[Congressional Record Volume 140, Number 90 (Wednesday, July 13, 1994)]
[Extensions of Remarks]
[Page E]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 13, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
       THE GSP RENEWAL AND REFORM ACT OF 1994, H.R. 4586--PART I

                                 ______


                       HON. GEORGE E. BROWN, JR.

                             of california

                    in the house of representatives

                        Wednesday, July 13, 1994

  Mr. BROWN of California. Mr. Speaker, my distinguished colleague, 
Congressman John LaFalce and I recently introduced comprehensive 
legislation to extend and make badly needed improvements in the most 
important trade program governing U.S. relations with developing 
nations on the third world--the Generalized System of Preferences [GSP] 
Program.
  The GSP law was substantially amended in 1984 to increase trade with 
developing countries and to spread the benefits of trade more broadly 
within every trading nation in order to stimulate long-term, 
sustainable development. The goal was to bring GSP implementation more 
into concert with the fundamental premise of the founding of the GATT 
in 1948-49.
  Specifically, the GATT Preamble states, ``Relations among countries 
in the field of trade and economic endeavor should be conducted with a 
view to raising standards of living and ensuring full employment.'' The 
subsequent generation of knee-jerk free traders seem to have forgotten 
this underlying purpose of trade liberalization. Trade is not an end in 
itself, but a mechanism for improving the standard of living for 
people, most of whom are workers.
  The guiding assumption underpinning the GSP Program and reflected in 
its original legislative history has been that giving developing 
countries temporary trading preferences through duty-free treatment of 
many of their exports would encourage long-term, sustainable 
development, thereby reducing the need for unilateral U.S. aid.
  The original GSP Program was quite simple in its operation, but it 
failed to achieve its primary development objective. The program 
permitted countries identified as beneficiary developing countries 
[BDCs] to export to the United States duty-free any products listed as 
eligible articles. Providing duty-free access to the U.S. market, GSP 
was expected to increase exports from BDCs and provide an incentive for 
investors to locate new plants in BDCs, thus creating jobs, stimulating 
the local economies, and gradually reducing the need for traditional 
forms of direct development aid. These surface economic goals were 
partly achieved, but broad-based development was quite limited.
  As Congress expressly indicated in the legislative history to the 
first reauthorization of GSP in 1984, which resulted in amendments to 
attempt to rectify the failure of the program to achieve the 
development objectives, the benefits of the program were largely 
restricted to the ``privileged elites'' in a handful of newly 
industrialized developing* countries.\1\ There was also increasing 
evidence that the GSP Program was providing a strong incentive for U.S. 
employers to relocate to developing countries, where they could take 
advantage of the absence of fundamental worker rights and substandard 
labor conditions coupled with duty-free access to U.S. markets.\2\
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     *Footnotes to appear at end of article.
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 the 1984 gsp amendments required compliance with worker rights to be 
 eligible for gsp benefits, but the past two administrations disagreed 
   with the policy and failed in fundamental ways to enforce the law

  Rather than abolish the GSP Program, or simply accept the Reagan 
administration's recommendation to transform the program in ways to 
browbeat developing countries about counterfeiting and market 
access,\3\ Congress also tackled the problems associated with the 
systematic exploitation of workers in BDCs. We wrote into the mandatory 
and discretionary eligibility criteria for GSP benefits whether a 
country is ``taking steps to afford internationally recognized worker 
rights to its workers.'' With the added requirement that BDCs must 
comply with internationally recognized worker rights, the benefits of 
GSP could be expected to reach more of the impoverished workers, who 
would finally be able to bargain for a fair share of the benefits of 
increased trade. In addition, by improving worker rights in developing 
countries, U.S. companies would be less likely to make investment 
decisions based upon the availability of duty-free access to the U.S. 
market from countries that were able to offer labor made artificially 
cheap due to the systematic suppression of worker rights.
  For reasons that will be discussed in detail, the goals of Congress 
in passing the 1984 amendments have been largely unrealized due to the 
failure of the Reagan and Bush administrations to properly implement 
and enforce the GSP worker rights provisions. The main problem arose 
because too much discretion was left to the executive branch in 
determining whether a BDC was in compliance with the worker rights 
provisions. Accordingly, the Reagan and Bush administrations undermined 
enforcement of the worker rights provisions. They pursued a policy of 
promoting trade with the overriding goal of increasing the volume of 
GSP trade, leaving concerns as to whether the workers benefited to the 
whims of employers to share their bounty and to a belief in the failed 
policy of ``trickle down'' economics. This was the policy approach that 
Congress sought to change in passing the 1984 amendments--the benefits 
of increased trade through the original GSP Program had not resulted in 
any measurable improvement in conditions for workers, so Congress took 
the step of requiring that specific standards were enforced to release 
the flow of benefits that had previously been trickling down drop by 
drop without any broad-based impact.
  Disagreement with the goals of the 1984 amendments, coupled with 
broad enforcement discretion, allowed the Reagan and Bush 
administrations to substantially negate congressional intent. 
Enforcement was neglected to such an extreme degree that all of the 
parties that had ever petitioned in the annual GSP administrative 
review for stronger enforcement of the GSP worker rights provisions 
banded together and filed suit against the Bush administration, seeking 
a judicial order requiring the executive branch to enforce the GSP law 
consistent with the intent of Congress.\4\ The case, International 
Labor Rights Education and Research Fund et al versus George Bush et 
al\5\, resulted in a split decision in the Court of Appeals for the 
District of Columbia Circuit in which the judges expressed differing 
rationales, but left standing a lower court ruling that the present GSP 
law leaves broad discretion in the hands of the executive branch and 
that the Congress would need to amend it in order to achieve its 
expressed statutory purposes.
  If we don't enact amendments now to further clarify congressional 
intent, the substantial GSP benefits of duty-free access to U.S. 
markets will continue to be available to countries that systematically 
deny internationally recognized worker rights. The past decade has 
shown that the executive branch will continue to be exercised in ways 
that minimize the impact of the GSP worker rights provisions. This will 
allow countries that are among the worst offenders of worker rights, 
and many large U.S.-based multinational corporations operating in such 
countries, often to take advantage of unprotected labor kept cheap by 
the suppression of worker rights, to continue receiving billions of 
dollars in GSP benefits without fulfilling the reciprocal 
responsibility of allowing workers to share more fully in those 
benefits. Without improved specific, enforceable provisions requiring 
that BDCs respect internationally recognized worker rights, the goal of 
encouraging sustainable, broad-based economic development will not be 
achieved.


further amendments are needed to realize the original development goals 
                           of the gsp program

  It is now up to the Congress to take the required steps to restore 
the original goal of the GSP Program. The 1994 GSP Renewal and Reform 
Act seeks to more nearly fulfill the intent of Congress in enacting the 
worker rights provisions a decade ago. By improving BDC compliance with 
internationally recognized worker rights, this legislation will ensure 
that BDCs spread the benefits of the GSP program to a broader base of 
citizens. This will directly encourage sustainable development and will 
allow workers to finally begin to purchase some of the products they 
make, increasing global demand.
  In addition, improved compliance with worker rights in BDCs will help 
curb the loss of U.S. jobs by reducing the gap between worker rights 
and labor costs in the United States and developing countries, thus 
allowing legitimate comparative advantages to guide investment 
decisions and discouraging the practice of rewarding countries that are 
the most willing to deny worker rights and maintain wages that are 
artificially constrained.


    the gsp administrative review and enforcement processes must be 
                                improved

  A brief history of the evolution of the GSP administrative review and 
enforcement processes are necessary to understand why changes are 
needed.
  Shortly after the 1984 GSP amendments were enacted, the GSP 
Subcommittee (the GSP Comm.) within the Office of the U.S. Trade 
Representative (USTR), which is comprised of representatives from USTR 
and the Departments of Agriculture, Interior, Labor, State and 
Treasury, drafted and implemented new regulations to establish new 
procedures under which an ``interested party'' may petition the GSP 
Committee to review whether a country is in compliance with the worker 
rights provisions and other eligibility criteria that apply to 
designation of BDCs or eligible articles under the GSP program. This 
was in furtherance of Congress' expressed intent to allow ``parties 
interested in the implementation and protection of . . . workers 
rights'' to participate fully in the review process to the same extent 
as ``parties having a significant economic interest.''

  The current administrative review process thus requires an interested 
party to file a petition with the USTR that documents alleged 
violations of internationally recognized worker rights within a GSP 
beneficiary country. The GST Committee then makes a determination as to 
whether to summarily deny the petition or whether to accept it for 
investigation and public hearing.


                               footnotes

     \1\H.R. Rep. No. 98-1090, 98th Cong., 2d Sess. 11, reprinted 
     in, Committee Report at 5111.
     \2\Id at 5111-12; 130 Cong. Rec. at 977-79.
     \3\The Reagan administration proposed a ten-year extension of 
     GSP with no substantial change except provisions for greater 
     access to foreign markets. 130 Cong. Rec. at E 977. 
     Congressman Pease, the sponsor of the 1984 amendment bill, 
     stated in reference to the bill proposed by the Reagan 
     administration, ``[a]s is customary with the Reagan 
     administration's trade policy, there is nothing in the 
     President's bill that recognizes the impact of a program like 
     GSP upon American workers . . .'' 130 Cong. Rec. at E978.
     \4\There were a total of 23 parties who joined together to 
     challenge the failure of the Bush administration to enforce 
     the worker rights provision consistent with the intent of 
     Congress: The International Labor Rights Education and 
     Research Fund; The American Federation of Labor and Congress 
     of Industrial Organizations (AFL-CIO); International Union of 
     Electronic, Electrical, Salaried, Machine, and Furniture 
     Workers; International Union, United Automobile, Aerospace 
     and Agricultural Implement Workers of America; American 
     Federation of State, County and Municipal Workers; United 
     Steelworkers of America; International Longshoremen's and 
     Warehousemen's Union; International Ladies Garment Workers 
     Union; Amalgamated Clothing and Textile Workers Union; 
     Communications Workers of America; International Association 
     of Machinists and Aerospace Workers; United Electrical 
     Workers; Human Rights Watch; North American Coalition for 
     Human Rights in Korea; Lawyers Committee for Human Rights; 
     Council on Hemispheric Affairs; Institute for Policy Studies; 
     Indochina Resource Center, Inc. d/b/a/ Asia Resource Center; 
     Washington Office on Haiti; Massachusetts Labor Committee in 
     Support of Democracy, Human Rights and Non Intervention in 
     Central America; American-Arab Anti-Discrimination Committee; 
     Columbian Fathers Justice and Peace Office, and Bread for the 
     World.
     \5\752 F. Supp. 495 (D. D.C. 1990), aff'd by a divided 
     opinion, 954 F. 2d 745 (D.C. Cir 1992).

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