[Congressional Record Volume 140, Number 38 (Tuesday, April 12, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: April 12, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
  INTRODUCTION OF LEGISLATION TO AMEND BUDGET RULES AS THEY APPLY TO 
                            TRADE AGREEMENTS

  The SPEAKER pro tempore. Under a previous order of the House, the 
gentleman from Illinois [Mr. Ewing] is recognized for 5 minutes.
  Mr. EWING. Mr. Speaker, today I am introducing legislation to amend 
the budget rules as they apply to trade agreements so that a more 
accurate accounting of revenue collected by the Federal Government may 
be used to offset lost revenues resulting from the lowering of tariffs 
in trade legislation. Most importantly, this bill will ensure that 
trade agreements which lower tariffs will not be used as an opportunity 
to raise taxes on the American people.
  The current budget pay-as-you-go [PAYGO] rules require that any lost 
revenue to the Federal Government due to reduced tariff rates be offset 
by higher taxes or spending cuts. While I support the PAYGO process 
because it helps keep the deficit from growing even larger than it 
already is, I believe that trade agreements represent one situation 
where the PAYGO rules clearly do not make sense and are 
counterproductive.
  There is a broad consensus among the economic community that trade 
agreements which lower tariffs among trading partners generate economic 
activity which in turn leads to more taxable income to the Federal 
Government. During the debate over the North American Free-Trade 
Agreement [NAFTA], it was discovered that the NAFTA would result in 
over $2 billion of lost tariff revenues over 5 years which had to be 
paid for through spending cuts or new taxes under the budget rules. I 
fought with many of my colleagues to keep taxes out of the NAFTA, and 
we were able to have most of them removed from the implementing 
legislation. However, this became a bitter debate which caused many 
supporters of NAFTA to reconsider their position because of the tax 
increases originally proposed by the Clinton administration. This was a 
frustrating exercise because we all knew that through economic growth, 
expected under the NAFTA to be more than $100 billion over 5 years, the 
NAFTA would bring in much more tax revenue to the Government than what 
would be lost through lower tariff rates. The PAYGO rules do not make 
sense in the case of trade agreements, and I believe that we should be 
flexible enough to recognize this fact and modify our way of treating 
these agreements.

  Late this year, the House is expected to take up legislation to 
implement the Uruguay round of the General Agreement on Tariffs and 
Trade [GATT]. As a result of this agreement, tariff levels around the 
world will be reduced over time increasing international trade and 
economic growth among the participating countries. However, as with the 
NAFTA, under current budget rules there is going to be lost tariff 
revenues to the Federal Government on the order of $13 billion over 5 
years which will have to be offset as part of GATT's implementation. My 
preference would be to pay for these trade agreements with spending 
cuts, but the reality of the situation is such that an increase in 
taxes may once again be introduced to provide for the offset unless the 
budget rules are changed. The GATT should not be used as a reason to 
raise taxes when in reality there will be a total revenue increase, not 
a decrease, as a result of the agreement.
  U.S. Trade Representative Mickey Kantor told the House Ways and Means 
Committee earlier this year that he expects the GATT to generate tax 
revenue sufficient to cover the expected reduction in revenues due 
to lower tariff revenues. It is expected that GATT will result in $7 to 
$21 billion in additional economic activity in the first year after 
enactment and increase to $100 to $200 billion per year once fully 
implemented. This increased economic activity will result in billions 
of dollars of tax revenue to the Federal Government each year. However, 
the paygo rules do not allow these increased revenues to be used to 
offset the tariff losses. Understandably, Mr. Kantor also stated that 
he finds it frustrating dealing with the budget rules as they apply to 
trade agreements.

  Raising taxes to support a bill which will naturally increase 
revenues and lower the deficit makes little sense. I want to make it 
clear that this legislation only changes the paygo rules as they apply 
to trade agreements and that the increased revenue to the Government 
through increased economic activity is only to be used to offset lost 
tariff revenue. If the offset is determined to be insufficient to cover 
the lost tariff revenues, the difference would still have to be paid 
for through spending cuts or taxes.
  Mr. Speaker, I urge all of my colleagues to join me in changing the 
paygo rules so that trade agreements will no longer be used as a reason 
to raise taxes. I urge my colleagues to join me by cosponsoring this 
legislation.
  The SPEAKER pro tempore. Under a previous order of the House, the 
gentlewoman from Illinois [Mrs. Collins] is recognized for 5 minutes.
  [Mrs. COLLINS of Illinois addressed the House. Her remarks will 
appear hereafter in the Extensions of Remarks.]

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