[Congressional Record Volume 140, Number 144 (Thursday, October 6, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: October 6, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                 GENERAL AGREEMENT ON TARIFFS AND TRADE

  Mrs. BOXER. Mr. President, this morning I am going to announce my 
position on the General Agreement on Tariffs and Trade, known as GATT. 
I have been studying this issue and have come to a decision on it and 
would like to share it with my colleagues and with the people of 
California.
  Mr. President, the California economy is beginning to show signs of 
life again. Jobs are being created. In fact, the UCLA Business 
Forecasting Project is projecting that California will have a net gain 
of 111,000 jobs by the end of this year, and this follows some very, 
very dismal job loss numbers.
  Housing permits are up by 15 percent and sales of existing homes 
increased by 24 percent. Retail sales rose by 4.5 percent in the first 
half of the year, and new business incorporations are up 10 percent. 
Venture capital flows in Silicon Valley have hit record levels this 
year. The recovery in California has at long last begun, and it has 
been very, very difficult for us.
  But our challenges are far from over. We need to ensure that this 
economic growth continues and that we keep creating jobs. We must be 
sure that we are truly building a solid economic base. And we must look 
to the future.
  What will it take to compete and win in the 21st century? How do we 
provide our workers with not only jobs, but with good jobs?
  What can we do to ensure that California's products and know-how are 
always one generation ahead of the cutting edge, as we have been in the 
past?
  One way, Mr. President, is through expanding trade, breaking down 
foreign market barriers. California is a trading State; in fact, the 
largest trading State in the Nation. In 1993, exports totaled more than 
$100 billion in goods and services. Exports of goods alone are 
responsible for an estimated 1.4 million California jobs, and the 
importance of international trade has increased dramatically in recent 
years. California's exports grew by 107 percent between 1987 and 1993.
  More trade will create more jobs. Trade will increase the 
competitiveness of our companies because a company that sells more 
abroad can invest more in better equipment, in training and in 
education of its workers at home. In the new global marketplace, a 
customer is as likely to be in Tokyo or Taipei as in Torrance or 
Tustin, CA.
  So let me say, after carefully considering the economic challenges 
facing California and our Nation, I believe that, on balance, GATT will 
be good for California.
  This agreement is not without problems, but I believe GATT will 
expand California exports, create jobs and strengthen our economic 
recovery. The GATT agreement will tear down many of the existing 
foreign barriers to California-made computers, semiconductors, 
electronics, medical devices, large equipment, toys, and other 
manufactured goods.
  The GATT agreement will provide greater protection for California's 
world-class software and pharmaceuticals and music recordings and 
television shows. The strength of the California economy, Mr. 
President, and the promise of our future are the great ideas of our 
inventors and our entrepreneurs. Too often these ideas are stolen and 
sold by pirates in markets abroad. In fact, in 1992 alone, U.S. 
companies lost between $15 and $17 billion from piracy. With the GATT 
agreement, we will have more effective tools to attack these pirates. 
With the GATT agreement, we have promises from our trading partners to 
provide greater protection to American copyrights and patents.
  The GATT agreement will also expand California's farm exports and 
create jobs in the agricultural sector, especially for growers of rice, 
grapes, almonds, walnuts, tree fruits, and vegetables. The GATT 
agreement will provide California companies with greater access to 
lucrative foreign government procurement contracts worth over $100 
billion each year.
  The GATT agreement may mean as much as $10.1 billion in new 
California exports in the first 10 years. According to the California 
Institute, California stands to gain as many as 200,000 jobs from 
increased exports of manufactured products alone, and exports of 
services and agricultural products will generate another 44,000 jobs 
for Californians.
  I know, Mr. President, that this agreement is not perfect. It does 
not do enough to open markets for our entertainment industry, 
telecommunications companies and our aircraft makers. I also recognize 
that many are concerned that our strong Federal and State environmental 
health and safety laws could be vulnerable under new GATT rules.
  I understand these concerns and I have thought about them very 
carefully. Anyone who knows me knows of my strong commitment to the 
environment and to the health and safety of consumers. I pride myself 
on a very long record on those issues. I have dedicated my public life 
to fighting for those issues. I would not and could not support any 
measure that would weaken it. I do not believe that the GATT agreement 
will threaten these laws. GATT rules or GATT panel decisions do not 
have the force of law. Not one single environmental health or safety 
law at the Federal or State level could be changed without action by 
Congress or the State Government in question. Nothing in this GATT 
implementation legislation, or nothing a GATT panel decides, can change 
any of our environmental or consumer laws. Yet, our trading partners 
could challenge these laws. That is true. But, no, our trading partners 
cannot change these laws, and anyone who says that our trading partners 
can change United States laws simply has not read the GATT record.
  I have received specific assurances from U.S. Trade Representative 
Mickey Kantor on this very issue. Ambassador Kantor has assured me that 
``California's strong environmental and consumer protection laws cannot 
be overturned by WTO rules or dispute settlement panels.''
  Ambassador Kantor points out that section 102(a)(1) of the GATT 
implementing legislation states explicitly that no provision of the 
GATT agreement ``that is inconsistent with any law of the United States 
shall have effect.''
  Ambassador Kantor has assured me that ``any decision on how to 
respond to an adverse panel report would be a matter for State and 
Federal officials--not the WTO--to decide.''
  Ambassador Kantor also has assured me that the GATT agreement 
``protects the ability of governments to use more stringent standards'' 
with respect to food safety. He says that, ``Each country--and in the 
case of the United States--each State is free to establish the level of 
protection it deems appropriate.''
  With respect to environmental and health rules, Ambassador Kantor has 
assured me that the agreement ``recognizes that countries may set 
standards for products in order to protect human life, health and 
safety or the environment.'' And that--and this is my last quote--``the 
agreement makes clear that the level of protection the Federal 
Government or a State seeks to achieve through standards of this kind 
is not subject to challenge.''
  Mr. President, I ask unanimous consent that the entire text of 
Ambassador Kantor's letter be printed in the Record.
  There being no objection, the letter was ordered to be printed in the 
Record, as follows:

                                        U.S. Trade Representative,


                            Executive Office of the President,

                                                   Washington, DC.
     Hon. Barbara Boxer,
     U.S. Senate,
     Washington, DC.
       Dear Senator Boxer: I want to address immediately some of 
     the concerns you have voiced with respect to the implications 
     of the Uruguay Round agreements for California and this 
     nation.


                        1. supremacy of u.s. law

       At the outset, let me assure you that California's strong 
     environmental and consumer protection laws cannot be 
     overturned by WTO rules or dispute settlement panels. Neither 
     the WTO itself, nor any panels it establishes, can change 
     U.S. law. Only the Congress and State legislatures can change 
     U.S. laws.
       To make the relationship between the new agreements and 
     U.S. law crystal clear, section 102(a)(1) of the Uruguay 
     Round implementing bill (S. 2467) states explicitly that:
       ``No provision of any of the Uruguay Round Agreements, nor 
     the application of any such provision to any person or 
     circumstance, that is inconsistent with any law of the United 
     States shall have effect.''
       The bill also makes clear that foreign governments and 
     private parties cannot use the new agreements or WTO panel 
     reports as a basis for suit against the States in U.S. 
     courts. In fact, even the Federal Government is precluded 
     under the bill from bringing a court challenge against a 
     State law on the basis of a WTO panel report.
       In the event that a California law were to be challenged in 
     a dispute settlement proceeding in Geneva, S. 2467 commits 
     the Federal Government to work together with California State 
     officials in developing the U.S. response. The Administration 
     is fully committed to working collaboratively with the State 
     of California both during and after any WTO panel proceeding 
     concerning California law. But I want to reiterate that any 
     decision on how to respond to an adverse report would be a 
     matter for State and Federal Officials--not the WTO--to 
     decide.


                          2. food safety rules

       Our negotiators had strong environmental and food safety 
     laws fully in mind in concluding the Uruguay Round agreements 
     with out trading partners. As a result, the agreements 
     recognize the right of each government to protect human, 
     animal, and plant life and health, the environment, and 
     consumers and to set the level of protection for health, the 
     environment, consumers--as well as the level of safety--that 
     the government considers appropriate.
       Under the WTO, most food safety laws will be covered by the 
     ``Agreement on the Application of Sanitary and Phytosanitary 
     Measures'' (S&P Agreement). The Agreement will permit us to 
     continue to reject food imports that are not safe. The S&P 
     Agreement will not require the Federal Government or 
     California to adopt lower food safety standards.
       The S&P Agreement calls for food safety rules to be based 
     on ``scientific principles.'' That is important for 
     California, our leading agricultural exporting state, because 
     many countries reject our agricultural exports on non-
     scientific grounds.
       As a general matter, the FDA and EPA (which participated 
     directly in the negotiation of the S&P Agreement), as well as 
     the State of California, base their food safety regulations 
     on science. Thus, meeting the basic requirement of the S&P 
     Agreement should pose no problem for U.S. food safety rules.
       It is worth noting that the rule in the Agreement requiring 
     a scientific basis applies to S&P measures. It does not apply 
     to the level of food safety that those measures are designed 
     to achieve. Each country and--in the case of the United 
     States each State--is free to establish the level of 
     protection it deems appropriate. That means, for example, 
     that the ``zero tolerance'' level for carcinogens mandated by 
     the federal ``Delaney clauses'' are entirely consistent with 
     the Uruguay Round agreements.
       While the S&P Agreement contains a general obligation to 
     use international standards, it protects the ability of 
     governments to use more stringent standards if they have a 
     ``scientific justification.'' The S&P Agreement makes 
     explicit that there is a scientific justification if 
     California, for example, determines that the relevant 
     international standard does not provide the level of food 
     safety that California determines to be appropriate. Far from 
     undermining California laws, this language serves to make 
     clear that no ``downward harmonization'' is required for 
     California's laws.
       Under the S&P Agreement, food safety rules imposed by the 
     States will be subject to the same rules as those for Federal 
     restrictions. But the Agreement does not require that States 
     use the same food safety standards as the Federal Government.


                   3. environmental and health rules

       Most environmental and health based product standards for 
     industial and consumer goods will be covered by the Agreement 
     on Technical Barriers to Trade (TBT Agreement). The new TBT 
     Agreement carries forward, with some clarifying and 
     strengthening modifications, the provisions of the existing 
     GATT TBT Code, which entered into force for the United States 
     in 1980.
       The TBT Agreement recognizes that countries may set 
     standards for products in order to protect human life, 
     health, or safety or the environment. U.S. regulations 
     prescribing safety standards for infant clothing, or banning 
     the presence of PCBs in consumer products, are the types of 
     product oriented measures covered by the TBT agreement. The 
     Agreement makes clear that the level of protection the 
     Federal Government or a State seeks to achieve through 
     standards of this kind is not subject to challenge.
       In general, our State and Federal clean air and clean water 
     laws and regulations are directed at controlling pollution 
     generated in industrial operations. Not only do these laws 
     generally not raise trade-related questions, they are 
     generally not even covered by the new TBT Agreement since 
     they do not set product standards. Where those laws do set 
     product standards, as for automobile emission controls, they 
     will be treated like the other product standards described 
     above. Both the S&P and TBT provisions of the Uruguay Round 
     agreements will allow each State to maintain stricter safety 
     standards than the Federal Government in order to achieve the 
     level of protection that the State considers appropriate.
       On the question of environmental standards, let me point 
     out that the GATT panel report released last Friday lays to 
     rest fears that WTO panels will interpret the GATT in a way 
     that challenges our ability to safeguard our environment. The 
     panel report on our Corporate Average Fuel Efficiency (CAFE) 
     rules explicitly upheld the sovereign power of governments to 
     regulate their markets and their environments. The panel 
     report confirms the broad discretion of governments to 
     distinguish among products in order to achieve legitimate 
     domestic policy objectives, such as progressive taxation, 
     fuel conservation, clean air and water, and responsible 
     energy use.


                             4. section 301

       As a result of the Uruguay Round agreements in general, and 
     the WTO Dispute Settlement Understanding in particular, 
     section 301 will be even more effective than it has been in 
     the past in addressing foreign unfair trade barriers. We will 
     continue to use section 301 to pursue vigorously unfair trade 
     barriers that violate U.S. rights or deny this country the 
     benefits to which it is entitled under international trade 
     agreements. We will also use section 301 to combat unfair 
     trade barriers that are not covered by these agreements.
       Under the GATT as it has existed for the past 47 years, 
     other countries have been able to violate their GATT 
     obligations to us and then block the adoption of panel 
     reports that found such practices illegal. Moreover, the GATT 
     Council has typically been unwilling to authorize us to 
     retaliate against such countries, even if they continue to 
     violate their commitments long after the panel has issued its 
     report. In 1988, Congress asked us to make changes in GATT 
     dispute settlement procedures to ensure that they would be 
     effective.
       That is what we did in the Uruguay Round. Once the new 
     agreements are in place, countries will no longer be able to 
     block panel reports. If the violation persists and we are not 
     able to settle the matter in another way, we will be able to 
     take action under section 301 without risk of counter-
     retaliation. That could be particularly important when we are 
     taking action against a large trading partner.
       Furthermore, with the new agreements in effect we will be 
     able to use section 301 more effectively to pursue unfair 
     foreign practices in the areas of trade in services and the 
     protection of intellectual property rights. As you know well, 
     both of those sectors are vital components of California's 
     economy. In addition, the implementing bill for the Uruguay 
     Round agreements revises section 301 so that we will be 
     better able to go after governments that tolerate systematic 
     anticompetitive activities by private and state-owned 
     companies that deprive our firms of access to their markets.


                  5. economic benefits for california

       The Uruguay Round agreements will provide tremendous 
     economic benefits for California. Among California's 
     industries most likely to benefit are those in the 
     electrical, semiconductor, banking, aerospace, chemicals, and 
     agriculture sectors. The new agreements will generate an 
     enormous expansion of export opportunities by limiting the 
     ability of foreign governments to impose tariffs, quotas, 
     subsidies, and a variety of other domestic policies that 
     have been used to block California's exports in the past.
       Other industries, such as computers and software, will 
     benefit from the enhanced protection of intellectual property 
     rights required under the new agreements. The agreements also 
     provide critical new safeguards against rampant piracy of 
     films and sound recordings around the world.
       Overall, the GATT agreement should add $100 billion to $200 
     billion annually to the U.S. Gross Domestic Product. 
     California will receive a large share of that revenue, as 
     California is a leader in rapidly expanding export sectors, 
     such as services, and also enjoys a special trade 
     relationship with the Pacific Rim nations. Many of these 
     countries, as well as developing nations in Latin America and 
     East Asia, will become full members of the world trading 
     system under the new agreement. Developing nations buy nearly 
     a third of U.S. exported goods and services--about $235 
     billion a year--and are our fastest growing export markets.
       Californians will greatly benefit from the increased job 
     opportunities and incomes that will flow from the new export 
     opportunities created by the Uruguay Round agreements. 
     California has experienced tremendous growth in exports over 
     recent years (up over 100 percent from 1987 to 1992). That 
     growth will only increase as a result of the agreements now 
     pending before the Congress.
           Sincerely,
                                                   Michael Kantor.

  Mrs. BOXER. Mr. President, I note that it is important that I did not 
get verbal assurances from our Trade Representative, Ambassador Kantor. 
I asked he put it in writing. He did so in an unequivocal way.
  I have looked closely at the concerns about our environmental, health 
and safety laws. I understand these concerns. But I am confident that 
our laws can and will be protected.
  I believe that the GATT agreement is about California's economic 
future and about this country's economic future. We cannot turn back 
from the fact that it is now a global marketplace, Mr. President.
  Times have changed, and I think that if America is going to lead in 
the world, we must recognize this change. It is about opening foreign 
markets to our competitive, export-oriented companies. It is about 
protecting the ideas of our inventors and entrepreneurs. California has 
always been ready to look forward and face new challenges, and so has 
America. Competition in the global marketplace is among the biggest of 
these challenges. We are ready with the best workers and bold new 
ideas. I say the time is right for this new and exciting chapter in the 
economic story of California and the entire Nation.
  Mr. President, thank you very much, and I yield the floor.

                          ____________________