[Congressional Record Volume 153, Number 18 (Tuesday, January 30, 2007)]
[Senate]
[Pages S1322-S1324]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TRADE RELATIONS WITH LATIN AMERICA
Mr. GRASSLEY. Mr. President, I rise to speak on the U.S. trade
agenda. There are a number of important items on this year's trade
agenda, including reauthorization of Trade Promotion Authority for the
President and reauthorizing our trade adjustment assistance programs
for workers who are displaced by trade. I will speak on those
priorities another day.
Today I want to focus on our trade relations with our neighbors in
Central and South America. During my chairmanship of the Finance
Committee, Congress passed implementing bills for trade agreements
covering 12 countries. Out of these 12 countries, over half--7--are
located in Latin America. I am pleased that Congress acted to
strengthen our economic relations with Chile, the Dominican Republic,
Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica, by
implementing our trade agreements with these neighbors to the south.
And I think we should all be pleased that these seven countries made it
a priority to develop closer economic ties with us and to further
commit themselves to transparency and the rule of law.
I hope that the current Congress will continue working to strengthen
economic relations between the United States and Latin America.
Fortunately, we already have a roadmap for doing so. We have concluded
free trade agreements with Peru and Colombia, and we are about to sign
an agreement with Panama. It is up to this Congress to pass
implementing legislation for these agreements. Failure to do so would
only damage our relations with these important allies and embolden
other southern neighbors who are increasingly hostile to the United
States.
Moreover, by implementing our trade agreements with Peru, Colombia,
and Panama, we would provide an important boost for U.S. exporters.
During my time in the Senate, I have heard many of my colleagues
complain that the global trade situation reflects an uneven playing
field. To some extent, I agree. In too many cases, the duties imposed
on U.S. exports by our trading partners are much higher than our
duties. That is certainly the situation with Peru, Colombia, and
Panama. Right now, almost all imports from those three countries enter
the United States duty free. Ninety percent of the value of our imports
from Colombia enter duty-free. With respect to Panama, it is over 95
percent, and with respect to Peru it is 97 percent.
On the other hand, our exports to these countries face significant
duties. Colombia's tariffs generally range from 10 to 20 percent, while
those of Peru range from 12 to 25 percent. After Panama acceded to the
World Trade Organization in 1997 its tariffs averaged 8 percent, but
since then Panama has raised tariffs on certain agricultural products.
For example, Panama's tariff on pork--a major Iowa product--is
currently 74 percent, while its tariff on chicken imports is 273
percent. Now that is what I call a one-way street.
This imbalance is largely the result of unilateral trade benefits
that we extend to these nations. Panama gets duty-free access to our
markets under the Caribbean Basin Initiative, while Peru and Colombia
are eligible under the Andean Trade Preference Act. And all three are
eligible under our Generalized System of Preferences.
The nonpartisan U.S. International Trade Commission, ITC, analyzed
our trade agreements with Peru and Colombia. The ITC concluded that
these agreements will help to level the playing field that is currently
tilted against U.S. exporters.
Here is what the ITC has to say about our trade promotion agreement
with Peru:
Given the substantially larger tariffs faced by U.S.
exporters to Peru than Peruvian exporters to the United
States, the TPA is likely to result in a much larger increase
in U.S. exports than in U.S. imports.
The ITC goes on to state that the agreement will likely increase U.S.
exports to Peru by 25 percent, while Peruvian exports to the United
States will grow by 8 percent.
The ITC's analysis of our trade promotion agreement with Colombia
draws similar conclusions. The ITC report states that:
Colombian exporters generally face substantially lower
tariffs in the U.S. market
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than do U.S. exporters in the Colombian market. . . . The TPA
is likely to result in a much larger increase in U.S. exports
to Colombia than in U.S. imports from Colombia.
The ITC predicts that after implementing the agreement, U.S. exports
to Colombia will be $1.1 billion higher than today, and U.S. imports
from Colombia will be $487 million higher.
The ITC has not yet completed its analysis of our trade agreement
with Panama. But given the disparity in tariff levels between the
United States and Panama, I think it is safe to assume that the ITC
will reach similar conclusions regarding the likely economic impact of
that agreement as well. And the benefits of these three trade
agreements will be spread across all major sectors of our economy. U.S.
agricultural producers, manufacturers, and service providers all stand
to gain.
According to the American Farm Bureau Federation, our trade agreement
with Peru could increase U.S. agricultural exports by over $705 million
annually. With respect to Colombia, the Farm Bureau predicts that full
implementation of our trade agreement will have an annual net benefit
of over $660 million for the U.S. agricultural sector. The Farm Bureau
hasn't finished its analysis of the impact of our trade agreement with
Panama, but I am confident that it will find major benefits for U.S.
farmers.
Our manufacturers stand to gain as well. According to the
International Trade Commission, U.S. producers of machinery, chemicals,
rubber, and plastic products will be among the biggest beneficiaries of
these agreements. And Panama will eliminate tariffs on manufactured
products within 10 years of implementing our trade agreement.
U.S. service providers will also gain from increased trade with Peru,
Colombia, and Panama. Under their respective agreements, each of those
countries agree to exceed the commitments they made on services in the
World Trade Organization.
In addition, Panama is scheduled to initiate a $5.25 billion
expansion project for the Panama Canal in 2008. Our trade agreement
with Panama will help ensure market access for U.S. service providers
for this major project.
So to those of my colleagues who complain that the current world
trading situation is unfair, here is a chance to help fix the problem.
By implementing trade agreements with Peru, Colombia, and Panama,
Congress will level the playing field for U.S. farmers, manufacturers,
and service providers in these important markets. These agreements will
boost U.S. exports and help create jobs. I think it is ironic that some
of my colleagues oppose these free trade agreements and yet at the same
time complain the loudest about the trade deficit and how the deck is
stacked against U.S. exporters.
These agreements level the playing field. It is beyond me as to how
someone could oppose that. Now, I understand that there is rising
protectionism in Congress. But let's look at the facts. Take as an
example the Dominican Republic-Central America Free Trade Agreement,
otherwise known as CAFTA.
According to the U.S. Department of Commerce, our exports to the
CAFTA countries were up 17 percent in the period January through
November 2006, while our imports from the CAFTA countries were up 3
percent. As a result, our trade balance swung from a $1.2 billion
deficit 2 years ago to an annualized surplus of $1 billion last year.
That is what happens when you level the playing field.
And we are not the only ones who stand to benefit. Peru, Colombia,
and Panama will also benefit from implementing our trade agreements.
The leaders of these countries are to be commended. By pursuing trade
agreements with the United States, they have demonstrated a commitment
to locking in economic reforms, increasing economic freedoms, and
enhancing transparency and respect for the rule of law.
That leadership and foresight will be rewarded once our trade
agreements are implemented. I read recently in the Wall Street Journal
of a joint study conducted by the Journal and the Heritage Foundation.
According to the article, their study found that ``economically free
countries enjoy significantly greater prosperity than those burdened by
heavy government intervention.''
We certainly see examples of heavy-handed government intervention in
some other Latin American countries. Instead of fostering individual
and economic liberty, these governments are embracing the failed policy
of statism. Chief among them is the Government of Venezuela.
President Chavez has announced plans to turn Venezuela into a
``socialist republic.'' To that end, he announced this month that he
plans to nationalize Venezuela's telecommunications and electricity
industries. That decision will directly impact U.S. companies with
investments in those sectors of the Venezuelan economy.
President Chavez also might nationalize Venezuela's mining sector,
and he intends to increase state control over the oil industry as well.
Significantly, President Chavez is demonstrating that those who
withdraw economic rights often seek to withdraw political rights, and
that those who centralize economic power tend to centralize political
power. For example, he has stated that he plans to pull the
broadcasting license of one of Venezuela's oldest television
broadcasters, which also happens to be one of his major critics.
President Chavez is also proposing changes in Venezuelan laws that will
enable him to rule by decree for 18 months, permit his indefinite
reelection as President, and reduce the power of state governors and
mayors.
Unfortunately, President Chavez is not alone. Two other countries in
the region are moving toward increased state control of their
economies. Bolivia and Ecuador each currently enjoy duty-free access to
the U.S. market under the Andean Trade Preference Act. Yet last year
Bolivia undertook a de facto nationalization of its natural gas
industries, forcing companies to renegotiate their contracts with the
state. Bolivian President Morales is also considering nationalizing the
country's mining, electricity, and telecommunications sectors. In the
case of Ecuador, last year the government revoked the operating license
of a U.S. oil company and seized $1 billion of the company's assets.
So Latin America is clearly divided. Some countries, led by
Venezuela, are consolidating economic power in the state. President
Chavez is also clearly seeking to centralize political power, and has
demonstrated an active hostility to the United States.
That stands in stark contrast to our allies and trading partners,
Peru, Colombia, and Panama. The governments of these three countries
have gone out on a limb. They have demonstrated they want closer
economic ties with the United States. They appreciate that, by working
with us, by building more links between businesses in their countries
and ours, they can better improve the lives of their citizens. We need
to reward that leadership. We should do so by implementing our
respective trade agreements as soon as possible. If we don't, we will
be turning our backs on allies in the region. We will be sending a
signal to Latin America that we don't really care about opening markets
and enhancing the rule of law. Instead, we'd help build the clout of
Chavez and other leaders in the region who see the failed policy of
statism as Latin America's future. And we would be shooting ourselves
in the foot by giving up a chance to level the playing field. Why would
we want to do that?
Before concluding, I would like to address two other sets of issues
that have arisen with respect to our trade agreements with Peru,
Colombia, and Panama. First are the labor and environment chapters of
the agreements, and second is the Andean Trade Preference Act.
I understand that some in Congress would like to see the labor and
environment chapters of these agreements renegotiated. I disagree. I
believe that the provisions on labor and the environment are strong.
And I note that renegotiation would effectively preclude implementation
of these agreements under the current Trade Promotion Authority, which
is set to expire on July 1.
I question whether those who would insist on renegotiation aren't
really trying to kill the agreements outright. In my view, the best
thing we can do to advance labor rights and environmental protections
in these countries is to implement our trade agreements with them.
Implementation will increase the rate of economic growth and
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prosperity in these countries. It will increase business activity and
awareness of labor rights. It will create new bodies for more active
oversight of labor and the environment.
As important as labor and the environment are to some of my
colleagues, I don't see how they can justify holding back these trade
agreements that are so good for the United States. They should be
embarrassed for holding them up. The sooner we implement these
agreements, the sooner our farmers, manufacturers, and service
providers will benefit from them. That being said, I understand that
U.S. Trade Representative Susan Schwab is in discussions with some of
my colleagues to explore ways to address their concerns regarding labor
and the environment. I am willing to listen to any constructive
proposals that are put forward.
Separately, I note that the Andean Trade Preference Act has been
extended until June 30. That leaves Congress sufficient time to
implement our trade agreements with Peru and Colombia, so that their
preferential access to the U.S. market does not terminate.
But with respect to Bolivia and Ecuador, their preferential access to
the U.S. market will terminate after June 30 because we don't have
comprehensive trade agreements lined up with those two countries.
Some of my colleagues are already talking about extending the Andean
Trade Preference Act beyond June 30. I see no reason to do so. If
Congress acts responsibly and implements our trade agreements with Peru
and Colombia by June 30, neither of those countries will need
unilateral preferential trade benefits.
As far as Bolivia and Ecuador go, I see no reason to extend
preferential trade benefits to them. Not only are they withholding
market access from U.S. exporters, they are actively engaged in
nationalizing industries and expropriating foreign assets.
It wouldn't be right to treat imports from Bolivia and Ecuador the
same as products from Peru and Colombia. Why should Congress be in the
business of rewarding bad behavior? So I disagree with my colleagues
who favor extending the Andean Trade Preference Act past June 30.
In sum, Mr. President, I hope that the administration will soon be in
a position to send implementing legislation for the U.S-Peru Trade
Promotion Agreement to Congress. And I urge my colleagues to work with
me to implement not only that agreement, but also our agreements with
Colombia and Peru as soon as possible. Our agricultural producers,
manufacturers, and service providers are counting on us. Our allies are
counting on us. It is in our economic interest, and it is in our
national interest. Now it is up to Congress. We have to execute our
responsibilities without delay. We cannot let the opportunities
embodied in these trade agreements slip us by.
Mr. President, I yield the floor and suggest the absence of a quorum.
The PRESIDING OFFICER. The clerk will call the roll.
The assistant legislative clerk proceeded to call the roll.
Mr. REID. Mr. President, I ask unanimous consent that the order for
the quorum call be rescinded.
The PRESIDING OFFICER. Without objection, it is so ordered.
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