[Congressional Record Volume 149, Number 77 (Thursday, May 22, 2003)]
[Senate]
[Pages S7004-S7007]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BAUCUS (for himself and Mr. McCain):
  S. 1121. A bill to extend certain trade benefits to countries of the 
greater Middle East; to the Committee on Finance.
  Mr. BAUCUS. Mr. President, I rise today to introduce, on behalf of my 
self and Senator McCain, the Middle East Trade and Engagement Act of 
2003.
  For more than a thousand years, the most important trade route in the 
world ran through the heart of the

[[Page S7005]]

Middle East. The Silk Road that linked the Western world with China 
wound its way through what is today Egypt, Iraq, Jordan, Turkey, and a 
host of other countries in the Middle East.
  Merchants who traveled either direction along the Silk Road brought 
with them not only their goods for sale, but also their ideas and 
culture. In this way, all peoples from the West through the East were 
enriched with both money and knowledge.
  But in modern times, the countries of the Middle East have retreated 
from their historically critical role in world trade. Today, few 
countries in the Middle East engage fully in the global trading system.
  Many are not members of the World Trade Organization. Many have high 
barriers to international trade and investment. Their economies have 
suffered as a result. A declining share of world trade and investment 
has led to decades of deepening poverty and slow job creation in the 
countries of the Middle East.
  At the same time, they have been experiencing population growth rates 
among the highest in the world. That means that a growing number of 
young people will be entering the workforce to look for jobs that don't 
now exist.
  The United States cannot stand idly by as a generation of young 
people in the Middle East grows up to discover that there is no 
meaningful work for them, and that they have no way to provide for a 
family of their own.
  The problem will only get worse if we don't act now. As the rest of 
the world continues to liberalize its trade, the countries of the 
Middle East will only be left further behind.
  That is why we're today introducing the Middle East Trade and 
Engagement ACt of 2003. Under this Act, countries in the Middle East 
will be given preferential access to the U.S. market.
  This is not a one-way street. Countries must meet certain conditions. 
They must support our war on terrorism, and they must pursue economic 
reforms. Only then will they reap the benefits of this legislation.
  Our proposal can have an immediate impact. Opening our markets to the 
countries of the Middle East will encourage higher levels of trade and 
direct investment in those countries. And we know it can be a success 
because if has worked before in other regions. Our bill is modeled on 
successful programs that increased economic development in sub-Saharan 
Africa and the Andean countries.
  This legislation will do the same for the countries of the Middle 
East. Increased economic development in that region means jobs for the 
young and the unemployed, some of whom may otherwise be recruited by 
our enemies in the war on terrorism.
  By helping to strengthen these economies, we also increase the number 
of people who can afford to purchase American products and services. 
That means increased export opportunities for American businesses and 
more jobs for American farmers and workers.
  President Bush recently announced an initiative to create a free 
trade area for the United States and the countries of the Middle East 
by the year 2013. This is a good long-term goal. But the people in the 
Middle East need our help now. They need jobs now, not ten years from 
now.
  The Middle East Trade and Engagement Act would bring the benefits of 
trade to the people of the countries in the Middle East in a much 
shorter time. It would also help those countries make the economic 
reforms they'll need to make before a free trade area can become a 
realistic option.
  And just as trade in the time of the Silk Road allowed the exchange 
of ideas and culture as well as goods, increased trade now can 
strengthen ties between the United States and the countries in the 
Middle East.
  Now, in the Aftermath of the war in Iraq, the whole world's attention 
is focused on the Middle East. It is the ideal time for the United 
States to engage these countries in a comprehensive way and help bring 
them more fully into the global trading system.
  I hope that my colleagues will join Senator McCain and me in 
cosponsoring this important legislation, and I hope we will have a 
change to consider this in the Finance Committee this year.
  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. 1121

       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 ``Middle East Trade and 
     Engagement Act of 2003''.

     SEC. 2. FINDINGS.

       Congress finds that--
       (1) it is in the mutual interest of the United States and 
     the countries of the greater Middle East to promote stable 
     and sustainable growth and development throughout the greater 
     Middle East;
       (2) Congress views democratization and economic progress in 
     the countries of the greater Middle East as important 
     elements of a policy to address terrorism and endemic 
     instability;
       (3) free trade relationships are not a substitute for, but 
     a complement to, necessary political and economic reforms 
     that lead to political liberalization and economic freedom;
       (4) the countries of the greater Middle East have enormous 
     economic potential and are of enduring political significance 
     to the United States;
       (5) despite their economic potential, the countries of the 
     greater Middle East are experiencing deepening poverty, slow 
     job creation, and a declining share of world trade and 
     investment, while at the same time experiencing population 
     growth rates among the highest in the world;
       (6) these economic conditions are in part the result of 
     barriers to trade and investment, a failure to engage fully 
     in the global trading system, lack of participation in the 
     World Trade Organization, and, often, a lack of economic 
     diversification and over-reliance on the energy sector;
       (7) offering the countries of the greater Middle East 
     enhanced trade preferences will encourage higher levels of 
     trade and direct investment and help bring those countries 
     more fully into the global trading system;
       (8) higher levels of trade and investment and greater 
     involvement in the global trading system can lead to 
     increased economic development, which can in turn lead to 
     more jobs for people in the countries of the greater Middle 
     East; and
       (9) encouraging the reciprocal reduction of trade and 
     investment barriers in the greater Middle East will enhance 
     the benefits of trade and investment for all the countries in 
     the greater Middle East as well as enhance commercial and 
     political ties between the United States and the greater 
     Middle East.

     SEC. 3. STATEMENT OF POLICY.

       Congress supports--
       (1) encouraging increased trade and investment between the 
     United States and the countries of the greater Middle East 
     and among the countries of the greater Middle East;
       (2) reducing tariff and nontariff barriers and other 
     obstacles to trade between the United States and the 
     countries of the greater Middle East and among the countries 
     of the greater Middle East;
       (3) strengthening and expanding the private sector and 
     accelerating the rate of job creation in the countries of the 
     greater Middle East;
       (4) focusing on countries committed to the rule of law, 
     economic reform, political liberalization, respect for human 
     rights, and the eradication of poverty;
       (5) facilitating the development of civil societies and 
     political freedom in the countries of the greater Middle 
     East;
       (6) promoting sustainable development, and protecting and 
     preserving the environment in a manner consistent with 
     economic development; and
       (7) encouraging the countries of the greater Middle East to 
     diversify their economies, implement domestic economic 
     reforms, open to trade, and adopt anticorruption measures, 
     including through accession to the Organization for Economic 
     Cooperation and Development (OECD) Convention on Combating 
     Bribery of Foreign Public Officials in International Business 
     Transactions.

     SEC. 4. DESIGNATION OF ELIGIBLE COUNTRIES.

       (a) In General.--The President is authorized to designate 
     any country listed in subsection (c) as a beneficiary country 
     if the President determines that the country--
       (1) has established, or is making continual progress toward 
     establishing--
       (A) a market-based economy that protects private property 
     rights, incorporates an open rules-based trading system, and 
     minimizes government interference in the economy through 
     measures such as price controls, subsidies, and government 
     ownership of economic assets;
       (B) the rule of law and the right to due process, a fair 
     trial, and equal protection under the law;
       (C) political pluralism, a climate free of political 
     intimidation and restrictions on peaceful political activity, 
     and democratic elections that meet international standards of 
     fairness, transparency, and participation;
       (D) the elimination of barriers to United States trade and 
     investment, including by--
       (i) providing national treatment and measures to create an 
     environment conducive to domestic and foreign investment;
       (ii) protecting intellectual property; and

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       (iii) resolving bilateral trade and investment disputes;
       (E) economic policies that reduce poverty, increase the 
     availability of health care and educational opportunities, 
     expand physical infrastructure, promote the development of 
     private enterprise, and encourage the formation of capital 
     markets through micro-credit or other programs;
       (F) a system to combat corruption and bribery, such as 
     signing and implementing the OECD Convention on Combating 
     Bribery of Foreign Public Officials in International Business 
     Transactions;
       (G) protection of internationally recognized worker rights, 
     including the right of association, the right to organize and 
     bargain collectively, a prohibition on the use of any form of 
     forced or compulsory labor, a minimum age for the employment 
     of children, and acceptable conditions of work; and
       (H) policies that provide a high level of environmental 
     protection;
       (2) does not engage in activities that undermine United 
     States national security or foreign policy interests, and 
     supports a peaceful resolution of the Israeli-Palestinian 
     conflict;
       (3) is a signatory of the United Nations Declaration of 
     Human Rights, does not engage in gross violations of 
     internationally recognized human rights, and is making 
     continuing and verifiable progress on the protection of 
     internationally recognized human rights, including freedom of 
     speech and press, freedom of peaceful assembly and 
     association, and freedom of religion;
       (4) is not listed by the United States Department of State 
     as a state sponsor of terrorism and cooperates fully in 
     international efforts to combat terrorism;
       (5) does not participate in the primary, secondary, or 
     tertiary economic boycott of Israel; and
       (6) otherwise meets the eligibility criteria set forth in 
     section 502(b)(2) of the Trade Act of 1974 (19 U.S.C. 
     2462(b)(2)), other than section 502(b)(2)(B).
       (b) Continuing Compliance.--If the President determines 
     that a designated beneficiary country no longer meets the 
     requirements described in subsection (a), the President shall 
     terminate the designation of the country made pursuant to 
     subsection (a) and inform Congress of the President's 
     determination and the reasons therefor.
       (c) Countries Eligible for Designation.--In designating 
     countries as beneficiary countries under this Act, the 
     President shall consider only the following countries of the 
     greater Middle East or their successor political entities:
       (1) Afghanistan.
       (2) Algeria.
       (3) Azerbaijan.
       (4) Bahrain.
       (5) Bangladesh.
       (6) Egypt.
       (7) Iraq.
       (8) Kuwait.
       (9) Lebanon.
       (10) Morocco.
       (11) Oman.
       (12) Pakistan.
       (13) Qatar.
       (14) Saudi Arabia.
       (15) Tunisia.
       (16) Turkey.
       (17) United Arab Emirates.
       (18) Yemen.
       (d) The Palestinian Authority.--The President is also 
     authorized to designate the Palestinian Authority or its 
     successor political entity as a beneficiary political entity 
     which, if so designated, shall be accorded benefits under 
     this Act as if it were a beneficiary country, if the 
     President determines that the Palestinian Authority--
       (1) satisfies the conditions of subsection (a) (1) and (2);
       (2) does not participate in acts of terrorism, and takes 
     active measures to combat terrorism;
       (3) cooperates fully in international efforts to combat 
     terrorism;
       (4) does not engage in gross violations of internationally 
     recognized human rights, and is making continuing and 
     verifiable progress on the protection of internationally 
     recognized human rights, including freedom of speech and the 
     press, freedom of peaceful assembly and association, and 
     freedom of religion; and
       (5) accepts Israel's right to exist in peace within secure 
     borders.

     SEC. 5. DESIGNATION OF ELIGIBLE ARTICLES.

       (a) Eligible Articles.--Except as provided in sections 
     503(b)(2) and (3) of the Trade Act of 1974 (19 U.S.C. 
     2463(b)(2) and (3)), the President is authorized to designate 
     articles as eligible for duty-free treatment from all 
     beneficiary countries for purposes of this Act by Executive 
     order or Presidential proclamation after receiving the advice 
     of the International Trade Commission in accordance with 
     subsection (c).
       (b) Rules of Origin.--
       (1) General rule.--The duty-free treatment provided under 
     this Act shall apply to any eligible article which is the 
     growth, product, or manufacture of 1 or more beneficiary 
     countries if--
       (A) that article is imported directly from a beneficiary 
     country into the customs territory of the United States; and
       (B) the sum of--
       (i) the cost or value of the materials produced in 1 or 
     more beneficiary countries, plus
       (ii) the direct cost of processing operations performed in 
     such beneficiary country or countries,

     is not less than 35 percent of the appraised value of such 
     article at the time it is entered.
       (2) Additional countries.--For purposes of the rules of 
     origin in paragraph (1) and the regulations prescribed 
     pursuant to paragraph (4), the term ``beneficiary country'' 
     includes Israel and Jordan.
       (3) Exclusions.--An article shall not be treated as the 
     growth, product, or manufacture of a beneficiary country by 
     virtue of having merely undergone--
       (A) simple combining or packaging operations; or
       (B) mere dilution with water or mere dilution with another 
     substance that does not materially alter the characteristics 
     of the article.
       (4) Regulations.--The Secretary of the Treasury, after 
     consulting with the United States Trade Representative, shall 
     prescribe such regulations as may be necessary to carry out 
     this subsection, including, but not limited to, regulations 
     providing that, in order to be eligible for duty-free 
     treatment under this Act, an article--
       (A) must be wholly the growth, product, or manufacture of 1 
     or more beneficiary countries, including Israel and Jordan; 
     or
       (B) must be a new or different article of commerce which 
     has been grown, produced, or manufactured in 1 or more 
     beneficiary countries, including Israel and Jordan.
       (c) International Trade Commission Advice.--Before 
     designating an article as an eligible article under 
     subsection (a), the President shall publish in the Federal 
     Register and furnish the International Trade Commission with 
     a list of articles that may be considered for designation as 
     eligible articles for purposes of this Act. The President 
     shall comply with the provisions of sections 131, 132, 133, 
     and 134 of the Trade Act of 1974 as if an action under this 
     Act were an action taken under section 123 of the Trade Act 
     of 1974 to carry out a trade agreement entered into under 
     section 123.

     SEC. 6. UNITED STATES-MIDDLE EAST TRADE AND ECONOMIC 
                   COOPERATION FORUM.

       (a) Declaration of Policy.--The President shall convene 
     annual high-level meetings among appropriate officials of the 
     United States Government, officials of the governments of 
     eligible beneficiary countries, and officials of the 
     Governments of Israel and Jordan in order to foster close 
     economic ties between the United States and the countries of 
     the greater Middle East.
       (b) Establishment.--Not later than 12 months after the date 
     of enactment of this Act, the President, after consulting 
     with Congress and the governments concerned, shall establish 
     a United States-Middle East Trade and Economic Cooperation 
     Forum (in this section referred to as the ``Forum'').
       (c) Requirements.--In creating the Forum, the President 
     shall meet the following requirements:
       (1) The President shall direct the Secretary of Commerce, 
     the Secretary of the Treasury, the Secretary of State, and 
     the United States Trade Representative to host the first 
     annual meeting with their counterparts from the governments 
     of designated beneficiary countries, and those countries and 
     political entities listed in section 4 (c) and (d) that the 
     President determines are taking substantial positive steps 
     toward meeting the eligibility requirements in section 4. The 
     purpose of the meeting shall be to discuss expanding trade 
     and investment relations between the United States and the 
     countries of the greater Middle East and the implementation 
     of this Act including encouraging joint ventures between 
     small and large businesses. The President shall also direct 
     the Secretaries and the United States Trade Representative to 
     invite to the meeting representatives from appropriate 
     organizations and government officials from countries and 
     political entities in the greater Middle East.
       (2)(A) The President, in consultation with Congress, shall 
     encourage United States nongovernmental organizations to host 
     annual meetings with nongovernmental organizations from the 
     countries and political entities of the greater Middle East 
     in conjunction with the annual meetings of the Forum for the 
     purpose of discussing the issues described in paragraph (1).
       (B) The President, in consultation with Congress, shall 
     encourage United States representatives of the private sector 
     to host annual meetings with representatives of the private 
     sector from the countries and political entities of the 
     greater Middle East in conjunction with the annual meetings 
     of the Forum for the purpose of discussing the issues 
     described in paragraph (1).
       (3) The President shall, to the extent practicable, meet 
     with the heads of governments of designated beneficiary 
     countries, and those countries and political entities listed 
     in section 4 (c) and (d) that the President determines are 
     taking substantial positive steps toward meeting the 
     eligibility requirements in section 4, not less than once 
     every 2 years for the purpose of discussing the issues 
     described in paragraph (1). The first such meeting should 
     take place not later than 12 months after the date of 
     enactment of this Act.
       (d) Dissemination of Information by USIS.--In order to 
     assist in carrying out the purposes of the Forum, the United 
     States Information Service shall disseminate regularly, 
     through multiple media, economic information in support of 
     the free market economic reforms described in this Act.

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     SEC. 7. FREE TRADE AGREEMENTS WITH COUNTRIES OR POLITICAL 
                   ENTITIES IN THE GREATER MIDDLE EAST.

       (a) Declaration of Policy.--Congress declares that 
     bilateral free trade agreements should be negotiated, where 
     feasible, with interested countries or political entities in 
     the greater Middle East, in order to serve as the catalyst 
     for increasing trade between the United States and the 
     greater Middle East and increasing private sector investment 
     in the greater Middle East.
       (b) Eligibility.--Any country or political entity that 
     desires to negotiate a bilateral free trade agreement with 
     the United States shall be a member of the World Trade 
     Organization or be working diligently toward membership and 
     shall satisfy the criteria in section 4(a) of this Act.
       (c) Plan Requirement.--
       (1) In general.--The President, taking into account the 
     willingness of the governments of the beneficiary countries 
     to engage in negotiations to enter into free trade 
     agreements, shall develop a plan for the purpose of 
     negotiating and entering into 1 or more trade agreements with 
     interested beneficiary countries.
       (2) Elements of plan.--The plan shall include the 
     following:
       (A) The specific objectives of the United States with 
     respect to negotiations described in paragraph (1) and a 
     suggested timetable for achieving those objectives.
       (B) The benefits to both the United States and the relevant 
     beneficiary countries with respect to the applicable free 
     trade agreement or agreements.
       (C) A mutually agreed-upon timetable for the negotiations.
       (D) Subject matter anticipated to be covered by the 
     negotiations and United States laws, programs, and policies, 
     as well as the laws of participating eligible countries of 
     the greater Middle East and existing bilateral and 
     multilateral and economic cooperation and trade agreements, 
     that may be affected by the agreement or agreements.
       (E) Procedures to ensure the following:
       (i) Adequate consultation with Congress and the private 
     sector during the negotiations.
       (ii) Consultation with Congress regarding all matters 
     relating to implementation of the agreement or agreements.
       (iii) Approval by Congress of the agreement or agreements.
       (iv) Adequate consultations with the relevant governments 
     of the greater Middle East during the negotiation of the 
     agreement or agreements.
       (d) Reporting Requirement.--Not later than 12 months after 
     the date of enactment of this Act, the President shall 
     prepare and transmit to Congress a report containing the plan 
     developed pursuant to subsection (c).

     SEC. 8. REPORTING REQUIREMENT.

       (a) In General.--The President shall monitor, review, and 
     prepare a report annually on the progress of each country and 
     political entity listed in section 4 (c) and (d) in meeting 
     the requirements described in section 4(a) in order to 
     determine the current or potential eligibility of each 
     country or political entity to be designated as a beneficiary 
     country under this Act. The report shall also include a 
     comprehensive discussion of the implementation of this Act 
     and an analysis of the trade and investment policy of the 
     United States with respect to the countries and political 
     entities listed in section 4 (c) and (d). To the extent that 
     any subject matter required by the report is included in 
     another report submitted by the President, the report 
     required by this section may reference the other report.
       (b) Time For Submitting Report.--The President shall submit 
     the report described in subsection (a) to Congress not later 
     than 1 year after the date of enactment of this Act, and 
     annually thereafter through 2011.

     SEC. 9. PRESERVATION OF BENEFITS OF UNITED STATES-ISRAEL AND 
                   UNITED STATES-JORDAN FREE TRADE AGREEMENTS.

       Nothing in this Act shall be deemed to nullify or impair 
     any right or benefit accorded either to Israel or to Jordan 
     under the existing trade agreements with the United States.

     SEC. 10. TERMINATION OF PREFERENTIAL TREATMENT.

       No duty-free treatment or other preferential treatment 
     extended to beneficiary countries under this Act shall remain 
     in effect after December 31, 2011.

  Mr. McCAIN. Mr. President, today I join Senator Baucus in introducing 
the Middle East Trade and Engagement Act of 2003. Our legislation would 
permit eligible countries in the greater Middle East to gain greater 
access to American markets through the duty-free treatment of certain 
exports, and ultimately to negotiate free trade agreements with the 
United States. It would condition broader trade relations on 
fundamental political and economic reforms, cooperation in the fight 
against terrorism, and support for the Israeli-Palestinian peace 
process, among other issues, in order to promote liberalization and 
reform across the Arab and Muslim worlds.
  Free trade is a powerful tool for opening up closed societies, if 
leaders in the greater Middle East are willing to make necessary and 
overdue political and economic reforms. It is past time for nations in 
the region to join the global economy, and for rulers to lead 
increasingly restive populations in the direction of democracy and free 
markets.
  Today, the countries of the Middle East account for a small 
percentage of non-energy sector trade for the United States. With the 
exception of oil, most Arab nations barely trade with each other, much 
less with the rest of the world, and many still maintain a hostile 
economic boycott on Israel--policies that isolate the Middle East from 
the global economy and perpetuate conflict instead of building 
prosperity. The wave of free-market reform and democratization that 
swept Europe, Latin America, Asia, and parts of Africa in the 1980s and 
1990s has left most of the Middle East untouched and unchanged.
  America's interest in economic opening and political liberalization 
in the region requires a new level of engagement with the countries of 
the greater Middle East, premised on the acceleration and active 
implementation of a host of reforms without which prosperity and 
democracy are not possible. Our legislation would tie preferential 
trade access to American markets to progress towards adoption of these 
reforms, as well as meaningful progress on human rights protections, 
decisive movement towards democracy, full cooperation in the war on 
terrorism, and an end to the primary, secondary, and tertiary economic 
boycott of Israel.
  Our bill is modeled on the success of the Andean Trade Preferences 
Act and the African Growth and Opportunity Act. Ideally, enactment of 
the bill we are introducing today would create a regime of duty-free 
trade in a number of goods from the greater Middle East. Such a trade 
preference program would encourage and often require eligible nations 
to undertake the kind of significant economic reforms that ultimately 
lead to free trade agreements, as President Bush has called for and 
which we support.
  The Andean Trade Preferences Act was created to expand the economies 
of Bolivia, Colombia, Ecuador, and Peru. By granting duty-free and 
reduced rate treatment to various products from these nations, we took 
action to strengthen the fragile economies of the region, expand their 
export bases, and provide Andean farmers and workers with legitimate 
employment outside of the drug trade. It has worked. The trade 
agreement created new industries in the region outside of the drug 
trade and expanded the economies of the region which helped to create 
legitimate jobs. We foresee similar effects from this legislation on 
parts of the Middle East, if leaders have the courage and vision to 
complement progress on trade with internal political and economic 
reforms.
  Reform in the Arab and Muslim worlds requires not just greater trade 
but accelerated political and economic liberalization, including 
respect for fundamental human freedom. It is my hope that the spirit 
and effect of our legislation will help move countries of the greater 
Middle East in that direction.
                                 ______