[Senate Report 107-139]
[From the U.S. Government Publishing Office]



                                                       Calendar No. 319
107th Congress                                                   Report
                                 SENATE
 2d Session                                                     107-139

======================================================================



 
            BIPARTISAN TRADE PROMOTION AUTHORITY ACT OF 2002

                                _______
                                

               February 28, 2002.--Ordered to be printed

                                _______
                                

   Mr. Baucus, from the Committee on Finance, submitted the following

                              R E P O R T

                             together with

                            ADDITIONAL VIEWS

                        [To accompany H.R. 3005]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Finance, to which was referred the bill 
(H.R. 3005) to grant trade promotion authority to the President 
through June 1, 2005, with the possibility of extension through 
June 1, 2007, having considered the same, reports favorably 
thereon with an amendment in the nature of a substitute and 
recommends that the bill as amended do pass.

                               I. SUMMARY

    H.R. 3005 establishes special rules for the implementation 
of international trade agreements that the President concludes 
prior to June 1, 2005, with a possibility of extension to June 
1, 2007. The bill would give the President the authority to 
proclaim modifications to certain tariff rates in order to 
implement such agreements. Where specific conditions have been 
met, legislation to implement trade agreements--including 
tariff reductions not subject to proclamation authority and 
other changes to current U.S. law--would be subject to 
streamlined procedures (known as ``fast track procedures'' or 
``trade authorities procedures'') when considered in the House 
of Representatives and the Senate. Under these fast track 
procedures, trade agreement implementing bills would not be 
subject to amendment and would be guaranteed a vote on the 
floor of each Chamber by a date certain.
    For implementing legislation to qualify for trade 
authorities procedures, the underlying trade agreement must 
make progress toward achieving the applicable objectives, 
policies, and priorities set forth in the bill. Further, the 
President must consult regularly with Members of Congress 
regarding agreements under negotiation. Congress reserves the 
right to withdraw the application of fast track procedures to 
an agreement or agreements in the event the President fails to 
consult as required.
    Fast track procedures for trade agreement implementing 
legislation were last enacted in 1988 and extended in 1991 and 
1993 with respect to certain agreements entered into before 
April 16, 1994. It is expected that the present extension of 
fast track procedures will support the President's efforts to 
conclude a new round of negotiations in the World Trade 
Organization, an agreement to establish a Free Trade Area of 
the Americas, and bilateral free trade agreements with Chile 
and Singapore, as well as efforts to conclude additional 
agreements the President may identify during the period covered 
by the bill.

                        II. GENERAL EXPLANATION


                             A. Background

    Implementation of trade agreements often requires the 
United States to enact legislation modifying tariffs and making 
other changes to U.S. law. Congressional consideration of such 
implementing legislation under ordinary rules of procedure 
carries several disadvantages. Under ordinary rules, a bill may 
be amended in a manner inconsistent with the underlying 
agreement, which may require the President to re-open 
negotiation of the agreement. Ordinary rules do not require 
that a bill be voted on by a date certain, or that it be voted 
on at all. A trade agreement could be concluded and languish 
indefinitely.
    These aspects of ordinary legislative procedure pose 
difficulties for trade negotiations. A foreign country may be 
reluctant to conclude negotiations with the United States faced 
with uncertainty as to whether and when a trade agreement will 
come up for approval by Congress. Similarly, a country may be 
reluctant to make concessions, knowing that it may have to 
renegotiate following Congress's initial consideration of the 
agreement.
    Recognizing that the failure to implement certain 
agreements concluded during the Kennedy Round of multilateral 
trade negotiations had damaged U.S. negotiating credibility, 
and desiring to facilitate the negotiation and implementation 
of trade agreements, Congress enacted special procedures for 
the consideration of trade agreement implementing legislation 
in the Trade Act of 1974. The ``fast track'' procedures were 
first applied to the Trade Agreements Act of 1979, in which 
Congress approved the results of the Tokyo Round of 
negotiations under the General Agreement on Tariffs and Trade. 
Fast track procedures were renewed in 1984 and extended to a 
broader array of agreements. They were renewed again in the 
Omnibus Trade and Competitiveness Act of 1988. That Act 
provided for application of fast track procedures to agreements 
concluded through June 1, 1991 with the possibility of 
extension through June 1, 1993. This period was subsequently 
extended to April 15, 1994. The procedures in the 1988 Act were 
used to approve the North American Free Trade Agreement and the 
Uruguay Round Agreements, including the Marakesh Agreement 
Establishing the World Trade Organization. Today, fast track 
procedures are widely viewed as essential to consideration of 
certain complex international trade agreements to which the 
United States may become a party.
    The present bill follows the model of past fast track 
legislation, with certain modifications to reflect new 
priorities and objectives, as well as an increased emphasis on 
consultation by the President with Congress at all phases of 
trade agreement negotiation. As under past fast track 
legislation, the present bill sets forth a series of detailed 
negotiating objectives covering particular sectors, such as 
agriculture and services, and issues that cut across sectors, 
such as dispute settlement and transparency in the institutions 
that regulate international trade. Next, the bill sets forth 
the conditions under which trade agreement implementing 
legislation will be eligible for consideration under fast track 
procedures. Generally, the President must make progress toward 
achieving the relevant objectives set forth in the bill and 
explain how he has done so. Further, the President must consult 
with Congress at all phases of an agreement's negotiation.
    If these conditions are met, then a bill approving a trade 
agreement and making only those changes to U.S. law necessary 
or appropriate to implement the agreement will be considered 
under fast track rules. Given the inability to amend 
legislation under fast track rules, it is important to 
protecting the constitutional authority of Congress that such 
legislation be limited to measures necessary or appropriate to 
implement the underlying agreement. For this reason, practice 
under past fast track legislation has been for the 
congressional Committees of jurisdiction and the President to 
collaborate closely on the drafting of implementing legislation 
before it is formally introduced. It is the Committee's 
expectation that this practice will be followed under the 
present bill.
    The very nature of trade authorities procedures requires 
that the executive and legislative branches work hand-in-hand 
during international trade negotiations. Constitutionally, the 
power to regulate commerce with foreign nations rests squarely 
with the Congress. In agreeing to fast track procedures, 
Congress retains this power, but modifies its use. In doing so, 
Congress recognizes that the Constitution vests the President 
with the power to speak to foreign leaders with one voice, and 
that the international trade interests of the United States can 
best be promoted by negotiating international trade agreements 
with foreign nations. In short, trade authorities procedures 
represent a partnership between the legislative and executive 
branches of government. By forging this partnership, Congress 
and the President enhance the effectiveness of their 
constitutionally endowed powers to serve the best interests of 
the American people. The foundation of this partnership is 
regular, detailed and frequent Presidential consultation with 
Congress.
    Recognizing the importance of congressional-executive 
consultation on trade negotiations, Congress set forth certain 
consultation requirements in the same legislation that 
contained the original fast track provisions. Section 161 of 
the Trade Act of 1974 requires the Speaker of the House of 
Representatives and the President pro tempore of the Senate to 
designate congressional advisers for trade policy and 
negotiations at the beginning of each regular session of 
Congress. These advisers consist of five members of the House 
Committee on Ways and Means and five members of the Senate 
Committee on Finance, as well as certain members that the 
Speaker and President pro tempore may designate from other 
Committees, according to the subject matter under negotiation. 
These advisers are tasked with providing ``advice on trade 
policy and priorities for the implementation thereof.'' They 
are to be ``accredited by the United States Trade 
Representative on behalf of the President as official advisers 
to the United States delegations to international conferences, 
meetings, and negotiating sessions relating to trade 
agreements.''
    The Trade Representative is required to keep the 
congressional advisers currently informed on matters affecting 
trade policy, possible trade negotiations, and ongoing trade 
negotiations, as well as changes to domestic law or 
administration of the law that may be required by trade 
agreements. Section 161 requires similar consultations with the 
Ways and Means Committee and Finance Committee, as well as 
other appropriate Committees of Congress.
    The present bill adds to the trade policy consultation 
requirements in several important respects. It establishes a 
special Congressional Oversight Group, in addition to the 
congressional trade advisers designated under section 161 of 
the Trade Act. The Group will consist of Members of the Ways 
and Means and Finance Committees, as well as Members of other 
Committees with jurisdiction over laws that may be affected by 
ongoing negotiations. Like the advisers under section 161, 
Members of the Oversight Group will be accredited as official 
advisers to the U.S. delegation in trade negotiations. To 
ensure their ability to fulfill this role effectively, the 
present bill requires the Trade Representative, in consultation 
with the Chairmen and Ranking Members of the Finance and Ways 
and Means Committees, to develop written guidelines for 
consultations with the Oversight Group.
    Additionally, the present bill contains special notice and 
consultation requirements regarding negotiations and proposed 
negotiations on particular subjects, including import-sensitive 
agricultural products, fish and shellfish, textiles, and trade 
remedy laws (i.e., antidumping, countervailing duty, and 
safeguards laws).
    The Committee recognizes that fast track procedures have 
facilitated the negotiation of important trade benefits for the 
United States. Trade agreements approved and implemented under 
fast track procedures have led to the opening of markets for 
U.S. manufactured goods, agricultural products, and services, 
the establishment of international disciplines on an array of 
practices affecting U.S. trade relations with foreign 
countries, and the adoption of rules fostering an environment 
conducive to foreign investment by U.S. individuals and 
businesses. The Committee believes that enactment of the 
Bipartisan Trade Promotion Authority Act of 2002 will promote 
U.S. leadership in trade policy, and enable the United States 
to expand on the benefits achieved under previous fast track 
legislation, while preserving strong and effective roles for 
both the legislative and executive branches of government in 
trade policy making.

                         B. Action in Committee


                              1. hearings

    On June 20 and 21, 2001, the Committee held hearings on 
Trade Promotion Authority. The Committee heard testimony from 
Secretary of Commerce Donald Evans and U.S. Trade 
Representative Robert B. Zoellick, several Members of the 
Senate and of the House of Representatives, and witnesses from 
the private sector, including several former U.S. trade 
officials. Private sector witnesses represented a broad cross-
section of interests, including agriculture, financial 
services, labor, and the environment. The Committee also 
received written statements from a number of interested 
parties.
    In general, witnesses expressed support for a U.S. policy 
of pursuing trade liberalization and expansion of the rules-
based world trading system, and recognized that this would be 
facilitated by enactment of fast track legislation. Witnesses 
observed that increased trading opportunities should have a 
positive impact on economic growth and employment in the United 
States. It was noted that, since fast track legislation lapsed 
in 1994, free trade agreements among other countries have 
proliferated, and that a new grant of fast track legislation 
would help the United States to affirm its leading role in 
world trade.
    At the same time, some witnesses testified that new fast 
track legislation should contain certain modifications from the 
1988 legislation. Some urged that new legislation take account 
of the relationships between trade and labor standards and 
trade and environmental standards--in particular, that a bill 
reflect the principles on these issues embedded in the United 
States-Jordan Free Trade Agreement. Others urged changes to 
procedures for congressional and executive branch interaction 
on trade policy--for example, excluding from fast track 
procedures any changes to U.S. trade remedy laws, and requiring 
that Congress expressly approve the implementation of any 
adverse decisions rendered in trade-related dispute settlement.
    A number of witnesses pointed out the importance that U.S. 
trade policy be built upon the foundation of a clear mandate 
agreed to by Congress and the President.

                    2. CONSIDERATION OF LEGISLATION

    On December 6, 2001, the Senate received from the House of 
Representatives the Bipartisan Trade Promotion Authority Act of 
2001 (H.R. 3005). The bill was read twice and referred to the 
Committee on Finance. The Committee held a meeting on December 
12, 2001, which continued on December 18, 2001. The Chairman 
offered an amendment in the nature of a substitute, which was 
agreed to by the Committee. Several other amendments were 
rejected by voice vote. The motion to report the bill as 
amended by the Chairman's amendment in the nature of a 
substitute was approved by a vote of 18 to 3.

                    III. SECTION-BY-SECTION ANALYSIS


Section 1. Short title; findings

    The short title of the bill is the ``Bipartisan Trade 
Promotion Authority Act of 2002.''
    Section 1(b) sets forth three sets of findings. First, 
Congress finds that expanded trade is vital to the national 
security of the United States, because it promotes stability 
through economic growth and prosperity and binds nations 
together in networks of mutual rights and obligations.
    Second, Congress finds that trade expansion has been the 
engine of economic growth for the United States, maximizing 
opportunities for sectors vital to the U.S. economy. By 
fostering new opportunities for the U.S. economy, it is 
expected that expanded trade will preserve a leading role for 
the United States in world affairs.
    The third set of findings, set forth in section 1(b)(3), 
expresses the view that continued support for trade expansion 
requires a preservation of the balance of rights and 
obligations negotiated in trade agreements. It identifies a 
growing concern that this balance may be upset by decisions of 
dispute settlement panels convened in the World Trade 
Organization (``WTO'') and the WTO Appellate Body. This concern 
is prompted by recent decisions placing new obligations on the 
United States, and identifying restrictions on the use of 
antidumping, countervailing duty and safeguard measures, which 
are not found anywhere in the negotiated texts of the relevant 
WTO agreements.
    Congress finds that WTO panels and the Appellate Body have 
ignored their obligation to afford an appropriate level of 
deference to the technical expertise, factual findings, and 
permissible legal interpretations of national investigating 
authorities--particularly the U.S. Department of Commerce and 
the U.S. International Trade Commission (``ITC''). The record 
compiled so far in reviews of antidumping duty, countervailing 
duty, and safeguard measures reflects a bias against import 
relief.
    First, WTO panels and the Appellate Body have, through 
interpretation, substantially rewritten the WTO Antidumping 
Agreement in ways disadvantageous to the United States. For 
example, in United States--Anti-Dumping Measures on Certain 
Hot-Rolled Steel Products from Japan, the Appellate Body held 
that investigating authorities, in order to justify antidumping 
measures, must separate and distinguish the amount of injury 
caused by each potential factor relating to a domestic 
industry's material injury, rather than simply finding that 
material injury exists and that dumped imports are among the 
causes of material injury. This decision has no basis in the 
text of the Antidumping Agreement and is inconsistent with 
previously adopted decisions of panels under the General 
Agreement on Tariffs and Trade (``GATT'') concerning the 
causation analysis required in material injury investigations 
in antidumping cases. Moreover, it is contrary to the 
expectations of the Committee based on the Statement of 
Administrative Action that accompanied the Uruguay Round 
Agreements Act. See Uruguay Round Trade Agreements, Texts of 
Agreements, Implementing Bill, Statement of Administrative 
Action, and Required Supporting Statements, H. Doc. No. 316, 
103d Cong., 2d Sess. at 851 (1994) (``Article 3.5 of the 
Antidumping Agreement and 15.5 of the Subsidies Agreement do 
not change the causation standard from that provided in the 
1979 Tokyo Round Codes. * * * The GATT 1947 Panel Report in the 
Norwegian Salmon case approved U.S. practice as consistent with 
the 1979 Codes. The panel noted that the [U.S. International 
Trade] Commission need not isolate the injury caused by other 
factors from injury caused by unfair imports.'').
    In the same case, the Appellate Body further held that 
investigating authorities may not include, among the company-
specific dumping margins averaged together to establish an 
antidumping duty deposit rate for companies not individually 
investigated, any company-specific margin based even in part on 
``facts available''--a decision with no basis in the text of 
the Antidumping Agreement. In this and other respects, the Hot-
Rolled Steel case resulted in the announcement of obligations 
concerning the use of facts available that are different from 
the obligations set forth in the Antidumping Agreement.
    In this case and in others, the panels and Appellate Body 
have avoided or misapplied the standard of review in Article 
17.6 of the Antidumping Agreement, which is supposed to ensure 
deference to reasonable factual determinations and legal 
interpretations rendered by national investigating authorities. 
\1\
---------------------------------------------------------------------------
    \1\ Other examples of WTO panels and the Appellate Body wrongly 
narrowing the discretion of national investigating authorities, and 
thereby upsetting the carefully negotiated balance of the Antidumping 
Agreement, include: United States--Anti-Dumping Duty on Dynamic Random 
Access Memory Semiconductors (DRAMS) of One Megabit or Above from 
Korea; United States--Anti-Dumping Measures on Stainless Steel Plate in 
Coils and Stainless Steel Sheet and Strip from Korea; Thailand--Anti-
Dumping Duties on Angles, Shapes and Sections of Iron or Non-Alloy 
Steel H-Beams from Poland; European Communities--Anti-Dumping Duties on 
Imports of Cotton-Type Bed-Linen from India; and Guatemala--Definitive 
Anti-dumping Measure regarding Grey Portland Cement from Mexico.
---------------------------------------------------------------------------
    Second, WTO panels and the Appellate Body have, through 
interpretation, substantially rewritten Part V of the Agreement 
on Subsidies and Countervailing Measures, which applies to WTO 
Members' countervailing duty actions, in ways disadvantageous 
to the United States. For example, the Appellate Body in United 
States--Imposition of Countervailing Duties on Certain Hot-
Rolled Lead and Bismuth Carbon Steel Products Originating in 
the United Kingdom refused to apply a deferential standard of 
review which the United States had sought and negotiated and 
which is applicable, under a 1994 WTO Ministerial Declaration, 
to countervailing duty disputes. The Appellate Body also 
invented new limits, with no basis in the text of the Agreement 
on Subsidies and Countervailing Measures, on the use of 
countervailing duties to offset non-recurring subsidies whose 
benefits are allocated over time. The substantive rules 
announced by the Appellate Body created a loophole in the 
existing WTO anti-subsidy regime and undermined negotiated 
disciplines which the United States worked for decades to 
achieve.
    Third, WTO panels and the Appellate Body have, through 
interpretation, substantially rewritten the WTO's rules on 
safeguard measures, including the Agreement on Safeguards, in 
ways disadvantageous to the United States. In United States--
Safeguard Measures on Wheat Gluten from the EU and United 
States--Safeguard Measures on Lamb from Australia and New 
Zealand, WTO tribunals faulted the ITC's longstanding method 
for assessing the role played by imports when multiple factors 
are contributing to a domestic industry's serious injury--
decisions with no basis in the text of the Agreement on 
Safeguards. These two recent decisions against the United 
States continued a pattern in which no challenged safeguard 
measure has ever been upheld in WTO dispute settlement, and 
they have invited additional challenges to valid U.S. safeguard 
measures on other products.
    This record in WTO dispute settlement proceedings is 
particularly troubling, because the right to act against 
dumped, subsidized, and surging imports is a fundamental part 
of the multilateral trade regime, having been codified in 
Articles VI and XIX of the original General Agreement on 
Tariffs and Trade 1947. Foreign governments' successful use of 
dispute settlement procedures to erode bargained-for trade 
remedy protections negatively affects American firms, workers, 
and farmers and may jeopardize public support for a liberal 
trading system.
    Because of the Committee's concerns about the trend in WTO 
dispute settlement involving U.S. trade remedy laws and its 
potential damage to support for the WTO, a later provision of 
the bill (section 5(b)(2)) requires the Secretary of Commerce 
to submit a report to Congress outlining a strategy for 
correcting instances in which dispute settlement panels and the 
Appellate Body have added to obligations or diminished rights 
of the United States, as described in section 1(b)(3).

Section 2. Trade negotiating objectives

            Summary
    Section 2 of the bill sets forth the objectives, policies, 
and priorities of the United States in negotiating trade 
agreements over the next 5 years. In order for legislation 
implementing a trade agreement to qualify for consideration 
under the special trade authorities procedures set forth in 
section 3 of the bill, the President must state that the 
agreement makes progress in achieving the applicable purposes, 
policies, priorities, and objectives of the bill. Further, 
these purposes, policies, priorities, and objectives should 
serve as the basis for consultations between the President and 
Congress during the course of an agreement's negotiation.
    Section 2 is organized into three subsections, all of which 
carry equal importance in defining the trade negotiating 
positions of the United States. Subsection (a) addresses 
overall objectives--that is, goals that cut across sectors and 
issue areas. Subsection (b) addresses objectives that are 
specific to particular sectors, such as services and 
agriculture, and particular issue areas, such as investment, 
dispute settlement, and the intersection between trade and core 
labor standards and between trade and the environment. 
Subsection (c) addresses priorities that are not necessarily 
negotiating objectives themselves but that should inform trade 
negotiations or be pursued parallel to trade negotiations. For 
example, one priority requires the conduct of environmental 
reviews in conjunction with new trade negotiations. Another 
priority directs the President to seek the establishment of 
consultative mechanisms among trade agreement partners to 
strengthen their capacity to promote respect for core labor 
standards.
    It is the expectation of the Committee that in affirming 
that a trade agreement makes progress toward achieving the 
applicable purposes, policies, priorities and objectives of 
this bill, the President will address the purposes, policies, 
priorities, and objectives in each of the subsections of 
section 2.
            Section 2(a). Overall trade negotiating objectives
    Section 2(a) identifies eight overall trade negotiating 
objectives, as follows:
           Obtaining more open, equitable, and 
        reciprocal market access;
           Obtaining the reduction or elimination of 
        trade barriers and other trade-distorting policies and 
        practices;
           Further strengthening the system of 
        international trading disciplines and procedures, 
        including dispute settlement;
           Fostering economic growth, raising living 
        standards, and promoting full employment in the United 
        States, and enhancing the global economy;
           Ensuring that trade and environmental 
        policies are mutually supportive, and seeking to 
        protect and preserve the environment and enhance the 
        international means of doing so, while optimizing the 
        use of the world's resources;
           Promoting respect for worker rights and the 
        rights of children, consistent with core labor 
        standards as defined in section 13(2) of the bill;
           Seeking commitments by trade agreement 
        partners to strive not to weaken or reduce protections 
        afforded in domestic environmental or labor laws in 
        order to gain trade advantages; and
           Ensuring that trade agreements afford small 
        businesses equal access to international markets, 
        equitable trade benefits, and expanded export 
        opportunities, and provide for the elimination of 
        barriers that affect small businesses 
        disproportionately.
    These overall objectives reflect several priorities in U.S. 
trade policy. Establishing greater access to foreign markets is 
one of those priorities, but it is not the only one. In 
particular, the overall objectives make clear that the pursuit 
of trade expansion should not be carried out at the expense of 
other priorities, such as protection of a sound, sustainable 
environment and protection of the rights of workers. Rather, 
these goals should be pursued in ways that will be mutually 
reenforcing. Similarly, as negotiators seek to expand trading 
opportunities for U.S. producers of goods and services, they 
also should seek to strengthen the disciplines that establish 
fairness and predictability in the world trading system.
            Section 2(b). Principal trade negotiating objectives
    Section 2(b) sets forth 14 objectives that are sector- or 
issue-specific, as follows:
            1. Trade barriers and distortions
    The principal negotiating objectives regarding trade 
barriers and distortions are:
           To expand competitive market opportunities 
        for U.S. exports and to obtain fairer and more open 
        conditions of trade by reducing or eliminating tariff 
        and nontariff barriers and policies and practices of 
        foreign governments directly related to trade that 
        decrease market opportunities for U.S. exports and 
        distort U.S. trade, and
           To obtain reciprocal tariff and nontariff 
        barrier elimination agreements, with particular 
        attention to products covered in section 111(b) of the 
        Uruguay Round Agreements Act.
    This language covers any tariff or non-tariff barrier as 
well as any policy or practice that is directly related to 
trade, regardless of whether the barrier is imposed at the 
foreign border or at some other point. The objective is 
directed at policies and practices, as well as formal statutes 
and regulations. The Committee recognizes that some of the most 
onerous foreign trade barriers faced by U.S. exporters consist 
of informal policies and practices that may not be as easy to 
identify as a written law that violates an international trade 
obligation. Further, this objective is directed at barriers 
regardless of the branch of government in which they occur 
(e.g., executive, legislative, or judicial), and regardless of 
the level of government at which they occur (e.g., national, 
provincial, or local).
    Section 2(b)(1)(B) directs the President to continue to 
seek the elimination of duties on a reciprocal basis for 
products covered in section 111(b) of the Uruguay Round 
Agreements Act, as described in page 45 of the Statement of 
Administrative Action accompanying that Act. Although the 
President was successful in obtaining the reciprocal 
elimination of duties for a number of products contained in 
that list as part of the Information Technology Agreement 
negotiated under the auspices of the WTO, there are a number of 
products on the list for which ``zero-for-zero'' agreements 
have not been reached. It is the Committee's intention that the 
President pay particular attention to the elimination of 
tariffs on these products, which could result in substantial 
benefits to U.S. industry and workers. For many of these 
products, U.S. producers remain at a significant competitive 
disadvantage. In other sectors, tariff inequities are 
aggravated by tariff escalation, which occurs when a country 
establishes low or zero tariffs for raw materials but maintains 
relatively high tariffs for processed products. The Committee 
intends that the Administration pursue ending such practices 
for the sectors covered by the proclamation authority provided 
in section 111(b) of the Uruguay Round Agreements Act.
            2. Services
    The principal negotiating objectives regarding services are 
to reduce or eliminate barriers to international trade in 
services, including regulatory and other barriers, that deny 
national treatment or unreasonably restrict the establishment 
or operations of services suppliers.
    The Committee notes that U.S. services exports are 
approaching $300 billion annually. Many markets for U.S. 
services are vast and essentially untapped. As income in 
foreign countries grows, their imports of U.S. services tend to 
rise disproportionately. Thus, negotiations that reduce 
barriers to all modes of supply of services could lead to a 
major expansion of U.S. services exports, resulting in a 
significant improvement in the U.S. balance of payments 
account.
    Certain services, such as telecommunications, financial 
services, supply of energy, information technology, and express 
delivery, are essential to a country's infrastructure. 
Additionally, U.S. manufacturers benefit from the efficient 
delivery of services to support production, such as product 
design and engineering, marketing and distribution, 
outsourcing, and globalized logistics strategies. Accordingly, 
the objective on services directs negotiators to expand market 
access for all service sectors.
    Specifically, it is important to: (1) achieve maximum 
liberalization of trade in all modes of supply, including 
cross-border supply of services and movement of natural 
persons, across the widest possible range of services; (2) 
provide rights of establishment with majority ownership and 
national treatment for companies operating in foreign markets; 
(3) allow investors to establish in whatever corporate form is 
most appropriate to their business objectives; (4) grandfather 
existing liberalization commitments; (5) create a free and open 
commercial environment for the development of electronic 
commerce; (6) ensure that market access commitments apply no 
matter what technology is used to deliver the service; (7) in 
sectors where appropriate, promote domestic regulatory reform, 
with the objective of securing ``best practices'' and 
committing governments to avoid discrimination against foreign 
service suppliers in their current and future regulations; (8) 
promote transparency of regulatory processes, including rule-
making, granting of licenses, setting of standards, and 
judicial and arbitral proceedings; (9) challenge both the 
desirability and the feasibility of a services safeguard 
regime, especially in light of the impact of such a provision 
on the climate for foreign direct investment and economic 
development; (10) explicitly acknowledge the importance of 
maintaining free flows of financial and other information that 
is necessary for the operation of global business; (11) 
increase transparency and access to government procurement for 
services providers; and (12) seek the elimination of cross-
subsidization by holders of foreign government granted monopoly 
rights--that is, the use of revenues from the provision of a 
service (e.g., postal or telecommunications service) on a 
monopoly basis to subsidize the provision of another, non-
monopoly service.
    U.S. negotiators should pursue liberalization of trade in 
services in bilateral and regional trade agreements, as well as 
in the WTO. In general, they should seek commitments that go 
beyond the baseline established in the WTO's General Agreement 
on Trade in Services (``GATS'').
    Where possible, services trade liberalization should be 
pursued through a ``negative list,'' rather than a ``positive 
list'' approach. That is, negotiators should seek market-
opening commitments that apply across sectors, minimizing 
exceptions for particular sectors, rather than seeking market 
commitments on a sector-by-sector basis.
            3. Foreign investment
    Foreign investment is closely interrelated to trade. 
Companies invest abroad to get closer to markets, acquire new 
technologies, form strategic alliances, and enhance 
competitiveness by integrating production and distribution. 
When they invest abroad, U.S. companies often become consumers 
of U.S. exports--either from affiliated entities or other U.S. 
companies.
    The importance of international investment to the U.S. 
economy is large and growing. The United States receives more 
than 30 percent of worldwide investment. According to the U.S. 
Bureau of Economic Analysis, foreign investment in the United 
States grew sevenfold between 1994 and 2000, reaching almost 
$317 billion last year. As of 1998, foreign companies had 
invested over $3.5 trillion in the United States. They employed 
5.6 million people and paid average annual salaries of over 
$46,000, well above the average salary for U.S. workers as a 
whole. U.S. subsidiaries of non-U.S. companies accounted for 
13.5 percent of all U.S. manufacturing jobs. In 1998, foreign 
companies' affiliates in the United States accounted for 
approximately 22 percent of total U.S. exports.
    The ability of U.S. companies to invest abroad is also 
vital to U.S. economic growth. Between 1994 and 2000, U.S. 
investment abroad doubled from $73 billion to $148 billion. 
This investment spurs economic growth and U.S. exports, as over 
40 percent of U.S. large company exports and 20 percent of U.S. 
small company exports go to foreign affiliates overseas. The 
sales of U.S. affiliates abroad exceed $2.4 trillion and help 
support jobs and business activities in the United States.
    As the extent of foreign investment has increased in recent 
decades, the interest of the United States in protecting the 
rights of U.S. investors abroad has grown. Since the early 
1980s, the United States has entered into bilateral investment 
treaties (``BITs'') to secure the rights of U.S. investors 
abroad. In fact, even before the BITs, the United States sought 
to protect the rights of U.S. investors in treaties of 
friendship, commerce and navigation and similar agreements. 
Currently, the United States has concluded BITs with 46 
countries. Additionally, the Parties to the North American Free 
Trade Agreement (``NAFTA'') incorporated the substance of a BIT 
in chapter 11 of that agreement.
    There are a number of common elements among the BITs 
(including NAFTA chapter 11). These include obligations of a 
host country not to discriminate among investors of different 
nationalities (most-favored-nation obligation), not to 
discriminate as between foreign and domestic investors 
(national treatment obligation), and to accord foreign 
investors, at a minimum, fair and equitable treatment and full 
protection and security of their investments (minimum standards 
obligation). Further, host countries generally undertake an 
obligation not to expropriate or nationalize covered 
investments (either directly or indirectly), except for a 
public purpose; in a non-discriminatory manner; upon payment of 
prompt, adequate, and effective compensation; and in accordance 
with due process of law and the minimum standards obligation.
    A key aspect of investment agreements is the establishment 
of neutral tribunals in which foreign investors may seek 
redress for host government measures which they believe to be 
violations of those agreements. Rather than pursue their 
complaints through local courts under local laws, foreign 
investors may invoke arbitration under the law of the 
appropriate investment agreement, including the rules of 
customary international law as may be incorporated by reference 
into the agreement.
    Under NAFTA chapter 11, the number of investor-state 
disputes to which the United States is a party has grown 
substantially. While there are no reported cases of foreign 
investor challenges to U.S. measures under the BITs, there have 
been four such challenges since NAFTA's inception in 1994. (To 
date, a total of 13 investor complaints have been filed under 
NAFTA chapter 11.)
    The growing number of investor-state disputes has caused 
concern among certain interest groups. In particular, some 
environmental groups see investor-state dispute settlement 
provisions as having a potentially chilling effect on the 
adoption of environmental laws and regulations.
    It is argued that arbitral tribunals may interpret the 
concept of what constitutes a compensable ``expropriation'' for 
purposes of an investment agreement more broadly than courts of 
the United States have interpreted what constitutes a 
compensable ``taking'' for purposes of the Constitution of the 
United States. Thus, a Canadian or Mexican investor might be 
able to seek compensation for loss of value flowing from a U.S. 
(or state or local) government measure, whereas a similarly 
situated U.S. investor would not. It is argued that the fear of 
challenge by a Canadian or Mexican investor might cause the 
U.S. (or a state or local) government to reverse an 
environmentally beneficial measure or to refrain from adopting 
such a measure in the first place.
    Some environmental groups point to the obligation to accord 
fair and equitable treatment to foreign investments as having a 
similar impact. As in the case of expropriation, they view this 
common investment agreement term as potentially giving to 
foreign investors a right not available to U.S. investors to 
seek compensation for U.S. (or state or local) government 
measures.
    The negotiating objective on foreign investment reflects 
the Committee's view that it is a priority for negotiators to 
seek agreements protecting the rights of U.S. investors abroad 
and ensuring the existence of an investor-state dispute 
settlement mechanism. It also reflects the view that in 
entering into investment agreements, negotiators must seek to 
protect the interests of the United States as a potential 
defendant in investor-state dispute settlement. In other words, 
there ought to be a balance. Protecting the rights of U.S. 
investors abroad should not come at the expense of making 
Federal, State and local laws and regulations unduly vulnerable 
to challenge by foreign investors.
    The goal of seeking balance is described in the specific 
objectives set forth in section 2(b)(3) of the bill. First, the 
provision recognizes that protections of investor rights under 
U.S. law generally equal or exceed international law standards 
(including the non-discrimination and investment protection 
obligations described above). Accordingly, it is the 
understanding of the Committee that, when the United States 
agrees to afford foreign investors the protections required by 
international law, it is not making a commitment that will 
result in foreign investors having substantially different 
rights in the United States than those accorded U.S. investors 
under U.S. law.
    This point is made expressly in the direction to 
negotiators ``to reduce or eliminate artificial or trade-
distorting barriers to trade related foreign investment, while 
ensuring that United States investors in the United States are 
not accorded lesser rights than foreign investors in the United 
States.'' Negotiators should seek to dismantle barriers to U.S. 
investment abroad. But the reciprocal obligations the United 
States undertakes in pursuing that goal should not result in 
foreign investors being entitled to compensation for government 
measures where a similarly situated U.S. investor would not be 
entitled to relief.
    This does not mean that foreign investors should be 
required to go to U.S. courts to pursue their claims under 
investment agreements. The Committee recognizes that the 
procedures for resolving disputes between a foreign investor 
and a government may differ from the procedures for resolving 
disputes between a domestic investor and a government.
    Section 2(b)(3) of the bill further instructs negotiators 
to refer to U.S. legal principles and practice for guidance in 
seeking to enhance protections for U.S. investors abroad. The 
goal should be agreements that give U.S. investors a level of 
protection in foreign countries comparable to the level of 
protection they receive in the United States. It should be 
noted that, for purposes of section 2(b)(3), the Committee 
intends the term ``United States legal principles and 
practice'' to mean U.S. legal principles and practice as 
interpreted and applied by the courts of the United States in 
matters involving U.S. persons.
    The foreign investment provision in the bill then 
delineates specific ways in which the basic objective should be 
pursued, as follows:
     Reducing or eliminating exceptions to the 
principle of national treatment. Some countries have carved out 
sectoral or other specific exceptions to their general 
obligation not to discriminate as between foreign and domestic 
investors. Reducing or eliminating such exceptions would 
enhance opportunities for U.S. investors.
     Freeing the transfer of funds relating to 
investments. Some countries restrict the rights of foreign 
investors to repatriate profits. Such policies act as barriers 
to foreign investment. Negotiators should seek commitments from 
countries to eliminate these policies.
     Reducing or eliminating performance requirements, 
forced technology transfers, and other unreasonable barriers to 
the establishment and operation of investments. Some countries 
condition the right of a foreign national to make a direct 
investment on performance requirements. For example, a country 
may insist that a certain quantity of inputs used by a 
manufacturer be made locally. Or, the country may insist that a 
certain portion of the manufacturer's products be sold for 
export. These conditions are obstacles to U.S. investment 
abroad, and negotiators should seek their elimination.
     Seeking to establish standards for expropriation 
and compensation for expropriation, consistent with U.S. legal 
principles and practice. As noted above, one concern expressed 
about investment agreements currently in force is that the 
concept of what constitutes an expropriation may be interpreted 
more broadly than the concept of what constitutes a ``taking'' 
under U.S. law. U.S. takings law has evolved through more than 
two centuries of decisions by the Supreme Court and lower 
courts. While there is no fixed set of criteria, that 
jurisprudence has given rise to certain guidelines, such as 
criteria for determining when a government regulation (as 
opposed to a physical appropriation of land) amounts to a 
compensable ``taking.'' By contrast, certain complaints under 
NAFTA chapter 11 have urged arbitrators to find expropriations 
where the applicable tests under U.S. law may not support 
compensation for a taking. While there is unlikely ever to be a 
perfect overlap, and U.S. courts themselves differ on these 
issues, section 2(b)(3)(D) directs negotiators to draw on the 
guidelines developed in U.S. takings jurisprudence in seeking 
to refine the concept of expropriation for purposes of 
international investment agreements. This should help ensure 
that investment agreements do not confer on foreign investors 
in the United States a right to compensation for expropriation 
that differs substantially from the right to compensation for 
takings that U.S. citizens already enjoy.
     Seeking to establish standards for fair and 
equitable treatment consistent with U.S. legal principles and 
practice, including the principle of due process. The concept 
of fair and equitable treatment as defined in investment 
agreements raises concerns similar to those described above 
with respect to expropriation. The possibility of challenging a 
government measure as unfair or inequitable should not mean 
that a foreign investor effectively has access to a remedy 
where a U.S. investor would not. Accordingly, negotiators 
should seek to incorporate fair and equitable treatment 
protection that is consistent with applicable U.S. legal 
principles and practice. It is the understanding of the 
Committee that the concepts in U.S. law most closely analogous 
to fair and equitable treatment as used in investment 
agreements are the concepts of due process and the safeguards 
against arbitrary or discriminatory measures. Thus, section 
2(b)(3)(E) expressly directs negotiators to ensure that the 
term ``fair and equitable treatment'' is interpreted 
consistently with these concepts.
    The Committee recognizes that these are fluid concepts, 
which take shape through interpretation by U.S. courts. It is 
not the expectation of the Committee that negotiators will 
develop a fixed definition of fair and equitable treatment--or, 
indeed, expropriation--that contemplates all conceivable 
circumstances. However, negotiators should seek to provide 
guidelines to which tribunals should refer in deciding 
particular cases, including guidelines distinguishing the scope 
of fair and equitable treatment from the scope of 
expropriation. It is the expectation of the Committee that in 
developing such guidelines, U.S. negotiators will draw on U.S. 
case law interpreting the relevant legal principles.
     Providing meaningful procedures for resolving 
investment disputes. As discussed above, one of the goals of 
investment agreements to which the United States is a party is 
to ensure that U.S. investors can resolve disputes with host 
governments in a fair and efficient way. Often, this means 
giving investors the option of going to arbitration, rather 
than pursuing their claims through local courts. Negotiators 
should continue to seek provisions in investment agreements 
that allow U.S. investors to resolve disputes with foreign 
governments through arbitration, mediation, consultations, or 
other alternatives to local courts. Accordingly, section 
2(b)(3)(F) directs negotiators to seek agreements providing 
meaningful procedures for resolving investment disputes. By 
``meaningful procedures,'' the Committee means efficient 
procedures, judicial in character, that comport with principles 
of fair play and substantial justice. Moreover, the dispute 
settlement procedures adopted in investment agreements should 
reflect the fact that there often will be a public interest in 
how investor-state disputes are resolved. Given this interest, 
dispute settlement should be as transparent as possible, as 
discussed in greater detail in section 2(b)(3)(H).
     Seeking to improve mechanisms used to resolve 
disputes between an investor and a government. Section 
2(b)(3)(G) delineates four specific improvements that 
negotiators should seek in investor-state dispute settlement. 
First, they should seek mechanisms to eliminate frivolous 
claims and to deter the filing of frivolous claims. Agreements 
should authorize arbitrators to dismiss promptly complaints 
that plainly fail to state a cognizable claim. This will ensure 
that the United States and other governments are not put to 
needless expenditures of resources on discovery and other case 
preparation. Further, agreements should provide for deterrence 
of frivolous filings by, for example, authorizing arbitrators 
to impose attorneys' fees and costs on parties that file 
frivolous claims.
    Second, negotiators should seek to ensure the efficient 
selection of arbitrators and the expeditious disposition of 
claims. A benefit to U.S. investors of resolving disputes 
through arbitration is the ability to get quick and just 
results. That benefit is diminished if the selection of 
arbitrators and rules of arbitration can be abused to bring 
about delay. Negotiators should seek agreements that minimize 
the possibilities for abuse.
    Third, negotiators should seek procedures to enhance 
opportunities for public input into the formulation of 
government positions. Since investor-state dispute settlement 
generally will involve measures taken by a government 
ostensibly to enhance the welfare of the general public, there 
often will be interest in a case from an array of different 
perspectives. For example, several cases to date under NAFTA 
chapter 11 involve environmental laws and regulations. The 
public nature of the measures at issue in these disputes 
distinguishes them from arbitration between private parties. 
Because the resolution of these disputes may affect broader 
public policy, interested parties should have the opportunity 
to provide input into the formulation of government positions, 
consistent with pleadings schedules determined by arbitral 
tribunals. The Committee notes that the United States-Jordan 
Free Trade Agreement includes a Memorandum of Understanding on 
Transparency in Dispute Settlement in which the United States 
and Jordan commit to ``solicit and consider the views of 
members of their respective publics in order to draw upon a 
broad range of perspectives.'' While that commitment pertains 
to eventual disputes between two states, the underlying aim of 
increasing democratization is equally applicable to disputes 
between a state and a foreign investor. Accordingly, U.S. 
negotiators should seek to obtain similar commitments in 
investment agreements.
    Fourth, negotiators should seek to establish a single 
appellate body to review decisions in investor-state disputes. 
As the United States enters into more investment agreements and 
the number of investor-state disputes grows, the need for 
consistency of interpretation of common terms--such as 
expropriation and fair and equitable treatment--will grow. 
Absent such consistency, key terms may be given different 
meanings depending on which arbitrators are appointed to 
interpret them. This will detract from the predictability of 
rights conferred under investment agreements. A single 
appellate mechanism to review the decisions of arbitral panels 
under various investment agreements should help to address this 
issue and minimize the risk of aberrant interpretations.
     Ensuring the fullest measure of transparency in 
the dispute settlement mechanism. Recognizing the public 
interest in matters that generally will be at issue in 
investor-state dispute settlement, section 2(b)(3)(H) sets 
forth specific ways in which negotiators should seek to make 
such dispute settlement open to public view and public input. 
First, requests for dispute settlement should promptly be made 
available to the public. Second, written submissions, as well 
as panel decisions should promptly be made available to the 
public, and hearings should be open to the public. Finally, 
mechanisms should be established whereby arbitral panels may 
receive and consider submissions from interested third parties. 
Each of the foregoing objectives should be pursued within 
limits necessary to protect classified and business 
confidential information that may come out during dispute 
settlement proceedings and maintain the essential judicial 
character of the process.
    There is precedent for each of the foregoing transparency-
related objectives in the United States-Jordan Memorandum of 
Understanding on Transparency in Dispute Settlement. These 
objectives are restated in the United States-Jordan Joint 
Statement on WTO Issues, another side document concluded with 
the United States-Jordan Free Trade Agreement. While these 
precedents involve a different type of dispute settlement 
(state-to-state, rather than investor-to-state), the public 
nature of the matters that generally will be in dispute 
underlies the need for transparency in both cases.
            4. Intellectual property
    The principal negotiating objectives regarding intellectual 
property are:
           Ensuring accelerated and full implementation 
        of the WTO Agreement on Trade-Related Aspects of 
        Intellectual Property Rights (the ``TRIPs Agreement''), 
        especially with respect to enforcement obligations;
           Ensuring that trade agreements reflect a 
        standard of protection of intellectual property rights 
        similar to that found in U.S. law;
           Providing strong protection for new and 
        emerging technologies and new methods of transmitting 
        and distributing products embodying intellectual 
        property;
           Preventing discrimination regarding the 
        availability, acquisition, scope, maintenance, use, and 
        enforcement of intellectual property rights;
           Ensuring that standards of protection and 
        enforcement keep pace with technological developments 
        and, in particular, that rights are adequately 
        protected and enforced with respect to intellectual 
        property conveyed via the Internet and other global 
        communications media;
           Providing strong enforcement of intellectual 
        property rights, including through accessible, 
        expeditious, and effective civil, administrative and 
        criminal enforcement mechanisms; and
           Securing fair, equitable and non-
        discriminatory market access opportunities for U.S. 
        persons who rely on intellectual property protection.
    The priorities of the United States are to ensure that all 
countries provide an adequate level of protection through their 
laws and regulations, and that they support that protection 
with meaningful enforcement.
    Levels of protection of intellectual property rights have 
increased significantly in recent years, due in large part to 
enhanced obligations under the TRIPs Agreement. However, levels 
of enforcement of intellectual property rights remain 
inadequate in many countries.
    Piracy and counterfeiting rates in much of the world remain 
alarmingly high. The advent of the Internet, along with the 
rapid globalization of the world economy, mean that piracy, 
counterfeiting and other economic crimes are, to an increasing 
extent, global problems. U.S. industries based on copyright, 
patent, trademark, and other forms of intellectual property 
rights are among the fastest growing and most productive of all 
sectors of the U.S. economy. To enable these export-oriented 
industries to prosper, it is essential that the United States 
work together with governments throughout the world to prevent, 
punish, and ultimately deter these violations. Without 
effective enforcement, the full benefits of the TRIPS Agreement 
cannot be realized.
    Given the significant effort that many countries still must 
make to come into compliance with their TRIPs obligations, it 
probably would be premature to undertake WTO negotiations on 
the improvement of the TRIPs Agreement. At the same time, the 
Committee expects negotiators to pursue ``TRIPs plus'' 
commitments in bilateral and regional trade agreements, as they 
routinely have done in negotiations undertaken in recent years. 
An example of such a commitment is an obligation to give effect 
to provisions contained in other conventions on intellectual 
property, such as the World Intellectual Property Organization 
(``WIPO'') Copyright Treaty (1996) and the WIPO Performances 
and Phonograms Treaty (1996). These WIPO conventions reflect 
enhanced global minimum standards of protection and enforcement 
for the networked digital environment, and negotiators should 
continue to seek their ratification and implementation by other 
trade partners. They also should seek additional ``TRIPs plus'' 
commitments in free trade agreements as appropriate based on 
technological, legal, and other developments.
    The negotiating objective on intellectual property directs 
negotiators to seek standards of intellectual property rights 
protection comparable to standards contained in U.S. law.
    Finally, the Committee notes that U.S. industries based on 
intellectual property continue to suffer from unnecessary and 
discriminatory market access barriers around the globe. U.S. 
negotiators must remain vigilant in their efforts to eliminate 
these barriers, since they stunt the growth of otherwise highly 
productive industries.
            5. Transparency
    The principal negotiating objectives regarding transparency 
are:
           To increase timely public access to 
        information regarding trade issues as well as the 
        activities of international trade institutions;
           To increase openness in international trade 
        fora, including the WTO, by increasing public access to 
        appropriate meetings, proceedings, and submissions, 
        including with regard to dispute settlement and 
        investment; and
           To increase timely public access to 
        notifications made by WTO Members and the supporting 
        documents.
    The Committee believes that the continued success of the 
WTO and other fora in setting and administering the rules of 
international trade requires that these institutions operate in 
transparent ways. This means that their decision making 
processes must be clear and, where practicable, open to public 
observation and to input by interested parties. These 
principles should govern each of the various kinds of decisions 
international trade institutions make, whether in day-to-day 
administration, dispute settlement, or otherwise.
    The objectives regarding transparency reflect principles 
that govern decision making within the institutions of the 
United States and other democratic governments. Transparency is 
a strength of our system that reenforces support for our 
democratic institutions, even though individuals may disagree 
with particular decisions by those institutions.
    The same concept should apply to the WTO and other 
international trade institutions. Transparency can engender 
confidence that the institutions are operating fairly, even 
though individuals may disagree with particular decisions. 
Further, greater openness within these international 
institutions should encourage greater openness within the 
states that are members of those institutions.
    As described in section 2(b)(5), greater transparency 
requires three general undertakings within international 
institutions: first, keeping the public informed in a detailed 
and timely manner; second, allowing the public to observe, 
where practicable, meetings, proceedings, and submissions of 
international trade institutions; and third, giving the public 
greater and more timely access to written submissions to 
international institutions.
    Other parts of the bill call for negotiators to seek 
greater transparency in trade dispute settlement, in 
particular. For example, section 2(b)(3)(H) directs negotiators 
to seek greater transparency in investor-state dispute 
settlement, and section 2(b)(12)(A) directs negotiators to seek 
transparent mechanisms for resolving trade disputes, including 
state-state disputes. To illustrate how greater transparency 
can be achieved, the Committee notes the following provisions 
from a Memorandum of Understanding on Transparency in Dispute 
Settlement, which was entered into concurrently with the United 
States-Jordan Free Trade Agreement. In the MOU, the parties 
agreed that:
           They will solicit and consider the views of 
        members of their respective publics to draw upon a 
        broad range of perspectives;
           Submissions will be made available to the 
        public within ten days of filing;
           Oral presentations will be open to the 
        public, except as necessary to protect confidential 
        information;
           Arbitral panels will accept and consider 
        amicus curiae submissions by interested third parties; 
        and
           Arbitral panels will release their reports 
        to the public at the earliest possible time.
    The United States and Jordan repeated these commitments in 
a separate Joint Statement on WTO Issues, which applies to 
disputes that may arise between the two parties in the WTO.
    The transparency commitments in the United States-Jordan 
agreements should serve as a guide to negotiators in ongoing 
and future trade talks. In particular, seeking commitments from 
free trade agreement partners that will apply in the WTO as 
well as under the free trade agreement itself should help to 
foster a consensus in support of greater transparency in the 
WTO.
    Finally, the Committee emphasizes that, with respect to 
public access to documents filed with international trade 
institutions, negotiators should seek transparency commitments 
that cover the broadest possible array of filings, taking into 
account reasonable protections for proprietary and other 
confidential information. For example, when notice of 
government action is made available to the public, supporting 
documentation should be made available as well. The Committee 
is aware of concerns that while government notices to the WTO 
regarding levels of foreign government agriculture subsidies 
have been made available to the public, documents supporting 
notices to the WTO have not always been made available. 
Meaningful transparency requires that the public have 
reasonable access to all information necessary to make 
independent evaluations of the facts.
            6. Anti-corruption
    The principal negotiating objectives with respect to anti-
corruption are:
           To obtain high standards and appropriate 
        domestic enforcement mechanisms to prevent and deter 
        the use of money or other things of value to influence 
        acts, decisions, or omissions of foreign governments, 
        and
           To ensure that anti-corruption standards do 
        not put United States persons at a competitive 
        disadvantage.
    Corruption at all levels of government can constitute 
significant barriers to trade. Bribe-taking may impede the 
ability to get health and safety certificates necessary to move 
imported goods from port to consumer. Corruption may distort 
the market for government procurement. Corruption impairs the 
ability of investors to make well-informed determinations about 
the risks to expect in a foreign market. Further, to the extent 
that U.S. persons are legally bound not to engage in corrupt 
acts, even outside the United States, they may be placed at a 
competitive disadvantage vis-a-vis foreign persons who are not 
so bound.
    To eliminate barriers to trade, and to ensure that the 
playing field is level for U.S. producers of goods and services 
and their foreign competitors, negotiators should seek 
agreement from our trading partners to adopt and enforce strong 
anti-corruption disciplines. Strong disciplines are rules 
comparable to section 30A of the Securities and Exchange Act of 
1934 and sections 104 and 104A of the Foreign Corrupt Practices 
Act.
    The Committee takes note of efforts to expand 
implementation of the Convention on Combating Bribery of 
Foreign Public Officials in International Business Transactions 
negotiated under the auspices of the Organization for Economic 
Cooperation and Development, which came into effect in 1999. 
Parties to that Convention are required to take measures 
necessary to establish that it is a criminal offense under 
their respective domestic laws to offer or to give a bribe to a 
foreign official to induce that person to act or refrain from 
acting in a particular way. To promote adherence to the 
Convention, Congress established as a condition of eligibility 
for trade benefits under the African Growth and Opportunity Act 
that a country ``has established or is making continual 
progress toward establishing . . . a system to combat 
corruption and bribery, such as signing and implementing the 
Convention on Combating Bribery of Foreign Public Officials in 
International Business Transactions.'' Pub. L. No. 106-200, 
Sec. 104(a)(1)(E), 114 Stat. 251, 254 (2000). Congress 
established a similar condition for receipt of trade benefits 
under the United States-Caribbean Basin Trade Partnership Act. 
19 U.S.C. Sec. 2703(b)(5)(B)(vi), as amended by Pub. L. No. 
106-200, Sec. 211(a), 114 Stat. 251, 285 (2000) (in determining 
whether to designate country as ``CBTPA beneficiary country,'' 
President to consider ``extent to which the country has taken 
steps to become a party to and implements the Inter-American 
Convention Against Corruption''). And a bill to enhance the 
Andean Trade Preference Act reported by the Committee in the 
first session of this Congress would establish a similar 
condition for receipt of expanded benefits under that program. 
See S. Rep. No. 126, 107th Cong., 1st Sess. at 8 (Dec. 14, 
2001).
    The anti-corruption policy expressed in the above-mentioned 
laws and pending legislation is clear. It is the Committee's 
expectation that U.S. negotiators will continue to pursue that 
policy in ongoing and future trade negotiations.
            7. Improvement of the WTO and multilateral trade agreements
    The principal negotiating objectives concerning the WTO 
Agreements are:
           To achieve full implementation of the 
        existing Agreements and to expand their coverage to 
        products, sectors, and trade conditions not currently 
        covered, and
           To enhance and expand participation in the 
        Information Technology Agreement and other trade 
        agreements.
    As important as the objective of negotiating strong trade 
agreements is the objective of ensuring that trading partners 
of the United States fully implement their obligations under 
those agreements. In the WTO, dispute settlement is available 
to challenge a country's non-implementation of its obligations. 
However, dispute settlement can be time-consuming and is not 
always the most cost-effective means of bringing about 
compliance. The United States should use all available tools to 
bring about full implementation of obligations, including 
technical assistance, positive incentives, and dispute 
settlement, as appropriate.
    The question of full implementation has become more 
pressing as developing countries have reached or are about to 
reach the expiration of transition periods under certain WTO 
Agreements, including the Agreement on Trade-Related Aspects of 
Intellectual Property Rights, the Agreement on Customs 
Valuation, and the Agreement on Trade-Related Investment 
Measures. During these transition periods, developing countries 
were not required to fully implement their obligations. Since 
expiration of the transition periods, some WTO Members have 
sought extensions of time in which to fully comply. Negotiators 
should consider such requests on a case by case basis, taking 
into account specific steps toward compliance that countries 
seeking extensions have taken and are willing and able to take. 
At the same time, negotiators should firmly resist blanket 
requests for extensions and requests that the United States 
undertake new obligations in exchange for other countries' 
commitments to fully implement existing obligations.
    In addition to seeking enhanced implementation of current 
obligations under the WTO Agreements, negotiators should seek 
to expand the coverage of those Agreements to address 
circumstances, such as technological changes, that highlight 
gaps in existing WTO disciplines. For example, in the 
discussion above on intellectual property objectives, the 
Committee notes the ``TRIPs plus'' commitments agreed to in the 
United States-Jordan Free Trade Agreement, taking account of 
advances in international intellectual property rights law 
achieved since conclusion of the TRIPs Agreement. It is the 
expectation of the Committee that continued pursuit of TRIPs 
plus commitments in bilateral and regional trade agreements 
will generate support among trading partners of the United 
States to pursue similar advances in the TRIPs Agreement itself 
at the appropriate time.
    Moreover, negotiators should seek expanded country 
participation in and expanded product and service coverage of 
the various plurilateral agreements of the WTO--i.e., 
agreements to which countries are not automatically bound by 
virtue of WTO membership, but which they may join at their 
option. These include the Agreement on Government Procurement 
(``GPA'') and the Ministerial Declaration on Trade in 
Information Technology Products (known as the Information 
Technology Agreement or ``ITA'').
    The ITA, which eliminates tariffs on a wide range of 
products essential to the new economy, was concluded at the 
WTO's First Ministerial Conference at Singapore in December 
1996. As of this writing, the ITA has 56 participants 
representing over 95 percent of trade in the $600 billion-plus 
global market for information technology products. Through its 
work identifying standards, non-tariff measures, and 
possibilities for expansion of product coverage, the WTO 
Committee of Participants on the Expansion of Trade in 
Information Technology Products has demonstrated how the WTO 
can provide dynamic mechanisms for trade liberalization that 
are responsive to the ever-changing nature of sectors such as 
the information technology sector. Unfortunately, several 
countries in Latin America have shown reluctance in the past to 
joining the ITA. It is the Committee's expectation that the 
ongoing negotiations to establish a Free Trade Area of the 
Americas offer a strong opportunity to expand both the country 
participation and the product coverage of this important 
agreement.
    Like the ITA, WTO Members may commit to the Agreement on 
Government Procurement at their option. Obligations under this 
agreement apply to designated central and sub-central 
government entities and to the particular goods and services 
listed in a separate schedule for each party.
    Ordinary WTO rules on trade in goods and services make 
exceptions for government procurement. The GPA narrows those 
exceptions to the extent that WTO Members accept its 
obligations. In general, procurement subject to the GPA must be 
undertaken in accordance with the principles of 
nondiscrimination that apply under the General Agreement on 
Tariffs and Trade and the General Agreement on Trade in 
Services. The GPA also sets forth special rules for tendering 
procedures, placing particular emphasis on transparency.
    According to the WTO, government procurement typically 
constitutes 10 to 15 percent of a country's gross domestic 
product, and procurement currently subject to the GPA is worth 
about $300 billion annually. The benefits to U.S. producers of 
goods and services of continuing to bring this market under the 
umbrella of WTO disciplines should be significant. Accordingly, 
U.S. negotiators should seek to encourage those WTO Members not 
party to the GPA to become members and to reduce exceptions 
that particular governments have taken under the GPA (with 
respect to both entities and goods and services). This 
objective also should apply to negotiations on the accession of 
new Members to the WTO.
    Additionally, negotiators should seek to conclude a WTO 
Agreement on Transparency in Government Procurement, in 
furtherance of the mandate defined by the Singapore Ministerial 
Declaration in December 1996, and to promote global use of 
electronic publication of procurement information, including 
notices of procurement opportunities. Access to foreign 
government procurement markets, consistent with the terms of 
the GPA, also should be pursued in regional and bilateral free 
trade agreements, including the Free Trade Area of the 
Americas.
            8. Regulatory practices
    The principal negotiating objectives with respect to 
regulatory practices are:
           To seek increased transparency and 
        opportunity for public participation in foreign country 
        processes for developing regulations;
           To require that proposed regulations be 
        based on sound science, cost-benefit analysis, risk 
        assessment, or other objective evidence;
           To establish consultative mechanisms among 
        trade agreement parties to promote increased 
        transparency in developing laws, rules, regulations, 
        and guidelines; and
           To eliminate regulatory practices, such as 
        price controls and reference pricing, that operate as 
        market access barriers.
    Foreign government regulatory practices may effectively 
constitute trade-distorting barriers that diminish or nullify 
negotiated trade agreement benefits. For example, market access 
for agricultural products accorded through tariff concessions 
may be substantially offset by non-scientifically-based health 
and safety regulations that cause delay in getting the products 
to consumers. Similarly, a U.S. exporter of pharmaceutical 
products gains little benefit from a reduction in tariffs if 
the ministry of health in the importing country imposes 
regulatory controls on prices for those products. The problem 
of laws and regulations that act as disguised trade barriers is 
compounded when a government's processes for making its laws 
and regulations are not open to public view and are not 
receptive to public input.
    The negotiating objectives on regulatory practices focus on 
enhancing the transparency of foreign governments' law- and 
rule-making, and on eliminating practices that allow 
governments to set up trade barriers on the pretext of pursuing 
legitimate public purposes, such as protection of health and 
safety. The transparency-related objectives complement the 
objectives in section 2(b)(5) on enhancing transparency in 
international trade fora. U.S. negotiators are directed to 
promote greater openness and opportunity for public comment in 
foreign law- and rule-making processes, including through the 
establishment of consultative mechanisms among trade agreement 
parties.
    In seeking to eliminate foreign trade barriers in the guise 
of apparently legitimate laws and regulations, U.S. negotiators 
should focus on the evidence that governments use to justify 
trade-restrictive measures. A law or regulation purporting to 
serve a legitimate public purpose should not be immune from 
challenge as a trade barrier if it is not grounded in 
scientific or other objective data and analysis.
    Additionally, the objectives on regulatory practices direct 
negotiators to seek the elimination of particular regulatory 
barriers that occur with increasing frequency--price controls 
and reference pricing. Under these barriers, the government of 
an importing country restricts market access by limiting the 
prices at which particular products can be sold.
            9. Electronic commerce
    The principal negotiating objectives with respect to 
electronic commerce are:
           To ensure that current obligations, rules, 
        disciplines, and commitments under the WTO apply to 
        electronic commerce;
           To ensure that electronically delivered 
        goods and services receive no less favorable treatment 
        than like products delivered in physical form, and that 
        the classification of such goods and services ensures 
        the most liberal trade treatment possible;
           To ensure that governments refrain from 
        implementing trade-related measures that impede 
        electronic commerce;
           To obtain commitments that any regulations 
        affecting electronic commerce are the least trade 
        restrictive necessary to achieve legitimate policy 
        objectives, nondiscriminatory, transparent, and 
        supportive of an open market environment; and
           To extend the WTO moratorium on duties on 
        electronic transmissions.
    Electronic commerce is potentially subject to rules and 
disciplines from a variety of different subject matter areas, 
including trade in goods, trade in services, and trade-related 
aspects of intellectual property rights. Because electronic 
commerce does not fall exclusively into any one subject-matter 
area, but rather, straddles several areas, it warrants special 
consideration in trade negotiations. Negotiators must ensure 
that countries are not able to evade core disciplines--such as 
national treatment and most-favored-nation treatment--on the 
grounds that electronic commerce does not come neatly within 
any particular WTO Agreement. At the same time, negotiators 
must guard against regulations and disciplines that would 
discriminate against electronic commerce in favor of more 
traditional forms of commerce, or otherwise retard the growth 
of this technologically innovative way of doing business.
    The Committee notes that the United States-Jordan Free 
Trade Agreement represents an important step forward in 
achieving the objectives on electronic commerce described in 
the bill and in this report. That agreement requires the United 
States and Jordan to seek to refrain from imposing tariffs or 
other unnecessary barriers on electronic transmissions. It 
further requires them to seek to refrain from impeding the 
supply through electronic means of services subject to the 
agreement. The parties also are committed to make publicly 
available all relevant laws, regulations, and requirements 
affecting electronic commerce. Jordan made market access and 
national treatment commitments in all sectors critical to 
completing an electronic transaction, including 
telecommunications, computer-related services, financial 
services, distribution services, and express delivery services. 
Finally, as noted above in the discussion of objectives 
regarding intellectual property, the United States-Jordan Free 
Trade Agreement establishes certain obligations beyond those of 
the WTO Agreement on Trade-Related Aspects of Intellectual 
Property Rights, a number of which should help to promote the 
objectives regarding electronic commerce. The Committee expects 
that the advances on electronic commerce made in the United 
States-Jordan Free Trade Agreement will be a guide to 
negotiators in ongoing and future negotiations, recognizing 
that technological and other evolving circumstances may require 
building on the terms of that agreement.
            10. Reciprocal trade in agriculture
    The principal negotiating objectives on agriculture are:
           To ensure that U.S. trade negotiators duly 
        recognize the importance of agricultural issues;
           To obtain competitive market opportunities 
        for U.S. exports in foreign markets substantially 
        equivalent to the competitive opportunities afforded 
        foreign exports in U.S. markets, and to achieve more 
        equitable and more open conditions of trade in bulk, 
        specialty crop and value-added commodities;
           To reduce or eliminate, by a date certain, 
        tariffs or other charges that decrease market 
        opportunities for U.S. exports; to reduce or eliminate 
        trade-distorting export subsidies, while maintaining 
        legitimate food assistance, export credit, and market 
        development programs;
           To enhance disciplines on production 
        subsidies;
           To impose disciplines on the operations of 
        state-trading enterprises or similar administrative 
        mechanisms;
           To eliminate unjustified restrictions, 
        including labeling, that adversely affect products of 
        new technology, including biotechnology;
           To eliminate sanitary or phytosanitary 
        restrictions that contravene the Uruguay Round 
        Agreements;
           To eliminate unjustified technical barriers 
        to trade; and
           To improve import relief mechanisms to 
        accommodate the unique aspects of perishable and 
        cyclical agriculture.
    The principal negotiating objectives on agriculture require 
negotiators to take into account certain key factors, 
including:
           Whether a country has failed to adhere to 
        (or has circumvented) obligations under existing 
        agreements with the United States;
           Whether a product is subject to market 
        distortions by reason of other countries' failure to 
        adhere to existing obligations;
           The impact that existing agreements to which 
        the United States is a party is having on U.S. 
        agriculture; and
           The impact that simultaneous negotiations in 
        several fora may have on import-sensitive agricultural 
        products.
    The Committee intends that the United States secure a 
fairer world agricultural trading system that provides greater 
market access for U.S. agricultural products. The Committee 
believes this objective can best be achieved by reducing and 
preventing restrictions and distortions in world agricultural 
markets, and by addressing agricultural concerns in a non-
trade-distorting manner.
    The Committee acknowledges that trade in agricultural 
products is a critical element in multilateral, regional, and 
bilateral negotiations, and expects that the specific 
objectives in this section can be achieved while taking into 
account the special situation of import-sensitive products.
    The Committee believes that agricultural export subsidies 
are among the most disruptive elements in the operation of 
world markets. Especially when paired with domestic subsidies 
linked to price and/or production, they result in food prices 
within the countries that provide the subsidies that often are 
higher than world market prices. By skewing production 
decisions, they foreclose consumer choice in many parts of the 
world. In addition, agricultural export subsidies significantly 
distort trade in third-country markets; American farmers and 
agricultural producers have a difficult time competing with 
farmers, particularly those in the European Union, who receive 
large domestic subsidies to produce at home, and then receive 
additional subsidies to sell the surplus at below-market prices 
overseas.
    Agricultural export subsidies also lead to environmentally 
destructive farming practices, particularly among farmers in 
the world's developing nations, who often abandon more 
environmentally appropriate farming practices in order to keep 
pace with the artificially low, subsidized prices they must 
compete with in world export markets.
    The Committee believes that eliminating trade-distorting 
agricultural export subsidies should result in more stable 
prices for United States agricultural products.
    At the same time, the Committee recognizes that trade-
distorting export subsidy regimes should be distinguished from 
those agricultural market-development and export credit 
programs that are consistent with global trade rules, and that 
allow U.S. agricultural producers to compete on an equal 
footing with foreign export promotion programs. Similarly, the 
Committee believes that trade-distorting export subsidies 
should be distinguished from bona fide food aid programs that 
allow the United States to meet worldwide consumer needs for 
food and fiber, and that U.S. trade negotiators should work to 
preserve the right of the United States to use such programs.
    The Committee affirms the goal, outlined in the United 
States Proposal for Comprehensive Long-Term Agricultural Trade 
Reform submitted to the WTO in June 2000, of substantially 
reducing trade-distorting domestic support for agricultural 
production. The Committee notes that about 90 percent of 
European Union agricultural budget spending is related to 
trade-distorting intervention programs. This spending category 
in the European Union has increased by approximately 29 percent 
since 1995. As a result, market access opportunities for 
American farmers, ranchers, and agricultural producers in 
European markets is severely limited. The Committee believes 
that new disciplines on trade-distorting domestic support 
should be vigorously pursued in the recently launched WTO 
negotiations.
    In this regard, the Committee is particularly concerned 
about the disparity in the relative levels of agricultural 
production support between the United States and other 
developed countries. This disparity is especially evident in 
the difference between the maximum Aggregate Measurement of 
Support (``AMS'') of the United States and the maximum AMS of 
the European Union.
    The AMS is the annual level (expressed in monetary terms) 
of all domestic support measures where government funds are 
used to subsidize farm production and incomes. This is domestic 
agricultural spending that distorts trade.
    Under the Uruguay Round Agreements, certain countries bound 
their maximum AMS at specified annual levels and committed to 
reduce those levels through the end of 2000. The AMS was one of 
the more significant agricultural policy innovations of the 
Uruguay Round negotiations.
    However, the process for determining each WTO Member's AMS 
level, and thus the amount of trade-distorting subsidization 
that is subject to reduction commitments, can result in 
disparities. This is because the AMS calculation is based on 
each country's selection of a ``base period'' for determining 
the maximum AMS to which reduction commitments apply. By 
selecting a base period during which trade-distorting domestic 
spending was unusually high (by historical standards), a 
country can gain a trade advantage by minimizing its reduction 
commitments. In this way, the purpose of the AMS to constrain 
trade-impeding domestic spending can be thwarted. In addition, 
by selectively choosing favorable base years, and thereby 
keeping trade-distorting ``Amber Box'' spending at higher 
levels, countries have less incentive to allocate spending to 
non-trade-distorting ``Green Box'' policies.
    The Committee believes that the AMS constraint is useful in 
putting pressure on countries to re-orient domestic support 
programs away from trade-distorting spending. The selection of 
a common base year should contribute to that process. In 
addition, establishing a common base year should improve the 
transparency of negotiations on further reduction commitments 
by more accurately reflecting relative subsidy levels. Further, 
the common base year should be the end of each country's 
Uruguay Round implementation period, as reported in its Uruguay 
Round market access schedule. Thus, countries would be starting 
negotiations from the lowest, bound level of domestic support 
and would commit to make further reductions from that level.
    The Committee also believes that negotiators should pay 
special attention to the growing role of state trading 
enterprises. These entities distort markets by exerting 
monopoly power over sales prices and monopsony power over 
purchase prices. They allow foreign governments to drive 
production and marketing decisions, which in turn deny market 
access to competitive U.S. farmers, ranchers, and food 
processors, and distort sales within the United States.
    With regard to trade-related agricultural health and safety 
regulations, the Committee recognizes that trade measures may 
be used to address legitimate health and safety concerns, but 
they must not be used as disguised barriers to trade. In this 
regard, the Committee believes that both the spirit and the 
letter of the WTO Agreement on the Application of Sanitary and 
Phytosanitary Measures should be preserved in new trade 
negotiations.
    As the world's leader in the research and development of 
innovative, safe, technologies, including biotechnology, U.S. 
agricultural producers are increasingly facing new measures 
aimed at unfairly restricting trade in products that 
incorporate these technologies. The Committee is concerned 
about the proliferation of such measures, and believes that 
U.S. negotiators should work to preserve market access for 
these products. It is the Committee's intent that such 
negotiations not affect valid, non-discriminatory consumer 
measures in the United States.
    The Committee believes that trade obligations and 
competitive opportunities for agricultural products ought to be 
reciprocal. Therefore, negotiators should take into account 
whether a particular trading partner has failed to adhere to 
existing agreements, or has circumvented obligations under 
those agreements, and whether trade in specific products is 
subject to market distortions resulting from the failure of 
that trading partner to comply with its trade agreements with 
the United States.
    Finally, the bill requires negotiators to take account of 
the particular interests of producers of import-sensitive 
agricultural products and perishable and cyclical agricultural 
products. Negotiators should seek to eliminate practices that 
adversely affect perishable and cyclical products, for example, 
excessively burdensome inspection procedures that prevent goods 
from getting from port to market before they spoil. At the same 
time, negotiators should seek to ensure that antidumping, 
countervailing duty, and safeguards disciplines adequately 
account for the special nature of perishable and cyclical 
goods. With regard to import-sensitive agricultural goods, the 
bill directs negotiators to take into account the particular 
impact that overlapping sets of negotiations may have on these 
products. The Committee recognizes that bilateral and regional 
trade negotiations, by their nature, involve a significantly 
smaller group of countries than negotiations in the World Trade 
Organization, and as a result, they may be less effective in 
getting a critical mass of foreign countries to eliminate 
barriers and practices that distort world agricultural trade. 
Failure to get such a critical mass of foreign countries also 
may result in more intense pressure on import-sensitive 
agricultural products, since worldwide trade distortions by 
non-parties will continue to promote over-production.
            11. Labor and the environment
    The principal negotiating objectives with respect to labor 
and the environment are:
           To ensure that a party does not fail to 
        effectively enforce its environmental or labor laws, 
        through a sustained or recurring course of action or 
        inaction, in a manner affecting trade between the 
        United States and that party;
           To recognize that a party to a trade 
        agreement is effectively enforcing its laws if a course 
        of action or inaction reflects a reasonable exercise of 
        discretion or results from a bona fide decision 
        regarding allocation of resources, and that no 
        retaliation may be authorized based on the exercise of 
        these rights or the right to establish domestic labor 
        standards and levels of environmental protection;
           To strengthen the capacity of U.S. trading 
        partners to promote respect for core labor standards, 
        and to protect the environment through the promotion of 
        sustainable development;
           To reduce or eliminate government practices 
        or policies that unduly threaten sustainable 
        development;
           To seek market access for U.S. environmental 
        technologies, goods, and services; and
           To ensure that labor, environmental, health, 
        or safety policies and practices of parties to trade 
        agreements do not arbitrarily or unjustifiably 
        discriminate against U.S. exports or serve as disguised 
        barriers to trade.
    Section 2(b)(11), in conjunction with section 2(a)(7), is 
based upon the trade and labor and trade and environment 
provisions found in articles 5 and 6 of the United States-
Jordan Free Trade Agreement. Those provisions (including their 
coverage by the Agreement's general dispute settlement 
procedures) have come to be known as the ``Jordan standard.'' 
They seek to ensure that a country does not promote exports or 
attract investment by lowering or relaxing the enforcement of 
its environmental and labor laws. The agreement with Jordan 
accomplishes this through several commitments, which the 
present bill directs negotiators to pursue in ongoing and 
future trade negotiations.
    First, the bill directs negotiators to seek provisions in 
trade agreements under which parties to those agreements will 
strive to ensure that they do not weaken or reduce the 
protections afforded in domestic environmental and labor laws 
as an encouragement for trade. This objective applies both to 
measures affecting exports to the United States and measures 
affecting investment by U.S. persons.
    Second, the bill directs negotiators to work to strengthen 
the capacity of U.S. trading partners to promote respect for 
sustainable development and for core labor standards. The labor 
standards defined as ``core'' in section 13(2) of the bill are: 
(a) right of association; (b) right to organize and bargain 
collectively; (c) prohibition on the use of any form of forced 
or compulsory labor; (d) minimum age for employment of 
children; and (e) acceptable conditions of work with respect to 
minimum wages, hours of work, and occupational health and 
safety. By way of illustration, in the United States-Jordan 
Free Trade Agreement, promotion of respect for core labor 
standards was encouraged through the parties' reaffirmation of 
their obligations as members of the ILO and their commitments 
under the ILO Declaration on Fundamental Principles and Rights 
at Work and its Follow-up. Under the foregoing Declaration, all 
174 members of the ILO have an obligation, by virtue of that 
membership, ``to respect, to promote and to realize, in good 
faith and in accordance with the [ILO] Constitution, the [ILO 
core] principles.''
    Third, the bill directs negotiators to seek trade agreement 
provisions ensuring that countries do not fail to effectively 
enforce their own environmental and labor laws, through a 
sustained or recurring course of action or inaction, in a 
manner affecting trade with the United States. Like the first 
objective, this provision applies both to measures affecting 
exports to the United States and measures affecting investment 
by U.S. persons. This objective is not implicated when a 
country undertakes a course of action or inaction which 
reflects a reasonable exercise of discretion or results from a 
bona fide decision regarding the allocation of resources.
    The latter qualification is set forth in subparagraph (B) 
of section 2(b)(11). At the end of subparagraph (B), the bill 
makes clear that ``no retaliation may be authorized based on 
the exercise of these rights or the right to establish domestic 
labor standards and levels of environmental protection.'' The 
Committee understands this provision to clarify the language 
that precedes it in subparagraph (B). That is, in negotiating 
provisions on trade and labor and trade and the environment, 
the United States should make clear that a country is 
effectively enforcing its laws if a course of action or 
inaction is the result of a reasonable exercise of discretion 
or a bona fide decision regarding the allocation of resources, 
and, as such, the country cannot be subject to retaliation on 
the basis of that course of action or inaction alone.
    Importantly, this phrase does not limit the ability of the 
United States to negotiate trade agreements incorporating all 
elements of the ``Jordan standard.'' Nor does it provide an 
exception to the objective, set forth in section 2(b)(12)(G) of 
the bill, that U.S. negotiators should seek provisions in trade 
agreements that treat principal negotiating objectives equally 
with regard to the ability to resort to dispute settlement, the 
availability of dispute settlement procedures, and the 
availability of equivalent remedies.
    Sections 2(b)(11)(C) and (D) direct negotiators to help 
trading partners of the United States strengthen their capacity 
to promote respect for core labor standards and to protect the 
environment and promote sustainable development. Relatively low 
labor and environmental standards in a given country can affect 
trade by keeping costs of production low, thereby attracting 
investment and giving a competitive advantage to exports. 
However, low labor and environmental standards often do not 
reflect a political choice, but rather a lack of resources. 
Recognizing this circumstance, the bill sets as an objective 
the provision of assistance to trading partners to enable them 
to strengthen their labor and environmental standards.
    In sections 2(b)(11) (E) and (F), the bill sets forth 
additional objectives for pursuing sustainable development in 
conjunction with expanded trade. It directs negotiators to 
focus on reduction and elimination of government practices and 
policies that unduly threaten sustainable development. It 
further directs negotiators to pursue so-called ``win-win'' 
market access goals--i.e., reductions in tariff and non-tariff 
barriers which promote both expanded trade and a cleaner 
environment. One such win-win goal referred to in the bill is 
the elimination of tariffs and non-tariff barriers for U.S. 
environmental technologies, goods, and services. Another win-
win would be the elimination of fisheries subsidies, which tend 
to be both trade-distorting and harmful to the extent that they 
encourage over-fishing.
    Finally, section 2(b)(11)(G) calls on negotiators to ensure 
that other countries' labor, environmental, health and safety 
policies and practices do not arbitrarily or unjustifiably 
discriminate against U.S. exports or serve as disguised 
barriers to trade. This objective reflects a concern that some 
countries may establish laws and regulations that purport to 
serve legitimate public purposes, but that actually amount to 
unreasonable or unjustifiable trade barriers. For example, the 
Committee is aware of instances in which other countries have 
used sanitary and phytosanitary standards, not based in 
science, to arbitrarily discriminate against U.S. agricultural 
exports. New trade agreements should prohibit these and similar 
mis-uses of labor, environmental, health and safety standards.
            12. Dispute settlement and enforcement
    The principal negotiating objectives regarding dispute 
settlement and enforcement are:
           To seek provisions in trade agreements 
        providing for resolution of disputes between 
        governments in an effective, timely, transparent, 
        equitable, and reasoned manner requiring determinations 
        based on facts and the principles of the agreement, 
        with the goal of increasing compliance;
           To seek to strengthen the capacity of the 
        WTO Trade Policy Review Mechanism to review compliance;
           To seek improved adherence by WTO dispute 
        settlement panels and the Appellate Body to the 
        standard of review in applicable WTO Agreements, 
        including greater deference to the fact finding and 
        technical expertise of national investigating 
        authorities;
           To seek provisions encouraging the early 
        identification and settlement of disputes through 
        consultations;
           To seek provisions encouraging trade-
        expanding compensation;
           To seek provisions to impose a penalty that 
        encourages compliance, is appropriate to the parties, 
        nature, subject matter, and scope of the violation, and 
        has the aim of not adversely affecting parties or 
        interests not party to the dispute while maintaining 
        the effectiveness of the enforcement mechanism; and
           To seek provisions that treat U.S. principal 
        negotiating objectives equally with respect to ability 
        to resort to dispute settlement and availability of 
        equivalent procedures and remedies.
    Fair and efficient dispute settlement mechanisms are 
essential to well-functioning trade agreements. They help to 
clarify and consistently interpret agreement terms. This, in 
turn, enables interested parties to understand the rules of the 
trading system and to develop reasonable expectations upon 
which to base their business decisions. Moreover, fair and 
efficient dispute settlement can help to safeguard the rule-
based trading system against unilateral retaliation and other 
disruptions that could arise in the absence of neutral arbiters 
of the rules.
    To function well, a dispute settlement mechanism must have 
several features. First, it must be effective. That is, it must 
be capable of interpreting the rights and obligations of 
disputing parties and rendering determinations that the parties 
treat as binding. Where a party is found to be in violation of 
its obligations, the mechanism must be capable of bringing 
about prompt compliance, failing which, it must be capable of 
identifying ways for the complaining party to be compensated 
for any nullification or impairment of its trade agreement 
rights.
    Second, dispute settlement mechanisms must be capable of 
rendering determinations in a timely matter. Their utility 
diminishes if countries are reluctant to use them because of 
the time it takes to get a final decision.
    Third, dispute settlement mechanisms must be transparent. 
As discussed more generally above, a system that is open to 
public view and that is amenable to input from interested 
parties fosters confidence among the system participants. This 
is vital to sustaining long-term support for dispute settlement 
mechanisms in trade agreements.
    Next, dispute settlement mechanisms must be designed to 
render equitable and reasoned decisions, based on the facts of 
cases presented and the principles of the agreements they 
interpret. In other words, arbitral panels and other tribunals 
should explain the bases for their conclusions, which should be 
grounded in the text and (as appropriate) the context of trade 
agreements, as applied to the evidence before them.
    Finally, the goal of dispute settlement should be increased 
compliance with trade agreements. Retaliation, compensation, 
and other measures to adjust parties' rights and obligations 
generally should be considered only second-best options.
    The Committee recognizes that dispute settlement is not the 
exclusive means of bringing about greater compliance with trade 
agreements. Other means include periodic review of countries' 
trade policies for purposes of identifying potentially non-
compliant measures and addressing them through consultation. In 
the WTO, this function is filled by the Trade Policy Review 
Mechanism (``TPRM''). As described in Annex 3 to the Agreement 
Establishing the World Trade Organization, the purpose of the 
TPRM is ``to contribute to improved adherence by all [WTO] 
Members to rules, disciplines, and commitments made under the 
[WTO Agreements], and hence to the smoother functioning of the 
multilateral trading system, by achieving greater transparency 
in, and understanding of, the trade policies and practices of 
Members.'' The Trade Policy Review Board, established under the 
WTO Agreements, conducts reviews of WTO Members every 2, 4, or 
6 years, depending on the country's share of world trade, and 
reports back to the full WTO membership. These reviews and 
reports may flag policies and practices that could conflict 
with WTO obligations, enabling members to address them before 
they give rise to actual disputes.
    Section 2(b)(12)(B) of the bill directs negotiators to seek 
to strengthen the capacity of the TPRM to review countries' 
compliance with their WTO commitments. More generally, section 
2(b)(12)(D) directs negotiators to seek other provisions 
encouraging the early identification and settlement of 
disputes, short of formal dispute settlement proceedings.
    Section 2(b)(12)(C) highlights a concern of the Committee 
with the standard of review that dispute settlement panels and 
the WTO Appellate Body have applied in cases involving measures 
taken by administrative agencies of the United States--in 
particular, the U.S. International Trade Commission and the 
Department of Commerce. A familiar concept in U.S. 
administrative law is that courts reviewing actions of 
administrative agencies should give due deference to the fact 
finding and technical expertise of those agencies. Similar 
concepts are embedded in the WTO Agreements. For example, 
article 17.6 of the Agreement on Implementation of Article VI 
of the General Agreement on Tariffs and Trade 1994 (``the 
Antidumping Agreement'') provides that, where a dispute 
settlement panel finds that a national investigating 
authority's ``establishment of the facts was proper and the 
evaluation was unbiased and objective, even though the panel 
might have reached a different conclusion, the evaluation shall 
not be overturned.'' Similarly, ``Where the panel finds that a 
relevant provision of the Agreement admits of more than one 
permissible interpretation, the panel shall find the 
authorities' measure to be in conformity with the Agreement if 
it rests upon one of those permissible interpretations.''
    As discussed in greater detail in connection with the 
findings in section 1(b)(3) of the bill, recent decisions by 
panels and the Appellate Body have interpreted article 17.6 in 
a manner that strictly narrows the deference to be accorded to 
national investigating authorities. See, e.g., United States--
Anti-Dumping Measures on Certain Hot-Rolled Steel Products From 
Japan, Report of the Appellate Body (WT/DS184/AB/R) at 
para.para.50-62 (July 24, 2001). Similar concerns are prompted 
by cases involving U.S. countervailing duty and safeguards 
laws. This trend jeopardizes U.S. trade remedy laws by 
empowering panels and the Appellate Body to put their 
interpretations of the applicable agreements in place of U.S. 
investigating authorities' equally permissible interpretations 
of those agreements.
    Section 2(b)(12)(C) of the bill directs negotiators to seek 
improved adherence by WTO panels and the Appellate Body to the 
standard of review applicable under the WTO Agreement involved 
in a particular dispute, including greater deference, where 
appropriate, to the fact finding and technical expertise of 
national investigating authorities. Negotiators should pursue 
either amendments to the existing WTO Agreements or the 
conclusion of supplemental agreements to give clearer guidance 
to panels and the Appellate Body regarding standards for 
reviewing the actions of national investigating authorities.
    Section 2(b)(12)(E) of the bill directs negotiators to seek 
provisions encouraging the provision of trade-expanding 
compensation where a party to a trade dispute fails to come 
into timely compliance with its obligations. When a country is 
found to be in violation of its WTO obligations and fails to 
come into compliance within a reasonable period of time, there 
is a disruption in the balance of rights and obligations under 
the WTO Agreements. WTO rules contemplate two options for 
restoring balance. The first is the provision of compensation 
by the non-compliant country. The second is the suspension of 
concessions or other obligations by the complaining country.
    Compensation may take the form of a lowering of tariffs by 
the non-compliant country--on a non-discriminatory (most-
favored-nation) basis--on imports of products of importance to 
the complaining party. The suspension of concessions or other 
obligations typically entails an increase in tariffs imposed by 
the complaining country on imports from the non-compliant 
country. By definition, suspensions of concessions are trade-
reducing, as they raise barriers to trade between the 
complaining country and the non-compliant country, often 
harming the interests of both producers in the latter and 
consumers in the former. The harm to one's own consumers--as 
well as to subsidiaries and affiliates of one's own nationals 
that happen to be producing in the non-compliant country--often 
makes it difficult for a complaining country to suspend 
concessions. The problem is further complicated by the fact 
that sectors penalized by increased tariffs frequently have had 
nothing to do with the underlying dispute.
    By contrast, compensation is trade expanding. Exporters in 
the complaining country benefit from the lowering of tariffs or 
other barriers by the non-compliant country. And, since such 
compensation generally must be provided on a non-discriminatory 
basis, exporters in other countries may benefit as well. 
Consumers in the non-compliant country presumably benefit from 
the lower prices. The compensating country may lose some tariff 
revenue, and import-competing industries may face increased 
competitive pressure. However, since the compensation is 
undertaken voluntarily, the non-compliant country may assert 
some control over how the burdens are borne and may be able to 
counteract any adverse impact on import-competing industries.
    Section 2(b)(12)(E) of the bill expresses a preference for 
compensation over suspension of concessions or other 
obligations. It directs negotiators to seek trade agreement 
provisions that encourage compensation where a party fails to 
come into compliance with its obligations, in accordance with a 
dispute settlement decision.
    Recognizing that there may be cases where a party to a 
dispute fails to come into compliance with its obligations and 
compensation is not forthcoming, section 2(b)(12)(F) identifies 
guidelines for trade agreement provisions concerning the 
imposition of penalties. Most importantly, penalty provisions 
should encourage compliance with a country's obligations under 
a trade agreement. They should not be imposed simply to give a 
trade advantage to producers in the complaining country.
    Next, penalties should be appropriate to the parties, 
nature, subject matter, and scope of the violation. Trade 
agreements should require that authorized penalties be 
proportionate to the trade impact of the underlying violation 
and that they take account of the particular circumstances of a 
given case.
    Finally, penalties should minimize harm to parties or 
interests not party to the dispute, while maintaining the 
effectiveness of the enforcement mechanism. This objective 
reflects the principle, under WTO rules, that a party 
authorized to suspend concessions or other obligations should 
seek to do so first with respect to ``the same sector(s) as 
that in which the panel or Appellate Body has found a violation 
or other nullification or impairment.'' WTO Understanding on 
Rules and Procedures Governing the Settlement of Disputes, art. 
22.3(a). Only if this is not practicable or effective should 
the complaining party seek to suspend concessions or other 
obligations with respect to other sectors.
    Section 2(b)(12)(G) directs negotiators to seek provisions 
that treat the principal negotiating objectives of the United 
States equally with respect to the ability to resort to dispute 
settlement, the procedures available in dispute settlement, and 
the remedies available. The Committee recognizes that parties 
(correctly or not) may consider their obligations under trade 
agreements to be more or less binding, according to how they 
may be enforced. Obligations enforceable through arbitration 
may be treated as more binding than obligations as to which 
parties have a duty simply to consult. Similarly, where 
violation of an obligation may give rise to a penalty, 
compliance may be more forthcoming than violations where no 
penalty is available.
    Acknowledging that differences in method and degrees of 
enforceability may influence parties' compliance with their 
commitments, the Committee directs negotiators to pursue the 
principle of equivalence in negotiating agreement provisions on 
dispute settlement and enforcement. No commitment or 
commitments obtained pursuant to particular principal 
negotiating objectives should be relegated to less effective 
modes of enforcement than commitments obtained pursuant to 
other principal negotiating objectives.
    This does not mean that, in implementing trade agreements, 
U.S. officials should treat all disputes identically. It may be 
that certain differences are more amenable to consultation than 
arbitration. Likewise, some non-compliant practices may be 
better addressed through cooperation and technical assistance 
than through the threat of sanctions. Recognizing that trade 
officials should be able to deal with individual disputes 
according to the facts of the case presented, the United States 
should have equivalent enforcement tools available to it with 
respect to all commitments.
            13. Border taxes
    The principal negotiating objective regarding border taxes 
directs negotiators to seek a revision of WTO rules that will 
eliminate the current disadvantage to countries, such as the 
United States, that rely primarily on direct taxes (such as 
income taxes), rather than indirect taxes (such as sales and 
value-added taxes), and that tax income on a worldwide rather 
than a territorial basis. Rulings adopted by the WTO Dispute 
Settlement Body have found that the WTO Agreement on Subsidies 
and Countervailing Measures prohibits provisions in the United 
States Internal Revenue Code that exempt from taxation certain 
income from export transactions. By contrast, provisions under 
the laws of other countries that exempt export sales income 
from indirect taxes or remit to exporters taxes previously 
imposed might not be prohibited even though they provide 
similar relief to that afforded by the Internal Revenue Code.
    In the matter of United States--Tax Treatment for ``Foreign 
Sales Corporations,'' the WTO Appellate Body recognized the 
sovereign right of every country to set its own taxation rules. 
At the same time, the Appellate Body reached decisions 
concerning the Foreign Sales Corporation provisions of the 
Internal Revenue Code (and, more recently, the Extraterritorial 
Income Exclusion Act of 2000 provisions) that severely 
constrain the sovereign right of the United States to set its 
own rules of taxation for foreign source income earned in 
export transactions. Under the Appellate Body's 
interpretations, it would be difficult for the United States, 
consistent with WTO rules, to maintain its ``worldwide'' 
approach to international taxation while ensuring that U.S. 
producers are not at a competitive disadvantage compared with 
producers in jurisdictions that take a ``territorial'' approach 
to international taxation.
    In short, WTO subsidy rules as interpreted by dispute 
settlement panels and the Appellate Body give rise to a 
disparity that favors territorial tax jurisdictions over 
worldwide tax jurisdictions. The view of the Committee is that 
this disparity must be corrected, in order to preserve the 
sovereign right of every country to choose its own rules of 
taxation. Accordingly, the objective on border taxes directs 
the President to pursue this correction in the recently 
launched round of WTO negotiations. It is the Committee's 
expectation that in eliminating the existing disparity, the 
President will avoid a result that would place U.S. workers and 
companies now benefitting from the Extraterritorial Income 
Exclusion Act of 2000 at a competitive disadvantage.
            14. WTO extended negotiations
    Section 2(b)(14) incorporates by reference two negotiating 
objectives previously set forth in the Uruguay Round Agreements 
Act (``URAA''). The first objective concerns negotiations under 
the auspices of the WTO regarding trade in civil aircraft. 
Section 135(c) of the URAA identified five specific objectives 
for extended negotiations on trade in civil aircraft. These 
objectives called for the pursuit of greater market access 
through the reduction or elimination of tariff and non-tariff 
barriers, the maintenance of vigorous and effective disciplines 
on subsidies in this sector, the maintenance of the scope and 
coverage of rules on indirect support in the U.S.-E.C. 
Bilateral Agreement on Large Civil Aircraft, and the pursuit of 
increased transparency in foreign subsidy programs in the civil 
aircraft sector. Additionally, the Statement of Administrative 
Action that accompanied the URAA, and that Congress approved in 
section 101(a)(2) of the URAA, elaborated on how the United 
States would pursue the objectives set forth in section 135(c). 
See Uruguay Round Trade Agreements, Texts of Agreements, 
Implementing Bill, Statement of Administrative Action, and 
Required Supporting Statements, H. Doc. No. 316, 103d Cong., 2d 
Sess. at 681 (1994). The present bill reaffirms the objectives 
in section 135(c) of the URAA, along with the corresponding 
provisions from the Statement of Administrative Action.
    The second objective in section 2(b)(14) is the conclusion 
of a WTO agreement on harmonization of rules of origin. A work 
program for this purpose was established in article 9 of the 
WTO Agreement on Rules of Origin. Section 132 of the URAA 
requires that Congress enact separate authorizing legislation 
before the President implements an eventual agreement on 
harmonization of rules of origin.
            Section 2(c). Promotion of certain priorities
    Section 2(c) sets forth 12 priorities that the President 
shall pursue in conjunction with trade negotiations conducted 
under the authority provided in the present bill. While these 
priorities are not formally described as negotiating 
objectives, their importance as statements of the trade policy 
of the United States is equal to the importance of the general 
and specific objectives set forth in subsections (a) and (b). 
It is the expectation of the Committee that these priorities 
will be pursued with the same vigor as the objectives in those 
subsections, that the President will consult regularly with 
Congress regarding their status, and that the reports he 
transmits to Congress in support of trade agreements will 
address the progress made in achieving the priorities. This 
section summarizes the 12 priorities.
    The President shall seek greater cooperation between the 
WTO and the International Labor Organization. In setting forth 
this priority, the Committee recalls that section 131 of the 
Uruguay Round Agreements Act requires the President to seek the 
establishment in the WTO of a working party to examine the 
relationship of internationally recognized worker rights to the 
articles, objectives, and related instruments of the WTO. The 
objectives of the contemplated working party include developing 
methods to coordinate the work program of the working party 
with the International Labor Organization. 19 U.S.C. 
Sec. 3551(b)(4). The Committee takes note of the WTO 
Ministerial Declaration adopted November 14, 2001, in which the 
Members of the WTO reaffirmed their commitment to the 
observance of internationally recognized core labor standards 
and recognized the work of the ILO on ``the social dimension of 
globalization.'' The Committee expects that the President will 
work to reenforce this commitment through enhanced 
collaboration between the WTO and the ILO.
    Recognizing that capacity building is an important means to 
encourage trading partners of the United States to improve 
labor and environmental standards, the bill directs the 
President to establish consultative mechanisms among trade 
agreement parties for this purpose. The Committee notes that 
such mechanisms have been established in connection with 
several recent trade agreements. For example, in conjunction 
with the recently concluded free trade agreement with Jordan, 
the United States and Jordan adopted a Joint Statement on 
Environmental Technical Cooperation, in which they established 
a Joint Forum to meet regularly and develop technical 
cooperation initiatives to advance environmental protection in 
Jordan. Similarly, in conjunction with the conclusion of a 
bilateral trade agreement with Vietnam, the United States and 
Vietnam entered into a Memorandum of Understanding establishing 
a program of cooperation and dialogue on labor matters, and the 
United States provided technical assistance in collaboration 
with the ILO. And, labor consultations were agreed to as part 
of the recently extended United States-Cambodia Textile 
Agreement.
    Related to the priorities of establishing consultative 
mechanisms on labor and environmental standards, section 
2(c)(7) directs the President to have the Secretary of Labor 
consult with any country seeking a trade agreement with the 
United States concerning that country's labor laws and the 
provision of technical assistance as appropriate.
    Sections 2(c) (4) and (5) direct the President, before 
concluding new trade agreements, to conduct reviews of the 
likely impact of the proposed agreements on the environment in 
the United States and, as appropriate, outside the United 
States, and on employment in the United States. The concept for 
such reviews was established in Executive Order 13141 of 
November 16, 1999. 64 Fed. Reg. 63,169 (Nov. 18, 1999). That 
Executive Order directed the U.S. Trade Representative, in 
collaboration with other agencies, to undertake environmental 
reviews of certain trade agreements to enable the United States 
to factor environmental considerations into the development of 
its trade negotiating objectives. The present bill elevates the 
environmental review requirement to statutory status, and 
requires that the President report to the Senate Committee on 
Finance and the House Committee on Ways and Means on the 
results of such reviews. Further, the bill establishes a 
similar requirement with respect to the impact of future trade 
agreements on U.S. employment. The enactment of these review 
requirements is not intended to give rise to any private rights 
of action.
    Additionally, section 2(c)(8) of the bill requires the 
President to submit to the Senate Finance Committee and the 
House Ways and Means Committee a report on labor rights in any 
country with which the President is negotiating a trade 
agreement. It is the expectation of the Committee that this 
report will discuss (i) the extent to which the country 
complies with internationally recognized core labor standards, 
as defined by the International Labor Organization, (ii) the 
extent to which any failures to comply with core labor 
standards are likely to affect trade with the United States, 
and (iii) the extent to which the country has in place laws 
prohibiting exploitative child labor and is enforcing those 
laws. The timing for transmittal of labor rights reports is to 
be determined by the U.S. Trade Representative in collaboration 
with the Chairmen and Ranking Members of the Finance Committee 
and Ways and Means Committee as part of the development of 
guidelines on trade negotiation consultations, as required by 
section 7(b) of the bill.
    Section 2(c)(6) requires that in negotiating trade 
agreements, in addition to taking into account the commercial 
objectives of the United States, the President shall take into 
account other domestic policy objectives, including, but not 
limited to, the protection of health and safety, essential 
security, and consumer interests.
    Section 2(c)(9) addresses certain priorities regarding U.S. 
trade remedy laws, in particular, the antidumping, 
countervailing duty, and safeguards laws. It is a priority to 
preserve the ability of the United States to rigorously enforce 
these laws. Negotiators must avoid agreements that lessen their 
effectiveness or weaken the ability of the United States to 
enforce them. Preserving the integrity of these trade remedy 
regimes is essential to ensuring that benefits achieved through 
hard negotiations are not eroded, and that U.S. workers, 
farmers and businesses are able to compete on a level playing 
field. The Committee is concerned that some dispute settlement 
mechanisms, such as Chapter 19 of the North American Free Trade 
Agreement, could undermine the effectiveness of U.S. trade 
remedy laws.
    Negotiators also must avoid agreements that lessen the 
effectiveness of international disciplines on unfair trade, as 
well as international safeguard provisions. Further, section 
2(c)(9)(B) directs the President to address and remedy market 
distortions that lead to dumping and subsidization, including 
overcapacity, cartelization, and market-access barriers. The 
Committee notes that the WTO Ministerial Declaration adopted on 
November 14, 2001 calls for negotiations ``aimed at clarifying 
and improving'' disciplines on dumping and subsidies, ``while 
preserving the basic concepts, principles and effectiveness'' 
of existing WTO Agreements ``and their instruments and 
objectives.'' It is the expectation of the Committee that in 
pursuing these negotiations, the United States will advance as 
an affirmative agenda the priorities set forth in section 
2(c)(9)(B), while defending U.S. interests as described in 
section 2(c)(9)(A). These two sets of priorities go hand in 
hand and should not be traded off against each other.
    Section 2(c)(10) directs the President to promote 
consideration of multilateral environmental agreements 
(``MEAs'') and to consult with U.S. trading partners on the 
consistency of trade measures permitted under such agreements 
with environmental exceptions to ordinary trade rules. This 
provision refers, in particular, to Article XX of the General 
Agreement on Tariffs and Trade (``GATT''). That article, 
entitled ``general exceptions,'' permits WTO Members to adopt 
and enforce certain measures that otherwise would be 
inconsistent with WTO rules, as long as such measures are not 
applied in an arbitrary or discriminatory manner and do not 
constitute a disguised restriction on international trade. 
Measures subject to this general exception include measures to 
protect human, animal, or plant life or health and measures 
relating to the conservation of exhaustible natural resources.
    Certain existing MEAs, such as the Convention on 
International Trade in Endangered Species, permit parties to 
take trade-related measures in response to a party's violation 
of the agreement. Future MEAs may contain similar provisions. 
However, it is not clear whether measures taken pursuant to 
such provisions would be considered as coming under any of the 
categories of exceptions set forth in Article XX of the GATT. 
The present bill urges consultations among MEA parties that are 
also WTO Members to determine how trade provisions in MEAs 
should work with Article XX of the GATT.
    Section 2(c)(11) requires the President to report to the 
House Ways and Means Committee and the Senate Finance Committee 
on the effectiveness of trade remedies or penalties imposed 
under agreements concluded pursuant to the present bill. With 
respect to each remedy or penalty imposed, the President would 
be required to submit a report within 12 months discussing the 
effectiveness of the remedy in enforcing U.S. rights under the 
trade agreement. The report should discuss what steps the 
target country has taken to comply with its commitments 
following imposition of the remedy or penalty. The report also 
should discuss any impacts of the remedy or penalty on parties 
or interests not party to the underlying dispute.
    Finally, section 2(c)(12) requires the President to seek to 
establish consultative mechanisms among parties to trade 
agreements to examine the trade consequences of significant and 
unanticipated currency movements. These mechanisms also should 
examine whether a government has engaged in a pattern of 
manipulating its currency to promote a trade advantage. This 
provision reflects the concern of the Committee that 
significant swings in currency valuations have important 
impacts on trade and may erode benefits anticipated under trade 
agreements. Recognizing the inherent links between currency 
valuations and trade, the means to monitor those links should 
be built into trade agreements. It is expected that appropriate 
agencies, including the Department of Treasury, would be 
closely involved in the development and operation of such 
mechanisms.
            Section 2(d). Consultations
    Section 2(d) requires the U.S. Trade Representative to 
consult closely and on a timely basis with certain Members of 
Congress and to keep these Members fully apprized of 
negotiations conducted under the present bill. These Members 
are the newly established Congressional Oversight Group 
(described in section 7 of the bill), all Committees of the 
House and Senate with jurisdiction over laws that would be 
affected by trade agreements resulting from the negotiations, 
the congressional advisers for trade policy and negotiations 
appointed under section 161 of the Trade Act of 1974, the House 
Committee on Ways and Means, and the Senate Committee on 
Finance. Additionally, with regard to negotiations relating to 
agriculture trade, the U.S. Trade Representative shall consult 
closely and on a timely basis with the House Committee on 
Agriculture and the Senate Committee on Agriculture, Nutrition 
and Forestry.
    The Committee expects the consultations required under 
section 2(d) to occur throughout negotiation of an agreement, 
including immediately before initialing of the agreement. 
Consultations should keep Members of Congress currently and 
fully informed of progress in negotiations, including steps 
taken to fulfill each of the policies, priorities, and 
objectives of the present bill. Moreover, for consultations to 
be meaningful, they must be an opportunity for Members of 
Congress to provide input into negotiations, as well as an 
opportunity for negotiators to keep Members of Congress 
informed. To the extent that Members provide input, it is the 
Committee's expectation that negotiators will follow up with 
explanations of steps taken in pursuit of that input or 
decisions made notwithstanding that input.
            Section 2(e). Adherence to obligations under Uruguay Round 
                    Agreements
    Section 2(e) requires the President to consider the extent 
to which a country has implemented or accelerated 
implementation of its obligations under the Uruguay Round 
Agreements in determining whether to start new negotiations 
with that country. This provision complements the objective in 
section 2(b)(7) to pursue enhanced implementation of WTO 
obligations. The President necessarily must choose the 
countries with which the United States will negotiate trade 
agreements. The Committee recognizes that a number of 
commercial, foreign policy, and other factors influence these 
decisions. Section 2(e) emphasizes the importance of compliance 
with WTO obligations as a criterion in making these selections.

Section 3. Trade agreements authority

    Section 3 provides that the President may enter into trade 
agreements subject to the trade authorities procedures 
prescribed in the present bill before June 1, 2005 or, if such 
procedures are extended as provided in section 3(c), before 
June 1, 2007.
    Section 3 contains two different procedures for 
implementing trade agreements--one for implementing certain 
results of tariff negotiations, and one for implementing all 
other results of tariff negotiations, as well as other changes 
to U.S. law required by trade agreements.
    Tariff proclamation authority. Section 3(a) contains the 
first of these two procedures, commonly referred to as ``tariff 
proclamation authority.'' Tariff proclamation authority permits 
the President to proclaim the results of certain tariff 
negotiations directly into U.S. law, without need for separate 
legislation.
    Section 3(a) puts limits on the President's tariff 
proclamation authority. Specifically, where a current duty rate 
exceeds 5 percent ad valorem, the President would not be 
authorized to reduce it by more than 50 percent. Any greater 
reduction would have to be approved by Congress. Where a 
current duty rate is 5 percent ad valorem or less, the 
President may reduce it or eliminate it without separate 
congressional approval.
    An additional restriction on proclamation authority 
pertains to tariffs on certain import-sensitive agricultural 
products. The President may not proclaim reductions of tariff 
rates on such products below the rates applicable under the 
Uruguay Round Agreements. Products subject to this restriction 
are those agricultural products as to which the United States 
rate of duty was lowered by no more than 2.5 percent on the day 
the WTO Agreements went into effect (January 1, 1995). Tariff 
reductions on these products must be approved in separate 
legislation, described in section 3(b).
    Finally, the President may not, by proclamation, increase 
any rate of duty above the rate applied on the date this bill 
is enacted. Any such increases will require separate 
legislation.
    To the extent that tariff reductions may be implemented by 
proclamation, the bill requires that, in general, such 
reductions take place in stages. The stages may vary in size 
from period to period. However, the aggregate reduction in 
place at any given time may not exceed the aggregate reduction 
that would have been in place if, beginning on the date an 
agreement is implemented, tariffs had been reduced in equal 
annual stages of the greater of (i) 3 percent ad valorem, or 
(ii) one-tenth of the total reduction. The bill permits the 
President to round numbers off, within limits, to simplify 
staging calculations.
    An exception to the staging requirements is made where the 
U.S. International Trade Commission determines that there is no 
domestic production of an article.
    Finally, the bill reaffirms the residual proclamation 
authority granted to the President in section 111(b) of the 
Uruguay Round Agreements Act (``URAA''). That provision 
authorizes the President to proclaim certain tariff rate 
changes for articles that were the subject of duty elimination 
or harmonization negotiations during the Uruguay Round of 
multilateral trade negotiations. During that round, the United 
States sought, but did not achieve, reciprocal duty elimination 
in the wood products, electronics, distilled spirits, non-
ferrous metals, soda ash, and oilseeds and oilseed products 
sectors. In sectors where the United States did obtain 
agreement to reciprocal tariff elimination in the Uruguay 
Round--such as paper and paper products--the President 
determined, in the Statement of Administrative Action that 
accompanied the Uruguay Round Agreements Act, that the United 
States would pursue accelerated elimination of those tariffs 
following the Uruguay Round. Also, the President determined to 
continue to pursue harmonization of tariffs on chemical 
products following the Uruguay Round. Section 111(b) authorizes 
the President to proclaim tariff changes as necessary to 
implement each of the foregoing ends, and that authority 
remains unchanged under the present bill. See Uruguay Round 
Trade Agreements, Texts of Agreements, Implementing Bill, 
Statement of Administrative Action, and Required Supporting 
Statements, H. Doc. No. 316, 103d Cong., 2d Sess. at 701-02 
(1994).
    Since completion of the Uruguay Round, the President has 
exercised the residual proclamation authority under section 
111(b) to implement U.S. obligations under the WTO Information 
Technology Agreement (``ITA''), which eliminates tariffs on a 
wide array of products, including computers, semiconductors and 
telecommunications equipment. The Committee believes that the 
ITA was a substantial accomplishment for an important sector of 
the U.S. economy. The Committee recognizes, however, that the 
President's ability to negotiate and carry out similar 
agreements is limited, because section 111(b) applies only to 
sectors that were the subject of reciprocal duty elimination or 
harmonization negotiations during the Uruguay Round.
    In the interest of building on the success of the ITA, the 
present bill (in section 3(a)(6)) grants the President 
authority to modify any duty or the staged rate reduction of 
any duty, pursuant to a reciprocal elimination or harmonization 
of duties under the auspices of the WTO, regardless of whether 
the sector at issue had been subject to duty elimination or 
harmonization negotiations during the Uruguay Round. This 
authority is not subject to the ordinary limitations on the 
scope of proclaimed tariff reductions, the prohibition on 
proclaimed tariff increases, and the staging rules. However, 
this authority may not be used to proclaim the reduction or 
elimination of tariffs on import-sensitive agricultural 
products as provided for in section 3(a)(2)(B).
    Tariff reductions proclaimed under section 3(a)(6) of the 
present bill, like tariff reductions proclaimed under section 
111(b) of the URAA, are subject to the layover and consultation 
requirements prescribed by section 115 of the URAA. That is, 
the President must receive advice from the appropriate industry 
advisory committee and the ITC on the proposed proclamation, 
and the proclamation must lie before the Senate Finance and 
House Ways and Means Committees for a period of 60 days before 
going into effect, in order to give the Committees an adequate 
opportunity to consult with the President.
    It is the expectation of the Committee that the President 
will continue the efforts at tariff elimination and 
harmonization left over from the Uruguay Round, as well as 
efforts at accelerated tariff elimination in those sectors for 
which ``zero-for-zero'' agreements have been achieved. In 
addition, the Committee expects that the President will seek to 
expand the country and product coverage of existing tariff 
elimination agreements. Further, the Committee notes that new 
sectoral initiatives on tariff elimination which may be 
expected to yield significant benefits to the United States, 
based on volume of trade, include: electrical and non-
electrical machinery, processed foods (such as soups and 
broths, sauces and biscuits, and snack foods), autos and auto 
parts, meats (such as beef, pork, and poultry), and information 
technology products not already covered by the ITA.
    Agreements on tariff and non-tariff barriers. The second 
procedure for implementing trade agreements is found in Section 
3(b) and is commonly referred to as ``trade authorities 
procedures'' or ``fast track.'' Section 3(b)(1) authorizes the 
President to enter into a trade agreement with a foreign 
country whenever he or she determines that any duty or other 
import restriction, or any other barrier to or distortion of 
international trade, unduly burdens or restricts the foreign 
trade of the United States or adversely affects the U.S. 
economy, or that the imposition of any such barrier or 
distortion is likely to result in such a burden, restriction, 
or effect, and that entering into such agreement will promote 
the purposes, policies, priorities and objectives of this bill. 
The agreement must provide for the reduction or elimination of 
such barrier or other distortion or prohibit or limit the 
imposition of such a barrier or distortion. Unlike prior fast 
track legislation, no distinction would be made between 
bilateral and multilateral agreements.
    Conditions. Section 3(b)(2) provides that the trade 
agreement approval procedures may be used only if the agreement 
makes progress in meeting the applicable objectives set forth 
in sections 2 (a) and (b) (Overall and Principal Trade 
Negotiating Objectives), and the President satisfies the 
requirements set forth in section 4 (Consultations).
    Bills qualifying for trade authorities procedures. Section 
3(b)(3) provides that bills implementing trade agreements 
qualify for trade authorities procedures only if those bills 
consist solely of provisions approving the trade agreement and 
any statement of administrative action accompanying the 
agreement, and provisions necessary or appropriate to implement 
the trade agreement.
    If the foregoing conditions are met, then the trade 
authorities procedures described in section 151 of the Trade 
Act of 1974 apply to the implementing bill. Section 151 of that 
Act sets forth a timetable for consideration of implementing 
bills in the Committees of jurisdiction and on the floor of 
each House of Congress. Ordinarily, the maximum time for 
consideration in both Chambers will be 90 legislative days. 
Section 151 also prohibits amendments to implementing bills and 
limits the time for debate on the floor of each House to 20 
hours (subject to further limitation).
    The Committee intends to extend authority to the President 
to negotiate agreements subject to the trade authorities 
procedures similar to that given to past Presidents. The 
Committee also intends to provide the President with the 
flexibility needed to negotiate strong trade agreements. 
However, the Committee believes that for constitutional 
reasons, it is important to make trade promotion authority as 
tailored as possible, so as not to unnecessarily intrude on 
normal legislative procedures. Trade authorities procedures are 
exceptions to the ordinary rules of procedure, which are 
permitted only because of the co-equal status that the 
executive and legislative branches share in the area of trade. 
The President and Congress both have important powers with 
respect to trade and foreign affairs issues. Therefore, trade 
agreements do not readily fit the legislative model used to 
consider other types of legislation. Trade authorities 
procedures assure that trade relations with other countries are 
handled expeditiously and efficiently, with the involvement of 
the executive and legislative branches. The Committee believes 
that these procedures should apply only to meet the special 
requirements of trade agreements. Further, the trade 
authorities procedures should apply only to those provisions in 
an implementing bill that are strictly necessary or appropriate 
to implement the underlying agreement. To apply the procedures 
more broadly would encroach on Congress's constitutional 
authority to legislate. The Committee takes a strict 
interpretation of this requirement.
    Time period. Sections 3(a)(1)(A) and 3(b)(1)(C) grant trade 
promotion authority for agreements entered into before June 1, 
2005. An extension until June 1, 2007 would be permitted unless 
Congress passed a disapproval resolution, as described under 
section 3(c).
    Extension procedures. Section 3(c) outlines a process for 
extending the tariff proclamation authority of section 3(a) and 
the trade authorities procedures of section 3(b). Under this 
process, the President must request the extension from Congress 
and provide his reasons for that request, along with an 
explanation of the trade agreements for which he expects to 
need fast track authority, and a description of the progress he 
has made to date toward achieving the purposes, policies, 
priorities, and objectives of the present bill. The President 
must promptly notify an extension request to the Advisory 
Committee for Trade Policy and Negotiations established under 
section 135 of the Trade Act of 1974, which then must file its 
own report with Congress. The President also must promptly 
notify the International Trade Commission of his request for an 
extension. The International Trade Commission must file a 
report that contains a review and analysis of the economic 
impact on the United States of all trade agreements implemented 
between the date of enactment of this bill and the date upon 
which the President requests an extension.
    Consistent with prior law, the President's request for an 
extension through June 1, 2007 will be granted, unless either 
House of Congress passes a ``resolution of disapproval.'' Any 
Member of Congress may introduce such a resolution in his or 
her respective House of Congress. Such a resolution will be 
referred, in the Senate, to the Committee on Finance, and in 
the House, jointly to the Committees on Rules and Ways and 
Means. Floor action on such a resolution will not be in order 
unless the resolution is reported by the aforementioned 
committees. In the event the Committee on Finance reports an 
extension disapproval resolution, the resolution will be 
considered on the Senate floor under the fast track procedures 
set forth in section 152(e) of the Trade Act of 1974. In the 
event the Committee on Ways and Means and the Committee on 
Rules report an extension disapproval resolution, the 
resolution will be considered on the House floor under the fast 
track procedures set forth in section 152(d) of that Act.

Section 4. Consultations and assessment

    H.R. 3005 revises and strengthens the legislative-executive 
trade consultation procedures. To this end, section 4 
establishes a number of new requirements to help ensure close 
coordination and consultation at every stage of trade agreement 
negotiation.
    Specifically, section 4(a)(1) requires the President to 
provide written notice to Congress at least 90 calendar days 
prior to entering into negotiations. In the notice, the 
President must set forth the date on which he intends to 
initiate negotiations, the specific objectives for the 
negotiations, and whether the President intends to seek a new 
agreement, or to change an existing agreement. Failure to 
provide notice may trigger the introduction and consideration 
of a ``procedural disapproval resolution'' under the provisions 
of section 5(b). If a disapproval resolution were adopted, it 
would withdraw trade authorities procedures for legislation 
implementing the agreement at issue. Section 4(a)(2) requires 
the President to consult with relevant Committees regarding the 
negotiations before and after formal submission of the notice 
of intention to negotiate. Section 4(a)(3) requires the 
President, upon the request of a majority of the members of the 
Congressional Oversight Group (an entity established in section 
7 of this bill), to meet with the Congressional Oversight Group 
before initiating negotiations or at any other time concerning 
the negotiations.
    Section 4(b) establishes a special consultation requirement 
for agriculture and the fishing industry. Before initiating 
negotiations with a country concerning tariff reductions in 
agriculture, the President is to assess whether U.S. tariffs on 
agricultural products that were bound under the Uruguay Round 
Agreements are lower than the tariffs bound by that country. In 
his assessment, the President is also required to consider 
whether the tariff levels bound and applied throughout the 
world with respect to imports from the United States are higher 
than U.S. tariffs on like products, and whether the negotiation 
provides an opportunity to address any such disparity.
    The President is required to consult with the Committees on 
Ways and Means and Agriculture of the House and the Committees 
on Finance and Agriculture, Nutrition, and Forestry of the 
Senate concerning the results of this assessment, whether it is 
appropriate for the United States to agree to further tariff 
reductions under such circumstances, and how all applicable 
negotiating objectives will be met.
    Section 4(b)(2) sets forth special consultation procedures 
for import-sensitive agricultural products. It requires the 
U.S. Trade Representative, before initiating agriculture 
negotiations, to identify import-sensitive agricultural 
products, and consult with the Committee on Ways and Means and 
the Committee on Agriculture of the House of Representatives 
and the Committee on Finance and the Committee on Agriculture, 
Nutrition, and Forestry of the Senate concerning whether 
further tariff reductions on these products would be 
appropriate, whether these products face unjustified sanitary 
and phytosanitary restrictions, and whether the countries 
participating in the negotiations maintain export subsidies or 
other programs that distort world trade in these products. The 
U.S. Trade Representative also must request that the 
International Trade Commission prepare an assessment of the 
probable economic effect of any tariff reduction on the U.S. 
industry producing an import-sensitive agricultural product. 
After complying with these provisions, the U.S. Trade 
Representative must notify the aforementioned Committees of his 
or her intention to seek tariff liberalization in the 
identified products. Further, if during the course of 
negotiations additional import-sensitive agricultural products 
become candidates for tariff reductions, the Trade 
Representative must notify the foregoing Committees promptly 
and explain the reasons for seeking the proposed tariff 
reductions.
    For purposes of these special consultation requirements, 
``import-sensitive agricultural products'' are defined as 
agricultural products that are currently subject to tariff-rate 
quotas and agricultural products for which the rate of duty on 
the date the World Trade Organization was established (January 
1, 1995) was lowered by 2.5 percent.
    Section 4(b)(3) requires the President, before initiating 
or continuing negotiations directly related to fish or 
shellfish trade, to consult with the Committee on Ways and 
Means and the Committee on Resources of the House of 
Representatives, and the Committee on Finance and the Committee 
on Commerce, Science, and Transportation of the Senate and to 
keep these Committees apprized of negotiations on an ongoing 
and timely basis.
    Section 4(c) sets forth a special consultation requirement 
for negotiations regarding textiles. Textile and apparel 
production in the United States is especially sensitive to 
import competition. Pressures on this sector are increasing, 
due to the gradual elimination of quotas on textile imports. 
Under WTO rules, all quotas must be eliminated by January 1, 
2005. Given these special circumstances, the Committee believes 
there is a need for a separate mechanism for consultations in 
this sector. Accordingly, before initiating trade negotiations 
with a country, the bill requires the President to determine 
whether U.S. textile and apparel tariffs bound under the 
Uruguay Round Agreements are lower than tariffs bound by that 
country, and whether the negotiation affords an opportunity to 
address that disparity. The President then must consult with 
the House Ways and Means Committee and the Senate Finance 
Committee about his assessment, whether the United States 
should agree to further textile and apparel tariff reductions, 
and how all applicable negotiating objectives will be met.
    Section 4(d) requires the President, before entering into 
any trade agreement, to consult with the relevant Committees 
and the Congressional Oversight Group concerning the nature of 
the agreement, how and to what extent the agreement will 
achieve the applicable purposes, policies, and objectives set 
forth in H.R. 3005, as amended, and all matters relating to 
implementation under section 5, including the general effect of 
the agreement on U.S. laws.
    Section 4(d)(3) of the bill, in conjunction with section 
5(a)(2)(B)(ii)(VI), establishes a special structure for 
consultation between the President and Congress on the subject 
of changes to U.S. trade remedy laws that may be required by 
trade agreements to which the United States may become a party. 
The importance of preserving the integrity of trade remedy 
laws--in particular, the antidumping, countervailing duty, and 
safeguards laws--is described elsewhere in the bill. For 
example, section 2(c)(9)(A) directs the President to ``preserve 
the ability of the United States to enforce rigorously its 
trade laws.'' Section 1(b)(3) expresses concern about the way 
in which WTO dispute settlement panels and the Appellate Body 
have handled cases involving U.S. trade remedy laws.
    Given the priority the Committee attaches to keeping U.S. 
trade remedy laws strong and ensuring that they remain fully 
enforceable, the bill puts in place a process requiring special 
scrutiny of any impact that trade agreements may have on these 
laws. The process put in place by the bill requires 
Presidential comments on pending trade agreements, followed by 
congressional replies, followed by additional Presidential 
comments. It is the Committee's expectation that this process 
will focus attention on the interaction between trade 
agreements and trade laws and reenforce the goal of not 
sacrificing the latter for the sake of the former.
    Under section 4(d)(3), at least 90 calendar days before 
entering into a trade agreement, the President must notify the 
House Committee on Ways and Means and the Senate Committee on 
Finance of any changes to the antidumping, countervailing duty, 
or safeguard laws he proposes to include in a bill implementing 
the trade agreement. Along with this notification, the 
President must transmit to the Committees a report explaining 
his reasons for believing that these changes to U.S. law are 
(1) necessary to implement the agreement, and (2) consistent 
with the purposes, policies and objectives (described in 
section 2(c)(9) of the bill) of avoiding agreements that lessen 
the effectiveness of trade remedy laws and preserving the 
ability of the United States to enforce those laws rigorously.
    Not later than 60 calendar days after receiving the 
foregoing notification and report from the President, the 
Chairmen and Ranking Members of the Ways and Means and Finance 
Committees would be required to transmit to their respective 
Chambers reports of their own. These reports would be developed 
in consultation with the membership of the respective 
Committees and would state whether the changes to U.S. trade 
remedy laws proposed by the President are, in fact, consistent 
with the purposes, policies, and objectives of avoiding 
agreements that lessen the effectiveness of those laws and 
preserving the ability of the United States to enforce them 
rigorously. In the event that the Chairman and Ranking Member 
of either of the Committees disagreed with one another, the 
report would contain the separate views of the Chairman and 
Ranking Member.
    The purpose of the reports by the Chairmen and Ranking 
Members is to give the House and Senate membership alternative 
perspectives on the likely impact of proposed changes to trade 
remedy laws and thereby keep the bodies fully informed. 
Further, it is the Committee's expectation that anticipation of 
the reports by the Chairmen and Ranking Members will create a 
strong incentive for the President to consult closely with the 
Committees during negotiation of trade agreements. Working 
closely with the Committees may be expected to reduce the 
likelihood of dissent in the reports by the Chairmen and 
Ranking Members and thus improve the chances of congressional 
approval of the proposed trade agreement.
    The Committee notes that, under the bill, there would be no 
penalty in the event that the Chairman and Ranking Member of 
either Committee failed to issue their report as prescribed by 
section 4(d)(3) (C) and (D). In other words, a bill 
implementing the trade agreement at issue would remain eligible 
for consideration under trade authorities procedures. However, 
the Committee believes that the reports by the Chairmen and 
Ranking Members contemplated by this bill will play a critical 
part in congressional consideration of trade agreements and 
fully expects that they will be transmitted in a timely 
fashion. No negative inferences with respect to any aspect of 
the President's consultations with Congress should be drawn 
from the fact that the Chairman and Ranking Member of either 
Committee file dissenting reports. ]
    The final piece in the special procedures for consultation 
on trade remedy laws is a response by the President to the 
reports by the Chairmen and Ranking Members. Section 5(a)(2) of 
the bill sets forth certain supporting information that the 
President must provide to Congress when transmitting a trade 
agreement and implementing bill for consideration under trade 
authorities procedures. Among the supporting information 
required is a response to the reports of the Chairmen and 
Ranking Members, in the event that those reports find the 
President's proposed changes to trade remedy laws to be 
inconsistent with the purposes, policies, and objectives of 
avoiding agreements that lessen the effectiveness of those laws 
and preserving the ability of the United States to enforce them 
rigorously. In that case, the President must explain why he 
disagrees with the report of the Chairman and/or Ranking 
Member, as the case may be. This explanation (along with other 
information set forth in section 5(a)(2)) is required in order 
for an agreement entered into under the provisions of this bill 
to enter into force with respect to the United States.
    Section 4(e) concerns the timing of certain reports to be 
prepared by the Advisory Committee on Trade Policy and 
Negotiations (the ``ACTPN'') and sectoral or functional 
advisory committees at the conclusion of trade agreement 
negotiations.
    The ACTPN is an entity that Congress directed the President 
to establish in section 135 of the Trade Act of 1974. It 
consists of up to 45 members, appointed by the President on the 
recommendation of the U.S. Trade Representative for 2-year 
terms, and includes representatives from non-Federal 
governments, labor, industry, agriculture, small business, 
service industries, retailers, nongovernmental environmental 
and conservation organizations, and consumer interests. The 
ACTPN's mandate is to provide overall policy advice on trade 
negotiations, the operation of trade agreements in force, and 
other trade policy matters.
    The Trade Act of 1974 also directed the President to 
establish sectoral or functional advisory committees. Like the 
ACTPN, the sectoral or functional committees provide advice on 
negotiations, operation of trade agreements, and trade policy 
matters. Unlike the ACTPN, which focuses on the economy as a 
whole, the sectoral or functional committees focus on 
particular parts of the economy.
    Section 135(e)(1) of the Trade Act of 1974 directed the 
ACTPN, as well as the sectoral or functional committees whose 
issue areas are affected by a negotiation, to meet at the 
conclusion of a trade agreement negotiation and to prepare a 
report for the President, Congress, and the U.S. Trade 
Representative.
    Under the 1988 Omnibus Trade and Competitiveness Act, the 
advisory committee reports were required to be submitted no 
later than the date on which the President notified Congress of 
his intention to enter into an agreement. In recognition of the 
fact that important terms of trade agreements often are not 
determined before the final hours of the negotiations, the 
present bill would permit the committees to submit their 
reports within 30 days after the President notifies his intent 
to enter into an agreement, as opposed to requiring the report 
be filed on the same day as that notification. The Committee 
believes that the additional time would contribute to the 
usefulness of the reports.
    Finally, section 4(f) requires the President, at least 90 
days before entering into a trade agreement, to ask the 
International Trade Commission to assess the agreement, 
including the likely impact of the agreement on the U.S. 
economy as a whole, specific industry sectors, and U.S. 
consumers. The ITC's report of its assessment must be 
transmitted to Congress and the President not later than 90 
days from the date on which the President enters into the 
agreement.
    The Committee believes that strong legislative-executive 
consultations are the key to successful trade negotiations 
undertaken under the authorities provided in this bill. A 
strong consultation procedure, effectively utilized by both 
branches of government, can help build broad political support 
for trade agreements negotiated under this bill. Conversely, 
failure to adhere to the consultation procedures erodes trust 
between the executive and legislative branches and could lead 
to withdrawal of trade agreement approval procedures or 
rejection of trade agreements.
    The improvements made with respect to consultations, as 
compared with previous fast track legislation, are designed to 
assure maximum congressional participation before, during, and 
after the trade negotiating process. Given Congress's 
constitutional role in trade policy, it is imperative that 
Members and their staffs be given periodic and timely 
substantive briefings by U.S. negotiators and access to 
relevant documents and information sources. To this end, the 
Committee expects that the USTR will, consistent with past 
practice, commit to a set of procedures for supplying Members 
and properly cleared staff with relevant documents, whether 
classified or unclassified, on a timely basis.
    It is equally important that congressional trade advisers--
those named under section 161 of the Trade Act of 1974, as well 
as Members of the Congressional Oversight Group established 
under section 7 of the present bill--be given appropriate 
access to international conferences, meetings, and negotiating 
sessions relating to trade agreements. The Committee notes that 
under both section 161(a)(1) of the Trade Act of 1974 and 
section 7(a)(4) of the present bill, certain Members of 
Congress are to be accredited by the U.S. Trade Representative 
on behalf of the President as official advisers to the U.S. 
delegation in trade agreement negotiations. While these Members 
will not be negotiating on behalf of the United States, access 
to the negotiations as observers is critical to enabling the 
Members, in their capacity as official advisers, to provide 
timely input to the U.S. negotiators.
    The Committee is of the view that meaningful consultations 
entail an ongoing dialogue between the legislative and 
executive branches. The burden on the executive branch is not 
simply to keep Committees of jurisdiction and other 
congressional advisers informed. Negotiators also must solicit 
and take into account input from Congress. To the extent that 
negotiators take positions that differ from the input provided 
by Committees of jurisdiction and other congressional advisers, 
it is generally expected that they will explain the divergences 
to the Committees and other advisers in a timely manner.
    Moreover, while the obligations to consult under the 
present bill generally are placed on the President and the U.S. 
Trade Representative, the Committee recognizes that it may be 
appropriate for other executive branch officials to consult on 
particular matters. For example, the Committee expects that the 
Secretary of the Treasury or his designee will consult with the 
Committees of jurisdiction and other congressional advisers on 
matters regarding trade and monetary policy. Similarly, the 
Committee expects that the Secretary of Agriculture or her 
designee will consult on matters regarding trade and 
agriculture. Likewise, the Committee expects that where other 
matters that are the subject of trade negotiations come within 
the jurisdiction of departments and agencies other than the 
Office of the U.S. Trade Representative, the appropriate 
executive branch personnel will consult with Congress.
    The Committee emphasizes that Congress must be fully 
involved in all phases of the negotiating process and must have 
the ability to fully express its views and fulfill its 
constitutional role. The Committee intends that throughout the 
process, the consultations address the nature of the agreement 
in question, how and to what extent the agreement will achieve 
the applicable purposes, policies, and objectives set forth in 
H.R. 3005, as amended, and all matters relating to 
implementation under section 5, including the effects of the 
agreement on U.S. laws.
    It is the Committee's view that comprehensive, detailed 
consultations are especially important toward the conclusion of 
a negotiation--the point at which key, and often controversial, 
matters are resolved. Accordingly, it is the Committee's 
expectation that the U.S. Trade Representative will work with 
the Committees of jurisdiction and other congressional trade 
advisers to develop a set of procedures for consultations as 
negotiations enter their final days. Members will then have the 
opportunity to provide the USTR with their views as to any 
concerns regarding the status of negotiations at that time and 
possible tradeoffs that are likely to occur in the waning 
hours.

Section 5. Implementation of trade agreements

            Summary
    Section 5 of the bill describes the procedures to be 
followed for a trade agreement to enter into force with respect 
to the United States. It sets forth the documentation that the 
President must transmit to Congress to enable Congress to make 
a fully informed decision as to whether to approve a trade 
agreement. It then sets forth certain conditions under which a 
trade agreement implementing bill's eligibility for 
consideration under trade authorities procedures may be 
withdrawn. Finally, it affirms that the provisions for 
withdrawal of trade authorities procedures contained here and 
elsewhere in the bill are adopted pursuant to the 
constitutional authority of each House of Congress to determine 
the rules of its proceedings and to change those rules as it 
deems appropriate.
            Section 5(a). In general
    The information that the President must provide to Congress 
in connection with a proposed trade agreement is described in 
section 5(a). The requirement set out here complements the 
various requirements that the President consult with Congress 
during the course of an agreement's negotiation. Consultation 
during negotiation, combined with a complete accounting after 
negotiation, should enable Congress to participate in the trade 
policymaking process to the fullest extent of its 
constitutional authority.
    At least 90 days before entering into a trade agreement 
subject to this bill, the President must notify Congress of his 
intention to enter into the agreement and publish notice of 
that intention in the Federal Register. Also at this time, the 
President must transmit to the House Ways and Means Committee 
and the Senate Finance Committee the notification and report 
(described in section 4(d)(3) of the bill) concerning proposed 
changes to U.S. trade remedy laws.
    Within 60 days after entering into the agreement, the 
President must transmit to Congress a description of changes to 
U.S. law he believes would be necessary to bring the United 
States into compliance with the agreement. This requirement is 
in addition to the notification and report concerning proposed 
changes to trade remedy laws to be transmitted before entering 
into the agreement. That is, the description of necessary 
changes to U.S. law transmitted after entering into the 
agreement, must address all changes to U.S. law, not only 
changes to trade remedy laws.
    Next, the President must transmit to Congress (1) the final 
legal text of the agreement, (2) a draft bill to implement the 
agreement, (3) a statement of administrative action proposed to 
implement the agreement, and (4) certain supporting information 
(described in greater detail, below). There is no deadline for 
this transmittal. However, it must be made on a date on which 
both Houses of Congress are in session.
    It is the expectation of the Committee that, for any 
agreement subject to trade authorities procedures under the 
present bill, the draft implementing bill and statement of 
administrative action will be developed by the President in 
close collaboration with the Committees of jurisdiction in both 
Houses of Congress. This has been the practice under prior fast 
track legislation. Because an implementing bill subject to 
trade authorities procedures is not subject to amendment, 
cooperation between the executive branch and the Committees of 
jurisdiction prior to the bill's introduction is critical to 
protect congressional prerogatives in the development of 
legislation. In addition to such cooperation, the Committee 
expects that other past practices--such as hearings, informal 
markups, and informal conferences between House and Senate 
Committees of jurisdiction--will precede formal transmittal of 
a trade agreement, draft implementing bill, and supporting 
documentation to Congress. To ensure that the legislative and 
executive branches have adequate time to complete these pre-
transmittal processes, the bill establishes no deadline for 
transmittal. It simply provides, in section 5(a)(1)(C), that 
this is to happen ``after entering into the agreement.''
    The supporting information that the President must transmit 
to Congress, along with the agreement, draft implementing bill, 
and statement of administrative action, is as follows:
     An explanation as to how the bill and proposed 
administrative action will change or affect existing law.
     A statement asserting that the agreement makes 
progress in achieving the applicable purposes, policies, and 
objectives set forth in section 2 of the bill, and an 
explanation of how and to what extent it does so. This should 
be a detailed statement, addressing each of the applicable 
purposes, policies, and objectives in section 2 (recognizing 
that there may be certain purposes, policies, and objectives 
that are not applicable).
     A statement of whether and how the agreement 
changes provisions of previously negotiated agreements.
     A statement of how the agreement serves the 
interests of U.S. commerce.
     A statement of how the draft implementing bill 
meets the requirements for application of trade authorities 
procedures. Section 3(b)(3) of the bill provides that the 
special ``fast track'' rules contained in section 151 of the 
Trade Act of 1974--referred to in this bill as ``trade 
authorities procedures''--apply to Congress's consideration of 
trade agreement implementing bills that contain certain 
provisions. As explained above, such bills must (1) approve the 
underlying agreement and the proposed statement of 
administrative action, and (2) contain changes to existing law 
necessary or appropriate to implement the underlying agreement. 
The supporting information accompanying transmittal of the bill 
must explain how the bill meets each of these requirements. In 
particular, it is important that the President explain his 
reasons for believing that the changes to existing law 
contained in the bill are necessary or appropriate to implement 
the agreement.
     A statement of how and to what extent the 
agreement makes progress in achieving the applicable priorities 
set forth in section 2(c) of the bill.
     A response to any findings by the Chairmen and 
Ranking Members of the Finance and Ways and Means Committees 
that proposed amendments to U.S. trade remedies laws are 
inconsistent with the purposes, policies, priorities, and 
objectives (in section 2(c)(9) of the bill) to preserve the 
ability of the United States to enforce those laws rigorously, 
and to avoid agreements that lessen the effectiveness of 
domestic and international dumping, subsidies, and safeguards 
disciplines. As discussed above, section 4(d)(3) of the bill 
requires the President, at least 90 days before concluding an 
agreement, to notify the Finance and Ways and Means Committees 
of any changes to U.S. trade remedy laws that may be necessary 
to implement the agreement. He also must explain his reasons 
for believing that these changes will not contravene the 
purposes, policies, priorities, and objectives in section 
2(c)(9) of the bill. This notification is followed by a report 
by the Chairmen and Ranking Members of the two Committees. To 
the extent that any of these reports (including separate views 
of the Chairman and Ranking Member, where there is a lack of 
consensus) disagree with the President's assessment, the 
President must transmit a statement responding to the 
disagreeing views. His statement should address the arguments 
of the Member or Members who believe that the proposed changes 
to U.S. trade remedy laws will weaken those laws.
    Section 5(a) contains two safeguards to ensure that a bill 
implementing a trade agreement does not do things it was not 
intended to do. First, to ensure that a trade agreement does 
not inadvertently bestow benefits on countries not party to the 
agreement, section 5(a)(3) requires that an implementing bill 
provide explicitly that benefits and obligations under the 
agreement apply only to the parties to the agreement. This 
section also provides that an implementing bill may treat 
different trade agreement partners differently, if such 
differential treatment is consistent with the underlying 
agreement.
    Second, section 5(a)(4) provides that in enacting a trade 
agreement implementing bill, Congress does not approve any side 
agreements between governments that have not been disclosed to 
Congress. In other words, Congress's approval of a trade 
agreement is not an approval of any undisclosed deals that may 
be ancillary to that agreement. It is an approval only of those 
terms that have been expressly identified to Congress.
            Section 5(b). Limitations on trade authorities procedures
    Section 5(b) of the bill sets forth two circumstances under 
which the trade authorities procedures described in section 
3(b)(3) of the bill will not apply to trade agreement 
implementing legislation. First, trade authorities procedures 
will not apply to a particular agreement if a procedural 
disapproval resolution has been adopted with respect to that 
agreement. Second, trade authorities procedures will not apply 
if the Secretary of Commerce fails to transmit to Congress, by 
December 31, 2002, a report identifying a strategy for the 
United States to redress past instances in which WTO dispute 
settlement panels have effectively added to obligations or 
diminished rights of the United States.
    A disapproval resolution may be introduced at any time by 
any Member of either House. The language of the resolution is 
prescribed by section 5(b)(1)(B) of the bill. It withdraws 
application of trade authorities procedures to any implementing 
bill submitted with respect to a trade agreement or agreements 
as to which the President has failed or refused to notify or 
consult as required elsewhere in the bill. The Member 
introducing the resolution must identify in the resolution the 
agreement or agreements as to which that Member believes the 
President has failed or refused to notify or consult with 
Congress.
    The term ``failed or refused to notify or consult in 
accordance with the Bipartisan Trade Promotion Authority Act of 
2002'' is defined to make clear that the President has not met 
his obligations simply by going through the formalities of 
consultations. Section 5(b)(1)(B)(ii) establishes that the 
President may be considered to have failed to consult even if, 
from time to time, he has met with congressional 
representatives concerning a trade agreement.
    Specifically, this section provides that the President has 
failed or refused to notify or consult if:
           The President has failed to comply with the 
        requirements of sections 4 or 5 of this bill;
           The U.S. Trade Representative has failed to 
        develop or meet the consultation guidelines required by 
        section 7(b) of the bill;
           The President has not met with the 
        Congressional Oversight Group established under section 
        7(a), pursuant to a request made under section 7(c); or
           The agreement or agreements at issue fail to 
        make progress in achieving the purposes, policies, 
        priorities, and objectives of the present bill.
    Special rules apply to congressional consideration of a 
disapproval resolution. Such a resolution is referred to the 
Committee on Ways and Means and the Committee on Rules in the 
House of Representatives and to the Committee on Finance in the 
Senate. A disapproval resolution may not be amended. Such a 
resolution may not be considered on the floor of the House 
unless it has been reported by the Committee on Ways and Means 
and the Committee on Rules. It may not be considered on the 
floor of the Senate unless it has been reported by the 
Committee on Finance. In other words, a disapproval resolution 
cannot be forced to the floor through a discharge of the 
Committee(s) to which it has been referred.
    If a disapproval resolution is reported by the Committee or 
(in the House) Committees to which it has been referred, then 
it is eligible for consideration under fast track rules in the 
Chamber to which it has been reported. For this purpose, the 
fast track rules set forth in section 152(d) and (e) of the 
Trade Act of 1974 apply. Under those rules, a motion to proceed 
to consideration of a qualifying resolution is considered 
privileged (in the Senate) or highly privileged (in the House), 
and time for debate is limited. However, a disapproval 
resolution with respect to a particular agreement may be 
considered under these rules in a given Chamber only once per 
Congress.
    For trade authorities procedures to be withdrawn pursuant 
to a disapproval resolution, both Houses of Congress must adopt 
the resolution within 60 days of one another.
    Section 5(c) affirms that the foregoing procedures for 
adopting a disapproval resolution--as well as the procedures 
described in section 3(c) for adopting a resolution 
disapproving the extension of trade authorities procedures 
after June 30, 2005--are enacted pursuant to the rule-making 
powers of the House of Representatives and the Senate. It 
further recognizes the constitutional right of either House to 
change its rules at any time.
    Section 5(c) simply confirms what is the case under Article 
I, section 5, clause 2 of the Constitution of the United 
States, which provides that ``[e]ach House may determine the 
Rules of its Proceedings. . . .'' Because the rules of 
proceedings in each House are determined by that House and do 
not require the consent of the other Chamber, each House may 
change its rules independently of the will of the other 
Chamber. Thus, if the Senate, by simple resolution, for 
example, chose to withdraw trade authorities procedures with 
respect to a particular agreement, it could do so, 
notwithstanding the failure of the House of Representatives to 
adopt an identical resolution within the 60-day period 
prescribed by section 5(b). The House's failure to act would 
not preclude the Senate from withdrawing trade authorities 
procedures by virtue of its simple resolution. Historically, 
when fast track legislation has been in place for trade 
agreements, neither House has ever acted unilaterally to 
withdraw application of fast track procedures.
    In addition to adoption of a procedural disapproval 
resolution, section 5(b) provides for a second circumstance 
under which trade authorities procedures will not apply to 
proposed legislation implementing a trade agreement negotiated 
under the auspices of the WTO. This second circumstance is 
failure of the Secretary of Commerce to transmit to Congress, 
by December 31, 2002, a report setting forth a strategy for 
addressing certain adverse consequences to the United States 
stemming from a series of recent WTO dispute settlement 
decisions.
    The dispute settlement decisions at issue involve four 
cases in which other countries have challenged different 
aspects of U.S. antidumping, countervailing duty, and 
safeguards law. These are: (1) United States--Anti-Dumping 
Measures on Certain Hot-Rolled Steel Products from Japan (``the 
Hot-Rolled Steel case''); (2) United States--Imposition of 
Countervailing Duties on Certain Hot-Rolled Lead and Bismuth 
Carbon Steel Products Originating in the United Kingdom (``the 
UK Bar case''); (3) United States--Definitive Safeguard 
Measures on Imports of Wheat Gluten from the European 
Communities (``the Wheat Gluten case''); and (4) United 
States--Safeguard Measures on Imports of Fresh, Chilled or 
Frozen Lamb Meat from New Zealand and Australia (``the Lamb 
Meat case'').
    This is not an exhaustive list of dispute settlement 
decisions with which the Committee has concerns. However, the 
decisions in these cases highlight the concern that WTO dispute 
settlement may be weakening the ability of the United States to 
enforce trade remedy laws which Congress believed to be WTO-
consistent when it approved application of the WTO Agreements 
to the United States. The particular ways in which these cases 
may have weakened the ability of the United States to enforce 
its trade remedy laws are summarized in the findings in section 
1(b)(3) of the bill.
    The consistent trend of panels and the Appellate Body 
upholding challenges to U.S. trade remedy laws suggests a 
systemic problem. Preserving the ability to respond promptly 
and effectively to unfair trade practices and to harmful import 
surges is critical to maintaining support in the United States 
for an open, rule-based trading system. To the extent that 
decisions in dispute settlement erode that ability, they may 
well weaken support for the system.
    Given the seriousness of this problem, the bill directs the 
Secretary of Commerce to develop a comprehensive strategy for 
correcting instances in which dispute settlement panels and the 
Appellate Body have added to obligations or diminished rights 
of the United States, as described in section 1(b)(3). The 
strategy should identify ways to redress the weakening of trade 
remedy laws that resulted from the four cases noted above, as 
well as ways to ensure against further erosion in future cases. 
Because of the high priority attached to development of this 
strategy, submission of the strategy to Congress by December 
31, 2002 is a condition for application of trade authorities 
procedures to any bill implementing a trade agreement 
negotiated under the auspices of the WTO.

Section 6. Treatment of trade agreements for which negotiations already 
        underway

    Section 6 provides that the requirements (set forth in 
section 4(a)) that the President notify and consult with 
Committees of jurisdiction in Congress before initiating trade 
agreement negotiations do not apply to certain negotiations 
already underway at date of enactment. Specifically, the pre-
negotiation notice and consultation requirements do not apply 
to negotiations commenced before enactment of the present bill 
(1) under the auspices of the WTO; (2) to establish a free 
trade agreement with Chile; (3) to establish a free trade 
agreement with Singapore; and (4) to establish a Free Trade 
Area for the Americas.
    Since the foregoing negotiations already have commenced, 
the absence of the formal notification and consultation that 
ordinarily would be required before initiating negotiations 
will not preclude trade authorities procedures from being 
applied with respect to these agreements. Similarly, failure to 
formally notify and consult with Congress before initiating 
these agreements cannot form the basis for a disapproval 
resolution under section 5(b)(1)(B).
    However, all notification and consultation requirements 
that apply after negotiations have commenced will apply with 
equal force to the four enumerated sets of negotiations. 
Further, as soon as feasible after enactment, the President is 
required to notify Congress of the negotiations underway, 
identify specific objectives of the United States in those 
negotiations, and state whether the negotiations seek to 
establish new agreements or make changes to existing 
agreements. Both before and after providing this notice, the 
President is required to consult with the Senate Finance 
Committee, the House Ways and Means Committee, other Committees 
of both Houses with interest in the subject matter of the 
negotiations, and the Congressional Oversight Group established 
under section 7.

Section 7. Congressional Oversight Group

    Section 7 establishes a Congressional Oversight Group to 
consult with and provide advice to the U.S. Trade 
Representative on negotiating objectives, strategies, and 
positions, and on compliance with and enforcement of agreements 
in force. This Group will be a point of contact between 
Congress and the USTR, in addition to the Committees of 
jurisdiction and the congressional trade advisers designated 
under section 161 of the Trade Act of 1974.
    The bill requires the Chairmen of the Senate Finance 
Committee and the House Ways and Means Committee to convene the 
Congressional Oversight Group within 30 days of the 
commencement of each Congress. The first Congressional 
Oversight Group is to be convened within 60 days of enactment 
of the present bill. The Chairmen of the Finance and Ways and 
Means Committees will also be chairmen of the Congressional 
Oversight Group.
    The Group will be comprised of the following Members of the 
Senate: the Chairman and Ranking Member of the Committee on 
Finance and three additional members of the Committee (not more 
than two of whom are from the same party), and the Chairman and 
Ranking Member (or their designees) of the Committees which 
would have, under the Rules of the Senate, jurisdiction over 
provisions of law affected by a trade agreement being 
negotiated during the Congress. The Group would be comprised of 
the following Members of the House: the Chairman and Ranking 
Member of the Committee on Ways and Means and three additional 
members of the Committee (not more than two of whom are from 
the same party), and the Chairman and Ranking Member of the 
Committees which would have, under the Rules of the House, 
jurisdiction over provisions of law affected by a trade 
agreement being negotiated during the Congress.
    Congressional Oversight Group Members are to be accredited 
as official advisers to the U.S. delegation in negotiations to 
which the present bill applies. USTR is to develop written 
guidelines to facilitate the useful and timely exchange of 
information between USTR and the Group, including regular 
briefings, access to pertinent documents, and the closest 
possible coordination at all critical periods during the 
negotiations, including at negotiation sites. The guidelines 
also should address consultation on compliance with and 
enforcement of trade agreements once they enter into force. 
Finally, the guidelines should set forth a timetable for 
submission of the labor rights reports on proposed trade 
agreement partners (described in section 2(c)(8)).
    It is the Committee's expectation that USTR will develop 
these guidelines in close consultation with the Chairmen and 
Ranking Members of the Finance and Ways and Means Committees 
and that the guidelines will be developed within 120 days of 
enactment of the present bill. It also is the Committee's 
expectation that the guidelines will be updated from time to 
time, as necessary.
    The Committee believes that the establishment of the 
Congressional Oversight Group will greatly facilitate the 
meaningful and timely exchange of information and views between 
USTR and Congress. The Group is designed to involve a broad, 
bipartisan cross-section of the House and Senate, so that USTR 
will benefit from many viewpoints. The composition of the Group 
is flexible, to allow for the inclusion, after the convening of 
the Group, of representatives from additional Committees if 
developments in the negotiation indicate that laws over which 
such Committees have jurisdiction will be affected.
    The Committee emphasizes that the establishment of the 
Congressional Oversight Group in no way diminishes the 
obligation of the President and the U.S. Trade Representative 
to keep all Members of the Committee on Finance and the 
Committee on Ways and Means fully informed, on a timely and on-
going basis, of pending trade negotiations. The Finance 
Committee and the Ways and Means Committee remain the 
Committees of primary jurisdiction over tariffs and 
international trade policy. Establishment of the Congressional 
Oversight Group is not intended to diminish that role.

Section 8. Additional implementation and enforcement requirements

    Section 8 requires the President to submit to Congress a 
plan for implementing and enforcing any trade agreement 
concluded under the present bill. The plan is to be submitted 
simultaneously with the text of the agreement and is to include 
a review of the executive branch personnel needed to enforce 
the agreement as well as an assessment of any U.S. Customs 
Service infrastructure improvements required. The range of 
personnel to be addressed in the plan is comprehensive, 
including U.S. Customs and Department of Agriculture border 
inspectors, and monitoring and enforcement personnel at USTR, 
the Departments of Agriculture, Commerce, and the Treasury, and 
any other agencies as may be required. The plan also must 
contain an assessment of the costs of the additional personnel 
and infrastructure needs associated with the agreement at 
issue.
    The Committee believes that successful negotiations by 
themselves are not sufficient to realize the benefits from 
freer trade. Monitoring and enforcement are complementary and 
necessary factors in the trade liberalization process. That is, 
meaningful progress will result when trading partners know that 
the United States stands ready to enforce its rights under 
trade agreements. This provision, the Committee believes, will 
help to enhance the enforcement readiness of the United States 
by requiring the President to conduct a systematic review of 
the various agencies involved in border inspection and other 
types of trade monitoring and implementing activities. Further, 
the Committee recognizes that infrastructure improvements are 
important for Customs to maintain adequate border controls. 
Therefore, the provision also requires the President to provide 
a description of any additional equipment and facilities 
required by Customs to enforce the agreement at issue.

Section 9. Committee staff

    Section 9 expresses the view that increased staff should be 
provided to the Committees with primary jurisdiction over trade 
matters to accommodate the increase in trade negotiations and 
related activities expected to flow from enactment of the 
present bill. Also, the establishment of the Congressional 
Oversight Group under section 7 will bring more Members of 
Congress into the oversight of and consultation on trade 
negotiations which, in turn, will increase the demands on 
staff.
    As of the writing of this report, the United States is 
engaged in a new round of WTO negotiations, free trade 
agreement negotiations with Chile and Singapore, and 
negotiations to establish a Free Trade Area of the Americas. 
Additionally, it is expected that the President will seek to 
launch new trade negotiations during the period that trade 
promotion authority is in effect. It is expected that this 
Committee, the House Ways and Means Committee, other Committees 
with jurisdiction over laws that may be affected by 
negotiations, and the Congressional Oversight Group will 
monitor the negotiations closely. In addition to meeting 
regularly with U.S. negotiators, it is expected that Members 
accredited as official advisers to the U.S. delegation in trade 
negotiations pursuant to section 7(a)(4) of the present bill 
and section 161(a)(1) of the Trade Act of 1974 will attend 
international conferences, meetings, and negotiating sessions 
relating to trade agreements. It also is expected that, in 
addition to keeping abreast of developments in negotiations, 
these Members will offer input to the negotiators.
    Enabling the Committees, trade advisers, and Oversight 
Group to play a meaningful role in ongoing and future 
negotiations will require adequate staff support. Accordingly, 
section 9 calls for an increase in the trade staff resources of 
the primary Committees of jurisdiction.

Section 10. Conforming amendments

    Section 10 of the bill makes certain technical changes to 
the Trade Act of 1974 to conform to the changes described 
above.

Section 11. Report on impact of trade promotion authority

    Section 11 requires the International Trade Commission to 
report to the Committee on Finance of the Senate and the 
Committee on Ways and Means of the House of Representatives on 
the impact of past trade agreements which have been entered 
into by the United States using trade authorities procedures. 
The trade agreements to be reviewed are: the United States-
Israel Free Trade Agreement; the United States-Canada Free 
Trade Agreement; the North American Free Trade Agreement; the 
Uruguay Round Agreements; and the Tokyo Round of Multilateral 
Trade Negotiations. The purpose of this provision is to provide 
the U.S. Congress and the public with a broader context in 
which to view future trade agreements which Congress may 
implement using trade authorities procedures. The Committee 
believes that a broader understanding of the costs and benefits 
of past trade agreements will enhance general understanding of 
the potential impact of future agreements.

Section 12. Identification of small business advocate at WTO

    Section 12(a) requires the U.S. Trade Representative to 
pursue the identification of a small business advocate at the 
World Trade Organization Secretariat. The advocate would 
examine the impact of WTO agreements on the interests of small- 
and medium-sized enterprises, serve as a contact source for 
these businesses, and make recommendations on ways to address 
their interests in WTO negotiations.
    Section 12(b) designates an individual within the Office of 
the United States Trade Representative, currently, the 
Assistant USTR for Industry and Telecommunications, to be 
responsible for the interests of small business in trade 
negotiations. In particular, this person will be responsible 
for carrying out the general negotiating objective on small 
business interests described in section 2(a)(8) of the bill. 
The bill also expresses the sense of the Congress that the 
person within the Office of the U.S. Trade Representative who 
is responsible for small business matters should have that 
responsibility reflected in his or her title. While 
organization of the Office of the United States Trade 
Representative is an executive branch matter, section 12(b) 
expresses the sense of the Congress that the Trade 
Representative should designate a person within that Office as 
the Assistant USTR for Small Business. It is the Committee's 
view that this may be done by expanding the portfolio of an 
existing Assistant USTR.
    The Committee notes that small and medium-sized businesses 
in the United States are increasingly active in international 
trade. The number of American small businesses that export grew 
from 69,354 in 1987 to 209,244 in 1997, more than a 200 percent 
increase. Sixty-five percent of America's exporters are small 
businesses that employ 20 or fewer workers. Given the critical 
importance of small- and medium-sized businesses to the U.S. 
economy, the Committee believes that effective advocates for 
small business within USTR and the WTO will advance the overall 
interests of the U.S. economy.

Section 13. Definitions

    Section 13 defines terms used in this bill, including 
Agreement on Agriculture, Core Labor Standards, GATT 1994, ILO, 
Uruguay Round Agreements, World Trade Organization, and WTO 
Agreement.

                        IV. CONGRESSIONAL ACTION

    On December 6, 2001, H.R. 3005 was received in the Senate, 
read twice, and referred to the Committee on Finance.
    On December 12, 2001, the Committee on Finance held a 
meeting to consider the bill. At that time, the Chairman 
offered an amendment in the nature of a substitute to H.R. 
3005. The bill as amended by the Chairman's amendment in the 
nature of a substitute was ordered favorably reported on 
December 12, 2001, subject to amendments that might be accepted 
at a continuation of the Committee's meeting. The vote on the 
motion to report the bill was 18 to 3.
    On December 18, 2001, the Committee continued its 
consideration of the bill, at which time several amendments 
were considered and rejected, as discussed in section V of this 
report.

            V. VOTES OF THE COMMITTEE ON REPORTING THE BILL

    In compliance with paragraph 7(c) of rule XXVI of the 
Standing Rules of the Senate, the following statements are made 
concerning the roll call votes in the Committee's consideration 
of H.R. 3005.

                      A. Motion To Report the Bill

    H.R. 3005 as amended by the Chairman's amendment in the 
nature of a substitute was ordered favorably reported on 
December 12, 2001, subject to amendments that might be accepted 
at a continuation of the Committee's meeting. The vote on the 
motion to report the bill was 18 to 3.
    Ayes: Baucus, Daschle (proxy), Breaux (proxy), Graham, 
Jeffords, Bingaman (proxy), Kerry, Lincoln, Grassley, Hatch, 
Murkowski, Nickles, Gramm, Lott, Thompson, Snowe, Kyl, Thomas.
    Nays: Rockefeller, Conrad, Torricelli.

                         B. Votes on Amendments

    At a meeting of the Committee on December 18, 2001, 
amendments to H.R. 3005 were considered and disposed of as 
follows:
    (1) Senator Kerry offered an amendment that would change 
the principal negotiating objective on foreign investment by: 
requiring that trade agreements preserve the authority of 
federal, state, and local governments to take measures to 
protect the environment, consumers and public health; seeking 
to ensure that foreign investors in the United States do not 
receive a greater level of protection than U.S. investors in 
the United States; providing that foreign investors be 
compensated only for those expropriations that are physical 
invasions of property or denials of all economic or productive 
use of property; and requiring that an investor get the 
permission of its home government before seeking compensation 
from a host government under investor-state dispute settlement 
provisions of a trade agreement. The amendment failed by a 
voice vote.
    (2) Senator Conrad offered an amendment that would require 
the U.S. Trade Representative to consult with the Senate 
Committee on Finance and the House Committee on Ways and Means 
during a 10-day period between conclusion of negotiation of a 
trade agreement and initialing of the agreement. If either 
Committee requested that changes be made to the agreement, the 
Trade Representative would be required to negotiate those 
changes or submit a detailed explanation to the Committees as 
to why it was not possible to achieve those changes and what 
actions the Administration would take to address the concerns 
that prompted the request for those changes. The amendment 
failed by a voice vote.
    (3) Senator Conrad offered an amendment that would 
establish a negotiating objective that the U.S. Trade 
Representative seek mechanisms in trade agreements to permit 
the renegotiation of agreements where an agreement's 
implementation yields consequences not anticipated by Congress 
at the time it approved implementation of the agreement. The 
amendment failed by a voice vote.

                    VI. BUDGETARY IMPACT OF THE BILL


                         A. Committee Estimates

    In compliance with sections 308 and 403 of the 
Congressional Budget Act of 1974, and paragraph 11(a) of rule 
XXVI of the Standing Rules of the Senate, the following 
statement is made concerning the estimated budget effects of 
the bill.
    Enacting H.R. 3005 would have no budgetary impact.

                B. Budget Authority and Tax Expenditures


                          1. budget authority

    In accordance with section 308(a)(1) of the Budget Act, the 
Committee states that the Bipartisan Trade Promotion Authority 
Act involves no new or increased budget authority.

                          2. tax expenditures

    In accordance with section 308(a)(2) of the Budget Act, the 
Committee states that the Bipartisan Trade Promotion Authority 
Act will result in no change in tax expenditures over the 
period fiscal years 2002-2012.

            C. Consultation With Congressional Budget Office

    In accordance with section 403 of the Budget Act, the 
Committee advises that the Congressional Budget Office has 
submitted the following statement on the budgetary impact of 
the Bipartisan Trade Promotion Authority Act.
                                     U.S. Congress,
                                Congressional Budget Office
                                  Washington, DC, January 14, 2002.
Hon. Max Baucus,
Chairman, Committee on Finance,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 3005, the 
Bipartisan Trade Promotion Authority Act.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Erin 
Whitaker, who can be reached at 226-2720.
            Sincerely,
                                          Barry B. Anderson
                                    (For Dan L. Crippen, Director).
    Enclosure.

               congressional budget office cost estimate

H.R. 3005 Bipartisan Trade Promotion Authority Act

    Summary: H.R. 3005 would restore the President's authority 
to enter into multilateral and bilateral trade agreements with 
Congressional approval or rejection of, but not amendment to, 
those agreements. Enacting this legislation would not affect 
revenues, so pay-as-you-go procedures would not apply.
    CBO had determined that H.R. 3005 contains no new private-
sector or intergovernmental mandates as defined in the Unfunded 
Mandates Reform Act (UMRA) and would not affect the budgets of 
state, local, or tribal governments.
    Estimated cost to the Federal Government: CBO estimates 
that enacting H.R. 3005 would have no budgetary impact.
    Basis of estimate: Before their expiration on June 1, 1993, 
sections 1102 and 1103 of the Omnibus Trade and Competitiveness 
Act of 1988 granted the President the authority to enter into 
multilateral and bilateral trade agreements. The President 
could reduce certain tariffs by proclamation within specified 
bounds prescribed by the law. For provisions subject to 
Congressional approval, the Congress could not amend 
implementing legislation once it was introduced. Furthermore, 
as long as the President met statutory requirements concerning 
Congressional consultation during the negotiation process, 
Congress was required to act on the legislation following a 
strict timetable. Public Law 103-40 temporarily extended these 
provisions through April 16, 1994, for any trade agreement 
resulting from the Uruguay Round negotiations taking place 
under the General Agreement on Tariffs and Trade. H.R. 3005 
would restore the President's authority to propose trade 
agreements under an expedited procedure for Congressional 
approval. The act would have no direct effect on revenues, 
because future trade agreements would require implementing 
legislation.
    Pay-as-you-go considerations: None.
    Intergovernmental and private-sector impact: H.R. 3005 
contains no new private-sector or intergovernmental mandates as 
defined in UMRA and would not impose any costs on state, 
tribal, or local governments.
    Previous estimates: On October 11, 2001, CBO transmitted an 
estimate of H.R. 3005 as ordered reported by the House 
Committee on Ways and Means. The earlier version of H.R. 3005 
was similar to the version ordered reported by the Senate 
Committee on Finance, and CBO estimated that it also would have 
no direct effect on revenues.
    Estimate prepared by: Revenues: Erin Whitaker; Impact on 
State, Local, and Tribal Governments: Elyse Goldman; and Impact 
on the Private Sector: Paige Pipe/Bach.
    Estimate approved by: G. Thomas Woodward, Assistant 
Director for Tax Analysis.

                VII. REGULATORY IMPACT AND OTHER MATTERS

    In compliance with paragraph 11(b) of Rule XXVI of the 
Standing Rules of the Senate, the Committee states that the 
bill will not significantly regulate any individuals or 
businesses, will not affect the personal privacy of 
individuals, and will result in no significant additional 
paperwork.
    The following information is provided in accordance with 
section 423 of the Unfunded Mandates Reform Act of 1995 (Pub. 
L. No. 104-4). The Committee has reviewed the provisions of 
H.R. 3005 as approved by the Committee on December 12, 2001. In 
accordance with the requirements of Pub. L. No. 104-04, the 
Committee has determined that the bill contains no 
intergovernmental mandates, as defined in the UMRA, and would 
not affect the budgets of state, local, or tribal governments.

                VIII. ADDITIONAL VIEWS OF SENATOR GRAMM

    Trade brings benefits to America in the form of high-paying 
jobs, lower consumer prices, and increases in competitiveness 
and consumer choice.
    The first step to increase trade is to give the President 
the negotiating tools he needs. The authority in this bill is 
intended to allow the Administration, in consultation with the 
Congress, to negotiate trade agreements with the understanding 
that the Congress can either approve or reject the final 
agreement, but not change it, avoiding what could become and 
endless renegotiation. Therefore, H.R. 3005, The Bipartisan 
Trade Promotion Authority Act of 2002, is intended to help 
America be more competitive in the global marketplace. This 
authority will increase our ability to negotiate trade 
agreements while ensuring close consultations with the Congress 
during such negotiations. While the bill has my support, there 
are some points that merit clarification.
    In general, the Jordan Free Trade Agreement (FTA) must not 
be considered as a new template for future trade bills in 
general and this bill in particular. It was a special agreement 
negotiated and approved under unusual circumstances. While some 
elements of the Jordan FTA are present in this bill, it 
certainly does not embody a ``Jordan standard'' of any kind.
    Also, the role of the negotiating objectives in subsections 
(a) and (b) (addressing overall objectives and objectives 
specific to certain sectors, respectively) of section 2 is to 
inform trade negotiators what the objectives are while 
negotiating a trade agreement. This is an important element of 
the legislative-executive branch teamwork that is the central 
concept of the legislation. But, while it is imperative that 
these objectives are listed, the priorities in subsection 
(2)(c) do not carry the same weight as subsections (2)(a) and 
(2)(b). Rather, they are overall priorities that should be 
considered in general but by no means are items that should be 
the focus of a trade agreement.
    Currently, there are over a hundred and thirty free trade 
agreements in existence in the world; the United States is 
party to only three of these. The Congress and the 
Administration need to team up and promote a trade agenda that 
will progressively remove the barriers to the flow of goods and 
services that operates so powerfully to enhance our economic 
strength and well being.

                                                        Phil Gramm.

       IX. CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    In compliance with paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the bill, as reported, are shown as follows (existing law 
proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

                           TRADE ACT OF 1974

           *       *       *       *       *       *       *


               TITLE I--NEGOTIATING AND OTHER AUTHORITY

           *       *       *       *       *       *       *


         CHAPTER 3--HEARINGS AND ADVICE CONCERNING NEGOTIATIONS

SEC. 131. ADVICE FROM INTERNATIONAL TRADE COMMISSION.

    (a) Lists of Articles Which May Be Considered for Action.--
          (1) In connection with any proposed trade agreement 
        under [section 123 of this Act or section 1102 (a) or 
        (c) of the Omnibus Trade and Competitiveness Act of 
        1988,] section 123 of this Act or section 3 (a) or (b) 
        of the Bipartisan Trade Promotion Authority Act of 
        2002, the President shall from time to time publish and 
        furnish the International Trade Commission (hereafter 
        in this section referred to as the ``Commission'') with 
        lists of articles which may be considered for 
        modification or continuance of United States duties, 
        continuance of United States duty-free or excise 
        treatment, or additional duties. In the case of any 
        article with respect to which consideration may be 
        given to reducing or increasing the rate of duty, the 
        list shall specify the provision of this subchapter 
        under which such consideration may be given.
          (2) In connection with any proposed trade agreement 
        under [section 1102 (b) or (c) of the Omnibus Trade and 
        Competitiveness Act of 1988] section 3(b) of the 
        Bipartisan Trade Promotion Authority Act of 2002, the 
        President may from time to time publish and furnish the 
        Commission with lists of nontariff matters which may be 
        considered for modification.
    (b) Advice to President by Commission.--Within 6 months 
after receipt of a list under subsection (a) or, in the case of 
a list submitted in connection with a trade agreement, within 
90 days after receipt of such list, the Commission shall advise 
the President, with respect to each article or nontariff 
matter, of its judgment as to the probable economic effect of 
modification of the tariff or nontariff measure on industries 
producing like or directly competitive articles and on 
consumers, so as to assist the President in making an informed 
judgment as to the impact which might be caused by such 
modifications on United States interests, such as sectors 
involved in manufacturing, agriculture, mining, fishing, 
services, intellectual property, investment, labor, and 
consumers. Such advice may include in the case of any article 
the advice of the Commission as to whether any reduction in the 
rate of duty should take place over a longer period of time 
than the minimum period provided for in [section 1102(a)(3)(A)] 
section 3(a)(3)(A) of the Bipartisan Trade Promotion Authority 
Act of 2002.
    (c) Additional Investigations and Reports Requested by the 
President or the Trade Representative.--In addition, in order 
to assist the President in his determination whether to enter 
into any agreement under section 123 of this Act or [section 
1102 of the Omnibus Trade and Competitiveness Act of 1988,] 
section 3 of the Bipartisan Trade Promotion Authority Act of 
2002, or how to develop trade policy, priorities or other 
matters (such as priorities for actions to improve 
opportunities in foreign markets), the Commission shall make 
such investigations and reports as may be requested by the 
President or the United States Trade Representative on matters 
such as effects of modification of any barrier to (or other 
distortion of) international trade on domestic workers, 
industries or sectors, purchasers, prices and quantities of 
articles in the United States.

           *       *       *       *       *       *       *


SEC. 132. ADVICE FROM EXECUTIVE DEPARTMENTS AND OTHER SOURCES.

    Before any trade agreement is entered into under section 
123 of this Act or [section 1102 of the Omnibus Trade and 
Competitiveness Act of 1988,] section 3 of the Bipartisan Trade 
Promotion Authority Act of 2002, the President shall seek 
information and advice with respect to such agreement from the 
Departments of Agriculture, Commerce, Defense, Interior, Labor, 
State and the Treasury, from the United States Trade 
Representative, and from such other sources as he may deem 
appropriate. Such advice shall be prepared and presented 
consistent with the provisions of Reorganization Plan Number 3 
of 1979, Executive Order Number 12188 and section 141(c).

SEC. 133. PUBLIC HEARINGS.

    (a) Opportunity for Presentation of Views.--In connection 
with any proposed trade agreement under section 123 of this Act 
or [section 1102 of the Omnibus Trade and Competitiveness Act 
of 1988,] section 3 of the Bipartisan Trade Promotion Authority 
Act of 2002, the President shall afford an opportunity for any 
interested person to present his views concerning any article 
on a list published under section 131, any matter or article 
which should be so listed, any concession which should be 
sought by the United States, or any other matter relevant to 
such proposed trade agreement. For this purpose, the President 
shall designate an agency or an interagency committee which 
shall, after reasonable notice, hold public hearings and 
prescribe regulations governing the conduct of such hearings. 
When appropriate, such procedures shall apply to the 
development of trade policy and priorities.

           *       *       *       *       *       *       *


SEC. 134. PREREQUISITES FOR OFFERS.

    (a) In any negotiation seeking an agreement under section 
123 of this Act or [section 1102 of the Omnibus Trade and 
Competitiveness Act of 1988,] section 3 of the Bipartisan Trade 
Promotion Authority Act of 2002, the President may make a 
formal offer for the modification or continuance of any United 
States duty, import restrictions, or barriers to (or other 
distortions of) international trade, the continuance of United 
States duty-free or excise treatment, or the imposition of 
additional duties, import restrictions, or other barrier to (or 
other distortion of) international trade including trade in 
services, foreign direct investment and intellectual property 
as covered by this title, with respect to any article or matter 
only after he has received a summary of the hearings at which 
an opportunity to be heard with respect to such article has 
been afforded under section 133. In addition, the President may 
make an offer for the modification or continuance of any United 
States duty, the continuance of United States duty-free or 
excise treatment, or the imposition of additional duties, with 
respect to any article included in a list published and 
furnished under section 131(a), only after he has received 
advice concerning such article from the Commission under 
section 131(b), or after the expiration of the 6-month or 90-
day period provided for in that section, as appropriate, 
whichever first occurs.
    (b) In determining whether to make offers described in 
subsection (a) in the course of negotiating any trade agreement 
under [section 1102 of the Omnibus Trade and Competitiveness 
Act of 1988] section 3 of the Bipartisan Trade Promotion 
Authority Act of 2002, and in determining the nature and scope 
of such offers, the President shall take into account any 
advice or information provided, or reports submitted, by--
          (1) * * *

           *       *       *       *       *       *       *


SEC. 135. INFORMATION AND ADVICE FROM PRIVATE AND PUBLIC SECTORS.

    (a) In General.--
          (1) The President shall seek information and advice 
        from representative elements of the private sector and 
        the non-Federal governmental sector with respect to--
                  (A) negotiating objectives and bargaining 
                positions before entering into a trade 
                agreement under this title or [section 1102 of 
                the Omnibus Trade and Competitiveness Act of 
                1988] section 3 of the Bipartisan Trade 
                Promotion Authority Act of 2002;

           *       *       *       *       *       *       *

    (e) Meeting of Advisory Committees at Conclusion of 
Negotiations.--
          (1) The Advisory Committee for Trade Policy and 
        Negotiations, each appropriate policy advisory 
        committee, and each sectoral or functional advisory 
        committee, if the sector or area which such committee 
        represents is affected, shall meet at the conclusion of 
        negotiations for each trade agreement entered into 
        under [section 1102 of the Omnibus Trade and 
        Competitiveness Act of 1988] section 3 of the 
        Bipartisan Trade Promotion Authority Act of 2002, to 
        provide to the President, to Congress, and to the 
        United States Trade Representative a report on such 
        agreement. Each report that applies to a trade 
        agreement entered into under [section 1102 of the 
        Omnibus Trade and Competitiveness Act of 1988] section 
        3 of the Bipartisan Trade Promotion Authority Act of 
        2002 shall be provided under the preceding sentence 
        [not later than the date on which the President 
        notifies the Congress under section 1103(a)(1)(A) of 
        such Act of 1988 of his intention to enter into that 
        agreement] not later than the date that is 30 days 
        after the date on which the President notifies the 
        Congress under section 5(a)(1)(A) of the Bipartisan 
        Trade Promotion Authority Act of 2002 of the 
        President's intention to enter into that agreement.
          (2) The report of the Advisory Committee for Trade 
        Policy and Negotiations and each appropriate policy 
        advisory committee shall include an advisory opinion as 
        to whether and to what extent the agreement promotes 
        the economic interests of the United States and 
        achieves the applicable overall and principal 
        negotiating objectives set forth in [section 1101 of 
        the Omnibus Trade and Competitiveness Act of 1988] 
        section 2 of the Bipartisan Trade Promotion Authority 
        Act of 2002, as appropriate.

           *       *       *       *       *       *       *


   CHAPTER 5--CONGRESSIONAL PROCEDURES WITH RESPECT TO PRESIDENTIAL 
                                ACTIONS

SEC. 151. BILLS IMPLEMENTING TRADE AGREEMENTS ON NONTARIFF BARRIERS AND 
                    RESOLUTIONS APPROVING COMMERCIAL AGREEMENTS WITH 
                    COMMUNIST COUNTRIES.

    (a) * * *
    (b) Definitions.--For purposes of this section--
          (1) The term ``implementing bill'' means only a bill 
        of either House of Congress which is introduced as 
        provided in subsection (c) with respect to one or more 
        trade agreements, or with respect to an extension 
        described in section 282(c)(3) of the Uruguay Round 
        Agreements Act, submitted to the House of 
        Representatives and the Senate under section 102 of 
        this Act, [section 1103(a)(1) of the Omnibus Trade and 
        Competitiveness Act of 1988, or section 282 of the 
        Uruguay Round Agreements Act] section 282 of the 
        Uruguay Round Agreements Act, or section 5(a)(1) of the 
        Bipartisan Trade Promotion Authority Act of 2002 and 
        which contains--
                  (A) * * *

           *       *       *       *       *       *       *

    (c) Introduction and Referral.--
          (1) On the day on which a trade agreement or 
        extension is submitted to the House of Representatives 
        and the Senate under section 102 [or section 282 of the 
        Uruguay Round Agreements Act], section 282 of the 
        Uruguay Round Agreements Act, or section 5(a)(1) of the 
        Bipartisan Trade Promotion Authority Act of 2002, the 
        implementing bill submitted by the President with 
        respect to such trade agreement or extension shall be 
        introduced (by request) in the House by the majority 
        leader of the House, for himself and the minority 
        leader of the House, or by Members of the House 
        designated by the majority leader and minority leader 
        of the House; and shall be introduced (by request) in 
        the Senate by the majority leader of the Senate, for 
        himself and the minority leader of the Senate, or by 
        Members of the Senate designated by the majority leader 
        and minority leader of the Senate. If either House is 
        not in session on the day on which such a trade 
        agreement or extension is submitted, the implementing 
        bill shall be introduced in that House, as provided in 
        the preceding sentence, on the first day thereafter on 
        which the House is in session. Such bills shall be 
        referred by the Presiding Officers of the respective 
        Houses to the appropriate committee, or, in the case of 
        a bill containing provisions within the jurisdiction of 
        two or more committees, jointly to such committees for 
        consideration of those provisions within their 
        respective jurisdictions.

           *       *       *       *       *       *       *


              CHAPTER 6--CONGRESSIONAL LIAISON AND REPORTS

           *       *       *       *       *       *       *



SEC. 162. TRANSMISSION OF AGREEMENTS TO CONGRESS.

    (a) As soon as practicable after a trade agreement entered 
into under section 123 or 124 [or under section 1102 of the 
Omnibus Trade and Competitiveness Act of 1988] or under section 
3 of the Bipartisan Trade Promotion Authority Act of 2002 has 
entered into force with respect to the United States, the 
President shall, if he has not previously done so, transmit a 
copy of such trade agreement to each House of the Congress 
together with a statement, in the light of the advice of the 
International Trade Commission under section 131(b), if any, 
and of other relevant considerations, of his reasons for 
entering into the agreement.

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