[Congressional Record Volume 143, Number 1 (Tuesday, January 7, 1997)]
[Extensions of Remarks]
[Pages E11-E12]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                    THE FAIR TRADE OPPORTUNITIES ACT

                                 ______
                                 

                           HON. DOUG BEREUTER

                              of nebraska

                    in the house of representatives

                        Tuesday, January 7, 1996

  Mr. BEREUTER. Mr. Speaker, America's precious trade leverage is being 
eroded by outdated trade laws which undermine our Government's 
credibility and provide little incentive for countries to open their 
markets. These laws desperately need to be revised. Today, I have 
introduced legislation, the Fair Trade Opportunities Act, which 
abolishes the MFN trade status process while giving the President of 
the United States broad but flexible authority to raise tariffs on 
those countries which are not members of the World Trade Organization 
or which still prohibit emigration.
  American companies and workers deserve the right to compete for 
markets and consumers throughout the world. They deserve our best 
effort to pry open foreign markets so they can freely sell their 
products and services. Bluffing and posturing during Congress' annual 
MFN process does nothing to help them. Giving countries which are not 
members of the World Trade Organization a ``free-ride'' to our own 
markets without reciprocal benefits is not fair to American workers.
  The Fair Trade Opportunities Act responds to post-cold war realities 
by restoring U.S. trade sanction credibility and providing the 
President with the tools to open foreign markets. It should be 
considered in the 105th Congress if the U.S. Government hopes to 
reclaim America's precious trade leverage and give our export companies 
and workers equitable access to foreign markets.

                    The Fair Trade Opportunities Act

       Introduced by Representative Doug Bereuter (R-NE) on 
     January 7, 1996.--This legislation was introduced in the last 
     few days of the 104th Congress as the Fair Trade 
     Opportunities Act (H.R. 4289). It was slightly modified, and 
     then reintroduced on the first day of the 105th Congress.
       Eliminates outdated U.S. trade law distinction between 
     ``market'' and ``nonmarket'' economies and replaces it with a 
     more appropriate distinction in the post-Cold War Era between 
     member and nonmember countries of the World Trade 
     Organization (WTO).--Under current U.S. trade law, market 
     economy countries receive normal tariff status automatically 
     and nomarket economy countries must go through an annual 
     Jackson-Vanik certification process. The Fair Trade 
     Opportunities Act replaces this Cold War Era distinction with 
     two categories of tariffs--normal tariff status for WTO 
     members and potential ``snap-back'' tariffs for non-WTO 
     countries.
       Abolishes annual Most-Favored Nation (MFN) process for 17 
     countries which require annual waiver or certification of 
     compliance with Jackson-Vanik requirements.--The President 
     will no longer have to certify that these 17 countries meet 
     Jackson-Vanik requirements before they are entitled to MFN or 
     normal tariff status. Also, Congress' self-imposed, annual 
     review of the President's certification is eliminated. 
     [Congress retains Constitutional right (Article 1, Section 8) 
     to raise tariffs on any country at any time.]
       Abolishes Smoot-Hawley (Column #2) tariffs for all 
     countries except those countries which have not concluded 
     commercial agreements with the United States (i.e. 
     Vietnam).--Realistically, these Smoot-Hawley tariffs are only 
     imposed on pariah, bad-actor states, or countries which do 
     not have commercial agreements with the United States. For 
     political, economic, and domestic commercial reasons, threats 
     to impose Smoot-Hawley tariffs on other countries are hollow 
     and not taken seriously by foreign governments. Despite the 
     rancorous debates in Congress over the extension of MFN to 
     some countries, Congress is also quite unlikely to impose 
     Smoot-Hawley tariffs because of the harm it would inflict on 
     U.S. companies and workers.
       Replaces Smoot-Hawley tariffs with broad and flexible 
     Presidential authority to raise tariffs (snap-back) on 
     countries which are not members of WTO.--On a one-time basis 
     and within six-months of the enactment of the legislation, 
     the President is required to determine if non-WTO countries 
     are ``not according adequate trade benefits'' to the United 
     States. If the President makes such a finding, then the 
     President shall impose snap-back tariffs on that country six-
     months after the determination. In imposing snap-back 
     tariffs, the President has wide discretion to determine both 
     the amount of the tariff and on which categories of products 
     the snap-back tariffs will be imposed. However, under no 
     circumstances can the President exceed the legislation's 
     snap-back tariff ceiling which is the pre-Uruguay round MFN 
     tariff rates, i.e., the Column #1 tariff rates in effect on 
     December 31, 1994.
       Enhances United States Trade Representative's negotiating 
     leverage with countries which are not WTO members and 
     provides a strong incentive for those countries to liberalize 
     their trade laws and practices and to improve their WTO 
     accession offers.--Between enactment of the legislation and 
     the President's one-time, six-month determination and twelve-
     month imposition of snap-back tariffs, this legislation gives 
     those non-WTO countries time to modify their trade regimes so 
     as to give American exporters a fair

[[Page E12]]

     chance to compete for consumers in their markets. After the 
     President's determination and imposition of tariffs, the Fair 
     Trade Opportunities Act gives the President the authority to 
     withdraw the snap-back tariffs if that country either joins 
     the WTO or the President certifies that the country is 
     according the United States adequate trade benefits. In 
     addition, the President can modify, but not eliminate, the 
     snap-back tariffs for any reason.
       Provides President with discretionary authority to impose 
     snap-back tariffs on countries which unduly restrict 
     emigration.--The legislation's emigration standard which 
     triggers the presidential snap-back authority is identical to 
     the current freedom of emigration language in the Jackson-
     Vanik law.
       Does nothing to change current U.S. sanctions laws with 
     regard to rogue or pariah states such as Cuba, Iran, Iraq, 
     Libya, and North Korea.--Many countries, such as the pariah 
     or bad-actor states, retain normal tariff status with the 
     United States but are prohibited from some or all trading 
     with the United States because of U.S. sanctions laws.
                                  ____


                    The Fair Trade Opportunities Act


  Common Questions Regarding the Legislation's Impact on the People's 
                           Republic of China

       What is Congressman Bereuter's motivation for the bill?--
     During the Summer of 1996 in the height of the China Most-
     Favored Nation (MFN) debate, Congressman Doug Bereuter (R-NE) 
     promised an attempt to ``end [that] futile debate.'' He also 
     vowed to introduce legislation which comprehensively solved 
     the problems created by the MFN process, which with respect 
     to China, he said, only served to damage Sino-American 
     relations. Not long after his statement, Bereuter met with 
     Administration officials and realized that many countries, as 
     well as China, have little or no incentive to become members 
     of the World Trade Organization because they already enjoy 
     full WTO tariff benefits under U.S. MFN law.
       Recognizing that other countries, such as the European 
     Union, do not automatically extend MFN benefits to nonmembers 
     of the WTO, Bereuter's legislation attempts to combine both a 
     carrot (the equivalent of permanent MFN, i.e. normal tariff 
     status) and a stick (minor snap-back tariff increases) 
     approach to induce countries into joining the WTO and 
     eventually gaining normal tariff status permanently under 
     U.S. law. This approach steers a delicate middle ground 
     between those who wish to assert America's commercial and 
     foreign policy interests more aggressively and those who 
     believe American interests are best served by engaging 
     countries, such as China and Russia, mutliaterally.
       Recognizing that the legislation is not China-specific, how 
     would the Fair Trade Opportunities Act affect China's current 
     trade status and its WTO accession negotiations?--If the 
     Bereuter bill were signed into law, the President of the 
     United States would no longer have to annually certify that 
     China was complying with the Jackson-Vanik law. Likewise, the 
     United States Congress would not have an automatic, expedited 
     procedural mechanism for rejecting any Presidential decision. 
     [Although Congress may, at any time, vote any amount of 
     tariff increases on China because of its Constitutional 
     authority in Article I, Section 8.] In short, the current 
     China MFN process would be abolished.
       On a one-time basis and within six-months of the enactment 
     of the legislation, the President would be required to 
     determine if China is ``not according adequate trade 
     benefits'' (defined in existing law) to the United States. If 
     the President makes such a finding, then the President shall 
     impose snap-back tariffs on China six-months after that 
     determination. In imposing snap-back tariffs, the President 
     has wide discretion to determine both the amount of the 
     tariff and on which categories of products the snap-back 
     tariffs will be imposed. However, under no circumstances can 
     the President exceed the legislation's snap-back tariff 
     ceiling which is the pre-Uruguay round MFN tariff rates, 
     i.e., the Column #1 tariff rates in effect on December 31, 
     1994.
       A study by the Congressional Research Service estimates 
     that if the President were to utilize his full snap-back 
     authority on the top 25 Chinese exports to the United States 
     (based on 1995 figures), an additional $325 million in tariff 
     revenue would be generated for the U.S. treasury. (This 
     estimate is not adjusted to reflect any downward demand for 
     the product due to the increased tariff.)
       The President would be required to terminate the imposed 
     snap-back tariffs on China on the date China becomes a WTO 
     member or on the date the President determines that China is 
     according adequate trade benefits to the United States, 
     whichever is earlier. The President would also be able to 
     modify the snap-back tariffs for any reason as long as the 
     appropriate congressional committees are notified.

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