[Congressional Record Volume 149, Number 116 (Thursday, July 31, 2003)]
[Senate]
[Pages S10530-S10533]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
CHILE AND SINGAPORE FREE-TRADE AGREEMENTS
Mr. BAUCUS. Mr. President, I appreciate the work of the majority and
minority leaders in putting this agreement together tonight. It sounds
as if we will be able to get home for recess.
I will say a few words about the Chile and Singapore free trade
agreements.
Today the Senate begins its debate on implementing the United States-
Singapore and United States-Chile Free Trade Agreements.
Bringing these bills to the floor this month has been a priority for
me, as I know it has been for Senator Grassley. Timely passage will
allow these two important agreements to go into effect as planned on
January 1, 2004. And passage will user in a new era of enhanced
economic ties between the United States and two important trading
partners.
These are the first bills to come before the Senate under the renewed
fast-track procedures adopted last year in the Trade Act of 2002. So
before I discuss the agreements and the implementing bills in detail, I
want to talk about the events that have brought us here today.
One year ago, the Senate passed the Trade Act of 2002 by a vote of 64
to 34. Among other important provisions, the Trade Act gave the
President fast-track trade negotiating authority for 3 years, renewable
for 2 more. Fast-track--or trade promotion authority, TPA, as it is
sometimes called--is a contract between Congress and the
administration. It allows the President to negotiate trade agreements
with foreign trading partners with a guarantee that Congress will
consider the agreement as a single package. No amendments are allowed
and a straight up-or-down vote is guaranteed by a date certain.
In return, the President must pursue a list of negotiating objectives
set by Congress. And he must make Congress a full partner in the
negotiations by consulting with Members as the talks proceed.
Last year, as Chairman of the Finance Committee, I worked hard to
pass the Trade Act and renew the President's fast-track trade
negotiating authority.
In many cases, fast-track is an absolute necessity for completing new
trade agreements. Our trading partners simply will not put their best
deals on the table if they know that Congress can come back and change
the agreement later.
Getting those best offers on the table is critical. It means more
jobs for American workers, a level playing field, more exports for our
farmers, ranchers, and companies and more choices and lower costs for
consumers.
That doesn't mean our trade agenda ground to a halt without fast-
track. We passed the U.S.-Jordan FTA Implementation Act in 2001 without
fast-track--and by an overwhelming margin. And the Clinton
Administration began negotiating the Singapore and Chile FTAs without
fast-track.
I believe, frankly, that we could pass the Singapore and Chile bills
without fast-track as well. But having it certainly makes the process
run smoothly.
That brings me to the two free trade agreements themselves.
I have long been a supporter of trade with Singapore and Chile. In
1999, I took a delegation of Montana business people to Chile to press
the case directly. I have also visited Singapore with a Montana trade
delegation.
Even before we passed the Trade Act last year, I introduced
legislation to grant fast-track specifically for a Singapore or Chile
free-trade agreement.
Negotiating these agreements took several years of work, under both
the Clinton and Bush Administrations, many negotiating sessions, and
hours of consultation with Congress.
I am glad that my work and that of so many others has paid off and
brought these agreements before us today. Congratulations are due all
around for a job well done.
These are the first agreements to be held to the new and progressive
standards included in last year's Trade Act.
By and large, I think the two agreements stack up fairly well against
the negotiating objectives set out by Congress. They set a new standard
in many areas that is truly state-of-the-art.
I will touch on some of the highlights.
On agriculture, the Chile FTA provides for tariff-free, quota-free
trade within 12 years, with more than 75 percent of U.S. farm products
entering Chile tariff-free within 4 years. That's a major achievement.
U.S. farmers will have access to Chile that is as good as or better
than Chile gave to the European Union and Canada in existing trade
agreements.
Significantly, Chile has committed to the United States to eliminate
its so-called ``price bands'' on certain commodities. These price
bands--or variable tariffs--are extremely harmful to our farmers. Chile
agreed to eliminate them.
The main benefits to my state of Montana will be in improved market
access for beef and wheat.
Senator Grassley and I worked hard to ensure that Chile will grant
reciprocal recognition of U.S. meat inspections. With this important
development, Montana's world-class ranchers now have the access to
Chile's growing market that they deserve.
The agreement will also eliminate the 10 percent tariff that puts
American wheat growers at an artificial disadvantage when competing
with Canadian growers for sales in Chile. Obviously, Canadians do not
pay that. We Americans do, until this agreement is put into effect.
On Market access, these two agreements enshrine the principle that
all tariffs must eventually go to zero. U.S. policy of entering
comprehensive free trade agreements stands in sharp contrast to the
practices of some of our trading partners, who negotiate agreements
that exclude agriculture or other sensitive sectors.
The Singapore and Chile agreements send the right message on market
access: countries that are not ready to put everything on the table are
not ready to negotiate an agreement with the United States.
On services, both agreements offer expanded market access for U.S.
services providers and strong transparency rules for service
regulations that exceed Chile and Singapore's WTO commitments. The
agreements break new ground by using a ``negative list,'' where all
services are subject to the agreements' rules unless expressly
excluded.
Particular achievements include enhanced access to the Singapore
market for banking and other financial services, which is important
because Singapore is a regional hub for southeast Asia.
Enhanced market access for services is critical, because the service
sector now provides the majority of American jobs. So expanding
services trade means more job opportunities.
The agreements include intellectual property rights obligations that
exceed WTO levels. They set a high standard of protection for
trademarks, copyrights, patents, and trade secrets that will support
innovation and our country's creative industries, and they establish a
tough enforcement regime for piracy and counterfeiting.
The agreements extend free trade principles to electronic commerce--
making sure protectionism cannot take root in the new frontier of
trade.
Unlike NAFTA, which dealt with labor and environment in side
agreements, the Singapore and Chile agreements include core chapters
dedicated to these important subjects. It is an improvement.
Both agreements incorporate the key Congressional objective that
countries commit not to ``fail to effectively enforce'' their labor and
environmental laws ``through a sustained or recurring
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course of action or inaction, in a manner affecting trade.'' This
commitment is enforceable through dispute settlement.
The agreements also foster cooperative projects to promote
environmental protection and worker rights. For example, the United
States will assist Chile in building capacity for wildlife protection
and resource management and to improve public information about
chemicals released by industrial facilities.
The agreements establish a secure and predictable legal framework
that covers all forms of investment, and investor rights are backed up
with dispute settlement procedures.
All core obligations of the agreements, including environmental and
labor provisions, are subject to enforcement through dispute
settlement. Panel proceedings must be open and transparent--that is
totally new--including public hearings, public release of legal
submissions, and the right of third parties to submit views.
For the first time in a U.S. free trade agreement, panels will be
able to impose monetary penalties in the first instance. If those
monetary penalties are not paid, trade sanctions will be available as a
back up--even in environment and labor cases.
There are those who see this use of fines as a step back. In my view,
it is something worth trying, to see how well it works.
The fine mechanism should allow for a greater focus on cooperative
problem-solving in resolving disputes. If it doesn't trade sanctions
are still available.
Only experience can tell us how well this system will work. Based on
that experience, we can reconsider a fines-based system in future
agreements if we need to.
Finally, a word about trade laws. Last year's Trade Act instructed
the administration to ``avoid agreements that lessen the
effectiveness'' of U.S. trade laws.
These agreements reflect that instruction. There are no provisions
weakening our antidumping or countervailing duty laws.
As in NAFTA, the President may exclude Singapore from a global
safeguard remedy in certain circumstances. This exception does not
apply to Chile.
At the same time, both agreements strengthen the ability of American
producers to obtain safeguard relief--if needed--by creating new
bilateral safeguards, new textile and apparel safeguards, and a tariff
snap-back safeguard for sensitive agricultural products from Chile.
Overall--these agreements cover a lot of ground, and they do it well.
Does that mean that we now have the perfect text for every future
agreement? Of course not. There is always room for improvement in trade
agreements.
There is no one-size-fits-all solution--whether you are talking about
agriculture, intellectual property, environmental standards, or
services.
That is why I feel strongly that every new free-trade agreement needs
to be adapted to the particular circumstances of the partner country
involved. Some of the approaches taken in the Singapore and Chile
agreements--in environment, labor, and agriculture, for example--simply
may not work for countries at different levels of development or with
different political and social structure.
To some extent, these are issues for another day. But I raise them
today as fair warning.
I think the consultation process worked well for the Singapore and
Chile agreements, but we will need to do even better on the CAFTA,
Australia, and other potentially controversial agreements. Otherwise, I
believe both the ambitious negotiating schedules and the chances of
Congressional approval for future agreements are at serious risk.
Now I want to turn to the implementing bills themselves.
These bills were prepared by the administration in consultation with
Finance Committee members and staff. We have followed the sample
cooperative drafting procedures that were used for the NAFTA, the
Uruguay Round, and other trade agreements considered under fast-track.
I am satisfied with the results of this process.
The two bills before us today are very similar to each other and to
the Implementation Acts for NAFTA and the U.S.-Jordan Agreement. They
are narrowly tailored to include only what is necessary or appropriate
to implement the agreements. Where there are differences between the
two bills, they reflect different negotiated outcomes in the two
agreements.
I have worked hard to make sure these draft bills meet two criteria.
First, the bills must accurately reflect the agreements. Second, the
bills must preserve the prerogatives of Congress over trade policy.
One of my main concerns in the Singapore bill has been implementation
of the Integrated Sourcing Initiative, or ISI. I have worked to make
sure the bill narrowly reflects the purpose of the ISI and does not
provide unintended benefits to third countries.
The bill achieves that goal by assuring that Congress will have a
vote before the list of ISI products can be expanded. I want to thank
USTR and Chairman Grassley for working with me to come up with language
that does the job.
I also had some concerns about whether the ISI could create a
loophole in our economic sanctions and global safeguard laws. I
appreciate the Administration's willingness to think creatively and
come up with language in the Statement of Administrative Action that
will help avoid potential problems.
Another concern--in both bills--has been the role of Customs. A few
months ago, Chairman Grassley and I came to a temporary agreement with
the Administration on how to divide authority over Customs between the
Departments of Treasury and Homeland Security.
A process is in place to review the initial division of labor in the
coming year. So it is critical that nothing in these bills changes the
current division or supersedes the review process. Again--I appreciate
the willingness of Chairman Grassley and the Administration to work
with me on this issue.
Mr. President, the Singapore and Chile free trade agreements are
solid agreements that will create economic opportunities for Americans.
With the WTO talks in a stalemate and FTAA talks bogging down, we
need to pursue bilateral and regional options to expand trade and grow
our economy. These agreements help achieve that goal.
A strong vote in favor of these agreements will send all the right
messages--to American workers, farmers and businesses and also to our
trading partners--that the United States still stands for trade
liberalization. That our trade agenda is on track. And that the right
kind of agreements will receive broad Congressional support.
Mr. President 1 year ago this week, the Senate passed the Trade Act
of 2002.
This was landmark legislation. It was hard fought--it took the better
part of 18 months to write and pass. It was far-reaching--touching on
many aspects of our trade agenda. And it had support across the
political spectrum--especially in the Senate.
Among its many provisions, the Trade Act improved and expanded the
Trade Adjustment Assistance program for farmers and ranchers; renewed
the President's Fast-Track trade negotiating authority; and renewed and
expanded the Andean Trade Preference Act.
On august 6, we reach the 1-year mark for all these changes. So now
is a good time to take stock of what has been accomplished so far.
Have the provisions of the Trade Act been implemented in a timely
fashion? Are they working as Congress intended? And what remains to be
done?
In sum, what I am here to provide today is a report card on the first
year of the Trade Act of 2002.
I am proud of all the work that went into the Trade Act. But the part
I am most proud of is the historic improvement and expansion of Trade
Adjustment Assistance.
We all know that expanding trade is good for the economy as a whole.
It creates new export opportunities for farmers and businesses. It
generates employment. It gives consumers more choices and saves them
money.
But trade liberalization is not always good for individual workers.
Inevitably, some will lose their jobs.
Trade adjustment assistance is the result of a promise first made to
American workers by President Kennedy. He
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promised workers that when our Government's trade policy results in the
loss of jobs, we will help dislocated workers retrain, retool, and
learn the new skills that they need to return to the workforce. That
promise has been consistently renewed by Congress ever since.
Last year's Trade Adjustment Assistance Reform Act grew out of 40
years of experience with the TAA program. Many of the bill's key
reforms were suggested in comprehensive studies of the program's
strengths and weaknesses done by the GAO and the Trade Deficit Review
Commission.
What those reports told us was that there were some ways to make TAA
work better. That meant expanding eligibility to cover more workers
affected by trade. It meant expanding benefits to assure a more useful
retraining experience. and it also meant tightening up the rules in
some places to make sure that the program is operating responsibly.
The improved TAA program went into effect last November.
Primary workers who lose their jobs due to import competition
continue to be eligible for assistance. But the new, expanded
eligibility rules also make assistance available to secondary workers
whose companies lose business supplying inputs to primary firms; and
workers who lose their jobs when their companies shift production
overseas.
Secondary workers are only secondary in the minds of academics who
made up the term. The fact is that they suffer the same job loss for
the same reason as primary workers. They deserve the same chance to
retrain. Now, that is what they get.
In another improvement, workers can now get training and income
support for up to 2 years. this is a key change from the old program,
where income support ran out before training benefits.
That led many workers to drop out of training before they were done.
Dropping out of training defeats the whole purpose of TAA, so this was
a critical fix.
Another key fix was the addition of a health care benefit. One of the
things that has kept workers out of TAA retraining in the past was
their inability to maintain affordable health insurance for their
families. Now TAA enrollees are entitled to a 65 percent tax credit
toward qualified health insurance expenses while in training.
Workers are also benefitting from a streamlined application process.
The Trade Act combined the old TAA and NAFTA-TAA programs into one--so
workers no longer have to apply twice under different rules.
Since last November, the Department of Labor has certified 1,242 TAA
petitions, making 133,848 workers eligible to apply for TAA benefits.
That includes workers from Stimson Lumber in Libby, MT, and Trout
Creek Lumber in Trout Creek, MT. Our lumber industry in Montana has
been hard hit by unfairly subsidized Canadian lumber. I hope there will
be a long-term solution to this intractable problem that will stop the
job losses. I know that getting TAA assistance is not the first choice
for any of these workers. But at least it is something--and something
much more useful now than it was before.
Most of last year's reforms to TAA have been fully implemented and
are working well. I want to thank Secretary Chao, Assistant Secretary
DeRocco, and the team at the Education and Training Administration for
making this priority. Thanks to their planning and hard work, the
Department of Labor has done an exemplary job getting the improved
program off the ground.
Still, the work of implementing TAA reform is not done. There are at
least four areas where more work lies ahead.
First, the Trade Act required the Department of Labor to process
petitions faster--in 40 days rather than 60. Slow petition approvals
are a problem that has dogged the TAA program for years. Workers can't
get program benefits until their petitions are approved.
I am glad to see that processing times are picking up. But they are
not down to 40 days yet. I know the Labor Department appreciates the
importance of speeding up processing time--and I certainly urge them to
redouble their efforts in that regard.
Second, the Trade Act created a new Alternative TAA program--
sometimes called ``wage insurance''--aimed at older workers. Instead of
enrolling in traditional TAA, these workers can choose to take a lower-
paying job and receive a wage supplement from the government for up to
2 years. The goal of Alternative TAA is to encourage on-the-job
training--which is usually the best training--and get workers back in
jobs faster by making up some of the temporary income loss they may
suffer by changing careers.
Alternative TAA is scheduled to go into effect on August 6 of this
year. I am increasingly concerned that this deadline will not be met.
Labor Department officials have assured me that they fully intended to
launch this program on time. I don't doubt their sincerity or resolve.
So far, however, no draft regulations or program details have been
made available. That means the public has not been able to comment on
how the program might work. Outreach to potential enrollees cannot
begin. And time is growing awfully short to get the States involved,
even though they are on the front lines in running this program.
Alternative TAA is one of the most important innovations in the Trade
Act. If it works, it could provide a whole new model for assisting
displaced workers in this country.
One year seems like plenty of time to get this program running. I
certainly hope it will be up and running by the deadline set by
Congress.
A third outstanding item is the health care tax credit. A refundable
credit was available starting last December. Congress set this August
as the deadline for making the credit advanceable. For most people,
that is the key to affordability.
The tax credit has been off to a somewhat shaky start. That is
understandable, given that we are trying something completely new here.
In order for the tax credit to work, each state has to provide at
least one group coverage option for eligible workers who do not have
COBRA coverage.
As of now, it appears that about 22 states will have their coverage
options up and running by August. That means that in more than half the
states, some qualified workers will not be able to use their tax
credits to by health insurance--unless they have COBRA.
That's not something the Federal Government can ultimately control.
It is up to the States to provide retraining workers with qualified
options. But I certainly encourage Treasury, HHS, and DOL to redouble
their outreach efforts to get the slower States to pick up the pace.
The Trade Act of 2002 for the first time created a TAA program
especially for farmers and ranchers. Farmers and ranchers are affected
by trade a little differently from manufacturing workers. They don't
tend to lose their jobs and go on unemployment insurance. Instead, they
can face sudden sharp falls in commodity prices due to trade. These
price drops affect their income, but not necessarily their employment
status.
TAA for farmers has been a long time in coming. After several failed
attempts, history has shown that trying to shoe-horn farmers and
ranchers into a TAA program designed for manufacturing workers doesn't
work. So Congress created a TAA program that better fits their needs.
The eligibility trigger is different--it is based on the effect of
trade on commodity prices. But the purpose is the same--give farmers a
chance to retool, retrain, and adapt to import competition.
I am very proud of this program. It has the potential to do some real
good in Montana and other States where farmers work hard to make it in
a global economy. And it can help bolster support for trade
liberalization in the agricultural community.
USDA has done some solid thinking on how to put this program
together. I commend them on their outreach to Congress and to the
private sector during the planning stages.
But the effort got off to a very slow start. Even though things are
back on track now, they are running way behind schedule. Congress set
aside $90 million for this program in fiscal year 2003 and told USDA to
get the program operational by March of this year. That didn't happen.
I know that USDA is close to finalizing the regulations so they can
get
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TAA for Farmers up and running. I urge Secretary Veneman to do
everything in her power to make sure that the program gets started in
time to use the funds that Congress intended for our farmers in this
fiscal year.
What happens next?
The first step is getting all the changes to TAA up and running. I
hope that we are in the home stretch on that.
Then we need to start tracking results. Seeing how well the new,
improved program is working. To that end, Senator Grassley and I have
jointly asked the GAO to do an assessment of how well TAA has been
working in the first year under the new law. We have to wait long
enough for meaningful data to be collected. So that report is due out
next summer, and I am looking forward to the results.
In the meantime, I will be keeping my eye on TAA. A few important
issues to watch will be training funds: Was the increase in the Trade
Act enough to meet increased enrollment?, and performance evaluation:
Are DOL and the states cooperating to generate good data for tracking
program participation and outcomes?
One last item for future action is TAA for Firms. This program, which
operates out of the Department of Commerce, provides technical
assistance to small and medium-sized companies that face layoffs due to
import competition. The companies themselves chip in half the money to
fund their adjustment plans. And they pay back the Federal share in tax
revenues and foregone unemployment services when they succeed.
For many years, TAA for Firms has been chronically underfunded. A
backlog of approved but unfunded adjustment proposals is building up in
every State.
In order to begin reducing this backlog, in the Trade Act of 2002,
Congress reauthorized TAA for Firms at an increased funding level of
$16 million annually. The President's budget for fiscal year 2004,
however, proposes funding at only $13 million.
This is not enough, and I view it as unacceptable backsliding by the
administration. I encourage our appropriators to fund this program
fully at the authorized level of $16 million.
Aside from funding, I think the biggest threat to the effective
operation of the TAA for Firms program is a pending proposal to change
its management structure. This program works well under a small
centralized management in Washington, supplemented by the excellent
work of 12 regional Trade Adjustment Assistance Centers.
The program is not broken and does not need to be fixed. That is why
I oppose the department's plans to break the Washington office up into
seven separate offices scattered around the country. It seems like an
inefficient use of government resources that will only complicate
oversight and jeopardize consistent decision-making. This is not a
partisan issue--it's just good government.
That is why I have introduced S. 1120--a bill to move the FAA for
Firms program to a different part of the Commerce Department, where it
can continue to be centrally managed. The bill currently has 12 co-
sponsors, and I urge my colleagues to support it.
In addition to TAA, there were, of course, several other very
important provisions in the Trade Act of 2002. Most significantly--
Trade Promotion Authority.
After a lapse of 8 years, we were able to renew the fast-track
procedures that allow the President to submit trade agreements to
Congress for an up-or-down vote with no amendments. It is these very
procedures that bring us to the floor today to debate, and ultimately
vote on, the Singapore and Chile FTAs.
Some people say our trade agenda was stalled--or even dead--before we
passed TPA. I strongly disagree.
We completed China and Taiwan's WTO accessions. We passed AGOA, the
Jordan FTA and the Vietnam trade agreement. We know from experience
that good, strong trade bills with bipartisan support can pass the
Congress even without fast-track.
But fast-track makes this more likely. And--particularly when we are
negotiating complex agreements with large groups of countries in the
WTO or FTAA--there is just no other way to get our trading partners to
put their best deals on the table. They won't show their bottom line if
they think Congress can come back and renegotiate the deal.
So getting fast-track renewed is an important accomplishment. It
lasts for 3 years--extendable to 5. I hope we use it well.
I want to see us use fast track to negotiate trade agreements that
serve the commercial objectives of our farmers and businesses.
Agreements that will create jobs for our workers and real value for
consumers.
These are the kinds of agreements that will build domestic support
for our trade agenda. With that support, our progress on trade will
become self-reinforcing--and we will not need to worry about another
lengthy lapse in fast-track.
For the last few months I have been working--together with
Congressman Dooley and others--to reach out to business and agriculture
groups and others interested in trade to hear their priorities for
commercially meaningful trade agreements. I plan to continue this
process and to consult closely with the administration on what I learn.
That leads me to just a few comments on consultation. The bills
before us today are the first to be considered under the fast-track
procedures approved last year. And one of the key refinements in the
bill was to beef up the consultation process between the administration
and Congress.
I want to thank Ambassador Zoellick and his staff for the efforts
they have put into these consultations. Given the nature and pace of
negotiations, there is always a balance to be struck between timely and
meaningful consultation with Congress and quick turnaround by our
negotiators. I hope they will continue their efforts to improve
Congressional access to draft negotiating documents and keep the lines
of communication open even when the pace of negotiations gets frantic.
I also want to commend both USTR and Senator Grassley and his staff
for the drafting process for the Singapore and Chile bills. It was very
cooperative. This is the way the informal drafting process is supposed
to work under fast-track. I think it sets a good precedent as new
agreements come down the road.
Finally, I want to turn to another part of the Trade Act--the renewal
and expansion of the Andean Trade Preferences Act.
Early reports slow rising exports from ATPA countries to the U.S. in
some of the new categories to receive benefits. Reports from USTR and
the ITC indicate that ATPA continues to play a critical role in
economic diversification and drug eradication efforts in the Andean
region.
As always, that doesn't mean our trade relationship with the region
is trouble-free. For one thing, U.S. companies have a number of
unresolved investment disputes with Andean countries. Even with the
pressure USTR could bring to bear prior to ATPA renewal, we were not
able to resolve them all. For example, Ecuador continues to deny VAT
payment credits that it owes to American companies--despite continued
promises at the highest levels of government.
Advancing the trade agenda through new agreements is important--but
so is making sure that our trading partners are living up to the
commitments they have already made. Congress will be looking at ATPA
again in a few years, and we need to keep our eyes on the region.
The Trade Act of 2002 was the most significant and far-reaching piece
of trade legislation to come through the Congress in 14 years. I am
proud to have played a central role in shaping it. Overall, my report
card on implementation is pretty positive.
As implementation on TAA moves forward, I intend to continue
monitoring the administration's efforts and the impact that the program
has on eligible workers. I also plan to continue working on trade
legislation that advances our agenda of job creation and economic
growth. There will be plenty of opportunities ahead.
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