be blunt with our trading partners. All 
sanitary and phytosanitary barriers to trade must be based on 
sound scientific principles, and our trading partners should 
expect that we will respond immediately when barriers are 
raised.
    The third issue is directly related to this and was 
addressed in the overall negotiating objectives with the 
following language: ``To further strengthen the system of 
international trading disciplines and procedures including 
dispute settlement.''
    Now that several major cases have gone through both the 
North American Free Trade Agreement (NAFTA) and the General 
Agree settlement processes, we know the basic dispute 
resolution systems are good systems, but are not designed to 
respond quickly to disputes over perishable products.
    We market many perishable products that encompass a broad 
range of growing and harvesting seasons and processing methods. 
The dispute settlement system is basically well designed but 
must be made more effective and time sensitive to meet the 
needs of perishable commodities.
    We are delighted that other issues such as intellectual 
property rights, transparency and state trading have been 
addressed, as well as the broad range of agricultural issues.
    Farm Bureau is very concerned with the extent of labor and 
environmental issues included in this trade proposal. We 
believe these issues are best addressed in their respective 
international bodies and not through the World Trade 
Organization. The WTO was not designed to address these issues 
nor does it have the resources to do so. The Office of the 
United States Trade Representative was not created to resolve 
labor and environmental debates. USTR's resources are needed to 
address the growing number of trade issues facing U.S. 
industries around the world.
    Mr. Chairman, the U.S. market is already open. Others are 
not. The United States is the most open major market in the 
world. We must work together toward continuing to open our 
competitors' markets. To do this we must have the strongest 
trade agreements possible. Agreements must not jeopardize our 
industry for social issues but must move us forward in the 
global marketplace. The administration must have the authority 
guided by sound trade objectives and principles to negotiate 
and bring to Congress trade agreements that will benefit 
agriculture and the nation.
    International trade can and does created significant 
markets for U.S. agricultural commodities. Agreements must 
ensure that trade is both free and fair for all products. We 
need to continue to monitor and enforce these accords to make 
sure the benefits promised to farmers and ranchers are fully 
realized and move forward in creating new and stronger markets 
for all U.S. industries. For this to be accomplished, Congress 
must be willing to commit necessary resources to agencies 
responsible for monitoring international trading disciplines 
and procedures.
    Attached to this testimony are a few specifics on why this 
is so critical to the nation.
    Mr. Chairman, our current trade agreements have been 
basically good for agriculture but adjustments are needed for 
some sectors. Negotiating and modifying existing trade 
agreements and establishing new agreements is critical to the 
competitiveness of U.S. agriculture. In order to do this the 
President must have the authority to go forward and negotiate 
with our trading partners. Without this authority our trading 
partners will not take our negotiators seriously and America's 
leadership role in the international trade arena will be 
greatly diminished.
    Thank you for holding this hearing and we look forward to 
working with you on this important issue.
      

                                


                               Attachment

    The ability to expand existing markets and open new markets 
will dictate the future of our industry and the well-being of 
the nation. I have included some points why trade and good 
trade agreements are critical to agriculture.
    The well-being of US agriculture is tied to competitiveness 
in global markets. U.S. agricultural exports have more than 
doubled from $29 billion in 1984 to $60 billion in 1996. Much 
of this growth has been attributed to efforts to open markets 
through trade agreements and multilateral trade negotiations, 
increasing per capita income in the rest of the world, 
production shortfalls in key regions, a weaker U.S. dollar and 
greater exports of value-added products. To guarantee the 
continuation of this trend, market expansion must be allowed to 
continue.
    Good trade agreements are critical to opening markets. The 
rapidly expanding global economy presents enormous 
opportunities for farm families and agribusinesses. In a world 
where over 95 percent of the world's consumers live outside of 
the United States, and where U.S. agriculture already depends 
on exports for one third of all sales, we must have new and 
expanded markets.
    Commercial competitiveness is critical to our position of 
global leadership. Europe, Canada, China, Japan and others are 
forging preferential commercial alliances with emerging 
markets, which put American exports at a disadvantage. Those 
trade alliances also play a vital role in defining strategic 
relationships between countries and regions.
    Exports create American jobs. Today, more than 11 million 
American jobs are supported by exports, including one in every 
five manufacturing jobs-- good jobs, paying 13-16 percent more 
than non-trade related jobs. Over the last four years, one 
quarter of our economic growth came from trade--exports created 
1.4 million new jobs. Agriculture depends on exports for one-
third of all sales. If we are to raise our standard of living, 
we must continue creating jobs through exports.
    Agriculture: The next round of talks in the World Trade 
Organization are to begin in 1999. American agriculture must be 
in position to lead the renegotiation of the Uruguay Round 
General Agreement on Tariffs and Trade for agriculture. Some 
issues of importance in this round include: increased market 
access; resolution of state trading issues; greater 
transparency between trading partners; greater adherence to 
sound science in resolving sanitary and phytosanitary issues; 
rules of origin; export subsidies; internal support schemes 
disguised as environmental payments; clearly defined trade in 
genetically modified organisms and an overall trade in products 
of biotechnology based on sound science. Negotiations to cut 
trade barriers in the $526 billion global agriculture market 
will define the structure of American agriculture for the next 
decade.
    Global negotiations will address other key areas such as 
intellectual property rights, customs and government 
procurement rules which will not only affect agriculture, but 
also the overall soundness of our economy.
    Sectoral Agreements: Negotiating authority would be used to 
negotiate industry sectors where the U.S. is most competitive. 
Barriers must be reduced in areas like environmental 
technology, biotechnology, medical equipment and computer 
software, areas where America leads the world.
    Regional Trade Agreements: Continuing regional initiatives 
presents vast opportunities, and keeps the U.S. on a 
competitive basis with our neighbors and trading partners who, 
in some cases, have moved forward with agreements that would be 
disadvantageous to the U.S.
    Latin America and the Caribbean: This area was the fastest 
growing market for U.S. exports in 1996. If trends continue, 
Latin America and the Caribbean will exceed the EU as a 
destination for U.S. exports by 2000 and exceed Japan and the 
EU combined by 2010.
    Asia: Contains the fastest growing economies in the world, 
with nearly 3 billion people. Independent forecasters put 1996 
GDP for the region at $2.8 trillion and expect real growth of 6 
to 7 percent annually for the next 15 years.
    Other countries are breaking down barriers for their 
producers. Since 1992, our competitors have negotiated 30 
regional trade pacts without us. In every region of the world, 
this process continues. MERCOSUR is a developing customs union 
with ambitions to expand to all of South America; the EU has 
begun a process to reach free trade with MERCOSUR; China's 
``strategic priorities'' include Mexico, Argentina, Brazil, 
Chile, and Venezuela; Japan has undertaken high-level efforts 
in Asia and Latin America. Canada has reached a trade agreement 
with Chile that will provide an 11 percent tariff reduction on 
Canadian products. Every time an American company competes to 
sell to Chile, it will face an immediate 11 percent 
disadvantage. Canada also negotiated to exempt its supply 
managed dairy and poultry sectors from the agreement, allowing 
it to at any time in the future impose tariffs similar to those 
keeping U.S. dairy and poultry products out. This sets a very 
bad precedent for Canada to use during the 1999 WTO 
negotiations for exempting sectors of the industry.
      

                                


      
    
    
      

                                


    Mr. Nussle. Thank you, Mr. Vice.
    It is now my personal pleasure to introduce a friend of 
mine and a fellow Iowan, Alan Tank, the chief executive officer 
of the Pork Producers.

STATEMENT OF ALAN TANK, CHIEF EXECUTIVE OFFICER, NATIONAL PORK 
   PRODUCERS COUNCIL; ON BEHALF OF AGRICULTURE FOR FAST TRACK

    Mr. Tank. Congressman, thank you very much, and I certainly 
appreciate the opportunity to be here today. I am appearing 
here today on behalf of a coalition of 46 agricultural 
organizations, ranging from farmers and ranchers to processors. 
I have attached a list of that coalition to my testimony.
    I suspect many people who are listening today are wondering 
why American agriculture has two people on this very important 
panel and more importantly with regard to this hearing. I think 
it is important to put into perspective, American agriculture 
is the largest employer, both directly and indirectly, in the 
United States, employing about 18 percent of the work force, a 
significant portion of that coming from exports.
    Second, the U.S. agriculture industry is generally the 
lowest cost, highest quality producer in the world and without 
fast track will not be able to add economic comparative 
advantage to its fullest extent.
    Third, the value of U.S. agriculture exports have grown to 
about $60 billion in 1996, of which 23 billion is a positive 
trade balance that benefited the citizens of the United States. 
It is the single largest sector of our positive balance of 
trade.
    World food and fiber demand is expected to double in the 
next 35 years. Clearly, we believe that the future growth and 
profitability of American agriculture depends on trade 
expansion, and the only real vehicle to achieve that trade 
expansion is through fast track negotiating authority.
    There are many, many reasons why fast track is extremely 
important to American agriculture, and I will try to outline 
five of them because I think those are the ones that are 
extremely relevant to this discussion.
    First of all, as Congressman Dooley pointed out earlier 
this morning, there has been a proliferation of new trade 
agreements between our agricultural competitors and our world 
customers. In fact, American agriculture is very concerned 
about that. Mr. Vice referenced that in his testimony as well. 
There have been more than 100 bilateral and regional trade 
deals that have been signed in the last 5 years, and to put 
this into perspective, yesterday's Japan Times, of which a 
colleague of mine is in Tokyo at the present time, he had a 
copy of a paper showing the economic ministers of Asia and 
Europe were meeting to talk about a number of things, and one 
of those is securing foodstuffs for the Asian community, and 
clearly without fast track we can't be at the negotiating table 
with our Asian trading partners, and the European Union 
actually will be repositioning itself.
    Second, from the Chicago Tribune, and if the Chairman were 
here today, I would point out last Friday they pointed out the 
trade between MERCOSUR, the regional trading bloc made up of 
Argentina, Brazil, Uruguay and Paraguay and Europe, now exceeds 
$40 billion, exceeding that of the United States with that very 
same trading bloc, and so fast track negotiating authority is 
going to be extremely important.
    For American agriculture, it is important to realize that 
our failure to act, Congress' failure to act, or the 
administration's failure to act is actually fostering growth in 
agricultural competitors throughout the world, whether they be 
in Canada, whether they be in South America, in any region that 
we compete with. It is important to understand that American 
agriculture will be the single largest beneficiary of any of 
these trade agreements. We will gain additional market access, 
we will reduce export subsidies, we will reduce internal 
supports, of which most of American agriculture has eliminated 
at the present time, and as a result we are going to be a very 
significant beneficiary, and we believe that as a result of 
that, it is very, very imperative to move forward.
    Third, there are some very strong provisions within the 
administration's agricultural section of the fast track 
negotiating authority, particularly pertaining to market 
access, the sanitary and phytosanitary issues, dispute 
resolution of biotechnology and state trading. I think it is 
very important that this administration and this Congress 
recognize there are serious challenges facing American 
agriculture internationally. We all know that if we export 
products, we generate significant economic growth, we generate 
significant new jobs, significant new revenues, and we really 
are talking about the future of American agriculture. If we are 
going to have growth, if we are going to have profitability, if 
we are going to provide food and fiber for the world's 
populations, we have to have fast track negotiating authority. 
We have to have access to the world's population.
    It has been said many, many times that 95 percent of the 
world's population lives outside our borders. This is a very 
mature market in the United States for U.S. agricultural 
producers. We have to exploit the potential of the 
international marketplace. You can only do that through fast 
track.
    We very much appreciate the leadership of this Subcommittee 
and of the administration in moving forward on this very 
critical issue. On behalf of the coalition of 46 agriculture 
and commodity organizations, I want to thank you, Mr. Nussle, 
for the opportunity to be here this afternoon. Thank you.
    [The prepared statement and attachment follow:]

Statement of Alan Tank, Chief Executive Officer, National Pork 
Producers Council; on Behalf of Agriculture for Fast Track

    Good morning, Mr. Chairman, and Members of the 
Subcommittee. I am Al Tank, Chief Executive Officer of the 
National Pork Producers Council. We represent more than 80,000 
pork producers in 44 affliated states. I am appearing before 
you on behalf of 46 organizations representing every sector of 
production agriculture in the United States--from farmers and 
ranchers to commodity traders and processors to end product 
manufacturers. A list of these organizations is provided on the 
front page of my written statement. We compliment you on 
holding this hearing, Mr. Chairman, and appreciate the 
opportunity to testify before you today.
    As we prepare to enter the 21st century, U.S. agriculture 
is facing a tremendous challenge and responsibility--to supply 
world demand for food and fiber which is expected to more than 
double in the next 35 years. Meeting this challenge will 
require flexibility in crop management to maximize production. 
It will require more sophisticated technologies to enhance 
yields and reduce input costs while protecting the environment. 
And it will require fair and enforceable rules for 
international trade that ensure greater access to growing 
markets.
    We have taken the first step by adopting the ``Freedom to 
Farm'' concept in the Federal Agricultural Improvement and 
Reform Act of 1996. Under Freedom to Farm, government no longer 
directs production of basic commodities and idling of 
productive farmland. In exchange, farmers must rely 
increasingly on the marketplace to support their income. As 
world demand and exports increase, our ability to access and 
compete for foreign markets will be vital to the success of 
this new farm program.
    We are taking the second step toward meeting future world 
demand by adopting new technologies that make agriculture more 
efficient. These innovations include Global Positioning 
Satellite (GPS) systems that adjust the amount of fertilizer 
and crop protection chemicals applied to particular ``grids'' 
of each field. They include no till crop rotation and 
integrated pest management practices. And they include the 
rapid acceptance of genetically enhanced crops that reduce 
input costs and diversify markets. Each of these new 
technologies is making U.S. agriculture more productive and 
more sustainable, which are both necessary to meet future 
demand.
    The third step--providing fair and enforceable trading 
rules--requires leadership by our government to require other 
countries to further open their markets to agricultural trade. 
The North American Free Trade Agreement and the Uruguay Round 
Agreement made progress toward greater trade liberalization in 
our sector. But the job is by no means complete. Without U.S. 
leadership in preparing for the next round of negotiations, 
which is scheduled to begin in 1999, the world will slide 
toward restrictive import policies and into bilateral and 
regional trading arrangements. And the ability of U.S. 
agriculture to meet global demand will be diminished rather 
than enhanced.
    Mr. Chairman, opponents of Fast Track argue there is no 
reason to move forward with this legislation at this time. Some 
suggest we can wait until next year. Or, if next Fall's 
elections make consideration of Fast Track too great a 
political risk, we can wait until 1999. Or even 2001. I can 
assure you that U.S. agriculture literally cannot wait for new 
trade negotiations to begin. Simply stated, with 95 percent of 
the world's population living outside the borders of the United 
States, Fast Track is the only real avenue we have to opening 
the global market for U.S. agricultural products.
    Let me offer three good reasons why we need Fast Track now. 
First, existing rules for resolving disputes and enforcing 
settlements on sanitary and phytosanitary issues are 
inadequate. The number and severity of import restrictions 
based on food safety concerns are growing out of control. In 
recent years, the European Union has restricted U.S. pork 
imports because of differences in our processing methods, U.S. 
beef because we use growth hormones to maximize feed 
efficiency, and U.S. tallow because of unsubstantiated reports 
of BSE. The U.S. has considered restricting imports of Mexican 
avocadoes because of potential insect infestation, and 
strawberries because they may be responsible for a hepatitus 
outbreak in California. Other countries are imposing their own 
restrictions on these and other products.
    While a step in the right direction, the Sanitary and 
Phytosanitary agreement negotiated in the Uruguay Round, 
resolving complaints is extremely time consuming. By the time a 
case is concluded, the industry involved has lost years of 
exports and market share, and consumer acceptance of its 
product has been seriously impaired. Even after a case is 
decided, enforcement procedures are unable to ensure reversal 
of an unfair SPS action. In addition, global concerns about 
food safety have grown incrementally with each incident. Unless 
the SPS rules are strengthened in the near future, there could 
be a major meltdown in consumer confidence in the ability of 
government agencies to protect the safety of the world's food 
supply.
    A second and related reason for immediate action on Fast 
Track authority is the lack of accepted standards and rules 
governing international trade in the products of biotechnology. 
The scientific evidence is clear that, with limited and defined 
exceptions, genetically modified and conventional varieties of 
the same crops are identical in terms of composition, 
nutritional value, and end use characteristics. As one might 
expect, this has not deterred anti-technology activists from 
inflaming public opinion in Europe and elsewhere with 
unsubstantiated safety concerns to the point where governments 
are beginning to abuse existing WTO safeguards in order to 
restrict imports of biotech crops and products.
    Production of biotech varieties of soybeans, corn, and 
cotton in the U.S. is expanding almost exponentially--from 3.6 
million acres in 1996 to 18.5 million acres this year. The 
total for 1998 for these three crops alone will exceed 40 
million acres. With the European Union moving to mandate labels 
on all products containing ingredients from biotech crops, and 
other countries likely to follow suit, the potential for 
significant trade disruptions is already great. Add the fact 
that the biotech varieties now on the market are only the 
beginning--many more in the regulatory pipeline will soon be 
commercialized--and we see the makings of a major train wreck 
in world trade.
    The third, and possibly most important reason for immediate 
action on Fast Track is the proliferation of new trade 
agreements between U.S. customers and competitors. In the three 
years since expiration of the last Fast Track authority, over 
100 bilateral and regional trade deals have been signed by 
nearly every country except the United States. These include 
agreements between the EU and Canada--both major U.S. 
competitors for agricultural markets--with countries in South 
America. It is clear that, not only is the rest of the world 
not waiting for the U.S. to negotiate on trade, our rivals are 
actively exploiting our current inability to sit at the table. 
If Fast Track authority is delayed, we may find ourselves 
locked out of some key trading relationships, with our trading 
partners much less interested in opening new talks.
    With few exceptions, the U.S. agricultural industry has 
traditionally been very supportive of trade and trade 
agreements. Exports have driven our crop production and 
processing sectors since the 1970's. In the last 15 years, we 
have seen an explosion in world demand for high value products, 
including fruits and vegetables, and value-added products, 
including processed meats and poultry, eggs, dairy products, 
protein meal, and vegetable oil. Since 1990, U.S. farm exports 
have increased 50%--from $40 to $60 billion. Including food 
product manufacturing and merchandising, agriculture employs 
18% of the U.S. workforce--by far the largest U.S. industry. We 
make the largest positive contribution to the U.S. balance of 
trade--over $23 billion in 1996. Ironically, some of the very 
groups that oppose Fast Track today owe their livelihood to the 
growth of agricultural exports--which are occurring because of 
the extension of Fast Track negotiating authority, which 
established the trade agreements that are currently benefiting 
agriculture.
    Our greatest concern during past trade negotiations was 
whether our own negotiators understood the critical importance 
of trade to agriculture, or the importance of agricultural 
trade to the national economy. It has sometimes appeared that 
agricultural interests have been traded off for concessions in 
other sectors--that we have not been recognized as a priority 
in U.S. trade.
    The Fast Track legislation proposed by the Administration 
lays these concerns to rest. Agriculture is clearly identified 
as a key priority for future trade negotiations. The specific 
issues identified in the agriculture section and among the 
general provisions of the proposal reflect a clear 
understanding of current problems that need to be resolved and 
of other areas that need to be addressed. These include:
     The need to strengthen the Sanitary and 
Phytosanitary provisions included in the Uruguay Round 
Agreement;
     The need to strengthen the enforcement procedures 
for dispute resolution;
     The need to address unfair trade practices, 
including those affecting the products of biotechnology;
     The need to discipline trade distorting activities 
of State Trading Enterprises.
    These objectives encompass many of the concerns and goals 
shared by a strong majority of U.S. agricultural interests. 
There are other more specific objectives which nearly every 
sector in our industry would add to their own ``wish list'' for 
future trade negotiations. However, none of the organizations 
represented here today would endanger renewal of trade 
negotiating authority by conditioning support for Fast Track 
authority on receiving specific guarantees on these issues.
    Mr. Chairman, the U.S. has led the world in the 20th 
century by being bold, taking initiative, and innovating to 
overcome challenges. U.S. agriculture has played an important 
role in building this record of leadership. We have had our 
share of bad times and low prices, lost more than our share of 
workers, and adapted to changes as rapid and profound as any 
industry has faced. But throughout this century, the need to 
expand trade with the rest of the world has been a constant and 
increasingly important priority. This fact will not change, for 
agriculture or for any other industry, as we prepare to begin a 
new century. The U.S. has no alternative to moving forward on 
trade. We cannot do so, and cannot begin to address our trade 
problems and priorities, until Congress grants Fast Track 
negotiating authority. On behalf of U.S. agriculture, we ask 
this Subcommittee and the Congress to squarely meet this 
challenge and responsibility, just as we are preparing to meet 
ours.
    Thank you again, Mr. Chairman. I will be happy to respond 
to any questions you or other Members of the Subcommittee may 
have.
      

                                


      

            Agriculture Organizations Supporting Fast-Track

As of September 29, 1997

    Agricultural Retailers Association
    American Crop Protection Association
    American Feed Industry Association
    American Horse Council
    American Meat Institute
    American Soybean Association
    Blue Diamond Growers
    Bunge Corporation
    Cargill, Inc.
    Cerestar USA
    Central Soya Company Inc.
    Chocolate Manufacturers Association
    ConAgra, Inc.
    Continental Grain Company
    Corn Refiners Association, Inc.
    Farmland Industries, Inc.
    The Fertilizer Institute
    International Dairy Foods Association
    Louis Dreyfus Corporation
    Miller's National Federation
    National Broiler Council
    National Cattleman's Beef Association
    National Confectioners Association
    National Corn Growers Association
    National Cotton Council
    National Food Processors Association
    National Dry Bean Council
    National Grange
    National Grain and Feed Association
    National Grain Sorghum Producers
    National Grain Trade Council
    National Pork Producers Council
    National Oilseed Processors Association
    National Sunflower Association
    Nestle USA, Inc.
    North American Export Grain Association
    Northwest Horticultural Council
    United Egg Association
    United Egg Producers
    U.S. Apple Association
    U.S. Dairy Export Council
    U.S. Feed Grains Council
    U.S. Meat Export Federation
    U.S. Wheat Associates, Inc.
    USA Poultry & Egg Export Council
    USA Rice Federation
      

                                


    Mr. Nussle. Thank you, Mr. Tank.
    Our final witness today is Mr. Shimberg, Vice President for 
Federal and International Affairs for the National Wildlife 
Federation.

 STATEMENT OF STEVEN J. SHIMBERG, VICE PRESIDENT, FEDERAL AND 
      INTERNATIONAL AFFAIRS, NATIONAL WILDLIFE FEDERATION

    Mr. Shimberg. Thank you, Mr. Chairman. I know how difficult 
it is to sit through over 5 hours of testimony. I appreciate 
your patience and your attention. On behalf of the National 
Wildlife Federation, I want to thank you for inviting us here 
to present our testimony and our views on fast track.
    At the outset, in an attempt to establish some credibility 
on the issue, I want to highlight the fact that the National 
Wildlife Federation did in fact support NAFTA in 1993 as well 
as fast track authorization in 1991. We did so because we 
believed then, and we continue to believe, that trade and the 
environment are two sides of the same coin. The issues are 
inextricably linked and they can either operate in concert with 
each other, each working to enhance the other, or they can work 
against each other.
    We recognized in 1993 that NAFTA's environmental provisions 
were not perfect. But they were a step in the right direction. 
For that reason we supported it. We were hopeful that the 
implementation of NAFTA and trade-related agreements negotiated 
since NAFTA would have continued to build on a solid foundation 
that we saw in 1993. Unfortunately, although we still believe 
trade and the environment are linked and can be used to enhance 
each other, the record since NAFTA has in our view been a 
disappointing one. We have repeatedly voiced to the 
administration our concern over the absence of U.S. leadership 
on trade and environmental issues, disappointment with the 
inattention paid to NAFTA's environmental institutions and 
frustration with the secret and multilateral agreement on 
investment. After reviewing President Clinton's draft bill for 
fast track authority, we have concluded that the 
administration's request for fast track authority falls well 
below our expectations for at least two reasons. I will briefly 
touch upon those now.
    First, NAFTA taught us that the negotiators at future trade 
agreements must be instructed to bring home agreements that 
level the playingfield. Otherwise U.S. businesses that are 
operating in this country in compliance with our domestic 
environmental laws will lose out. In countries where basic 
environmental laws are absent or are not enforced, foreign 
manufacturers are able to gain a competitive advantage by 
polluting or abusing natural resources. That situation is not 
fair and correcting that situation must be a principal 
objective of any new fast track authority.
    There has been a lot of discussion throughout today about 
whether or not the interest in labor and environmental issues 
are meant to be a mandate in the fast track authority. Our 
position is that they are not a mandate. That is not what we 
are looking for. We are looking for, however, that they be a 
principal negotiating objective on a par with the other 
principal negotiating objectives. They are meant to be guidance 
to our negotiators. They are meant to give our negotiators 
leverage when they are at the table.
    During the previous panel, Mr. Nussle, you asked how can 
one guarantee we are going to get what we want in negotiations? 
The fact is there may be a chance that we won't get what we 
want. That is fair. We don't know that. But at least we should 
try. Principal negotiating objectives that include the 
environment should be on the table and be a guiding principle. 
If the agreement comes back and it does not have the provisions 
we think are adequate, we will look at the agreement as a whole 
and judge it on its merits. We will not prejudge it.
    The second point about the administration's proposal is 
that it fails to ensure that all international trade bodies are 
open, democratic institutions. The inclusion of negotiating 
objectives that are focused on creating procedural transparency 
at just the WTO is too little and too late, as some of the 
other witnesses have suggested. This issue is bigger than the 
WTO.
    Mr. Chairman, while reading the newspaper this past 
weekend, I was struck by several articles about fast track 
authority and in particular three quotes that I saw from 
administration officials who are working on fast track. First, 
the administration wants us to believe that this is a fight 
between pro free traders and antifree traders. It is either 
black or white, you are with us or you are against us.
    That approach, I would suggest, does a disservice to all of 
you and to all of the witnesses who are here today. The issue 
before us is much more complex than that. It is not a question 
of for or against.
    Second, the administration officials suggested in the 
newspapers that President Clinton has earned our trust, so we 
should not worry about the details of the legislative language. 
We are told to support broad, vague authority and trust him to 
do the right thing. Again, that approach misses the point. 
Congress must avoid the trap of legislating by personality. 
Fast track authorization is not about trusting or not trusting 
President Clinton. It is about recognizing the integral link 
between trade and the environment. It is about using 
environmental concerns to promote trade in appropriate 
circumstances and not using trade concerns to undermine the 
environment.
    The third quote that the administration officials had 
suggested that this debate is all about, ``the politics of the 
moment.'' And speaking from one large conservation 
organization, I can assure you that this is not about politics 
with a small ``p'' or with a capital ``P.'' We have gone 
through the proposed text with painstaking detail. We have 
reviewed our experience since 1993. For us this is about a 
fundamental, substantive policy disagreement.
    Mr. Chairman, Americans care when they feel they cannot 
trust in the safety of imported food. Our members get angry 
when an anonymous trade panel in Geneva tells them they have no 
right to control access to our markets as a tool to protect 
endangered sea turtles. These two examples illustrate the point 
that I started out with. Trade and the environment are linked. 
Trade patterns have environmental consequences and trade rules 
can affect environmental policies. The question is no longer 
whether U.S. trade policies should recognize these linkages but 
how to respond to them.
    We stand ready to work with the Members of this 
Subcommittee and with the administration to make this fast 
track legislation a tool to help negotiators bring home trade 
and investment agreements that promote both environmental 
protection and trade. On the other hand, we stand ready to 
oppose fast track legislation if it does not accomplish these 
goals. Thank you.
    [The prepared statement follows:]

Statement of Steven J. Shimberg, Vice President, Federal and 
International Affairs, National Wildlife Federation

    Thank you, Mr. Chairman and members of the committee for 
inviting me to testify before you today. I am Steven J. 
Shimberg, Vice President for Federal and International Affairs 
at the National Wildlife Federation. NWF is America's largest 
not-for-profit conservation education organization with over 4 
million members and supporters. Our members are America's 
mainstream and main street conservation activists who 
understand the link between sustainable economic development 
and environmental protection.
    At the outset of this testimony it is critical to note that 
NWF supported NAFTA in 1993 and fast track re-authorization in 
1991. We made those decisions because we recognized the 
potential of trade as an instrument to enhance environmental 
protection, and believed that NAFTA was a good first step 
toward the integration of trade and environment. We knew that 
NAFTA's environmental provisions were not perfect, but we 
believed we would continue our work with the Administration and 
with Congress to improve upon them. Based on our experience 
with NAFTA, and with other trade and investment agreements, we 
now know we can no longer rely solely on side agreements to 
achieve our environmental objectives, or on fast track rules 
which do not state explicit goals for environmental protection. 
Future trade agreements must recognize that increased trade can 
have both positive and negative implications for the 
environment, and they should actively promote sustainable 
development.
    We still believe in trade as an important component of 
national and international efforts to better peoples' lives, 
but we have learned that lives are made better only when trade 
rules and environmental protection go hand in hand. Over the 
past four years we have grown disillusioned at the treatment of 
environmental interests in trade and investment negotiations. 
Along with other environmental organizations, NWF has voiced 
repeatedly our concern over the absence of U.S. leadership on 
trade and the environment, disappointment with the inattention 
paid to NAFTA's environmental institutions, and our frustration 
with the secret Multilateral Agreement on Investment. 
Unfortunately, our appeals for a more responsible agenda for 
environment in trade have been met with silence from the 
Administration.
    The National Wildlife Federation opposes the fast track 
proposal offered by President Clinton because it fails to learn 
from past experiences which show us that trade and the 
environment are inexorably linked. Americans care when they 
feel they cannot trust in the safety of imported foods. Our 
members get angry when an anonymous trade panel tells them we 
have no right to try to protect endangered sea turtles. The 
point of these two examples is that trade patterns have 
environmental consequences and trade rules can affect 
environmental policies. The question is no longer whether U.S. 
trade policy should recognize these linkages, but how to 
respond to them. We stand ready to work with Congress and the 
Administration to make this fast track a tool to help 
negotiators bring home trade and investment agreements that 
promote environmental protection. We also stand ready to oppose 
fast track if it does not.

        Fast Track Authority is not About Trusting the President

    Fast track authority should not be negotiated on the basis 
of trust in the Administration, but on specific negotiating 
guidelines designed to guide U.S. negotiators to bring home 
trade and investment agreements that promote the national 
interest. Fast track authority designed to promote the national 
interest will ensure that companies play on a field made level 
by promoting high environmental standards. U.S. based 
businesses should not be forced to compete with foreign 
companies that pollute the water, soil, and air to secure a 
competitive advantage. The national interest is also served 
when fast track rules guide negotiators to produce agreements 
that promote global competition that requires green technology. 
This creates incentives for companies around the world to 
purchase U.S. environmental technologies. And certainly the 
national interest is served when negotiators make certain that 
food products imported under liberal trade rules don't poison 
our citizens. These objectives have nothing to do with trust; 
they have everything to do with promoting the national interest 
by articulating concrete negotiating guidelines.

   Fast Track Authority is About Substantive Analysis of Negotiating 
                       Objectives and Procedures

    Granting fast track authority is also not about the 
politics of the moment. The Administration is trying to shape 
the fast track vote as either being ``for'' or ``against'' 
trade. This is not what the debate is about. Taking a position 
on fast track authority requires conducting a substantive 
analysis of the negotiating goals, rules and procedures 
outlined in the proposal. When this is done, we believe 
President Clinton's fast track request fails to ensure that 
U.S. interests are served.
    Trade Rules Must Promote Green Competition: If trade 
agreements are to benefit from the NAFTA experience, then 
negotiators must be instructed to bring home agreements that 
level the playing field for businesses in compliance with 
environmental laws. In countries where basic environmental laws 
are absent or not enforced, manufacturers are able to develop a 
competitive advantage by polluting or abusing their natural 
resources. To ask domestic producers, operating in compliance 
with national environmental laws, to compete against foreign-
based companies that compete by polluting the environment or 
destroying natural resources is simply not fair.
    To promote a level playing field, NWF asked the 
Administration to do two things. First, we asked them to assure 
that environmental policies regulating Production Process 
Methods are preserved from challenge by trade dispute. Second, 
we asked the Administration to make non-enforcement of 
environmental laws that have competitive implications 
actionable under trade rules. We believe protecting the 
environment should be given the same level of concern that is 
shown to individuals or companies whose investments are 
jeopardized by a violation of property rights or investment 
laws. The proposed fast track language does not accomplish 
this.
    The Proposed Fast Track Contains Only Weak Environmental 
Objectives. Both the overall and principal negotiating 
objectives (Sections 2(a) and 2(b)) are inadequate guides for 
negotiators on environmental matters. First, the ``Overall 
Trade Negotiating Objectives'' outlined in Section 2(a) have no 
mechanism to hold negotiators accountable. The mechanism for 
accountability is found in Section 3(b)(2), which applies only 
to the ``Principal Trade Negotiating Objectives'' outlined in 
Section 2(b). Second, the phrase ``directly related to trade'' 
(Section 2(a)(5)) is meant to ``limit the President's 
discretion to negotiate trade agreements that include areas 
that are not specified in the fast-track authorization.\1\ If 
this language achieves that purpose, it will limit negotiations 
only to those specific environmental issues outlined in Section 
2(b). Unfortunately, the only specific negotiating objectives 
for the environment outlined in this section are: to ``promote 
sustainable development'' and ``to seek to ensure that trade 
and environmental protection are mutually supportive, including 
through further clarification of the relationship between 
them.'' (Section 2(b)(7)(D&E)). These two objectives do not 
accomplish the goals outlined in the previous section.
---------------------------------------------------------------------------
    \1\ Congressional Research Service, Fast Track Authority: 
Objectives for Future Trade Negotiations. (Washington, DC: The United 
States Congress, Updated May 27, 1997).
---------------------------------------------------------------------------
    Instead, to ensure that U.S. negotiations on trade and 
investment agreements benefit from the lessons of NAFTA we 
believe specific negotiating guidelines must include a 
commitment to:
    (a) Create a level playing to ensure that trading partners 
compete fairly by enforcing environmental laws;
    (b) To insulate from trade challenge non-discriminatory, 
procedurally transparent, constitutionally consistent 
environmental laws which might incidentally have negative 
implications for trade;
    (c) Leave in the hands of national legislators the ability 
to set and enforce appropriate levels of risk; and
    (d) Assure trade and investment agreements support the 
Polluter Pays and Precautionary Principle(s) as accepted by 
customary international law.
    Focus on the WTO is too Narrow: We applaud the Clinton 
Administration's explicit commitment to greater transparency at 
the WTO (Section 2(b)(5)). Environmentalists agree unanimously 
that the WTO and its Committee on Trade and the Environment are 
hostile fora for environmental dialogue.\2\ Exposing the WTO to 
the spotlight of moral suasion through expanded public 
involvement is an important step toward greener trade. But 
while we agree that WTO reform should be a component of any 
agenda for the environment in trade, negotiating objectives 
focused solely on attaining procedural transparencies at the 
WTO are too narrow. There are other trade and investment 
agreements that demand our immediate attention. Under the 
proposed fast track the Administration plans to: complete the 
Multilateral Agreement on Investment; negotiate a bilateral 
agreement with Chile; complete FTAA negotiations by the year 
2005; and make substantial progress in trade negotiations at 
the Asian Pacific Economic Cooperation forum. Each of these 
agreements will likely lead to the creation of new and powerful 
international institutions that will have great influence on 
the behavior of local, state and federal governments. Despite 
this ambitious agenda for trade and investment negotiations the 
Administration will only commit to greater transparency at the 
WTO.
---------------------------------------------------------------------------
    \2\ International Institute for Sustainable Development. GATT, the 
WTO and Sustainable Development. (Winnepeg, Canada: IISD, no date).
---------------------------------------------------------------------------
    We believe that this narrow agenda for transparency in 
trade runs counter to our goals as a democratic nation. We urge 
Congress to insist that the Administration produce trade 
agreements that ensure all trade institutions operate in an 
open and democratic fashion. Preferential access to trade 
institutions for big corporations capable of maintaining 
lobbying offices in Geneva or Paris is contrary to the 
interests of ordinary citizens and small businesses whose lives 
are affected by the decisions made by these bureaucrats. 
Preferential access to FTAA negotiations afforded to big 
business is not fair. Citizens have a right to know that a 
particular rule is under consideration. They have a right to 
know what the U.S. government is doing to protect legitimate 
environmental laws from challenge by trade dispute panels.
    The Administration has committed to expanding public access 
to negotiations, and to better avenues for accountability 
through committees in Congress (Section 3(3); 
Section 4(a)(b)(c); Section 5(a)(b); and Section 7). This is 
promising, but we have not had sufficient time to fully analyze 
the implications for public participation of the proposed 
changes to fast track. We urge the Congress to request from the 
Administration a narrative explaining how these proposed 
changes will affect public access and accountability.

                               Conclusion

    Trade and the environment are linked. Trade patterns have 
environmental consequences and trade rules can affect 
environmental policies. The question is no longer whether US 
trade policy should recognize these linkages, but how to 
respond to them.
    We stand ready to work with members of this Committee and 
the Administration to make this fast track legislation a tool 
to help negotiators bring home trade and investment agreements 
that promote environmental protection and trade. We stand ready 
to oppose fast track if it does not.
      

                                


    Mr. Nussle. Thank you. I appreciate your testimony. I want 
to thank the entire panel for their testimony.
    One of the issues that came up, has come up a number of 
times today, and particularly for Mr. Vice and Mr. Tank, I 
would like to get their input on this and that is the issue of 
our food supply and whether or not trade agreements, as 
opponents have suggested, undermine our ability to protect our 
food and food safety.
    I would first to Mr. Vice, just a jump ball, would you care 
to comment on whether or not that is the fact, and if you don't 
agree with that, what you would say to argue against that. I 
will give that as a jump ball to both of you. First, Mr. Vice.
    Mr. Vice. Thank you. I believe that our food quality 
inspection and criteria for determining things like pesticide 
residues are basically pretty sound and are followed by our 
trading partners. For example, in NAFTA, I grow avocados and 
citrus. I have been to Mexico in many of their regions and I 
ask them questions about the kind of cultural practices and by 
and large they mirror almost exactly what our practices are in 
this country. The reason is that those products are designed to 
be imported, or exported into our market. If they are found to 
be outside of the criteria that is used by our inspections for 
our own domestic products, they are turned down at the border.
    Does that mean that everything that is coming across is 
inspected? Absolutely not. I don't think there is any way in 
the world that we could do that regardless of what country it 
is from. But I think the system that we have and the criteria 
that we placed on our trading partners as it relates to food 
safety issues and pesticide residues is a pretty good system. 
That is not one of my biggest fears. We are dealing with an end 
product when it comes into this country and our trading 
partners know the criteria that they have to meet.
    Mr. Nussle. Mr. Tank.
    Mr. Tank. I would largely agree with Mr. Vice with regard 
to many of the points he raised regarding food safety. I truly 
believe that one of the benefits of fast track negotiating 
authority and the NAFTA as well as the WTO is that we have been 
able to enhance food safety standards.
    Why is that? Because for the first time in the history of 
American agriculture, and actually world agriculture, we 
included agriculture into the NAFTA as well as to the WTO 
without an escape clause. As a result, we established a set of 
rules, whether they are perfect or imperfect is another point. 
We established a set of rules that allowed us to require food 
safety standards to be imposed upon importers into this 
country. The critical component is going to be enforcement. It 
always has been, it always will be. As a result, we have to 
work with other Committees and other Subcommittees to make sure 
the proper funding levels are available as well as that 
enforcement is occurring on products being imported into this 
country.
    But as regard to food safety standards, I truly believe 
that we have actually enhanced worldwide food safety standards, 
particularly on products being brought into this country 
because of the trading rules associated with sanitary and 
phytosanitary measures that are included both in the NAFTA as 
well as the WTO.
    Mr. Destler. May I say something briefly in response to 
that? I am certainly not an expert on the details of this issue 
but it seems to me that this is one where there is clearly a 
very strong common interest between those who export this food 
and those who eat it. The last thing any food producer overseas 
wants is any question at all about the safety or edibility of 
their product. There may very well be some problems of 
transition in our own food inspection system as more imports 
come in and to the degree they exist, these problems need to be 
dealt with. I understand the President has announced some 
measures in that regard.
    My sense is that unlike some trade negotiating issues, 
where you have to watch people like a hawk because it is in 
their interest to deceive you, here it seems to me their 
interest is totally, 100 percent, to provide safe, effective 
food because that is the only way they are going to get a 
larger market.
    Mr. Nussle. I would agree with your observation. There is 
no question. All I have to do is look back to a recent scare 
with regard to frozen hamburger patties or to what is happening 
right now in the Chesapeake Bay with regard to fish to see what 
it does, if there is any question of what that has on the 
marketplace.
    One other question I just wanted to pose to our agriculture 
folks, our ``aggies'' as we call ourselves, what if we wait? 
What happens if this does get mired, whether it is in politics 
or in an inability to move legislation or lack of support? Give 
me your thumbnail sketch of what that means vis-a-vis 
agriculture in particular if this is not passed and if it waits 
until next year or beyond?
    Mr. Tank. Mr. Nussle, let me try to answer that first. I 
would say that fast track negotiating authority is the single 
most important issue facing American agriculture today and the 
ability to sit down and negotiate with our trading partners and 
our customers in the world. If we wait, I think it is important 
for us to understand that it took us 7 years to negotiate the 
Uruguay round and most likely American agriculture will be the 
single largest loser, not the single largest beneficiary, of 
that activity.
    Why is that? Because what is going to happen, whether it is 
in the pork industry or every other sector of American 
agriculture, we are going to force investment offshore, whether 
that be in Canada or Brazil or Argentina or anywhere else where 
they can produce agricultural products, you are going to force 
people to take a look at investing in foreign countries, 
largely because of the reason that they are going to invest in 
technology, they are going to invest capital into those places 
that can be reliable suppliers of products, and today the U.S. 
agricultural industry cannot be that reliable supplier if we 
don't have negotiating authority to enter into trade agreements 
with customers and competitors all over the world.
    Mr. Vice. I would agree entirely with Mr. Tank. I think we 
have already gotten ourselves in a hole, quite frankly. We are 
missing out today in the Latin American market, as well as the 
Asian market, in billions of dollars' worth of trade because we 
haven't been a part over the last 2, 3, or 4 years of some of 
the trade pacts that are going on. To some extent, we can make 
up some ground if we move ahead with fast track authority. 
Again, this is assuming, as I said in my statement earlier, 
that we give one that has some safeguards in it because, quite 
frankly, we don't want to move forward with agreements that 
actually hurt us over the long run. So with the thought in mind 
that the Subcommittee is going to make sure we come up with a 
good, clean piece of legislation with some safeguards in it, I 
think we must move forward or we will pay the price for years 
and years to come.
    Mr. Nussle. Thank you. Mr. Herger.
    Mr. Herger. Thank you, Mr. Chairman.
    I want to thank our members of the panel, particularly for 
the most recent comments that were made by you, Mr. Vice and 
Mr. Tank, on how essential it is that we be able to move 
forward with a good and fair and equitable agreement and allow 
us to not be losing out to our competitors. So I appreciate 
that.
    Mr. Vice, I understand you just--I think you mentioned in 
your testimony and in our own conversations that you have 
recently been down to South America, to Chile and to several 
other countries. Would you mind telling us a little more about 
what you saw there in respect to fast track?
    Mr. Vice. Yes, I just returned, took an industry group from 
California, farmers down to Chile, Argentina, and Brazil, was 
there 2\1/2\ weeks, returned about 1 week ago.
    The thing that impressed me the most, and one of the 
reasons I went down there, to take a good firsthand look to 
assess not only their ability to export more than they are 
presently, and they are big exporters into this country, but 
also to see what the market looked like for our ability to 
export down there.
    I can tell you that their ability to expand beyond what 
they are currently growing and exporting is just tremendous in 
all three countries. They have a great deal of undeveloped 
land. They have adequate water at almost free cost. Their 
infrastructure is good. The investment is great; both North 
American as well as European investment is pouring into the 
country.
    We saw lots and lots of new stone fruit orchards being put 
in, a lot of table grapes, a lot of wine grapes. So we need to 
get this one right, because they are going to be tremendous 
competitors. And, quite frankly, they come into this country 
pretty trouble free and pretty tariff free right now and so we 
need to get access to that market. Chile is probably the 
smaller of the three markets, but certainly Argentina and 
Brazil hold great promise for us as agricultural producers in 
this country.
    But one of the things that I mentioned just briefly in 
passing in my statement was the fact that we need to make sure 
that the resources are sent to the right place. One of the 
things that we certainly discovered in all three countries is 
that we do not have the capabilities in our Embassies in those 
three countries to answer the questions that are being posed by 
the governments of those three countries as it relates to 
phytosanitary questions. We were told on more than one occasion 
that they had answered questions that we had posed to them 
about bringing product in several months ago and we hadn't 
gotten back to answering the question. So to some degree our 
inability to move product in this country is our own problem, 
not having enough resources that our personnel can answer the 
questions for them. That has to be corrected.
    Mr. Herger. I thank you.
    On that same issue of sanitary and phytosanitary barriers 
to U.S. exports, let me just ask, is the use of sanitary and 
phytosanitary barriers to U.S. exports on the rise by U.S. 
trading partners and how great of a threat are these to the 
agricultural community's ability to export?
    Mr. Vice. I think they are on the rise. I think Mr. Tank 
had it in his testimony, and I said it in mine also, as we get 
these regional trade agreements and we are successful in moving 
more product in, the natural barrier becomes phytosanitary 
barriers when the other barriers are taken down. So we have 
seen an increase in that. In fact, you might be--I know you 
would be interested in this coming from California. We were 
just told on Friday, we need to get these phytosanitary things 
in place because we are being told as of last Friday we can't 
send table grapes into Chile anymore because of the oriental 
fruit fly in Los Angeles which hasn't had anything to do with 
Kern County. It is the only trading partner we have in the 
world that is not taking a product from a county where there 
has been no evidences of that pest being in the county. Those 
are the kind of phytosanitary barriers that we must get torn 
down and must have rectified.
    Mr. Herger. Thank you very much.
    Mr. Nussle. Thank you, Mr. Herger.
    Ms. Thurman.
    Ms. Thurman. Good afternoon, gentlemen. I am sorry that I 
missed some of your testimony, but this place for some reason 
does not allow us to get to all of that all the time for some 
reason. I think we ought to do something about the scheduling 
around this place.
    Mr. Tank, I am interested in something here, because the 
agriculture issues from Florida are, as you may know, we are 
very skeptical of what is going on right now with fast track. 
It is my understanding, though, in the Canadian agreement with 
NAFTA, that you all are having a problem as well because they 
actually took pork and dairy off the table so you can't even 
discuss that or we can't get pork and dairy in there; is that 
correct?
    Mr. Tank. That is not correct. Actually it is poultry and 
dairy.
    Ms. Thurman. Excuse me, poultry and dairy. Nonetheless, 
there are items that we are not even able to negotiate on that 
have been pulled off the table with some of our trading 
partners.
    Mr. Tank. That is correct.
    Ms. Thurman. That causes a problem; doesn't it?
    Mr. Tank. It causes a problem to all of us, absolutely.
    Ms. Thurman. So Mr. Vice, let me then ask you from the 
American Farm Bureau and from California, is that not a problem 
or do you see us maybe doing some of those very things in some 
trade agreements from our side?
    Mr. Vice. I think some of the inequities in trade, we like 
to cite the things that are keeping us out of markets. I think 
to some degree we have been maybe guilty of that in the past 
ourselves. And so I think as we--and it is a natural 
occurrence, I think, for a retaliation kind of measure. I think 
that is what we see with a lot of phytosanitary problems that 
we have. It doesn't mean that we can't work through those. It 
is just that it has to be a priority as we start to negotiate 
this agreement.
    I am very pleased, and I think the growers in Florida, I 
have spoken to many growers in Florida, I think we are all a 
lot more pleased with this agreement and the way it is starting 
in terms of it being a key element in negotiation being 
agriculture and the consultation that would be a part of the 
process. We didn't have that during NAFTA. I think that is 
going to be a lot of help. That doesn't mean--I don't think you 
can design a trade agreement anywhere in the world that is 
going to benefit every single person at every single commodity 
on both sides. That is impossible.
    Ms. Thurman. But, and given the actions taken by Canada, 
would it be to our advantage, then, to look at taking some of 
our own products off that might be adversely affected because 
of the competition?
    Mr. Vice. I think a lot of times the way things are done is 
that one side will start retaliating, you have taken ours off 
so we are going to take something off. That usually leads to 
the first party putting something else on and the first thing 
you know, we are in a trade dispute. I think the way we have 
tried to work those out, and we are working presently with 
Canada on poultry and dairy to try to get beyond it. We also 
have a wheat problem with them. We need to get through that 
problem. But what we have tried to do in negotiation is not 
retaliate but try to work through those. I am confident that we 
will resolve the wheat and the poultry and the dairy issue, and 
we will do it in a manner which doesn't make us have to get in 
a tit for tat with them.
    Ms. Thurman. Mr. Vice, you spoke about the phytosanitary, 
while I understand where the potential problem of that might be 
in Mexico because of tomatoes or whatever, as far as Florida 
citrus goes, but on the other side of that, we all face that 
issue in China today where we are not getting anything going in 
there. So I wonder, is there a retaliation there that you can 
tell me about? Help me here. Because my farmers are not--I have 
to be honest with you. They are not seeing this as retaliation 
as much as the fact that they are losing their businesses.
    Mr. Vice. It is a very tough situation. We also have 
growers of a lot of commodities and we are sitting right on the 
Pacific rim, a lot of our growers are saying the same thing, 
how come we can't get product in? As you probably know, we just 
achieved table grapes to China in the last 2 weeks. That is 
going to be a big boon to our table grapegrowers. We would like 
to have citrus, a lot of other things in. We have apples from 
Washington.
    Ms. Thurman. But you are getting citrus from California 
into China, or into Mexico.
    Mr. Vice. Into Mexico, but not into China.
    Ms. Thurman. Where Florida is not at this point.
    Mr. Vice. Right. Those trade agreements, going back to 
China, it is always difficult when you see China being such a 
great market for some of our goods. Take Boeing Aircraft, for 
example, a tremendous customer of China. So is that good for 
all concerns? Yes. Is it particularly good for tomato growers 
in Florida or citrus growers in California? Not exactly. But I 
think we need to keep moving toward opening that trade and not 
saying no more--we are not going to sell you any more airplanes 
unless you buy grapes, too. It just doesn't work well that way. 
I know it is a struggle.
    My heart goes out to growers in Florida, but I am confident 
that we are going to get some things in this agreement that 
will alleviate some of that that we did not have in NAFTA.
    Ms. Thurman. I will give you the fact that I think that 
this administration has seemed to have opened up some dialog 
with us on agriculture, there is no question. I will tell you, 
though, trying to pull the right language together that gives 
them the comfort is, I think, going to be much harder than what 
any of us might think could happen in this short period of 
time, if in fact we are looking at another couple of days or 1 
week or so.
    I really am very concerned and I am going to say it in a 
way, when I look at Florida agriculture, and probably similar 
to how you feel about California agriculture, and the fact that 
Florida raises about 50 percent of the winter vegetables for 
this country alone, when you look at the figures for hunger 
across this world by the year 2025, my biggest concern in these 
trade issues, and I can assure you that in Florida if you 
damage any more so the agriculture conditions there, those 
lands will in fact be developed. We will never have the 
opportunity to have food production in Florida, and if we lose 
that, we lose a very large interest in this country and 
something to this entire world. I think it is something that we 
all have to be considerate of when we are looking at these 
agreements.
    Mr. Nussle. Thank you, Ms. Thurman.
    I want to thank our panelists for their testimony today. I 
want to thank our other witnesses. The record of this hearing 
will remain open until October 7.
     That concludes the hearing of the Trade Subcommittee and 
the Subcommittee stands adjourned.
    [Whereupon, at 3:45 p.m., the hearing was adjourned.]
    [Submissions for the record follow:]

Statement of California Cling Peach Growers Advisory Board

                            I. Introduction

    The following written statement is submitted on behalf of 
the California Cling Peach Growers Advisory Board and its 
clingstone peach grower and processor members in connection 
with the Subcommittee on Trade's September 30, 1997, hearing on 
the extension of fast-track trade negotiating authority.
    The California Cling Peach Growers Advisory Board is a non-
profit quasi-governmental association representing all 750 
cling peach producers and 5 cling peach processors in the State 
of California. Virtually all of the United States' production 
of cling peaches occurs in California. Over ninety-five percent 
of that production is used for processing--the primary product 
is canned peaches. California canned peaches are sold 
domestically, our largest single market, and to export markets 
in the Pacific Rim, Canada, and elsewhere. The Board's primary 
role is to assist the U.S. industry in the development of these 
domestic and export markets.
    The California cling peach industry is deeply concerned 
about the application of fast-track negotiating authority to 
trade agreements, especially as that authority would pertain to 
the negotiation of a free-trade agreement with Chile. More than 
most U.S. agricultural sectors, the California cling peach 
industry stands to lose considerably from the elimination of 
U.S. tariffs in favor of Chile. First, our industry has faced 
several decades of unfair competition from illegally subsidized 
Greek canned peaches, which competition has eliminated our EU 
market, reduced our exports to all other markets, and in recent 
years, begun to displace sales in our own U.S. market, leaving 
our industry extremely vulnerable to imports. Second, Chile is 
already a competitive exporter of canned fruit to the U.S. 
market even with U.S. tariff rates of 18.5% on canned peaches 
and 16.2% on canned fruit mixtures. Lower U.S. tariffs in favor 
of Chile is certain to trigger additional canned fruit imports 
that will enter the U.S. market only by displacing one-for-one 
higher-priced U.S. canned fruit sales.
    Because of our industry's demonstrable import-sensitivity, 
the U.S. cling peach industry is asking that fast-track 
authority contain specific language to protect U.S. tariffs on 
canned peaches (H.S. 2008.70.00), canned fruit mixtures (H.S. 
2008.92), and other cling peach products from any reductions 
below the tariff levels at which the products were bound in the 
Uruguay Round Agreements where a determination is made by the 
Office of the United States Trade Representative that foreign 
trade-distortive subsidies on such products are decreasing 
market opportunities for United States exports or distorting 
agricultural markets to the detriment of the United States. The 
unfairness of the EU subsidies distorting our canned fruit 
markets is particularly objectionable, since these subsidies 
are in violation of a GATT panel ruling and a bilateral trade 
agreement. The U.S. industry urges the support of this 
Subcommittee for protecting U.S. cling peach tariffs at current 
tariff rates if the Office of the United States Trade 
Representative has made a determination that EU or other 
foreign trade-distorting subsidies are decreasing marketing 
opportunities for U.S. cling peach exports or distorting our 
markets to the detriment of our industry. Without this 
commitment, California growers and processors are certain to be 
irreparably harmed.

 II. The California Cling Peach Industry Is Particularly Sensitive To 
Imports, Largely The Consequence of Trade-Distortive Foreign Subsidies 
    That Have Upset The Competitive World Market For Canned Peaches.

    The import-sensitivity of California cling peaches has 
consistently been upheld by the U.S. government in prior trade-
related determinations, including in reviews under the 
Generalized System of Preferences, NAFTA, the Uruguay Round, 
and other bilateral matters involving canned fruit. The reasons 
are uncontested: nearly two decades of domestic oversupply, 
little or no growth in U.S. consumer demand for canned fruit, 
growing competition and market access barriers in export 
markets, and growing U.S. imports of low-cost and often 
unfairly subsidized canned fruit from Greece, Chile, and South 
Africa, and more recently from Spain and Italy.
    The California industry's fragile state is largely a 
consequence of global forces beyond its control. The most 
egregious of these has been the massive subsidization of canned 
peach production in Greece, which has led to years of global 
oversupply, market displacement and depressed world prices. 
This illegal subsidization has continued and even increased in 
violation of a favorable GATT panel ruling and a bilateral 
agreement that was to eliminate the illegal aids. Because the 
GATT ruling and bilateral agreement have not been upheld, and 
because U.S. government efforts to enforce compliance with 
these agreements have had inadequate results, our growers and 
processors need assurances that U.S. tariffs on canned peach 
products will be protected until compliance with these 
obligations and the elimination of trade-distortive subsidies 
is achieved.
    All economic indicators--global oversupply, decreasing U.S. 
exports, and sharply increasing imports into an already 
oversupplied U.S. market--point to a U.S. industry that is 
import-sensitive and cannot withstand increased U.S. imports of 
low-priced canned peaches from Chile or elsewhere triggered by 
U.S. tariff reductions.

A. Rapidly Expanding Foreign Cling Peach Production Has Led to 
Global Oversupply, Forcing the U.S. Cling Peach Industry Into 
Retraction.

    Between 1970 and 1997, U.S. production of canned cling 
peaches declined by 36%, while canned cling peach production in 
Greece and Chile rose by roughly 540% and 340%, respectively.

                                                      Global Canned Peach Production (Annual Basis)
                                                            1,000 Cases 24/2\1/2\ Equivalent
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                  %                  %                  %                  %
                                                                       U.S.   Increase   Greece  Increase   Chile   Increase   Others  Increase   Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
1970-73............................................................   25,968              2,869                478             13,305             42,610
1990-93............................................................   18,197     (30%)   15,050      425%    1,512      220%   15,347       15%   50,106
1994-97............................................................   16,630     (36%)   18,437      540%    2,115      340%   18,158       36%   55,777
--------------------------------------------------------------------------------------------------------------------------------------------------------
 Source: USDA/FAS Horticultural Products Review
 U.S. data for 1990/93, 1994-97 California Canning Peach Association, Almanac, 1997

    In Greece alone over the last decade, annual production of 
raw cling peaches has soared from 170,000 metric tons in 1986 
to 750,000 metric tons in recent years, accounting for half of 
world production. This surge in production, encouraged by 
massive illegal processor and grower subsidies, has led to 15 
successive years of global oversupply. With no such subsidies 
available to U.S. growers for their oversupply, California 
growers and processors have had no choice but to take radical 
measures to reduce production.

B. As U.S. Exports Have Fallen, Greece, Chile and Other Low-
Cost Suppliers Have Significantly Increased Their Exports, 
Flooding the Global Market.

    Canned peach exports have followed a similar pattern to 
global production trends. As U.S. exports dropped by nearly 70% 
between the early 1970's and 1996, exports of Greek and Chilean 
canned peaches increased by as much as 10-fold. During this 
period the U.S. share of global exports fell from 22.7% to 3%, 
while Greece increased its export share from 10% to nearly 66%. 
Chile went from virtually no exports in 1970 to surpassing U.S. 
export volumes in the early 1990's.

                                   Global Canned Peach Exports (Annual Basis)
                                        1,000 Cases 24/2\1/2\ Equivalent
----------------------------------------------------------------------------------------------------------------
                                                                    %                   %                   %
                                                        U.S.    Increase   Greece   Increase    Chile   Increase
----------------------------------------------------------------------------------------------------------------
1970-73.............................................     2,955               1,431                 130  ........
1990-93.............................................       943     (70%)    14,309      900%     1,042      700%
1994-96.............................................       981     (66%)    17,457    1,120%     1,645    1,165%
----------------------------------------------------------------------------------------------------------------
 Source: USDA/FAS Horticultural Products Review
 U.S. data for 1990/93 from California Canning Peach Association, Almanac, 1994

    The surge of low-priced, subsidized Greek exports onto the 
global market in the mid-to late 1980's forced California 
canned peaches out of the EU market (at one time the California 
industry's leading export outlet) and substantially displaced 
California product in Japan, Canada and elsewhere. More 
recently, Chile and South Africa--with increasing exports of 
low-priced canned peaches--have joined Greece in displacing 
U.S. product in global markets.

C. As U.S. Exports Have Declined, U.S. Imports Have Increased 
Sharply.

    Despite relatively good U.S. tariff protection of 20% on 
canned peaches and 17.5% on fruit mixtures (18.5% and 16.2% 
respectively as of January 1, 1997, with Uruguay Round 
reductions), U.S. imports of canned peaches increased 
significantly, from 23,000 cases in the early 1970's to up to 2 
million cases in the 1990's. In 1996/97, U.S. imports from 
Greece alone reached record-high levels of nearly 1 million 
cases. Imports also continue to enter from Spain, Chile and 
South Africa.

D. With Global Canned Peach Production and Exports Increasing, 
the U.S. Industry Had No Choice But to Retrench.

    Faced with massive global oversupply, increased U.S. 
imports, declining U.S. exports, and a declining U.S. consumer 
base, the California industry was forced into severe 
contraction and consolidation. Between the early 1970's and 
1990's, the number of California canned peach processors 
declined from 17 to 5. Over the same period, acreage of cling 
peach production dropped from 52,000 acres to 30,000 acres as 
growers pulled out orchards to meet a smaller U.S. market. This 
past year again, California growers have turned to a tree pull 
program to remove an additional 4,000 acres from production.
    Self-help measures such as acreage reduction alone have not 
been enough to keep supplies in line with market demand. The 
U.S. industry has also relied on extensive U.S. government 
school lunch and other federal purchase programs to purchase 
excess supply and to help keep prices at minimally sustainable 
levels. Government purchases have been significant, averaging a 
million cases annually in the 1970's and 1980's. Although these 
purchases dropped by some 500,000 cases between the early 
1980's and 1990's as the effects of industry tree pull programs 
kicked-in, in 1995 U.S. government purchases again increased to 
over a million cases per year.

II. Chile is a Competitive Producer and Exporter of Canned Peaches and 
   is Poised for Massive Expansion to the U.S. Market if U.S. Tariff 
                        Preferences are Granted.

    In the context of the hearings held in 1995 on Chile's 
accession to NAFTA, the California cling peach industry made 
clear at that time that granting Chilean canned fruit producers 
preferential tariff access to the U.S. market would be a lose-
lose situation for U.S. growers and processors. What we 
demonstrated was that under a free trade agreement that did not 
protect U.S. tariffs, Chilean canned peach exports to the U.S. 
market would increase without any reciprocal opportunities for 
U.S. exports to Chile. As described below, the Chilean canned 
peach industry is poised to increase production targeted for 
the U.S. market. U.S. tariff reductions will put that plan in 
motion.

A. Chilean Canned Peach Producers Enjoy Significant Cost 
Advantages Over California Producers.

    Chile is among the lowest cost producers of canned peaches 
in the world. Largely because of low labor ($1.00 per hour), 
raw product, and agricultural land costs, Chile's cost of 
production for a standard case of peaches is roughly $1.50 less 
than the average cost of production for California processors.
    Chilean canned peach processors also benefit from two forms 
of export rebates available under Chile's duty drawback system. 
One of the rebate programs pays processors for import duties 
paid on imported sugar and tin plate that are used as inputs in 
canned peaches. These rebates, which are obtained upon export 
of the finished product, are believed to amount to a subsidy of 
$.50 a case. The other program is an automatic rebate of 10% of 
the FOB value of the finished product under Chile's 
``simplified duty drawback'' system. Chilean processors are 
believed to receive this rebate for almost all of their 
production.
    Chilean exporters also enjoy transportation cost advantages 
over California shippers when sending product to east coast 
U.S. markets. Shipping rates from California to New York for a 
standard case of peaches are roughly one-third higher than 
rates from Chile to New York. These lower transportation rates 
are available to Chilean exporters because of the high 
frequency with which ships transporting large volumes of fresh 
fruit travel between Chile and the United States.
    Chile's cost advantages are expected to increase as Chile's 
cling peach sector increases its production (see below) and 
Chilean processors become more efficient through economies of 
scale. Chile's raw product costs are expected to drop as 
orchard productivity is improved through the introduction of 
new California varieties (some of which were obtained illegally 
in violation of U.S. patents) and better production practices; 
processing costs will also come down with production of the new 
varieties that are more suitable for processing. All told, the 
Chilean industry's emerging advantages will result in an 
additional cost differential of $1.20 per case, for a total 
cost advantage of $3.20 per case. This nets to a 20% price 
advantage over the U.S. cling peach product cost of $15.25 to 
$15.65 per case.
B. The Chilean Cling Peach Industry is Anticipating Significant 
Expansion in the Near-Term--Precisely Targeted for the U.S. 
Market.

    There is evidence that the Chilean cling peach industry is 
engaged in measures to increase its canned peach production for 
the U.S. market in anticipation of preferential access. Much of 
the new production will come from increased yields resulting 
from newer, more productive California varieties that are now 
coming on line.
    Several years ago during a Fruit and Vegetable ATAC 
Committee visit to Chile, U.S. industry and U.S. government 
representatives saw first-hand the significant expansion 
efforts. What was evident was that Chile had ample processing 
capacity and raw product availability to meet its increased 
production targets.
    This increased raw product availability and rapidly 
expanding capacity is already being targeted for the U.S. 
market. Chile now exports significant volumes of canned peaches 
to the U.S. market at prices $2 to $3 a case below California 
prices even paying the 18.5% U.S. duty. Any relaxation of this 
duty will provide additional impetus and advantage to Chilean 
processors to increase canned peach production exclusively for 
the U.S. market.

C. Increased U.S. Imports From Chile Will Wreak Havoc on an 
Already Mature and Oversupplied U.S. Market. 

    With U.S. consumer demand for canned peaches stable at best 
and U.S. processors already losing sales to lower-priced Greek 
and Chilean product, any increase in imports from Chile will be 
at the direct and immediate expense of California processors 
and growers. Substantial jobs will be lost and U.S. grower and 
processor profitability severely eroded.
    Price/purchase relationship data on canned peaches show 
that in the mature U.S. market, imports of low-priced Chilean 
canned peaches will cause the U.S. market price for canned 
peaches to drop, but without a corresponding increase in 
consumer demand for peaches. With no market expansion, lower-
priced imports will net a one-for-one displacement of higher-
priced California canned peaches. It has been calculated that a 
50% increase in Chilean imports will displace some 625,000 
cases of U.S. canned peaches, causing grower revenues to 
decline by some $2.5 million and U.S. processor revenues to 
drop by $10 million. The higher quality of California product 
and U.S. brand recognition will have little if any effect on 
salvaging this displacement. In part, this is because a large 
percentage of canned peach and fruit mixture sales are sold to 
the institutional and food service sector where brand loyalty 
means little and price alone is the controlling purchasing 
factor.

                             IV. Conclusion

    Over the past two decades the California cling peach 
industry has been successful in keeping its tariff protection 
despite efforts from foreign producers to gain GSP-eligibility 
or to gain tariff cuts through multilateral or bilateral trade 
negotiations.
    The viability of the California industry depends on the 
continued commitment of the U.S. government to maintain U.S. 
cling peach tariffs until such time as foreign trade-distortive 
subsidies that have destroyed the competitive market for U.S. 
cling peaches are eliminated.
    The extension of fast-track negotiating authority raises 
particular concerns for the California cling peach industry 
especially as that authority would apply to a free trade 
agreement with Chile. As Congress considers renewal of fast-
track authority, we ask this Subcommittee to support language 
to protect U.S. cling peach tariffs from further reductions 
during negotiations with Chile or in other bilateral or 
multilateral context, until trade commitments in this sector 
are honored and foreign trade-distortive practices are removed.
      

                                


Statement of Cargill, Inc.

    Cargill, Incorporated, strongly supports prompt 
consideration and enactment of fast track trade negotiating 
authority. The United States is already losing ground in 
bilateral and regional trade. More importantly, the United 
States must not abandon its historic leadership role in setting 
the agenda for, and carrying out, important trade negotiations.
    Cargill is an international marketer, processor and 
distributor of agricultural, food, financial and industrial 
products. The company employs some 79,000 people in more than 
1,000 locations in 72 countries and does business in 100 more.
    Fast track is of particular importance to American 
agriculture. Without fast track, the United States will not 
have the means to enter into market-opening negotiations with 
other countries that will pave the way for additional growth in 
U.S. agricultural exports. In addition, the United States needs 
fast track to enter into negotiations to resolve a variety of 
outstanding trade problems.
    U.S. agriculture has benefited from trade liberalization 
made possible by previous fast track authorities. Agricultural 
exports hit an all-time high of $60.3 billion in 1996; U.S. 
agriculture has contributed a consistent trade surplus, which 
last year climbed to $27 billion. The United States is an 
efficient and competitive producer of a wide range of 
agricultural commodities that are in demand around the world. 
U.S. agriculture is poised to make additional export gains from 
upcoming trade negotiations that can only be conducted with 
appropriately crafted fast track legislation.

                           Negotiations Ahead

    Many developing countries are experiencing robust economic 
growth. This is providing rapidly rising incomes for their 
citizens, which is allowing them to seek to upgrade their diets 
by consuming more livestock products, vegetable oil, fruits and 
vegetables. Imports from the United States can serve much of 
the increased food needs in developing countries more 
economically, but there is no guarantee that those countries 
will grant market access to food and agricultural products from 
our country.
    U.S. agriculture needs additional trade agreements to lower 
import barriers, constrain domestic subsidies and eliminate the 
use of trade-distorting export practices. Fast track 
negotiating authority is the key to realizing these goals, and 
there are several opportunities here now and on the horizon 
that we should not miss:
     Free trade with Chile--Chile has negotiated 
preferential trading arrangements with Canada, Mexico, 
Colombia, Venezuela and Mercosur (Argentina, Brazil, Paraguay 
and Uruguay). Because Chile has no such agreement with the 
United States, U.S. agricultural exports to Chile still face an 
11-percent blanket tariff, while tariffs on food and 
agricultural exports from other nations have been reduced or 
eliminated. The absence of fast track authority also has left 
the United States unable to negotiate reductions in Chile's 
sanitary and phytosanitary restrictions, which have, among 
other things, cut U.S. wheat exports to that country from 
around 300,000 tons a year to zero.
     Free Trade of the Americas (FTAA)--Western 
Hemisphere leaders have committed to completing negotiations on 
the FTAA by 2005. Talks are expected to get under way in 
earnest next year. Without fast track authority, the United 
States will not be able to engage effectively in the FTAA 
process.
     Free trade agreements in the Asia-Pacific region--
Similarly, the United States should not take a back seat during 
talks to create a free trade area among members of the Asia 
Pacific Economic Cooperation (APEC) forum. Developed nations in 
APEC have agreed to establish free and open trade by 2010; 
developing nations by 2020.
     1999 World Trade Organization agricultural 
negotiations--WTO members will convene negotiations in 1999 to 
continue the process of agricultural trade liberalization begun 
in the Uruguay Round. Preliminary work involving information 
gathering and analysis is already under way. The United States 
should not sacrifice its leadership role and opportunity in 
forming the agenda for these critical talks.

Broad, clean and permanent

    The United States needs broad, clean and permanent fast 
track negotiating authority to address these several challenges 
ahead. Many members of this committee have participated in the 
process of developing implementing legislation for previous 
trade negotiations and are well aware that the term ``fast 
track'' is not an accurate characterization of the process.
    Congressional consideration of a trade agreement is 
thorough and deliberate. Before even getting to the point of 
drafting implementing legislation, the administration consults 
actively with Congress before and during the actual 
negotiations. Once a negotiation is concluded, Congress and the 
administration engage in an extensive discourse on all aspects 
of the agreement and the implementing legislation. In effect, 
this comprehensive exchange of views constitutes an informal 
mark-up of the legislation that addresses all pertinent issues 
before the implementing bill is introduced formally in 
Congress. Only then are time-tables under fast track authority 
triggered; only then does Congress face the prospect of an up 
or down vote.
    Trade negotiating authority must be broad. It must enable 
the United States to negotiate bilateral, plurilateral and 
global trade liberalizing agreements. Trade occurs in a complex 
world of evolving and intertwining relationships. Sometimes it 
may be beneficial to negotiate bilateral free trade 
agreements--as with Israel or, prospectively, with Chile. The 
United States must also be able to advance its interests in 
emerging regional free trade areas. The FTAA and APEC do not 
just loom large on the horizon; they are upon us. The WTO needs 
to revisit the unfinished agenda of the Uruguay Round of 
multilateral trade talks; negotiations on agriculture and 
services are scheduled to begin in 1999. It was the United 
States that put agriculture on the table in the Uruguay Round; 
it is the United States that must pave the way for additional 
reforms and market-opening discussions in the 1999 talks.
    Trade negotiating authority must be clean. Trade 
negotiating authority should be free from requirements to 
address nontrade issues. Trade negotiations are difficult 
enough to conclude in and of themselves. Adding extraneous 
issues--whose promoters seek leverage that denying trade 
benefits might provide--will only weigh down trade negotiations 
to the point that everyone loses.
    Environmental and social issues are important and difficult 
in their own right. They should be addressed in other 
international fora. Trade talks may appear to provide appealing 
leverage, but in fact trade is a much weaker engine, especially 
when unilateral action is threatened in a global economy, than 
advocates for environmental and social issues have recognized.
    People who are concerned with feeding themselves turn first 
to putting food on the table. Only when they have developed and 
prospered enough from the benefits that more liberalized trade 
can provide will they turn their attention to improving their 
environment or addressing labor and human rights concerns. 
Unfortunately, these very real concerns are considered luxuries 
in many poorer areas of the world. Trade should not be used as 
a weapon but as a means to improve peoples' wealth, exchange 
ideas and transfer the technology needed to realize social and 
environmental progress.
    Trade negotiating authority should be permanent. The 
Constitution provides Congress with authority to regulate the 
foreign commerce of the United States. The responsibility for 
negotiating with other countries is delegated to the executive 
branch. Fast track authority is merely an arrangement between 
these two branches to coordinate this allocation of power and 
strengthen U.S. leverage in international trade negotiations. 
Given the constraints imposed on the executive branch by the 
consultative process described above, enough safeguards can be 
included in fast track authorities to ensure that open-ended 
authority will not be abused.
    Permanent authority should include a mechanism to allow the 
establishment of deadlines for specific negotiations. Without 
deadlines, it is often difficult to bring talks to conclusion. 
Congress, of course, would retain the right to vote on any 
trade agreements reached by the administration.
    Permanent negotiating authority provides the administration 
with the ongoing ability to offer tariff reductions or other 
policy changes--with ultimate approval to be determined by 
Congress on an up or down vote--in exchange for critical 
concessions from other countries. Permanent authority will 
ensure that the executive branch is ever poised to take 
advantage of negotiating opportunities to further U.S. 
interests. The delay in adopting fast track authority since it 
expired last in 1994 has meant that U.S. exports, especially 
agricultural exports, have lost significant ground in Chile. 
Moreover, the delay has meant that our trading partners do not 
take U.S. assertion of a trade negotiating agenda seriously, 
undermining any U.S. advocacy positions in regional talks such 
as the FTAA or APEC and in the WTO.
    Congressional approval will still apply under permanent, 
uncluttered, broad-ranging trade negotiating authority. The up 
or down process works because it is subject to such intensive, 
thorough negotiations between the two branches before it gets 
to the floor for that critical final vote. And, if Congress is 
still not satisfied with the final package, it may vote against 
individual agreements, just as efforts to pass a U.S.-Canada 
Free Trade Agreement were defeated a number of times before the 
final agreement took effect in 1989.

                   Agriculture Should Be Top Priority

    Finally, once all these other hurdles are cleared, and the 
United States enters into trade negotiations under new, 
permanent fast track authority, agricultural trade 
liberalization should be made a top priority. U.S. agriculture 
will certainly benefit from improved market access around the 
world. Moreover, policy reforms in agriculture around the world 
will lead to improved trade and exports for other sectors of 
the U.S. economy.
    It is an unfortunate fact of life that the poorest 
countries frequently have the highest food costs. Many 
developing nations tax their farmers by keeping input prices 
high and providing artificially low commodity prices in the 
export market due to inconsistent and unreliable export 
practices, or they force their consumers to pay above world 
prices by restricting imports. Even small reforms in these 
areas could lead to significant improvement in disposable 
income--additional income that could be used to purchase other, 
non-food commodities to better the lives of the people in these 
countries. Reform of food and agriculture policies in these 
countries will free up income that will provide a strong demand 
base for the many other goods and services that U.S. firms 
could provide.
    Trade liberalization for agriculture should also be 
comprehensive. The focus of agricultural trade negotiations 
should be to remove all government distortions to trade, 
including, but not limited to, market access barriers, unfair 
trade practices, domestic policies linked to production or 
marketing; and supply access barriers. Countries around the 
world employ a diverse range of policies and practices to 
protect and support their domestic agricultural interests. The 
only way to create truly equal competitive status is to put all 
trade-distorting practices on the negotiating table.
    Without fast track negotiating authority, agriculture would 
never have been included in the Uruguay Round as one of the top 
negotiation objectives. Fast track negotiating authority 
provides assurances to our trading partners that the U.S. 
government speaks with one voice during the deliberations that 
lead up to production of a final trade agreement. Fast track 
authority provides assurances to our trading partners that they 
can enter into negotiations with the U.S. government to resolve 
trade problems, and the final settlement will be approved or 
rejected, but it will not be second-guessed or picked apart by 
the U.S. Congress.

                               Conclusion

    Fast track negotiating authority can and should be used to help 
resolve outstanding trade disputes. Previous trade negotiations have 
disciplined many trade practices but have left others relatively 
untouched. The result is a global trading system for agriculture that 
is rife with inequities, many of which work against U.S. exports. Fast 
track can provide the leverage necessary to address our concerns. Fast 
track will also enable the United States to participate early and fully 
in bilateral, regional and global negotiations to improve the world's 
trading environment.
    A vote for fast track is also a vote in favor of addressing the 
various trade problems that afflict U.S. agricultural interests and 
other sectors. A vote against fast track is a vote in favor of 
continuing the status quo and perpetuating those problems. With fast 
track, our trade negotiators can begin to address and correct many of 
these problems. With fast track, our trade negotiators can move to 
expand trade opportunities to help U.S. agriculture to grow and serve 
rising demand in all parts of the world.
      

                                


Statement of Bob Crawford, Commissioner of Agriculture, State of 
Florida

    Increasing international trade is an admirable goal. 
Increasing international trade in a manner that decreases U.S. 
food production and increases food safety concerns are outcome 
measurements of a system gone awry.
    When the language of the North American Free Trade 
Agreement was negotiated, safeguards recognizing the fragile 
interdependent system of perishable food production in this 
country were to be included. To assuage fears and achieve the 
necessary votes for passage, promises were made to provide 
resolutions for conflicts, equal phase-outs with trading 
partners for essential chemicals, and safeguards from damaging 
trade surges. Regrettably, the test of time has shown the 
intentions of the past were not met by the language constructed 
in the agreement or implementing legislation.
    So, should we rush down the fast track highway into new 
agreements based on the same flawed language? Florida 
agriculture and the Florida Congressional Delegation answer 
this question with a resounding vote of concern and caution.
    While fast track language may smooth the road in efficient 
trade negotiations, fair treatment for agriculture is critical 
to insure continued production of perishable commodities in our 
nation. The vulnerability of perishable commodities and the 
processed products made from them was recognized by President 
Clinton in 1993 when he pledged his support and commitment to 
insure fair treatment for the unique nature of these crops.
    The other nations in the Southern Hemisphere also recognize 
the vulnerability of their perishable agriculture production. 
In the recent Business Forum in Belo Horizonte, focusing on the 
upcoming Free Trade Area of the Americas, country after country 
cited similar agricultural concerns due to perishable 
agriculture's strong position in their individual economies.
    Despite reports of positive trade effects, recent Florida 
production statistics show a 24% reduction in all fruits and 
vegetables over the past three years. Tomato production 
declined 53.5% since 1992. Other agriculture sectors face 
continuing threats through unequal and totally divergent 
requirements for sanitation, field worker safety, water 
quality, labor restrictions and environmental compliance. Yet, 
we find ourselves at a place in time, when some are proposing 
to require more restrictions on the domestic farming industry 
before requiring even basic sanitation compliance by our 
trading partners.
    Fast track needs to be placed on a ``slow track'' until 
differences can be dealt with constructively. Trade talks can 
go forward, a new round for WTO can begin, and we can do so 
with a concurrent commitment to fix the flaws before fast track 
authority is given.
    Globalization and concentration in our food supply today 
are showing that the foodsafety rules developed for yesterday's 
world are not adequate for today. Our food supply is either 
being imported from abroad or handled and processed in the 
hands of fewer and fewer companies in the U.S. Foodborne 
illness sickens between 33 to 81 million Americans each year 
with an estimated 9,000 deaths and $5 to 15 billion dollar 
strain in preventable health care costs. Increasing outbreaks 
involving imported strawberries, cantaloupe, raspberries, 
lettuce, basil, canned mushrooms, coconut juice, and green 
onions alarm us. Today we have a global food supply and one 
that is sickening us more frequently. As a recent Atlanta 
Constitution article quoted, ``We have the world's food, and 
it's as safe as the environment it comes from.'' Consumers have 
the right to know where their food comes from and to demand it 
be produced under clean conditions or not imported. As Dr. 
David Kessler, former Commissioner of the Food and Drug 
Administration stated, ``We built a system back 100 years ago 
that served us very well for a world within our border. We 
didn't build a system for the global market place.''
    Increased trade will go forward. Trade should not increase 
at the expense of human health and U.S. food production. Fast 
track needs to be put on a ``slow track''until sanitation and 
food safety concerns as well as basic rules affecting the trade 
in perishable and sensitive crops can be worked out.
      

                                


Statement of Hon. Byron L. Dorgan, a U.S. Senator from the State of 
North Dakota

    Mr. Chairman: As a former member of this committee, I 
particularly appreciate this opportunity to outline my concerns 
about fast track and our nation's trade policies.
    Normally before a vehicle is allowed on a track, it first 
must be inspected to determine if it is roadworthy. The issue 
of fast track presupposes that we have a roadworthy vehicle 
that can properly negotiate the curves of today's global trade 
track.
    Unfortunately, the reality is that our nation's trade 
policies in modern times have been a dismal failure. We have 
had 21 consecutive years of chronic, escalating merchandise 
trade deficits. A whole generation of Americans have grown up 
and become legal age since the last time this country has seen 
a merchandise trade surplus. In that time we have accumulated 
trade deficits totaling almost $2 trillion.
    While this nation has opened its doors to trade, we do not 
have reciprocal access to the markets of our major trading 
partners. Year after year, the annual trade barriers report 
compiled by the Office of U.S. Trade Representative documents 
that a series of tariff and nontariff barriers continue as 
persistent major problems with our trading partners. It also 
documents that the little progress which has been achieved with 
our trading partners has come with great resistance, 
retrenchment, and constant renegotiation.
    Since 1974 when fast-track was first authorized it has been 
used five times. Since the first agreement under the fast track 
procedure (the Tokyo Round of GATT talks) took effect in 1981 
our nation's trade deficit has mushroomed from $28 billion to a 
record $191 billion this past year. In the last three years, we 
have had accumulated three successively higher trade deficit 
records. Fast track has not moved us to the right trade track.
    The bulk of our trade deficits continue to be abiding, 
structural deficits with a handful of trading partners. In 
fact, 92 percent of our trade deficits result from trade with 
six trading partners: Japan, China, Canada, Mexico, Germany and 
Taiwan.
    To assume that our trade policies are roadworthy and ready 
for another fast track is simply not credible. It is not good 
enough to simply make a pit stop and slap on a new set of tires 
and make a few adjustments to get ready for a new fast track. 
Not only does our trade vehicle need a major overhaul, it also 
needs fundamental design changes.
    We have to begin to identify and diagnose the various 
symptoms that make up our nation's failed trade policy 
syndrome.
    First and foremost among the symptoms is that our trade 
agreements are either not enforced or they are not enforceable.
    Our enforcement problems are compounded by the fact that 
the mechanisms for dispute resolution with our trading partners 
do not function very effectively. Nor do we have reliable trade 
remedies for our own domestic industries when they are 
adversely affected by unfair trading practices. The ongoing 
dispute over Canadian grain exports to the United States is a 
prime example of these difficulties. Too often, between our 
bilateral and multilateral agreements we have painted ourselves 
into a corner, and left our own citizens with little recourse 
to address the trade problems they face.
    Other symptoms include the lack of full reciprocity for 
American agricultural and manufactured goods; the growth and 
persistenceeficits; and, the hemorrhaging within our nation's 
manufacturing sector as American production and jobs have been 
outsourced to our trading partners.
    Rather than fixing the underlying systemic problems in our 
trade policies, we seem to be in a never-ending rush to achieve 
new agreements. We have been measuring our success in trade 
policy by the number of agreements we have reached, rather than 
on the performance of those agreements.
    We are suffering from the logical consequences of fast 
track which is defined by Webster's dictionary as ``a building 
method in which construction begins even before plans and 
designs are completed.''
    We don't even do a good job of keeping track of the 
multitude of agreements that we do make. In fact, a study 
released earlier this year by the American Chamber of Commerce 
in Japan indicated that tracking down and compiling a list of 
the recent bilateral trade agreements was an enormous task in 
itself.
    The American Chamber's report stated: ``Indeed, the 
American Chamber of Commerce in Japan was astonished to learn 
that no U.S. government agency has a readily accessible list of 
all U.S.-Japan agreements or their complete texts. This may 
indicate that it has often been more important for the two 
governments to reach agreements and declare victory than to 
undertake the difficult task of monitoring the agreements to 
ensure that their implementation produces results.''
    This same study concluded that of the 45 major bilateral 
U.S.-Japan trade agreements that were reached between 1980 and 
1996, only thirteen were deemed successful. The remainder were 
rated as being only marginally successful or failures. 
Unfortunately, this study is representative of most of our 
trade relationships.
    With the myriad of problems we face in international trade 
it is time for a thorough examination of where we are at and 
where we should be going. We can now longer rely on our post-
World War II design and model trade policy to work for the 21st 
century. We need a more thoughtful and considered trade policy 
agenda.
    I would like to suggest how we might begin building the 
right trade track for American trade policy. I believe a United 
States trade policy for the 21st century must:
    1. End chronic, escalating trade deficits by increasing 
U.S. net exports.
    2. Result in real growth in the U.S. economy, provide more 
and better jobs, and improve living standards.
    3. Provide mandatory performance standards for trade 
agreements together with enforcement to ensure full reciprocity 
in market access, the lowering of tariffs, and the reduction of 
export subsidies.
    4. Include adjustment mechanisms to prevent currency 
exchange rate fluctuations or manipulation from distorting 
trade flows or voiding tariff reductions.
    5. Maintain and strengthen U.S. defense and security 
capabilities.
    Before we rush headlong into another debate about the 
intricacies of fast track procedures within Congress, this 
Congress needs to have a serious debate on what we want to 
achieve through our nation's trade policies.
    The bottom line is that we need to get on the right trade 
track before we take another ride on fast track.
    Thank you.
      

                                


      

Statement of National Milk Producers Federation, International Dairy 
Foods Association, U.S. Dairy Export Council

    The National Milk Producers Federation (NMPF), the 
International Dairy Foods Association (IDFA) and the U.S. Dairy 
Export Council (USDEC) are jointly submitting this statement in 
support of the renewal of fast track trade negotiating 
authority. Our organizations together represent U.S. producers, 
processors, manufacturers and exporters of a wide range of 
dairy products, including beverage milk and milk products, 
yogurt, sour cream, cheese, ice cream and frozen novelties, 
butter, milk powders and other dairy-based food ingredients.
    NMPF's 31 member cooperatives, through their 70,000 dairy 
producer owners, market 70 percent of the milk produced in the 
United States. IDFA's members include more than 650 companies 
and organizations accounting for approximately 85 percent of 
the $70 billion worth of dairy foods annually consumed in the 
United States. USDEC's members account for over 85 percent of 
the more than $740 million of dairy products exported last 
year. Collectively members of these three organizations reside 
in all 50 states.
    The reason we are supporting renewal of fast track trade 
negotiating authority is very simple--the future growth and 
prosperity of the U.S. dairy industry largely depends on 
foreign market opportunities. Fast track authority provides the 
best vehicle for breaking down foreign trade barriers and 
negotiating market-opening agreements to benefit the U.S. dairy 
industry.
    The fact that we are jointly submitting this statement is 
evidence of the broad consensus within the U.S. dairy industry 
over the importance of foreign market development, and the 
critical role of fast track in helping us achieve our goals.
    Historically, the U.S. dairy industry has concentrated on 
the U.S. domestic market. That focus, however, is changing. New 
international trade rules in the World Trade Organization (WTO) 
coupled with greater market orientation in U.S. domestic dairy 
policy provide new incentives and opportunities for the dairy 
industry to supply international markets. U.S. dairy price 
supports will be eliminated at the end of 1999, and world 
market conditions will have a much greater influence on our 
profitability and sales opportunities. With 96% of the world's 
consumers living outside of our borders, the greatest prospects 
for our industry's growth and prosperity lie in international 
markets.
    The United States is the largest single-country producer of 
dairy products in the world. Our industry is cost efficient and 
has the potential to be a major global supplier of dairy 
products. Due, however, to market barriers and extensive use of 
subsidies by some foreign competitors, the U.S. share of world 
dairy trade has been very limited. For example, the United 
States produces 27 percent of the world's cheese, but accounts 
for only 3 percent of world cheese exports. The European Union, 
on the other hand, a heavy subsidizer of dairy products, 
accounts for 47 percent of world cheese production but 57 
percent of world cheese exports.
    The GATT Uruguay Round Agreements were an historic first 
step toward free and open trade in agriculture on a 
multilateral basis. Export subsidies by WTO members, a 
significant impediment to the international competitiveness of 
U.S. dairy products, are now subject to maximum caps and annual 
reductions. Minimum import access commitments also represent 
progress in opening markets to agricultural trade. These 
changes, albeit modest in size, are an extremely important 
discipline on international behavior, and must be rigorously 
implemented and enforced.
    We cannot tolerate the efforts of certain WTO members, such 
as the European Union and Canada, to sustain protection to 
their dairy industries in circumvention of their WTO 
obligations. The European Union is skirting around its limits 
on export subsidies for processed cheese through creative 
allocation methods under an inward processing program. Canada's 
recent conversion to a price-pooling export subsidy scheme is 
clearly designed to maintain export subsidies without regard to 
the limits and reductions required under the WTO. The Clinton 
Administration shares our concern over these practices, and we 
appreciate its commitment to take forceful action to ensure 
full enforcement of existing WTO obligations.
    Although the Uruguay Round Agreements represent an 
important step forward, it did not eliminate all inequities in 
world trading conditions or every barrier to dairy trade. Much 
more remains to be done to improve world trade opportunities in 
the dairy sector. That is why renewal of fast track authority 
is so important.
    The next stage of WTO negotiations on agricultural trade 
rules will begin in late 1999. Prompt renewal of fast track 
authority is imperative if U.S. trade negotiators are to 
participate in any meaningful way in the upcoming multilateral 
negotiations. Continuing the multilateral reforms in 
agricultural trade is critical, and requires strong, bold 
leadership by the United States. This can only come about, 
however, if U.S. negotiators have the authority and mandate 
which comes from fast track.
    Moreover, improved access to growing regional markets 
requires fast track authority. Since fast track negotiating 
authority lapsed in 1994, the United States has been virtually 
on the sidelines as bilateral and regional trade agreements 
were negotiated among trading partners in Latin America and 
Asia. With rapidly growing populations, rising incomes, and 
increasing popularity of western-style foods, these regions 
provide the greatest opportunities for expanded exports of U.S. 
dairy products. In the past five years, however, more than 20 
new trade agreements have been concluded without U.S. 
participation in Latin America and Asia. Important 
opportunities for U.S. exporters are being missed due largely 
to lack of fast track authority.
    We also have unfinished business on opening markets for 
dairy trade in North America. Although Mexico opened up new 
opportunities for U.S. dairy exports, Canada continues to block 
access to its dairy market through exorbitant tariffs. We must 
continue to seek ways to remove impediments to U.S.-Canada 
dairy trade. The geographic proximity of our markets and of our 
dairy industries makes free and open dairy trade a logical 
objective.
    Our organizations understand that we will not achieve our 
international trade goals by renewal of fast track authority 
alone. Strong leadership by our trade negotiators will be 
needed to ensure that trade agreements result in meaningful, 
tangible benefits to the U.S. dairy industry. Trading partners 
reluctant to open up their dairy markets at home must not be 
allowed to keep dairy ``off the table.'' Subsidies must be 
attacked in whatever form they appear, and market access must 
be substantially improved. Moreover, once trade negotiations 
are concluded and agreements are signed, they must be 
vigorously implemented and enforced.
    Much work lies ahead if international market opportunities 
for U.S. dairy products are truly to be improved. But none of 
it is possible unless Congress renews fast track trade 
negotiating authority. President Clinton's legislative proposal 
would renew fast track authority until 2005 and includes 
significant improvements to the notification and consultation 
procedures, thus ensuring continuing dialogue with the Congress 
and the private sector. We also applaud the President's 
recognition of the importance of agricultural trade 
liberalization in the specific identification of agricultural 
trade negotiating objectives.
    NMPF, IDFA, and USDEC urge the Congress to work 
constructively with the President to swiftly enact fast track 
negotiating authority, so that the United States can improve 
opportunities for the U.S. dairy industry to grow and prosper 
as an active, competitive supplier to international markets.
      

                                


Statement of Edward Fire, President, International Union of Electronic, 
Electrical, Salaried, Machine and Furniture Workers (IUE), AFL-CIO

    On behalf of the 130,000 members of the International Union 
of Electronic, Electrical, Salaried, Machine and Furniture 
Workers (IUE), AFL-CIO, I appreciate this opportunity to 
comment on the proposed extension of fast-track negotiating 
authority to the Clinton administration for use in negotiating 
trade agreements, and on the report required under Section 108 
of the North American Free Trade Agreement (NAFTA).
    IUE represents production and maintenance workers 
throughout a broad spectrum of trade-sensitive industries 
including electrical-electronics, automobiles and parts, 
aircraft engines and aerospace, power-generating equipment and 
furniture manufacture. Our members work for some of the largest 
export and import corporations in the United States, including 
General Electric (GE), General Motors (GM), Lockheed Martin, 
United Technologies, North American Phillips, Whirlpool, ITT 
and Boeing, as well as for many smaller companies.
    While these corporations are diverse, they share an 
investment and subcontracting strategy that continually 
threatens not only the living standards of the working men and 
women of this country but the economic well-being of workers 
globally. The extension of a U.S. trade policy that lacks 
fundamental labor rights and environmental protections would 
act only to further accelerate the deterioration of the 
environment and economic equality. The preferential treatment 
allowed by fast track should apply only to agreements that 
contain enforceable provisions on labor and the environment. 
Such provisions would ensure that workers share in the benefits 
of international trade and the global economy.
    President Clinton and other proponents of fast track want 
to persuade the American public to think that such negotiating 
authority would be beneficial to American workers and the 
domestic economy. They suggest that, by providing incentives to 
companies to move basic manufacturing to low-wage nations, that 
free-trade agreements without labor standards will help to 
maintain higher-paying jobs in the United States. This specious 
argument, obscures the real reason that this specific fast-
track proposal has such avid supporters: The companies 
supporting this proposal expect to benefit economically from 
the exploitation of workers and the nonexistence of meaningful 
governmental regulations. While extension of NAFTA surely would 
boost further the profits of many American-based companies, it 
would cause irreparable harm to millions of American workers.
    Four years ago, President Clinton requested similar 
authority from Congress. U.S. Trade Representative Mickey 
Kantor, echoing the administration's refrain, assured Congress 
that the North American Free Trade Agreement (NAFTA) would 
``generate high-paying jobs that will have a huge impact on 
this country.'' Contrary to Mr. Kantor's predictions, more than 
133,000 American workers already have lost their jobs and 
qualified for NAFTA Trade Adjustment Assistance (TAA). As many 
as 500,000 more American workers have felt NAFTA's sting with 
the loss of their jobs, too.
    Our experience with NAFTA offers just a sample of what 
American workers can expect from fast-track negotiating 
authority. Just last week, 240 members of IUE Local 417 became 
the latest trade victims when Allied Signal announced it was 
exporting 240 jobs to various locations--including Mexicali, 
Mexico. These highly skilled workers produce generators and 
transformers for military and commercial aircraft at the 
company's Eatontown, N.J., facility. In a July 31, 1997, open 
letter to these workers, Allied Signal President Daniel Burnham 
lauded their performance, calling the Eatontown site ``a pace 
setter in the area of Quality Systems. Recent letters received 
congratulating us on our accomplishments are a testament to the 
quality of your efforts.'' A handwritten note accompanying the 
letter concluded by praising their performance on a Boeing 
project: ``Eatowntown is the best in the company in this 
critical measure [quality]. I'm proud of all of you.''
    Apparently, being ``the best in the company'' in the post-
NAFTA world is not enough to protect your job from low-wage 
competition. Neither is working at a profitable plant or making 
the Blackhawk helicopters that ``serve an essential role in 
increasing the preparedness our armed forces.'' Each of these 
descriptions applies to the members of IUE Local 417--yet, 
their jobs are headed for Mexico.
    Highly compensated workers also are vulnerable to 
exploitation when the United States enters into trade accords 
bereft of even minimal labor standards. This year, 245 workers 
at the Motor Coils facility outside Pittsburgh also were 
victimized by NAFTA. Workers at this plant, members of IUE 
Local 606, earned an average of $14.30 an hour, or roughly 
$30,000 annually--approximately 7 percent above the industry 
average. Including employee pension and health care benefits, 
the Motor Coils workers earned a total compensation package 
worth roughly $26 per hour.
    Despite the fact that the plant was both productive and 
profitable, Motor Coils workers recently were told their jobs 
would be moved to Mexico. IUE officers met with company 
officials in an effort to coordinate meetings with regional 
economic development agencies, to seek assistance from state 
and federal representatives and to negotiate wage and benefits 
concessions. The company told us not to bother trying--unless 
the workers were willing to work for less than what Motor Coils 
would be paying its Mexican workers. The company claimed, and a 
review of the company's books confirmed, that Motor Coils plans 
to pay the Mexican workforce $3.37 an hour--a figure that 
included both wages and benefits.
    Highly productive and well-compensated workers at such 
large corporations like as ITT especially are susceptible to 
the ramifications of trade agreements containing no labor 
provisions.
    Highly productive and well-compensated workers at such 
large corporations as ITT especially are susceptible to the 
ramifications of trade agreements containing no labor 
provisions. With the closing of Steelworker-represented plant 
in Canada, members of IUE Local 509 employed at ITT Automotive 
in Rochester, NY., are working at the last remaining North 
American facility outside of Mexico. How long will it be before 
their jobs move south, too?
    The administration has said that fast-track trade accords 
would bring jobs to states along the Mexican border. Again, the 
reality for IUE workers is much different than administration's 
rhetoric. IUE represents 1,500 highly skilled workers at the 
Trane Co., facility in Tyler, Texas,--just miles from the 
Mexican border. A few weeks ago, Trane announced it would 
export nearly 200 jobs that pay IUE members $13.21 an hour from 
Tyler across the border to a new facility in Mexico.
    In a pattern that has become all to familiar to NAFTA 
victims, Trane implied during recent contract negotiations that 
unless substantial concessions were forthcoming, the plant 
would become ``uncompetitive'' and eventually would close. 
After pillaging worker benefits at the negotiating table and 
forcing workers to increase their already record productivity, 
the company moved the 200 jobs anyway.
    In closing, I would like to address an assumption that 
underlies each of the administration's arguments for fast 
track. President Clinton says that congressional amendments 
addressing labor standards would preclude the U.S. from 
negotiating trade accords. The administration essentially is 
saying that despite the fact that fragile, developing economies 
all over the world are desperate to gain access to the 
lucrative U.S. market, our country has no leverage at the ``new 
world economy'' bargaining table.
    The problem is not leverage. The problem is the 
Administration's unwillingness to demand improved labor 
standards as a precondition for access to U.S. consumers. Such 
demands would enhance worldwide labor standards and end the 
exploitation of low-wage earners in foreign countries--and also 
would inhibit corporations from threatening to move U.S. jobs 
to countries with inferior labor laws. The administration and 
congressional free-trade adherents foresee a trade war with the 
use of such tactics, but the Clinton administration, with the 
full support of lassiez-faire proponents, already has 
threatened to close access to the U.S. market as a bargaining 
tool--on behalf of corporate America.
    Recently, China--a country with 20 times as many potential 
customers for U.S. goods as Chile--refused to crack down on the 
rampant pirating of U.S. software and other intellectual 
property within its borders. When the Clinton administration 
threatened to restrict China's access to lucrative American 
markets, China agreed to reign in illegal pirating. As this 
example illustrates, countries desire access to the U.S. market 
and are willing to negotiate to achieve success. Clearly, 
President Clinton has all the leverage he needs to negotiate a 
trade agreement that respects worker dignity. Congress doesn't 
need to give President Clinton any more negotiating authority.
    Our members are outraged that the Clinton administration is 
forging ahead with such fast-track proposals against the 
backdrop of growing economic inequality and increasing demands 
from employees that workers moderate their expectations of wage 
and benefit improvements. The ramifications of free-trade 
agreements are far too broad and serious to be negotiated 
without the full involvement and input of the Congress. Thus, 
we urge you to deny President Clinton the authority to 
negotiate trade agreements that preclude Congress from sending 
such accords to address labor standards and environmental 
concerns.
      

                                


Statement of Steve Beckman, International Economist, International 
Union, United Automobile, Aerospace and Agricultural Implement Workers 
of America (UAW)

    Mr. Chairman, my name is Steve Beckman. I am an 
international economist for the International Union, United 
Automobile, Aerospace and Agricultural Implement Workers of 
America. The UAW represents 1.3 million active and retired 
members in the automotive and other industries. The UAW 
appreciates the opportunity to present its views to the 
Subcommittee on fast track trade negotiating authority.
    The UAW believes strongly that the Administration's fast 
track proposal goes in precisely the wrong direction. It 
clearly does not require that labor and environmental 
protections must be included in the core of any new trade 
agreements, enforceable through trade sanctions, in order for 
those agreements to be subject to fast track procedures. 
Instead, it actually prohibits fast track consideration of 
labor and environmental issues in bilateral and regional trade 
agreements.
    The Administration's proposal includes negotiating 
objectives that limit fast track coverage of worker rights and 
the environment to negotiations in the World Trade Organization 
(WTO). Fast track procedures, thus, would not apply to labor 
and environment provisions that might be negotiated in any 
bilateral, regional or other trade agreements. Yet, it is in 
these non-WTO negotiations that the U.S. has the most leverage 
to ensure that these matters are addressed in a meaningful way.
    In defining the provisions that can be included in 
legislation eligible for fast track treatment by Congress, the 
Administration proposal would apply to provisions that are 
``necessary or appropriate'' to implement the trade agreement 
``and which are related to trade.'' The meaning of this last 
phrase has been made clear by Chairman Archer--it is to be a 
barrier to the inclusion of provisions on labor and 
environmental issues in trade agreements that are subject to 
fast track procedures. Practically, this provision would ensure 
that provisions covering the enhancement and enforcement of 
internationally-recognized core labor standards, such as the 
right to freedom of association, the right to organize and 
bargain collectively, child and prison labor prohibitions and 
minimum standards on wages, hours and workplace safety and 
health are not included in fast track legislation. This 
provision betrays the decades-long efforts of the UAW, the 
American labor movement and unions of workers around the globe 
to establish a constructive discussion of the need for the 
interests of workers to be incorporated into international 
trade agreements in equal measure with the interests of 
multinational corporations.
    The bill reported by the Senate Finance Committee is a 
further step in the wrong direction. It eliminates fast track 
consideration of labor and environmental enforcement and 
improvement by the WTO, and makes it clear that these issues 
cannot be included in any fast track deals. The 
Administration's positive response to the Finance Committee 
bill demonstrates its decision to pursue trade negotiating 
authority that does not address the need for worker rights and 
environmental protections in trade agreements.
    The Senate Finance Committee bill excludes ``promoting 
respect for workers' rights'' from fast track coverage 
completely. Along with ``seeking to protect and preserve the 
environment,'' improving worker rights and standards is 
included in a section called ``International Economic Policy 
Objectives Designed to Reinforce the Trade Agreements 
Process.'' The bill precludes the use of fast track procedures 
to advance these objectives by leaving them out of the list of 
principal trade negotiating objectives. Even there, safe from 
fast track consideration, the Senate Finance Committee bill 
sets no specific objectives in the area of worker rights. 
Instead, it defines U.S. policy as ``reviewing'' and 
``seeking'' worker rights progress. After more than 20 years of 
efforts to win provisions in international trade agreements 
concerning worker rights, the absence of a requirement to make 
progress in this area is an insult to workers in the U.S. and 
around the world.
    The Senate Finance Committee bill takes this restrictive 
language one step further by limiting implementing legislation 
to provisions that are ``directly related to trade.'' Again, 
the goal is to prevent the inclusion of labor and environment 
provisions from being covered in fast track legislation. The 
intent is the same as in the Administration proposal; the 
Senate Finance Committee's language is more explicit.
    In its list of principal trade negotiating objectives, the 
Senate Finance Committee bill competes with the Administration 
proposal for disingenuous intent. While the Administration 
limited a broad objective (``to promote respect for 
internationally recognized worker rights'') just to the forum 
provided by the WTO (where progress on labor and environment 
issues has been stymied for years and no change is in sight), 
the Senate Finance Committee bill does not limit the forum but 
sharply circumscribes the subject of discussion. Only changes 
in foreign government regulation and practices, including the 
areas of labor and environment, that have as their purpose 
attracting investment or inhibiting U.S. exports are considered 
to be principal negotiating objectives to be covered under fast 
track legislation. This language would prevent including in 
trade agreements subject to fast track consideration provisions 
that promote respect for internationally-recognized worker 
rights or the environment. Under this formulation, even the 
weak and ineffective NAFTA side agreements could not be 
negotiated. They cover broader issues and include obligations 
on the U.S. (which is proscribed by the Senate bill) as well as 
on foreign governments.
    Like the Administration bill, the Senate Finance Committee 
bill requires that labor and environmental provisions be 
``trade related'' to be considered ``necessary'' for fast track 
implementing legislation. As Chairman Archer has indicated, 
this would restrict coverage to measures adopted specifically 
to influence international trade. Thus, the inadequacy of 
protections for workers and the environment in numerous 
countries and the need for improved standards could not be 
remedied in fast track trade legislation under these 
limitations, even when the undermining of international norms 
provides an advantage in the international economy. As a 
result, the Administration proposal and the Senate Finance 
Committee bill are dismissive of our concern that fundamental 
worker and environmental rights and standards are being eroded 
by international trade and investment agreements.
    In contrast to both the Administration proposal and the 
Senate Finance Committee bill, the promotion of respect for 
internationally recognized worker rights was a principal 
negotiating objective in the 1988 trade act that gave President 
Bush the authority to negotiate NAFTA and the Uruguay Round of 
GATT. In the 1988 authority, there was no restriction on the 
forum in which the promotion of these rights could be 
negotiated, no limitation on examining only the diminution of 
those rights for specific purposes and no requirement that 
these issues be trade related or directly trade related, as 
defined by those outspokenly antagonistic to including worker 
rights in trade agreements. Both the Administration and Senate 
Finance Committee proposals on worker rights depart from, and 
seriously restrict, previous fast track negotiating authority. 
The inadequate NAFTA side agreements are the results of 
negotiations that took place under the broader 1988 fast track 
authority. It is clear that the results of negotiations under 
the fast track proposals before us today will be even more 
unsatisfactory.
    The bill prepared by Chairman Archer contains the same 
deficiencies as the Administration and Senate Finance 
proposals. It limits the consideration of labor and environment 
in fast track legislation to those aspects that are directly 
trade related and limit market access. The promotion of respect 
for internationally recognized workers rights and standards in 
international trade, which the UAW believes must be the goal of 
U.S. trade policy, would be excluded from fast track 
consideration by Chairman Archer's proposal. The inadequacy of 
the Archer bill on the issues of labor and the environment is 
shown by its exclusion of fast track treatment for protections 
such as the NAFTA side agreements, which have been acknowledged 
to be weak and ineffective.
    For these reasons, the Archer bill, the Administration 
proposal and the Senate Finance bill all represent major steps 
backward in the treatment of worker rights and standards in 
U.S. fast track trade negotiating authority. On these grounds 
alone, the UAW urges the rejection of legislation granting the 
President fast track authority at this time.
    In addition to this fundamental shortcoming, the UAW 
opposes fast track legislation because the trade agreements 
negotiated under this model of international trade and 
investment have undermined workers' living standards in the 
U.S. and abroad. NAFTA is the result of negotiations based on 
these objectives. The staggering growth of the U.S. trade 
deficit with Canada and Mexico since NAFTA went into effect, 
from $9 billion in 1993 to $36 billion in 1996, provides a 
strong argument against extending badly flawed trade 
negotiating authority. NAFTA trade in automotive products, 
which accounts for one-fourth of all U.S. trade with Mexico and 
Canada, produced a U.S. deficit of $26.6 billion in 1996, more 
than twice the pre-NAFTA 1993 deficit of $13.1 billion. 
American auto workers have missed out on hundreds of thousands 
of jobs producing vehicles and parts for the North American 
market as a result of the growth in this trade imbalance.
    The loss of American workers' job opportunities caused by 
the widening trade deficit and the downward pressure on their 
wages and benefits stimulated by the international competition 
for investment has reinforced the resolve of American workers 
to oppose the extension of the NAFTA model. Broader authority 
to reach agreement on worker and environmental provisions in 
trade agreements is needed, not greater restriction on the 
Administration's ability to negotiate in these areas as is 
being proposed.
    The importance of fast track trade negotiating authority 
has been misrepresented by advocates of renewing this 
authority. The Administration claims to have negotiated two 
hundred trade agreements during the period in which fast track 
authority has not been in effect. Clearly, it is possible to 
negotiate with U.S. trading partners and reach agreements 
without fast track authority. Contrary to the scare tactics of 
fast track proponents, U.S. trade balances have been improving 
with Chile and other Latin American countries that are 
considered to be next in line for NAFTA-expansion negotiations 
if fast track authority is extended. U.S. exporters are not 
being swept aside in these countries by producers abroad. At 
the same time, the U.S. trade balance with Mexico and Canada 
has deteriorated sharply since NAFTA became effective in 1994. 
Given the fact that trade agreements have been negotiated 
without fast track authority, the serious adverse consequences 
for Americans of the fast track-negotiated NAFTA and the recent 
gains in trade with Latin American countries, Congress should 
be considering how to use its Constitutional authority over 
U.S. international commerce to ensure that American workers and 
the environment benefit from growing international trade and 
investment. It will not serve the public interest to grant the 
Administration the authority to build on the faulty foundation 
of the NAFTA model with additional agreements that cannot be 
amended or improved by Congress.
    Without progress in the areas of most concern to our 
members, we must oppose the extension of fast track trade 
negotiating authority. The Archer bill, the Administration 
proposal and the Senate Finance Committee bill fail to address 
the deficiencies of past trade agreements and the negotiating 
authority that led to them. We urge the members of the 
Subcommittee to reject these proposals and the NAFTA model of 
trade agreements that they represent.
    Thank you.
      

                                


      
                                   National Association    
                                           of Manufacturers
                                                    October 3, 1997

The Honorable Bill Archer
Chairman, Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, DC 20515

    Dear Mr. Chairman:

    As you know from our previous testimony, the National Association 
of Manufacturers (``NAM''), on behalf of 14,000 US manufacturers--large 
and small--and approximately 18 million workers, supports trade 
liberalization. International commerce has become an important mainstay 
of our companies' livelihoods, and is simply irreversible.
    The NAM believes that extension of the executive branch's trade 
negotiating authority must be achieved. We have already been too long 
without ``fast track'' authority and welcome a speedy resolution of the 
issue.
    We commend you for your hard work in forcing the necessary 
compromises on the complex and controversial issues that are the crux 
of the fast track debate. It is due to you and your staff's hard work 
that this bill is moving forward.
    The NAM has always been clear that while this matter is a top 
priority, we would not accept ``fast track'' at any cost. We have 
stated repeatedly, as have you, that we disagree with the inclusion of 
broad authority for the negotiation of non-trade provisions in a trade 
agreement. The linkage of labor and environmental provisions is 
inappropriate if it exceeds a direct relationship to trade. We are not 
pushing for a statutory definition of ``directly related to trade'' 
however: that is likely to sink the whole process. Guiding language in 
the legislative history regarding this matter might be useful, if 
language could be agreed upon.
    The matter that is of most pressing concern to US manufacturers is 
the use of trade sanctions to enforce non-trade provisions or 
agreements. The NAFTA side agreements exercise showed that the 
executive branch is willing to include sanctions as enforcement 
mechanisms for non-trade issues. While the enforcement mechanisms in 
the NAFTA side agreements have been characterized as minimal, a 
precedent has been set. It also is argued that Congress has already 
agreed to the cede some trade sanctions authority through the ``section 
301'' process. However, 301 trade sanctions are for trade policy 
purposes only. It is our strong recommendation that the fast track 
legislative package include some guiding language suggesting the 
inappropriate nature of using unilateral sanctions for non-trade 
purposes.
    Finally, the NAM member companies note that an earlier draft 
proposal for the extension of fast track procedures included a 
provision requiring consultations with industry sector advisory groups 
regarding specific trade barriers that the Administration is intending 
to address in any proposed negotiations. That provision was omitted in 
the Administration's current proposal.
    The NAM member companies would like to see that provision, or a 
similarly appropriate one, included in the proposal your Committee 
marks up next week. Provision again for briefing of the appropriate 
industry sector advisory groups by the Administration before an 
agreement is entered into would also be helpful. This would ensure that 
those industries with a particular stake in the negotiations would 
provide additional input to Congress and the Administration regarding a 
proposed trade agreement. Enclosed please find a copy of the 
legislative language that was included in the prior proposal. I would 
be happy to discuss this with your staff further.
    Again, the NAM member companies thank you for your commitment to 
extending the procedures for a consultative and expedited process for 
the negotiation of trade agreements. The US manufacturing community 
cannot overemphasize the importance of continuing momentum and US 
leadership in the pursuit of trade liberalization and market access. We 
want to continue to be able grow the economy and jobs!

            Sincerely,
                                         M. Dianne Sullivan
                                             Director, Trade Policy
Enclosure
      

                                


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Statement of Bryan McCanless, President, National Business Association

    The membership of the National Business Association 
strongly opposes fast-track legislation because they have 
already been economically hurt by NAFTA which was approved by 
Congress under the fast-track process.
    Many of our members work in the service industry whose 
businesses have suffered because they have lost customers who 
cannot afford the services of our membership because these 
customers have either lost their jobs or their earnings have 
declined.
    I am submitting into the record two tables illustrating the 
employment and trade impact of NAFTA on U.S. industries from 
the Economy Policy Institute analysis of Commerce Department 
data. It demonstrates the growing U.S. trade deficit and job 
loss from 1993-1996.
    Also included is the U.S. Business and Industrial Council's 
table of the median wages of all U.S. workers from 1979-1996. 
This provides state-by-state statistics showing that workers' 
wages in 36 states have dropped while wage growth in the 
remaining 14 states and the District of Columbia has been 
minimal. Overall, the median wages of workers in the U.S. has 
declined 5.3 percent during this period.
    I am including these tables because the NBA represents 
small businesses in the service industry who are not usually 
counted in official statistics because we do not engage in 
international trade. In figures that show closed factories and 
job losses, we do not get counted, but we still feel an 
indirect impact because our customers are the people who work 
in communities whose economies depend on industry.
    When they suffer we suffer. The service industry only 
expands in an affluent society. If you cut the core of that 
affluence--jobs for people in the industrial sector--you cannot 
support that service.
    I surveyed the NBA's members on their views of NAFTA's 
impact. Here are some of their opinions:
    The owner of Pitts Towing and Service Center of St. 
Waynesville, North Carolina told me, ``We were against NAFTA 
from the start. Now we are realizing all the effects--lost jobs 
everywhere! But the GATT (now the World Trade Organization) 
scares us even more. We are very much against one world trade, 
government and money.''
    From Whitcomb's Forest Harvesting, Inc.: ``(NAFTA) seems to 
be having an adverse effect on many states, in particular 
states that produce produce for a living. Also the tainted food 
coming into this country is getting to be a big problem. States 
that are more factory-oriented are being hurt.''
    An NBA member from Rioux Electric in Medway, Maine is 
concerned that NAFTA's passage is helping the U.S. feed drug 
lords and their crimes.
    ``My home town has been affected by (NAFTA) in more than 
one way.''--Roller Palace (Gentry Investments).
    ``NAFTA was passed by Congress to benefit big business and 
a corrupt Mexican government and to provide a way for Big Banks 
in the USA to receive interest on loans made to Mexico which 
could not be serviced, all at the expense of American jobs and 
taxpayers. It was blatantly unconstitutional.''--contractors 
Horongolo-Davis, Inc.
    According to Carpenter's Nursery, NAFTA has caused much 
havoc in the United States.
    ``NAFTA is hurting all of the small businesses in the 
USA,'' says Pearson Electronics in Belton, South Carolina.
    In Irwinton, Georgia, Howell's Body Shop says, ``NAFTA was 
the biggest mistake our Congress has made. It undermines 
everything we have worked for. Imports come into Mexico and 
then flood the U.S. uncontrolled. That alone is very wrong.''
    The owner of Custom Paving, Inc. in Waynesville, North 
Carolina says that his county has lost over 700 jobs as a 
result of NAFTA.
    One member thinks that Ross Perot, who heard the sucking 
sound of jobs going to Mexico, was right after all.
    ``I have opposed NAFTA since long before it was law,'' says 
the owner of B & L Mechanical. ``I strongly disagree with the 
'open-borders' situation created by NAFTA. I am against 
allowing manufacturing in any foreign country (not controlled 
by the same laws, regulations and codes as our own) to unfairly 
compete with no equalizing tariffs when brought into our 
country.''
    The owner of Clarence's Friendly Lunch notes that Singer 
Furniture, located one mile from him, just closed down as a 
result of NAFTA.
    ``NAFTA is just another government sell-out.''--
CountryStyle in Dover-Foxcroft, Maine.
    ``NAFTA is another huge step in selling out the sovereignty 
of the United States.''--Financial Security Alliance.
    ``Because of NAFTA many jobs have been lost in the 
U.S..''--Irish Auto Service.
    ``Last July some of my former friends told me about an 
electrical plant closing in a city in New York which left 160 
highly-skilled people out of work to move to Mexico for the 
cheap labor there. The company found out the people down there 
could not do the work, and they asked their former employees to 
move to Mexico because they needed them.''--Philann Farms.
    ``My beef cows have dropped from $1.00 a pound to 50 cents 
a pound.''--Stonebridge Farm.
    ``Canadian Seafood products that come into the U.S. without 
tariffs effects our U.S. markets for own our products and thus 
hold down wages and fishermen's prices. It is hard enough to 
compete with the cheaper Canadian dollar.''--John W. Dunbar Co.
    ``It is my understanding that President Clinton made 
concessions with some states so they would vote for NAFTA which 
should have been illegal. I wonder if the hepatitis 
strawberries would be here if NAFTA (had been) shot down.''--
Bradford Auto Sales.
    Fast-track legislation unconstitutionally ties the hands of 
Congress--the people's elected representatives--by forbidding 
it to amend or change any trade pact or treaty or agreement 
negotiated by the executive branch. Only two of the three 
million workers in this branch--the president and the vice 
president--are elected. Therefore, the individuals in and out 
of government who negotiate and write these massive trade 
treaties like NAFTA are unelected. We need to return authority 
over trade back to Congress as the Constitution states.
    Enough time has passed to measure the destructive impact 
NAFTA has had on America's small business community. It is 
doubtful Congress would have approved NAFTA if its members had 
had the time to study NAFTA's pork-filled 1,000 page 
implementing legislation which was made available to lawmakers 
just a week before they were expected to vote on it.
    What kind of a representative government do Americans have 
if the people's elected representatives don't even have the 
opportunity to study what they are voting on?
    The World Trade Organization, which gives global 
bureaucrats in Geneva, Switzerland authority over U.S. trade 
matters, was approved through the fast-track process.
    In 1996, Renato Ruggerio, the WTO Director General, made it 
clear he understood that a revolutionary transfer of power from 
the United States to him and his international bureaucrats was 
occurring when he said, ``We are writing the constitution of a 
single global economy.''
    The NBA's opposition to fast-track echoes the strong 
sentiments of the majority of small businessmen, the 
grassroots, and hard-working Americans who are feeling the 
devastating aftermath of NAFTA and the World Trade Organization 
and the fast-track process now sought by President Clinton.
    Major polls clearly show the majority of Americans don't 
like fast track or NAFTA:
     61 percent of Americans oppose ``having Congress 
grant the President fast-track authority'' (Hart and Teeter for 
The Wall Street Journal/NBC, July 26-28, 1997).
     57 percent of Americans oppose ``new trade pacts 
with Latin American countries (Wirthlin Worldwide for Bank of 
Boston, November 1996).
     56 percent of Americans believe ``expanded trade 
leads to a decrease in the number of U.S. jobs (Louis Harris 
and Associates for Business Week, September 3-7, 1997).
     64 percent of Americans believe world trade pulls 
down U.S. wages (Market Strategies for the Committee for Free 
Trade and Economic Growth, June 1996).
     64 percent believe trade agreements between the 
U.S. and other nations cost more jobs than they create 
(Greenberg Research for Campaign for America's Future, November 
1996).
     51 percent of Americans believe ``America's 
integration in global markets mainly benefits multinational 
corporations at the expense of average working families (Penn, 
Schoen and Berland Associates for the Democratic Leadership 
Council, July 1997).
    The trade policies pursued by the leaders of both major 
political parties have been disastrous. The U.S. trade deficit 
has increased every year, doubling between 1992 and 1996. 
According to the Commerce Department's own figures, increased 
deficits have wiped out 1.3 millon jobs in high-wage, goods-
producing industries.
    The Federal Reserve Bank of St. Louis has calculated that 
the net effect of trade in the first quarter of 1997 was to 
slow the U.S. economy by 1.27 percent of GDP on an annualized 
basis.
    Fast-track means Congress must agree before it sees a trade 
agreement that when that agreement is finished it will vote on 
it and all required changes to domestic law operating under 
these conditions: a closed rule with no amendments or changes 
allowed; a maximum of 20 hours of debate per chamber; an up or 
down vote; and no committee mark-up.
    The NBA urges that Congress vote down fast-track and take 
back its authority over trade as authorized in the 
Constitution.
      

                                


Statement of the National Farmers Union

    On behalf of its 300,000 farm and ranch family members, the 
National Farmers Union (NFU) appreciates the opportunity to 
present testimony to this panel. NFU is pleased the House Ways 
and Means Subcommittee on Trade is holding a hearing on fast-
track negotiating authority, because this process has 
profoundly and directly affected our nation's farmers, ranchers 
and rural communities.
    The Canadian-U.S. Free Trade Agreement (Canada-U.S. FTA), 
the North American Free Trade Agreement (NAFTA) and the General 
Agreement on Tariffs and Trade (GATT) were all passed in 
Congress according to fast-track procedures. All three 
agreements directly affected not only American farmers, but 
U.S. health, safety, domestic investment, environmental, labor 
and consumer standards and laws. Future agreements are expected 
to affect U.S. citizens in much the same way. Prior to the 
ratification of these agreements, we, as well as many members 
of Congress, observed severe inadequacies in these agreements; 
many have yet to be addressed to this day. We believe a large 
reason behind the passage of these agreements, despite the 
serious concern members of Congress and the public raised 
during the debate, was due to the fact that fast-track rules 
were in effect.
    National Farmers Union is opposed to fast-track legislation 
because it prevents Congress from having enough direct 
involvement in the negotiation of trade agreements. NFU 
believes the U.S. Congress should be a full partner in any 
international trade agreement because of the direct, domestic 
impact trade agreements have on all U.S. citizens. Under the 
Constitution, Congress has exclusive authority to regulate 
foreign commerce. We do not believe it should delegate this 
important responsibility to the executive branch under the 
restrictive fast-track rules.

                   Fast-track Authority is Too Broad

    The bill put forward by President Clinton titled, the 
``Export Expansion and Reciprocal Trade Agreements Act of 
1997,'' would enable the ongoing negotiations to bring Chile 
and other Latin American countries into the NAFTA, create a 
Free Trade Area of the Americas (FTAA) by 2005, sign an Asia 
Pacific Economic Cooperation agreement to achieve free trade by 
2010/2020, a second agreement to eliminate import tariffs on 
information technologies and the World Trade Organization 
negotiations scheduled for 1999 to further open up agriculture 
markets.
    One of the most far reaching impacts of fast-track has 
received the least attention. The sweeping Multilateral 
Agreement on Investment (MAI) which greatly expands the rights 
of private investors at the expense of governments and 
municipalities in international trade agreements could be 
considered by Congress under fast-track rules. Only a limited 
number of officials from the U.S. State Department and the U.S. 
Trade Representative office, and others representing private 
interests were allowed to participate in the 2-year 
negotiations on behalf of the United States.
    With respect to the overall trade-negotiating objectives 
set forth in the president's bill, Farmers Union was encouraged 
to see that agriculture, labor and environment were included as 
separate provisions in the document. The U.S. government should 
adhere to certain principles when it enters into trade 
agreements with other countries that do not have the same 
standards and laws as we do in this country. Throughout its 
history, NFU has focused on international development programs 
in impoverished countries. For this reason, we urge that 
environmental and labor issues be addressed in the core text of 
trade agreements to ensure people in these countries receive a 
fair wage for their labor in a safe working environment, 
natural resources are protected and no exploitation of these 
growing countries occurs. Properly crafted trade agreements 
could work to achieve those goals.
    However, the language in the president's bill limits labor 
and the environment negotiations to those that are ``directly 
related'' to trade. We object to this language because it is 
actually more restrictive than the fast-track legislation that 
was used to negotiate and pass the Canada-U.S. FTA, NAFTA and 
GATT. As the world leader, the U.S. can play a crucial role in 
setting the parameters for international trade agreements. 
Trade agreements have far reaching implications on U.S. health, 
safety, labor, environmental and other laws that we believe 
must be fully considered, individually and directly.
    We were encouraged that the Clinton administration chose to 
address agricultural priorities as a distinct and separate 
issue to work to correct unfair trade practices in the 
agriculture sector. The primary agricultural goal of the U.S. 
in trade negotiations has long been to reduce agricultural 
import tariffs and export subsidies around the world. National 
Farmers Union has long held that internal economic, social and 
political imperatives will result in other nations pursuing 
ways to protect their agricultural producers and other basic 
industries. We believe the United States should do the same.
    The president's bill calls for the reform of ``state 
trading enterprises,'' such as the Canadian Wheat Board (CWB), 
which have not previously been a major focus in international 
trade negotiations. It is evident that the CWB is able to 
provide a fair return for producers. While state trading 
enterprises should be monitored to ensure they are trading 
fairly, we urge lawmakers to realize the benefit that this type 
of structure could provide to U.S. farmers. National Farmers 
Union supports the creation of an American Marketing Board 
(AMB) which producers throughout the country could use to 
enhance their marketing power.

                  Five Concerns That Must Be Addressed

    Since the North American Free Trade Agreement was enacted, 
National Farmers Union has urged members of Congress and the 
Clinton administration to make improvements on the agreement 
due to the problems it created. NAFTA should be improved in 
four categories, which affect our members not only as family 
farmers, but as consumers and taxpayers as well. Farmers Union 
urges Congress to renegotiate NAFTA because the agreement does 
not adequately address country of origin labeling, dispute 
resolution, currency fluctuations, proper reporting of 
agricultural imports and exports, and food safety standards. We 
urged members of this committee to act to correct these 
problems when we testified here in April.
    (1) Country of Origin Labeling. All imported foods, feeds, 
and fibers should be labeled to disclose country of origin, 
actual contents, and additives. Public awareness of the country 
of origin issue has been greatly increased since E. coli 
contaminated beef was found in Colorado and strawberries which 
caused Hepatitis-A where discovered in Michigan. Regardless of 
whether the contamination occurred in the U.S. or abroad, the 
public is beginning to ask where food sold in the U.S. 
originates. Many countries already require country of origin 
labeling for U.S. products. If the goal is to create a truly 
level playing field, all products should be labeled to indicate 
their country of origin.
    (2) Dispute Resolution. Canada-U.S. FTA, NAFTA, and GATT 
have indeed increased trade, but the enormous influxes of 
agricultural products into the U.S. at times have had a 
devastating impact on U.S. producers. Last year, when there was 
a surge in Mexican tomato and pepper imports, the U.S. winter 
vegetable industry was injured irreparably when produce was 
imported at far below U.S. production costs, which forced 
market prices down and left U.S. growers unable to compete. 
When this occurred, many U.S. farmers quickly went out of 
business. The tomato farmers filed a Section 201 petition with 
the U. S. International Trade Commission (USITC), to stem the 
flow of produce into U.S. markets; however, months later the 
commission failed to find sufficient evidence of injury and did 
not rule in favor of the U.S. industry. The damage to the U.S. 
tomato industry by that time was irreparable.
    U.S. Trade Representative Charlene Barshefksy continues to 
debate Canadian Agriculture Minister Ralph Goodale over whether 
Canada should limit the amount of wheat and barley it exports 
to the U.S. One-way trade of Canadian grain exports of wheat, 
durum wheat and barley to the U.S. has filled U.S. grain 
elevators and disrupted U.S. markets and marketing channels. 
Canada has flatly maintained it will not limit the amount of 
grain it exports, yet the dispute continues to the great 
detriment of U.S. farmers. While lawmakers engage in debates 
over trade flows, U.S. farmers watch as their prices decline 
for grains, livestock, produce and other agricultural products.
    (3) Currency Fluctuations. We are very proud that the bail-
out of the Mexican financial infrastructure was a success and 
that the funds, with interest, were returned the U.S. ahead of 
schedule. Had NAFTA included a provision to address currency 
fluctuations, we would have avoided the entire escapade. Until 
there is the establishment of a common measure of currency, to 
prevent unstable, dramatic fluctuations of currency, whether 
natural or manipulated by central banks, we will never have 
fair trade agreements. This is true with our GATT trading 
partners as well. We must address fluctuating currency exchange 
rates in the Canada-U.S. FTA, NAFTA, GATT or any existing or 
future trade agreements.
    (4) Reporting. Many changes over the past decade, including 
the new farm law and reform of the crop insurance/disaster 
programs, have saddled U.S. producers with an ever-growing 
burden of risk management. In order to be efficient managers 
and marketers, and in order to survive in an ever-deregulated 
business environment, U.S. producers need the latest, most 
accurate information available. Information is the lifeblood of 
risk management and includes data on weather, consumer trends, 
markets and other key facts. Import and export numbers are an 
indispensable part of the information our producers require.
    However, the accuracy of our reporting system is rightly 
called into question because much of the food and foodstuffs 
crossing our borders are not adequately monitored or inspected.
    (5) Food Safety and Inspection Standards. A recent General 
Accounting Office report concluded that fewer than 1 percent of 
every 3.3 million trucks entering the U.S. are inspected. Food 
and other raw commodities now travel across our borders largely 
unchecked. When NAFTA was being considered, Farmers Union urged 
Congress to increase the amount of food inspection at the 
border, yet much of the food that enters our borders is never 
inspected. We were promised that all foods would meet U.S. food 
safety standards, which would be enforced vigorously by the 
U.S. at the border. Yet with less 1 percent or less of our food 
being inspected at the border, our government literally has no 
way to determine whether the food is safe or not.
    Because so few agricultural commodities are inspected, 
certain animal and plant diseases have been introduced into the 
U.S. since Canada-U.S. FTA, NAFTA and GATT went into effect. 
The inspection and reporting systems for foods and agricultural 
products entering this country simply cannot keep up with the 
sharp increase in trade flows. Due to the lack of inspection of 
agricultural products, pests and diseases have been introduced 
into this country at great cost to the U.S. farmer and 
taxpayer.
    In the report, ``Improvements Needed to Minimize Threat of 
Foreign Pests and Diseases,'' the General Accounting Office 
(GAO) found that federal inspectors, seeking procedural 
shortcuts, allowed brokers themselves to choose the samples for 
inspection. In the report GAO focused on the U.S. Department of 
Agriculture's Animal Plant Health Inspection Service (APHIS), 
the federal agency mainly responsible for preventing 
infestation by harmful foreign pests and diseases, protecting 
U.S. agriculture and preserving the marketability of 
agricultural products in the United States and abroad.
    To allow those who buy and sell imported agricultural 
products to pick and choose which ones are inspected clearly 
illustrates how fundamentally flawed this system currently is. 
The GAO report found that due to staffing shortages, APHIS 
``does not conduct any inspections at 46 northern and six 
southern ports of entry,'' and at many other ports there are no 
inspectors on duty for many hours of the day or night. Even 
high-risk cargo is not properly inspected, according to the 
report.
    Despite the fact that U.S. border inspection has been 
crippled due to the massive influx of imports, free-trade 
proponents are urging inspectors to speed up the flow of goods 
across U.S. borders. Such a policy threatens not only the 
health and safety of our domestic crops and livestock, but more 
importantly this nation's food supply. U.S. taxpayers will pay 
for the problems when they are forced to pay to eliminate pests 
and diseases. Just over a year ago in a congressional 
appropriations hearing on Capitol Hill, a U.S. Department of 
Agriculture official admitted that karnal bunt, a wheat 
disease, had ``crept over the border'' after the NAFTA went 
into effect. This is just one example of the diseases that have 
been introduced into the U.S. The U.S. farmer understands the 
true costs that pests and diseases bring. Farmers many times 
have to eliminate whole herds and slash and burn whole fields 
to eradicate pests and diseases.
    When pests and diseases spread to the U.S. by the exchange 
of infested agricultural commodities, other countries will 
undoubtedly demonstrate a reluctance to buy U.S. agricultural 
goods. When pests and diseases are present within our shores, 
regardless of where they came from or how they are spread, it 
is the American farmer's reputation that is called into 
question. We receive the blame and we suffer the consequences 
because demand for American agricultural products declines 
sharply. Regardless of how vigourously we negotiate trade 
agreements and urge other countries to buy U.S. agricultural 
products, once it is found that pests and diseases reside here, 
other countries will simply buy elsewhere to protect their own 
agricultural industry from these problems. Many times it is 
difficult if not impossible to prove to other countries that we 
are rid of harmful pests and diseases after they have been 
discovered here in the U.S. For this reason we urge that all 
food and agricultural commodities be labeled to indicate 
country of origin and inspection at the border be substantially 
increased.
    The country of origin labeling, dispute resolution, 
currency fluctuation, reporting and food safety, concerns 
Farmers Union has urged members of the Clinton Administration 
and Congress to correct have been addressed to date, yet the 
Clinton administration and some members of Congress want to 
move forward to expand NAFTA to Chile and other countries. We 
believe the flaws in existing agreements, that Farmers Union 
and other organizations have urged members of Congress to 
correct, will surely grow in their seriousness and enormity if 
trade is expanded in the manner the Clinton administration and 
some members of Congress are proposing.

                               Conclusion

    We must remind ourselves that fast-track been used just 
five times: the Tokyo Round of GATT (1975), the U.S.-Canada 
Free Trade Agreement (1988), the U.S.-Israel Free Trade 
Agreement (1989), the North American Free Trade Agreement 
(1993) and the Uruguay Round of GATT establishing the World 
Trade Organization. Many supporters of fast-track contend that 
it must be passed now or else the U.S. will be prevented from 
entering into any new trade negotiations. However, during the 
past 2 years since fast-track has expired, more than 200 trade 
agreements have been completed without fast-track authority.
    When fast-track was initially proposed, trade agreements 
dealt mainly with changes in tariffs structures. Today, U.S. 
trade and investment policy carries direct, domestic 
implications for U.S. laws. U.S. negotiators do not necessarily 
represent the full range of U.S. interests at the negotiating 
table. Private corporations and interests have far too great a 
presence and influence as members of the trade advisory 
committees institutionalized in fast-track.
    Farmers have felt the impact of NAFTA in a variety of ways 
since it began. When foods enter the U.S. from countries where 
labor, environmental and health and safety standards are 
different than those we have in the U.S., the American farmer 
is affected. These imported foods are many times sold at a 
price below that which we can produce it in this country 
because of the high standards we have adopted, which leads to 
an influx of grains, cattle, produce or other commodities and 
lowers the price U.S. farmers receive. Canada-U.S. FTA, NAFTA 
and GATT have fundamentally redefined what we as farmers think 
of when we face price instability. We understand that risk is 
inherent in farming. Unless some safeguards are put in place to 
ensure farmers receive a fair price for their product, 
regardless of the political, environmental, economic or any 
other conditions in other countries, we will continue to see 
the number of farmers in this country decrease because the risk 
is simply too great. While farmers must have access to global 
markets, the major thrust of every nation's agricultural 
production should be domestic food security. Domestic food 
production must be priced at a parity level that assures 
profitability for a producer practicing average-or-better 
efficiency.
    Thank you, Mr. Chairman, for the opportunity to express our 
concerns to this committee today.
      

                                


Statement of National Oilseed Processors Association

    The National Oilseed Processors Association (NOPA) supports 
approval of Fast Track negotiating authority that is not 
encumbered by environmental, labor, or other issues. NOPA is a 
national trade association comprised of 14 regular and 24 
associate member companies, which process vegetable meals and 
oils from oilseeds. NOPA's regular member firms process an 
estimated 1.4 billion bushels of oilseeds annually at 67 plants 
in 21 states, employing an estimated 4,500 workers.
    U.S. oilseed processors remain strong supporters of and 
advocates for greater trade liberalization. The Uruguay Round 
and the NAFTA were important steps in liberalizing agricultural 
trade. Both agreements resulted in important new market access 
opportunities for U.S. exports of oilseeds and oilseed 
products. However, further progress needs to be made. High 
tariffs and other barriers continue to restrict our access in 
potentially large markets such as China and India. In addition, 
a number of countries are using market-distorting export 
practices that were not disciplined by the Uruguay Round export 
subsidy commitments. These practices need to be brought under 
the WTO trade rules.
    NOPA, as a member of the American Oilseed Coalition, has 
been actively pursuing the Level Playing Field (LPF) initiative 
to eliminate all trade-distorting import barriers and export 
practices in the oilseeds and oilseed products sector. Although 
the Uruguay Round implementing legislation gave the 
Administration the authority to continue negotiating trade 
liberalization in this sector, the LPF initiative would have a 
much greater chance of success in a negotiation that is broader 
based in terms of both country coverage and sectoral coverage. 
Fast-track authority is needed to successfully engage in broad-
based, multilateral negotiations that will lead to greater 
liberalization for oilseeds and oilseed products, and for all 
of agriculture.
    The United States is in danger of being left behind in the 
regional and bilateral free-trade agreements being negotiated 
throughout the Western Hemisphere. U.S. exports of oilseeds and 
oilseed products are disadvantaged by Western Hemisphere free-
trade agreements that give some of our largest competitors 
preferential access to markets in which we could be 
competitive.
    With the 1999 review and continuation process that is part 
of the WTO's built-in agenda from the Uruguay Round, The Free 
Trade Area of the Americas, and APEC, U.S. agriculture is 
already facing an ambitious trade policy agenda. The United 
States not only has to get engaged in these trade negotiations, 
we have to take the lead in setting an agenda that will remove 
the remaining distortions to trade in agricultural products. 
Some countries would like to leave agriculture out of future 
trade negotiations.
    NOPA supports an agenda for trade negotiations that:
     ensures that agriculture is a full participant in 
any negotiation and moves forward in tandem with other sectors;
     requires any regional or bilateral free-trade 
agreement to result in the elimination of all trade barriers in 
agriculture by a date certain;
     emphasizes the importance of reducing tariffs and 
increasing minimum access levels; and
     allows developing countries a longer 
implementation period, but otherwise imposes the same 
disciplines on them as on developed countries.
      

                                


Statement of Public Citizen

 **Side-By-Side Analysis** Reagan-Bush 1988 Fast Track Versus ClintoN 
                       1997 Fast Track Proposal 

Clinton Proposal Worse than Reagan-Bush Fast Track

    This side-by-side analysis shows how the recent Clinton 
proposal on fast track takes away the ability for the U.S. 
President to negotiate and/or have implemented trade agreements 
containing enforceable labor, environmental or other provisions 
in their core texts.
    Under the Clinton proposal, for the eight years that it 
would run, the U.S. President would be affirmatively limited 
from including labor, environmental and other standards of the 
same enforceable, core nature as now are provided for the 
protection of intellectual property or investors' rights. 
Indeed, all of the issues left out of U.S. negotiating 
objectives in the recent Administration proposal would also be 
kept out, such as: food safety, illegal drug trade, currency 
stability, human rights, and religious freedom.
    Under the fast track established in 1974 and used five 
times since, the U.S. President had the authority, although was 
not required to include, labor, environmental and other 
provisions in trade agreements. It was this authority under 
which NAFTA was negotiated that allowed President Bush to put 
the very limited environmental measures he did in the text of 
NAFTA chapter 11 on investment and chapter 1 on multilateral 
environmental agreements. The new Administration proposal would 
remove this discretion, strictly limiting the contents of trade 
agreements to matters ``directly trade related'' and limiting 
further fast track coverage of future trade implementing bills 
only to the ``further clarification'' of environmental issues 
and ``discussion'' of labor rights and only at the GATT-World 
Trade Organization (WTO.)

                  Side-By-Side of Relevant Provisions

                I. Overall Trade Negotiating Objectives

    (Sec. 1101(a) 1988 fast track; Sec. 2(a) of Clinton proposal)

Reagan-Bush Fast Track:

    1. Open equitable reciprocal markets,
    2. Reduction or elimination of barriers and other trade distorting 
policies and practices,
    3. More effective system of international trading disciplines and 
procedures.

Clinton Proposal:


    Addition: Chapeau language specifies that the authority to 
negotiate granted in this bill is limited to the objectives listed 
only.
    Comment: This provision sets new limits on what issues can even be 
negotiated in both trade agreements to which fast track approval 
procedures will be applied and those which can be entered into without 
a vote. The new limits include those aspects of foreign government 
policies and practices regarding labor, the environment, and other 
matters that are ``directly related to trade'' and ``decrease market 
opportunities for U.S. exports or distort U.S. trade.'' (A later 
section in the Clinton proposal further limits environmental and labor 
issues which can be included in a fast tracked trade implementing 
bill.)

    Addition: Second objective amended to read: ``reduction or 
elimination of barriers or distortions that are directly related to 
trade and decrease market opportunities for U.S. exports or distort 
U.S. trade;

    Comment: This new language--"directly related to trade'' and 
``decrease market opportunities for U.S. exports or distort U.S. 
trade''--is added to exclude labor or environmental practices which 
have ``trade distorting'' effects from being covered as targets for 
negotiation. Old language was: ``Reduction or elimination of barriers 
and other trade distorting policies and practices'' which would have 
allowed discretion to set rules against child labor or toxics dumping 
which cause U.S. companies a competitive disadvantage.

    Addition: New objective added: ``to address those aspects of 
foreign government policies and practices regarding labor, the 
environment, and other matters that are directly related to trade and 
decrease market opportunities for U.S. exports or distort U.S. trade;

    Comment: This language serves to tightly limit what the President 
has authority to negotiate about. The ``and'' connector means that both 
conditions must be met. Thus, only aspects of environmental and labor 
matters that ``decrease market opportunities for U.S. exports'' AND 
that are ``directly related to trade'' can be addressed. The clause 
``foreign government policies and practices regarding labor, the 
environment and other matters'' is added to empower the President to 
negotiate for the elimination of other countries' such policies if they 
limit U.S. exports, a goal which Ways and Means Chair Archer has 
identified as the purpose of this language. The term ``other matters'' 
used here and in the previous fast tracks has meant other broader, 
unlisted goals such as human rights, food safety, animal welfare or 
human health.

    Addition: New objective added: to foster economic growth, raise 
living standards, promote full employment in US and to enhance the 
global economy

    Comment: This is rhetoric to counter the enforceable provisions. 
Given that it is an entirely subjective judgement as to what fulfills 
these broad goals, the provision is only hortatory.

    Addition: New objective added: further strengthen system of 
international trading disciplines and procedures, including dispute 
settlement.

    Comment: This is a relocation of an objective that was located in 
the principle trade negotiating objective of past fast tracks.

               II. Principle Trade Negotiating Objectives

    (Sec. 1101(b) of 1988 fast track; Sec. 2(b) of Clinton Proposal)

Reagan-Bush Fast Track:

    1. Dispute Settlement--more effective and expeditious

Clinton Proposal:

    Moved up to overall negotiating objectives

Reagan-Bush Fast Track:

     2. Improvement of GATT and multilateral trade negotiations.

Clinton Proposal:

     Eliminated

Reagan-Bush Fast Track:

     3. Transparency

Clinton Proposal:

     Moved down to objective 5.

Reagan-Bush Fast Track:

    4. Developing Countries--promote adoption of open trading systems 
and eliminate non-reciprocal benefits to more advanced countries

Clinton Proposal:

    Eliminated

Reagan-Bush Fast Track:

    5. Current Account Surpluses--develop rules to address to address 
large and persistent current account imbalances of countries, including 
imbalances which threaten the stability of the international trading 
system
    6. Trade and Monetary Coordination--to develop mechanisms to assure 
greater coordination, consistency, and cooperation between 
international trade and monetary systems and institutions

Clinton Proposal:

    Both objectives eliminated

    Comment: Given the 1995 Mexican peso crash and the recent Thai and 
other Southeast Asian currency drops, it is ill advised to eliminate 
trade negotiating objectives in this area. Before seeing the Clinton 
proposal, trade policy experts had assumed that these objective would 
be strengthened and moved up in priority. This is especially the case 
because the Clinton Administration has argued that the Mexican peso 
crash is a leading factor in NAFTA's failure to meet Administration 
promises of NAFTA benefits. Indeed, the Clinton Administration was 
urged in congressional hearings in 1993 before House Small Business 
Committee Chair LaFalce to add currency provisions to the NAFTA because 
the peso's crash was predictable. The Administration refused to do so, 
although the Reagan-Bush fast track provided the authority to do so. By 
eliminating these negotiating objectives, the Administration takes away 
its ability to ensure future trade agreements are not susceptible to 
such currency flucuations.

Reagan-Bush Fast Track:

    7. Agriculture--more market access, eliminate barriers and 
subsidies, resolve issues with export subsidies, seek agreements to 
avoid over production during periods of oversupply, eliminate 
unjustified sanitary and phytosanitary restrictions.

Clinton Proposal:

    Moved to objective 6. General language the same.

    Addition: for elimination of ``unjustified restriction or 
commercial requirements affecting new technologies, including 
biotechnology'' and ``other unjustified technical barriers to trade.''

    Comment: The new clause was added to empower the President to 
attack other countries' policies forbidding or requiring labeling of 
genetically engineered foods. Recently genetically engineered soy beans 
and so-called ``Frankenfood'' tomatoes with fish genes spliced in were 
refused entry into the European Union, which has a precautionary ban on 
growing or importing of such crops.

Reagan-Bush Fast Track:

     8. Unfair Trading Practices--discipline forms of subsidy having 
adverse trade effects

Clinton Proposal:

    Eliminated

    Comment: Eliminating this provision closes yet another possible 
avenue for requiring environmental and labor provisions be enforced in 
core trade texts. A leading theory of those promoting binding 
environmental and labor standards in trade agreements is that the 
absence of such rules is equal to an unfair subsidy for the company or 
country exploiting labor or the environment. Thus, dumping of toxics by 
a foreign factory producing products to import into the U.S., rather 
than paying for their proper disposal as required of U.S. competitors, 
is seen as taking a subsidy on public health or environmental quality. 
It was this provisions under which President Clinton promised some 
Members of Congress during NAFTA that he would issue a new executive 
order specifically making labor and environmental failures an unfair 
trade practice. This executive order was never issued. Elimination of 
this provisions would restrict future presidential action in this 
regard.

Reagan-Bush Fast Track:

    9.Trade in Services -reduce or eliminate barriers, taking into 
account ``domestic objectives, including, but not limited to, the 
protection of legitimate health or safety, essential security, 
environmental, consumer, or employment opportunities interests and the 
law and regulations thereto.''

Clinton Proposal:

    Moved to objective 2.

    Addition: Previous language replaced by ``reduce or eliminate 
barriers to international trade in services, including regulatory and 
other barriers that deny national treatment and unreasonably restrict 
the establishment and operation of service suppliers.''

    Comment: This change replaces safeguards for health, safety, and 
the environment and ``employment opportunities'' with a mandate to 
``reduce or eliminate'' such regulations if they limit trade in 
services. This provision would cover health care, transportation, 
telecommunications, broadcast, and all other service sectors.
Reagan-Bush Fast Track:

    10. Intellectual Property--enforcement of protections, establish 
international standards.

Clinton Proposal:

    Moved up to objective 4.

    Addition: Language added: full implementation of GATT Trade-Related 
Intellectual Property (TRIPs) Agreement; strengthening enforcement of 
intellectual property rights through ``accessible, expeditious, and 
effective civil, administrative and criminal enforcement mechanisms.''

    Comment: In the same legislation that withdraws the President's 
ability to negotiate enforceable labor and environmental provisions, 
protections for intellectual property are expanded through criminal 
enforcement. That is to say that U.S. negotiating objectives are to see 
violations of intellectual property rights punished through criminal, 
civil and trade remedies, while labor rights cannot be negotiated, much 
less enforced. This is the first use of obtaining criminal penalties to 
enforce a trade provision contained in U.S. trade negotiating 
objectives. This negotiating objective also calls for full 
implementation of the highly controversial GATT TRIPs agreement that is 
opposed by hunger activists in developing countries for putting 
monopoly patents on seeds, by consumer advocates worldwide for 
eliminating compulsory licensing (and thus affordability for poor 
consumers) of pharmaceuticals and medical devises and by religious 
advocates and ethicists worldwide for promoting the patenting of 
lifeforms.

Reagan-Bush Fast Track:

    11. Foreign Direct Investment--eliminate barriers, expand principle 
of national treatment, develop international agreed upon rules to 
ensure free flow of foreign direct investment taking into account 
``domestic objectives, including, but not limited to, the protection of 
legitimate health or safety, essential security, environmental, 
consumer, or employment opportunities interests and the law and 
regulations thereto.''

Clinton Proposal:

    Name changed to ``Foreign Investment'' and moved to objective 3.

    Additions: ``freeing of transfer of funds relating to investments; 
reducing or eliminating performance requirements and other unreasonable 
barriers to establishment and operation of investments; establishing 
standards for expropriation and compensation for expropriation...''

    Comments: This provision now tracks exactly the provisions of the 
Multilateral Agreement on Investment, the expansive new global 
investment treaty which has been 90% completed at the OECD. 
``Expropriate and compensation'' are entirely new U.S. trade 
negotiating objectives. Under this concept, a corporation or investor 
could directly sue a government for monetary compensation if it felt 
that its investment was being undermined by government action. This 
concept has been likened to the GOP Radical Takings Agenda that was 
defeated last Congress. A limited provision of the NAFTA incorporating 
this concept is now being exploited by the U.S. Ethyl Corporation who 
is suing the government of Canada for $251 million for damage to the 
name of their gas additive, MMT, which the Canadian parliament was 
considering banning. MMT is banned in many U.S. states because it 
destroys catalytic converters and contains substances know to have 
harmful effects to child development.

Reagan-Bush Fast Track:

    12. Safeguards -make transparent, temporary

Clinton Proposal:

    Eliminated

Reagan-Bush Fast Track:

    13. Specific Barriers--to obtain competitive opportunities for U.S. 
exports substantially equivalent to opportunities afforded foreign 
exports to US markets

Clinton Proposal:

    Name changed to ``Trade barriers and Distortions'' and moved to 
objective 1.

    Deletion: Language on substantially equivalent opportunities.

    Comment: Given the growing U.S. trade deficit, it is perverse to 
eliminate the one negotiating objective that addressed reciprocity in 
trade policy.

    Additions: ``directly related to trade'' added as limitation to 
definition of barriers and distortions that should be eliminated and 
further limiting clause added to definition of barriers to be 
eliminated as those ``that decrease market opportunities for U.S. 
exports...''

    Comment: These new limitations have the same effect as above in 
restricting what topics the President may negotiate.

Reagan-Bush Fast Track:

    14. Worker Rights--``(A) to promote respect for worker rights; (B) 
to secure a review of the relationship between worker rights to GATT 
articles, objectives, and related instruments with a view to ensuring 
that the benefits of the trading system are available to all workers; 
(C) to adopt, as a principle of the GATT, that the denial of worker 
rights should not be a means for a country or its industries to gain 
competitive advantage in international trade.''

Clinton Proposal:

    Name changed to ``Worker Rights and Environmental Protection'' and 
moved to final objective in proposal, number 6.

    Additions: The chapeau of the section limits consideration of these 
issues to ``through the World Trade Organization.''

    Comments: This addition relegates to the WTO all future discussion 
of labor and environmental issues. Sending these issues to the WTO is 
equivalent to sending them directly to Hell. In its December 1996 
Singapore Ministerial Declaration, the WTO announced its refusal to 
deal with labor issues, declaring that the International Labor 
Organization (ILO) is the appropriate forum for such discussions. 
Unlike the powerful WTO, there is no enforcement mechanism at the ILO. 
The WTO has had a committee on Trade and Environment for almost three 
years. To the extent that committee has done anything, it has been to 
identify for elimination environmental measures that limit trade.
    Change: Subsection (A) replaced with: ``to promote respect for 
internationally recognized worker rights, including with regard to 
child labor.''

    Comment: Previous fast tracks merely referred to promotion of 
``worker rights.'' According to the definition of internationally 
recognized labor rights, child labor is covered. Specific mention here 
is rhetorical. Oddly, the definition section of he bill also provides a 
definition for ``core labor standards,'' although that term is not used 
in the Administration proposal.

    Addition: (C) Worker rights modified by ``internationally 
recognized.''

    Addition: New Subsections: (D) to promote sustainable development; 
and (E) to seek to ensure that trade and environmental protection are 
mutually supportive, including through further clarification of the 
relationship between them.''

    Comment: As meaningless as the worker rights provisions above are, 
the environmental provisions are worse. Not only is all discussion 
relegated to the WTO, but the terms of discussion are only to clarify 
the relationship between trade and environment.

    Addition: Non-binding hortatory clause added at end: The U.S. will 
also seek to establish in the International Labor Organization a 
mechanism for the systematic examination of, reporting on, and 
accountability for the extent to which member governments promote and 
enforce core labor standards.''

    Comment: This provision has no legal meaning and is not 
enforceable. It is not a negotiating objective. Nor, does it relate to 
U.S. trade negotiations. The provision calls for the U.S. to ``seek to 
establish'' a reporting system of labor rights violations, a mechanism 
already in place at the ILO.

Reagan-Bush Fast Track:

    15. Access to High Technology--eliminate barriers to US equitable 
access to foreign-developed technology
    16. Border Taxes--Adjust GATT to balance direct versus indirect tax 
approach in different countries

Clinton Proposal:

    Both objectives eliminated

    NEW SUBSECTION IN CLINTON PROPOSAL 2(c): ``Guidance for negotiators 
(1) In pursuing the negotiating objectives described in subsection (b), 
US negotiators ``shall take into account'' list of domestic objectives 
found in Reagan-Bush fast track at 1101(b)(9) and ``In the course of 
negotiations conducted under this Act, the USTR shall'' consult with 
and keep fully apprised of the negotiations private sector trade 
advisors and to take into account ability of US to retain the ability 
to rigorously enforce its trade laws.

    Comment: This substance of this provision had appeared in the 
Reagan-Bush fast track as a limitation on a specific negotiating 
objective. It is unclear what its legal authority is in its new 
positioning as a ``guidance for negotiators.'' ``Guidance for 
negotiators'' is not a known mechanism and is not in itself a 
negotiating objective. Moving this provisions is a clever rhetorical 
devise because it puts the word health and job opportunity and consumer 
into a paragraph of the fast track bill, but does so in a way that does 
not make these matters allowable negotiating objectives.

    NEW SUBSECTION IN CLINTON PROPOSAL 2(d): ``Adherence to Obligations 
Under Uruguay Round Agreements'' The President shall take into account 
in decided with which countries to negotiate the extent to which that 
country has implemented its obligations under the Uruguay Round.

               III. Trade Agreement Negotiating Authority

    (Sec. 1102 1988 fast track; Sec. 3 of Clinton proposal)
    Section name changed in Clinton Proposal to ``Trade 
Agreement Procedures''

Reagan-Bush Fast Track:

    (a) Agreements Regarding Tariff Barriers: Gives President 
authority to enter into trade agreements with foreign countries 
and to proclaim changes, continuation, setting of duties as he 
determines to be required or appropriate to carry out any such 
trade agreement. Authority runs through June 1993.

Clinton Proposal:

    Maintains same language and updates new extension of 
authority as existing through October 1, 2005.

    Additions: New section ``(6) Other Tariff Modifications'' 
providing that none of the limitations of duration (through 
2005) or other specific conditions for proclamation of tariff 
changes set forth in the new bill will apply to the authority 
given the President in the 1994 Uruguay Round Agreements Act to 
proclaim tariff cuts or enter into agreements in the areas that 
were topics of negotiation in the GATT Uruguay Round. 
(Subsection B) And extends this broad authority contained in 
sec. 115 of the Uruguay Round Agreements Act also to ``part of 
an interim agreement leading to the formation of a regional 
free-trade area.'' (Subsection A)

    Comment: The provision relating to continuation of and 
superiority of the negotiating authority in the Uruguay Round 
means negotiations in all areas covered by the Uruguay Round 
are authorized indefinitely, rather than through the 2004 
ending date of this proposed fast track grant.
    The new authority concerning interim agreements is to allow 
the president to make concession in APEC (Asian Pacific 
Economic Cooperation) or the FTAA (Free Trade Area of the 
Americas, the hemispheric NAFTA) without a specific fast track 
grant by Congress for APEC or the FTAA.

Reagan-Bush Fast Track:

    b) Agreements Regarding Nontariff Barriers: provides 
authority through June 1993 for president to enter into 
agreements reducing such barriers ``only if such agreement 
makes progress in meeting the applicable objectives described 
in sec. 1101. (Both overall and principle objectives.)
    (c) Bilateral Agreements Regarding Tariff and Nontariff 
Barriers: provides authority through June 1993 for President to 
enter into agreements such barriers ``only if such agreement 
makes progress in meeting the applicable objectives described 
in sec. 1101. (Both overall and principle objectives.) The 
President must give 60 days written notice to the Ways and 
Means and the Finance Committees of intention to enter into 
such an agreement.

Clinton Proposal:

    These two sections are merged under new title: ``Agreements 
Regarding Tariff and Nontariff Barriers'' Duration of authority 
is extended through Oct. 1, 2005.

    Additions: Authority is newly limited only to agreements 
making progress in principle, but not overall objectives via 
3(b)(2).
    Comment: This change means that the matters covered in the 
first five objectives (including relating to foreign countries 
environmental and labor measures directly related to trade and 
limiting US exports) are not to be subject to implimentation 
using the fast track procedure. That is to say, these are items 
the President would have authority to negoitiate, but not to 
impliment in the fast tracked bill. Thus, only measures 
relating to clarifying the relationship at the WTO of 
environment and labor issues and trade could be in fast-tracked 
trade legislation.

    Additions: Section 151 of the 1974 Trade Act (first 
establishing fast track) is amended by replacing it with: ``if 
changes in existing laws or new statutory authority is required 
to implement such trade agreement or agreements or such 
extension, provisions which are necessary or appropriate to 
implement such trade agreement or agreements or extension and 
which are related to trade.... and provisions necessary for 
purposes of complying with sec. 252 of the Balanced Budget and 
Emergency Deficit Control Act of 1985...''

    Comments: This change adds the ``related to trade'' 
language, plugging any loophole left over by eliminating 
coverage of all principle trade negotiating objectives. It also 
newly puts into order for fast track consideration any revenue 
offsets required by the Balanced Budget Act to make up for 
revenues lost through tariffs cuts.

                        IV. Other Key Provisions

Other major changes from the previous fast track include:

    1. Fast Track is automatically extended to NAFTA expansion to Chile 
and ant agreement implementing the ``built in'' agenda or ``work 
programs'' of the GATT Uruguay Round. (Clinton Proposal Sec. 6.) In 
past fast tracks, Congress has had 60 days to disapprove a President's 
request to apply fast track congressional procedures to a particular 
negotiations. This so-called ``emergency brake'' provision is 
eliminated.
    The provision regarding work plan of the GATT Uruguay Round is one 
avenue through which the congressional consideration of the MAI could 
be covered under this fast track. Normally, for an agreement to obtain 
fast track congressional consideration, the request to Congress for 
fast track coverage must be done before negotiations start. However, 
this provision of the Administration's proposal eliminates both the 
notice requirements and Congress' ability to do anything to stop fast 
track from applying. Of course, the Uruguay Round's work program 
included negotiations on an investment agreement. Negotiations have 
been conducted in parallel at the OECD and the WTO on an investment 
agreement.
    2. Broad discretion for the President to declare private sector 
trade advisory committee reports classified. (Clinton Proposal Sec. 
3(c)(4).) Currently, these reports are public records.
      

                                


      Questions and Answers About Fast Track Negotiating Authority

               What Is Fast Track Negotiating Authority?

    Fast Track is a set of rules mostly about how Congress will 
consider the domestic legislation implementing trade 
agreements, not about the authority to negotiate trade deals 
itself. The term ``fast track'' refers to several related 
congressional procedures used for certain international trade 
and investment agreements.
    Fast Track is one version of how negotiating authority is 
delegated from the Legislative branch (which has exclusive 
constitutional authority over regulation of foreign commerce) 
to the Executive branch. Fast Track allows the Executive branch 
to conduct trade negotiations under a guarantee that whatever 
agreement is concluded, Congress will consider it with no 
amendments allowed and limited debate. Instituted by President 
Nixon in 1973, this extraordinary process has only been used 
five times.\1\ Fast Track negotiating authority is only one 
version of how Congress could delegate authority to the 
Executive branch on such trade issues. Alternative processes 
would maintain more leverage for Congress to shape 
negotiations.
---------------------------------------------------------------------------
    \1\ Fast track has only been used five times: the Tokyo Round of 
GATT (1975), the U.S.-Canada Free Trade Agreement (1988), the U.S.-
Israel Free Trade Agreement (1989), the North American Free Trade 
Agreement (1993) and the Uruguay Round of GATT establishing the World 
Trade Organization.
---------------------------------------------------------------------------

            How Does Fast Track Negotiating Authority Work?

    Fast Track requires Congress to agree, before seeing any 
text (or for that matter, before negotiations begin) that when 
a trade pact is finished, Congress will vote on the agreement 
AND all of the changes to domestic law required to conform U.S. 
law to the pact under the following terms:\2\
---------------------------------------------------------------------------
    \2\ Statutory references for specific fast track provisions: no 
amendments to the implementing legislation or the trade agreement are 
permitted under the fast-track procedures at 19 U.S.C. 2191(d). The 60 
day voting requirement consists of two aspects contained at 19 U.S.C. 
2191(e): The congressional committees to which the implementing bill is 
referred have only 45 legislative days to review it but without any 
changes, at which time it is automatically referred to the full House, 
and a floor vote must then be taken within 15 legislative days. In 
calculating the time periods for action in either chamber, the days on 
which that House is not in session are excluded. 19 U.S.C. 2191(e)(3). 
The limitation of debate to not more than 20 hours, divided equally 
between those favoring and those opposing the legislation is located at 
19 U.S.C. 2191(f)(2) & (g)(2).
---------------------------------------------------------------------------
    A. a closed rule (absolutely no amendments);
    B. maximum 20 hours of floor debate in each chamber;
    C. an up or down vote;
    D. legislation written by the Executive branch;
    E. bypass regular congressional committee procedures, such 
as mark ups;
    F. vote within 60 legislative days after that legislation 
is submitted to the Congress.
    Trade implementing legislation, which in the case of both 
NAFTA and GATT numbered thousands of pages, made hundreds of 
amendments to conform our existing laws with the trade texts.

     What Is Congress' Role Under Fast Track Negotiating Authority?

    To obtain such a pre-agreed closed rule before even initiating a 
negotiation, the President must notify Congress that he wants to 
negotiate a specific trade agreement with fast-track procedures.\3\ 
Congress must then vote to refuse the application of fast-track 
procedures to a specific agreement by a vote of both Houses within 60 
days.\4\
---------------------------------------------------------------------------
    \3\ Notification is at 19 U.S.C. 2902(c)(3)(C).
    \4\ Disapproval is at 19 U.S.C. 2903(c)(1)(A) & (2).
---------------------------------------------------------------------------
    If Congress fails to reject the Fast Track request in 60 days, the 
President is then free to negotiate the Agreement knowing Congress will 
be required to vote on legislation drafted by the Executive branch 
under a closed rule. Under the statute, the President must next involve 
Congress by notifying Congress 90 calendar days before he intends to 
sign the trade agreement. After the President enters into (i.e., signs) 
the agreement following the expiration of the congressional notice 
period, he may submit the signed trade agreement, implementing 
legislation, and certain required supporting information to Congress 
for approval.\5\ Congress must then vote yes or no within 60 
legislative days.
---------------------------------------------------------------------------
    \5\ Id. 2903(1)(B). Although not required by statute, some 
Administrations have invited selected Members or Committees to hold 
what they call ``unmark ups'' and ``unhearings'' to discuss the 
Executive Branch text before it is formally submitted. Meanwhile, 
Members not chosen for this arbitrary process only obtain the 
legislative language when it is presented for final consideration.
---------------------------------------------------------------------------

        Fast Track and Congress: Responsibility But No Authority

    Polls show that the public expects Congress to be in 
control of domestic issues which are impacted by trade 
agreements like food safety, truck and highway safety and 
illegal drugs. Under Fast Track, Congress loses the authority 
and the ability to shape these issues though they are still 
ultimately held responsible for the result. Once Congress signs 
off on Fast Track they lose the ability to control the outcome 
of the negotiations. For instance, since 1988, putting labor 
standards into trade pacts has been a U.S. negotiating 
objective under Fast Track. When the Executive branch has 
returned with agreements without labor standards, Congress, 
limited to an up or down vote, could not put them into the 
agreement.

       Is Fast Track Mandatory for Negotiating a Trade Agreement?

    The Executive branch has the capacity to negotiate with 
foreign sovereigns right now. Thus, the notion that without 
fast track, no ``major trade deals are possible'' is simply 
untrue. In fact, this extraordinary delegation of authority has 
only ever occurred five times, twice in the Clinton 
Administration. Yet the Clinton Administration touts in 
testimony and press releases more than 200 trade agreements 
which were negotiated and implemented without fast track. Among 
these trade agreements completed without Fast Track are 
expansive and multilateral agreements like the ITA 
(International Technology Agreement) and the Telecom Agreement 
and bilateral and plurilateral agreements including the two 
Japanese Auto Agreements. As well, currently, the Clinton 
Administration is close to completion on negotiations of the 
29-nation, highly complicated Multilateral Agreement on 
Investment (MAI), and deep in the talks on the WTO's Financial 
Services Agreement and parts of Asian Pacific Economic 
Cooperation (APEC). In fact, the entire MAI negotiation has 
occurred during a period where the Administration has not had 
Fast Track authority.

  This Unique Extreme Delegation of Authority Is No Longer Appropriate

    No limitation of congressional authority as severe as Fast 
Track exists in U.S. law. For instance, while some budget votes 
are granted closed rules automatically in advance, budget bills 
are shaped by Congress and have undergone extensive 
congressional committee process.
    Given that today's ``trade'' agreements are no longer just 
about tariffs and quotas, the extreme, total delegation of 
congressional authority represented by Fast Track simply is no 
longer appropriate. For example, the NAFTA text sets standards 
for the pesticide residues on the food children will eat; 
restricts how intensely border meat inspection can be conducted 
without being a trade barrier; specifies the length and weight 
of trucks that will travel in North America; restricts how 
local tax dollars can be used, for example by forbidding 
performance requirements such as mandating recycled paper 
content in government procurement.

       What Trade Agreements Will Be Included In This Fast Track?

    The Administration has stated that this Fast Track 
authority would include expansion of the North American Free 
Trade Agreement (NAFTA) to Latin America and to the Caribbean 
starting with Chile, and then to Asia through the Asian Pacific 
Economic Cooperation (APEC); the Multilateral Agreement on 
Investment (MAI) and expansion of the World Trade Organization, 
which implements the General Agreement on Tariffs and Trade 
(GATT).

                   What is the Origin of Fast Track?

    Fast Track was established by President Nixon in 1973 but 
has its roots even farther back. Under the 1933 Tariff Act, the 
trade negotiating authority delegated from the Legislative to 
the Executive branch did not cover non-tariff issues at all. 
During the Kennedy Round of GATT negotiations--the Round prior 
to the mid-1970s Tokyo Round--the first non-tariff issue arose 
in trade negotiations: standardizing customs classifications. 
President Truman was informed by Congress that he needed to 
obtain specific congressional approval for the necessary 
changes to U.S. statutes setting the tariff classification 
system. The Executive branch did not do this and instead used 
its existing proclamation authority to ``declare'' the law 
changed. This did not go over well with Congress. There was a 
specific congressional vote (which was not necessary) to show 
support for the Kennedy Round itself--but to also announce that 
the Customs Classifications could not be changed except through 
congressional action.
    This bit of turf war was then used by President Nixon to 
propose an amendment to the existing proclamation authority to 
specifically allow the President to proclaim changes to actual 
laws as needed to conform them to trade negotiations. Of 
course, this suggestion also did not go over well with Congress 
either--to say nothing of some rather major constitutional 
problems it would have posed. The ``deal'' that got cut in this 
turf war is the procedure we now call ``fast track.'' However--
the entirety of the non-tariff issues which President Nixon 
obtained fast track to cover was that customs classification 
and a non-binding agreement on ``Technical Barriers to Trade.''

     Does Fast Track Eliminate Special Interest Deals in Congress?

    Fast Track functions as a type of super glue for port 
barrel deals in trade agreements. Because no amendments are 
allowed, Congress is thus forced into rejecting entire trade 
agreements or approving special deals and unsavory amendments 
The two times fast track was used by the Clinton Administration 
to negotiate a trade agreement a bounty of special interest 
deals were involved.
    With the GATT Uruguay vote in a lame duck session of 
Congress in late 1994, one foreign auto company got a multi-
million dollar tax break in the GATT implementing legislation, 
a certain cellular phone interest was given a special deal, 
pension liabilities for certain companies were relieved, 
controversial changes in the U.S. Savings Bond Program were 
made and so on. These items had nothing to do with implementing 
the text of the Uruguay Round.
    Much has been written about the dozens of special interest 
deals conducted by the Clinton Administration in the final days 
of the NAFTA vote. Any Member who supported NAFTA also 
approved, for instance, an obscure provision of NAFTA's 
implementing legislation which retroactively wiped out tariffs 
owed on Canadian-made Honda Civics shipped to the United States 
since 1989.
    A Wall Street Journal/NBC News poll, conducted July 26-28 
1997, found that 61% of Americans oppose Fast Track. The poll 
asked: ``President Clinton will ask Congress to give him ``fast 
track'' authority to negotiate more free trade agreements. This 
would mean that once the negotiations are completed, Congress 
would take an up or down vote, but not make any amendments or 
changes. Do your favor or oppose this?''I11Favor Fast Track: 
32%
    Oppose Fast Track: 61%
    For more information about Fast Track or NAFTA, please 
contact Public Citizen's Global Trade Watch at (202) 546-4996.
      

                                


Statement of Hon. Jack Quinn, a Representative in Congress from the 
State of New York

    During the debate on the extension of fast track trade 
authority we have heard many arguments about the pros and cons 
of free trade. In theory there are many benefits of free trade. 
However, in practice, these benefits often don't materialize.
    As members of Congress, we strive to create economic 
conditions that encourage the creation of good job 
opportunities and raise the standard of living of all 
Americans. While Congress debates trade expansion, our 
attentions should be focused on what effect a new trade pact 
will have on American workers, and whether or not it will 
improve our standard of living.
    I must state my strong opposition to the extension of fast 
track trade authority. It is clear to me that recent trade 
pacts have failed to achieve a net job increase or an 
improvement of the standard of living in this country. The 
effects of the North American Free Trade Agreement (NAFTA) make 
clear the argument that free trade can be harmful to America.
    After only a few years, it has become obvious that NAFTA 
has cost America jobs. In my state of New York alone, we have 
lost over 20,000 jobs since the NAFTA agreement, according to 
the Bureau of Labor Statistics. In fact, every state in the 
union has reported a net job loss under the NAFTA regime. It is 
no secret as to where these jobs are going. Every region of the 
country has seen numerous industries literally pack up and 
relocate outside our borders.
    Furthermore, the NAFTA agreement is eroding Americans' 
standard of living. Job loss due to NAFTA is greatest in the 
high-paying manufacturing sector. In Buffalo, New York we have 
already seen the devastating effects of manufacturing job loss. 
Manufacturing jobs are often the heart and soul of a community. 
They allow families to live healthy, stable existences, often 
times on only one income. The fact of the matter is, when these 
jobs are lost, they do not return.
    When a manufacturing job is replaced with a service level 
job, there is no job loss, but there is a significant income 
loss. This phenomena is evident in the decline of real wages 
since the NAFTA agreement was implemented. Real wages in the 
U.S. have declined by 4% in just four years.
    A decline in wages isn't the only factor in the erosion of 
Americans' standard of living. Under NAFTA, the United States 
has suffered from a massive influx of illegal drugs from 
Mexico, an increase in contaminated food from Mexico, and the 
importation of items that were produced through child labor and 
environmental degradation.
    I find it hard to believe that the United States would be 
eager to create new trade pacts before it addresses these 
problems. I am a co-sponsor of the NAFTA Accountability Act and 
the Import Produce Labeling Act, both of which seek to address 
the flaws of NAFTA. I encourage the Administration to review 
this legislation. Furthermore, I urge the Administration to 
take aggressive steps towards alleviating the numerous flaws of 
NAFTA, including job loss, wage decline, drug flow, the 
importation of contaminated food, and environmental damage.
    Rather than pursue free trade at all costs, the United 
States should practice responsible trade. Responsible trade 
seeks to lower burdensome and unnecessary barriers to trade 
while preserving American interests. Increasing exports is not 
the only goal in a trade agreement. A trade agreement must 
serve all Americans.
      

                                


                                    Stewart and Stewart    
                                             Washington, DC
                                                    October 7, 1997

Mr. A.L. Singleton
Chief of Staff
Committee on Ways and Means
U.S. House of Representatives
1102 Longworth House Office Building
Washington, D.C. 20515

Re: TR-17, Hearing on Implementation of Fast Track Trade Authority

    Dear Mr. Singleton:

    In response to the September 25, 1997 Advisory from the House 
Committee on Ways and Means Subcommittee on Trade, I submit these 
comments on the President's proposed legislation for renewal of fast 
track negotiating authority for trade agreements. Our firm has 
represented a wide variety of industries and worker groups over the 
years on trade matters. Many of our existing clients operate 
internationally. The views expressed herein, however, are those of the 
author and do not necessarily reflect the views of our clients or my 
firm.

1. Any fast track negotiating authority must permit the Administration 
        to address issues affecting trade that remain unresolved

    What many have discovered over time is that as one layer of trade 
restrictions has been removed, another layer becomes apparent. 
Moreover, as trade becomes increasingly global, the types of problems 
that need to be addressed to enhance rational resource allocation may 
be different than have been previously addressed. While intellectual 
property enforcement and services were not viewed as important 
``trade'' issues in the 1960s and 1970s, they became core objectives in 
the Uruguay Round. The success of the U.S. in the Uruguay Round in 
addressing intellectual property enforcement and starting the process 
of establishing rules and liberalizing trade in services flowed in part 
from the fact that U.S. negotiating objectives included addressing 
these areas of increased importance to U.S. business.
    As the negotiations on basic telecommunications demonstrated, 
however, the areas that need to be addressed to actually liberalize 
trade in various areas may go beyond issues normally part of the 
existing ``trade'' umbrella (e.g., the issue of cross-subsidization in 
situations where there are monopoly suppliers).
    In the area of unfair trade practices, there are a range of 
practices that are not currently reachable in fact that may seriously 
prejudice U.S. exporters. Some practices are ``private'' (though 
arguably government tolerated) and hence not subject to internationally 
agreed rules at the present time. Even private practices that are 
addressable, such as dumping, are not in fact addressable when 
occurring in export markets. While third country dumping actions are 
permissible, no third country action has ever been accepted by the U.S. 
or any other country. No cause of action exists where foreign producers 
are targeting U.S. producers globally in multiple markets. Yet this is 
a growing problem that should be addressable.
    Hence, the U.S. negotiating authority should reflect both specific 
objectives in particular areas and provide sufficient breadth to permit 
the Administration to address additional issues as they arise or are 
identified.
    Similarly, the U.S. did not achieve all of the objectives it set 
for itself in the Uruguay Round negotiations. The objectives not met 
have not necessarily lost their importance since 1988. The disparate 
treatment for direct and indirect taxes under international rules is a 
case in point. Eliminating the disparate treatment should be an 
objective in any future negotiations. The language reported by the 
Senate Finance Committee earlier this month attempts to ensure at least 
comparable breadth of direction as that provided in the 1988 Omnibus 
Trade and Competitiveness Act. Hopefully, the House Ways and Means 
Committee bill will be similarly comprehensive.

  2. Sectoral liberalization and objectives should be promoted where 
                             sectors desire

    The U.S. has achieved some notable successes by focusing on the 
total needs of particular sectors in the past. Agriculture and basic 
telecommunications are two examples. Similarly, some sectors have 
wanted expedited trade liberalization and have been subject to ``0-for-
0'' negotiations or tariff harmonization exercises.
    While Congress has shown an interest in promoting the tariff 
elimination objectives, there has not been specific authorization or 
objectives set to explore ``WTO plus'' arrangements in sectors where 
U.S. industry supports such an undertaking. Last year's information 
technology agreement (``ITA'') is a notable success. Yet, tariffs are 
usually only one part of the issues that need to be addressed for trade 
flows to improve. Certainly where a sector expresses an interest in 
exploring such expanded and expedited liberalization, U.S. negotiating 
objectives should provide for inclusion of such subjects in ongoing or 
future negotiations. ITA II attempts to do that for information 
technology products. Why should other goods and services sectors not 
have similar opportunities?
    Similarly, where sectors are interested in expedited tariff 
elimination or tariff harmonization, U.S. negotiators should view such 
harmonization or expedited elimination objectives as important goals 
for the negotiations.

      3. Agricultural objectives need to reflect market realities

    Because agriculture around the world has been highly 
regulated and heavily subsidized for decades, liberalization 
poses certain major challenges not seen in most other goods 
areas. The fact that developed countries have tariffs higher 
than 100% (indeed above 600% for at least one country) shows 
the obstacles that exist to liberalized trade. While the U.S. 
is highly competitive in a wide range of agricultural products, 
recent agricultural reform efforts, which reduce U.S. subsidy 
levels, leave U.S. farmers exposed to disparate subsidy 
treatment abroad which is specifically permitted under the WTO. 
As further liberalization is pursued in agriculture, care 
should be taken to ensure that net protection levels (tariffs, 
subsidies (both domestic and export) and other non-tariff 
barriers) are harmonized with U.S. levels on products where 
foreign government subsidies are significantly larger on a per 
unit basis than those provided by the U.S. Companies should not 
be asked to compete against foreign treasuries.
    Similarly, the Uruguay Round Agreement on Agriculture 
recognized that perishable and seasonal products within 
agriculture may require special rules. See Article 5.6 of the 
Agreement on Agriculture. U.S. negotiators should seek agreed 
rules to reflect the unique characteristics and needs of such 
products in any agreement which deals with agricultural 
products. Trade rules should make sense and apply to all 
products. Our antidumping law and international agreements have 
long recognized the concept of ``regional'' industry. In 
agriculture, perishable and seasonal products have 
characteristics that should be accounted for in the hurdles for 
rights being invoked and for the relief that follows.
    Finally, international rules should be negotiated to deal 
with injurious trade flows that reflect international 
agreements or national laws that discriminate against developed 
country producers of agriculture in areas such as agricultural 
chemical use. The problems for farmers in the U.S. and other 
developed countries from the future ban some ten years ahead of 
developing countries of methyl bromide is one example. While 
the U.S. may decide for other reasons to accept an earlier 
phase out of use of certain chemicals for environmental 
purposes, our farmers should not lose out at least in the U.S. 
market because of that decision.

4. Every agreement should provide for effective safeguard measures and 
  workers, companies and communities should have access to meaningful 
                         adjustment assistance

    For roughly fifty years, every trade agreement has included some 
form of safeguard provision. For many years, there has also been in 
domestic law some form of trade adjustment assistance. The promises 
repeatedly made to American workers, their companies and their 
communities is that those who pay for the benefits of trade 
liberalization will be able to seek temporary relief and assistance. 
Those promises have been the backbone of the bipartisan support for 
trade liberalization in our country. Yet, in the last twenty years, the 
U.S. safeguard law has been almost impossible to invoke and the 
Congress and various Administrations have provided inadequate 
adjustment assistance funds. Is there any real doubt about why 
organized labor no longer actively supports further trade 
liberalization when the safety net repeatedly promised has seldom been 
in place? The WTO does not require the high negative rate of decisions 
by the U.S. International Trade Commission or the inaction by the 
President that characterizes Section 201 cases. Congress should ensure 
that fast track authorization continues to insist not only on safeguard 
agreements but that such agreements be useable in fact when trade 
developments warrant. Congress should also ensure that adjustment 
assistance is in fact available and that it is meaningful. Economists, 
most businesses and many politicians argue that increased trade 
benefits most people. Why should the many beneficiaries expect those 
who are hurt to bear the cost alone?

                              5. Services

    With roughly two-thirds of GDP accounted for by services, it is 
little wonder that the U.S. has been leading the calls for 
liberalization in trade in services. While many service sectors offer 
the opportunity for growth in exports, a priority should be provided 
for expanding market access in service sectors that facilitate growth 
in goods exports. To date, a number of such sectors have received 
extensive consideration: basic telecommunications, financial services, 
professional services. However, sectors such as the express integrated 
air-cargo services and other transportation areas similarly deserve 
sectoral analysis and broad based liberalization. These areas obviously 
have multiplier effects on trade expansion when liberalization is 
successful.

                             6. Investment

    The U.S. properly has included and continues to stress 
liberalization in investment rights. The TRIMs agreement was a minimal 
step in the right direction. Efforts underway within the OECD offer 
some promise. However, as negotiations with China for its accession 
into the WTO and as problems in sectors such as automobiles in various 
countries in Asia and the Americas demonstrate, trade flows are being 
seriously distorted by tariff and investment policies of a number of 
important nations in the world. I strongly support the proposed 
language from the Administration.

                      7. Exchange rate volatility

    While past Administrations have not viewed exchange rate policy as 
a ``trade'' issue, the significant swings in exchange rates of certain 
currencies in the past decade have often been more trade distorting 
that all of the tariff and non-tariff barriers pursued by the USTR. 
Industries can move from being competitive to non-competitive or vice 
versa in a matter of months because of currency movements. Congress 
should include negotiating objectives for the Administration to improve 
exchange rate policies to minimize exchange rate volatility and to 
maximize the likelihood that the exchange rate reflects the underlying 
competitiveness of the country in question.
    The Senate Finance Committee bill includes as a negotiating 
objective addressing current account surpluses. The same objective was 
in the 1988 Act. While I support inclusion of the negotiating objective 
and the aggressive use by the Secretary of the Treasury of his 
authority under 22 U.S.C. 5304(b)(it is not clear why Japan and China 
are not currently the subject of bilateral negotiations under this 
provision), more can and should be done to provide companies, investors 
and workers more rational market environments in which to operate.

                      8. Regional Free Trade Areas

    Article XXIV of the GATT 1994 and Article V of the GATS do not 
require all products to be covered in a regional free trade agreement. 
Past Administrations have taken the position that 100% of trade should 
be covered in all cases. This is not required by the language of the 
WTO and can result in unnecessary economic hardships and unnecessary 
political opposition to liberalized trade. At a minimum, Congress 
should establish negotiating objectives that require an appropriate 
recognition of highly import sensitive products in (a) coverage and (b) 
transition periods. Article XXIV:8(b) uses the term ``substantially all 
the trade.'' This term has no accepted meaning within the GATT or WTO, 
although some early cases suggest 85% coverage as adequate to satisfy. 
Most other regional agreements provide some carve outs for particularly 
sensitive products. There is no reason that the U.S. cannot show 
greater flexibility on this issue.
    Similarly, with regard to transition periods, the language of the 
Understanding on the Interpretation of Article XXIV of the General 
Agreement on Tariffs and Trade 1994 permits periods longer than 10 
years on those products where tariffs are being eliminated ``in 
exceptional cases.'' Highly sensitive products in NAFTA received 15 
year phase-outs. Where an industry can make the case for an even longer 
phase out period, it should not be excluded from consideration. 
Similarly, nothing in the WTO prohibits the schedule of adjustments to 
backload phaseouts as well where such a schedule would be appropriate.

            Sincerely,
                                         Terence P. Stewart
      

                                


Statement of the Wine Institute

    The experience of the U.S. wine industry with the trade 
negotiation process has been disappointing. Despite Congress's 
consistent call for market-opening opportunities for U.S. wine 
exports, the history of U.S. wine trade policy is a series of 
one-sided agreements that have tilted the international playing 
field sharply against U.S. winegrowers. Today, the U.S. has the 
most open market for wine imports and the lowest tariffs of any 
major wine-producing country, while U.S. winegrowers face high 
tariff and non-tariff trade barriers around the world.
    Congress became concerned about inequities in the market 
for wine and other alcoholic beverages after the Tokyo Round of 
multilateral trade negotiations was concluded in 1979. In the 
Trade Agreements Act of 1979, which implemented the Tokyo Round 
accords, Congress instructed U.S. negotiators to examine the 
trade barriers facing U.S. exports of alcoholic beverages, 
including wine, in an effort to construct a strategy for 
opening overseas markets to U.S. products. The U.S. industry 
voiced its concern then over the ``disparity between U.S. 
tariff and non-tariff measures regarding wine, and those 
maintained by other countries'' which placed the U.S. industry 
in serious jeopardy.
    In responding to Congress's request, the President conceded 
the U.S. wine industry's point. The President's Report detailed 
the structural imbalance in tariffs and other trade barriers 
facing the U.S. wine industry as a result of the Tokyo Round 
negotiations, the first negotiations completed under the so-
called ``fast track'' procedures for Congressional approval. 
The 1981 Report revealed that the United States had much lower 
tariffs than almost all other major wine-producing countries 
and markets for U.S. wine. It also cataloged a wide array of 
non-tariff barriers hindering U.S. exports, including monopoly 
practices, required price mark-ups, restrictive labelling 
rules, certification requirements, and restrictions on 
winemaking practices.
    Moreover, the President concluded that the U.S. had already 
lost any leverage they might have had in future negotiations. 
He confirmed that--
    [s]ubstantial reductions were made in U.S. tariff and non-
tariff measures governing imported alcoholic beverages during 
the [Tokyo Round], therefore it is unlikely that the U.S. could 
offer equivalent concessions in the alcoholic beverage sector 
in exchange for a reduction in trade barriers by other 
countries.
    In other words, the President acknowledged that, having 
traded away much of the United States' negotiating leverage, 
the U.S. had few tools, other than ``concessions by the United 
States in other product sectors,'' to restore any balance to 
U.S. wine trade.
    That led Congress to enact the Wine Equity and Export 
Expansion Act in 1984 urging the Executive to rectify the 
damage to the U.S. wine industry's interests. The Act 
recognized that--
    there is a substantial imbalance in international wine 
trade resulting... from the relative accessibility enjoyed by 
foreign wines to the United States market while the United 
States wine industry faces restrictive tariff and non-tariff 
barriers in virtually every existing or potential foreign 
market.
    To redress that competitive imbalance, Congress directed 
the U.S. Trade Representative (``USTR'')--
    to enter into consultations with each major wine trading 
country to seek a reduction or limitation of that country's 
tariff barriers and non-tariff barriers to (or distortions of) 
trade in United States wine.
    Congress required the negotiators to report back on their 
progress.
    In late 1985, President Reagan responded with a report that 
summarized the results of consultations conducted under the 
Wine Equity and Export Expansion Act requirements. The report 
of discussions with various countries details the limited 
progress made; the consistent theme that runs through the 
report was the pledge that the remaining barriers would be 
addressed in the next round of multilateral trade negotiations 
within the framework of the General Agreement on Tariffs and 
Trade (``GATT'').
    The lack of progress achieved in the initial round of 
discussions led Congress, in the Omnibus Trade and 
Competitiveness Act of 1988, to renew the provisions of the 
Wine Equity and Export Expansion Act. By then Congress had 
renewed the President's negotiating authority, President Reagan 
had concluded a free trade agreement with Canada, and the 
Uruguay Round of multilateral trade negotiations had begun. 
President Bush responded to the 1988 Act's requirements by 
forwarding a report prepared by the USTR. It reported the 
progress made in the U.S.-Canadian Free Trade Agreement, but 
acknowledged that the agreement had done little to deter the 
Canadian provinces from discriminating against U.S. exports. 
The remainder of the USTR's submission echoed the same themes 
of the 1985 report to Congress--little progress, an intent to 
consult further, and deferral of remaining issues to the 
Uruguay Round of GATT talks.
    Despite nearly two decades of effort, Congress has yet to 
see any dramatic results. Rather than heed Congress's calls for 
equity, the U.S. has concluded a series of trade agreements 
that have compounded the U.S. industry's problems.
    Instead of closing the gap between lower U.S. tariffs and 
higher foreign tariffs, the gap has grown. Our foreign trading 
partners have maintained their non-tariff barriers to imports 
of U.S. wines.
    The U.S.-Canada Free Trade Agreement (``FTA'') was supposed 
to create a preferential trading relationship between the U.S. 
and Canada. In the case of wine, however, U.S. products 
continued to face discriminatory barriers to trade.
    Wine sales in Canada are conducted by the provincial 
governments. The provinces mark up the price of U.S. wines to 
account for the incremental costs of importing the products. 
Key provinces--Ontario and British Columbia--utilized highly 
inflated ``cost of service'' markups that bore no relationship 
to the actual incremental costs associated with importing. The 
inflated markups, coupled with preferences the provinces 
maintained for European and South American wines, placed U.S. 
products at a disadvantage in the local market until industry-
led negotiations with the individual Liquor Control Boards in 
Ontario and British Columbia resulted in cost-of-service 
reductions to levels comparable to the charges imposed on other 
countries exporting wine to Canada.
    The results of NAFTA for wine were dramatic. Coincident 
with NAFTA, Mexico gave Chilean wines an immediate tariff 
reduction from 20 to 8 percent, and a guarantee of duty-free 
status in four years. Today, Chile exports wine to Mexico duty 
free. By contrast, U.S. wines were scheduled to receive a 10-
year phase out, leaving U.S. wines at a significant competitive 
disadvantage in the Mexican market.
    When NAFTA ratification was uncertain, the Clinton 
Administration gained support from the California congressional 
delegation by pledging to correct the inequities of the U.S. 
wine and brandy industries' treatment under NAFTA within 120 
days of the agreement's entry into force. This has not been 
done. When the Administration was designing its Mexican bailout 
program, it did not respond to suggestions by Members of 
Congress to use the bailout to correct the NAFTA situation.
    Today, as a result of a corn broom dispute, Mexico has 
increased its tariffs on wine and brandy to the pre-NAFTA 20% 
level.
    The most dramatic example of the failure to heed Congress's 
instructions, however, lies in the results of the Uruguay 
Round. When the talks began, the U.S. had the lowest tariffs of 
any major wine producing country. The U.S., nonetheless, agreed 
to a 36 percent reduction in the U.S. wine tariff to take 
effect the day the agreement entered into force--January 1, 
1995.
    The European Union, by contrast, agreed to reduce their 
applied wine tariffs by a mere 10 percent, with no actual 
reduction in European tariffs for the first 3 years of the 
agreement. Other countries agreed to reduce their tariffs by 
10-20 percent, but, in many instances, those figures were based 
on reductions in ``bound'' rates, not the tariff rates actually 
applied to U.S. exports, which diminished any benefit to U.S. 
producers. The remaining countries declined to reduce wine 
tariffs at all.
    Another way to measure the success in implementing the 
strategy called for by Congress in the Wine Equity and Export 
Expansion Act is to examine the barriers to U.S. exports that 
remain in place.
    The European Union is both the largest wine producing and 
consuming entity in the world. The United States has opened its 
market to European wine exports. We are Europe's largest export 
market.
    Under pressure from pending legislation to enact the Wine 
Equity and Export Expansion Act, the European Community in 1983 
entered an agreement with the United States to liberalize trade 
in wine by amending restrictive rules on winemaking practices 
and import certifications. This agreement, known in the 
industry as the ``Wine Accords,'' has failed to secure 
significant access to the European market.
    Despite the Wine Accords, the European Union continues to 
impose restrictions on production methods based on spurious 
health concerns. For example, European Union rules prohibit 
wine makers in E.U. member countries from using the ion-
exchange process, which is widely used in the United States. 
E.U. officials have publicly conceded that this process does 
not raise any health concerns; it simply improves the taste of 
wine. The prohibition on the use of ion-exchange was originally 
designed to protect the Bordeaux and Burgundies from 
competition from wines originating in the less prestigious 
growing areas in Europe. The tactic has since been translated 
into international trade.
    In the Wine Accords, the U.S. agreed to grant protection of 
various appellations of origin that had not become ``semi-
generic'' in exchange for permission to use ion-exchange and 
certain other wine making practices on products exported to 
Europe. While the U.S. has honored its commitments, the 
European Union has failed adequately to fulfill its part of the 
bargain, limiting entry to temporary exemptions from the rules 
on a six-month or yearly basis. By placing market access in 
constant jeopardy, the Europeans raise the risk for and cost of 
U.S. companies attempting to build brand recognition in Europe.
    Likewise, the European Union continues to impose 
restrictive import certification requirements. In marked 
contrast to the ease with which foreign wines enter the United 
States, U.S. wines must undergo an arduous process to enter the 
European Market, with each wine shipment requiring production 
and shipping information and eight costly chemical tests.
    The Uruguay Round agreement on standards, like the Wine 
Accords, is also supposed to prevent the use of false health 
claims as trade barriers. Thus far, it has had no impact on 
E.U. policy.
    The failure of the Wine Accords, however, is only part of 
the problem. What follows is a brief catalog of the tariff and 
non-tariff measures U.S. wine exports continue to face in 
Europe in addition to those noted above.
     Tariffs: Although European tariffs were already 3 times 
higher than U.S. tariffs on an ad valorem basis, the U.S. 
agreed in the Uruguay Round to reduce our tariffs by 36 percent 
while the European Union reduced its applied tariff rates by 
only 10 percent.
    Labelling Issues: By heavily regulating ``quality'' terms 
on labels and by retaining exclusive rights to the term ``table 
wine,'' the European Union inhibits U.S. exporters from 
effectively marketing their wines.
    Trademarks: The European Union permits a new appellation of 
origin to nullify or, in some circumstances, co-exist with an 
older established trademark, thereby raising the risks and 
costs for U.S. companies, particularly those that bear the 
names of families that originally emigrated from Europe.
    E.U. Enlargement: The European Union raised tariffs on U.S. 
wine exports to Sweden, Finland, and Austria when they joined 
the European Union and imposed the E.U.'s array of non-tariff 
barriers; the USTR has sought ``compensation'' without success.
    U.S. wine producers continue to face significant trade 
barriers in Taiwan, notwithstanding the limited accomplishments 
of the USTR in negotiating access to the Taiwanese alcoholic 
beverages market. U.S. wines face a staggering 275 percent 
markup due to the combined effect of import tariffs and excise 
taxes not paid by domestic producers in Taiwan. In addition, 
Taiwan bars anything more than a minimal markup at the retail 
level, thus inhibiting Taiwanese retailers from stocking U.S. 
wines.
    The USTR has recognized a number of significant trade 
barriers confronting U.S. wine in Japan. These include a 21% 
tariff, restrictive additive labelling regulations, additive 
standards, and testing systems, as well as groundless 
challenges to some U.S. winemaking practices.
    In the People's Republic of China, U.S. wine faces a 70% 
tariff. In addition, the USTR has acknowledged that American 
companies face difficulties in getting the sole official 
distributor to handle their products.
    What the history of trade negotiations and the partial 
catalog of foreign trade barriers set out above illustrates is 
that, despite the admonition of Congress and the opportunity to 
succeed, the U.S. has not achieved a level playing field for 
U.S. winegrowers.

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