[Congressional Record Volume 142, Number 97 (Thursday, June 27, 1996)]
[Senate]
[Pages S7188-S7189]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. ROTH (for himself, Mr. Moynihan, Mr. Chafee, Mr. Baucus, 
        Mr. Simpson, Mr. Conrad, Mr. Grassley, Ms. Moseley-Braun, Mr. 
        Bradley, Mr. Rockefeller, Mr. Murkowski, Mr. Nickles, Mr. 
        Pryor, Mr. Graham, Mr. Breaux, Mr. Gramm, Mr. D'Amato, Mr. 
        Hatch, Mr. Pressler, and Mr. Lott):
  S. 1918. A bill to amend trade laws and related provisions to clarify 
the designation of normal trade relations; to the Committee on Finance.

[[Page S7189]]

                     the normal trade relations act

  Mr. ROTH. Mr. President, since the founding of our Republic, the 
cornerstone of United States international trade policy has been the 
principle of nondiscrimination. What this principle means is that every 
country will give equal treatment to all products it imports from any 
other country. For example, the United States applies the same tariff 
duty rate on a particular product imported from one country as it 
applies to imports of the same product from all other countries.
  However, the principle of nondiscrimination goes beyond just trade in 
goods. For example, if a foreign company wants to set up a branch in 
the United States, it is subject to the same rules for establishing and 
running its operations as companies from all other countries operating 
in the United States.
  The traditional term for this principle of nondiscrimination is most-
favored-nation treatment, or MFN for short. This term is rooted in a 
very old concept in international law which states that in trade 
relations, all countries will receive the same treatment as the most 
favored nation.
  While the term ``most-favored-nation'' is very old, it is a misnomer 
that has created much confusion as to its exact meaning. There is no 
such thing as a most favored nation--it is merely a hypothetical 
concept. Yet, many mistakenly believe that a country that has MFN 
status is being singled out for special status or preferential 
treatment.
  Despite its name, however, MFN is not a special trading privilege or 
reward, nor is it the most favorable trade treatment that the United 
States gives to its trading partners. Rather, MFN refers to the uniform 
trade treatment that the United States gives to nearly every country in 
the world. Because there are only seven countries in the world to which 
the United States does not give MFN status, MFN denotes the ordinary, 
not the exceptional, trading relationship.
  To help correct the misconception created by the term ``most-favored-
nation'', Senator Moynihan and Senator Chafee have argued for some time 
that the term should be changed. I agree with my colleagues that a 
better term is needed. After working with them and Senator Baucus on 
this issue, I am now introducing a bill, with the cosponsorship of the 
entire membership of the Committee on Finance, that would establish a 
new term--``normal trade relations'' as a more accurate description in 
U.S. law and regulation of the principle of nondiscrimination. Creating 
this new term does not in any way alter the international rights and 
obligations of the United States. Rather, we merely seek to clarify 
that the principle of nondiscrimination under U.S. law denotes the 
standard and normal trade relationship that we have with nearly every 
country in the world.
  I urge my colleagues to support this modest, but important piece of 
legislation.
  Mr. MOYNIHAN. Mr. President, today I join with the chairman of the 
Committee on Finance in introducing legislation to bring new clarity to 
the muddled language of U.S. trade policy. The unanimity of support for 
this legislation is demonstrated by the fact that each and every Member 
of the Finance Committee is an original cosponsor.
  Since the 18th century, the United States has pursued a policy of 
nondiscrimination among its trading partners. This policy has created 
considerable equality in the trading conditions we extend to the great 
majority of countries with which we trade. If the United States has 
normal trade relations with a country, that country receives treatment 
equal to most others under our trade laws.
  The legislation we introduce today is designed to call this policy of 
equal treatment what it is--normal trade relations. For it has become 
increasingly clear that the 18th century term used to describe this 
policy of equal treatment, the term that still prevails in our 
international agreements, our laws, and our usage, has served only to 
confuse. By confusing, it is complicating the conduct of American 
foreign trade policy.
  Much of international and American law would have one believe that 
there is a select handful of countries that are most favored. Not at 
all the case, so it is time to stop suggesting so.
  The legislation we introduce today states that it is the sense of the 
Congress that henceforth U.S. law should more clearly reflect the 
underlying principles of U.S. trade policy by substituting the term 
``normal trade relations'' for the term ``most-favored-nation.'' In 
each instance in U.S. trade law where it is appropriate to make such a 
change, the legislation does so.
  To our trading partners, let me say that there is no intention to 
alter our international rights or obligations by virtue of this 
legislation. ``MFN'' is a term with a long history of application and 
interpretation. We mean no substantive change here. Our purpose is 
solely linguistic--to change the language, not the content, or our 
trade policy so that it is more comprehensible.
  I hope the Senate will have an opportunity to act on this legislation 
soon. I commend it to the attention of the Senate.
                                 ______