[Congressional Record (Bound Edition), Volume 145 (1999), Part 20]
[Extensions of Remarks]
[Pages 29891-29892]
[From the U.S. Government Publishing Office, www.gpo.gov]




     THE INTRODUCTION OF H.R.   , THE TRADE ENHANCEMENT ACT OF 1999

                                 ______
                                 

                          HON. SANDER M. LEVIN

                              of michigan

                    in the house of representatives

                       Tuesday, November 16, 1999

  Mr. LEVIN. Mr. Speaker, today, along with Representatives Houghton 
and Thurman, I am introducing the Trade Enhancement Act of 1999. This 
bill will strengthen the ability of the U.S. government to counteract 
foreign country measures that act as market access barriers to U.S. 
agricultural and manufactured goods and services. It will do this by 
updating section 301 of the Trade Act of 1974, as well as the Sherman 
Antitrust Act.
  For 25 years, section 301 has been essential to the effective conduct 
of U.S. trade policy. Section 301 investigations by the Office of the 
U.S. Trade Representative (``USTR'') have opened foreign markets for 
U.S. workers, farmers and businesses. These investigations have also 
led to negotiation of multilateral and bilateral agreements that 
liberalize trade, expand markets and strengthen rules of fair and open 
competition for manufactured and agricultural products and services, 
and improve protection of intellectual property rights. Today, benefits 
from these agreements flow not only to the United States, but to all 
WTO members.
  Section 301 remains an important policy tool, even with the advent of 
binding dispute settlement in the WTO. As international trade and 
economic integration have grown, new barriers have arisen or have 
become more apparent. In a number of cases, neither U.S. laws nor WTO 
rules yet provide an adequate means for addressing such barriers. This 
bill identifies three significant gaps in the existing body of U.S. and 
WTO law and amends U.S. law to address foreign country barriers that 
exploit those gaps.
  The first gap concerns market access barriers masquerading as health 
and safety measures. Such barriers come within the purview of the WTO 
Agreement on Sanitary and Phytosanitary Measures (``the SPS 
Agreement''). However, barriers in this sector have tended to 
proliferate in a fragmented way, which makes them difficult to 
challenge one at a time. WTO-inconsistent health and safety regulations 
often focus on individual products or narrow product categories. It is 
generally inefficient to take each one on independently. However, there 
is no mechanism under current law to call attention to or challenge a 
series of regulations en bloc.
  This bill begins to fill that gap by creating an ``SPS Special 301'' 
provision, modeled after the existing Special 301 for measures 
affecting intellectual property rights. It requires USTR to make an 
annual identification of the most onerous or egregious instances of 
foreign country trade barriers disguised as health and safety measures. 
As with Special 301 for intellectual property rights, identification of 
the priority foreign country SPS measures will trigger a requirement 
for USTR to undertake a section 301 investigation of those measures.
  The bill also requires the President to take into account the extent 
to which a country's health and safety regulations are based on 
scientific evidence in determining that country's eligibility for 
benefits under the Generalized System of Preferences.
  The second gap in current U.S. and WTO law concerns market access 
barriers that take the form of private anticompetitive conduct 
supported, fostered, or tolerated by a foreign government. For example, 
some governments delegate regulatory-type authority to trade 
associations, which are thereby able to engage in conduct that would 
violate the antitrust laws if engaged in by entities in the United 
States. These practices allow foreign producers to gain a regulatory 
advantage over exporters from the United States and other countries.
  Neither current U.S. laws nor the rules of the WTO are equipped to 
address fully joint public-private market access barriers. Section 301 
authorizes USTR to respond to certain foreign government measures, but 
does not refer expressly to some of the forms of conduct that make 
these barriers effective. Nor does section 301 authorize USTR to 
respond to the private activity component of these barriers.
  U.S. antitrust law authorizes the Justice Department and Federal 
Trade Commission to address foreign anticompetitive conduct that harms 
U.S. exports, but this authority has rarely been exercised, and there 
is no requirement that it be exercised in appropriate cases.
  Nor are WTO rules yet adequate to address joint public-private 
anticompetitive conduct. This was illustrated by the recent Japan-Film 
decision, in which the WTO declined to find that U.S. benefits under 
the WTO had been ``nullified or impaired'' due to a Japanese 
distribution regime that discriminated against imports, including U.S.-
made photographic film and paper.
  Joint public-private barriers flourish in environments where 
government rulemaking and administration are opaque. While WTO rules 
require transparency in these processes, the WTO to date has failed to 
apply its rules in a way that achieves that result. Also, the WTO rules 
are not designed to address the private component of joint public-
private market access barriers.
  The Trade Enhancement Act of 1999 begins to fill this second gap by 
upgrading the authority of USTR so that the agency is better able to 
respond to joint public-private market access barriers. It does this in 
two principal ways.
  First, the bill broadens the definition of foreign conduct that will 
trigger USTR's authority to take responsive action. To the category of 
conduct requiring responsive action by USTR, the bill adds a foreign 
government's fostering of systematic anticompetitive activities. (Under 
current law, a foreign government's toleration of systematic 
anticompetitive activities triggers USTR's discretionary authority to 
take responsive action.) The bill also makes clear that anticompetitive 
conduct triggering USTR's authority includes conduct coordinated 
between or among foreign countries (not just within a single foreign 
country) and conduct that has the effect of diverting goods to the U.S. 
market (not just conduct that keeps U.S. goods and services out of 
foreign markets).
  Second, the bill establishes a mechanism for addressing the private 
components of joint public-private market access barriers. Under

[[Page 29892]]

current law, at the conclusion of a section 301 investigation, USTR 
must determine whether the foreign country under investigation has 
engaged in conduct requiring or warranting responsive action. Under 
this bill, if that determination is affirmative, USTR will be required 
to make an additional determination, to wit: whether there is reason to 
believe that the conduct at issue involves anticompetitive conduct by 
any person or persons. If the latter determination is also affirmative, 
USTR will be required to refer the matter to the Department of Justice.
  Upon referral of a matter from USTR, the Department of Justice will 
be required to undertake an investigation to determine whether there is 
reason to believe that any persons have violated the Sherman Antitrust 
Act. That investigation ordinarily will have to be completed within 180 
days. An affirmative determination will require the Department either 
to commence an enforcement action against the alleged violators or 
explain to Congress its reasons for declining to do so.
  The third gap in current law is the lack of any express penalty for 
foreign non-cooperation in the gathering of evidence relevant to an 
investigation of market access barriers. In recent years, there have 
been several instances in which a foreign government refused to 
cooperate with USTR in the conduct of a section 301 investigation or 
the enforcement of a bilateral trade agreement. In certain cases, these 
attempts to obstruct the conduct of an investigation extended even to 
refusing to meet with Cabinet-level and other senior Administration 
officials. These actions prevent the United States from developing a 
factual basis to understand and resolve important trade problems and 
issues and, in addition, contradict longstanding norms of diplomatic 
behavior.
  The Trade Enhancement Act of 1999 begins to fill the third gap by 
creating a deterrent to non-cooperation in investigations of market 
access barriers. USTR will be authorized to draw an inference adverse 
to the interests of a foreign respondent in the event of non-
cooperation in the provision of relevant evidence. The adverse 
inference would be limited to the issues on which the foreign 
government refused to cooperate. This sanction is modeled on discovery 
sanctions that courts and administrative bodies in the United States 
commonly apply.
  Mr. Speaker, it is important that the agencies working to open 
foreign markets to U.S. goods, services, and capital be equipped with 
modern tools to address modern problems. It has been over a decade 
since these tools were last upgraded. In that time, the nature of 
foreign trade-impeding activity has changed. It has become more 
sophisticated. The tools used to defend U.S. rights ought to be equally 
sophisticated. Accordingly, I urge my colleagues to support this bill, 
and I urge that it receive serious consideration by the committees of 
jurisdiction and by the full House.

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