[Congressional Record Volume 145, Number 111 (Monday, August 2, 1999)]
[Senate]
[Pages S9963-S9965]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




          TRADE AND THE ENVIRONMENT IN AN ERA OF GLOBALIZATION

  Mr. BAUCUS. Mr. President, I would like to talk today about the 
relationship between trade and the environment.
  When I joined the Finance Committee in 1979, debate about the Tokyo 
Round was just concluding. I don't remember a single mention of water 
pollution, air pollution, or the protection of sea turtles and other 
endangered species--important issues, but they were not part of the 
trade debate.
  NAFTA changed this. We negotiated the environmental side agreement, 
and created the North America Commission on Environmental Cooperation. 
There were flaws and limitations, but it was a turning point.
  Now, like it or not, environmental issues are an integral part of the 
trade debate. Environmental group opposition was one of the major 
reasons for the defeat of Fast Track legislation last year. Ambassador 
Barshefsky has said that the next round of trade negotiations should 
expressly address environmental protection. Two months ago, the WTO 
held a series of high level roundtable discussions on trade and the 
environment, in part to help define the issues for consideration in 
Seattle.
  Why has this happened?
  It is partly a function of technology. Environmental groups have 
plugged into the Internet--aggressively. Browse the web sites of almost 
any environmental group, and you will see what I mean. Any citizen can 
follow a high-level environmental trade dispute on the Internet. The 
heretofore insulated, inaccessible, and arcane international trade 
world meets the chaotic, grassroots, democratic, and Internet-savvy 
environmental world.
  Let me tell my friends in the trade world something about my friends 
in the environmental world. I have worked with them for years. 
Sometimes on the same side, sometimes in disagreement. They are smart, 
dedicated, energetic, and aggressive. And they are very good at using 
the latest communications technology. So, if you are uncomfortable with 
the new role of the environmental community in the trade debate, my 
only advice is: Get used to it and figure out how to work together. The 
same advice goes to my environmental friends: The trade folks are here 
to stay. Figure out how to work with them.
  There's a second important reason why environmental protection is now 
an important part of the trade debate.
  We are in the midst of an economic boom in the United States and the 
revolution of globalization. Globalization is bringing every classroom 
in every

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small western town, and on every Native American reservation, smack 
into the middle of the information-based global marketplace. It allows 
small businesses all over the world to tap into the global marketplace. 
It's forcing virtually every company to become more competitive.
  But there's another side to the story. Call it the dark side of 
globalization. And it has a long history.
  America's age of industrialization created great wealth and progress. 
But it left behind a terrible environmental legacy. Rivers so infected 
with toxic chemicals that they caught fire. Abandoned mine tailings 
that dot the landscape of the mountainous west. The loss of wetlands 
and other habitat necessary to sustain the animal and plant species 
upon which our survival depends.

  In America, we have turned the tide. Our air and water are cleaner 
now. But we have seen what unchecked economic development did to us.
  Extend that kind of growth worldwide. And pick up the pace, to 
reflect the hyper-speed of global competition. As globalization 
accelerates, along with the expanded trade that accompanies and fuels 
it, we are likely to see a rapid increase in environmental problems.
  Tom Friedman puts it this way, in The Lexus and the Olive Tree:

       [globalization has] unleashed forest-crushing forces of 
     development . . . which, if left unchecked, [has] the 
     potential to destroy the environment and uproot cultures, at 
     a pace never before seen in human history.

  Let me give you two examples.
  For years, Montanan and other U.S. softwood lumber producers have 
been fighting against subsidized Canadian imports. One continuing issue 
is Canada's relatively weak environmental standards for timber 
harvesting. Canada has no law, at the federal or provincial level, like 
our Endangered Species Act.
  This gives Canadian producers an economic advantage over U.S. 
producers. It also can have a serious environmental effect. In Montana, 
we're struggling to protect the Bull Trout, which is listed as an 
endangered species. One of the biggest populations resides in Lake 
Kookanusa, just south of the Canadian border. In the spring, the fish 
swim up Wigwam Creek, across the border in British Columbia, to spawn.
  Recently, British Columbia announced a program of aggressive timber 
harvesting in the Wigwam Basin. Maybe things will work out, and the 
harvesting will occur in a way that does not threaten the Bull Trout. 
But, if not, our efforts to protect an endangered species in this 
country will be undermined because of another developed country's 
environmental laws that are deliberately weak to support an industry 
interest.
  Or consider the objectives of the Endangered Species Act which 
includes preserving biodiversity, the web of life that sustains us. 
We're losing species at an alarming speed--perhaps a thousand times the 
natural rate.
  No matter how strictly we protect species here in the United States, 
if the South American rain forest continues to disappear at the current 
rate, all of our efforts will have been futile.
  The message is simple. Globalization and expanded trade benefit us. 
But we must ensure that globalization and expanded trade are conducted 
in a way that enhances, and does not undermine, environmental 
protection.
  One thing that worries my greatly is the polarization that has 
occurred among participants in the trade and environment debate. The 
middle ground seems to have fallen into a sink hole. Yet the middle is 
where we need people to find solutions to these very difficult 
problems.
  Let's turn to the next round of multilateral trade negotiations that 
will be the subject of the WTO Ministerial in Seattle in late November. 
We must accommodate globalization and expanded trade while, at the same 
time, preserve and enhance environmental protection.
  America must lead. We are the world's largest economy. We are the 
world's largest trader. And we are the world's leader in developing 
strong environmental laws. As in many different areas, if we don't 
exert leadership, no one else will. This is not arrogance. This is not 
unilateralism. This is leadership, and I offer no excuses and no 
apologies for it.
  I believe that we must follow three broad precepts in developing the 
proper linkage between trade and the environment. Call these my ``Three 
No's''.
  Trade liberalization must not harm the environment: Trade rules must 
not be used to stop legitimate and reasonable environmental protection; 
Environmental regulations must not be used as an instrument for trade 
protection that closes markets and distorts trade flows.
  We need to balance trade and environmental goals and prevent trade 
and environmental abuses. So, let me turn to my agenda for trade and 
the environment in the next round of trade negotiations.
  First, the WTO dispute resolution process must be made more open, 
transparent and publicly accessible. This is important in the context 
of environmental law and regulation, which relies heavily on citizen 
suits and the public's right to know. And it is important in the 
context of the WTO's credibility. Secrecy does not enhance respect and 
confidence in institutions.
  The GATT was created in an era when nation-states were the only 
significant actors on the world scene. The WTO followed the same 
structure. But it does not reflect today's reality where non-
governmental entities have become important international and national 
players. The rules and procedures must accommodate these new actors.
  The dispute settlement process takes too much time and must be 
shortened significantly. Loopholes that allow delay in complying with 
decisions must be closed.
  Second, the Administration must conduct an environmental assessment 
for the trade agreement that will emerge from the new round. I will 
introduce legislation soon requiring such a review.
  Third, we should eliminate all tariffs on environmental goods and 
services. One important way to improve environmental conditions in 
other countries, especially in developing countries, is to reduce the 
cost of environmental technology--everything from the elements of a 
sewage treatment plant to catalytic converters to groundwater 
bioremediation technology. U.S. companies are leaders in this field, so 
reduced tariffs will have the added advantage of increasing U.S. 
exports.
  My fourth item involves environmentally harmful subsidies. In some 
cases, like fishing and agriculture, excessive subsidies lead to 
practices that are both economically and environmentally harmful. By 
limiting such subsidies, we can achieve a ``win-win,'' that makes good 
economic and good environmental sense. I would like to see the total 
elimination of fishing subsidies. Export subsidies for agriculture 
should be eliminated worldwide. We should also start looking seriously 
into the reduction of domestic agricultural subsidies throughout the 
world.
  The fifth item relates to other subsidies--the so-called ``pollution 
subsidy'' where intentionally keeping environmental standards weak can 
be an unfair and unacceptable practice that distorts trade, cuts costs 
of production for the polluter, and makes taxpayers pay the difference 
through higher health and environmental cleanup costs.
  A sub-set of this problem is that of PPMs--production processes and 
methods. How a product is produced affects the environment. Examples 
include the way shrimp harvesting affects sea turtles, and the way 
timber harvesting affects species, water pollution, and the demand for 
recycled materials.

  These are complex issues. Some argue that the WTO has already 
accepted the principle that a production process can determine how a 
product should be treated. They point out that countries already 
determine if an imported product was made with improperly obtained 
intellectual property or with improper government subsidies. If so, 
those countries can prevent the import of that good because of the 
process of production. They argue that if this is the rule under the 
WTO for intellectual property and for subsidies abuses, it should be 
the rule for environmental processes as well.
  The WTO needs to take on this set of tough issues that sits clearly 
at the intersection of trade and the environment. We need serious and 
responsible discussion now.

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  Sixth, the environmental community believes that we need to find a 
way to integrate multilateral trade agreements and multilateral 
environmental agreements, MEAs, and they are right. Actions taken under 
an MEA should not be subject to a GATT challenge. There are two ways to 
go about this. One is to ``grandfather'' specific environmental 
agreements, as we did in NAFTA. We could start out by providing a so-
called ``safe haven'' for the Montreal Protocol and CITES, the 
Convention on International Trade in Endangered Species of Wild Fauna 
and Flora. The other is to describe the characteristics of an MEA that 
will automatically be protected.
  Let me add a few other agenda items that are unrelated to my Seattle 
list but need to be on our ``to do'' list in the United States.
  First, we should take a hard look at the NAFTA environmental side 
agreement, and see how it is working. I will ask the key Congressional 
Committees, including the Senate Environment and Public Works 
Committee, to conduct appropriate oversight.
  Second, we need to improve our domestic trade policy institutions. 
And that includes enhancing the role of Congress in trade negotiations. 
Last week, in a speech at the Washington International Trade 
Association, I proposed the establishment of a Congressional Trade 
Office. This office would provide the Congress with additional 
independent, non-partisan, neutral trade expertise.
  Its functions would include: monitoring compliance with major 
bilateral, regional, and multilateral trade agreements; analysis of 
Administration trade policy, trade actions, and proposed trade 
legislation; participation in dispute settlement deliberations at the 
WTO and NAFTA, and evaluation of the results of dispute settlement 
cases involving the United States.
  The National Wildlife Federation and the Sierra Club have proposed 
such an office, although the functions in my concept are quite 
different.
  I will be offering legislation on this later this year.
  One of the most difficult issues that has arisen in recent years has 
been the relationship between trade policy and environmental 
protection. The lack of consensus on this relationship has been one of 
the major reasons that we have not been able to proceed with fast track 
legislation in the Congress.
  Paralysis helps no one. I hope that the thoughts I have set out today 
for Seattle and for our own domestic agenda will help to begin a 
constructive and responsible dialogue between the trade and the 
environmental communities. We need trade. We need environmental 
protection. We need a sustainable earth, and that means a clean world 
and a growing world--more and better jobs everywhere, increased income, 
cleaner air and water, the protection of our natural heritage for 
future generations. These goals are only incompatible when people are 
unwilling to talk about them together.
  I yield the floor.

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