[Congressional Record Volume 144, Number 105 (Thursday, July 30, 1998)]
[Senate]
[Pages S9449-S9450]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                            By Mr. DASCHLE:

  S. 2391. A bill to authorize and direct the Secretary of Commerce to 
initiate an investigation under section 702 of the Tariff Act of 1930 
of methlyl tertiary butyl ether imported from Saudi Arabia; to the 
Committee on Finance.


                     Fair Trade in MTBE Act of 1998

  Mr. DASCHLE. Mr. President, today I am pleased to introduce 
legislation designed to combat unfairly traded imports of methyl 
tertiary butyl ether (MTBE) from Saudi Arabia. MTBE is an oxygenated 
fuel additive derived from methanol.
  Through the wintertime oxygenated fuels program to reduce carbon 
monoxide pollution and through the reformulated gasoline program to 
reduce emissions of toxics and ozone-causing chemicals, we have created 
considerable demand in this nation for oxygenated fuels, such as MTBE, 
ETBE and ethanol. It has been my hope that this demand could be met 
with domestically-produced oxygenates, thereby reducing our dependence 
on foreign imports and expanding economic opportunities at home. 
Unfortunately, this goal has not been achieved, in large part because 
of a substantial expansion of subsidized MTBE imports from Saudi 
Arabia.
  Mr. President, I am a supporter of free trade when it is also fair 
trade. However, there has been a marked surge in MTBE imports from 
Saudi Arabia in recent years that does not reflect the natural outcome 
of market-based competition.
  These imports appear to be driven by a pattern of government 
subsidies. Not only is this increasing our dependence on foreign 
suppliers, but it is unfairly harming domestic oxygenate producers and 
those who provide the raw materials for these oxygenates, such as 
America's farmers.
  The Saudi government has made no secret of its desire to expand 
domestic industrial capacity of methyl tertiary butyl ether (MTBE). In 
particular, several years ago, there were public reports that the Saudi 
government promised investors a 30% discount relative to world prices 
on the feedstock raw materials used in the production of MTBE. The 
feedstock is the major cost component of MTBE production, and the Saudi 
government decree has apparently translated into a nearly -30% 
artificial cost advantage to Saudi-based producers and exporters.
  Moreover, it appears that this blatant subsidy is in large measure 
responsible for the increase in Saudi MTBE exports to the United States 
in recent years. These exports have not only reduced the U.S. market 
share of American producers of MTBE, ETBE, and ethanol, but also has 
discouraged new capital investment, thereby depriving American workers, 
farmers, and investors of a significant share of the economic activity 
that Congress contemplated when it drafted the oxygenated fuel 
requirements of the Clean Air Act Amendments of 1990.
  Mr. President, I believe it is high time for the United States 
government to respond to the Saudi government's subsidies. Saudi Arabia 
is a valued ally; however, our bond of friendship should not be a 
justification for turning a blind eye to an unfair element of our 
otherwise mutually beneficial trading relationship.
  Because it is not a member of the World Trade Organization nor a 
party to its Agreement on Subsidies and Countervailing Measures, the 
Saudi government may not feel constrained by the international trade 
rules by which we legally are required to abide. This does not mean, 
however, that we must stand idly by while foreign subsidies undermine 
an important sector of our economy.
  For this reason, my bill would require the Secretary of Commerce to 
self-initiate an investigation under Section 702 of the Tariff Act of 
1930 to determine whether a countervailable subsidy has been provided 
with respect to Saudi Arabian exports of methyl tertiary butyl ether 
(MTBE). If the Secretary finds that a subsidy has indeed been provided 
to Saudi producers, he would be required under the terms of our 
existing law to impose an import duty in the amount necessary to offset 
the subsidy. Because Saudi Arabia is not a member of the WTO, there 
would be no requirement for a demonstration of injury to the domestic 
industry as a result of the subsidy.
  Let's talk for a moment about what is at stake here for American 
consumers. Last year, I asked the U.S. General Accounting Office (GAO) 
to assess the impact on U.S. oil imports of the Reformulated Gasoline 
(RFG) program that was created by Congress in 1991. The GAO found that 
the U.S. RFG program has already resulted in over 250,000 barrels per 
day less imported petroleum due to the addition of oxygenates like 
ethanol, ETBE and MTBE. That means, at an average of $20 spent per 
barrel of imported oil, we currently save nearly $2 billion per year 
due to domestically produced oxygenates.
  The GAO further found that, if all gasoline in the U.S. were 
reformulated (compared to the current 35%), the U.S. would import 
777,000 fewer barrels of oil per day. That is more than $5.5 billion 
per year that would not be flowing to foreign oil producers and could 
be reinvested in the United States.
  This is not ``pie-in-the-sky'' theory. Ethanol production and 
domestically produced MTBE can reduce oil imports and strengthen our 
economy. In rural America, for example, new ethanol and

[[Page S9450]]

ETBE plants will be built, so long as we wise up and create a level 
playing field against subsidized Saudi competition.
  Phase II of the Clean Air Act's reformulated gasoline program (RFG) 
requires transportation fuels to meet even tougher emissions standards 
starting in the year 2000. That gasoline market is growing, with demand 
for ethanol, ETBE and MTBE in 2005 estimated to be 300,000 barrels per 
day. Unless we act to ensure that American-made oxygenated fuels can 
compete in American fuels markets, we stand to cede those markets to 
subsidized Saudi Arabian MTBE.
  Mr. President, I am hopeful that my legislation will help level the 
playing field for American producers of ethanol, ETBE and MTBE and add 
new economic vitality to their associated communities of workers, 
farmers, and business owners. I urge my colleagues to give it serious 
consideration and to enact it as soon as possible so that we may begin 
the process of bringing fairness back into the realm of international 
trade in oxygenated fuels.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 2391

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Fair Trade in MTBE Act of 
     1998''.

     SEC. 2. FINDINGS.

       Congress makes the following findings:
       (1) Section 814 of Public Law 101-549 (commonly referred to 
     as the ``Clean Air Act Amendments of 1990'') expressed the 
     sense of Congress that every effort should be made to 
     purchase and produce American-made reformulated gasoline and 
     other clean fuel products.
       (2) Since the passage of the Clean Air Amendments Act of 
     1990, Saudi Arabia has added substantial industrial capacity 
     for the production of methyl tertiary butyl ether (in this 
     Act referred to as ``MTBE'').
       (3) The expansion of Saudi Arabian production capacity has 
     been stimulated by government subsidies, notably in the form 
     of a governmental decree guaranteeing Saudi Arabian MTBE 
     producers a 30 percent discount relative to world prices on 
     feedstock.
       (4) The expansion of subsidized Saudi Arabian production 
     has been accompanied by a major increase in Saudi Arabian 
     MTBE exported to the United States.
       (5) The subsidized Saudi Arabian MTBE exports have reduced 
     the market share of American producers of MTBE, ETBE, and 
     ethanol, as well as discouraged capital investment by 
     American producers.
       (6) Saudi Arabia is not a member of the World Trade 
     Organization and is not subject to the terms and conditions 
     of the Agreement on Subsidies and Countervailing Measures 
     negotiated as part of the Uruguay Round Agreements.

     SEC. 3. INITIATION OF COUNTERVAILING DUTY INVESTIGATION.

       (a) In General.--Not later than 30 days after the date of 
     enactment of this Act, the administering authority shall 
     initiate an investigation pursuant to title VII of the Tariff 
     Act of 1930 (19 U.S.C. 1671 et seq.) to determine if the 
     necessary elements exist for the imposition of a duty under 
     section 701 of such Act with respect to the importation into 
     the United States of MTBE from Saudi Arabia.
       (b) Administering Authority.--For purposes of this section, 
     the term ``administering authority'' has the meaning given 
     such term by section 771(1) of the Tariff Act of 1930 (19 
     U.S.C. 1677(1)).
                                 ______