[Congressional Record Volume 148, Number 67 (Wednesday, May 22, 2002)]
[Senate]
[Pages S4696-S4697]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   TUNA IMPORTS FROM THE PHILIPPINES

  Mr. SARBANES. Mr. President, I rise today to express my concerns 
about a provision in the Andean Trade Preferences Act, ATPA, that will 
have serious adverse, unintended consequences on United States 
initiatives in the Philippines and our relationship with the Philippine 
government.
  Both the House and Senate versions of the ATPA would allow canned 
tuna from the Andean region to enter the United States duty-free, while 
maintaining the current tariff rates for all other countries. There are 
slight differences between the two versions: The House version allows 
all canned tuna imports from the Andean region to enter duty-free; the 
Senate version extends duty-free treatment to Andean tuna imports up to 
a cap equal to 20 percent of the preceding calendar year's domestic 
production excluding production in American Samoa. For the Philippines, 
however, the House and Senate versions have the same effect. Philippine 
tuna is sold generically; purchasers of this tuna are the most price-
sensitive, and they would gravitate to the cheaper, duty-free product.
  Loss of these sales would mean, effectively, the collapse of the tuna 
market. The major suppliers to the U.S. canned tuna market are just six 
countries: Thailand, 60 percent; the Philippines, 18 percent; 
Indonesia, 12 percent; Papua NG, 4 percent; Ecuador and Malaysia, 2 
percent each. Of the six, Ecuador is the only one of the six that would 
benefit from the proposed trade preference, to the sharp detriment of 
the Philippines. The Philippine government estimates that the 
implementation of the ATPA preference would affect 24,000 workers 
directly, and another 150,000 indirectly.
  Moreover, it is the economy of Mindanao, where the entire tuna-
canning industry is located, that would be especially hard hit. It is 
on this southernmost island that the poverty level is acute and 
terrorist activity is concentrated; a number of civilians have been 
kidnapped or murdered there by Abu Sayef, an extremist Islamic group, 
and two Americans are currently being held there.
  The ramifications of this legislation will almost certainly undercut 
the Philippine government's efforts in Mindanao. It will undercut U.S. 
efforts

[[Page S4697]]

as well, since the U.S. government through USAID has provided over $20 
million in fiscal year 2001 and fiscal year 2002 in ESF for economic 
development in Mindanao, and the fiscal year 2003 budget request 
includes a further $20 million; ATPA would seriously compromise those 
investments.
  It will of course be argued that the ATPA provision will strengthen 
the Andean economies and enable them better to resist terrorist 
encroachments. But our efforts to strengthen these economies should not 
come at the cost of making anti-terrorist efforts in the Philippines 
more difficult. Surely that is not the intent, but it could well be an 
unintentional but highly regrettable consequence of the legislation.
  Given the likelihood of grave, harmful consequences for the 
Philippines, I urge my colleagues to work toward a constructive 
solution to the problem posed by the ATPA provision that would give 
duty-free entry to canned tuna from the Andean countries. I ask 
unanimous consent to have printed in the Record the discussion of this 
issue which appears in today's New York Times.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

         [From the New York times via Dow Jones, May 21, 2002]


                           quandary on trade

                          (By Keith Bradsher)

       General Santos City, the Philippines, May 16, 2002--How 
     should the United States set its tariffs and trade rules, 
     globally or country-by-country?
       It is no arid academic debate to the tuna fishermen of this 
     knockabout port city on the south coast of Mindanao, nor to 
     sugar cutters in the Caribbean or garment workers in 
     Pakistan. Faraway changes in American fine print can have 
     very real, sometimes unintended consequences.
       A move in Congress to extend trade preferences to Andean 
     nations, in part to help wean their economies off coca 
     production, could lead to the layoff of thousands of Muslim 
     workers in the tuna industry here, even as American troops 
     help the Philippine army fight Abu Sayyaf Muslim insurgents 
     in this region.
       In Pakistan, officials have struggled to win a larger quota 
     for textile shipments to the United States as a reward for 
     Islamabad's help during the conflict in Afghanistan. And in 
     the Caribbean, the emergence of any especially pro-American 
     government brings a request for a larger quota to ship sugar 
     to the high-priced, highly protected American market.
       By returning to the pre-1922 practice of awarding 
     preferential trade treatment to certain countries and 
     regions, often for political rather than economic reasons, 
     Washington now finds itself constantly badgered for trade 
     concessions by whatever friendly nation is in the news at any 
     given moment.
       This is the problem that most `favored nation' status was 
     supposed to solve. When countries won that status--as nearly 
     all of America's trading partners did in recent decades--they 
     were assured that their exports would get the same tariff 
     treatment as any other, and that generally, concessions 
     awarded to one would be awarded to all.
       After the ruinous bilateral trade competition in Europe in 
     the 1930's, the United States backed a global adoption of the 
     same approach, leading in the decades after World War II to 
     the international trade rules enshrined in the General 
     Agreement on Tariffs and Trade and later to the creation of 
     the World Trade Organization.
       `The history of trade negotiations basically was that, 
     because of the bilateral special deals that inevitably made 
     other nations unhappy, we came around to most-favored-nation 
     treatment and GATT negotiations,' said William Cline, a 
     senior economist at the Institute for International Economics 
     in Washington.
       Up through the 1980's, most economists criticized regional 
     trade agreements as just as bad as bilateral deals. Beyond 
     making winners of some countries and losers of others, 
     regional blocs can be bad for global efficiency, by prompting 
     importers to favor a higher-cost producer within the bloc 
     over a lower-cost producer outside whose goods are still 
     subject to high tariffs and quotas.
       Global trade agreements minimize such drawbacks, because 
     these days very few countries remain outside them. But global 
     treaties are becoming increasingly difficult to conclude. The 
     last was wrapped up in Geneva in 1993; talks meant to produce 
     the next one did not get under way until last November in 
     Doha, Qatar, and are expected to take years.
       But the regional free trade concept has become fashionable 
     again, in great part because of the success of the European 
     Union, which hugely increased trade among its 15 members by 
     eliminating tariffs and trade barriers. It helped inspire the 
     1992 North American Free Trade Agreement--joining the United 
     States, Canada and Mexico--as well as several other regional 
     groupings.
       One provision of the Nafta treaty helped set off the 
     dispute now roiling American efforts to retain the support of 
     the Philippines in the war on terrorism.
       Among the tariffs to be eliminated within North America by 
     the treaty is the American duty on canned tuna imported from 
     Mexico. It will not disappear until 2008, and for the moment 
     it means little because Mexico, well north of the equatorial 
     waters where the best fishing grounds are found, has a tiny 
     tuna industry. But tuna from other countries is subject to 
     duty of up to 35 percent, creating a big incentive for Mexico 
     to build up its tuna fleet, despite the high labor and fuel 
     costs for the long journeys to where the tuna swim.
       Several smaller Central American and Caribbean nations also 
     have small tuna fleets; three years ago, Congress agreed to 
     phase out tuna duties for them on the same timetable.
       To the Andean nations of South America, these concessions 
     posed a serious threat--that preferential access to the 
     United States would soon make big new competitors out of 
     Mexico and Central America. The United States had lowered 
     tariffs on many products from Andean nations like Ecuador and 
     Colombia in 1991, but canned tuna was not among them. When 
     the 1991 concessions came up for renewal last year, the 
     Andean nations, supported by Starkist, demanded that they be 
     expanded to include canned tuna.
       Ecuador has a huge tuna fishing fleet, and Colombia a 
     smaller one; both countries are eager to create jobs that do 
     not depend on narcotics trafficking. That persuaded the House 
     of Representatives to approve a bill earlier this year that 
     would immediately eliminate duty on Andean tuna.
       A more limited bill that would phase out duty on about a 
     third of current shipments is before the Senate as part of a 
     broader trade bill. If it passes, differences between the 
     provisions would be worked out in a conference of senators 
     and representatives.
       Now it is the Philippines' turn to feel threatened. Letting 
     Ecuador and Colombia, but not the Philippines, ship tuna to 
     the United States duty free would be both unfair and unwise, 
     officials in Manila are warning, because of the hardship it 
     would create in this poor, Muslim and sometimes rebellious 
     part of the country, where terrorists are believed to be 
     active. ``We understand you want to do this because of 
     narcotics,'' said Manuel A. Roxas II, the country's secretary 
     of trade and industry, ``but terrorism is just as 
     important.''
       Washington has been on notice for some time that this kind 
     of chain reaction of anger and demands for relief was likely 
     to develop. An influential report by the United States Tariff 
     Commission foresaw that special deals for some countries 
     would ``lead to claims from states outside the agreement 
     which, if granted, defeat the purpose of the treaties, and 
     which, if not granted, occasion the preferring of a charge of 
     disloyalty to treaty obligations.''

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