Ask the Scholar
Document scope · 1 page
Scholar
Ask about this object, its catalog metadata, its source description, or the page inventory.
For page-specific OCR and visual context, open one of the page chats.
Scholar Source Context
Document identity
localId
158702000
label
Fast Track 97 [2]
core
doc
dtoType
document
citationUrl
pageCount
1
Source metadata
id
158702000
contentType
document
title
Fast Track 97 [2]
citationUrl
collections
Records of the Office of Policy Development (Clinton Administration)
Lael Brainard's Files
imageCount
1
hasImages
yes
source
import
hasTranscription
no
Source extras
naId
158702000
levelOfDescription
fileUnit
otherTitles
42-t-7386091-20170401F-026-005-2019
recordType
description
ocrSource
nara-archive
Single page context
seq
1
pageIndex
0
type
document
mediaId
b4bbca7c5b25a238
ocrText
FOIA Number: 2017-0401-F
FOIA
MARKER
This is not a textual record. This is used as an
administrative marker by the William J. Clinton
Presidential Library Staff.
Collection/Record Group:
Clinton Presidential Records
Subgroup/Office of Origin:
Policy Development
Series/Staff Member:
Lael Brainard
Subseries:
OA/ID Number:
20582
FolderID:
Folder Title:
Fast Track 97 [2]
Stack:
Row:
Section:
Shelf:
Position:
S
100
2
5
1
HIGHLY SENSITIVE DRAFT
EYES ONLY
Section-by-Section Analysis
Section 1. Short title.
Section 2. Negotiating objectives
This section of the proposed bill lays out the "overall" and "principal" objectives the Congress
establishes to guide U.S. negotiators in hammering out fast track trade agreements. This general
structure parallels that included in the 1988 fast track authority, which in turn was based on a
similar format in the original 1974 fast track legislation.
Much of the text is drawn from language negotiated between USTR and House Republicans
during 1995. The key provision is the first "principal" objective, relating to "specific barriers."
This language was understood in 1995 to encompass trade-related environment and labor
measures, even though the text does not say so. Labor and environment are mentioned explicitly
only in the final "overall" objective but the language of the two provisions are otherwise very
close -- making clear that the principal objectives encompass labor and environment as well.
While the language essentially reflects our negotiations with Chairman Archer in 1995, we have
made changes that make our draft a bit less restrictive on the environment and labor issues. In
particular, our proposal changes the principal objective on "specific barriers" -- as well as the
final "overall" objective -- to say that environmental and labor measures subject to fast track
negotiations must simply be "trade-related" rather than "directly" or "specifically" related to
trade as the 1995 text put it. This change may be somewhat helpful on the Democratic side, but
could be viewed as backtracking by Republicans.
The bifurcation between "overall" and "principal" objectives is consistent with past fast track
legislation. The House Republicans used this bifurcation in 1995 to limit the President's
discretion in the area of labor and the environment by requiring that all provisions of a fast-track
implementing bill be "directly related to" the principal negotiating objectives. Under that
approach, the principal objectives serve to limit the implementing legislation, while the text of
the overall objectives is more advisory in nature.
It is worth noting that we have made a number of other, less controversial changes from the
Republican 1995 bill in both the overall and principal objectives. For example, we have added a
principal objective relating to agriculture. (Such an objective was contained in the 1988 Act as
well.) Consistent with the approach in the 1995 bill negotiated with Chairman Archer, the
principal negotiating objectives are general in nature. We expect we will hear from various
business and other interest groups that would like their objectives explicitly mentioned in the
bill.
9/3/97
Section 3.
Proclamation Authority and Fast Track Implementing Bills.
The first portion of this section provides the President with specific authority to lower U.S. tariffs
-- without seeking further approval from the Congress -- in return for reciprocal concessions
from our trade partners. Much of the language on this subject is derived from earlier iterations of
tariff authority dating back to the mid-1930s. We have added a provision that will allow the
President to conclude new sectoral tariff deals (like the deal we concluded on ITA in December).
A second portion of the section (sec. 3(b)(3)) deals with the kinds of provisions that may be
included in fast track implementing bills. This is a critical provision as it gives flexibility to
attract support necessary for passage of legislation pursuant to fast track authority. The
traditional formulation -- in the fast track authority from 1974 to 1994 -- was that implementing
bills could include any provision the Congress believed was "necessary or appropriate" to
implement the trade agreement.
That formulation worked well in helping to secure the votes necessary to enact each of the five
fast track agreements presented to the Congress since 1979. But it was subject to criticism from
House Republicans and Senators of both parties on the ground that the language permitted fast
track implementing bills to become Christmas trees for trade and non-trade matters unrelated to
the actual implementation of the agreement.
We worked with House Republicans in 1995 to draft language that would limit the Christmas
tree problem without unduly jeopardizing approval of future trade agreements or crimping the
President's ability to treat trade-related environmental and labor issues. We were unable to come
to closure. The Republican proposal proved to be too limiting. First, it placed in doubt our
ability to get future trade deals through the Congress (for example, it would not have allowed for
the inclusion of worker trade adjustment assistance which was critical to attract Democratic
support for the NAFTA). Second, it was seen on the Democratic side as a blatant effort to keep
the Administration from addressing trade-related labor and environment matters.
Our proposed draft goes back to the original "necessary or appropriate" formulation (by
referencing section 151 of the 1974 trade act -- which also contains all of the voting and timing
procedures relevant to fast track). The 1995 Republican bill amended section 151 to require
implementing provisions to be both: 1) "directly related" to a principal negotiating objective; and
2) "necessary" to implement the trade agreement. The Republican bill also allowed for the
insertion of certain kinds of housekeeping provisions, like those defining state and federal
responsibilities under the agreement and providing for oversight. In addition, the Republican bill
provided for the insertion of necessary PAYGO provisions.
Our proposal de-links the implementing bill from the principal negotiating objectives.
Moreover, our proposal also allows for the inclusion of non-"necessary" provisions in fast-track
implementing bills. For both reasons, our proposed bill will be controversial from the
Republican perspective.
2
Finally, section 3(b)(1) also sets the duration for fast track. Our going-in position is that fast
track should be in place through the end of the next President's term of office. Previous versions
of fast track tended to be shorter in duration, and often provided that the President could extend
the duration subject to Congressional disapproval. For example, the 1988 version lasted through
mid-1991, with an extension through mid-1993, and then again through 1994. One reason the
periods were short was to put pressure on our trading partners to reach quick deals in GATT
negotiating rounds then underway. There is no round in progress at this time. Nonetheless, we
would not be opposed to re-inclusion of an extension provision, particularly on a three plus four
year basis.
Sections 4 and 5. Notice, Consultations, and Disapproval.
These sections of the bill set out the quid pro quo that the Congress exacts from the President in
agreeing to an expedited "up or down" vote on fast track trade agreements. Sections 4 and 5
contain a number of provisions requiring the President to notify and consult with the Congress
before and during the negotiation phase. The idea is to ensure that the Congress is fully
integrated into the formulation of U.S. goals, strategies, and decision-making for each particular
negotiation. In fact, Section 5 establishes an expedited procedure for Congress to withdraw fast
track if it finds that the Administration is not adequately informing the Congress about the
negotiations.
The language included in sections 4 and 5 roughly tracks that included in the 1988 legislation.
(The 1988 act had somewhat different notice and consultation requirements for bilateral and
multilateral negotiations, a distinction we and the Republicans agreed to drop.) In 1995, USTR
agreed informally with House Republicans to add some consultation provisions beyond those
required in the 1988 act. These were largely designed to elicit the Administration's intentions
regarding its labor and environment objectives in specific negotiations. Our proposed bill does
not include those provisions and we would expect the Republicans would add those back once
the bill is introduced.
Further consultation procedures and safeguards could be added if there is pressure to do so. It is
worth noting that beginning in 1984, bilateral fast track trade negotiations were subject to an up-
front veto by either the Ways and Means or Finance committee. (Neither our draft nor the 1995
Republican bill contains such a provision.)
Section 6. Exemption for Chile and WTO Negotiations.
This section provides that the pre-negotiation notice and consultation provisions required under
section 4 do not apply to our negotiations with Chile (which got underway in 1995) and certain
WTO negotiations.
Section 7. Conforming Amendments.
3
These are technical and non-controversial changes to other statutes required as a result of the new
fast track provisions.
4
Traditional Trading Authority
Discussion Points for Calls to Republicans
Shared Objective. We both want to ensure that fast track authority is renewed. We believe in
free trade, and we know that our future prosperity depends on it. We can get this done. Our
team is fully committed to doing whatever it takes to get it done, and we hope we can work in the
same spirit of trust and cooperation that allowed us to get the budget done.
Delayed Bill to Gain Bipartisan Support. We delayed introducing the bill for a couple of days
to address the concerns of moderate Democrats whose votes are absolutely essential for passage.
We listened to them and made some changes, but we fully expect criticism from the rest of the
Democratic caucus and from labor. We believe we now have strong legislation that deserves
support from both sides of the aisle.
Accepted Your Proposal on "Directly Related to Trade." Most importantly, we have accepted
the Archer language on "directly related to trade." The President is firmly committed to ensuring
that, in our push for free trade, we do not undermine labor and environmental standards. And we
are prepared to pursue side agreements with Chile and other nations to promote stronger labor
and environmental standards. Even so, we have adopted the Archer-Dreier language on "directly
related," and we recognize its importance to the Republican caucus.
More Detailed Review of Provisions. Key provisions of the bill include:
Provision on Worker Rights and the Environment. The principal negotiating objective
on worker rights included in this legislation is symmetrical to that granted to President
Bush, but does specifically mention the environment and child labor standards as well. It
is limited to making progress in the World Trade Organization ("WTO") and the
International Labor Organization ("ILO").
Necessary or Appropriate. The bill would permit the Administration to include in future
implementing bills those provisions that are "necessary or appropriate" to implement the
relevant trade agreement, but only if those provisions are also "trade-related." As we have
discussed, we need to strike a balance. We need flexibility to include provisions that,
while not absolutely required to implement a particular trade agreement, nevertheless
address trade policy issues raised by that agreement. But we also don't want to allow
extraneous provisions in the fast track bill. We think this strikes the right balance.
Duration. The duration of the trading authority extends to 2001, with extension until
2005 subject to a congressional vote.
Consultations with Congress. We have added strong language to ensure Congress is a
full partner in setting objectives and establishing trade priorities for American negotiators.
Provisions never before included in fast track bills include: (1) a requirement that the
Administration inform Congress of its negotiating objectives for a specific agreement
before negotiations begin; (2) a requirement that the Administration consult before signing
an agreement about parallel agreements, such as labor and environmental side agreements.
Negotiating Instructions. We added a section on negotiating instructions that will
ensure negotiators do nothing that would lower U.S. public health and safety standards,
and insist upon strict enforcement of our trade laws.
Specific Agriculture Objective. The legislation responds to congressional concerns by
providing a series of measures designed to achieve fairer and more open conditions of
agricultural trade, including: reducing or eliminating tariffs and subsidies that hurt U.S.
agricultural exports and market opportunities; addressing other unjustified barriers to such
exports; and strengthening the international rules covering unfair foreign practices that
distort world agricultural markets. We think this principal negotiating objective will
appeal to Members of both parties.
Chile. We have specifically designated Chile as the next country with which we would
negotiate a bilateral free trade agreement.
Would Like to Proceed in a Bipartisan Spirit. We have made a genuine attempt to write a bill
Republicans can support, while attracting moderate Democrats as well. We think it is a good
bipartisan bill, and we would like your support. At the very least, we would like generally
positive statements (e.g. "Good start," "We can work with this"). We pledge to work closely
with you as the bill is considered.
Traditional Trading Authority
Discussion Points for Calls to Democrats
Held Bill Back to Listen to and Address Democratic Concerns. We held the bill back several
days to hear the concerns of Democrats. We listened, and we believe we now have a bill that
reflects the proper balance to address worker rights (including child labor standards) and
environmental protection. Key provisions include:
Worker Rights. Bill includes a negotiating objective on worker rights symmetrical to that
granted President Bush by a Democratic Congress, with a specific reference to child labor.
Also includes direction to seek stronger worker rights through the ILO, an idea proposed
by Senator Moynihan and other Democrats.
Environment. The negotiating objective also adds a specific provision on the environment,
the first time ever this has been referenced in a fast track bill.
Agriculture. Bill contains specific negotiating objective on agriculture, requested by
Democrats.
Better Consultations. Entirely new provisions requiring greater consultations, as to both
the trade agreement and any labor/environmental side agreements.
Duration. Authority granted until 2001, with extension until 2005 only after a
congressional vote.
Bill Reflects Ongoing Commitment to Democratic Values. Overall, the President is
committed to pursuing three objectives: (1) to break down unfair foreign trade barriers and create
good American jobs; (2) to promote and advance worker rights; and (3) to promote responsible
environmental protections. Throughout this process on fast track, our goal has been to ensure the
President has the capacity to pursue all three objectives effectively.
Trade Agreements. This bill permits labor/environmental provisions "directly related to
trade" to be brought back to Congress under fast track authority. This is but one of many
tools the President can use to advance his goals.
Side Agreements. The President has extensive executive authority to reach
labor/environmental agreements with countries. These agreements do not require
congressional approval. We have already committed to conclude companion
labor/environment agreements in future trade agreements where appropriate, and Chile has
already agreed to enter such agreements.
Other Agreements. The Clinton Administration has done more than any other to press
countries to improve labor and environmental protection and we will continue to do so,
whether through the ILO, the WTO, the UN, or international financial institutions. We
should be concerned about improving conditions in all countries, not just in free trade
partners.
More Detailed Review of Provisions. Key provisions include:
Necessary and Appropriate. We have added language that will allow us to include in
future implementing bills those provisions that are "necessary or appropriate" to
implement the relevant trade agreement. The Administration and the Congress need
flexibility to include in such bills provisions that, while not absolutely required to
implement a particular trade agreement, nevertheless address trade policy issues raised by
that agreement. These might include, for example, the agreement's relationship to existing
U.S. trade laws, authority to monitor the results of the agreement, or extending Trade
Adjustment Assistance to help those American workers who do not share the benefits
from expanded trade. Restricting future bills only to those provisions deemed "necessary"
would prevent inclusion of these and other critically important provisions.
Duration. The duration of the trading authority extends to 2001, with extension until
2005 only after a congressional vote.
Consultations with Congress. We have added strong language to ensure Congress is a
full partner in setting objectives and establishing trade priorities for American negotiators.
Provisions never before included in fast track bills include: (1) a requirement that the
Administration inform Congress of its negotiating objectives for a specific agreement
before negotiations begin; (2) a requirement that the Administration consult before signing
a trade agreement about any parallel agreements, such as labor and environmental side
agreements.
Negotiating Instructions. We added a section on negotiating instructions that will
ensure negotiators do nothing that would lower U.S. public health and safety standards,
and insist upon strict enforcement of our trade laws.
Specific Agriculture Objective. The legislation responds to congressional concerns by
providing a series of measures designed to achieve fairer and more open conditions of
agricultural trade, including: reducing or eliminating tariffs and subsidies that hurt U.S.
agricultural exports and market opportunities; addressing other unjustified barriers to such
exports; and strengthening the international rules covering unfair foreign practices that
distort world agricultural markets.
Chile. We have specifically designated Chile as the next country with which we would
negotiate a bilateral free trade agreement. Chile made a firm commitment to enter into
side agreements on labor and the environment.
FAST TRACK Q&A'S
"DIRECTLY RELATED TO TRADE"
Q: What does it mean to say that any labor/environment provisions brought back on fast
track must be "directly related to trade"?
It means that labor and environmental provisions having a direct relationship to trade can be
included in fast track legislation.
It is one part of our overall commitment to labor and the environment. As the President has
stated, he is committed to pursuing three objectives as we move forward: 1) to open foreign
markets and create good U.S. jobs; 2) to promote labor rights; and 3) to promote responsible
environmental development. Throughout this debate, our goal has been to ensure the
President has the capacity to pursue all three objectives.effectively.
The Administration's bill gives the President ample latitude to accomplish his
labor/environment objectives. He has many tools at his disposal:
Trade Agreements. As we said, the bill permits labor/environmental provisions "directly
related to trade" to be brought back to Congress under fast track authority. This is only
one tool he can use.
Global Negotiations: This Administration has done more than any other to press
countries to improve labor rights and vironmental protection - and we will continue to
do so. The bill itself contains a negotiating objective encouraging us to make progress in
these areas in the WTO and the ILO. In addition, we will continue to press in other for a,
like the World Bank, IMF, other international financial institutions and the UN. We
should be concerned about improving the conditions in all countries, not just in free trade
partners.
Side Agreements: The President has extensive executive authority to reach
labor/environment agreements with countries. These agreements do not require
Congressional approval. In the context of future free trade agreements, we have
committed to conclude companion labor/environment agreements, when appropriate.
Chile has already agreed to enter such agreements.
The important point is to secure fast track authority. If we pursue trade negotiations, we
have a much better chance of engaging these countries on labor and environmental issues.
Rejecting fast track will not advance our interests on labor/environment.
2
Q: But what does the term "directly related to trade" mean?
It means that a discrete set of provisions directly related to trade could be included in the fast
track legislation. We are still discussing the precise definition with Congress, but examples
include establishing the principle that countries should not lower their environmental or
health and safety standards to attract foreign investment or provisions relating to the ability
of a country to use sanitary/phytosanitary measures as a disguised form of trade protection.
Remember that this is only one tool we have to pursue our labor and environmental
objectives. We believe the combination of side agreements and other measures already give
us much latitude to pursue our objectives.
Q: Suppose a country lowers its child labor standards to attract foreign investment or to
export cheaper products to the U.S. Could this be included in the trade agreement?
Obviously, we are not going to negotiate a free trade agreement with a country that has a
heinous labor rights or environmental record, so the issue of what can be contained in an
agreement would not arise.
As to the precise definition of directly related to trade", we are still working that out with
Congress. We would favor a broader definition, but we also need to achieve a bipartisan
consensus.
CONTENT OF SIDE AGREEMENTS
Q: What provisions will be contained in any side agreements you reach?
A: That could vary among countries. Different countries would have different conditions and
different needs. As a general matter, agreements could include provisions to:
Promote better enforcement of a country's labor and environmental laws and
regulations.
Encourage greater transparency and public disclosure about a country's labor and
environmental standards and performance.
Provide greater technical assistance to countries to improve their labor rights and
environmental protection.
We would consult extensively with Congress about our approach in any individual case.
3
LINKAGE BETWEEN
TRADE AGREEMENT/SIDE AGREEMENTS
Q: Do you commit to reach side agreements with all future free trade agreement
partners?
We reached side agreements with Mexico and Canada during those free trade negotiations.
We have already said we will negotiate side agreements in the context of free trade talks with
Chile - and Chile has agreed to do it.
There may be instances when side agreements wouldn't be necessary (England, Sweden) but
we would negotiate them when they are appropriate. In any case, we will move forward in
full consultation with Congress.
SANCTIONS AND SIDE AGREEMENTS
Q: Would you make any future labor/environmental side agreements enforceable through
trade sanctions?
We will ensure that any side agreements we reach are enforceable through sanctions
(whether monetary fines or other methods).
Q: Yes, but would you entertain the use of trade sanctions to enforce the agreements, as
you did in NAFTA?
At this time, the only bilateral free trade agreement we envision negotiating is with Chile.
Chile has agreed to enter labor/environment side agreements enforceable by monetary fines.
We think that will provide sufficient enforcement. Therefore, the question of other bilateral
free trade agreements - let alone how they would be enforced - at this point is pretty
theoretical.
We would need to consult with Congress extensively before we pursue another bilateral free
trade negotiations. If that situation arises, we will consult on this question as well.
Q: But at the end of the day, would you consider using trade sanctions?
In most cases, we believe enforcement through monetary fines or similar methods could be
effective. If they cannot, we would consider using trade sanctions to collect monetary fines,
as we have done in past agreements. We would pursue this approach only after extensive
consultation with Congress.
4
INTELLECTUAL PROPERTY
VERSUS
LABOR/ENVIRONMENT
Q: Critics charge that you incorporate intellectual property provisions in free trade
agreements, but fail to give the same treatment to labor/environmental provisions? Aren't
they correct that you care more about American corporations than about American
workers?
First, no Administration in history has been more aggressive in pressing to improve
international labor rights or environmental protection. We have:
Continued to press this agenda in international institutions, like the ILO and WTO. In
fact, our fast track bill contains a negotiating objective directing us to continue this effort.
Made a commitment to negotiate labor/environment side agreements in the context of
future free trade agreements, when appropriate. We will negotiate such agreements in the
context of the Chilean free trade talks. Those agreements can make a difference: there
have 7 cases brought involving labor violations under the NAFTA side agreement, none
brought for IPR violations under the NAFTA itself.
Other initiatives, like the President's 1996 Apparel Industry Partnership ("No Sweat
Initiative"), a collaboration between labor, business and NGO's to encourage adoption of
a code of conduct prohibiting exploitative child labor and encouraging humane working
conditions.
As to the critics' charge, there is a fundamental difference between intellectual property
rights and labor/environment. Violations of intellectual property rights relate to the product
itself, which is being exported to the United States. The issue of labor/environment
involves more broadly the entire social and legal structure of the foreign country, which
goes beyond trade concerns. That's an important difference.
19 USCA (1980)
Ch. 12 NEGOTIATING & OTHER AUTHORITY
19 § 2191
19 § 2171
TRADE ACT OF 1974
Ch. 12
(A) a provision approving such trade agreement :r
Section 1-106. Incidental Transfers and
Section 1-107. Effective Dates.
agreements,
Reassignments
(a) Sections 1. 2(a), 2(b)(2), 2(c), 2(d),
So much of the personnel, property. rec-
3. 4. 5(a). 5(b) (2), 5(c) through (e), and 6
(B) a provision approving the statement of administra-
ords. and unexpended balances of appro-
through S of Reorganization Plan No. 3
tive action (if any) proposed to implement such trade
priations. allocations. and other funds
of 1979 [set out as a note under this sec-
employed. used. held. available, or to be
tion). and the provisions of this order,
agreement or agreements, and
made available in connection with fune-
shall take effect as of January 2. 1980.
(C) if changes in existing laws or new statutory authori-
tions transferred or reassigned by the
(b) Section 5(b)(1) of such plan [set
provisions of this order as the Director
out as a note under this section] shall
ty is required to implement such trade agreement or agree-
of the Office of Management and Budget
take effect as of April 1, 1980.
ments. provisions, necessary or appropriate to implement
shall determine shall be transferred or
JIMMY CARTER
such trade agreement or agreements, either repealing :-r
reassigned for use in connection with
such functions.
amending existing laws or providing new statutory authori-
ty.
Library References
(2) The term "implementing revenue bill" means an imp.e-
United States 031.
C.J.S. United States $ 31.
menting bill which contains one or more revenue measures by
Code of Federal Regulations
reason of which it must originate in the House of Representa-
tives.
Organization, etc., see 15 CFR Chap. XX.
(3) The term "approval resolution" means only a concurrent
PART 5-CONGRESSIONAL PROCEDURES WITH RESPECT
resolution of the two Houses of the Congress, the matter after
TO PRESIDENTIAL ACTIONS
the resolving clause of which is as follows: "That the Congress
approves the extension of nondiscriminatory treatment with re-
spect to the products of
transmitted by the President to
§ 2191.
Bills implementing trade agreements on nontariff
the Congress on
", the first blank space being filled with
barriers and resolutions approving commercial
the name of the country involved and the second blank space
agreements with Communist countries
being filled with the appropriate date.
(a) Rules of House of Representatives and Senate.-This section
(c) Introduction and referral.-
and sections 2192 and 2193 of this title are enacted by the Con-
(1) On the day on which a trade agreement is submitted to
the House of Representatives and the Senate under section 2112
gress-
(1) as an exercise of the rulemaking power of the House of
of this title, the implementing bill submitted by the President
Representatives and the Senate, respectively, and as such they
with respect to such trade agreement shall be introduced by
are deemed a part of the rules of each House, respectively, but
request) in the House by the majority leader of the House. for
applicable only with respect to the procedure to be followed in
himself and the minority leader of the House, or by Members of
that House in the case of implementing bills described in
the House designated by the majority leader and minority lead-
subsection (b) (1) of this section, implementing revenue bills
er of the House; and shall be introduced (by request) in the
described in subsection (b) (2) of this section, approval resolu-
Senate by the majority leader of the Senate, for himself and
tions described in subsection (b) (3) of this section, and resolu-
the minority leader of the Senate, or by Members of the Senate
tions described in sections 2192(a) and 2193(a) of this title;
designated by the majority leader and minority leader of the
and they supersede other rules only to the extent that they are
Senate. If either House is not in session on the day on which
such a trade agreement is submitted, the implementing bill shall
inconsistent therewith; and
be introduced in that House, as provided in the preceding sen-
(2) with full recognition of the constitutional right of either
tence, on the first day thereafter on which that House is in ses-
House to change the rules (so far as relating to the procedure
sion. Such bills shall be referred by the Presiding Officers of
of that House) at any time, in the same manner and to the same
the respective Houses to the appropriate committee, or. in the
extent as in the case of any other rule of that House.
case of a bill containing provisions within the jurisdiction of
(b) Definitions.-For purposes of this section-
two or more committees, jointly to such committees for consid-
(1) The term "implementing bill" means only a bill of either
eration of those provisions within their respective jurisdictions.
House of Congress which is introduced as provided in subsec-
(2) On the day on which a bilateral commercial agreement.
tion (c) of this section with respect to one or more trade agree-
entered into under subchapter IV of this chapter after January
ments submitted to the House of Representatives and the Sen-
159
ate under section 2112 of this title and which contains—
158
19 § 2191
Ch. 12 NEGOTIATING & OTHER AUTHORITY
19
§
2191
TRADE ACT OF 1974
Ch. 12
3, 1975, is transmitted to the House of Representatives and the
(2) The provisions of paragraph (1) shall not apply in the
Senate to an implementing revenue bill. An implementing rev-
Senate, an approval resolution with respect to such agreement
shall be introduced (by request) in the House by the majority
enue bill received from the House shall be referred to the ap-
leader of the House, for himself and the minority leader of the
propriate committee or committees of the Senate. If such com-
mittee or committees have not reported such bill at the close of
House, or by Members of the House designated by the majority
leader and minority leader of the House; and shall be intro-
the 15th day after its receipt by the Senate (or, if later. before
the close of the 45th day after the corresponding implementing
duced (by request) in the Senate by the majority leader of the
Senate, for himself and the minority leader of the Senate, or by
revenue bill was introduced in the Senate), such committee or
Members of the Senate designated by the majority leader and
committees shall be automatically discharged from further con-
sideration of such bill and it shall be placed on the calendar.
minority leader of the Senate. If either House is not in session
A vote on final passage of such bill shall be taken in the Senate
on the day on which such an agreement is transmitted, the ap-
on or before the close of the 15th day after such bill is reported
proval resolution with respect to such agreement shall be intro-
duced in that House, as provided in the preceding sentence, on
by the committee or committees of the Senate to which it was
referred, or after such committee or committees have been dis-
the first day thereafter on which that House is in session. The
approval resolution introduced in the House shall be referred to
charged from further consideration of such bill.
the Committee on Ways and Means and the approval resolution
(3) For purposes of paragraphs (1) and (2), in computing a
introduced in the Senate shall be referred to the Committee on
number of days in either House, there shall be excluded any day
Finance.
on which that House is not in session.
(d) Amendments prohibited.-No amendment to an implementing
(f) Floor consideration in House.-
bill or approval resolution shall be in order in either the House of
(1) A motion in the House of Representatives to proceed to
Representatives or the Senate; and no motion to suspend the appli-
the consideration of an implementing bill or approval resolution
cation of this subsection shall be in order in either House, nor shall
shall be highly privileged and not debatable. An amendment to
it be in order in either House for the Presiding Officer to entertain
the motion shall not be in order, nor shall it be in order to move
a request to suspend the application of this subsection by unani-
to reconsider the vote by which the motion is agreed to or disa-
mous consent.
greed to.
(e) Period for committee and floor consideration.-
(2) Debate in the House of Representatives on an implement-
(1) Except as provided in paragraph (2), if the committee or
ing bill or approval resolution shall be limited to not more than
committees of either House to which an implementing bill or
20 hours, which shall be divided equally between those favoring
approval resolution has been referred have not reported it at
and those opposing the bill or resolution. A motion further :0
the close of the 45th day after its introduction, such committee
limit debate shall not be debatable. It shall not be in order to
or committees shall be automatically discharged from further
move to recommit an implementing bill or approval resoluti:
consideration of the bill or resolution and it shall be placed on
or to move to reconsider the vote by which an implementing bill
the appropriate calendar. A vote on final passage of the bill or
or approval resolution is agreed to or disagreed to.
resolution shall be taken in each House on or before the close
(3) Motions to postpone, made in the House of Representa-
of the 15th day after the bill or resolution is reported by the
tives with respect to the consideration of an implementing bill
committee or committees of that House to which it was re-
or approval resolution, and motions to proceed to the considera-
ferred, or after such committee or committees have been dis-
tion of other business, shall be decided without debate.
charged from further consideration of the bill or resolution. If
prior to the passage by one House of an implementing bill or
(4) All appeals from the decisions of the Chair relating to
approval resolution of that House, that House receives the same
the application of the Rules of the House of Representatives to
implementing bill or approval resolution from the other House,
the procedure relating to an implementing bill or approval reso-
lution shall be decided without debate.
then—
(A) the procedure in that House shall be the same as if
(5) Except to the extent specifically provided in the preced-
no implementing bill or approval resolution had been re-
ing provisions of this subsection, consideration of an imple-
ceived from the other House; but
menting bill or approval resolution shall be governed by the
Rules of the House of Representatives applicable to other bills
(B) the vote on final passage shall be on the implement-
and resolutions in similar circumstances.
ing bill or approval resolution of the other House.
161
160
19 § 2191
TRADE ACT OF 1974
Ch. 12
Ch. 12 NEGOTIATING & OTHER AUTHORITY 19 § 2192
(g) Floor consideration in Senate.-
(B) a resolution of either House of the Congress. the
matter after the resolving clause of which is as follows:
(1) A motion in the Senate to proceed to the consideration of
"That the
does not approve
transmitted :
an implementing bill or approval resolution shall be privileged
the Congress on
", with the first blank space being
and not debatable. An amendment to the motion shall not be in
filled with the name of the resolving House, the
order, nor shall it be in order to move to reconsider the vote by
blank space being filled in accordance with paragraph 2.
which the motion is agreed to or disagreed to.
and the third blank space being filled with the appropriate
(2) Debate in the Senate on an implementing bill or approval
date.
resolution, and all debatable motions and appeals in connection
(2) The second blank space referred to in paragraph 1) B
therewith. shall be limited to not more than 20 hours. The time
shall be filled as follows:
shall be equally divided between, and controlled by, the majori-
ty leader and the minority leader or their designees.
(A) in the case of a resolution referred to in section
1003(e) of this title, with the phrase "the termination of
(3) Debate in the Senate on any debatable motion or appeal
the Secretary of the Treasury under section 303(d) of the
in connection with an implementing bill or approval resolution
Tariff Act of 1930";
shall be limited to not more than 1 hour to be equally divided
between, and controlled by, the mover and the manager of the
(B) in the case of a resolution referred to in section
bill or resolution, except that in the event the manager of the
2437(c) (2) of this title with the phrase "the extensioz of
bill or resolution is in favor of any such motion or appeal, the
nondiscriminatory treatment with respect to the products
time in opposition thereto, shall be controlled by the minority
of
" (with this blank space being filled with the
leader or his designee. Such leaders, or either of them, may,
name of the country involved); and
from time under their control on the passage of an implement-
(C) in the case of a resolution referred to in section
ing bill or approval resolution, allot additional time to any Sen-
2437(c) (3) of this title, with the phrase "the report of the
ator during the consideration of any debatable motion or ap-
President submitted under section
of the Trade Ac:
peal.
of 1974 with respect to
" (with the first blank space
(4) A motion in the Senate to further limit debate is not de-
being filled with "402(b)" or "409(b)", as appropriate. and
batable. A motion to recommit an implementing bill or approv-
the second blank space being filled with the name of the
al resolution is not in order.
country involved).
Pub.L. 93-618, Title I, § 151, Jan. 3, 1975, 88 Stat. 2001.
(b) Reference to committees.-All resolutions introduced in the
House of Representatives shall be referred to the Committee on
Historical Note
Ways and Means and all resolutions introduced in the Senate shall
Legislative History. For legislative 1974 U.S.Code Cong. and Adm.News. p.
be referred to the Committee on Finance.
history and purpose of Pub.L. 93-618. see 7186.
(c) Discharge of committees.-
Library References
(1) If the committee of either House to which a resolution
United States 22.
has been referred has not reported it at the end of 30 days after
C.J.S. United States §§ 22. 25.
its introduction, not counting any day which is excluded under
§ 2192.
section 2194(b) of this title, it is an order to move either to dis-
Resolutions disapproving certain actions
charge the committee from further consideration of the restlu-
(a) Contents of resolutions.-
tion or to discharge the committee from further consideration
(1) For purposes of this section, the term "resolution" means
of any other resolution introduced with respect to the same
only-
matter, except no motion to discharge shall be in order after
the committee has reported a resolution with respect to the
(A) a concurrent resolution of the two Houses of the
same matter.
Congress, the matter after the resolving clause of which is
as follows: "That the Congress does not approve the action
(2) A motion to discharge under paragraph (1) may be made
taken by, or the determination of, the President under sec-
only by an individual favoring the resolution, and is highly
tion 203 of the Trade Act of 1974 transmitted to the Con-
privileged in the House and privileged in the Senate; and de-
gress on
", the blank space being filled with the ap-
bate thereon shall be limited to not more than 1 hour, the time
propriate date; and
to be divided in the House equally between those favoring and
162
163
(9 USCA (Supp., 1994)
CUSTOMS DUTIES
CUSTOMS DUTIES
19 $ 2192
19 § 2171
Title note set out under section 1801 of this
Section 1-104. Authority Under the For-
HISTORICAL AND STATUTORY NOTES
title], section 350 of the Tariff Act of 1930
eign Service Act and Related Laws.
1990 Amendment
Effective Date of 1990 Amendment
[section 1351 of this title], Reorganization Plan
Pub.L. 101-382, in subsec. (b), in par. (2),
Amendment by Pub.L. 101-382 effective Anz
No. 3 of 1979 [set out as a note under this
[See main volume for text of (a) ]
inserted provisions relating to resolution, wher-
20, 1990, except as otherwise provided for. see
section), and section 301 of title 3 of the United
ever appearing, and in par. (3), substituted pro-
section 132(d) of Pub.L. 101-382 set out as 1
States Code [section 301 of Title 3, The Presi-
(b) [Revoked by Ex.Ord. No. 12292, Feb. 23,
visions relating to joint resolution for provisions
note under section 2432 of this title.
dent], and as President of the United States, it
1981, 46 F.R. 13968.)
relating to concurrent resolution, and in subsec.
is hereby ordered as follows:
(e)(2), inserted provisions relating to resolution,
Legislative History
[See main volume for text of
[See main volume for text of (c);
wherever appearing.
For legislative history and purpose of Publi
sections 1-101 to 1-103)
sections 1-105 to 1-107]
1988 Amendment
100-418, see 1988 U.S.Code Cong. and Act
CODE OF FEDERAL REGULATIONS
Subsec. (b)(1). Pub.L. 100-418 inserted refer-
News, p. 1547. See, also, Pub.L. 101-382 1990
ence to section 2903(a)(1) of this title.
U.S. Code Cong. and Adm. News. p. 928.
Office of U.S. Trade Representative. freedom
of information policies and procedures, see 15
LAW REVIEW COMMENTARIES
CFR 2004.1 et seq.
Constitutionality of binational panel review in
Christenson
and
Kimberly
Gambrel
3
Canada-U.S. free trade agreement. Gordon A.
Int'l.Law. 401 (1989).
PART 5-CONGRESSIONAL PROCEDURES WITH RESPECT TO PRESIDENTIAL ACTIONS
§ 2192. Resolutions disapproving certain actions
§ 2191. Bills implementing trade agreements on nontariff barriers and resolu-
tions approving commercial agreements with Communist countries
(a) Contents of resolutions—
(1) For purposes of this section, the term "resolution" means only-
[See main volume for text of (a)]
(A) a joint resolution of the two Houses of the Congress, the matter after the
resolving clause of which is as follows: "That the Congress does not approve the
(b) Definitions
action taken by, or the determination of, the President under section 203 of the
For purposes of this section-
Trade Act of 1974 transmitted to the Congress on
", the blank space being
(1) The term "implementing bill" means only a bill of either House of Congress
filled with the appropriate date; and
which is introduced as provided in subsection (c) of this section with respect to one
(B) a joint resolution of the two Houses of Congress, the matter after the
or more trade agreements submitted to the House of Representatives and the
resolving clause of which is as follows: "That the Congress does not approve
Senate under section 2112 or section 2903(a)(1) of this title and which contains-
transmitted to the Congress on
", with the first blank space being
filled in accordance with paragraph (2), and the second blank space being filled with
[See main volume for text of (A) to (C)]
the appropriate date.
(2) The term "implementing revenue bill or resolution" means an implementing
(2) The first blank space referred to in paragraph (1)(B) shall be filled as follows:
bill, or approval resolution, which contains one or more revenue measures by reason
(A) in the case of a resolution referred to in section 1303(e) of this title. with the
of which it must originate in the House of Representatives.
phrase "the termination of the Secretary of the Treasury under section 303(d) If the
(3) The term "approval resolution" means only a joint resolution of the two
Tariff Act of 1930"; and
Houses of the Congress, the matter after the resolving clause of which is as follows:
(B) in the case of a resolution referred to in section 2437(c)(2) of this title. with
"That the Congress approves the extension of nondiscriminatory treatment with
the phrase "the report of the President submitted under section
of the
respect
to the the products first blank space being filled with the name of the country involved
of
transmitted by the President to the Congress on
Trade Act of 1974 with respect to
" (with the first blank space being filled
with "402(b)" or "409(b)", as appropriate, and the second blank space being alled
and the second blank space being filled with the appropriate date.
with the name of the country involved).
[See main volume for text of (c) and (d)]
[See main volume for text of (b)]
(e) Period for committee and floor consideration
(c) Discharge of committees
[See main volume for text of (1)]
(1) If the committee of either House to which a resolution has been referred has not
reported it at the end of 30 days after its introduction, not counting any day which is
(2) The provisions of paragraph (1) shall not apply in the Senate to an implementing
excluded under section 2194(b) of this title, it is an order to move either to discharge the
revenue bill or resolution. An implementing revenue bill or resolution received from the
committee from further consideration of the resolution or to discharge the committee
House shall be referred to the appropriate committee or committees of the Senate. If
from further consideration of any other resolution introduced with respect to the same
such committee or committees have not reported such bill or resolution at the close of
matter, except that a motion to discharge-
the 15th day after its receipt by the Senate (or, if later, before the close of the 45th day
after the corresponding implementing revenue bill or resolution was introduced in the
(A) may only be made on the second legislative day after the calendar day on
Senate), such committee or committees shall be automatically discharged from further
which the Member making the motion announces to the House his intention to do
consideration of such bill or resolution and it shall be placed on the calendar. A vote on
so; and
final passage of such bill or resolution shall be taken in the Senate on or before the close
(B) is not in order after the Committee has reported a resolution with respect :0
of the 15th day after such bill or resolution is reported by the committee or committees
the same matter.
of the Senate to which it was referred. or after such committee or committees have been
[See main volume for text of (2); (d) and (e)]
discharged from further consideration of such bill or resolution.
[See main volume for text of (3); (f) and (g)]
(f) Procedures in the Senate
(As amended Pub.L. 100-418, Title 1. § 1107(b)(1), Aug. 23, 1988, 102 Stat. 1135; Pub.L. 101-382,
(1) Except as otherwise provided in this section, the following procedures shall apply
in the Senate to a resolution to which this section applies:
Title I, § 132(b)(2), Aug. 20, 1990, 104 Stat. 645.)
83
82
PUBLIC LAW 103-49-JULY 2, 1993
107 STAT. 239
Public Law 103-49
103d Congress
An Act
To provide authority for the President to enter into trade agreements to conclude
the Uruguay Round of multilateral trade negotiations under the auspices of
the General Agreement on Tariffs and Trade, to extend tariff proclamation author-
July 2, 1993
ity to carry out such agreements, and to apply congressional "fast track" procedures
[H.R. 1876]
to a bill implementing such agreements.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION. 1. EXTENSION OF URUGUAY ROUND TRADE AGREEMENT
NEGOTIATING AND PROCLAMATION AUTHORITY AND
OF "FAST TRACK" PROCEDURES TO IMPLEMENTING
LEGISLATION.
Section 1102 of the Omnibus Trade and Competitiveness Act
of 1988 (19 U.S.C. 2902) is amended by inserting at the end the
following new subsection:
"(e) SPECIAL PROVISIONS REGARDING URUGUAY ROUND TRADE
NEGOTIATIONS.-
"(1) IN GENERAL-Notwithstanding the time limitations
in subsections (a) and (b), if the Uruguay Round of multilateral
trade negotiations under the auspices of the General Agreement
on Tariffs and Trade has not resulted in trade agreements
by May 31, 1993, the President may, during the period after
May 31, 1993, and before April 16, 1994, enter into, under
subsections (a) and (b), trade agreements resulting from such
negotiations.
"(2) APPLICATION OF TARIFF PROCLAMATION AUTHORITY.-
No proclamation under subsection (a) to carry out the provisions
regarding tariff barriers of a trade agreement that is entered
into pursuant to paragraph (1) may take effect before the
effective date of a bill that implements the provisions regarding
nontariff barriers of a trade agreement that is entered into
under such paragraph.
"(3) APPLICATION OF IMPLEMENTING AND 'FAST TRACK'
PROCEDURES.-Section 1103 applies to any trade agreement
negotiated under subsection (b) pursuant to paragraph (1),
except that-
"(A) in applying subsection (a)(1)(A) of section 1103
to any such agreement, the phrase 'at least 120 calendar
days before the day on which he enters into the trade
agreement (but not later than December 15, 1993),' shall
be substituted for the phrase 'at least 90 calendar days
before the day on which he enters into the trade agree-
ment,'; and
69-139 0 93 (49)
107 STAT. 240
PUBLIC LAW 103-49-JULY 2, 1993
"(B) no provision of subsection (b) of section 1103 other
than paragraph (1)(A) applies to any such agreement and
in applying such paragraph, 'April 16, 1994;' shall be sub-
stituted for 'June 1, 1991;'.
"(4) ADVISORY COMMITTEE REPORTS.-The report required
under section 135(e)(1) of the Trade Act of 1974 regarding
any trade agreement provided for under paragraph (1) shall
be provided to the President, the Congress, and the United
States Trade Representative not later than 30 days after the
date on which the President notifies the Congress under section
1103(a)(1)(A) of his intention to enter into the agreement (but
before January 15, 1994).".
Approved July 2, 1993.
LEGISLATIVE HISTORY-H.R. 1876 (S. 1003):
HOUSE REPORTS: No. 103-128, Pt. 1 (Comm. on Ways and Means) and Pt 2
(Comm. on Rules).
SENATE REPORTS: No. 103-66 accon.panying S. 1003 (Comm. on Finance).
CONGRESSIONAL RECORD, Vol. 139 (1993):
June 22, considered and passed House.
June 30, considered and passed Senate.
WEEKLY COMPILATION OF PRESIDENTIAL DOCUMENTS, Vol. 29 (1993):
July 2, Presidential statement.
Calendar No. 104
103D CONGRESS
REPORT
SENATE
1st Session
103-66
PROVIDING AUTHORITY FOR THE PRESIDENT TO ENTER INTO TRADE
AGREEMENTS TO CONCLUDE THE URUGUAY ROUND OF MULTILATERAL
TRADE NEGOTIATIONS UNDER THE AUSPICES OF THE GENERAL AGREE-
MENT ON TARIFFS AND TRADE, TO EXTEND TARIFF PROCLAMATION AU-
THORITY TO CARRY OUT SUCH AGREEMENTS, AND TO APPLY CONGRES-
SIONAL "FAST TRACK" PROCEDURES TO A BILL IMPLEMENTING SUCH
AGREEMENTS
JUNE 23 (legislative day, JUNE 22), 1993.-Ordered to be printed
Mr. MOYNIHAN, from the Committee on Finance,
submitted the following
REPORT
[To accompany S. 1003]
The Committee on Finance, to which was referred the bill (S.
1003) providing authority for the President to enter into trade
agreements to conclude the Uruguay Round of multilateral trade
negotiations under the auspices of the General Agreement on Tar-
iffs and Trade, to extend tariff proclamation authority to carry out
such agreements, and to apply Congressional "fast track" proce-
dures to a bill implementing such agreements, having considered
the same, reports favorably thereon without amendment and rec-
ommends that the bill do pass.
I. SUMMARY
The Committee bill renews negotiating and proclamation author-
ity and provides for the application of fast track approval proce-
dures for agreements concluding the Uruguay Round of multilat-
eral trade negotiations. The authority provided under the Commit-
tee bill would require that the President enter into any Uruguay
Round agreements before April 16, 1994. The bill would also re-
quire that, before entering into any agreements, the President
must give the Congress 120 days' advance notice of his intent to
enter into the agreements. Under the Committee bill, the last day
for such advance notification would be December 15, 1993. The
Committee bill would also permit the private sector advisory com-
mittees established by section 135 of the Trade Act of 1974 to sub-
69-010
3
2
mit their reports to the Congress 30 days after the President noti-
gotiations. The notification period required to qualify for fast track
fies the Congress of his intent to enter into Uruguay Round agree-
procedures is extended from 90 days to 120 days to provide the
ments.
Congress with a meaningful opportunity to review the agreement
since the period of review is likely to include weeks when the Con-
II. GENERAL EXPLANATION
gress is not in session. Finally, the bill delays the requirement for
the submission of the private sector advisory committee reports
The Congress first adopted expedited legislative procedures for
until 30 days after the notification date to allow more informed
trade agreements (known as the "fast track") in the Trade Act of
analyses of the outcome of the negotiations.
1974 ("1974 Trade Act"). The fast track has been renewed twice. It
The Committee believes that the Senate should promptly ap-
was extended for eight years in the Trade Agreements Act of 1979
prove S. 1003 to enable the President to make a final attempt to
and, after a lapse of eight months, was reauthorized in the Omni-
bring the Uruguay Round to a successful conclusion. The Commit-
bus Trade and Competitiveness Act of 1988 ("1988 Trade Act"). The
tee continues to believe that a properly negotiated Uruguay Round
1988 Trade Act provided fast track procedures for trade agree-
agreement can improve access to foreign markets for exports of
ments 1991. signed by June 1, 1993, subject to a Presidential request in
U.S. manufactured goods, agricultural products and services. Fur-
ther, the Committee believes that the Round provides the United
Under the 1988 Trade Act, the President was authorized to enter
into trade agreements to reduce or eliminate tariff and non-tariff
States with the best opportunity to seek improvements and clari-
barriers and other trade-distoring measures. The 1988 Trade Act
fications to the rules governing world trade and to bring under
General Agreement on Tariffs and Trade (GATT) discipline, for the
also granted the President the authority to proclaim, within pre-
scribed limits, modifications to U.S. tariffs that are negotiated as
first time, trade in services and agriculture, intellectual property
rights and trade-related investment measures.
part of a multilateral trade agreement. The President was required
As the negotiations move into their final phase, the Committee
to notify the Congress at least 90 days in advance of his intent to
also believes that it is appropriate to review U.S. goals and objec-
enter into a trade agreement in order for the agreement to be con-
sidered using the fast track procedures provided by the 1988 Trade
tives for the Uruguay Round. The Committee stands firmly by the
Act. The last date for such advance notification under the 1988
negotiating objectives set forth in the 1988 Trade Act, and intends
Trade Act was March 2, 1993, and the authority itself expired May
to measure the overall results of the Round against these objec-
31, 1993. In addition, the private sector advisory committees estab-
tives. At the same time, the Committee recognizes that the negotia-
lished under section 135 of the 1974 Trade Act were required to
tions have evolved since they were first launched in 1986. Accord-
submit reports to the Congress on any trade agreement at the
ingly, the Committee has sent to the President the following letter
same time as the President notified Congress of his intent to enter
stating its views on what U.S. objectives should be as the negotia-
into such agreement.
tions enter their final stage.
On April 27, 1993, United States Trade Representative Michael
U.S. SENATE,
Kantor transmitted to the Congress, on behalf of the President, a
COMMITTEE ON FINANCE,
legislative proposal to extend the fast track approval procedures to
Washington, DC, June 23, 1993.
trade agreements that conclude the Uruguay Round of multilateral
The PRESIDENT,
trade negotiations, provided that the President notified the Con-
The White House,
gress by December 15, 1993 of his intent to enter into any such
agreements before April 16, 1994.
Washington, DC.
Consistent with the President's request, the Committee bill re-
DEAR MR. PRESIDENT: The Committee on Finance has closely
news negotiating and proclamation authority and provides for the
monitored the progress of the Uruguay Round negotiations since
application of fast track approval procedures for Uruguay Round
they were launched at Punta del Este in September 1986. As you
agreements. The authority would apply to agreements entered into
know, the Congress set forth the principal negotiating objectives for
before April 16, 1994, and would require that the President give
the Round in the Omnibus Trade and Competitiveness Act of 1988.
the Congress a minimum of 120 days' advance notification (or by
These have been, and will continue to be, the overall benchmarks
December 15, 1993) of his intent to do so. Tariff reductions pro-
against which we will measure the outcome of these negotiations.
claimed under the authority may not take effect before the effective
Since then, however, the negotiations have evolved and the is-
date of a bill implementing the non-tariff elements of any agree-
sues have become more clearly defined. In particular, in December
ments. The bill would also require that the private sector advisory
1991, GATT Director General Arthur Dunkel tabled his "Draft
committees submit their reports to the Congress on the Uruguay
Final Act," the document which has since become the basis for
Round agreements within 30 days of the President's notification to
much of the negotiations.
the Congress.
It is therefore appropriate, as the Congress considers the Presi-
The Committee believes that this extension of the fast track, re-
dent's request to renew negotiating authority and "fast track" pro-
quiring notice of an agreement by December 15, 1993, should be
cedures for the Uruguay Round, to consider once again our goals
sufficient to permit the participants to conclude a comprehensive
and objectives in light of the specific issues raised. or left
agreement in light of progress made in the past seven years of ne-
unaddressed, in the Draft Final Act. We set forth below the views
5
4
of the Committee on Finance on the goals it believes the United
tions, non-actionable subsidies, and the termination of antidumping
States should pursue with respect to eight key areas of the negotia-
and countervailing duty orders. We should seek stronger disciplines
tions. It is the Committee's intention to review any final Uruguay
against export and domestic subsidies (including equity infusions,
Round agreement against these objectives, as well as the objectives
and natural resource and regional subsidies), as well as effective
set forth in the 1988 Trade Act.
measures to prevent circumvention of antidumping and counter-
First, as negotiations on market access move forward in anticipa-
vailing duty orders and diversionary dumping. At the same time,
tion of the July meeting of the leaders of the Group of Seven coun-
we should work toward greater transparency in the antidumping
tries, the Committee reaffirms its longstanding belief that the Uru-
and countervailing duty actions taken by our trading partners, as
guay Round must result in more open, equitable, and reciprocal ac-
well as a clarification of substantive rules and stronger procedural
cess for U.S. exporters of goods and services. With respect to manu-
standards to prevent the misuse of these rules against U.S. export-
factured products, the United States should seek an agreement
ers.
that will substantially reduce tariff and non-tariff barriers to U.S.
In the intellectual property negotiations, the Committee believes
exports and eliminate tariffs where our private sector favors such
that our overarching goal should be an agreement that provides
an action and significant trading partners concur.
adequate protection and effective enforcement of all forms of intel-
In the negotiations on services trade, the United States should
lectual property rights. We believe, however, that the Draft Final
seek substantial market access commitments that provide for na-
Act is deficient in several respects. The transition periods, particu-
tional treatment, right of establishment, and equivalent competi-
larly as they apply to developing countries, should be shortened.
tive opportunities for our firms; countries that fail to make such
The agreement should provide for pipeline patent protection for
commitments should be denied the benefits of the services agree-
ment. In addition to a substantial reduction in existing trade bar-
products subject to pre-market regulatory review. The rules regard-
riers, the Round should also establish rules to prevent countries
ing the use of compulsory licenses should be strengthened. And the
agreement should fully recognize contractual arrangements and
from erecting new ones.
Market access is also an important objective in the negotiations
transfers, and provide for comprehensive national treatment for
on agricultural trade, where we should seek to obtain meaningful
U.S. owners of intellectual property rights.
commitments that will expand export opportunities for U.S. pro-
Finally, in the textile and apparel negotiations, we believe that
ducers. In addition, we should aim for significant reductions in ex-
the United States should ensure that all countries provide equi-
port subsidies and in farm support programs that distort world
table access to their domestic markets and that measures are put
market prices by promoting overproduction and dumping of excess
in place to prevent such trade-distorting practices as trans-
production on the world market. We should also ensure that un-
shipment, false declarations, smuggling, and other forms of trade
justified sanitary and phytosanitary measures are disciplined,
rule circumvention. In addition, we believe strongly that any coun-
while preserving our right to maintain legitimate measures to pro-
try that does not adhere to the overall Uruguay Round agreement
tect health, safety, and the environment.
should not benefit from the phase-out of the Multifiber Arrange-
The government procurement negotiations also provide an oppor-
ment (MFA). We also urge you to take into consideration, in any
tunity for greater market access for U.S. firms. In addition to seek-
negotiations on textile and apparel tariff reductions, the significant
ing to reduce barriers in foreign markets, the United States should
trade-liberalizing effect of the phase-out of the MFA, as well as the
work to expand the coverage of the Government Procurement Code
impact on employment.
and improve the fairness and transparency of administrative proce-
We urge you to keep these objectives, along with those in the
dures.
1988 Trade Act, in mind as you work to conclude the Uruguay
The Committee continues to believe that the United States
Round by the end of this year. We look forward to working with
should seek a stronger GATT dispute settlement mechanism that
you as these negotiations move forward, and stand ready to provide
will ensure, within set timeframes, the prompt and effective en-
whatever assistance or advice you may find useful.
forcement of our rights. At the same time, we must retain the abil-
Sincerely,
ity to use our trade laws to remedy trade agreement violations and
DANIEL PATRICK MOYNIHAN,
address the unfair trading practices of our competitors. In that con-
Chairman.
nection, the Committee believes that dispute settlement panels
BoB PACKWOOD,
hearing challenges to our antidumping or countervailing duty ac-
Ranking Member.
tions should be precluded from substituting their own judgment for
the judgment of the U.S. International Trade Commission, the De-
III. VOTE OF THE COMMITTEE IN REPORTING THE BILL
partment of Commerce, or U.S. courts.
The Committee strongly believes that our antidumping and coun-
In compliance with section 133 of the Legislative Reorganization
tervailing duty laws must be preserved as effective tools for fight-
Act of 1946, the Committee states that S. 1003 was ordered favor-
ing unfair dumping and government subsidies. We are concerned,
ably reported, without amendment, by a vote of 18 to 2.
in particular, with the provisions of the Draft Final Act on stand-
ing, cumulation, cost and profit methodologies, de minimis excep-
6
7
IV. BUDGETARY IMPACT OF THE BILL
Because S. 1003 would extend the President's authority to imple-
In compliance with sections 308 and 403 of the Congressional
ment certain tariff changes, the bill would be subject to pay-as-you-
Budget Act of 1974, and paragraph 11(a) of rule XXVI of the Stand-
go procedures under Section 252 of the Balanced Budget and Emer-
ing Rules of the Senate, the following letter has been received from
gency Deficit Control Act of 1985. However, CBO would score the
the Congressional Budget Office regarding the budgetary impact of
effect of any such changes with the legislation implementing other
sections of the agreement. The pay-as-you-go effects of S. 1003 are
the bill:
shown in the table below.
U.S. CONGRESS,
CONGRESSIONAL BUDGET OFFICE,
PAY-AS-YOU-GO CONSIDERATIONS
Washington, DC, June 23, 1993.
[By fiscal year, in millions of dollars)
Hon. DANIEL PATRICK MOYNIHAN,
1993
1994
995
Chairman, Committee on Finance,
Changes in outlays
(1)
(1)
(1)
U.S. Senate, Washington, DC.
Changes in receipts
0
0
0
DEAR MR. CHAIRMAN: The Congressional Budget Office has re-
'Not applicable.
viewed S. 1003, as ordered reported by the Senate Committee on
Finance on June 23, 1993. CBO estimates that this bill would
If you wish further details, please feel free to contact me or your
staff may wish to contact John Stell at 226-2720.
cause no change in federal government receipts.
Before their expiration on June 1, 1993, sections 1102 and 1103
Sincerely,
of the Omnibus Trade and Competitiveness Act of 1988 granted the
ROBERT D. REISCHAUER,
Director.
President the authority to enter into multilateral and bilateral
trade agreements. The President could reduce certain tariffs by
V. REGULATORY IMPACT OF THE BILL
proclamation within specified bounds prescribed by the law, and for
provisions subject to Congressional approval, Congress could not
In compliance with paragraph 11(b) of rule XXVI of the Standing
amend implementing legislation once it had been formally intro-
Rules of the Senate, the Committee states that the bill will not sig-
duced. Furthermore, as long as the President met statutory re-
nificantly regulate any individuals or businesses, will not impact
quirements concerning Congressional consultation during the nego-
on the personal privacy of individuals, and will result in no signifi-
tiation process, Congress was required to act on the legislation fol-
cant additional paperwork.
lowing a strict timetable. This consideration process was known as
VI. CHANGES IN EXISTING LAW
the "fast track" procedures. S. 1003 would extend these provisions
for any trade agreement resulting from the Uruguay Round nego-
Pursuant to the requirements of paragraph 12 of rule XXVI of
tiations taking place under the General Agreement on Tariffs and
the Standing Rules of the Senate, changes in existing law made by
Trade.
the bill, S. 1003, as reported, are shown as follows (existing law
Because the fast track procedures have expired, Congress can
proposed to be omitted is enclosed in black brackets, new matter
amend any legislation implementing trade agreements entered into
is printed in italic, existing law in which no change is proposed is
since the expiration and faces no time constraints on the consider-
shown in roman):
ation. Secondly, the President no longer has the authority to imple-
ment certain tariff reductions of trade agreements without Con-
OMNIBUS TRADE AND COMPETITIVENESS ACT OF 1988
gressional approval. S. 1003 would make a special exception for the
*
*
*
Uruguay Round negotiations taking place under the auspices of the
General Agreement on Tariffs and Trade. The President could
SEC. 1102. TRADE AGREEMENT NEGOTIATING AUTHORITY.
enter into an agreement before April 16, 1994 (as long as he noti-
(a) AGREEMENTS REGARDING TARIFF BARRIERS.-
fied Congress of his intention 120 days beforehand), utilize his
proclamation authority for certain tariff reductions, and have the
(d) CONSULTATION WITH CONGRESS BEFORE AGREEMENTS EN-
legislation considered by Congress under the fast track procedures.
TERED INTO.-
Because any agreement resulting from the Uruguay Round nego-
(1) Before the President enters into any trade agreement
tiations would need legislation in addition to S. 1003 for implemen-
under subsection (b) or (c), the President shall consult with-
tation, the budgetary impact of the agreement would be scored
(A) the Committee on Ways and Means of the House of
with that other implementing legislation. Therefore, CBO scores no
Representatives and the Committee on Finance of the Sen-
change in revenues resulting from enactment of S. 1003. If, how-
ate; and
ever, CBO believed that the President would use the proclamation
(B) each other committee of the House and the Senate,
authority before the consideration of the legislation implementing
and each joint committee of the Congress, which has juris-
other parts of the agreement, CBO would score the effect of the
diction over legislation involving subject matters which
proclaimed tariff reductions with this bill.
would be affected by the trade agreement.
8
(2) The consultation under paragraph (1) shall include-
(A) the nature of the agreement;
(B) how to what extent the agreement will achieve the
applicable purposes, policies, and objectives of this title;
and
(C) all matters relating to the implementation of the
agreement under section 1103.
(3) If it is proposed to implement two or more trade agree-
ments in a single implementing bill under section 1103, the
consultation under paragraph (1) shall include the desirability
and feasibility of such proposed implementation.
(e) SPECIAL PROVISIONS REGARDING URUGUAY ROUND TRADE NE-
GOTIATIONS.-
(1) IN GENERAL.-Notwithstanding the time limitations in
subsections (a) and (b), if the Uruguay Round of multilateral
trade negotiations under the auspices of the General Agreement
on Tariffs and Trade has not resulted in trade agreements by
May 31, 1993, the President may, during the period after May
31, 1993, and before April 16, 1994, enter into, under sub-
sections (a) and (b), trade agreements resulting from such nego-
tiations.
(2) APPLICATION OF TARIFF PROCLAMATION AUTHORITY.-No
proclamation under subsection (a) to carry out the provisions
regarding tariff barriers of a trade agreement that is entered
into pursuant to paragraph (1) may take effect before the effec-
tive date of a bill that implements the provisions regarding non-
tariff barriers of a trade agreement that is entered into under
such paragraph.
(3) APPLICATION OF IMPLEMENTING AND "FAST TRACK" PROCE-
DURES.-Section 1103 applies to any trade agreement nego-
tiated under subsection (b) pursuant to paragraph (1), except
that-
(A) in applying subsection (a)(1)(A) of section 1103 to any
such agreement, the phrase "at least 120 calendar days be-
fore the day on which he enters into the trade agreement
(but not later than December 15, 1993)," shall be sub-
stituted for the phrase "at least 90 calendar days before the
day on which he enters into the trade agreement"; and
(B) no provision of subsection (b) of section 1103 other
than paragraph (1)(A) applies to any such agreement and
in applying such paragraph, "April 16, 1994;" shall be sub-
stituted for "June 1, 1991;".
(4) ADVISORY COMMITTEE REPORTS.-The report required
under section 135(e)(1) of the Trade Act of 1974 regarding any
trade agreement provided for under paragraph (1) shall be pro-
vided to the President, the Congress, and the United States
Trade Representative not later than 30 days after the date on
which the President notifies the Congress under section
1103(a)(1)(A) of his intention to enter into the agreement (but
before January 15, 1994).
*
*
*
*
*
102d Congress, 1st Session
House Document
X
THE EXTENSION OF FAST TRACK PROCEDURES
MESSAGE
FROM
THE PRESIDENT OF THE UNITED STATES
TRANSMITTING
A REPORT THAT INCLUDES HIS REQUEST FOR THE EXTENSION
OF FAST TRACK PROCEDURES FOR THE CONSIDERATION OF IM-
PLEMENTING LEGISLATION WITH RESPECT TO TRADE AGREE-
MENTS ENTERED INTO AFTER MAY 31, 1991, AND BEFORE JUNE
1, 1993, TOGETHER WITH A DESCRIPTION OF THE PROGRESS
MADE TO DATE IN BILATERAL AND MULTILATERAL TRADE NE-
GOTIATIONS, THE ANTICIPATED SCHEDULE FOR TRANSMITTING
SUCH AGREEMENTS TO THE CONGRESS, AND A STATEMENT OF
THE REASONS SUPPORTING HIS REQUEST FOR AN EXTENSION
OF FAST TRACK PROCEDURES
MARCH 4, 1991. Message and accompanying papers referred to the
Committees on Ways and Means and Rules, and ordered to be printed
U.S. GOVERNMENT PRINTING OFFICE
40-445
WASHINGTON : 1991
MAR 4 1991
and accompanying pepera
The
the Committee
==
AMD
TO THE CONGRESS OF THE UNITED STATES:
Rui- PR
Pursuant to section 1103 (b) (2) of the Omnibus Trade and
Competitiveness Act of 1988 (Public Law 100-418; 102 Stat. 1129),
I transmit herewith a report that includes my request for the
extension of fast track procedures for the consideration of
implementing legislation with respect to trade agreements entered
into after May 31, 1991, and before June 1, 1993, together with
a description of the progress made to date in bilateral and
multilateral trade negotiations, the anticipated schedule for
transmitting such agreements to the Congress, and a statement of
the reasons supporting my request for an extension of fast track
procedures.
The fast track mechanism has played a vital role in U.S.
trade policy for many years. It strengthens the hand of our
trade negotiators and preserves the important role of the
Congress in the shaping of U.S. trade policy. The continued
availability of the fast track procedures over the next 2 years
will ensure that our negotiators can bring to the Congress for
its consideration trade agreements that will truly enhance the
ability of the United States to compete internationally.
At a time when world events have reconfirmed the importance
of U.S. leadership in multilateral efforts, maintaining fast
track is essential to our leadership in the global trading
system.
My request reflects my strong desire to continue the
partnership between the Congress and the executive branch that
the fast track represents. This partnership is essential if we
are successfully to meet the world's growing economic challenges
into the next century.
Gg
Bl
THE WHITE HOUSE,
March 1, 1991.
(1)
3
2
FOREWORD
The Fast Track and Why It Is Essential
For the better part of this century, Congress and the
Executive have recognized that the negotiation and implementation
of trade agreements require special cooperation between the two
Branches. In the aftermath of the record-high rates of the
Smoot-Hawley Tariff Act of 1930 and the Depression that they
helped fuel, both Congress and the Executive came to realize that
REPORT TO THE CONGRESS
only by working closely together in the exercise of their
ON THE EXTENSION OF FAST TRACK PROCEDURES
constitutional responsibilities could the two Branches
effectively bring down foreign barriers to our trade and open
opportunities for U.S. products and services in the international
Pursuant to Section 1103 (b)
marketplace.
of the
Omnibus Trade and Competitiveness Act of 1988
This new partnership was reflected in the Reciprocal Trade
Agreements Act of 1934, which gave the President authority not
only to conclude tariff-cutting agreements but also to implement
them by proclamation without the need for subsequent legislation.
During the following years, when the principal barriers to trade
were tariffs, this arrangement proved highly successful and was
responsible for the tariff reductions that promoted post-World
War II economic growth, particularly in successive rounds of
multilateral tariff-cutting negotiations.
As countries began to rely less on tariff protection and
more on non-tariff trade barriers, the scope of trade
negotiations broadened, and the "fast track" procedures were
created by Congress as the necessary complement to this broader
trade agenda.
Fast track procedures for approval of trade agreements were
included by Congress in trade legislation in 1974, 1979 and again
in the Omnibus Trade and Competitiveness Act of 1988 ("1988
Submitted by the President
Act"). While giving Congress the assurance of meaningful
participation throughout the negotiating process, fast track also
March 1, 1991
provides two guarantees essential to the successful negotiation
of trade agreements: (1) a vote on implementing legislation
within a fixed period of time, and (2) no amendments to that
legislation.
These procedures reflect an understanding that trade
agreements, in which results in one area are often linked to
results in others, are particularly vulnerable to multiple
amendments that, while possibly small in themselves, could
unravel entire agreements. Whether the balance of benefits
contained in any trade agreement is in the overall interest of
the United States can only be determined by looking at the whole
package.
1
4
5
Through the fast track, Congress has given the President the
legislation are still not acceptable, they can be rejected by
same bargaining power possessed by his counterparts: the ability
majority vote of either house. In fact, as a result of the
to assure his negotiating partners that the agreement reached
extensive consultations with Congress and the private sector, the
internationally would be the agreement voted on at home. Without
agreements that have been implemented under fast track procedures
fast track, the President cannot give his negotiating partners
enjoyed widespread support when they were presented to Congress.
that assurance. Without that assurance, foreign governments are
reluctant to negotiate with the United States and will not make
We find ourselves today engaged in bilateral and
the tough concessions necessary to reach agreements the United
multilateral trade initiatives that hold unprecedented promise
States would be willing to sign. No negotiating partner will
for the advancement of U.S. economic objectives. With such
give its bottom line knowing that the bargain could be re-opened.
initiatives in the balance, now is not the time to dissolve a
partnership that has endured for almost sixty years.
On the basis of fast track procedures, the United States has
negotiated and implemented three remarkable trade agreements,
Continuing Fast Track is Essential to Securing Economic Gains
each of which was approved by an overwhelming majority in both
houses of Congress. These agreements -- the results of the Tokyo
In incorporating the fast track in the 1988 Act, Congress
Round of GATT negotiations in 1979, the free-trade agreement
expressly contemplated that on extension of the provision beyond
("FTA") with Israel in 1985, and the FTA with Canada in 1988 --
June 1991 might be necessary and appropriate in order for the
have reduced barriers to trade and provided a powerful engine for
President to pursue effectively the trade policy objectives set
economic growth in the United States and worldwide.
out in the law.
The United States has much to gain through trade agreements
The continued availability of fast track procedures over the
that open markets and provide rules for free and fair trade.
next two years -- during which we expect to complete the Uruguay
Maintaining the fast track will preserve our ability to continue
Round of multilateral negotiations, negotiate a North American
efforts to liberalize trade and open markets through the GATT,
Free Trade Agreement with Mexico and Canada, and pursue the trade
through other multilateral agreements, and through bilateral
objectives of the Enterprise for the Americas Initiative -- will
agreements.
enable our negotiators to bring to Congress for its consideration
trade agreements that will enhance the ability of the United
Extension of Fast Track Continues a Cooperative Relationship
States to compete internationally. Supporting fast track now
will allow these important negotiations to go forward without in
Fast track procedures preserve Congress's role during the
any way detracting from Congress' ability to assess each
negotiation, approval and implementation of trade agreements. To
agreement on its merits when presented for approval.
ensure congressional and private sector input, the fast track
statute contains extensive notification and consultation
The Uruguay Round. These complex negotiations with 107
requirements. At each step along the way, from initiation
other nations (many of which are not fully integrated into the
through implementation, Congress is an active partner.
multilateral trading system) offer rich opportunities to break
down trade barriers and expand the scope of international trade
To use the fast track for any agreement, bilateral or
rules.
multilateral, the President must notify Congress 90 calendar days
before signature. By the time the President gives his 90-day
o
Since their inception in 1986, the Uruguay Round
notification, our many private sector advisory committees must
negotiations have been conducted in fifteen areas. Our
report their views on the agreement both to Congress and the
objectives include more open markets, internationally
President. For bilateral agreements, Congress must be given
agreed rules in areas not previously covered by
advance notice of the negotiations; during the following 60
multilateral agreements (services, investment,
legislative working days, either the Senate Finance or House Ways
intellectual property rights), and institutional
& Means Committee can vote to deny fast track treatment.
improvements in the GATT. The negotiations have been
difficult, and important issues remain, but there has
Once an agreement is reached, Congress and the
been significant progress overall toward our
Administration work in close consultation to formulate
objectives. That progress should not be abandoned.
implementing legislation. The process has involved the full
participation of all committees of jurisdiction, and not only
The United States had hoped to conclude the Uruguay
those committees traditionally consulted in setting trade
Round last December at a ministerial level meeting in
negotiating objectives. If the agreement and its implementing
Brussels. However, the status of the negotiations on
11
111
6
7
several subjects at that time did not warrant
conclusion -- particularly on agriculture. The
The United States has an enormous stake in the future of the
unwillingness of the European Community ("EC"), as well
global trading system. Exports have become a vital source of
as Japan and Korea, to accept a framework for
strength to the U.S. economy. In 1990, the nearly 8.5 percent
agricultural reform impeded progress in the
growth in U.S. exports accounted for 88 percent of U.S. GNP
negotiations in all areas.
growth. Since 1986, expanded exports have accounted for over 40
percent of the growth in U.S. GNP. In order to sustain the
o
We are encouraged by a recent statement of GATT
expansion of exports and consequent growth, we must continue our
Director-General Arthur Dunkel that all participants
efforts to open world markets. We must maintain our active
have now agreed to negotiate specific binding
leadership role. Without an extension of fast track, those
commitments in each of the key areas of agricultural
efforts and that role are placed in jeopardy.
reform, thus clearing the way for the resumption of
negotiations. However, important differences in
Preserving fast track procedures -- and the partnership
agriculture and other areas remain. Much hard
between Congress and the Executive Branch which fast track
bargaining lies ahead.
represents -- will keep on course our joint efforts to liberalize
trade and open markets through the initiatives described above
O
The United States refused to accept a deficient Uruguay
and through other multilateral and bilateral agreements. No
Round package in Brussels. Our high standards have not
country stands to gain more from those efforts than the United
changed. Although ultimate success in the Uruguay
States.
Round cannot be guaranteed, we believe the United
States should continue negotiations because a
As we approach the beginning of a new century, we should not
successful Round is overwhelmingly in our long-term
hesitate to pursue the opportunities for economic growth and
economic interests.
prosperity presented by successful trade negotiations. In order
to turn those opportunities into realities, Congress and the
North American FTA. We have a historic opportunity to
Executive must continue to work together in the manner envisioned
achieve a North American Free Trade Agreement ("NAFTA") with
by the fast track.
Canada and Mexico. The Mexican Government has been pursuing a
dramatic opening of its trading regime and has introduced market-
oriented domestic reforms that benefit both Mexico and the United
States. Building on those reforms and on the existing FTA we
have with Canada, we can create a NAFTA that encompasses some 360
million people with almost $6 trillion in output. A
comprehensive NAFTA will create growth and better jobs in all
three countries, and will make us more competitive in the global
marketplace.
Extension of fast track will be essential for these
negotiations, which are expected to begin in late Spring.
Enterprise for the Americas Initiative. An extension of
fast track will also enable the United States to take steps in
the next two years toward fulfillment of the trade objectives of
the Enterprise for the Americas Initiative (EAI), announced in
June 1990. Although it is likely that few Latin American nations
will be in a position to enter into FTA negotiations with the
United States before June 1993, the United States must continue
to be able to respond to the increasing pace of economic
liberalization in the region.
V
26 International lawyer 183 (1992)
RECENT DEVELOPMENTS
ALAN F. HOLMER*
JUDITH H. BELLO**
U.S. Trade and Policy Series No. 20
The Fast Track Debate: A
Prescription for Pragmatism
In June 1990, Presidents George Bush and Carlos Salinas de Gortari endorsed
the negotiation of a U.S.-Mexico free-trade agreement. In December 1990, trade
ministers from over 100 nations failed to reach agreement in the long-running
Uruguay Round multilateral trade negotiations. In February 1991, Presidents
Bush and Salinas and Canadian Prime Minister Brian Mulroney announced their
intention to negotiate a trilateral North American Free Trade Agreement
(NAFTA).
To continue the multilateral talks and to begin the NAFTA negotiations. Pres-
ident Bush on March 1, 1991, formally requested a two-year extension of "fast
track" procedures. This request unleashed a torrent of intense lobbying and
triggered a spirited debate in the Congress. Although much opposition to the
extension focused on certain industries that would likely be "losers" in free
trade with Mexico, the fast track procedure itself provoked concern and exten-
sive comment.
This article describes the fast track procedures and their previous applications.
It then summarizes the developments in the Uruguay Round multilateral trade
negotiations and with respect to Mexico (and Canada) that required extension of
*Partner in the Washington, D.C., office of Sidley & Austin. Mr. Holmer previously served as
Deputy United States Trade Representative.
**Partner in the Washington, D.C., office of Sidley & Austin. Ms. Bello was previously General
Counsel to the United States Trade Representative.
183
184
THE INTERNATIONAL LAWYER
FAST TRACK DEBATE
185
the fast track. Next, it outlines the concerns expressed by many in the Congress
Finance and House Ways and Means Committees of his intention to enter
and relates the President's response to those concerns. Finally, this article ana-
into negotiations;⁹
lyzes the debate in the Congress over the fast track extension and, in light of this
the President notified the House of Representatives and Senate of his in-
debate, offers a prescription for an effective executive-congressional partnership
tention to enter into the agreement at least ninety calendar days before the
in trade negotiations.
day on which he entered into the agreement;¹⁰
after entering into the agreement, the President submitted to the House and
I. The Fast Track Procedures
Senate the agreement, a draft implementing bill, a statement of adminis-
Under the U.S. Constitution the President is empowered to conduct the foreign
trative action proposed to implement the agreement, and detailed supporting
affairs of the United States. 1 Therefore, the President does not need statutory
information, 11 including notably a statement explaining how the agreement
authority to negotiate with foreign countries, including trade negotiations. How-
makes progress in achieving the negotiating objectives established in sec-
tion 1101; 12 and
ever, the Congress is empowered to make the laws in general² and to regulate
trade with foreign nations in particular. 3 A trade agreement whose implementa-
both the House and the Senate did not separately agree to procedural dis-
tion requires changes in U.S. domestic law therefore falls squarely within the
approval resolutions within any sixty-day period, making legislation to
implement a trade agreement ineligible for fast track procedures on the basis
jurisdiction of the Congress.
The fast track is a procedure devised in the Trade Act of 1974⁴ to establish a
of the President's failure or refusal to consult with Congress on trade ne-
congressional-executive partnership for trade negotiations. It enhances the Pres-
gotiations.
13
ident's credibility in trade negotiations, in particular by increasing the likelihood
The 1988 Act further provided an opportunity to extend the above-described
that Congress will implement the trade agreements that he negotiates with advice
deadlines to cover any trade agreement entered into after May 31, 1991, and
from and in consultation with the Congress. Fast track authority expired in
before June 1, 1993, if and only if:
January 1988, but was revived in the Omnibus Trade and Competitiveness Act
the President requested such extension by March 1, 1991;
of 1988 (1988 Act). 5 Sections 1102 and 1103 of the 1988 Act⁶ provide the
the President submitted to Congress a report: (1) describing all the trade
authority and set forth the conditions for the application of the fast track proce-
agreements that have been negotiated under section 1102(b) or (c) and when
dures provided in section 151 of the Trade Act of 1974.⁷
they will be submitted to Congress for approval,14 (2) describing the
Basically, those procedures have been applied to any legislation implementing
progress made to date in the remaining negotiations, (3) stating that such
a trade agreement entered into under section 1102(b) or (c) of the 1988 Act8
progress justifies continuation of the negotiations, and (4) stating the rea-
sons why the extension is needed to complete the negotiations;
before June 1, 1991, provided:
in the case of bilateral agreements, the foreign country requested the nego-
by March 1, 1991, the private sector Advisory Committee for Trade Policy
tiation and the President provided at least sixty days' notice to the Senate
and Negotiations submitted a report to Congress on its views regarding the
1. United States V. Curtiss-Wright Export Corp., 299 U.S. 304, 319 (1936).
9. Id. § 1102(c)(3)(B)-(C), 19 U.S.C. § 2902(c)(3)(B)-(C).
2. U.S. CONST. art. I, § 8, cl. 18.
10. Id. § 1103(a)(1)(A), 19 U.S.C. § 2903(a)(1)(A).
3. Id. cl. 3.
11. Id. § 1103(a)(2), 19 U.S.C. § 2903(a)(2). The required information includes: (1) an expla-
4. Trade Act of 1974, §§ 101-102. 151, Pub. L. No. 93-618, 88 Stat. 1978, 1982, 2001 (1975)
nation how the implementing bill and proposed administrative action will affect existing law: (2) a
(codified at 19 U.S.C. §§ 2101, 2111-2112, 2191) (1988) [hereinafter 1974 Act]. For an excellent
statement that the agreement makes progress in achieving the applicable purposes, policies. and
overview of the fast track, see Harold H. Koh. Congressional Controls on Presidential Trade
objectives set forth in § 1101 of the 1988 Act, 19 U.S.C. $ 2901: (3) a statement of the President's
Policymaking After I.N.S. V. Chadha, 18 N.Y.U. J. INT'L L. & POL. 1191 (1986); Koh, History of
reasons regarding how the agreement makes such progress (as well as the extent to which the
the Fast-Track Approval Mechanism, in JUDITH H. BELLO & ALAN F. HOLMER, GUIDE TO THE
agreement does not do so), how it serves the interests of U.S. commerce, and why the implementing
U.S.-CANADA FREE-TRADE AGREEMENT 1 (1990).
bill and proposed administrative action are required or appropriate to carry out the agreement: (4) a
5. Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418, 102 Stat. 1107
statement describing the efforts of the President to obtain international exchange rate equilibrium and
(codified as amended in scattered sections of 19 U.S.C. (1990)) [hereinafter 1988 Act].
any effect of the agreement on increased international monetary stability; and (5) a statement relating
6. Id. §§ 1102-1103, 19 U.S.C. §§ 2902-2903.
to noncommercial state trading enterprises.
7. 1974 Act § 151, 19 U.S.C. $ 2191.
12. Id. § 1101, 19 U.S.C. § 2901.
8. Section 1102(b) concerns agreements (other than bilateral agreements) regarding nontariff
13. Id. § 1103(c), 19 U.S.C. § 2903(c).
barriers. Section 1102(c) deals with bilateral agreements regarding tariff and nontariff barriers. Id.
14. Presumably, the President would indicate that he planned to submit all Uruguay Round
§ 1102(b)-(c), 19 U.S.C. § 2902(b)-(c). Section 1102(a) gives the President authority to proclaim
agreements as a package, even if some were already concluded. In fact, it seems unlikely that any
reductions in U.S. tariffs, subject to specified limits. Id. § 1102(a), 19 U.S.C. § 2902(a).
agreements will be firmly concluded until they all are.
VOL. 26, NO. 1
SPRING 1992
FAST TRACK DEBATE
187
186
THE INTERNATIONAL LAWYER
progress made in the negotiations and the reasons for its views regarding
The next two uses of the fast track were to implement bilateral rather than
whether the requested extension should be approved or disapproved; and
multilateral agreements. First, the Trade and Tariff Act of 1984²² outlined ob-
neither the House nor the Senate adopted an extension disapproval resolu-
jectives for, and authorized the negotiation of, a free trade agreement with
tion before June 1, 1991 15
Israel. 25 With advice from the Congress and the private sector, the administration
An extension disapproval resolution could be introduced by any member of Con-
concluded those negotiations the following year and then cooperatively drafted
gress. 16 Any such resolution would be referred to the Committee on Finance in the
an implementing bill with the Congress. The House passed the bill submitted by
Senate or, in the House, to the Committees on Ways and Means and Rules. Impor-
the President following this joint collaboration by a vote of 422-0, 26 and the
tantly, there is no automatic discharge provision -meaning that a resolution re-
Senate passed the bill by a voice vote. 27 The bill was then enacted as the United
ferred to such committees could simply languish there without further action.
States-Israel Free Trade Area Implementation Act of 1985. 28
Second, in response to Prime Minister Brian Mulroney's request in 1985. 29
II. The Previous Applications of Fast Track Procedures
and with the advice of the Congress and the private sector, the United States and
Canada negotiated a free trade agreement signed by the President and the Prime
As noted above, the United States Congress established the fast track in the
Minister on January 2, 1988. 30 While the administration felt it had consulted the
Trade Act of 1974, 18 the central purpose of which was to facilitate the seventh
Congress regularly and in detail, 31 some in the Congress strongly disagreed. 32
or Tokyo Round of multilateral trade negotiations under the auspices of the
Nonetheless, the congressional leadership entered into an agreement with Sec-
General Agreement on Tariffs and Trade (GATT). 19 With advice from the Con-
retary of the Treasury James A. Baker III and U.S. Trade Representative Clayton
gress and the private sector, those negotiations were finally concluded in April
Yeutter concerning the legislation to implement the Canada agreement.
1979 when the United States and other GATT trading partners signed various
The administration officials agreed to draft the bill cooperatively with the
codes and framework agreements amending the GATT for their signatories. 20 In
Congress. Moreover, they agreed to accept the provisions worked out in this
accordance with the fast track procedures, implementing legislation was coop-
consultative process, provided: (1) they were consistent with the agreement and
eratively drafted by the executive branch (led by the Office of the then Special
its implementation, and (2) were appropriate to carrying out its fundamental
Trade Representative) and the Congress (led by the Senate Finance and House
purposes. For their part, the congressional officials agreed to vote on the legis-
Ways and Means Committees). The President then submitted the bill already
lation submitted by the President in 1988, and to use their best efforts to expedite
agreed upon, which was passed by the House (395-7)²¹ and Senate (90-4)² and
the process and vote before the August recess, if possible. 33 Under these pro-
enacted into law as the Trade Agreements Act of 1979.
24. Trade and Tariff Act of 1984, Pub. L. No. 98-573, 98 Stat. 2948 (codified as amended in
15. 1988 Act § 1103(b)(1)(B). 19 U.S.C. § 2903(b)(1)(B). Moreover, any extension disapproval
scattered sections of 7, 18, 19, 22, 26, 28, 29, 31, 49 and 50 U.S.C. (1988)).
resolution introduced in either house must be reported out of the committee to which it is referred (in
25. Id., tit. IV (codified as amended in scattered sections of 19 U.S.C. (1988)).
the House, the Rules and the Ways and Means Committees; in the Senate, the Committee on Finance)
26. 131 CONG. REC. 10631 (1985).
by no later than May 15, 1991.
27. Id. at 13574.
16. Id. § 1103(b)(5)(B)(i), 19 U.S.C. § 2903(b)(5)(B)(i).
28. United States-Israel Free Trade Area Implementation Act of 1985, Pub. L. No. 99-47, 99
17. Section 1103(5)(C) of the 1988 Act (19 U.S.C. $ 2903(5)(C)) makes only § 152(d)-(e)
Stat. 82 (codified at 19 U.S.C. § 2112 note (1988)).
(19 U.S.C. § 2192(d)-(e)) relating to floor consideration, applicable to extension disapproval reso-
29. Letter from Prime Minister Mulroney to President Reagan (Oct. 1, 1985), reprinted LPI
lutions, and does not make applicable § 152(c) (19 U.S.C. § 2192(c)) on discharge of a resolution
BELLO & HOLMER, supra note 4, app. at A-1.
from a committee.
30. See generally id.
18. See supra note 4 and accompanying text.
31. See, e.g., the list of consultations between congressional committees and the executive
19. General Agreement on Tariffs and Trade (GATT), opened for signature Oct. 30, 1947, 61
branch prepared by the Office of the U.S. Trade Representative in 1987. reprinted in id. app. at A-6.
Stat. (pts. 5 & 6) A3, 55 U.N.T.S. 187.
32. For example, Senator Max S. Baucus (D-Mont.) wrote that "[t]he Reagan Administration
20. E.g., Agreement on Interpretation of Article VI of the General Agreement on Tariffs and
consultations with Congress concerning the FTA were reminiscent of the academic strategy of the
Trade, Apr. 12, 1979, 31 U.S.T. 4919, T.I.A.S. No. 9650; International Dairy Agreement, Apr. 12,
average college student. During the term, important assignments were ignored or halfheartedly
1979, 31 U.S.T. 679, T.I.A.S. No. 9623; Agreement on Trade in Civil Aircraft, Apr. 12, 1979, 31
carried out. But, with failure close at hand. they were able to study all night to pass the final." Id.
U.S.T. 619, T.I.A.S. No. 9620; Agreement on Interpretation and Application of Articles VI, XVI
at 88. Several years later, some members would still recall what. in their view, had been inadequate
and XXIII of the General Agreement on Tariffs and Trade, Apr. 12, 1979, 31 U.S.T. 513, T.I.A.S.
consultations regarding the FTA. See, e.g., 137 CONG. REC. H3500 (daily ed. May 23, 1991)
No. 9619; Agreement on Technical Barriers to Trade, Apr. 12, 1979, 31 U.S.T. 405, T.I.A.S.
(statements by Rep. Donald J. Pease (D-Ohio) during the fast track extension debate); id. at H3608
No. 9616.
(debate statements by Rep. Richard A. Gephardt (D-Mo.)); id. at S6552 (debate statements by Sen.
21. 125 CONG. REC. 18017 (1979).
Lloyd Bentsen (D-Tex.)).
22. Id. at 20194.
33. Exchange of letters between Secretary of the Treasury James A. Baker III and Ambassador
23. Trade Agreements Act of 1979, Pub. L. No. 96-39, 93 Stat. 144 (codified as amended in
Clayton Yeutter and the Hons. Jim Wright, Robert Byrd, Dan Rostenkowski, and Lloyd Bentsen
scattered sections of 5, 19, 26 and 31 U.S.C. (1988)).
(Feb. 17. 1988), reprinted in BELLO & HOLMER, supra note 4, app. at A-10, 11.
SPRING 1992
VOL. 26, NO. 1
188
THE INTERNATIONAL LAWYER
FAST TRACK DEBATE
159
cedures, the administration and Congress again cooperatively drafted legislation
June 10, 1991. 39 At their direction, trade ministers Carla A. Hills and Juime
that the President then submitted to the Congress. As passed by the House
Serra Puche consulted, and in August 1990 recommended the launch of nego-
(366-40)³⁴ and Senate (83-9), 35 that bill was enacted as the United States-Canada
tiations. On September 25, 1990, President Bush formally notified the (Con-
Free-Trade Agreement Implementation Act of 1988. 36
gress of his intention to negotiate a free trade agreement with Mexico. In Feb-
ruary 1991 the U.S. and Mexican presidents and Canadian Prime Minister E-man
III. Developments in the Uruguay Round and with
Mulroney announced that Canada would participate too, making it a trilaneral
Mexico Requiring Extension of the Fast Track
North American Free Trade Agreement negotiation. On February 5. 1391.
President Bush formally notified the Congress of his intention of negotiating 2
In 1982 the United States sought to capitalize on the Tokyo Round momentum
free trade agreement with Canada as well as Mexico. 42
and generate support for a new round of multilateral trade negotiations. At the
Also in February 1991 all Uruguay Round participants (including the Eare-
GATT ministerial meeting the United States tried, but failed in this effort. The
pean Communities) agreed to negotiate agricultural subsidy reductions in each of
resulting disappointment helped fuel U.S. resort to bilateral and plurilateral
the three major areas. 43 Negotiations in Geneva could then resume. However.
initiatives, notably the free trade negotiations with Israel (1984-85) and Canada
under the U.S. fast track, time had run out.
(1985-87). Nonetheless, the U.S. remained committed to the GATT and its
further liberalization. Finally in 1986, at another more successful ministerial
meeting in Punta del Este, Uruguay, an eighth round of multilateral trade nego-
IV. The President's Extension Request and
tiations was finally launched, scheduled to be concluded within four years. 37
Response to Congressional Concerns
A midterm review in Montreal in December 1988 involved trade ministers in
The fast track was due to expire on March 1, 1991, the deadline for the
their staffs' negotiations, crystallized issues, and mapped out a timetable and
President to notify the Congress of his intention to enter into any trade agree-
direction for final negotiations. 38 In the spring of 1990, U.S. trade negotiators
ment. The President had high hopes for both a NAFTA and a successful con-
planned their final assault aimed at a successful conclusion in December 1990.
clusion to the Round, but nothing in hand. To preserve the fast track option for
They planned to use interim events-a trade summit at Puerto Vallarta, Mexico,
these negotiations (as well as any possible agreement resulting from the Enter-
in April, the G-7 Economic Summit in Houston in early July, and a meeting of
prise for the Americas Initiative), the President requested an extension of the fast
the GATT Trade Negotiations Committee in late July-to create enough crises to
track on March 1, 1991. 44 He submitted to the Congress all necessary supporting
compel reluctant trading partners to make the painful concessions needed to
documents, including a voluminous report on progress in the Uruguay Round
conclude the Round successfully.
multilateral trade negotiations and a report of the Advisory Committee on
However, the Mexican meeting did not jump-start serious negotiations; in
Houston the European Communities appeared to agree, but later did not agree,
to meaningful agricultural reform; and the Trade Negotiations Committee meet-
39. The White House, Office of the Press Secretary, Joint Statement by the Presidents of Menico
ing did not resolve impasses or generate momentum. At the Brussels meeting in
and the United States on Negotiation of a Free Trade Agreement (June 11, 1990).
December 1990, the talks broke down, principally over the continued impasse
40. OFFICE OF THE U.S. TRADE REPRESENTATIVE. JOINT REPORT BY THE U.S. TRADE REPRESEN-
TATIVE AND THE SECRETARY OF COMMERCE AND INDUSTRIAL DEVELOPMENT OF MEXICO TO THE Pass-
regarding, in particular, the use of subsidies. The meeting was adjourned sine
IDENT OF THE UNITED STATES OF AMERICA AND THE PRESIDENT OF THE UNITED MEXICAN STATES IN
die, without a certainty of resumption.
BILATERAL U.S.-MEXICAN TRADE (Aug. 8. 1990).
Meanwhile, the United States did not put all its trade-liberalizing eggs in one
41. The White House, Office of the Press Secretary, Text of a Letter from the President the
Chairman of the Senate Committee on Finance and the Chairman of the House Committee on Ways
basket. While the GATT remains the cornerstone of U.S. trade policy, Presidents
and Means (Sept. 25, 1990).
Bush and Salinas announced their intention to pursue a free trade agreement on
42. Letter from President Bush to Dan Rostenkowski, Chairman, Committee on Way: and
Means (Feb. 5, 1991).
43. Specifically, participants agreed "to conduct [agricultura]] negotiations to achieve specific
34. 134 CONG. REC. 21295 (1988).
binding commitments on each of the following areas: domestic support, market access. and export
35. Id. at 24444.
competition
Proposal by the Chairman at Official Level, Trade Negotiations Committee
36. United States-Canada Free-Trade Agreement Implementation Act of 1988, Pub. L. No.
Programme of Work (Feb. 26, 1991).
100-449, 102 Stat. 1851 (codified at 19 U.S.C. § 2112 note (1990)).
44. Letter from President Bush to the Congress (March 1, 1991) (available from the White
House, Office of the Press Secretary).
37. GATT, Ministerial Declaration on the Uruguay Round (Sept. 20, 1986).
45. REPORT TO THE CONGRESS ON THE EXTENSION OF FAST TRACK PROCEDURES PURSUANT TO
38. GATT Secretariat, Multilateral Trade Negotiations, Trade Negotiations Committee, Trade
SECTION 1103(B) OF THE OMNIBUS TRADE AND COMPETITIVENESS ACT OF 1988, H.R. Doc. No. 51.
Negotiations Committee Meeting at Ministerial Level (Dec. 9, 1988) (restricted document).
102d Cong., 1st Sess. (1991).
VOL. 26, NO. 1
SPRING 992
190
THE INTERNATIONAL LAWYER
FAST TRACK DEBATE
19:
Trade Policy and Negotiations endorsing the extension of fast track, continuation
described various economic studies demonstrating that a free-trade agree-
of the Round, and the NAFTA initiative. 46
ment with Mexico would provide economic benefits to the United States:
If the President's request had concerned use of the fast track solely to imple-
outlined the administration's plan to conduct separate, but parallel negoti-
ment any Uruguay Round agreements, the reaction in the Congress might have
ations with Mexico on environmental issues; and
been muted. His proposal of a free trade agreement with Mexico, however,
indicated how the United States and Mexico proposed to consult on labor-
provoked strong concerns in the Congress and among some interest groups in the
related issues. 51
private sector. In particular, organized labor strongly opposed the fast track
In addition to this eighty-six-page response, administration witnesses testified
extension for fear of losing American jobs to Mexico because of lower labor rates
before numerous committees in support of the President's request for extension
and less stringent (and less stringently enforced) Mexican standards. Many en-
of the fast track. They argued that:
vironmental groups echoed strong concerns as well, fearing protection of the
An extension was essential to continued U.S. economic leadership.
environment would be eroded.
Without fast track authority, the Office of the U.S. Trade Representative
Crystallizing such concerns, Senate Finance and House Ways and Means
(USTR) would be out of business; USTR could not engage in trade liber-
Committee Chairmen Lloyd Bentsen and Dan Rostenkowski wrote President
alizing negotiations without the fast track. Congress had to decide whether
Bush on March 7.47 The chairmen's letter asked the President to indicate, by no
or not it wanted USTR to negotiate trade liberalizing agreements. If it dod.
later than May 1, his plans with respect to labor and environmental issues in
it was essential it give USTR the fast track.
connection with the Mexican negotiations. On March 27, House Majority
The vote on the fast track extension was not a vote on any result and did not
Leader Richard A. Gephardt also wrote the President, asking for the adminis-
lock any member in; it was only a procedural vote.
tration's plans regarding wage disparity, rules of origin, environmental protec-
The fast track was neither a fast, nor a narrow, track; the administration was
tion, health and safety standards, labor mobility, worker and human rights, an
not trying to rush anything through. Congress had ample time for input in
escape clause, and worker adjustment programs.
the negotiations and review of the final agreement.
The administration responded to the committee chairmen and majority leader
The administration would honor its end of the bargain: Congress would
on May 1. In his letter the President first made a personal commitment to "close
receive detailed consultations, and the administration would write the im-
bipartisan cooperation in the negotiations and beyond. Second, he agreed to
plementing legislation with Congress. Members could vote against the im-
work with the Congress to provide adequate worker adjustment assistance.
plementing legislation the President submitted if they believed the agree-
Third, he agreed to develop and implement an expanded program of U.S.-
ment he negotiated was unacceptable. 52
Mexico environmental cooperation parallel to the NAFTA talks. Fourth, he also
Meanwhile, fast track extension disapproval resolutions were introduced and
agreed to work through new initiatives with Mexico to expand bilateral labor
reported out of committees in both the House of Representatives and the Senate.
cooperation.
50
The House resolution, H. Res. 101, was sponsored by Representative Byron
Submitted in support of the President's letter, numerous memoranda:
Dorgan (D-S.D.); the identical Senate measure, S. Res. 78, was sponsored by
described Mexico's record on labor and environmental issues, to correct any
Senator Ernest L. Hollings (D-S.C.). The Dorgan resolution was reported out of
misunderstandings about Mexico's commitments to worker rights and ad-
the Ways and Means Committee unfavorably on a vote of 27-9 on May 14 53
equate protection of the environment;
The Hollings resolution likewise was reported unfavorably out of the Finance
Committee on a vote of 15-3 on May 14. 54 With the receipt of the administra-
46. ADVISORY COMM. FOR TRADE POLICY AND NEGOTIATIONS, REPORT TO THE U.S. CONGRESS
CONCERNING THE PRESIDENT'S REQUEST FOR THE EXTENSION OF FAST TRACK PROCEDURES IMPLEMENT-
51. Id. at 4-86.
ING LEGISLATION FOR TRADE AGREEMENTS (March 1991).
52. See, e.g., statements of Ambassador Carla A. Hills before the Senate Comm. on Finance
47. Letter to the President from Senator Lloyd Bentsen, Chairman, Committee on Finance, and
(Feb. 6. 1991); Subcomm. on Trade, House Comm. on Ways and Means (Feb. 20, 1991): House
Representative Dan Rostenkowski, Chairman, Committee on Ways and Means (March 7, 1991),
Comm. on Ways and Means (March 12, 1991); House Comm. on Agriculture (April 24. 1991
reprinted in COMMITTEE ON WAYS AND MEANS, EXCHANGE OF LETTERS ON ISSUES CONCERNING THE
53. H.R. REP. No. 63, pt. 2, 102d Cong., 1st Sess., at 9 (1991).
NEGOTIATION OF A NORTH AMERICAN FREE TRADE AGREEMENT, 102d Cong., 1st Sess. app. at 87
54. S. REP. No. 56, 102d Cong., 1st Sess. 6 (1991). Both Chairmen Rostenkowski and Bentsen
(Comm. Print 1991) [hereinafter EXCHANGE OF LETTERS].
elected to report the resolutions out for floor action, rather than keep them bottled up in committe.
48. Id. at 89-98.
even though the fast track procedures do not provide for the automatic discharge of a resolution from
49. Id. at 2.
committee. See supra notes 4, 18 and accompanying text; see also 137 CONG. REC. S6550-54 (daily
50. Id.
ed. May 23, 1991) (comments of Chairman Bentsen).
VOL. 26, NO. 1
SPRING 1992
FAST TRACK DEBATE
193
192
THE INTERNATIONAL LAWYER
tion's response, a torrent of lobbying by various interest groups, 55 and the
expressed was institutional-of the executive branch by the Congress. For ex-
reports of the Finance and Ways and Means Committees, the congressional
ample, one congressman said: "Trade negotiators ask you to just trust them. The
debate began.
Tokyo Round experience [led by the Democratic Carter administration) shows
they were willing to lie massively to get a deal. And they want us to respect ther
V. The Congressional Debate over Extension of the Fast Track
in the morning and trust them again. In addition to the Tokyo Round. the use
of fast track with respect to the more recent free-trade agreement with Canada
Much of the debate in the Congress over the President's fast track extension
was criticized. Congressman John Dingell (D-Mich.) spoke of what he charac-
request centered on the substance of the negotiations concerned, in particular the
terized as the administration's broken promises regarding the FTA;67 Majority
NAFTA talks with Mexico. However, a considerable portion of the debate
Leader Richard Gephardt said that the public debate of that agreement prior to it:
addressed the fast track procedure itself. A few members suggested that the fast
conclusion was "almost nonexistent.
track procedure was unconstitutional. 57 Most opponents of its extension, how-
In particular, some members-including some fast track supporters-
ever, accepted its lawful basis, but decried the "abrogation," "abdication,"
complair.ed of the inadequacy of past administrations' consultations with the
"surrender," or ''relinquish[ment]''6 of congressional power, prerogatives,
Congress. Finance Committee Chairman Lloyd Bentsen, for example, said that
and responsibilities. They opposed giving the executive a "carte blanche,"
the Reagan administration's initial consultations with the Congress regarding the
"blank check, or "keys to the store,' thus reducing the role of Congress to
U.S.-Canada Free-Trade Agreement were inadequate. While he maintained
that of a mere "rubber stamp.
that the Bush administration had "learned that lesson" and "[has] been cor-
Some opponents argued that fast track required that Congress trust the
sulting with us every step of the way,"70 other members disagreed. Senator
administration-a trust that some felt unwarranted by the administration's track
Thomas A. Daschle (D-S.D.), for example, maintained: "In my experience. the
record. 65 Indeed, such distrust was not limited to the Bush administration, or
consultations have not been meaningful
Muggers meet directly with the =
even to Republican administrations, by a Democratic Congress. The distrust
victims, too, but we don't call it consultations.' Senator Emest B. Hollings
(D-S.C.) echoed this concern: "[T]hey claim that the distinguished Ambassader
55. See, e.g., Jill Abramson, U.S.-Mexico Trade Pact Is Pitting Vast Armies of Capitol Lobbyists
for Trade, Carla Hills, she consults. She consults. That is what I am complaining
against Each Other, WALL ST. J., Apr. 25, 1991, at A16; see also 137 CONG. REC. S6634-36 (daily
about. These consultations are killing
ed. May 23, 1991), S6797-98, S6810-11, S6816-17 (daily ed. May 24, 1991) (letters and press
Some members disagreed that the fast track was necessary to conduct any
releases incorporated in the fast track extension congressional debate).
56. See, e.g., id. at S6614-15 (daily ed. May 23, 1991) (comments of Sen. Slade Gorton
trade negotiations. Congressmen Jenkins and Helms, for example, both said the
(R-Wash.)).
just did not accept the argument that fast track authority "is essential to =
57. See, e.g., id. at H3505 (comments of Rep. John J. LaFalce (D-N.Y.)) ("The whole concept
successful negotiation of new trade agreements." As Representative
of fast-track authority is ultra vires and unenforceable.") id. at H3565 (comments of Rep. Gerald D.
Kleczka (D-Wis.)) ("Our founding fathers would shudder at the thought of an agreement with so great
William L. Clay (D-Mo.) argued: "Fast track may be convenient to the President
an impact on American lives not subject to the consideration of elected representatives.").
of the United States, but it is by no means essential to his ability to negotiate
58. Id. at H3503 (comments of Rep. LaFalce).
international agreements.
59. Id. at H3514 (comments of Rep. Cardiss Collins (D-III.)), H3529 (comments of Rep.
David R. Obey (D-Wis.)), H3544 (comments of Rep. Richard J. Durbin (D-III.)), S6574 (comments
On the other hand, many who supported the extension of fast track for the
of Sen. Jesse A. Helms (R-N.C.)).
multilateral Uruguay Round negotiations opposed, or expressed serious reserve-
60. Id. at H3524 (comments of Rep. Tim Johnson (D-S.D.)), H3574 (comments of Rep. Louis
Stokes (D-Ohio)).
61. Id. at H3531 (comments of Rep. Ed Jenkins (D-Ga.)).
62. Id. at H3578 (comments of Rep. Craig Thomas (R-Wyo.)), H3590 (comments of Rep.
66. Id. at H3516 (comments of Rep. Stark).
Thomas McMillen (D-Md.)). Both of those representatives supported fast track extension and argued
67. Id. at H3547-48 passim.
that such extension was not a blank check. Contra id. at H3582 (comments of Delegate Eleanor
68. Id. at H3608.
Holmes Norton (D-D.C.)), H3587 (comments of Rep. Nick J. Rahall, II (D-W.Va.)).
69. Id. at S6552 (daily ed. May 24, 1991). He then added that the administration later "got the
63. Id. at H3584 (comments of fast track supporter Rep. Robert F. Smith (R-Or.)).
message and then they came and consulted." Id.; see also supra note 32 for similar comments of Se=
64. Id. at H3579 (comments of Rep. Ted Weiss (D-N.Y.)); see also id. at S6595 (comments of
Baucus concerning consultations concerning the U.S.-Canada FTA.
70. 137 CONG. REC. S6552 (daily ed. May 24, 1991).
Sen. Tom Harkin (D-Iowa)).
65. See id. at H3519 (comments of Rep. Dorgan) ("Do I trust this administration? Of course
71. Id. at S6640.
not.''); see also id. at H3547 (comments of Rep. Andrews), H3549 (comments of Rep. Kildee),
72. Id. at S6778.
H3551 (comments of Rep. Conyers), H3562 (comments of Rep. Wolpe). Representative Douglas
73. Id. at S6575 (daily ed. May 23, 1991) (comments of Sen. Helms); see also id. at H3530-3
Applegate (D-Ohio) also claimed that "[t]he Administration's track record on trade stinks." Id. at
(comments of Rep. Jenkins).
H3605.
74. Id. at H3585.
SPRING 1992
VOL. 26, NO. 1
194
THE INTERNATIONAL LAWYER
FAST TRACK DEBATE
195
tions about, its use for the NAFTA talks. Representative Pease, for example,
Instead of bemoaning the problems, we should be looking for solutions. And ome of
maintained that the use of the fast track "is warranted when negotiating trade
the best available solutions is to open foreign markets with trade agreements. 81
agreements with as many as 107 partners. The administration, however, did
Second, fast track supporters argued that other nations simply would not
not persuade Representative Pease and others that fast track was necessary in
participate in trade negotiations with the United States except under fast tack
negotiations with far fewer trading partners. As Senator Paul S. Sarbanes
procedures. As Senator John C. Danforth (R-Mo.) summarized:
(D-Md.) argued:
[I]t is the overwhelming opinion of people who know anything about international trade
I have voted for this [fast track] procedure on GATT in the past. I was moved by the
that without fast track there is no possibility of a trade agreement. It is just not going
argument that if you go to a negotiation with 107 negotiators, it is very difficult to go
to happen.
Carla Hills says she has been told by her negotiating partners. forget
back and renegotiate it.
But now, the administration is extending this to negotia-
it, we are not even going to talk to you. 82
tions with individual countries.
Sam M. Gibbons (D-Fla.), chairman of the Subcommittee on International
I do not support the administration's path of moving to make fast track
Trade, House Committee on Ways and Means, explained that during the sixth
standard operating procedure in each trade negotiation that comes along. 76
round of multilateral trade negotiations, the Kennedy Round, the administration
In addition to this concern about the use of fast track for bilateral or trilateral
had negotiated two agreements that the Congress subsequently had refused to
negotiations generally, opposition was expressed to its use for talks with Mexico
implement legislatively. This experience, he noted, was the reason Congress
in particular. Senator Metzenbaum (D-Ohio) argued: "The Mexicans initiated
created the fast track. Failure to implement the Kennedy Round agreements
these trade talks. The Mexicans want this agreement. And the Mexicans will
convinced the trading partners of the United States that negotiations with the
continue to negotiate with or without the fast track. That is the reality. Further,
U.S. executive branch lacked an adequate foundation in the absence of some
some members noted reports of a statement by the Mexican chief negotiator that
substantial indication that the Congress supported the executive in the negotia-
Mexico would negotiate with the United States, with or without the fast track. 78
tions. 83 As Chairman Gibbons summarized, the reaction of trading partners was:
In response to these concerns, fast track supporters made the following argu-
'' 'Listen, unless you reform your congressional procedures, we aren't dealing
ments. First, they maintained that trade negotiations are an essential component
with you anymore. You are not a reliable bargainer.' ,,84
of any strategy to enhance American competitiveness. House Majority Leader
Thus, argued fast track supporters, trade negotiations were essential to stim-
Gephardt began the argument: "[I]f we [can] open closed markets today we can
ulate American competitiveness, and the fast track was essential to trade nego-
open closed factories tomorrow." Senator Lloyd Bentsen and Chairman of the
tiations. Moreover, they added, the fast track did not reduce, but rather en-
Finance Subcommittee on International Trade, Max Baucus, continued it:
hanced, the role of the Congress in trade negotiations. The fast track ensured that
If you are serious about cracking down on foreign barriers, trade negotiations must
the Congress was a partner in the executive's deliberations with foreign namons
be a part of your strategy. In the absence of negotiations, a multitude of unfair foreign
on trade matters. "Fast track enables us to be a trade negotiating partner with the
barriers will remain. And the United States cannot settle for that-not if we want to be
ultimate power to say yes or no," said House Minority Leader Robert H. Michel
effective competitors for world markets. 80
(R-III.). 85 Indeed, Chairman Dan Rostenkowski of the Ways and Means Com-
mittee argued that as a result of the fast track extension debate, Congress thas
already strongly influenced the scope, agenda and course of the North American
75. Id. at H3500.
free trade negotiations before they even begin.
76. Id. at S6598-99; see also id. at S6787 (daily ed. May 24, 1991) (comments of Sen. Ed-
ward M. Kennedy (D-Mass.)) ("[I]t is difficult to envision a multilateral trade negotiation that would
allow each nation to amend the treaty. And that is why the fast track procedure should be approved.
But I want to express my deep concern over the Administration's use of fast track authority to enter
81. Id. at S6798 (daily ed. May 24. 1991) (comments of Sen. Baucus).
into trade negotiations with Mexico."); id. at S6825 (comments of Sen. Joseph R. Biden (D-Del.))
82. Id. at S6623 (daily ed. May 23. 1991); see also id. at H3498-99 (comments of Rep. David
(*[F]ast track was designed with multilateral negotiations in mind.'').
Dreier (R-Cal.)), H3503 (comments of Sam M. Gibbons (D-Fla.)).
77. Id. at S6603 (daily ed. May 23, 1991).
83. Id. at H3503, H3517.
78. See, e.g., id. at S6598 (comments of Sen. Sarbanes), S6602 (comments of Sen. Metzen-
84. Id. at H3503.
baum). Metzenbaum referenced excerpts from El Financiero, "a respected Mexican newspaper,"
85. Id. at H3559; see also, e.g., id. at H3518 (comments of Rep. Bill Archer (R-Tex.)) H3546
which reported the following observation made by Mexican Chief Negotiator Herminio Blanco in
(comments of Rep. David E. Price (D-N.C.)), H3607 (comments of Rep. Rostenkowski (D-II.).
March 1991: 'With the fast track or without it, in any case the negotiations will be carried out.'
86. Id. at H3521; see also id. at S6596 (comments of Sen. John D. Rockefeller IV (D-W. Va.11
Id. at S6602-03.
("Congress's role is not cosmetic"); id. at S6806 (daily ed. May 24, 1991) (comments of Sen.
79. Id. at H3607.
Connie Mack (R-Fla.)) (asserting that the fast track does not eliminate the Congress's influence on
80. Id. at S6552 (comments of Sen. Bentsen).
the outcome of trade negotiations).
VOL. 26, NO. 1
SPRING 1992
FAST TRACK DEBATE
197
196
THE INTERNATIONAL LAWYER
Moreover, supporters generally credited at least the current administration
Congressman Doug Bereuter (R-Neb.): "This Member would
serve
with doing a good job in consulting with the Congress on trade negotiations.
notice to the administration that he will go over the eventual NAFTA with
As ranking member of the Senate Finance Committee Bob Packwood (R-Or.)
a fine-toothed comb.' 93
concluded: "If there is anything that can be said now about our U.S. Trade
Perhaps the House Majority Leader characterized this attitude most colorfully:
Representative, Ambassador Carla Hills, it is that she has given us opportu-
I am serving notice today that Congress will [keep the pressure on] Chairman Rosten-
nity after opportunity
for input. Further, many supporters stressed that
kowski, Senator Bentsen, and I will sound like the song by the [P]olice that gces.
Bush administration trade negotiators had earned the Congress's trust by
"Every breath you take, every step you take, every move you make, we'll be watching
you." Trust but verify: that will be our policy.94
allowing the Brussels Ministerial to fail rather than to accept bad agreements.
Speaker after speaker in the fast track extension debate gave the administration
Finally, various members-fast track supporters and opponents-indicated that
substantial credit for the courage of its conviction that no agreement was
if the Congress was dissatisfied with the agreements the administration negon-
better than a bad agreement. For example, Representative Philip M. Crane
ated, then it had, and might exercise, the right to change the fast track rules 95
(R-III.) "remind[ed]
those of little faith, that it was our distinguished
Ultimately the fast track supporters prevailed. On May 23, 1991, the House of
U.S. Trade Representative who refused to conclude what in her eyes was an
Representatives rejected the fast track disapproval resolution sponsored by Rep-
unsatisfactory agreement in the Uruguay round.' Senator Phil Gramm (R-Tex.)
resentative Byron L. Dorgan (D-N.D.), voting 192-231. 96 Immediately after
added:
defeating the disapproval resolution, the House passed overwhelmingly a "sense
of the House''97 resolution affirming the Congress's commitment to hold the
The fact that Carla Hills was willing to walk away from the last best offer of the
Europeans at the end of the GATT round in late 1990s tells me that this is a lady of real
administration to promises it had made concerning the treatment of environmen-
toughness. And it convinces me that she will be prepared to walk away from another
tal safeguards, worker safety, and worker adjustment assistance. 98 On May 14.
GATT round if the final offer is not acceptable and will be willing to walk away from
1991, the Senate disapproval resolution sponsored by Senator Emest F. Hollir ?S
a United States-Mexico agreement if not successful.89
also failed, by a vote of 36-59.9 Consequently, the President has authority until
00
Next, fast track supporters maintained that extension of fast track procedures
June 1, 1993, to enter into trade agreements pursuant to fast track procedures.
did not require a wholesale delegation of trust to the administration. As several
members indicated, "Trust but verify" may be applied to trade as well as
VI. A Prescription for a Pragmatic Partnership
strategic arms negotiations. 90 Indeed, many fast track supporters who voted
As Senator Gramm characterized it, the rejection of the House and Senate
against the extension disapproval resolutions joined fast track opponents in
resolutions that would have disapproved the extension of fast track was a -
stressing their intention to seek to maximize congressional influence in the ne-
umph of reason over passion" and "a victory of public interest over the special
gotiations and scrutinize the outcome closely:
interests. Clearly, it was a strong, bipartisan endorsement for using trade
Congressman David E. Skaggs (D-Colo.): "Negotiate, Mr. President, but
negotiate well.
I'll be reading the fine print of any agreement."
Senator Sam Nunn (D-Ga.): "I will be looking carefully at the final
93. Id. at H3544 (daily ed. May 23, 1991).
agreement reached in the Uruguay round and the trade agreement with
94. Id. at H3608 (comments of Rep. Richard Gephardt (D-Mo.)).
95. See, e.g., id. at H3498 (comments of Rep. Anthony C. Beilenson (D-Cal.)), H3572 (com-
Mexico, and my vote for the fast track in no way commits me to vote for
ments of Rep. William Hughes (D-N.J.)), H3590 (comments of Rep. Thomas McMillen (D-ME
final approval."⁹²
H3609 (comments of Rep. Bill Barrett (R-Neb.)), S6639 (comments of Sen. Thomas Dascile
(D-S.D.)).
96. Id. at H3588.
87. Id. at S6555 (daily ed. May 23, 1991).
97. Id. at H3589, H3610.
88. Id. at H3527.
98. EXCHANGE OF LETTERS, supra note 47.
89. Id. at S6607; see also, e.g., id. at H3595 (comments of Rep. Bill Emerson (R-Mo.)), S6600
99. 137 CONG. REC. S6829 (daily ed. May 24, 1991).
(comments of Sen. Dave Durenburger (R-Minn.)), S6617 (comments of Sen. Dennis DeConcini
100. Even though the administration prevailed in the vote on an extension disapproval resolut: on.
(D-Ariz.)), S6798 (comments of Sen. Max Baucus). But cf., e.g., id. at S6595 (comments of Sen.
the fast track remains decidedly fragile. Despite its inclusion in a statute, it remains expressly subject
Tom Harkin (D-lowa)), S6640 (comments of Sen. Thomas Daschle (D-S.D.)).
to the constitutional rulemaking authority of each house. At any time, either the House of Regre-
90. Id. at H3572 (comments of Rep. William Hughes (D-N.J.)).
sentatives or the Senate can change its fast track rule, or eliminate the fast track altogether. Therefore.
91. Id. at H3592-93. He also added: "We promise you careful scrutiny of the results." Id. at
the administration and supporters of the Round and North American free trade talks must remain
H3594.
vigilant to preserve the fast track.
101. 137 CONG. REC. S6586 (daily ed. May 23, 1991).
92. Id. at S6814 (daily ed. May 24, 1991).
SPRING 1992
VOL. 26, NO. 1
198
THE INTERNATIONAL LAWYER
FAST TRACK DEBATE
199
negotiations to open foreign markets and thus enhance American competitive-
to prioritize their objectives and to share with the administration their advice
ness. A comfortable majority in both houses basically decided to "give trade a
about negotiating positions. Unless they are prepared to do so, they are emically
chance.
102
estopped from complaining about the trade-offs that the administration ultimately
The debate, however, exposed the fragility of the fast track and the peril for
must make.
any trade agreement negotiated by an administration without sufficient involve-
Of course, even if both branches are responsible and faithful partners. dis-
ment of the Congress. For the President to enjoy both credibility with America's
agreements on the substance will occur. Even when the administration consults
trading partners and substantial prospects for congressional passage of imple-
diligently and the Congress, in private, offers frank advice about negociating
menting legislation, these two branches must truly work together as partners: in
positions and trade-offs, the administration must sift conflicting advice-from
the establishment of negotiating objectives, throughout the actual negotiations,
different members and committees, the private sector, and executive agencies-
and in the implementation of agreements in U.S. domestic law.
and make hard choices that will not be universally popular.
Pragmatically, this means that the administration must consult the Congress
Ultimately, the fast track requires the executive to exercise leadership. but
not only regularly, but meaningfully. While naturally loathe to disclose publicly
reserves power for the Congress to accept or reject the agreements concluded
its strategy, tactics, and goals, administration officials must be able and willing
with its advice. This formula does not guarantee that trade negotiations will
to consult with and confide in members and their staffs on these decisions. Some
succeed, but it provides the best opportunity for such success. If the Congress is
disagreements about substance are unavoidable, but Congress should have no just
realistic in its private advice to the administration, and the administration in turr.
ground for complaint against the administration regarding procedures.
is forthcoming in regular consultations with the Congress, there is no reason why
While regular and meaningful consultation with the Congress may sound easy
this fast track partnership, while always fragile, cannot prosper through not only
to those not directly involved with the federal government, it requires an enor-
the Uruguay Round and NAFTA negotiations, but for the trade negotiations of
mous expenditure of energy and time by many administration officials. The U.S.
the twenty-first century as well.
Trade Representative is not able to address the combined houses, as the President
does when he delivers his State of the Union message. Even if she had this
opportunity, it is far too public a forum in which to consult meaningfully without
betraying negotiating positions to other nations. Instead, teams of administration
officials, at varying levels and from varying agencies, haunt House and Senate
hearing rooms, chambers, and corridors in an effort faithfully and diligently to
meet their responsibility to consult with the Congress. However inefficient and
diverting this requirement, it must be fulfilled.
For its part, on the other hand, Congress must be prepared to shoulder the
burden of making trade-offs if it wishes to be a responsible partner in trade
negotiations. The classic public injunction of the Congress to any administra-
tion in trade negotiations is to achieve 100 percent of all U.S. objectives and to
make no concessions. While this is an understandable starting point, it is
impossible to realize. Negotiations are based upon compromise. Trade agree-
ments are likely to endure only if they embody compromise, since sovereign
governments adhere over time only to arrangements that, on balance, serve
their interests.
Of course, members of Congress who wish to be reelected cannot reasonably
take positions in public that would provoke opposition by constituents. In public
many in the Congress feel compelled to enjoin the administration to make no
sacrifice and to attain all goals. In private, however, members must be prepared
102. Id. at H3607 (comments of Rep. Richard Gephardt (D-Mo.)).
VOL. 26, NO. 1
SPRING 1992
19 § 2904
19 USCA (Supp., 1994)
CUSTOMS DUTIES
CUSTOMS DUTIES
19 $ 2906
(2) If the President determines under paragraph (1) that a major industrial country
(ii) will afford United States business firms adequate opportunity. in
has not made concessions under trade agreements entered into under section 2902(a)
accordance with customary practice, to compete for participation in such
and (b) of this title which provide substantially equivalent competitive opportunities for
purchases or sales; or
the commerce of the United States, the President shall, either generally with respect to
such county or by article produced by such country, in order to restore equivalence of
(B) a bill submitted under subsection (c) of this section which approves of
competitive opportunities, recommended to the Congress-
the extension of the application of the GATT between the United States and
such major foreign country is enacted into law.
(A) legislation providing for the termination or denial of the benefits of conces-
sions of trade agreements entered into under section 2902(a) and (b) of this title
(c) Expedited consideration of bill to approve extension
that have been made with respect to rates of duty or other import restrictions
imposed by the United States, and
(1) The President may submit to the Congress any draft of a bill which approves of
the extension of the application of the GATT between the United States arri a mapor
(B) legislation providing that any law necessary to carry out any trade agree-
foreign country.
ment under section 2902(a) or (b) of this title not apply to such country.
(2) Any draft of a bill described in paragraph (1) that is submitted by the Presider: to
(3) For purposes of this subsection, the term "major industrial country" means
the Congress shall-
Canada, the European Communities, the individual member countries of the European
Communities, Japan, and any other foreign country designated by the President for
(A) be introduced by the majority leader of each House of the Cor:gress by
purposes of this subsection.
request) on the first day on which such House is in session after the date such draft
is submitted to the Congress; and
(Pub.L. 100-418, Title I, § 1105, Aug. 23, 1988, 102 Stat. 1132.)
(B) shall be treated as an implementing bill of purposes of subsections (d). e).
HISTORICAL AND STATUTORY NOTES
(f), and (g) of section 2191 of this title.
Legislative History
(d) Publication
For legislative history and purpose of Pub.L.
100-418, see 1988 U.S.Code Cong. and Adm.
The President shall publish in the Federal Register each determination made under
News, p. 1547.
subsection (a) of this section.
(Pub.L. 100-418, Title I, § 1106, Aug. 23, 1988, 102 Stat. 1133.)
LIBRARY REFERENCES
Customs Duties ©11.
HISTORICAL AND STATUTORY NOTES
C.J.S. Customs Duties $ 18.
Delegation of Functions
779, set out as a note under section 2301 of this
Functions vested in the President by Subsecs.
title.
§ 2905. Accession of state trading regimes to the General Agreement on Tariffs
(a), (b) and (d) of this section regarding the
and Trade
accession of state trading regimes to the Gener-
Legislative History
al Agreement on Tariffs and Trade, delegated to
For legislative history and purpose of Put...L.
(a) In general
the United States Trade Representative, pursu-
100-418, see 1988 U.S. Code Cong. and A.D
ant to Ex.Ord. No. 12661, Dec. 27, 1988, 54 F.R.
News, p. 1547.
Before any major foreign country accedes, after August 23, 1988, to the GATT the
President shall determine—
LIBRARY REFERENCES
(1) whether state trading enterprises account for a significant share of-
Customs Duties =10, 11.
(A) the exports of such major foreign country, or
C.J.S. Customs Duties §§ 17, 18.
(B) the goods of such major foreign country that are subject to competition
from goods imported into such foreign country; and
§ 2906. Definitions
(2) whether such state trading enterprises—
For purposes of this chapter:
(A) unduly burden and restrict, or adversely affect, the foreign trade of the
(1) The term "distortion" includes, but is not limited to, a subsidy.
United States or the United States economy, or
(2) The term "foreign country" includes any foreign instrumentality. Any terri-
(B) are likely to result in such a burden, restriction, or effect.
tory or possession of a foreign country that is administered separately for customs
(b) Effects of affirmative determination
purposes, shall be treated as a separate foreign country.
(3) The term "GATT" means the General Agreement on Tariffs and Trade.
If both of the determinations made under paragraphs (1) and (2) of subsection (a) of
this section with respect to a major foreign country are affirmative-
(4) The term "implementing bill" has the meaning given such term = section
2191(b)(1) of this title.
(1) the President shall reserve the right of the United States to withhold
extension of the application of the GATT, between the United States and such
(5) The term "international trade" includes, but is not limited to-
major foreign country, and
(A) trade in both goods and services, and
(2) the GATT shall not apply between the United States and such major foreign
(B) foreign direct investment by United States persons. especially if such
country until-
investment has implications for trade in goods and services.
(A) such foreign country enters into an agreement with the United States
(6) The term "state trading enterprise" means----
providing that the state trading enterprises of such foreign country-
(A) any agency, instrumentality, or administrative unit of a foreign country
(i) will-
which-
(I) make purchases which are not for the use of such foreign
(i) purchases goods or services in international trade for any purpose
country, and
other than the use of such goods or services by such agency, instrumentali-
(II) make sales in international trade,
ty, administrative unit, or foreign country, or
in accordance with commercial considerations (including price, quality,
(ii) sells goods or services in international trade; or
availability, marketability, and transportation), and
(B) any business firm which-
304
905
19 § 2906
CUSTOMS DUTIES
CUSTOMS DUTIES
19 § 3002
(i) is substantially owned or controlled by a foreign country or any
(3) to provide that the Convention shall be treated as a trade agreement
agency, instrumentality, or administrative unit thereof,
obligation of the United States.
(ii) is granted (formally or informally) any special or exclusive privilege
by such foreign country, agency, instrumentality, or administrative unit,
(Pub.L. 100-418, Title I, $ 1201, Aug. 23, 1988, 102 Stat. 1147.)
and
HISTORICAL AND STATUTORY NOTES
(iii) purchases goods or services in international trade for any purpose
References in Text
Harmonized Tariff Schedule is "anuary :. 1989.
other than the use of such goods or services by such foreign country,
This chapter, referred to in text, read in the
On such date-
agency, instrumentality, or administrative unit, or which sells goods or
original "this subtitle", meaning subtitle B of
"(1) the amendments made by sections
services in international trade.
Pub.L. 100-418, Title I. Subtitle B is classified
1204(a) [amending pre-section 1202 otce).
to this chapter and: amended sections
1213 [amending sections 1315.d) and 2483 of
(Pub.L. 100-418. Title I. § 1107(a), Aug. 23, 1988, 102 Stat. 1134.)
58c(a)(9)(A), (C), (3), 1312(f)(1), (2)(A), (3),
this title and pre-section 1302 nota; 1314
HISTORICAL AND STATUTORY NOTES
1315(d), 1321(a)(2)(B), 1337(j), 1466(f),
[amending sections 58(c)(a) 3)(A). --2:. 3.
1498(a)(1)(A) to (C), (1), 2011, 2138(b), 2253(f)(1),
1312(f). (1), (2)(A), (3), 1321(a)(2XB). 1337j).
References in Text
sections 2133(a), (b)(2), (d) and 2191(b)(1), and
(3), 2434(c), 2437(c)(3), 2481(7), 2483, 2581(b)(3),
1466(f). 1498(a)(1)(A). (1), 2012. 2138(c)(1)-T).
enacted section 2133(e) of this title.
2702(a)(1)(C), 2703(b)(4), (5), (c)(1)(A)(i), (ii), (d),
2253(f)(1), (3), 2434(c), 2437(c)(3). 2451
This chapter, referred to in text preceding
Legislative History
(f)(5)(A) to (F) of this title; enacted section 3001
2483, 2581(b)(3), 2702(aX1XC). and
par. (1), read in the original "this part", meaning
note and section 3005 note; amended pre-sec-
2703(c)(1)(A)(i), (ii), (d). (DG AHF of this
Part 1 of Subtitle A of Title I of Pub.L. 100-418.
For legislative history and purpose of Pub.L.
tion 1202 notes and section 2112 note; and
100-418, see 1988 U.S. Code Cong. and Adm.
title; and amending note provision under sec-
Part 1 provisions are classified to this chapter
amended section 511r(a)(2), 1444(f)(3), 1783,
tion 2112 of this title; and amending secoids
and repealed section 2131(a) to (c), amended
News, p. 1547.
1784 of Title 7, Agriculture, section 374(a)(3) of
511r(a)(2), 1444(f)(3), 1783. acd 1784 or The 7.
Title 10, Armed Forces, section 301(b), (e), (f) of
Agriculture; section 374(a) 3) of Title 10.
LIBRARY REFERENCES
Title 13, Census, sections 1274(b), (c), 2064(d),
Armed Forces; section 301(c) (e). (f) of Title
Customs Duties >10 to 12.
2066(a), 2602(7), 2612(a)(1) of Title 15, Com-
13, Census; sections 1274(5), (c). 3064 d
C.J.S. Customs Duties §§ 17, 18, 19 et seq.
merce and Trade, sections 1606a(b)(1), 3912 of
2066(a), 2602(7), and 2612(a)(1) of Title 15.
Title 16, Conservation, sections 41, 951(a)(2) of
Commerce and Trade; sections 16 5a : (1)
Title 21, Food and Drugs, section 5059(a) of
and 3912 of Title 16, Conservation: sections
CHAPTER 18-IMPLEMENTATION OF THE
Title 22, Foreign Relations and Intercourse, sec-
41 and 951(a)(2) of Title 21. Food and Dr
HARMONIZED TARIFF SCHEDULE
tions 7652(e)(3), 9504(b)(1)(B) of Title 26, Inter-
section 5059(b) of Title 22, Foreign Relamors
nal Revenue Code, section 1295(a)(7) of Title 28,
and Intercourse: sections 7652(e.1.3) and
Judiciary and Judicial Procedure, and section
9504(b)(1)(B) of Title 26, Internal Revenue
Sec.
Sec.
98h-4 of Title 50, War and National Defense.
3006. Presidential action on Commission rec-
Code; section 1295(a)(7) of Title 28, Judiciary
3001. Purposes.
and Judicial Procedure; and section 38b-1 or
3002. Definitions.
ommendations.
Effective Date
3003. Congressional approval of United States
(a) In general.
Title 50, War and National Defense] and 1215
Section 1217 of Pub.L. 100-418 provided that:
(b) Lay-over period.
[amending section 2138(b)(6). (7) and masting
accession to the Convention.
(c) Effective date of modifications.
"(a) Accession to Convention and Provi-
section 2138(b)(8) of this title) take effect and
(a) Congressional approval.
3007. Publication of the Harmonized Tariff
sions Other Than the Implementation of the
apply with respect to articies entered CO or
(b) Acceptance of the final legal text of
Schedule.
Harmonized Tariff Schedule.-Except as pro-
after such date; and
the Convention by the President.
(a) In general.
vided in subsection (b), the provisions of this
(c) Unspecified private remedies not
subtitle [subtitle B, §§ 1201-1207, of Pub.L.
"(2) sections 1204(c) [sections 3004 el
(b) Content.
created.
3008. Import and export statistics.
100-418, Title I. For distribution of subtitle B
1211 [3011], and 1212 [3012 of this title] take
3009. Coordination of trade policy and the
in the Code, see References in Text note set out
effect."
(d) Termination.
3004. Enactment of the Harmonized Tariff
Convention.
under this section] take effect on the date of the
Schedule.
3010. United States participation on the Cus-
enactment of the Omnibus Trade and Competi-
Legislative History
(a) Omitted.
toms Cooperation Council regarding
tiveness Act of 1988 [Aug. 23, 1988).
For legislative history and purpose I P.O.L.
(b) Modifications to the Harmonized
the Convention.
"(b) Implementation of the Harmonized
100-418, see 1988 U.S.Code Cong. and Aim.
Tariff Schedule.
(a) Principal United States agencies.
Tariff Schedule.-The effective date of the
News, p. 1547.
(c) Status of the Harmonized Tariff
(b) Development of technical proposals.
Schedule.
(c) Availability of Customs Cooperation
(d) Interim informational use of Har-
Council publications.
§ 3002. Definitions
monized Tariff Schedule classifica-
3011. Transition to the Harmonized Tariff
As used in this chapter:
tions.
Schedule.
(1) The term "Commission" means the United States International Trade Com-
3005. Commission review of, and recommenda-
(a) Existing executive actions.
tions regarding, the Harmonized Tariff
(b) Generalized system of preferences
mission.
Schedule.
conversion.
(2) The term "Convention" means the International Convention on the Parmot-
(a) In general.
(c) Import restrictions under the Agri-
ized Commodity Description and Coding System, done at Brussels on June 14. 1983.
(b) Agency and public views regarding
cultural Adjustment Act.
and the Protocol thereto, done at Brussels on June 24, 1986, submitted to the
recommendations.
(d) Certain protests and petitions under
Congress on June 15, 1987.
(c) Submission of recommendations.
the customs law.
(3) The term "entered" means entered, or withdrawn from warehouse for
(d) Requirements regarding recommen-
3012. Reference to the Harmonized Tariff
consumption, in the customs territory of the United States.
dations.
Schedule.
(4) The term "Federal agency" means any establishment in the executive branch
of the United States Government.
(5) The term "old Schedules" means title I of the Tariff Act of 1930 (12 U.S.C.
§ 3001. Purposes
1202) as in effect on the day before January 1, 1989.
The purposes of this chapter are-
(6) The term "technical rectifications" means rectifications of an editorial charac-
(1) to approve the International Convention on the Harmonized Commodity
ter or minor technical or clerical changes which do not affect the substance or
Description and Coding System;
meaning of the text, such as-
(2) to implement in United States law the nomenclature established internation-
(A) errors in spelling, numbering, or punctuation;
ally by the Convention; and
(B) errors in indentation;
306
307
CUSTOMS DUTIES
19 USCA (Supp, 1994)
&
19 475 2901
19 § 2804
CUSTOMS DUTIES
available sufficient funds to initiate, in cooperation with nongovernmental trade
the President. shall take all appropriate and feasible action under the Trade Act of 1974
associations representative of United States wineries, an export promotion program
to enforce the rights of the United States under any such trade agreement or to obtain
for United States; and
the elimination of such act, policy, or practice.
(2) request, for each subsequent fiscal year, an appropriation for such a TICE
(Pub.L. 98-573, Title IX, § 905, Oct. 30, 1984, 98 Stat. 3049.)
export promotion program that will not be at the expense of any appropriations
requested for export promotion programs involving other agriculture commodities
HISTORICAL AND STATUTORY NOTES
References in Text
mittee on Ways and Means and the Committee
(Pub.L. 98-573, Title IX, § 907, Oct. 30, 1984, 98 Stat. 3050.)
Section 854(a) of the Trade Agreements Act of
on Finance under section 905(b) of the Wine
HISTORICAL AND STATUTORY NOTES
1979, referred to in subsec. (b)(1), (b)(1)(A). is
Equity and Export Expansion Act of 1984 (19
set out as a Review of International Trade in
U.S.C. 2804) (subsec. (b) of this section] and
References in Text
Legislative History
Alcoholic Beverages note under section 2135 of
submit the updated report to both of such com-
Section 135 of the Omnibus Budget Reconcili-
For legislative history and purpose I P:5. L
this title.
mittees. Each updated report shall contain,
ation Act of 1982, referred to in cl. (1), is set out
98-573, see 1984 U.S. Code Cong. and Adm
with respect to the major wine trading country
as an Agricultural Export Promotion note under
The Trade Act of 1974, referred to in subsecs.
concerned-
section 612c of Title 7, Agriculture.
News, p. 4910.
(b)(1)(C)(i) and (c), is Pub. L. 93-618, Jan. 3,
1975, 88 Stat. 1978, as amended, which is classi-
"(1) a description of each tariff or nontariff
fied principally to chapter 12 (section 2101 et
barrier to (or other distortion of) trade in
CHAPTER 1.-NEGOTIATION AND IMPLEMENTATION
seq.) of this title. For complete classification of
United States wine of that country with re-
this Act to the Code, see References in Text
spect to which the United States Trade Rep-
OF TRADE AGREEMENTS
note set out under section 2101 of this title and
resentative has carried out consultations since
Tables.
the report required under such section 905(b)
Sec.
Sec.
(subsec. (b) of this section] was submitted;
2901. Overall and principal trade negotiating
2903. Implementation of trade agreements.
Delegation of Functions
"(2) the status of the consultations de-
objectives of the United States.
(c) Limitations on use of "fast tack
Functions vested in the President by section
scribed under paragraph (1); and
(a) Overall trade negotiating objectives.
procedures.
"(3) information, explanations, and recom-
(b) Principal trade negotiating objec-
(d) Rules of House of Representative
1125 of Pub.L. 100-418 [set out as a note under
this section], regarding the updated report on
tives.
and Senate.
mendations of the kind referred to in para-
barriers to wine trade, delegated to the United
graph (1)(C), (D), and (E) of such section
2902. Trade agreement negotiating authority.
(e) Computation of certain periods of
States Trade Representative pursuant to Ex.
905(b) [subsec. (b) of this section] that are
(a) Agreements regarding tariff barri-
time.
2904. Termination and reservation authority.
Ord. No. 12661, Dec. 27, 1988, 54 F.R. 779, set
based on developments (including the taking
ers.
reciprocal nondiscriminatory real-
out as a note under section 2901 of this title.
of relevant actions, if any, of a kind not con-
(b) Agreements regarding nontariff bar-
ment.
templated at the time of the enactment of
riers.
(a) In general.
Reports on Negotiations to Eliminate Wine
such 1984 Act [Aug. 5, 1983]) since the sub-
(c) Bilateral agreements regarding tar-
(b) Reciprocal nondiscriminatory treat-
Trade Barriers
mission of the report required under such
iff and nontariff barriers.
ment.
Pub.L. 100-418, Title I, § 1125, Aug. 23, 1988,
section."
(d) Consultation with Congress before
2905. Accession of state trading regimes :s the
102 Stat. 1147, provided that:
agreements entered into.
General Agreement on Tariffs and
"Before the close of the 13-month period be-
Legislative History
(e) Special provisions regarding Uru-
Trade.
ginning on the date of the enactment of this Act
For legislative history and purpose of Pub. L
guay Round trade negotiations.
(a) In general.
[Aug. 23, 1988], the President shall update each
98-573, see 1984 U.S. Code Cong. and Adm.
2903. Implementation of trade agreements.
(b) Effects of affirmative determination
report that the President submitted to the Com-
News, p. 4910.
(a) In general.
(c) Expedited consideration of bill :0 a=-
(b) Application of Congressional "fast
prove extension.
track" procedures to implement-
(d) Publication.
§ 2805. Required consultations
ing bills.
2906. Definitions.
The Trade Representative shall consult with the Committees and with representatives
of the wine and grape products industries in the United States—
(1) before identifying tariff barriers and nontariff barriers to (or other distortions
§ 2901. Overall and principal trade negotiating objectives of the United States
of) trade in United States wine and designating major wine trading countries under
section 2803 of this title;
(a) Overall trade negotiating objectives
(2) in developing the reports required under section 2804(b) of this title; and
The overall trade negotiating objectives of the United States are to obtain-
(3) for purposes of determining whether action by the President is appropriate
(1) more open, equitable, and reciprocal market access;
under any provision of the Trade Act of 1974 with respect to any act, policy, or
practice referred to in section 2804(b)(1) of this title.
(2) the reduction or elimination of barriers and other trade-distorting policies ar.i
(Pub.L. 98-573, Title IX, § 906, Oct. 30, 1984, 98 Stat. 3050.)
practices; and
(3) a more effective system of international trading disciplines and procedures.
HISTORICAL AND STATUTORY NOTES
References in Text
see References in Text note set out under sec-
(b) Principal trade negotiating objectives
tion 2101 of this title and Tables.
The Trade Act of 1974, referred to in cl. (3), is
Pub. L. 98-618, Jan. 3, 1975, 88 Stat. 1978, as
Legislative History
(1) Dispute settlement
amended, which is classified principally to chap-
For legislative history and purpose of Pub. L
The principal negotiating objectives of the United States with respect to dispute
ter 12 (section 2101 et seq.) of this title. For
98-573, see 1984 U.S. Code Cong. and Adm.
complete classification of this Act to the Code,
News, p. 4910.
settlement are-
(A) to provide for more effective and expeditious dispute settlemer= mecha-
§ 2806. United States wine export promotion
nisms and procedures; and
In order to develop, maintain, and expand foreign markets for United States wine, the
(B) to ensure that such mechanisms within the GATT and GATT agree-
President is encouraged to-
ments provide for more effective and expeditious resolution of disputes and
(1) utilize, for the fiscal year ending September 30, 1985, the authority provided
enable better enforcement of United States rights.
under section 135 of the Omnibus Budget Reconciliation Act of 1982 to make
289
CUSTOMS DUTIES
19 $ 2901
19 § 2901
CUSTOMS DUTIES
(D) seeking agreements by which the major agricultural exporting nations
(2) Improvement of the GATT and multilateral trade negotiation agreements
agree to pursue policies to reduce excessive production of agricultural c:ommod-
The principal negotiating objectives of the United States regarding the improve.
ities during periods of oversupply, with due regard for the fact that the United
States already undertakes such policies, and without recourse to arbitrary
ment of GATT and multilateral trade negotiation agreements are-
schemes to divide market shares among major exporting countries.
(A) to enhance the status of the GATT;
(B) to improve the operation and extend the coverage of the GATT and such
(8) Unfair trade practices
agreements and arrangements to products, sectors, and conditions of trade not
The principal negotiating objectives of the United States with respect = unfair
adequately covered; and
trade practices are-
(C) to expand country participation in particular agreements or arrange-
(A) to improve the provisions of the GATT and nontariff measure agree-
ments, where appropriate.
ments in order to define, deter, discourage the persistent use of. and oriberwise
discipline unfair trade practices having adverse trade effects, including forms of
(3) Transparency
subsidy and dumping and other practices not adequately covered such 25
The principal negotiating objective of the United States regarding transparency
resource input subsidies, diversionary dumping, dumped or subsidized inputs-
is to obtain broader application of the principle of transparency and clarification of
and export targeting practices;
the costs and benefits of trade policy actions through the observance of open and
(B) to obtain the application of similar rules to the treatment of primary ar 5
equitable procedures in trade matters by Contracting Parties to the GATT.
nonprimary products in the Agreement on Interpretation and Application of
Articles VI, XVI, and XXIII of the GATT (relating to subsidies and tounter-
(4) Developing countries
vailing measures); and
The principal negotiating objectives of the United States regarding developing
(C) to obtain the enforcement of GATT rules against-
countries are-
(i) state trading enterprises, and
(A) to ensure that developing countries promote economic development by
(ii) the acts, practices, or policies of any foreign government which as a
assuming the fullest possible measure of responsibility for achieving and
practical matter, unreasonably require that-
maintaining an open international trading system by providing reciprocal
(I) substantial direct investment in the foreign country be made.
benefits and assuming equivalent obligations with respect to their import and
export practices; and
(II) intellectual property be licensed to the foreign country or is
any firm of the foreign country, or
(B) to establish procedures for reducing nonreciprocal trade benefits for the
more advanced developing countries.
(III) other collateral concessions be made,
as a condition for the importation of any product or service of the United
(5) Current account surpluses
States into the foreign country or as a condition for carrying on business in
The principal negotiating objective of the United States regarding current
the foreign country.
account surpluses is to develop rules to address large and persistent global current
(9) Trade in services
account imbalances of countries, including imbalances which threaten the stability of
the international trading system, by imposing greater responsibility on such coun-
(A) The principal negotiating objectives of the United States regarding rade in
tries to undertake policy changes aimed at restoring current account equilibrium,
services are-
including expedited implementation of trade agreements where feasible and appro-
(i) to reduce or to eliminate barriers to, or other distortions of, international
priate.
trade in services, including barriers that deny national treatment and restric-
tions on establishment and operation in such markets; and
(6) Trade and monetary coordination
(ii) to develop internationally agreed rules, including dispute settlement
The principal negotiating objective of the United States regarding trade and
procedures, which-
monetary coordination is to develop mechanisms to assure greater coordination,
(I) are consistent with the commercial policies of the United States. and
consistency, and cooperation between international trade and monetary systems and
(II) will reduce or eliminate such barriers or distortions. and help
institutions.
ensure fair, equitable opportunities for foreign markets.
(7) Agriculture
(B) In pursuing the negotiating objectives described in subparagraph (A. United
States negotiators shall take into account legitimate United States domestic objec-
The principal negotiating objectives of the United States with respect to agricul-
tives including, but not limited to, the protection of legitimate health cr safety.
ture are to achieve, on an expedited basis to the maximum extent feasible, more
essential security, environmental, consumer or employment opportunity interests
open and fair conditions of trade in agricultural commodities by-
and the law and regulations related thereto.
(A) developing, strengthening, and clarifying rules for agricultural trade,
including disciplines on restrictive or trade-distorting import and export prac-
(10) Intellectual property
tices;
The principal negotiating objectives of the United States regarding intellectual
(B) increasing United States agricultural exports by eliminating barriers to
property are-
trade (including transparent and nontransparent barriers) and reducing or
(A) to seek the enactment and effective enforcement by foreign countries of
eliminating the subsidization of agricultural production consistent with the
laws which-
United States policy of agricultural stabilization in cyclical and unpredictable
(i) recognized and adequately protect intellectual property, including
markets;
copyrights, patents, trademarks, semi-conductor chip layout designs. and
(C) creating a free and more open world agricultural trading system by
trade secrets, and
resolving questions pertaining to export and other trade-distorting subsidies,
(ii) provide protection against unfair competition,
market pricing and market access and eliminating and reducing substantially
other specific constraints to fair trade and more open market access, such as
(B) to establish in the GATT obligations—
tariffs, quotas, and other nontariff practices. including unjustified phytosanitary
(i) to implement adequate substantive standards based on-
and sanitary restrictions:
291
19 § 2901
CUSTOMS DUTIES
CUSTOMS DUTIES
19 § 2901
(I) the standards in existing international agreements that provide
(B) foreign tariffs and nontariff barriers on competitive United States
adequate protection, and
exports when like or similar products enter the United States at low rates of
(II) the standards in national laws if international agreement stan-
duty or are duty-free, and other tariff disparities that impede access to
dards are inadequate or do not exist,
particular export markets.
(ii) to establish effective procedures to enforce, both internally and at
(14) Worker rights
the border, the standards implemented under clause (i), and
(iii) to implement effective dispute settlement procedures that improve
The principal negotiating objectives of the United States regarding worker rights
on existing GATT procedures;
are-
(C) to recognize that the inclusion in the GATT of-
(A) to promote respect for worker rights;
(i) adequate and effective substantive norms and standards for the
(B) to secure a review of the relationship of worker rights to GATT articles.
protection and enforcement of intellectual property rights, and
objectives, and related instruments with a view to ensuring that the benefits of
the trading system are available to all workers; and
(ii) dispute settlement provisions and enforcement procedures,
(C) to adopt, as a principle of the GATT, that the denial of worker rights
is without prejudice to other complementary initiatives undertaken in other
should not be a means for a country or its industries to gain competitive
international organizations; and
advantage in international trade.
(D) to supplement and strengthen standards for protection and enforcement
in existing international intellectual property conventions administered by
(15) Access to high technology
other international organizations, including their expansion to cover new and
(A) The principal negotiating objective of the United States regarding access to
emerging technologies and elimination of discrimination or unreasonable excep-
tions or preconditions to protection.
high technology is to obtain the elimination or reduction of foreign barrers to, and
acts, policies, or practices by foreign governments which limit, equitable access by
(11) Foreign direct investment
United States persons to foreign-developed technology, including barriers. arts.
policies, or practices which have the effect of-
(A) The principal negotiating objectives of the United States regarding foreign
direct investment are-
(i) restricting the participation of United States persons in government-
supported research and development projects;
(i) to reduce or to eliminate artificial or trade-distorting barriers to foreign
direct investment, to expand the principle of national treatment, and to reduce
(ii) denying equitable access by United States persons to government-Leld
unreasonable barriers to establishment; and
patents;
(ii) to develop internationally agreed rules, including dispute settlement
(iii) requiring the approval or agreement of government entities. or impos-
procedures, which-
ing other forms of government interventions, as a condition for the granting of
licenses to United States persons by foreign persons (except for approval or
(I) will help ensure a free flow of foreign direct investment, and
agreement which may be necessary for national security purposes to control
(II) will reduce or eliminate the trade distortive effects of certain trade-
the export of critical military technology); and
related investment measures.
(iv) otherwise denying equitable access by United States persons to foreign-
(B) In pursuing the negotiating objectives described in subparagraph (A), United
developed technology or contributing to the inequitable flow of technology
States negotiators shall take into account legitimate United States domestic objec-
between the United States and its trading partners.
tives including, but not limited to, the protection of legitimate health or safety,
(B) In pursuing the negotiating objective described in subparagraph (A). the
essential security, environmental, consumer or employment opportunity interests
United States negotiators shall take into account United States Government policies
and the law and regulations related thereto.
in licensing or otherwise making available to foreign persons technology and other
(12) Safeguards
information developed by United States laboratories.
The principal negotiating objectives of the United States regarding safeguards
(16) Border taxes
are-
The principal negotiating objective of the United States regarding border taxes is
(A) to improve and expand rules and procedures covering safeguard mea-
to obtain a revision of the GATT with respect to the treatment of border adjust-
sures;
ments for internal taxes to redress the disadvantage to countries relying primarily
(B) to ensure that safeguard measures are-
for revenue on direct taxes rather than indirect taxes.
(i) transparent,
(Pub.L. 100-418, Title I, $ 1101, Aug. 23, 1988, 102 Stat. 1121.)
(ii) temporary,
(iii) degressive, and
HISTORICAL AND STATUTORY NOTES
(iv) subject to review and termination when no longer necessary to
Short Title
these activities affect each other and the
remedy injury and to facilitate adjustment; and
Section 1(a) of Pub.L. 100-418 provided that:
health of the United States economy.
"This Act [see Tables for classification) may be
"(2) the United States is confronted with a
(C) to require notification of, and to monitor the use by, GATT Contracting
Parties of import relief actions for their domestic industries.
cited as the 'Omnibus Trade and Competitive-
fundamental disequilibrium in its trade and
ness Act of 1988'."
current account balances and a rapid increase
in its net external debt;
(13) Specific barriers
Findings and Purposes of Trade, Customs,
"(3) such disequilibrium and increase are a
The principal negotiating objective of the United States regarding specific
and Tariff Laws
result of numerous factors, including-
barriers is to obtain competitive opportunities for United States exports in foreign
Section 1001 of Pub.L. 100-418 provided that:
"(A) disparities between the macroeco-
markets substantially equivalent to the competitive opportunities afforded foreign
exports to United States markets, including the reduction or elimination of specific
"(a) Findings-The Congress finds that-
nomic policies of the major trading nations.
tariff and nontariff trade barriers, particularly-
"(1) in the last 10 years there has arisen a
"(B) the large United States budget
new global economy in which trade, technolog-
deficit,
(A) measures identified in the annual report prepared under section 2241 of
ical development, investment. and services
"(C) instabilities and structural defects
this title, and
form an integrated system; and in this system
in the world monetary system.
293
19 § 2901
CUSTOMS DUTIES
CUSTOMS DUTIES
19
$
2901
"(D) the growth of debt throughout the
"(5) the President should be authorized
developing world,
and encouraged to negotiate trade agreements
(1) Establishment. There is established an
merce, for submission to the Congress by the
"(E) structural defects in the world trad-
and related investment, financial, intellectual
Interagency Group on Countertrade, which shall
President.
ing system and inadequate enforcement of
property, and services agreements that meet
be composed of the Secretaries of Commerce,
trade agreement obligations,
the standards set forth in this title [Title I of
State, Defense, Treasury, Labor, Agriculture,
PART III-FOREIGN CORRUPT PRAC-
Pub.L. 100-418. See Tables volume for clas-
and Energy, the Attorney General, the Adminis-
TICES AMENDMENTS: INVEST-
"(F) governmental distortions and barri-
sifications]; and
trator of the Agency for International Develop-
MENT; AND TECHNOLOGY
ers.
"(6) while the United States is not in a
ment, the Director of the Federal Emergency
Sec. 3-101. Foreign Corrupt Practices Act
"(G) serious shortcomings in United
position to dictate economic policy to the rest
Management Agency, the United States Trade
Amendments.
States trade policy, and
of the world, the United States is in a position
Representative and the Director of the Office of
to lead the world and it is in the national
The functions conferred upon the Present
"(H) inadequate growth in the productiv-
Management and Budget, or their respective
ity and competitiveness of United States
interest for the United States to do so.
by section 5003(d)(1) ("International Agree-
representatives. The Secretary of Commerce or
ment") of the Omnibus Trade Act [set DEL 15 a
firms and industries relative to their over-
"(b) Purposes.-The purposes of this title
his representative shall be the Chairman of the
note under section 78dd-1 of Title LE. Com-
seas competition;
[Title I of Pub.L. 100-418. See Tables volume
interagency group.
merce and Trade] are delegated w the Secre-
"(4) it is essential, and should be the high-
for classifications.) are to-
(2) Functions. The interagency group shall
tary of State, who in performing such functions
est priority of the United States Government,
"(1) authorize the negotiation of reciprocal
carry out the functions and duties set out in
shall act in consultation with the Attorney Gen-
to pursue a broad array of domestic and inter-
trade agreements;
section 2205(a) of the Omnibus Trade Act.
eral, the United States Trade Representative.
national policies-
"(2) strengthen United States trade laws;
Sec. 2-201. Sanctions Against Toshiba and
the Chairman of the Securities and Exchange
"(A) to prevent future declines in the
"(3) improve the development and manage-
Kongsberg.
Commission, the Secretary of Commerce. the
United States economy and standards of
ment of United States trade strategy: and
(1) Procurement Sanctions. Pursuant to
Secretary of the Treasury and the Director of
living,
"(4) through these actions, improve stan-
section 2443 of the Omnibus Trade Act [set
the Office of Management and Budget
"(B) to ensure future stability in exter-
dards of living in the world."
out as a note under section 2410a of the Appen-
Sec. 3-201. Authority to Review Certain
Legislative History
dix to Title 50, War and National Defense] and
Mergers, Acquisitions, and Takeovers.
nal trade of the United States, and
subject to the exceptions referred to in para-
(1) Executive Order No. 11858. as umended
"(C) to guarantee the continued vitality
For legislative history and purpose of Pub.L.
graph (3), departments, agencies and instrumen-
[set out as a note under section TSD of Title 15.
of the technological, industrial, and agricul-
100-418, see 1988 U.S. Code Cong. and Adm.
talities of the United States Government shall
Commerce and Trade], regarding the Commit-
tural base of the United States;
News, p. 1547.
not for the three-year period beginning on the
tee on Foreign Investment in the United States
date this Order takes effect, contract with or
(the "Committee") is further amended as fol-
EXECUTIVE ORDERS
procure products and services from Toshiba Ma-
lows:
EXECUTIVE ORDER NO. 12661
chine Company, Kongsberg Trading Company,
(A) By adding new Sections 7 and ¿ as fol-
Dec. 27, 1988, 54 F.R. 779, as amended Ex.Ord. No. 12697, Dec. 22,
Toshiba Corporation or Kongsberg Vaapenfa-
lows:
brikk. The head of each department, agency or
1989, 54 F.R. 53037; Ex.Ord. No. 12716, May 24, 1990, 55 F.R.
instrumentality is hereby directed and autho-
"Sec. 7. (1) Investigations. (a) The Com-
21831; Ex. Ord. No. 12774, Sept. 27, 1991, 56 F.R. 49835
rized to implement this procurement sanction in
mittee is designated to receive notices and other
accordance with paragraph (3).
information, to determine whether investigations
IMPLEMENTATION OF OMNIBUS TRADE AND COMPETITIVENESS ACT
should be undertaken, and to make investiga-
OF 1988 AND RELATED INTERNATIONAL TRADE MATTERS
(2) Import Sanctions. Pursuant to section
tions, pursuant to Section 721(a) of the Defense
2443 of the Omnibus Trade Act and subject to
Production Act (section 2170(a) of the Appendix
By virtue of the authority vested in me as
section 2804 of this title] regarding the updated
the exceptions referred to in paragraph (3), im-
to Title 50]. (b) If the Committee decermines
President by the Constitution and laws of the
report on barriers to wine trade, are delegated
portation into the United States, its territories
that an investigation should be undertaken such
United States of America, including the Omni-
to the United States Trade Representative.
and possessions, of products produced by Toshi-
investigation shall commence =0 later than 30
bus Trade and Competitiveness Act of 1988
Sec. 1-301. Steel Imports. The functions
ba Machine Company or Kongsberg Trading
days after receipt by the Committee of WITHES
(P.L. 100-418, 102 Stat. 1107) ("Omnibus Trade
vested in the President by section 805(d)(1) and
Company is prohibited for three years from the
Act"), the Tariff Act of 1930 (Chapter 497, 46
notification of the proposed or pending merger.
Stat. 590, June 17. 1930), as amended ("Tariff
(2) of the Trade and Tariff Act of 1984 (19
effective date of this Order. The Secretary of
acquisition, or takeover. Such investigation
Act"), the National Defense Authorization Act,
U.S.C. 2253, note), as amended by section 1322
the Treasury is hereby directed and authorized
shall be completed no later than 45 days after
of the Omnibus Trade Act [amending provisions
to implement this import sanction in accordance
Fiscal Year 1989 (P.L. 100-456, 102 Stat. 1918)
such determination. (c) If one or more Commit-
with paragraph (3).
("Defense Authorization Act"), section 301 of
set out as a note under section 2253 of this title]
tee members differ with a Committee decision
Title 3 of the United States Code [section 301 of
are delegated to the United States Trade Repre-
(3) Exceptions. Authority to make determi-
not to undertake an investigation. the Chairman
Title 3, The President], and, in general, to en-
sentative.
nations as to exceptions to sanctions and to
shall submit a report of the Committee to the
sure that the international trade policy of the
Sec. 1-401. Telecommunications Trade.
implement exceptions by regulation or otherwise
President setting forth the differing views and
United States shall be conducted and adminis-
The functions vested in the President by sec-
is delegated (i) to the Secretary of Defense with
presenting the issues for his decision =this 25
tered in a way that achieves the economic, for-
tions 1375 and 1376(e) of the Omnibus Trade Act
respect to determinations under section
days after receipt by the Committee of written
eign policy, and national security objectives of
[sections 3104 and 3105(e) of this title], regard-
2443(c)(1) regarding the procurement of defense
notification of the proposed or pending merger.
the United States and in a coordinated manner
ing certain telecommunications negotiations as
articles or defense services, (ii) to the Secretary
acquisition, or takeover. (d) A unanimoras deci-
under the direction of the President, it is hereby
may be ordered by the President and reports
of the Treasury with respect to exceptions under
sion by the Committee not to undertake an
ordered as follows:
thereon to Congressional Committees, are dele-
section 2443(c)(2) regarding importation prohib-
investigation with regard to a notice scall con-
ited by section 2443(a)(2), and (iii) to the head of
clude action under this section on such notice.
PART I-TRADE, CUSTOMS,
gated to the United States Trade Representa-
AND TARIFF LAWS
tive.
each Federal department, agency or instrumen-
The Chairman shall advise the Presiden: of said
tality with respect to exceptions under section
decision.
Section 1-101. Accession of State Trading
Sec. 1-501. Uniform Fee on Imports. The
2443(c)(2) affecting their respective contracting
"(2) Report to the President. Upon com-
Regimes to the General Agreement on Tariffs
functions vested in the President by section 1428
and procurement. All regulations implementing
of the Omnibus Trade Act [enacting section 2397
pletion or termination of any investigation the
and Trade. The functions vested in the Presi-
these exceptions provisions shall be consistent
of this title and provisions set out as a note
Committee shall report to the President and
dent by sections 1106(a), (b) and (d) of the
with any guidelines provided by the Office of
present a recommendation. Any such report
Omnibus Trade Act [section 2905(a), (b) and (d)
thereunder), regarding negotiations to obtain
Federal Procurement Policy, Office of Manage-
shall include information relevant to subpara-
of this title] regarding the accession of state
authority under the General Agreement on Tar-
ment and Budget.
iffs and Trade to impose a small uniform fee on
graphs (1) and (2) of Section 721(d) of the De-
trading regimes to the General Agreement on
Tariffs and Trade, are delegated to the United
imports, are delegated to the United States
(4) Annual Report. The annual report re-
fense Production Act [Section 2170(d)(i) and (2)
States Trade Representative.
quired by section 2445 [enacting section 2413(f)
of the Appendix to title 50]. If the Committee is
Trade Representative.
of the Appendix to Title 50] concerning estimat-
unable to reach a unanimous recommendation
Sec. 1-201. Wine Barriers. The functions
PART II-EXPORT ENHANCEMENT
ed increases in defense expenditures arising
the Chairman shall submit a report of we Com-
vested in the President by section 1125 of the
from illegal technology transfers, shall be pre-
mittee to the President setting forth the differ-
Omnibus. Trade Act [set out as a note under
Sec. 2-101. Countertrade and Barter.
pared by the Secretary of Defense, in consulta-
ing views and presenting the issues for is deci-
294
tion with the Secretaries of State and Com-
sion.
19 § 2901
CUSTOMS DUTIES
CUSTOMS DUTIES
19
w.
2902
"Sec. 8. The Chairman of the Committee, in
cal barriers to the commercialization of super-
consultation with other members of the Commit-
conducting materials will be addressed; and
[set out as a note under section 601 of Title 5],
get. The Director may further delegate is time
tee, is hereby delegated the authority to issue
(D) Federal research to assist United States
the Director of the Office of Management and
heads of Executive departments and agencies
regulations to implement Section 721 of the
industry to develop and apply advanced manu-
Budget shall, with regard to regulations, rules,
responsibility for preparing particular sections
Defense Production Act [Section 2170 of the
facturing technologies for the production of du-
or agency statements of general applicability
of such reports. The heads or Executive depart-
Appendix to Title 50]."
rable and nondurable goods.
and future effect designed to implement, inter-
ments and agencies shall, to the extend permin-
pret, or prescribe law or policy or describing the
ted by law, provide the Director with such infor-
(B) By deleting. from the second sentence in
(2) The Department of Defense, the Depart-
procedure or practice requirements of an agency
mation as may be necessary for the effective
Section 1(a), the text beginning with "a repre-
ment of Energy, the National Science Founda-
relative to the administration of the Export Ad-
performance of these functions.
sentative" and ending with "by each of".
tion, the National Aeronautics and Space Ad-
ministration Act, determine whether such regu-
(C) By deleting, from the third sentence in
ministration, the Department of State, the Unit-
Sec. 5-301. International Trade Commin-
lations, rules, or agency statements are exempt-
ed States Trade Representative, and other Fed-
sion Report. The functions Tested in the Pres-
Section 1(a). the phrase "representative of the".
ed from review under that Order, pursuant to
eral agencies deemed appropriate by the Secre-
dent by section 332(g) of the Tarif Air (section
(D) By deleting "and" at the end of subpara-
the provisions of section 8(b) thereof.
tary of Commerce shall provide the information
1332(g) of this title], regarding reports by the
graph (3) of Section 1(b), by substituting and"
described in section 5141 of the Omnibus Trade
Sec. 5-201. Offsets. The negotiating func-
United States International Trade Commission
for the period at the end of subparagraph (4) of
Act [not classified to the Code] concerning their
tions under section 825(c) of the Defense Autho-
to the President, are delegated to time United
that Section, and by adding a new subparagraph
Fiscal Year 1989 program and proposed Fiscal
rization Act [set out as a note under section 2505
States Trade Representative.
(5) as follows: "(5) coordinate the views of the
Year 1990 program to the Secretary of Com-
of Title 10, Armed Forces), as may be ordered
Executive Branch and discharge the responsibil-
merce in sufficient time to permit preparation of
by the President, are hereby jointly delegated to
Sec. 5-401. Strengthening International
ities with respect to Section 721(a) and (e) of the
Defense Production Act of 1950, as amended (50
the report.
the Secretary of Defense and the United States
Institutions. To the exter: possible. sections
Trade Representative. These functions shall be
undertaken under this Order shall be conducted
U.S.C.App. 2061 et seq.) (Defense Production
(3) The Office of Management and Budget
coordinated with the Secretary of State and
in a manner that strengthens international insc-
Act) [section 2170(a) and (e) of the Appendix to
shall provide to the Secretary of Commerce, in
conducted in consultation with the Secretaries of
tutions that further United States objectives.
Title 50, War and National Defense]."
sufficient time to permit preparation of the re-
Commerce, Labor and the Treasury.
such as opening foreign markets and preventing
port, a summary of the Federal base program
the export of strategic goods and techmologies =
(E) By adding the following sentence at the
and Fiscal Year 1990 budget initiatives in each
Sec. 5-202. Reporting Functions. The re-
end of Section 5: "Information or documentary
proscribed destinations.
of the technical areas of the report.
porting functions of the President under section
material filed pursuant to Section 1(b)(5) or
825(d) of the Defense Authorization Act [not
Sec. 5-501. Effective Date. This Order
Section 7 of this Order shall be treated in accor-
(4) The Office of Science and Technology Pol-
classified to the Code] are delegated to the
shall take effect at 12:01 am on Wednesday.
dance with paragraph (b) of Section 721 of the
icy ("OSTP") shall provide the Secretary of
Director of the Office of Management and Bud-
December 28, 1988.
Defense Production Act (section 2170(b) of the
Commerce with appropriate policy guidance in
Appendix to Title 50]."
the technical areas of the report, including a
summary of the criteria used to select research
§ 2902. Trade agreement negotiating authority
(F) By inserting in Section 1(a) the following
projects within an agency and among agencies,
additional Committee members: "(7) The Attor-
and the results of any studies conducted by
ney General." and "(8) The Director of the Office
(a) Agreements regarding tariff barriers
OSTP, or by others if OSTP deems them to be
of Management and Budget."
relevant, which analyze the influence of the Fed-
(1) Whenever the President determines that one or more existing duties or other
(G) The Interim Presidential Directive to the
eral research programs in the technical areas of
import restrictions of any foreign country or the United States are unduly burdening
Secretary of the Treasury of October 26, 1988, is
the report.
and restricting the foreign trade of the United States and that the purposes. policies.
hereby revoked, and any notices received or
Sec. 3-401. [Revoked by Ex. Ord. No.
and objectives of this title will be promoted thereby, the President-
investigations pending as of the date this Order
12774, Sept. 27, 1991, 56 F.R. 49835. ][set out as
takes effect shall be referred to the Chairman of
a note under section 14 of Appendix 2 to Title
(A) before June 1, 1993, may enter into trade agreements with foreign countries:
the Committee for action consistent with this
5, Government Organization and Employees]
and
Order.
Sec. 3-301. Reporting Requirement on
PART IV-EDUCATION AND TRAINING
(B) may, subject to paragraphs (2) through (5), proclaim-
Semiconductors, Fiber Optics and Supercon-
FOR AMERICAN COMPETITIVENESS
(i) such modification or continuance of any existing duty,
ducting Materials.
Sec. 4-101. Buy American Act of 1988.
(ii) such continuance of existing duty-free or excise treatment, or
(1) The Secretary of Commerce, in consulta-
(1) The functions vested in the President by
tion with the Director of the Office of Science
section 7002 of the Omnibus Trade Act, regard-
(iii) such additional duties;
and Technology Policy, the Secretary of De-
ing section 4(d) [section 10b-1(d) of Title 41,
as he determines to be required or appropriate to carry out any such trade
fense, and the Director of the Office of Manage-
Public Contracts of Title III of the Buy Ameri-
ment and Budget, shall prepare for the Presi-
can Act of 1933, as amended (41 U.S.C. 10a-10d,
agreement.
dent to submit to the Congress with the Fiscal
are delegated to the Secretary of Defense.
(2) No proclamation may be made under subsection (a) of this section that-
Year 1990 budget a report describing policies
(2) The functions vested in the President by
and budget proposals regarding:
(A) reduces any rate of duty (other than a rate of duty that does not exceed 5
section 7003 of the Omnibus Trade Act, regard-
(A) Federal research in semiconductors and
ing the annual report required by subsection (d)
percent ad valorem on August 23, 1988,) to a rate which is less than 50 percent of
semiconductor manufacturing technology, in-
of section 305 of the Trade Agreements Act of
the rate of such duty that applies on such date; or
cluding a discussion of the respective roles of
1979, as amended (19 U.S.C. 2515) [section
(B) increases any rate of duty above the rate that applies on such date of
the various Federal departments and agencies in
2515(d) of this title], are delegated to the United
enactment.
such research;
States Trade Representative.
(B) Federal research and acquisition policies
PART V-MISCELLANEOUS
(3)(A) Except as provided in subparagraph (B), the aggregate reduction in the rate if
for fiber optics and optical-electronic technolo-
gies generally;
Sec. 5-101. Executive Oversight.
duty on any article which is in effect on any day pursuant to a trade agreement entered
into under paragraph (1) shall not exceed the aggregate reduction which would have
(C) Superconducting materials, including de-
Any actions or determinations taken or made
been in effect on such day if a reduction of 3 percent ad valorem or a reduction of one-
scriptions of research priorities, the scientific
by an officer or agency under the Omnibus
Trade Act or this Order shall be subject to the
tenth of the total reduction, whichever is greater, had taken effect on the effective date
and technical barriers to commercialization
which such research is designed to overcome,
Executive oversight and direction of the Presi-
of the first reduction proclaimed in paragraph (1) to carry out such agreement with
steps taken to ensure coordination among Fed-
dent, and such actions or determinations shall be
respect to such article.
eral agencies conducting research on supercon-
undertaken after appropriate inter-agency con-
sultation as established by the President.
(B) No staging under subparagraph (A) is required with respect to a rate reduction
ducting materials, and steps taken to consult
that is proclaimed under paragraph (1) for an article of a kind that is not produced in
with private United States industry to ensure
Sec. 5-102. Regulatory Review. Notwith-
standing the provisions of section 1(a)(2) of Ex-
the United States. The United States International Trade Commission shall advise the
that no unnecessary duplication of research ex-
ecutive Order No. 12291 of February 17, 1981
President of the identity of articles that may be exempted from staging under this
ists and that all important scientific and techni-
296
subparagraph.
297
19 § 2902
CUSTOMS DUTIES
CUSTOMS DUTIES
19 $ 2902
(4) If the President determines that such action will simplify the computation of
reductions under paragraph (3), the President may round an annual reduction by the
respect to the United States before January 1, 1987. the provision shall not acroiv with
lesser of-
respect to the foreign country that is party to that agreement.
(A) the difference between the reduction without regard to this paragraph and
(d) Consultation with Congress before agreements entered into
the next lower whole number; or
(B) one-half of 1 percent ad valorem.
(1) Before the President enters into any trade agreement under subsection 5) or
of this section, the President shall consult with-
(5) No reduction in a rate of duty under a trade agreement entered into under
subsection (a) of this section on any article may take effect more than 10 years after the
(A) the Committee on Ways and Means of the House of Representatives and the
effective date of the first reduction under paragraph (1) that is proclaimed to carry out
Committee on Finance of the Senate; and
the trade agreement with respect to such article.
(B) each other committee of the House and the Senate, and each joint committee
(6) A rate of duty reduction or increase that may not be proclaimed by reason of
of the Congress, which has jurisdiction over legislation involving subject matters
which would be affected by the trade agreement.
paragraph (2) may take effect only if a provision authorizing such reduction or increase
is included within an implementing bill provided for under section 2903 of this title and
(2) The consultation under paragraph (1) shall include—
that bill is enacted into law.
(A) the nature of the agreement;
(b) Agreements regarding nontariff barriers
(B) how and to what extent the agreement will achieve the applicable proposes.
(1) Whenever the President determines that any barrier to, or other distortion of,
policies, and objectives of this title; and
international trade—
(C) all matters relating to the implementation of the agreement under section
(A) unduly burdens or restricts the foreign trade of the United States or
2903 of this title.
adversely affects the United States economy; or
(3) If it is proposed to implement two or more trade agreements in E single
(B) the imposition of any such barrier or distortion is likely to result in a burden,
implementing bill under section 2903 of this title, the consultation under paragraph C.
restriction. or effect;
shall include the desirability and feasibility of such proposed implementation.
and that the purposes, policies, and objectives of this title will be promoted thereby, the
President may, before June 1, 1993, enter into a trade agreement with foreign countries
(e) Special provisions regarding Uruguay Round trade negotiations
providing for-
(1) In general
(i) the reduction or elimination of such barrier or other distortion; or
Notwithstanding the time limitations in subsections (a) and (b) of this section. 11,
(ii) the prohibition of, or limitations on the imposition of, such barrier or other
the Uruguay Round of multilateral trade negotiations under the auspices of the
distortion.
General Agreement on Tariffs and Trade has not resulted in trade agreements by
(2) A trade agreement may be entered into under this subsection only if such
May 31, 1993, the President may, during the period after May 31, 1993. and before
agreement makes progress in meeting the applicable objectives described in section 2901
April 16, 1994, enter into, under subsections (a) and (b) of this section trade
agreements resulting from such negotiations.
of this title.
(c) Bilateral agreements regarding tariff and nontariff barriers
(2) Application of tariff proclamation authority
(1) Before June 1, 1993, the President may enter into bilateral trade agreements with
No proclamation under subsection (a) of this section to carry out the provisions
foreign countries that provide for the elimination or reduction of any duty imposed by
regarding tariff barriers of a trade agreement that is entered into pursuant =
the United States. A trade agreement entered into under this paragraph may also
paragraph (1) may take effect before the effective date of a bill that implements the
provide for the reduction or elimination of barriers to, or other distortions of, the
provisions regarding nontariff barriers of a trade agreement that is entered into
international trade of the foreign country or the United States.
under such paragraph.
(2) Notwithstanding any other provision of law, no trade benefit shall be extended to
(3) Application of implementing and "fast track" procedures
any country by reason of the extension of any trade benefit to another country under a
trade agreement entered into under paragraph (1) with such other country.
Section 2903 of this title applies to any trade agreement negotiated under
subsection (b) of this section pursuant to paragraph (1), except that-
(3) A trade agreement may be entered into under paragraph (1) with any foreign
(A) in applying subsection (a)(1)(A) of section 2903 of this title to any such
country only if-
agreement, the phrase "at least 120 calendar days before the day on =hich be
(A) the agreement makes progress in meeting the applicable objectives described
enters into the trade agreement (but not later than December 15, 19935," shall
in section 2901 of this title;
be substituted for the phrase "at least 90 calendar days before the day on
(B) such foreign country requests the negotiation of such an agreement; and
which he enters into the trade agreement,"; and
(C) the President, at least 60 days before the date notice is provided under
(B) no provision of subsection (b) of section 2903 of this title other that
section 2903 (a)(1)(A) of this title-
paragraph (1)(A) applies to any such agreement and in applying such para-
(i) provides written notice of such negotiations to the Committee on Finance
graph, "April 16, 1994;" shall be substituted for "June 1, 1991;".
of the Senate and the Committee on Ways and Means of the House of
Representatives, and
(4) Advisory committee reports
(ii) consults with such committees regarding the negotiation of such agree-
The report required under section 2155(e)(1) of this title regarding ary trade
ment.
agreement provided for under paragraph (1) shall be provided to the President. the
(4) The 60-day period of time described in paragraph (3)(C) shall be computed in
Congress, and the United States Trade Representative not later than 30 days after
accordance with section 2903(e) of this title.
the date on which the President notifies the Congress under section 2903(a. 1)(A) of
this title of his intention to enter into the agreement (but before January 15. 1994
(5) In any case in which there is an inconsistency between any provision of this Act
and any bilateral free trade area agreement that entered into force and effect with
(Pub.L. 100-418, Title I, § 1102, Aug. 23, 1988, 102 Stat. 1126: Pub.L. 101-382, Title I, § 133(b). Aug.
% 1990, 104 Stat. 653; Pub.L. 103-49, § 1, July 2, 1993, 107 Stat. 239.)
298
299
19 § 2902
CUSTOMS DUTIES
CUSTOMS DUTIES
19 § 2903
HISTORICAL AND STATUTORY NOTES
(3) To ensure that a foreign country which receives benefits under a trade agreement
References in Text
1990 Amendment
entered into under section 2902(b) or (c) of this title is subject to the obligations imposed
This title, referred to in subsecs. (a)(1),
Subsec. (c)(4). Pub.L. 101-382, substituted
by such agreement, the President shall recommend to Congress in the implementing 5I
(b)(1)(B). and (d)(2)(B). is Title I of Pub.L.
100-118. Aug. 23. 1988. 102 Stat. 1119. For
"paragraph (3)(C)" for "paragraph (3)(B)" and
and statement of administrative action submitted with respect to such agreement that
complete distribution of Title I in the Code, see
"section 2903(e)" for "section 2903(f)".
the benefits and obligations of such agreement apply solely to the parties = such
Tables.
agreement, if such application is consistent with the terms of such agreement The
This Act, referred to in subsec. (c)(5), is the
Legislative History
President may also recommend with respect to any such agreement that the benefits
Omnibus Trade and Competitiveness Act of
For legislative history and purpose of Pub.L.
and obligations of such agreement not apply uniformly to all parties to such agreement
1988. Pub.L. 100-118. For classification of this
100-418. see 1988 U.S. Code Cong. and Adm.
if such application is consistent with the terms of such agreement.
Act in the Code, see Tables.
News, p. 1547. See, also, Pub.L. 101-382, 1990
1993 Amendments
U.S.Code Cong. and Adm.News, p. 928; Pub.L.
b) Application of Congressional "fast track" procedures to implementing bills
Subsec. (e). Pub.L. 103-19, $ 1. added sub-
103-49, 1993 U.S. Code Cong. and Adm. News,
(1) Except as provided in subsection (c) of this section-
sec. (e),
p. 301.
(A) the provisions of section 2191 of this title (hereinafter in this section referred
to as "fast track procedures") apply to implementing bills submitted with respect ==
LIBRARY REFERENCES
trade agreements entered into under section 2902(b) or (c) of this title before June
Customs Duties -10. 11.
1, 1991; and
C.J.S. Customs Duties §§ 17, 18.
(B) such fast track procedures shall be extended to implementing bills submitted
with respect to trade agreements entered into under section 2902 of this time after
§ 2903. Implementation of trade agreements
May 31, 1991, and before June 1; 1993, if (and only if)—
(a) In general
(i) the President requests such extension under paragraph (2); and
(1) Any agreement entered into under section 2902(b) or (c) of this title shall enter
(ii) neither House of the Congress adopts and extension disapproval resolu-
into force with respect to the United States if (and only if)—
tion under paragraph (5) before June 1, 1991.
(A) the President, at least 90 calendar days before the day on which he enters
(2) If the President is of the opinion that the fact track procedures should be
into the trade agreement, notifies the House of Representatives and the Senate of
extended to implementing bills described in paragraph (1)(B), the President must submit
his intention to enter into the agreement, and promptly thereafter publishes notice
to the Congress, no later than March 1, 1991, a written report that contains a request
of such intention in the Federal Register;
for such extension, together with-
(B) after entering into the agreement, the President submits a document to the
(A) a description of all trade agreements that have been negotiated under section
House of Representatives and to the Senate containing a copy of the final legal text
2902(b) or (c) of this title and the anticipated schedule for submitting such
of the agreement, together with-
agreements to the Congress for approval;
(i) a draft of an implementing bill,
(B) a description of the progress that has been made in multilateral and bilateral
(ii) a statement of any administrative action proposed to implement the
negotiations to achieve the purposes, policies, and objectives of this title. and at
statement that such progress justifies the continuation of negotiations: and
trade agreement, and
(iii) the supporting information described in paragraph (2); and
(C) a statement of the reasons why the extension is needed to complete the
negotiations.
(C) the implementing bill is enacted into law.
(3) The President shall promptly inform the Advisory Committee for Trade Policy
(2) The supporting information required under paragraph (1)(B)(iii) consists of-
and Negotiations established under section 2155 of this title of his decision to submit a
(A) an explanation as to how the implementing bill and proposed administrative
report to Congress under paragraph (2). The Advisory Committee shall submit to the
action will change or affect existing law; and
Congress as soon as practicable, but not later than March 1, 1991, a written report that
(B) a statement-
contains-
(i) asserting that the agreement makes progress in achieving the applicable
(A) its views regarding the progress that has been made in multilateral and
purposes, policies, and objectives of this title,
bilateral negotiations to achieve the purposes, policies, and objectives of this title:
(ii) setting forth the reasons of the President regarding-
and
(I) how and to what extent the agreement makes progress in achieving
(B) a statement of its views, and the reasons therefor, regarding whether the
the applicable purposes, policies, and objectives referred to in clause (i),
extension requested under paragraph (2) should be approved or disap proved.
and why and to what extent the agreement does not achieve other
(4) The reports submitted to the Congress under paragraphs (2) and (3). or any
applicable purposes, policies, and objectives,
portion of the reports, may be classified to the extent the President determines
(II) how the agreement serves the interests of United States commerce,
appropriate.
and
(5)(A) For purposes of this subsection, the term "extension disapproval resolution"
(III) why the implementing bill and proposed administrative action is
means a resolution of either House of the Congress, the sole matter after the resolving
required or appropriate to carry out the agreement;
clause of which is as follows: "That the
disapproves the request of the
President for the extension, under section 1103(b)(1)(B)(i) of the Omnibus Trade and
(iii) describing the efforts made by the President to obtain international
exchange rate equilibrium and any effect the agreement may have regarding
Competitiveness Act of 1988 [19 U.S.C.A. § 2903(b)(1)(B)(i)], of the provisions of section
151 of the Trade Act of 1974 (19 U.S.C.A. $ 2191] to any implementing bill submitted
increased international monetary stability; and
with respect to any trade agreement entered into under section 1102(b) or (c) of such
(iv) describing the extent, if any, to which-
Act [19 U.S.C.A. $ 2902(b) or (c)] after May 31, 1991, because sufficient tangible
(I) each foreign country that is a party to the agreement maintains non-
progress has not been made in trade negotiations.", with the blank space being filled
commercial state trading enterprises that may adversely affect, nullify, or
with the name of the resolving House of the Congress.
impair the benefits to the United States under the agreement, and
(B) Extension disapproval resolutions-
(II) the agreement applies to or affects purchases and sales by such
(i) may be introduced in either House of the Congress by any member of such
enterprises.
House; and
301
19 § 2903
CUSTOMS DUTIES
CUSTOMS DUTIES
19 § 2904
(ii) shall be jointly referred, in the House of Representatives, to the Committee
(d) Rules of House of Representatives and Senate
on Ways and Means and the Committee on Rules.
Subsections (b) and (c) of this section are enacted by the Congress-
(C) The provisions of section 2192(d) and (e) of this title (relating to the floor
(1) as an exercise of the rulemaking power of the House of Representatives and
consideration of certain resolutions in the House and Senate) apply to extension
the Senate, respectively, and as such is deemed a part of the rules of each House.
disapproval resolutions.
respectively, and such procedures supersede other rules only to the extent that they
(D) It is not in order for-
are inconsistent with such other rules; and
(i) the Senate to consider any extension disapproval resolution not reported by
(2) with the full recognition of the constitutional right of either House 1,0 change
the rules (so far as relating to the procedures of that House) at any time. in the
the Committee on Finance;
same manner, and to the same extent as any other rule of that House.
(ii) the House of Representatives to consider any extension disapproval resolu-
tion not reported by the Committee on Ways and Means and the Committee on
(e) Computation of certain periods of time
Rules; or
Each period of time described in subsection (c)(1)(A) and (E) and (2) of this section
(iii) either House of the Congress to consider an extension disapproval resolution
shall be computed without regard to-
that is reported to such House after May 15, 1991.
(1) the days on which either House of Congress is not in session because of ED
(c) Limitations on use of "fast track" procedures
adjournment of more than 3 days to a day certain or an adjournment of the
Congress sine die; and
(1)(A) The fast track procedures shall not apply to any implementing bill submitted
(2) any Saturday and Sunday, not excluded under paragraph (1). when either
with respect to a trade agreement entered into under section 2902(b) or (c) of this title if
House of the Congress is not in session.
both Houses of the Congress separately agree to procedural disapproval resolutions
within any 60-day period.
(Pub.L. 100-418, Title I, $ 1103, Aug. 23, 1988, 102 Stat. 1128.)
(B) Procedural disapproval resolutions—
HISTORICAL AND STATUTORY NOTES
(i) in the House of Representatives-
References in Text
Pub.L. 100-418, Aug. 23. 1988. 102 Stat 11JT.
For classification of this Act in the Code. 100
(I) shall be introduced by the chairman or ranking minority member of the
This title, referred to in subsecs. (a)(2)(B)(i)
Tables volume.
Committee on Ways and Means or the chairman or ranking minority member
and (b)(2)(B), (3)(A), is Title I of Pub.L. 100-418,
of the Committee on Rules,
Aug. 23, 1988, 102 Stat. 1119. For complete
Legislative History
distribution of Title I in the Code, see Tables.
(II) shall be jointly referred to the Committee on Ways and Means and the
For legislative history and purpose of Publ
Committee on Rules, and
The Omnibus Trade and Competitiveness Act
100-418, see 1988 U.S. Code Cong. and Adm
of 1988, referred to in subsec. (c)(1)(E), is
News, p. 1547.
(III) may not be amended by either Committee; and
(ii) in the Senate shall be original resolutions of the Committee on Finance.
LIBRARY REFERENCES
Customs Duties =10, 11.
(C) The provisions of section 2192(d) and (e) of this title (relating to the floor
consideration of certain resolutions in the House and Senate) apply to procedural
C.J.S. Customs Duties §§ 17, 18.
disapproval resolutions.
NOTES OF DECISIONS
(D) It is not in order for the House of Representatives to consider any procedural
Construction with other laws 1
tute "final agency action" reviewable under it
disapproval resolution not reported by the Committee on Ways and Means and the
ministrative Procedure Act (APA). Public CE
Committee on Rules.
zen V. U.S. Trade Representative. C.A.D.C.1983
1. Construction with other laws
5 F.3d 549.
(E) For purposes of this subsection, the term "procedural disapproval resolution"
President's action in submitting international
means a resolution of either House of the Congress, the sole matter after the resolving
trade agreement to Congress would not consti-
clause of which is as follows: "That the President has failed or refused to consult with
Congress on trade negotiations and trade agreements in accordance with the provisions
§ 2904. Termination and reservation authority; reciprocal nondiseriminatory
of the Omnibus Trade and Competitiveness Act of 1988 [Pub.L. 100-418], and, therefore,
treatment
the provisions of section 151 of the Trade Act of 1974 [19 U.S.C.A. § 2191] shall not
apply to any implementing bill submitted with respect to any trade agreement entered
(a) In general
into under section 1102(b) or (c) of such Act of 1988 [19 U.S.C.A. § 2902(b) or (c)], if,
For purposes of applying sections 2135, 2136(a), and 2137 of this title—
during the 60-day period beginning on the date on which this resolution is agreed to by
(1) any trade agreement entered into under section 2902 of this title shall be
the
the
agrees to a procedural disapproval resolution (within
treated as an agreement entered into under section 2111 or 2112 of this title. as
the meaning of section 1103(c)(1)(E) of such Act of 1988).", with the first blank space
appropriate; and
being filled with the name of the resolving House of the Congress and the second blank
(2) any proclamation or Executive order issued pursuant to a trade agreement
space being filled with the name of the other House of the Congress.
entered into under section 2902 of this title shall be treated as a proclamation or
(2) The fast track procedures shall not apply to any implementing bill that contains a
Executive order issued pursuant to a trade agreement entered into under section
provision approving of any trade agreement which is entered into under section 2902(c)
2112 of this title.
of this title with any foreign country if either-
(b) Reciprocal nondiscriminatory treatment
(A) the requirements of section 2902(c)(3) of this title are not met with respect to
(1) The President shall determine. before June 1, 1993, whether any major industrial
the negotiation of such agreement; or
country has failed to make concessions under trade agreements entered into under
(B) the Committee on Finance of the Senate or the Committee on Ways and
section 2902(a) and (b) of this title which provide competitive opportunities for the
Means of the House of Representatives disapproves of the negotiation of such
commerce of the United States in such country substantially equivalent to the competi-
agreement before the close of the 60-day period which begins on the date notice is
tive opportunities, provided by concessions made by the United States under trade
provided under section 2902(c)(3)(C)(i) of this title with respect to the negotiation of
agreements entered into under section 2902(a) and (b) of this title, for the commerce of
such agreement.
such country in the United States.
302
303
Enskine-
Proposed changes
and more balance to
The recommendation
memo, while leaving
intact. He needs to
know downsides of
delay, feven 1 it
is the best course Sandy
FEB. -'26' 97 (WED) 13:51
TEL: 0000
P. 002
H-204 U.S. CAPITOL
RICHARD A. GEPHARDT
202-225-0100
MISSOURI
DEMOCRATIC LEADER
Congress of the United States
house of Representatives
Office of the Democratic Leader
CHASHINGTON, DC 20515-6537
February 26, 1996
Dear Democratic Colleague:
Shortly, President Clinton is expected to request that Congress grant new fast track trade
negotiating authority. I am writing to seek your support for a forward looking agenda that will
ensure that future trade agreements promote progress in living standards, environment and
human rights here in the U.S. and around the globe.
This is an important topic. Article One, Section Eight of our Constitution vests exclusive
authority over international commerce in the legislative branch. In recent years, Congress has
delegated more authority to the Executive Branch as our trade negotiating agenda has expanded
beyond tariff and quotas issues.
However, delegating trade negotiating authority should not be an abdication of the
important role that Congress has in this matter. The Constitution demands, and the American
people - our constituents - - expect that we will fight for their rights and interests in all venues.
Any delegation of legislative authority over international trade that occurs should be based on a
complete and thorough debate of the issues and a positive grant of authority.
In my view, the broad delegation of legislative authority involved in fast track isn't a
privilege to be granted lightly: it has to be earned.
In 1991, I supported President Bush's request for fast track authority because I believed,
as I do now, that we should seek to expand trade. We can't shy away from the world trading
system. Exports support millions of jobs here in the U.S. We've got to continue our efforts to
pry open foreign markets to ensure that American farmers, workers and businesses will have the
opportunity to sell their competitive products abroad.
However, focusing on exports alone fails to recognize that our nation's trade deficit has
reached historic levels fueled by an increasing flood of imports. Too many ideologues of the old
status quo are not willing to address the impact of imports. The fact is that imports are having a
tremendous impact on U.S. jobs and living standards. Last year, our nation's trade deficit
reached a new record with a $166.6 billion deficit in goods. Many Americans see themselves as
victims, rather than beneficiaries, of recent trade agreements.
As well, many of our nation's corporations are using the pressure of international
competition and the threat of moving jobs out of our country to limit wage and salary increases
and as a tool in fighting union organization efforts. During the debate over NAFTA, a Wall
Street Journal poll of executives found that a majority of executives from large companies
intended to shift some production to Mexico and that a large number intended to use NAFTA "as
a bargaining chip to keep down wages in the U.S." This trend continues: A recent survey
ITS of T abor found that in more than half of union organizing drives
FEB. --26' 97 (WED) 13:52
TEL: 0000
P. 003
February 26, 1997
Page 2
We must not negotiate away our jobs and our living standard based on outdated theories and
assumptions about trade and international economics. Defenders of the status quo seek to define
the debate on trade as being about either protectionism or free trade. Labels denigrate the debate
and short-sell the interests of our people. What's needed is an honest debate about the real issue.
We need a debate about the facts and our future, not motives and past theories.
The debate should be about how we continue the process of economic integration in a way
that is truly a force for progress for all involved. We must continue to provide U.S. leadership
without selling out average Americans who work hard, play by the rules and simply want a fair
chance to succeed.
We must be unwilling to compromise or negotiate away the economic interests of our
people. According to a recent survey, the public is growing increasingly frustrated with trade
treaties and agreements which a majority believes are sacrificing our jobs, opportunity and
economic future based on elite establishment projections that, in the long term, we'll all be better
off. Used in this way, the long-term is simply a debating point: a point in time that may never come.
The primary focus of the current debate over fast track negotiating authority is the goal of
expanding the North American Free Trade Agreement (NAFTA) first to Chile and, ultimately,
throughout all of South and Central America.
During the debate over NAFTA, I traveled around my District and across the U.S. talking to
farmers, workers and businesspeople to understand what competitive pressures faced our country. I
visited Mexico several times to see for myself what was happening on the ground. I flew to the U.S.
side of the border and drove across unannounced so that I could get an unvamished view. I talked to
hundreds of average people. I walked through scenes of environmental and health devastation. I
knocked on the doors of many companies asking to see and understand their operations. 1 didn't
want to rely simply on statistics or theories. I wanted to really understand what was necessary for
everyone to benefit.
I supported fast track in 1991 because I believe that we needed a NAFTA. We can't ignore
Mexico. Closing off our borders isn't an option. The question then, and now, is how do we make
NAFTA a real force for progress. How do we ensure that an agreement promotes, not undermines
living standards, health and safety for all our people. I believed that it was in the deep self-interest
of the U.S. to reach an agreement that addressed the issues in a way that would promote
fundamental, long-term change.
Recently David Bonior and I had the opportunity to visit Mexico to review first hand the
results of NAFTA. Rather than improving conditions, the NAFTA has validated Mexico's system
of labor relations, wage setting mechanisms and environmental enforcement that has damaged the
standard of living, health and safety of the Mexican people. We saw 21" century technology
combined with 19th century living and working conditions. The wages and living conditions of
average hard-working Mexicans haven't improved. They've declined. Real manufacturing wages
are now 25% lower than they were when NAFTA began.
FEB. --26' 97 (WED) 13:53
TEL: 0000
P. 004
February 26, 1997
Page 3
Since 1980, real manufacturing wages have dropped by about 50%. Everyone clearly agrees
that real wage declines have accelerated due to the peso crisis. However, it's important to recognize
that real wages were stagnating prior to the peso crisis while at the same time worker productivity
continued to grow. Workers simply aren't being compensated in relation to their efforts. The peso
crisis exacerbated the real wage declines but the problem of inadequate compensation has much
deeper roots in the Mexican economic and legal system.
There has been a tremendous increase in the number of maquiladora plants and an almost
50% increase in the maquiladora work force along the border since NAFTA began - - plants that are
almost exclusively created to send their exports into the U.S. During the 1993 debate on NAFTA's
passage, proponents in Mexico and the United States said that NAFTA would eliminate the
incentive to create maquiladoras. Investment in maquiladoras in the state of Baja California has
surged by more than 35% over the past year alone. Since the start of NAFTA, hundreds of
thousands of jobs have been shifted to maquiladora plants. These jobs pay wages on which it's
almost impossible to raise a family. We met family after family who said that they simply couldn't
make ends meet - a gallon of milk costs almost three hours of wages. One mother told me her
children were lucky if they got to drink milk once a week. Almost everyone in the family is forced
to work simply to get by.
Mexican workers are viewed simply as producers, not consumers. Many of the
maquiladoras experience tumover rates of 100% or more. As wage increases are virtually
nonexistent, workers have little recourse - many act like economic nomads going from plant to
plant hoping for the slightest advantage to survive. Some return home. Many decide that the only
ticket to a better life is to cross the border into the U.S. No one can live on much more than a
survival basis working in these plants.
We drove by industrial parks where the companies continue to dump their toxic wastes at
night into the rivers where people bathe. We saw furniture plants using highly toxic solvents and
finishes that once operated in California and throughout the U.S. which had moved to Mexico
because, as the General Accounting Office pointed out, of lax environmental enforcement. We
revisited an abandoned lead recycling facility that I had visited on an earlier trip to the area Tarps
now covered the huge mounds of waste, yet nothing has been done to really clean up the site. Just
feet away a dairy farm continues to operate. The milk from these cows is drunk by the kids in the
area - those that can afford it. High blood levels of lead continue to plague the surrounding
communities.
Not only have things not improved in the border area, but since NAFTA they've gotten
worse. The only positive sign for me was that the Mexican people continue to have hope. They are
proud people who simply want a chance to provide for themselves and their families. While the
border is only miles away, and it beckons far too many people, most want to stay in Mexico because
they love their country. Yet, many find that the pressures of daily life along the border and
throughout the country are too great. Countless people continue to cross the border into the U.S.
every day with the hope of a better life.
FEB. 26' 97 (WED) 13:54
TEL: 0000
P. 005
February 26, 1997
Page 4
Some are pointing to the fact that we need to recognize the impact that the peso crisis has
had in Mexico. I agree that the impact has been devastating. But, the negative trends under
NAFTA in our trade balance and in real wages for Mexican workers were in place before the peso
crisis hit. Months before the December 1994 peso crash, the U.S. trade surplus with Mexico had
already turned into a monthly deficit. And, as I wrote to the President before the peso crisis
occurred, the crisis was foreseeable. I warned, as many others did, about the overvalued peso and
the threat to our economy that would result if the issue was not dealt with during the negotiations.
Some are also highlighting the repayment of the billions of dollars in loans that we made to
Mexico as part of the peso bailout as a real sign of success. Clearly, we're all pleased that Mexico
has refinanced these loans. But let's recognize that Mexico has repaid this loan in two ways. First,
they've shifted some of their borrowing to other countries. Second, we ran a more than $16 billion
trade deficit with Mexico last year alone and have amassed more than $33.6 billion in trade deficits
with Mexico since the peso crisis began. In other words, many American workers have repaid
Mexico's loans with their jobs and living standard.
As I said, I supported President Bush's request because I believed that we should seek to
negotiate new trade agreements that expand opportunity. I spent several months negotiating with
President Bush and his Administration about what our objectives should be. I believed then, as I
believe now, that President Kennedy was right when he said in his first inaugural address: "Let us
never negotiate out of fear, but let us never fear to negotiate." I'm confident that if we understand
and fight for our objectives, we can reach good new agreements.
But there is a key difference between the debate in 1991 and today. In 1991 we were dealing
with abstract ideas. Now we have had three years of real life experience under a specific set of rules
embodied in the NAFTA. I believe that it would be a fundamental mistake to simply extend the
current NAFTA. It simply isn't working.
Why isn't NAFTA working?
The single biggest flaw in the NAFTA was its failure to adequately address industrial
relations — the right to strike, the right to organize and the right to freely associate. We've seen
clearly that the failure to adequately enforce such core labor laws in Mexico means that Mexican
wages have failed to rise. Nationally, wages are basically capped under the agreement known as "El
Pacto." Additionally, as numerous workers in Tijuana told David Bonior and me recently, the
maquiladora owners also privately set minimum and maximum wages so that they don't compete
for workers on this basis.
While U.S. businesses were able to demand a provision in the NAFTA that requires that
Mexico enforce it's intellectual property laws, and is able to use trade sanctions, criminal penalties
and impoundment of goods to enforce these measures, there is no similar provision for enforcement
of Mexico's labor laws or, for that matter, Mexico's environmental laws. Thus, if Mexico's failure
to enforce it's labor laws results in Mexican worker wages being held down and their rights
abrogated, there is little that we can do other than complain. So far, the few complaints that have
been brought under the labor side agreement have made little or no impact.
FEB. 26' 97 (WED) 13:55
TEL: 0000
P. 006
February 26, 1997
Page 5
Five cases concerning Mexico have been brought under the labor side agreement for labor
violations in Mexico. As a result of these cases, no union has been recognized in Mexico. There
has been no noticeable change on the ground. Take for example the cases at General Electric in
Ciudad Juarez or Honeywell in Chihuahua where workers were fired trying to organize independent
unions. Those unions remain unrecognized. Those workers have not been reinstated.
The workers that David and I talked to told stories very similar to the ones we heard during
the NAFTA negotiations. Worker after worker told us how there was no ability to try and fight for
better working conditions. If you complained, you were fired. Many told how the maquiladora
owners kept lists of "problem" employees who were blacklisted because of their complaints. Many
are arrested for their activities on trumped up charges.
Several workers told us they didn't even know if there was a union contract or, if there was,
they had no idea who their union representative was. The union was a sham, but there wasn't
anything they could do about it.
If we don't have an effective way of addressing this problem, Mexican workers aren't going
to get a fair deal. They won't be fairly compensated for their hard work. We won't create and
expand the middle class that can buy our products and alleviate the downward pressure on our
people's wages. Labor rights is a trade issue. It has an impact on Mexican workers and our
workers. The only truly effective way of dealing with this issue is being able to resort to trade
sanctions if all else fails.
The promise of NAFTA was to be greater opportunity and increased standards of living in
all three countries. That has not been the case. If Mexican workers can't bargain for higher wages,
they won't expand the middle class that can purchase U.S. products. Indeed, since NAFTA, the
percentage of Mexicans considered "extremely poor" rose from 31% in 1993 to 50% in 1996. Two
out of three Mexicans now report that their personal economic situation is worse than before
NAFTA. And, the downward pressure on our wages will continue.
As we seek to ensure adequate enforcement of labor laws, we need to seriously examine the
need to provide for cross-border organizational rights for our labor organizations. Because of
government dominated labor movements, cocrcion, and inadequate enforcement structures, it may
be that the situation could be materially improved through the assistance of U.S. or other
international labor organizations. As our businesses are able to form new alliances and have access
to the enforcement process, our labor unions should have the same rights as well.
In the area of the environment, the increase in post-NAFTA border production has increased
the border population and industrial and toxic emissions and waste. Yet, the promised
improvements to the existing serious border health and environmental damage have not occurred.
The NAFTA environmental side agreement is simply inadequate to the task.
FEB. '--26' 97 (WED) 13:56
TEL: 0000
P. 007
February 26, 1997
Page 6
To date, less than a handful of projects have been approved for funding by the NADBank
and through the BECC. While projects have languished before these organizations, the health and
safety of people on both sides of the border deteriorates. These organizations must begin to really
fulfill their intended purpose and focus on the needs of the people live on and near the border - not
just companies that are seeking to have their costs underwritten and defrayed by public funds.
We also need to be able to fully understand the potential impact of future trade agreements
on the world's environment. We must carefully balance economic development and environmental
protection. To do this, we must have complete environmental impact statements conducted as
negotiations proceed.
I am unwilling to support new trade negotiations that do not address these fundamental flaws
by including labor rights and the environment as chapters in the core of the agreement equal in
stature and force and linked to provisions on investment and trade. And, such labor and
environmental provisions must be fully enforceable with access to trade sanctions where necessary.
Access to the enforcement process for average citizens and non-governmental organizations must be
provided. Transparency throughout the process must also be assured.
These issues must not be covered in separate side agreements that can later be rejected by the
Republicans, but as integral parts of the agreement itself. For me, this is not negotiable. Trade,
labor and the environment are inextricably intertwined. Trade agreements should not become
vehicles to undermine progress in these important areas.
Scope of authority
Over the past four years we have signed more than 200 new trade agreements - NAFTA
and the GATT among them. While I support expanding our export opportunities and enhancing the
rules of trade, I do not believe that a case has yet been made for broad fast track authority.
Last year I joined with then Secretary of Commerce Kantor and Senator Hollings in calling
for dramatically expanded trade monitoring and enforcement capabilities. It was my belief - and
continues to be my belief - that we should seek to capitalize on and learn from existing trade
agreements before we haphazardly seek to engage in new negotiations simply for the sake of
negotiating.
In the first six months of its operation the trade monitoring and enforcement unit at the
Department of Commerce has already begun to root out substantial problems in the carrying out of
our trade policy. I-commend the Department for its attention to this area. It would be unwise to
proceed in new areas before we understand what has and hasn't worked.
FEB. 26' 97 (WED) 13:57
TEL: 0000
P. 008
February 26, 1997
Page 7
Accordingly, I believe that we should limit any grant of fast track authority - if the issues
that I have raised are addressed - to bilateral negotiations with Chile or to remedy the flaws in the
NAFTA before we proceed on any accession agreements. Indeed, our former colleague Bill
Richardson, now serving as U.S. Ambassador to the United Nations, and I introduced Chile-only
fast track legislation in 1994. While the legislative language is out-of-date, the approach of moving
forward only with Chile, with significant changes from the 1994 NAFTA, should be the basis for
any new trade negotiating authority. This proposal, and one I made later that year, provided trade
negotiating authority while including significant procedural safeguards to protect Congress'
interests.
I have been frustrated by the Administration's reluctance to provide factual analysis on our
trade agreements and ongoing negotiations. Let me give you a few examples. Authority is being
requested to expand NAFTA even before the congressionally-mandated July 1997 review is
complete. I requested that the International Trade Commission do an analysis of the potential
impact of allowing China to join the World Trade Organization. The ITC refused this request. As
well, I requested that the USTR endorse my request, as provided for under current law, to force the
ITC into acting. My understanding is that the USTR wants to limit the scope of the ITC's
examination of these issues. Our Department of Labor has not released the survey it commissioned,
which I mentioned earlier, that shows how companies are using the threat of moving jobs out of the
country to limit union organizing success. There are many other areas where the debate is not being
joined or is being stifled.
A case has not been made for providing trade negotiating authority in an open-ended way.
That would be an overly broad delegation of Congressional power. Let's review where we are,
what's been accomplished, and what needs to be accomplished before we provide broad trade
negotiating authority. I believe that there will be broad bipartisan support on this point.
Upward Harmonization:
Our first step in reaching new trade agreements must be to require that all signatories enforce
their basic laws. We should expect that as we engage in negotiations, the rule of law that a country
has on its books - - in its Constitution, statutory and regulatory manifestations - be fully enforced.
But this is the starting point, not the end, of our efforts. I commended the Mexicans during
the negotiations for many of the laws that they have had on their books - especially those
represented in Article 123 of their Constitution pertaining to basic labor rights. The first and most
fundamental problem we faced, and continue to face, with Mexico is inadequate enforcement.
FEB. '-26' 97 (WED) 13:58
TEL: 0000
P. 009
February 26, 1997
Page 8
Chile, on the other hand, has not madc similar progress in terms of its basic body of labor
laws. While Chile's efforts at democratic and political reform deserve our recognition and support,
Chile's progress in advancing labor rights has fallen short of the mark. The labor law put in place
during the Pinochet dictatorship remains in effect, thwarting organizing efforts. Large groups of
Chilean workers are effectively barred from being able to engage in collective bargaining: rural,
forestry, construction, and fisheries workers. Where the Chilean labor law even allows contracts to
be collectively negotiated, they are limited in scope to plant or enterprise bargaining with a ban on
industry-wide organizing.
It's important to recognize that President Frei's government has offered a number of
important labor law reforms that would improve Chile's legal foundation. But these reforms have
been blocked by business interests and the Pinochet faction in the Chilean Senate. A precondition
for reaching an agreement with Chile should be the passage of these and other reforms. As we have
demanded that other countries improve their intellectual property protection laws prior to entering
into agreements with them, we should require the same approach with regard to labor laws.
There also are improvements necessary in Chile's environmental laws. The most glaring
problem is that regulations have yet to be issued to implement Chile's 1994 environmental law. In a
resource rich economy where four categories of natural resources - agriculture, forestry, fisheries,
and mining - comprise 80% of all exports, this is a fundamental problem.
Clearly Chile has made great strides in advancing democracy - strides that I and many
others applaud. We need to work towards further enhancing and deepening the progress that has
been made. We have the opportunity to reach a good agreement with Chile. But, before we sit
down at the bargaining table, we have an obligation to consider what a "good agreement" really
means. And we have a right to say to the people of Chile: we'll start a new trade partnership - but
not if it means trading away our values. Not if it means lowering our labor and environmental
standards or standard of living. instead of raising yours.
Let's recognize that what we're talking about is comprehensive economic integration
between our countries: This is more comprehensive than the average trade agreement which simply
don't address these important issues. We're talking about a form of economic marriage. As such,
we can, and must, expect to have a comprehensive discussion of these issues. If the agreement is to
be a force for progress, it must address more than minimal standards. It has to ensure that the
opportunity growth and economic advancement are possible. If we limit the debate by failing to
address all the important issues we put our people's standard of living at risk.
During the NAFTA negotiations I and many others were told that we would be able to
change the agreement once it had been signed into law. We were told that a process existed that
would allow for negotiation and renegotiation of various changes.
FEB. - 26' 97 (WED) 13:58
TEL: 0000
P. 010
February 26, 1997
Page 9
This was essentially a false promise. The ability to achieve results exists during the
negotiating phase - not afterwards when our negotiating leverage has been lost. Rather than set an
arbitrary deadline for completing negotiations, or being willing to accept a less than desirable result,
we should remain at the negotiating table, or be willing to leave that table, if our national interests
aren't furthered by the text of the agreement.
But in addition to the changes that should be made as part of any agreement, we need to
recognize that further upward harmonization is necessary in labor and the environment and other
important areas. We need to find a process that will ensure further progress, over time. A process
that ties further trade liberalization - - possibly within the context of the agreement - to other
important improvements would further our interests in these vital areas.
Monetary Flows:
I pointed out earlier that I and others had raised during the NAFTA debate the threat that a
devaluation of Mexico's peso could have on the U.S. and on the potential benefits that could result
from any trade agreement with Mexico. Terms to counter major current fluctuations is an
appropriate area for negotiation as part of any trade agreement.
During the peso crisis Administration officials pointed out the contagious effect that
Mexico's problems could have on world financial markets. They pointed out that currencies and
markets around the globe - from the Thai baht to the Italian lire - were effected. The bipartisan
leadership on both sides of the Capitol supported the President's call for action.
But that call for action might have been avoided had we been aggressive with Mexico in
addressing their economic policies during the course of the NAFTA debate. We must not allow
this mistake to be made again. Congress' reluctance to support the peso bailout was a harbinger of
future reluctance. The international financial system is not yet fully equipped to dcal with a similar
threat in the future. New trade agreements must address the issue of capital flight and currency
stability.
Why must certain issues be covered in the core of the agreement
Coverage of labor and environmental issues must be included as a chapter in the core
agreement, rather than included as side agreements as was done in NAFTA. Given the expansion of
the impact of trade disciplines into the realm of domestic standards, coverage of labor and
environmental issues is now as important to the success of a trade agreement as "traditional" trade
issues.
A number of Republican members have indicated that they are willing to allow the
commercial components of a trade agreement to be considered under fast track, but that other issues
- labor and the environment and possibly others - might be subject to amendment. We cannot
allow for some issues to be considered under procedural rules favoring passage and others under
more cumbersome procedures. These Republicans want to try to delink labor and environmental
issues from the trade agreement. This is simply unacceptable.
FEB. 26' 97 (WED) 13:59
TEL: 0000
P. 011
February 26, 1997
Page 10
It's important to understand that any changes to the core agreement would require
symmetrical changes in other countries. If we were to accept coverage of labor and environment
and other issues under side agreements and these provisions were not agreed to by either the U.S. or
other countries, the core of the agreement could still stand. Only by including these issues in the
core of the agreement can we ensure that they will either be part of the law, or the entire agreement
will fail. The rules of the game must be as fair and effective for our workers as for our patents.
Human Rights - Rule of Law
The adequate protection of human rights should be a basic standard we apply to our trade
relations with any country. Our basic values and interests should not be auctioned off to the highest
bidder. The moral leadership of the United States has acted to promote change around the globe.
We must not debase this basic interest.
It's also important to understand that advocacy of human rights promotes, not undermines,
our economic interests. A country that does not protect human rights does not afford its people the
ability to demand fair compensation for their efforts. The result is that we fail to lift up the standard
of living of people in other countries. This means that we are not expanding the class of consumers
who can purchase our exports and we are putting downward pressure on our living standard simply
to compete.
Our business community also needs to understand that promotion of human rights is a
question of the rule of law. A country that fails to enforce its laws in this important area may refuse
to adequately enforce its laws that protect our business interests as well. We have clearly seen this
in China where the disdain for the basic rule of law as it relates to human rights has a parallel in
China's failure to adequately protect intellectual property, failure to adequately abide by its market
access commitments and its failure to follow the rule of law in many other areas.
Trade in narcotics
I believe that we must address narcotics flows as part of any future trade negotiations. As
we seek to enhance the flow of goods and services through easier access between and among our
trading partners, we must recognize the risk of increased drug trafficking. As we ease the way for
products to come to our shores, we increase the ability of drug traffickers to take advantage of
relaxed customs procedures.
It's appropriate and, indeed, vital that we address this issue as part of our trade negotiations.
Failure to aggressively address this issue will undermine our ability to stem the flow of drugs.
We've already seen the impact of the failure to address this issue as part of the NAFTA. Estimates
indicate a dramatic rise in the drug trade with Mexico.
Clearly enhancing economic opportunity in other countries through greater trade will help to
ease the pressure on the population to engage in drug production and trafficking as growth and
opportunity rise. But it would be naive to believe that this will occur quickly and that there will be a
wholesale replacement of the financial benefits in the drug trade.
FEB. --26' 97 (WED) 14:00
TEL: 0000
P. 012
February 26, 1997
Page 11
Drug use by our nation's children is on the rise. While we must do all that we can to reduce
the demand for drugs here in this country, we must also take advantage of every opportunity to
reduce the supply of drugs. This is not a problem to be swept under the rug.
Transition
The American people know that our future lies in expanding economic engagement, not
shying away from it. Given fair trade rules, American farmers, workers and businesses can out
compete anyone.
But even with further economic integration under fair rules, we've got to recognize that there
will be a price to pay for some Americans. While observers focus on the big winners, as elected
public officials, we've got to focus on making ordinary people winners as well.
During the NAFTA debate I argued strenuously on this point. On two occasions I invited
officials from the European Union to meet with me and other members of the Democratic Caucus to
learn how they had addressed the integration of Spain, Portugal and Greece into the EU. To this
day, the EU continues to focus on structural adjustment issues as a vital public policy issue. Since
the integration of these countries into the EU, well over $100 billion has been spent on integration
efforts. The leaders understood the need to seriously address the impact of integration and address
any dislocation or disruption in the economy. Clearly, any program we look at would, at best, only
spend a fraction of this amount, but it's clear that we just haven't been serious about this issue. We
need to have a comprehensive debate about this issue.
To date, over 109,000 people have been certified for NAFTA Trade Adjustment Assistance
benefits. Many, many more were disqualified because of the difficulty in qualifying for assistance.
And, many others never applied because of inadequate information or understanding about the
current program. And, the program needs to be expanded to increase individual eligibility and to
cover firms that need assistance as well. Employees should not have to relocate themselves and
their families because their firm and community has been adversely affected - we should also find
ways of helping firms shift their focus to new product lines and endeavors so that we prepare for
change, rather than protect against it.
In the past, transition assistance here in the U.S. has been an afterthought rather than an
integral part of our trade policy formulation. This is a fundamental mistake. If we are to build
public support for further trade expansion efforts we've got to seriously address this issue.
I believe that now is the time for a comprehensive trade adjustment assistance program to be
put in place that will provide the foundation for any future trade expansion efforts. We must not
allow future trade agreements to proceed without an adequate transition program being adopted that
is directly linked to the consideration of the trade agreement in Congress.
FEB. --26' 97 (WED) 14:01
TEL: 0000
P. 013
February 26, 1997
Page 12
Foreign Corrupt Practices
At the Miami Summit of the Americas in December, 1994 the issue of foreign corruption
was highlighted. Former Commerce Secretary Mickey Kantor spent a great deal of effort
highlighting this issue and seeking to promote positive solutions.
Across the globe U.S. business interests are prohibited from offering bribes or engaging in
other corrupt practices, rightfully so, to expand their business interests. Rather than handcuffing our
businesspeople as they seek to do business, we need to aggressively seek ways to rein in foreign
corrupt practices that seek to pit one business against another to win a contract. Future trade
agreements must seek to address this issue.
Length of authority
If trade negotiating authority is to be granted, it will essentially be a contract with President
Clinton as to what powers and authority are delegated to him and his administration by Congress.
While I believe that this grant should be as specific as possible, we must recognize that the authority
will also depend on the intent and beliefs of the President.
Accordingly, I believe that Congress should be extremely reluctant to grant fast track
authority beyond the current term of the President. Each President should have to make his or her
case to the Congress and the American people as to how the authority is to be used.
Conclusion
I know that this letter is long, but the issues are important and complex. And, believe it or
not, there are many other trade-related issues that demand attention - - the treatment of indigenous
peoples, and money laundering to name just two.
We need to have an engaged national debate on these issues in the country, not limit them to
the back rooms in Congress. I hope that you will join with me in this debate so that we can ensure
that future trade agreements enhance opportunity for all our people.
We must not be bound by arbitrary deadlines or the threat of lost opportunities. The United
States is still the most open market in the world. And, it is the most desirable consumer market.
We should be willing to use the leverage of access to our market to ensure that the rights and
interests of our farmers, workers, businesses, public health and the environment are advanced, not
undermined, by economic integration. I'm confident that an open, honest debate can yield positive
results here at home and around the world.
Sincerely,
Did Gesharder
Richard A. Gephardt
House Democratic Leader
EXECUTIVE OFFICE OF THE PRESIDENT
THE UNITED STATES TRADE REPRESENTATIVE
WASHINGTON, D.C. 20508
April 30, 1997
The President
The White House
Washington, D.C. 20500
Dear Mr. President:
Section 108 of the NAFTA implementing legislation directs the U.S. Trade Representative to
submit, by May 1, 1997, to you and to the Committee on Finance of the Senate and the
Committee on Ways and Means of the House of Representatives, a "report on significant market
opening." The enclosed report is submitted in fulfillment of this requirement.
As mandated by the legislation, this report is to list those foreign countries that currently provide
fair and equitable market access beyond what is required by existing multilateral trade agreements,
or that have made significant progress in opening their markets to U.S. exports, and the further
opening of whose markets has the greatest potential for U.S. exports.
This report covers all regions of the world. However, additional detail is provided on countries
in two regions--Latin America and Asia/Pacific--that have been experiencing the strongest
economic growth, and have been the major focus of recent U.S. regional trade policy efforts.
The legislation also requires, on the basis of this report, that you "determine with which foreign
country or countries, if any, the United States should seek to negotiate a free trade area
agreement or agreements." We hope that the enclosed report will be useful to you in making that
determination.
I believe that the information in this report provides a basis for continuing to work with the
Congress to identify opportunities for negotiating greater market access for U.S. exports.
Clauluur
Sincerely,
Charlene Barshefsky
Enclosure
FUTURE FREE TRADE
AREA NEGOTIATIONS
REPORT ON SIGNIFICANT
MARKET OPENING
This report was prepared by the Office of the United States Trade
Representative, in accordance with the North American Free Trade
Agreement Implementation Act, Sec. 108 (b)(2).
May 1, 1997
INTRODUCTION
As required by Section 108 (b)(2) of the North American Free Trade Agreement implementing
legislation (PL 103-182, 107 STAT 2057), the United States Trade Representative must submit to
the President and to the Senate Committee on Finance and the House Committee on Ways and
Means, no later that May 1, 1997, a "report on significant market opening." Specifically, this report
is to identify those foreign countries (a) that currently provide fair and equitable market access for
U.S. exports of goods and services and opportunities for export-related investment by U.S. persons,
beyond what is required by existing multilateral trade agreements or obligations; or have made
significant progress in opening their markets to U.S. exports of goods and services and export-related
investment by U.S. persons; and (b) the further opening of whose markets has the greatest potential
to increase U.S. exports of goods and services and export-related investment by U.S. persons, either
directly or through the establishment of a beneficial precedent. This report, entitled FUTURE FREE
TRADE AREA NEGOTIATIONS: Report on Significant Market Opening, fulfills this
requirement.
While this report covers all regions of the world as well as selected countries, additional detail is
provided on two regions, Latin America and Asia-Pacific, that are experiencing the strongest
economic growth and have been the major focus of recent U.S. trade policy efforts on a regional
basis.
Part I of this report provides a review of major developments that affect U.S. trade with countries
and regions that meet the criteria set out in Section 108. Part II of the report provides economic data
on top U.S. trading partners, ranked by U.S. exports for 1996, by GDP/GNP¹ for 1994, and by the
U.S. share of total imports for 1995.
A second report, due July 1, calls for recommendations by the President for free trade area (FTA)
negotiations with each foreign country selected on the basis of the information provided in the first
report. This step requires a separate Presidential determination. Thus this first report is not intended
to identify specific countries that might ultimately be selected for an FTA.
I Gross Domestic Product or Gross National Product where available.
Report on Significant Market Opening
1
2
Future Free Trade Area Negotiations
PART I:
MAJOR REGIONS AND COUNTRIES
WITH EXPORT MARKET OPPORTUNITIES
Latin America and the Caribbean
Overview
Economic Reforms and Growth
The Western Hemisphere is the largest regional destination for U.S. goods exports, accounting for
almost 40 percent of U.S. goods exports in 1996. Goods exports to the Hemisphere in 1996 totaled
$242 billion, while exports to Asia (excluding Japan and China) totaled $200 billion and exports to
the 15 member states of the European Union amounted to approximately $128 billion. U.S. goods
exports to the Hemisphere expanded by almost 76 percent between 1990 and 1996, while U.S.
exports to the world grew by only 57 percent. However, U.S. exports to the rapidly developing
markets of the Latin American and Caribbean countries (excluding Mexico) grew even more rapidly
between 1990 and 1996, expanding by over 100 percent. Since 1991, the United States has
consistently run a trade surplus with Latin America and the Caribbean, excluding Mexico.
The acceleration of regional economic growth in recent years is due to fundamental changes in
economic, fiscal, and trade policy in Latin America. Many of the countries in the region have
removed trade barriers, liberalized investment and services policy, privatized state enterprises, and
put in place important economic reforms. All Latin American and Caribbean countries, except the
Bahamas are now members of or in the process of acceding to the World Trade Organization
(WTO).
This fundamental shift was recognized at the 1994 Summit of the Americas in Miami, where the
34 democratically elected leaders of the Western Hemisphere agreed to create a Free Trade Area
of the Americas (FTAA) by 2005. Since then, the countries of the Hemisphere have been engaged
in the process of constructing the FTAA. The United States has played a key role in this process,
including acting as host for the 1995 Meeting of Trade Ministers in Denver.
Concurrent with the FTAA process has been ongoing work on the part of many of the countries
of Latin America and the Caribbean to deepen and expand regional trading arrangements.
MERCOSUR (Southern Common Market) and CARICOM (Caribbean Common Market) have
both expanded the scope of their agreements, CARICOM by adding several countries, and
MERCOSUR by signing free trade agreements with Chile and Bolivia. Bilateral and intra-bloc
Report on Significant Market Opening
3
arrangements are also proliferating. Chile and Canada signed a free trade agreement (FTA) in
1996. Mexico and MERCOSUR are exploring the possibility of an FTA, and MERCOSUR and
the Andean Pact countries are negotiating an FTA.
The United States is well-positioned to take advantage of the opportunities presented by the
region's dynamic growth. U.S. companies are very competitive in the region. At the same time,
however, Asia and Europe have become active in expanding their trade ties to the region. Latin
America was China's second fastest-growing export market in 1995. Chile's largest export market
is Japan, while the European Union (EU) constitutes the largest export market for MERCOSUR.
The EU has stated that it expects to sign reciprocal trade agreements with MERCOSUR and
Chile. The Latin American and Caribbean countries are responding positively to these overtures
and are actively seeking to diversify their export bases. However, they also seek greater economic
integration with the United States, which for most countries remains their largest single country
trading partner.
U.S. Trade
The pattern of U.S. trade in goods with Latin America and the Caribbean (excluding Mexico)
demonstrates the vitality of the trading relationship. Between 1990 and 1996, U.S. merchandise
exports to the region have more than doubled, from $25.7 billion in 1990 to $52.5 billion in 1996.
U.S. exports have been concentrated predominantly in high-value-added products, such as
consumer goods, capital equipment, and industrial supplies and materials. U.S. imports from Latin
America are concentrated in agricultural products, industrial supplies and materials, and consumer
goods.
Chile
Chile is the fifth largest economy among the United States' major export markets in the Latin
America and the Caribbean region, with a GDP/GNP of $49.3 billion in 1994. Shipments of U.S.
merchandise to Chile were valued at a record level of $4.1 billion in 1996 and accounted for 24.7
percent of Chile's total imports in 1995. Chile continues to demonstrate its outstanding economic
success, posting yet another year of over 6 percent growth in 1996, with inflation down further
and investment and savings as a share of GDP at record levels.
The Administration remains committed to fulfilling its commitment to a comprehensive trade
agreement with Chile. An agreement with Chile is viewed as the right first step in the multifaceted
Administration effort to build the FTAA.
Chile continues to pursue trade agreements with a variety of countries and regional entities.
Market opening both in Chile and by its trading partners has been a key ingredient in Chile's
economic success in recent years. Chile not only concluded an association agreement with
MERCOSUR (the first of this type with MERCOSUR) but also concluded a comprehensive
agreement with Canada that addresses tariffs, non-tariff measures, investment, services (except
financial services), rules of origin, customs procedures, emergency action (i.e., safeguards),
4
Future Free Trade Area Negotiations
dispute settlement, telecommunications, temporary entry for business persons, competition policy
and monopolies and state enterprises, antidumping and countervailing duties, labor, and the
environment.
The Canada agreement is viewed by Chile and Canada as both an interim step to negotiating
Chile's accession to the NAFTA and a strong bilateral market opening agreement in its own right.
Chile also initiated negotiations in January 1997 with Mexico to expand the rules of its existing
bilateral agreement on tariffs. In addition, Chile is pursuing market opening agreements with
Central America, is part of APEC, has concluded a framework agreement with the EU to begin
reciprocal trade negotiations, and continues its active pursuit of market opening with others in
South America.
Sub Regions
To fully understand the trade flows in the region, as well as the opportunities and challenges
facing the United States, one must look at the various trade arrangements that are in place or
being negotiated in the region. The 1990s has seen the revival of a number of older trading blocs,
including the Andean Pact, the Caribbean Community (CARICOM), and the Central American
Common Market (CACM), as well as the creation of the Southern Common Market
(MERCOSUR).
Throughout the 1990s, U.S. exports have increased to each of these major trading blocs. In the
1990-1996 period, exports to the Andean pact increased by 89 percent, to MERCOSUR by 177
percent, to the Central American Common Market by 116 percent, and to CARICOM by 30
percent.
These trading blocs are an added dimension of the U.S. export picture in the region. The
constituent countries of these blocs represent important markets for the United States in and of
themselves. At the same time, the economies of scale offered by these blocs offer the potential for
even greater export opportunities.
Southern Region (Southern Common Market)
Summary: The Southern Common Market (abbreviated as MERCOSUR in Spanish and
MERCOSUL in Portuguese) is the largest preferential trade agreement in Latin America.
Consisting of Argentina, Brazil, Paraguay, and Uruguay, it contains two of the largest economies
in Latin America, a combined GDP of just over $1 trillion (over half the GDP of Latin America),
and a population of over 200 million. Two-way trade between the United States and the
MERCOSUR was approximately $30 billion in 1996. The U.S. ran a merchandise trade surplus
with MERCOSUR of $7.3 billion in 1996.
The 1991 Treaty of Asuncion and its amendments, contained in the 1994 Protocol of Ouro Preto,
are the basis upon which MERCOSUR members are pursuing an eventual common market, with
the free movement of goods, services, and the factors of production among the member states.
Report on Significant Market Opening
5
The implementation of the MERCOSUR customs union commenced January 1, 1995, with the
establishment of a common external tariff (CET) covering 85 percent of MERCOSUR trade. The
CET for the remainder of MERCOSUR's trade will be phased in through the year 2005.
Members of MERCOSUR signed a framework agreement with the EU in 1995. MERCOSUR and
Chile concluded an association agreement that eliminates tariffs between MERCOSUR and Chile,
with implementation beginning on October 1, 1996. Chile has not joined the MERCOSUR
customs union, although additional discussions have been initiated to broaden the rules of the
association agreement to cover services market access. Bolivia concluded a similar association
agreement with MERCOSUR in December 1996. MERCOSUR has also been an important
participant in the FTAA process. Brazil will host the Third Trade Ministerial in Belo Horizonte in
May 1997, and Argentina chairs the FTAA Working Group on Subsidies, CVDs and
Antidumping.
Brazil: Brazil is the single largest economy among the United States' major export markets in the
Latin American and Caribbean region, with a GDP/GNP of $472.5 billion in 1994. Shipments of
U.S. merchandise to Brazil were valued at $12.7 billion in 1996 and accounted for 21.1 percent of
Brazil's total imports in 1995.
Since 1990, Brazil has undertaken significant reform to open its previously tightly closed
economy. The weighted average ad valorem tariff fell to 13.6 percent in 1996, down from 45
percent in 1986. Furthermore, a majority of quantitative restrictions have been eliminated. Brazil
is also a privatizing a number of industries.
Since the initiation of the Real Plan in 1994 and the liberalization of Brazil's trade regime, U.S.
exports to Brazil have increased dramatically in response to a pent-up demand from years of
import restrictions in Brazil. Much of the expanded U.S. exports have been capital goods that will
improve the efficiency of firms in Brazil.
Brazil is traditionally the largest trading partner of the United States in South America and the
largest recipient of U.S. foreign direct investment in Latin America. Trade reform since 1990 has
provided additional opportunities for U.S. firms. However, aspects of Brazil's trade and
investment-related regime continue to present significant obstacles for U.S. exports. Brazil's
regime for automobiles, which offers auto manufacturers reduced duties on imports of assembled
cars and other benefits if they export sufficient quantities of parts and vehicles and promise to
meet local content targets, is of particular concern.
Brazil passed a strong patent law in April 1996. The law contains pipeline protection and a one-
year transition for providing pharmaceutical product patent protection. Thus, Brazil has
accelerated its implementation of certain key provisions of the WTO Agreement on Trade-Related
Aspects of Intellectual Property Rights (TRIPs). This strengthened intellectual property rights
regime already has stimulated new investment commitments by international pharmaceutical firms.
Argentina: Argentina is the second largest economy among the United States' major export
markets in the Latin American and Caribbean region, with a GDP/GNP of $277.4 billion in 1994.
6
Future Free Trade Area Negotiations
Shipments of U.S. merchandise to Argentina were valued at $4.5 billion in 1996 and accounted
for 22.9 percent of Argentina's total imports in 1995.
Since 1989, Argentina has curtailed industrial production subsidies, abolished most price controls,
outlawed restrictive practices and regulations impeding access to the Argentine market, and
launched a fast-moving and largely successful privatization program. Argentine tariffs were
reduced from an average of 22 percent to around 12 percent in 1996. The government abolished
import-licensing requirements and most quantitative restrictions on imports. Argentina signed a
bilateral investment treaty with the United States and joined the GATT Subsidies Code in 1991.
However, Argentina's intellectual property rights regime, especially with respect to patents, is
inadequate.
Paraguay: Paraguay is the thirteenth largest economy among the United States' major export
markets in the Latin American and Caribbean region, with a GDP/GNP of $7.6 billion in 1994.
Shipments of U.S. merchandise to Paraguay were valued at $897 million in 1996 and accounted
for 19.3 percent of Paraguay's total imports in 1995.
In 1989, Paraguay embarked on an economic liberalization program to decontrol interest rates
and to implement a market-determined exchange rate. An investment law enacted in January 1992
granted nondiscriminatory treatment to foreign investors. In June 1992, Paraguay reduced duties
and eliminated a number of administrative nontariff barriers. Paraguay's average tariff of seven
percent is the lowest among the MERCOSUR countries and one of the lowest in Latin America
and the Caribbean, although the Government of Paraguay has raised tariffs on certain agricultural
imports that compete with domestic production. Paraguay became a GATT member in 1993.
Inadequate protection of intellectual property rights continues to be a source of concern.
Legislation to improve protection of such rights has been introduced and is being considered in
1997. However, the lack of enforcement of existing laws remains a problem.
Uruguay: Uruguay is the seventh largest economy among the United States' major export
markets in the Latin American and Caribbean region, with a GDP/GNP of $14.9 billion in 1994.
Shipments of U.S. merchandise to Uruguay were valued at $484 million in 1996 and accounted
for 9.9 percent of Uruguay's total imports in 1995.
Uruguay's small, open, and trade-based economy generally maintains few restrictions on trade
and investment, although the state retains a significant presence. Uruguay has no foreign exchange
controls and limits price controls to a small number of products and public services.
Nondiscriminatory treatment is provided for foreign investors, although investment in certain
sectors (including hydrocarbons, banking, railroads, strategic minerals, and telecommunications)
is restricted. Uruguay's tariffs range from zero to 20 percent. Legislation to improve protection of
intellectual property rights is under consideration in the Uruguayan Congress.
Report on Significant Market Opening
7
Andean Region
Summary: The five member countries of the Andean Pact -- Bolivia, Colombia, Ecuador, Peru,
and Venezuela -- have a combined internal market of 100 million people, a combined GDP of
more than $260 billion, and an average per capita GDP of over $2,600. (Note: At the time of this
report, Peru has indicated that it will not participate in the free trade area within the Andean Pact,
and the other members are considering whether Andean Pact decrees apply to Peru.)
The Andean Pact countries have undertaken liberalization of their trade and investment regimes as
a coordinated effort under the auspices of the Andean Pact. Free trade in a limited number of
products has been in effect among the Andean Pact countries since the early 1980s. In 1996, the
countries focussed on reforming the institutions which support their internal integration process --
agreeing to transform the Andean Pact institutions created in 1969 by creating the "Andean
Community," with a single Secretary General to replace the current five-member Junta.
In addition, the Andean Pact countries are moving toward greater integration with MERCOSUR.
Bolivia concluded a free trade agreement with MERCOSUR, which took effect in April 1997,
while the other members of the Andean Pact have begun negotiating a free trade agreement with
MERCOSUR.
Each of the five Andean Pact countries also is taking part in the FTAA process, including
participating in the eleven FTAA Working Groups. Colombia chaired the FTAA Trade Ministerial
in March 1996, Peru chairs the Working Group on Competition Policy, and Bolivia chairs the
Working Group on Customs Procedures and Rules of Origin.
Venezuela and Colombia have a free-trade agreement with Mexico (the G-3 FTA) which has been
in effect since January 1, 1995. The G-3 Agreement is not as comprehensive as the NAFTA, but
includes all of the same chapters as the NAFTA except the energy chapter. While some key areas
are left for future negotiations, the "G-3" covers substantially all trade.
Colombia, Ecuador, and Venezuela continue to apply the Andean Pact common external tariff
(CET), which took effect in early 1995. The CET has a structure of 5, 10, 15, and 20 percent,
with exceptions for certain products. Bolivia maintains its lower, two-tier tariff structure of 5 and
10 percent. Peru, although currently a member of the Pact, will not apply the Pact's CET and will
renegotiate existing tariff agreements with the other Pact Members.
The United States is the main export market for all Andean Pact countries except Bolivia. The
United States exported an estimated $12.7 billion in 1996, while imports from the region totaled
more than $20.0 billion. U.S. exports to the Andean countries grew by approximately 16 percent
between 1992 and 1996. Trade has been encouraged generally by the United States through
preferential tariff treatment, primarily under the Generalized System of Preferences (GSP) as well
as the Andean Trade Preference Act (ATPA) (see below).
Bolivia: Bolivia is the fifteenth largest economy among the United States' major export markets
in the Latin American and Caribbean region, with a GDP/GNP of $5.5 billion in 1994. Shipments
8
Future Free Trade Area Negotiations
of U.S. merchandise to Bolivia were valued at $269 million in 1996 and accounted for 20.9
percent of Bolivia's total imports in 1995.
Bolivia has made strong economic advances since 1985, resulting from improved fiscal and
macroeconomic policies. In addition, Bolivia has instituted trade reforms, lowering its maximum
tariff to 10 percent and removing almost all non-tariff barriers. The assessment of additional fees
on some products, however, continues to raise the cost of importing these goods.
Bolivia has removed restrictions on foreign investment and has launched a privatization program.
Bolivia's existing IPR laws and their enforcement needs to be strengthened.
Colombia: Colombia is the third largest economy among the United States' major export markets
in the Latin American and Caribbean region, with a GDP/GNP of $60.6 billion in 1994. Shipments
of U.S. merchandise to Colombia were valued at $4.7 billion in 1996 and accounted for 39.1
percent of Colombia's total imports in 1995.
Under an economic liberalization plan known as "apertura" (opening), in the early 1990s,
Colombia substantially reduced tariffs, eliminated almost all import licensing requirements,
simplified import and export procedures, established a free market exchange rate regime (with
very few conditions), created transparent and more liberal foreign investment rules, and opened
up nearly all sectors of the economy for foreign investment. The agricultural sector has been a
general exception to this opening. Colombia's WTO bound tariff rates are between 35 to 40
percent ad valorem. Currently, Colombia's average applied tariff rate is about 12 percent ad
valorem.
Colombia has largely eliminated investment screening, and the mechanisms that still exist are
generally routine and non-discriminatory. Legislation grants national treatment to foreign direct
investors and permits complete foreign ownership in virtually all sectors of the Colombian
economy. Colombia has made improvements in the area of intellectual property rights (IPR).
However, more needs to be done, and enforcement of IPR is a particular problem.
Ecuador: Ecuador is the eighth largest economy among the United States' major export markets
in the Latin American and Caribbean region, with a GDP/GNP of $14.3 billion in 1994. Shipments
of U.S. merchandise to Ecuador were valued at $1.3 billion in 1996 and accounted for 30.8
percent of Ecuador's total imports in 1995.
Ecuador has substantially liberalized its trade regime since 1990, resulting in a reduction of tariffs
and tariff dispersion, elimination of most non-tariff surcharges, and enactment of an in-bond
processing industry law. When it joined the World Trade Organization (WTO) in January 1996,
Ecuador bound most of its tariff rates at 30 percent or less. Ecuador's average applied tariff rate is
about 17 percent ad valorem.
Foreign investors are accorded the same rights of entry as Ecuadorian private investors, may own
up to 100 percent of enterprises in most sectors without prior government approval, and face the
Report on Significant Market Opening
9
same tax regime. There are no controls or limits on transfers of profits or capital, and foreign
exchange is readily available. There are no performance requirements. A bilateral investment
treaty with the United States that guarantees access to binding international arbitration was
implemented in April 1997. Ecuadorian law provides inadequate protection for intellectual
property rights (IPR), and it can be difficult to gain effective protection through the legal system.
Peru: Peru is the sixth largest economy among the United States' major export markets in the
Latin American and Caribbean region, with a GDP/GNP of $49.0 billion in 1994. Shipments of
U.S. merchandise to Peru were valued at $1.8 billion in 1996 and accounted for 26.7 percent of
Peru's total imports in 1995.
As of April 1997, Peru has a two-tier tariff structure with a duty of 12 percent on the vast
majority of imports and 20 percent on the remainder. The weighted-average applied tariff is less
than 13 percent, down from 80 percent when President Fujimori took office in 1990. Almost all
non-tariff barriers, including subsidies, import licensing requirements, import prohibitions, and
quantitative restrictions, have been eliminated. Peru applies a value-added tax (VAT) of 18
percent to most products, and special consumption taxes, ranging from 10 to 50 percent, on
certain items.
Peru has greatly liberalized its investment regime since 1990. National treatment for foreign
investors is guaranteed in the 1993 constitution. Foreign investment does not require prior
approval, except in banking and defense-related industries. There are no restrictions on
remittances of profits, dividends, royalties, or capital. Peru has made recent changes in its
intellectual property rights (IPR) regime, and further work needs to be done. IPR enforcement has
been stepped up recently, but piracy remains widespread.
Venezuela: Venezuela is the fourth largest economy among the United States' major export
markets in the Latin American and Caribbean region, with a GDP/GNP of $58.5 billion in 1994.
Shipments of U.S. merchandise to Venezuela were valued at $4.7 billion in 1996 and accounted
for 42.1 percent of Venezuela's total imports in 1995.
Venezuela's economic climate improved dramatically in 1996 as the government abandoned the
foreign exchange and price controls it had enacted in 1994 to cope with a financial crisis in the
banking sector. Under the banner "Agenda Venezuela," the Government of Venezuela introduced
in April 1996 a series of reforms designed to put the Venezuelan economy back on a free-market
footing. The government significantly reduced the long-standing subsidy on gasoline -- resulting
in an immediate five-fold increase in pump prices -- and re-started its stalled privatization
program.
As a result of the Uruguay Round, Venezuela bound most of its rates at 35 to 40 percent.
Venezuela's average applied tariff rate is approximately 10 percent.
Venezuela's investment policy continues to be characterized by state involvement. The state
controls key sectors of the economy, including oil, gas, iron ore, and much of the coal and
petrochemical industries; parastatals dominate others, like steel and aluminum. The government,
10
Future Free Trade Area Negotiations
however, plans to privatize several major state enterprises during 1997, including a four-company
aluminum complex, an iron and steel company, and a ferrosilicon plant. Foreign investment
continues to be restricted in the petroleum sector. Venezuela has made improvements in the area
of intellectual property rights (IPR), but more remains to be done. Enforcement of copyrights and
trademarks continues to be weak.
Caribbean Region
Summary: Countries in the Caribbean region include members of the Caribbean Community and
Common Market (CARICOM), the Dominican Republic, and Haiti. Current members of
CARICOM are: Antigua and Barbuda, Bahamas, Barbados, Belize, Dominica, Grenada, Guyana,
Jamaica, Montserrat, Saint Kitts and Nevis, Saint Lucia, Saint Vincent and the Grenadines,
Suriname, and Trinidad and Tobago.
CARICOM, formed in 1973 to supersede the Caribbean Free Trade Area, has an internal market
of about 6.3 million people and an average GDP of approximately $2,500 per capita. The
economies of member states are vulnerable to changes in commodity prices, erosion of
preferential markets, and the impact of frequent hurricanes. International aid flows to the
Caribbean have declined considerably in the past ten years. This economic environment has
prompted CARICOM countries to begin to open and reform their economies, to become more
competitive by improving their human resource base and quality of education, to improve public
services, and to promote private sector investment and export services.
Despite its name, CARICOM currently operates as a customs union and not a common market.
The CARICOM common external tariff (CET), first proposed in 1973, has not yet been
implemented by all member countries. In 1992, member states agreed to reform and implement
the CET, including a reduction over a six-year period of maximum rates on nonagricultural tariffs
to 20 percent, with the maximum rate on agricultural products set at 40 percent. Member states
are allowed to maintain their own import surcharges, licenses, quotas, and prohibitions, which
substantially increase the level of protection for many goods.
A fully implemented common market would significantly enhance the market potential of
countries in CARICOM. However, progress toward establishment of the CET has been limited.
The 17th CARICOM Summit, held in July 1996, noted progress toward the establishment of a
Common Caribbean Market and Economy, including the implementation of a CET and gradual
elimination of such non-tariff barriers between CARICOM member states as licensing systems,
quantitative restrictions, and discriminatory internal taxes. It was also noted that Barbados,
Dominica, Grenada, Guyana, Jamaica, and St. Lucia had passed legislation to extend the right to
work and reside to university graduates from other CARICOM countries. The Summit also
approved a plan, proposed by CARICOM Central Bank governors, to improve currency
convertibility and the convergence of the economies of CARICOM member states. While the 17th
CARICOM Summit produced an ambitious agenda, implementation remains a challenge.
Report on Significant Market Opening
11
The Dominican Republic, the largest beneficiary of the Caribbean Basin Initiative program, does
not belong to any regional trade association, but has increased cooperation with both Central
America and CARICOM. There has been some discussion of a CARICOM-Dominican Republic
trade agreement. Haiti, which is recovering from several years of political and economic
difficulties, is focussing primarily on reviving its economy.
Dominican Republic: The Dominican Republic is the tenth largest economy among the United
States' major export markets in the Latin American and Caribbean region, with a GDP/GNP of
$10.1 billion in 1994. Shipments of U.S. merchandise to the Dominican Republic were valued at
$3.2 billion in 1996 and accounted for 44.1 percent of the Dominican Republic's total imports in
1995.
The Dominican Republic has a market-determined exchange rate for most transactions. However,
the Government of the Dominican Republic has taken no concrete steps to streamline the
approval process for foreign investment or to lift restrictions on profit repatriation. Quantitative
import restrictions have been replaced with tariffs, while the tariff schedule has been simplified to
six categories with seven tariff rates ranging between five percent and 35 percent. The lack of
adequate protection of intellectual property rights remains an ongoing problem.
Jamaica: Jamaica is the eighteenth largest economy among the United States' major export
markets in the Latin American and Caribbean region, with a GDP/GNP of $3.9 billion in 1994.
Shipments of U.S. merchandise to Jamaica were valued at $1.5 billion in 1996 and accounted for
75.9 percent of Jamaica's total imports in 1995.
Jamaica has been working toward trade liberalization, but progress has been impeded by poor
macro economic policy and large debt obligations. The Jamaica - U.S. Bilateral Investment Treaty
came into force in June of 1996. Jamaica also has an Intellectual Property Rights Agreement with
the United States. Jamaica participated actively in the WTO negotiations on basic
telecommunications, making an offer that included market access and national treatment for
enhanced services, digital mobile services, international voice, data, and video transmission
services to firms involved in information processing located within free zones, telecommunications
equipment sales, rental, maintenance, connection, repair and consulting, and domestic data
services. Jamaica serves as chair of the FTAA Working Group on Smaller Economies.
Trinidad and Tobago: Trinidad and Tobago is the sixteenth largest economy among the United
States' major export markets in the Latin American and Caribbean region, with a GDP/GNP of
$4.9 billion in 1994. Shipments of U.S. merchandise to Trinidad and Tobago were valued at $665
million in 1996 and accounted for 50.6 percent of Trinidad and Tobago's total imports in 1995.
Trinidad and Tobago has embarked on a program of gradual but consistent reductions in tariff and
non-tariff barriers. The Bilateral Investment Treaty between Trinidad and Tobago and the United
States has been in force since June of 1996. The two countries have also agreed to an Intellectual
Property Rights Agreement.
12
Future Free Trade Area Negotiations
Central American Region
The Central American Common Market (CACM) was created in 1960 and became effective in
1963. Its members are Guatemala, El Salvador, Honduras, Costa Rica, and Nicaragua. Panama,
which has observer status, and Belize participate in CACM summits but not in regional trade
integration efforts. The CACM and Panama, taken together, have created an internal market of
over 30 million people, with a combined GDP of over $40 billion, and average GDP of about
$1,300 per capita.
While participating in the FTAA process, CACM members continue to move toward regional
integration. There are no duties for most products traded among CACM members, with certain
exceptions, notably agricultural products. The CACM has a common external tariff (CET) which
ranges between 5 and 20 percent on most products of non-CACM origin. Several of the Central
American nations have jointly implemented measures to liberalize and harmonize their trade
regime under the CACM. Guatemala, El Salvador, and Honduras, the so-called "northern
triangle," have adopted agreements to facilitate the movement of capital and labor.
In 1995, the members of the CACM agreed on reducing the CET to between 0 and 15 percent,
but allowed each member country to determine the timing of the changes. In addition to the
establishment of a CET, the specific objectives of the CACM integration process include
elimination of tariffs and quantitative restrictions on intra-regional trade (including the removal of
foreign exchange constraints), unrestricted movement of labor and capital, and the eventual
harmonization of monetary and fiscal policies.
Although intra-regional trade is generally not subject to tariffs, several member states maintain
non-tariff barriers, such as burdensome and selectively enforced sanitary, safety, and quality
standards and import licenses for sensitive items. Ongoing discussions to remove these barriers
have not been widely successful, as CACM members have only limited leverage for reform in the
absence of dispute settlement and enforcement provisions. In addition, recent discussions have not
produced a consensus with respect to the protection of intellectual property rights, foreign direct
investment, and services (especially banking and telecommunications) in the context of regional
integration. Progress in privatization has not been uniform. El Salvador has made dramatic strides
in privatizing such industries as telecommunications, while others are moving at a slower pace.
Panama, a CACM observer, has completed its accession to the WTO and is expected to take
appropriate legislative measures to ratify its accession before the June 30, 1997, deadline.
Central American countries have been extremely active in the FTAA process. Costa Rica chairs
the Working Group on Investment and will host the Fourth Trade Ministerial on February 1998.
Honduras is the chair of the Working Group on IPR, and El Salvador chairs the Working Group
on Market Access.
Costa Rica: Costa Rica is the eleventh largest economy among the United States' major export
markets in the Latin American and Caribbean region, with a GDP/GNP of $7.9 billion in 1994.
Report on Significant Market Opening
13
Shipments of U.S. merchandise to Costa Rica were valued at $1.8 billion in 1996 and accounted
for 52.3 percent of Costa Rica's total imports in 1995.
Since late 1994, Costa Rica has eliminated quantitative restrictions and requirements for import
licenses and permits for a variety of commodities. The import permits in many cases have been
replaced by tariffs. Most applied tariffs range from 1 to 28 percent as valorem. Government
monopolies in important sectors, including telecommunications, electric power production and
distribution, and insurance, represent a significant non-tariff barrier to U.S. private investment. By
law expropriations are to occur only after payment has been made in full; however, expropriations
made prior to 1995, as well as land invasions by squatters, remain unaddressed.
El Salvador: El Salvador is the twelveth largest economy among the United States' major export
markets in the Latin American and Caribbean region, with a GDP/GNP of $7.6 billion in 1994.
Shipments of U.S. merchandise to El Salvador were valued at $1.1 billion in 1996 and accounted
for 40.2 percent of El Salvador's total imports in 1995.
There are no legal barriers to U.S. exports of manufactured goods or bulk, non-agricultural
commodities to El Salvador. Most U.S. goods face tariffs ranging from 0 to 20 percent, with rates
scheduled to fall further by 1999. While higher duties are applied to automobiles, alcoholic
beverages, textiles, and some luxury items, the Government of El Salvador may incorporate these
excepted products into its general tariff schedule as it implements the 1996-99 reductions.
Building on its 1994 intellectual property law, El Salvador has taken steps to protect intellectual
property and enforce the rights of intellectual property holders. El Salvador has an open
investment regime.
Guatemala: Guatemala is the ninth largest economy among the United States' major export
markets in the Latin American and Caribbean region, with a GDP/GNP of $12.4 billion in 1994.
Shipments of U.S. merchandise to Guatemala were valued at $1.6 billion in 1996 and accounted
for 46.8 percent of Guatemala's total imports in 1995.
Guatemala formally implemented the CACM common external tariff effective November 1, 1992.
Price bands for corn and rice were eliminated in late 1995, but Guatemala has yet to formally
eliminate price bands for sorghum. Additionally, Guatemala continues to employ a reference price
methodology to value poultry imports. While Guatemala is making efforts to modernize its
intellectual property regime, its protection of such property remains inadequate. Investment
legislation designed to assure national treatment, clarify rules, and speed registration was adopted
in 1995, but has yet to be implemented. Restrictions on foreign investment remain in several
sectors of the economy, including public utilities, auditing, insurance, mineral exploitation,
forestry, and the media.
Honduras: Honduras is the nineteenth largest economy among the United States' major export
markets in the Latin American and Caribbean region, with a GDP/GNP of $3.5 billion in 1994.
Shipments of U.S. merchandise to Honduras were valued at $1.6 billion in 1996 and accounted
for 55.5 percent of Honduras's total imports in 1995.
14
Future Free Trade Area Negotiations
Honduras is working toward the full implementation of the CACM's common external tariff. The
Government of Honduras has drafted and submitted to the legislature amendments intended to
address shortcomings found in Honduras's 1993 copyright law, but that legislation has been
pending for more than two years. Honduras's 1992 investment law provides transparent
regulations, a reduction in discretionary government intervention, and nondiscriminatory
treatment for foreign investors, but also requires majority Honduran ownership in certain areas,
such as investments in commercial fishing, direct exploitation of forest resources, local
transportation, and those areas benefiting directly from the national agrarian reform law.
Honduras has signed a Bilateral Investment Treaty with the United States that has not, to date,
been ratified. It is also in the process of negotiating an Intellectual Property Rights Agreement
with the United States.
Nicaragua: Nicaragua is the twenty-fourth largest economy among the United States' major
export markets in the Latin American and Caribbean region, with a GDP/GNP of $30.2 billion in
1994. Shipments of U.S. merchandise to Nicaragua were valued at $262 million in 1996 and
accounted for 26.3 percent of Nicaragua's total imports in 1995.
Nicaragua is working toward the full implementation of the CACM's common external tariff.
Nicaragua also imposes a variety of import fees and employs a price band mechanism for certain
agricultural products. Inadequate protection of intellectual property and investment restrictions
(including expropriation disputes) remain significant current issues. Nicaragua has signed a
Bilateral Investment Treaty with the United States, which to date has not been ratified, and is
negotiating an Intellectual Property Rights Agreement with the United States.
Panama: Panama is the fourteenth largest economy among the United States' major export
markets in the Latin American and Caribbean region, with a GDP/GNP of $6.7 billion in 1994.
Shipments of U.S. merchandise to Panama were valued at $1.4 billion in 1996 and accounted for
12.5 percent of Panama's total imports in 1995.
Panama's October 1996 accession to the World Trade Organization (WTO), when completed, will
result in tariff protection of 30 percent on non-agricultural products. In December 1996, the
government issued a decree reducing tariffs on some items, converting other tariffs to ad valorem,
and eliminating non-tariff barriers on non-agricultural items, although Panama's agricultural sector
is still heavily protected by such barriers. Law 15 of 1994 (the Copyright Law) and Law 35 of
1996 (the Industrial Property Law) provide the framework for protection of intellectual property
in Panama. Panama's accession to the WTO in 1996 required it to implement the WTO
Agreement on the Trade-Related Aspects of Intellectual Property Rights (TRIPs) upon the date
of accession, with no transition. Panama has been deficient in meeting this obligation. A limitation
in Panamanian law on foreign government ownership of land affects a few U.S. Government
insurance programs, but places no legal limitations on foreign private investment or ownership.
The United States/Panama Bilateral Investment Treaty has been in force since 1991.
Report on Significant Market Opening
15
U.S. Trade Preference Programs
Andean Trade Preference Act
On December 4, 1991, President George Bush signed the Andean Trade Preference Act (ATPA),
a preference program designed specifically to encourage the development of licit trade by Bolivia,
Colombia, Ecuador, and Peru. Bolivia and Colombia were designated as beneficiaries in 1992,
while Ecuador and Peru were designated as beneficiaries in 1993. Modeled after Caribbean Basin
Economic Recovery Act (details of which are provided below), the ATPA is set to expire in 2001.
Caribbean Basin Initiative/Caribbean Basin Economic Recovery Act
The Caribbean Basin Initiative (CBI) was created by the Congress in 1984 to promote the
economic revitalization of the Caribbean Basin through tariff preferences. Twenty-eight countries
and territories are potentially eligible for benefits under the terms of the Caribbean Basin
Economic Recovery Act (CBERA): Anguilla, Antigua and Barbuda, Aruba, the Bahamas,
Barbados, Belize, Costa Rica, Dominica, Dominican Republic, El Salvador, Grenada, Guatemala,
Guyana, Haiti, Honduras, Jamaica, Nicaragua, Panama, Saint Lucia, Saint Vincent and the
Grenadines, Suriname, Trinidad and Tobago, Cayman Islands, Montserrat, Netherlands Antilles,
Saint Kitts-Nevis, Turks and Caicos Islands, and British Virgin Islands.
Currently 24 countries, territories, and successor political entities receive CBI benefits. The
following 20 countries were designated on January 1, 1984: Antigua and Barbuda, Barbados,
Belize, British Virgin Islands, Costa Rica, Dominica, Dominican Republic, El Salvador, Grenada,
Guatemala, Haiti, Honduras, Jamaica, Montserrat, Netherlands Antilles, Panama, St. Kitts and
Nevis, Saint Lucia, Saint Vincent and the Grenadines, and Trinidad and Tobago. The Bahamas
was designated on March 14, 1985. On April 11, 1986, Aruba was designated retroactive to
January 1, 1986, upon becoming independent of the Netherlands Antilles. Guyana was designated
effective November 24, 1988. Nicaragua was designated effective November 13, 1990. Panama's
beneficiary status under CBERA was suspended on April 9, 1988, making it the first country to
lose its designated status, and was restored effective March 17, 1990.²
Under the CBERA, U.S. duties are eliminated on all products from the CBI beneficiaries, except
for textile and apparel products subject to textile agreements; petroleum; canned tuna; footwear;
certain leather goods (which are eligible for reduced duties); and certain watches and watch parts.
Sugar imports are duty free up to the level of individual country quotas. Two-way trade between
the United States and CBI countries has expanded considerably since the program began in 1984.
In 1996, U.S. exports to CBI countries totaled $16.4 billion, while imports from these countries
were $14.6 billion, leaving the United States with a positive trade balance of $1.8 billion.
2 The following eligible countries and territories have not officially requested beneficiary status: Anguilla, Cayman
Islands, Suriname, and Turks and Caicos Islands.
16
Future Free Trade Area Negotiations
Exports of textiles and apparel to CBI countries have grown significantly since 1983, largely as a
result of the "9802" tariff program, under which import duties are levied only on the value added
by assembly abroad of U.S.-made components. The introduction in 1986 of the Guaranteed
Access Level Program also contributed to the increase in both CBI and U.S. exports. This special
access program provides liberalized quotas and market access guarantees for CBI apparel exports
made of components cut in the United States from 100 percent U.S.-manufactured fabric.
The CBI Program, originally designed to expire in 1995, was made permanent in 1990. In
addition, reduced tariffs were provided for several leather goods and for non-apparel products
assembled in CBI countries from 100 percent U.S. components. The program was enhanced in
September 1991, with new or expanded duty-free coverage provided to 94 products.
Asia-Pacific Region
Overview
Economic Reforms and Growth
The Asia-Pacific region encompasses the most dynamic economies in the world. It also is
characterized by significant diversity in levels of development, size, language, and cultures.
Nevertheless, this region collectively, and countries in the region individually, have already had a
significant impact on global growth. Pacific Rim countries will continue to serve as a key element
in fueling growth for the foreseeable future. These trends have been fostered by important
unilateral, bilateral, and multilateral efforts by the Asia Pacific Economic Cooperation (APEC)
members to deregulate their economies and integrate them more fully into the global trading
system. The 18 members of APEC are Australia, Brunei Darussalam, Canada, Chile, People's
Republic of China, Hong Kong, Indonesia, Japan, Korea, Malaysia, Mexico, New Zealand, Papua
New Guinea, Philippines, Singapore, Taiwan (Chinese Taipei), Thailand, and the United States.
The dynamic, developing Asian economies continue to grow at approximately three times the rate
of the established, industrialized countries. This growth is also reflected in income levels and
output. Just three decades ago, Asia contributed only 8 percent of the world's GDP. Today, Asia
commands almost 30 percent of global GDP.
Within the Asia Pacific region, several major regional trading arrangements -- the NAFTA, the
Australia-New Zealand Closer Economic Relations Agreement (CER), and the recent ASEAN
initiative to form an ASEAN Free Trade Agreement (AFTA) -- coexist. Some possibilities exist in
the future for exploring the relationship among these arrangements. Other regional economic and
trade arrangements include the South Asian Association for Regional Cooperation (SAARC) and
the Indian Ocean Rim Association for Regional Cooperation (IORARC).
Report on Significant Market Opening
17
U.S. Trade
Since 1990, U.S. merchandise exports to all of Asia have increased at a rapid pace, growing from
nearly $120 billion to approximately $200 billion in 1996. Much of what Asia needs to continue
its growth patterns are goods and services in which the United States is a dominant global
producer: aircraft, financial services, telecommunications, and infrastructure. Therefore, we
anticipate continued growth in U.S. exports, particularly as income levels and markets develop
further. Trade and investment among APEC members within Asia and with other trading partners
across the Pacific is also increasing. Nevertheless, the U.S. continues to serve as an important
market, if not the dominant market, for many APEC products.
Sub Regions
Asia Pacific Economic Cooperation (APEC)
Summary: All APEC members are either members of, or are currently acceding to, the WTO
disciplines. The People's Republic of China (PRC) and Taiwan (Chinese Taipei) currently are
engaged in negotiations toward their membership. All APEC/WTO members played an active role
in Uruguay Round negotiations.
In 1994, APEC Leaders set a goal of free and open trade and investment by 2010 for APEC's
industrialized economies and 2020 for its developing economies. In 1995, APEC developed the
Osaka Action Agenda which laid out the action plan to achieve that goal. In 1996, APEC made
some valuable contributions to trade liberalization, both within the forum and in the WTO. First,
the APEC Leaders endorsed the Information Technology Agreement, subsequently agreed upon
in the WTO, whereby countries accounting for over 90 percent of global trade agreed to zero
tariffs on semiconductors, computers, telecommunications, and other information technology
products. In addition, the APEC Telecommunications Group endorsed non-binding, pro-
competitive principles for open basic telecommunications systems, principles which subsequently
were incorporated into the WTO Agreement on Basic Telecommunications Services. Finally,
APEC economies developed individual and collective action plans that detailed the short-term
liberalization and facilitation steps that economies would take to meet the Bogor and Osaka
targets of free and open trade.
ASEAN: The Association of Southeast Asian Nations (ASEAN) was founded in 1967 by
Indonesia, Malaysia, the Philippines, Singapore, and Thailand to promote regional cooperation.
Brunei Darussalam joined in 1984, soon after attaining full independence, and Vietnam joined in
1996. Laos, Cambodia, and Myanmar are slated to join ASEAN in July 1997. Approximately 400
million people live in the seven ASEAN countries, which had a combined GDP/GNP of $523.8
billion in 1994.
In January 1992, ASEAN took its most important step to date toward increasing economic
integration when its members agreed to establish the ASEAN Free Trade Area (AFTA). Under
AFTA, tariff rates on imports of some manufactured goods and agricultural products from other
ASEAN countries will be reduced to five percent or less by 2003 (2006 for Vietnam). Some
18
Future Free Trade Area Negotiations
products covered by AFTA are scheduled for accelerated tariff reduction, including textiles,
electronics, and pharmaceuticals. In addition, ASEAN has expanded the scope of the AFTA to
include agreements on IPR, investment cooperation, and services. In implementing the AFTA,
ASEAN has also included unprocessed agricultural commodities in the tariff phase-out scheme
and placed more focus on the elimination of non-tariff measures such as customs surcharges and
technical barriers to trade.
The ASEAN countries have grown dramatically in the past decade, due in part to a drive to
increase exports. Between 1991 and 1994, the economies of the ASEAN countries (excluding
Vietnam) expanded by nearly 50 percent, growing from $345 billion to $509 billion. Assisted by
the high level of growth, U.S. exports to ASEAN have also risen rapidly; from $28 billion in 1993
to $43 billion in 1996. U.S. trade with the seven ASEAN countries (Brunei, Indonesia, Malaysia,
Philippines, Singapore, Thailand, and Vietnam) continued to grow rapidly in 1996, with two-way
trade reaching approximately $110 billion.
Brunei: Brunei is the eighteenth largest economy among the United States' major export markets
in the Asia-Pacific region, with a GDP/GNP of $4.4 billion in 1993. Shipments of U.S.
merchandise to Brunei were valued at $375 million in 1996 and accounted for 5.9 percent of
Brunei's total imports in 1995.
In 1993, Brunei joined the General Agreement on Tariffs and Trade Oil and gas production
account for over 75 percent of Brunei's GDP and 99 percent of its export revenues.
Indonesia: Indonesia is the seventh largest economy among the United States' major export
markets in the Asia-Pacific region, with a GDP/GNP of $167.6 billion in 1994. Shipments of U.S.
merchandise to Indonesia were valued at $4.0 billion in 1996 and accounted for 9.5 percent of
Indonesia's total imports in 1995.
In May 1995, the Indonesian Government unveiled a comprehensive tariff-reduction package
which covers roughly two-thirds of all traded goods and which is designed to reduce most tariffs
to under 5 percent by 2003. However, some products in the automotive, chemical, metal, and
agriculture sectors are excluded. The deregulation packages announced in January and June 1996
advanced some of this tariff reform. Also, Indonesia participated in both the Information
Technology Agreement (ITA) and the WTO negotiations on basic telecommunications services.
Indonesia retains significant barriers to trade in services and investment. Also, the 1996 pioneer
auto program modified the existing, WTO-inconsistent auto policy to grant tax and tariff
exemptions to wholly owned Indonesian companies that use a unique Indonesian-owned
trademark. Finally, generally on intellectual property rights (IPR), Indonesia does not provide
adequate protection of well-known marks or effective enforcement efforts aimed at software
piracy at the retail and end-user levels. However, the Indonesian Government has demonstrated
willingness to address the problem of use of pirated software by ministries. In 1997, the
parliament passed revised copyright, patent, and trademark laws.
Report on Significant Market Opening
19
Malaysia: Malaysia is the tenth largest economy among the United States' major export markets
in the Asia-Pacific region, with a GDP/GNP of $68.6 billion in 1994. Shipments of U.S.
merchandise to Malaysia were valued at $8.5 billion in 1996 and accounted for 21.3 percent of
Malaysia's total imports in 1995.
On a unilateral basis, Malaysia has gradually reduced import barriers, including tariffs, on a wide
range of products. Duties on a trade-weighted basis average less than 10 percent. However,
duties on some products remain relatively high, and in some cases have been increased to regulate
imports. Malaysia maintains high tariffs and local content requirements in order to promote the
domestic automobile industry. Malaysia has made progress in strengthening the protection and
enforcement of intellectual property rights (IPR), and plans to adopt additional legislation in order
to attract high-technology investment to the proposed "Multimedia Super Corridor" (MSC). In
the areas of government procurement, services and investment policy, the Malaysian Government
maintains a number of preferences to promote local businesses with ethnic Malay ownership.
The Philippines: The Philippines is the twelfth largest economy among the United States' major
export markets in the Asia-Pacific region, with a GDP/GNP of $63.7 billion in 1994. Shipments of
U.S. merchandise to the Philippines were valued at $6.1 billion in 1996 and accounted for 18.4
percent of the Philippines's total imports in 1995.
The Philippine Government continues to liberalize the economy and attract capital for
infrastructure and other developmental programs. The Philippines in 1996 implemented broad
tariff reductions which are generally in line with its Uruguay Round commitments and stated goal
of adopting a uniform 5 percent tariff rate by the year 2004. However, in some sectors high tariffs
and non-tariff barriers, as well as restrictive licensing practices for agricultural imports, continue
to be areas of concern. The benefits of many of these tariff reductions and market-opening
reforms are eroded by non-transparent and irregular customs practices. Enforcement of
intellectual property rights continues to improve since the 1993 conclusion of a bilateral IPR
agreement with the United States. However, the Philippines has not yet passed comprehensive
IPR legislation to bring its regime up to minimum world standards.
Singapore: Singapore is the eleventh largest economy among the United States' major export
markets in the Asia-Pacific region, with a GDP/GNP of $65.3 billion in 1994. Shipments of U.S.
merchandise to Singapore were valued at $16.7 billion in 1996 and accounted for 15.1 percent of
Singapore's total imports in 1995.
Singapore has one of the most open economies and maintains the lowest tariff rates in the region;
96 percent of imports enter duty-free. In the Uruguay Round, Singapore agreed to bind 70
percent of its tariff lines. Singapore does, however, retain barriers to trade in some sectors, for
example, financial services. According to industry estimates, Singapore has the lowest rate of
intellectual property piracy in Asia, although software piracy remains a concern. While its IPR
regime is generally strong, Singapore has decided against accelerated implementation of the WTO
Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs); opting instead to
exploit the developing country phase-in period. In 1996, Singapore became a signatory to the
WTO Government Procurement Agreement.
20
Future Free Trade Area Negotiations
Thailand: Thailand is the eighth largest economy among the United States' major export markets
in the Asia-Pacific region, with a GDP/GNP of $139.8 billion in 1994. Shipments of U.S.
merchandise to Thailand were valued at $7.2 billion in 1996 and accounted for 11.5 percent of
Thailand's total imports in 1995.
In recent years Thailand has gradually reduced tariffs on a range of goods. In 1996, the average
trade-weighted tariff was 17 percent; down from 21 percent in 1995. However, non-transparent
and irregular customs procedures are a significant concern to U.S. companies, and have reduced
the impact of Thailand's market opening reforms Tariffs on a range of agricultural products
remain relatively high. Thailand also continues to deregulate the financial sector, in an effort to
attract overseas capital; but retains certain restrictions on foreign financial services providers. U.S.
investment in Thailand is covered by the 1966 Treaty of Amity and Economic Relations, which
provides for the better of national or MFN treatment in most sectors. Thailand has substantially
improved its intellectual property rights regime since 1992, and continues to work toward the
adoption of improved patent legislation. Thai authorities have improved IPR enforcment
activities, which continues to be a priority for the United States.
Closer Economic Relations Trade Agreement: In an effort to expand trade between the two
countries, Australia and New Zealand established the Closer Economic Relations Trade
Agreement (CER) in 1983. The CER, which was built upon a series of preferential bilateral
agreements from the 1960s and expanded progressively over time, is comprehensive in both its
rules and in the scope of trade covered. After a 1988 review, trade in services was brought into
the agreement for the first time. By 1990, the CER abolished all border restrictions to trade in
goods, including tariffs, quantitative restrictions, import and export prohibitions, and export
incentives and export restrictions. Trans-Tasman antidumping provisions were removed, and the
harmonization of business law and the application of trade practices legislation came into effect.
In November 1996, a Single Aviation Market (SAM) was created within and between Australia
and New Zealand. Also in 1996, the two nations signed a Mutual Recognition Arrangement,
signed and implemented the Agreement Establishing a System for the Development of Joint Food
Standards, and exchanged letters on arrangements for inspecting imported food.
Since the CER Agreement was signed in 1983, total trans-Tasman trade has grown at an annual
average rate of about 12 percent. The economies of both countries have grown at slower rates
than those of other developed APEC countries -- 3.1 percent for Australia and 2.3 percent for
New Zealand.
U.S. exports to Australia and New Zealand have grown less dramatically than to the rest of the
Asia-Pacific region. From 1995 to 1996, U.S. merchandise exports to Australia grew 11.2 percent
and to New Zealand by 2.0 percent. In 1996, the United States had a trade surplus of $8.1 billion
with Australia and $263 million with New Zealand.
Report on Significant Market Opening
21
Australia: Australia is the fourth largest economy among the United States' major export markets
in the Asia-Pacific region, with a GDP/GNP of $320.4 billion in 1994. Shipments of U.S.
merchandise to Australia were valued at $12.0 billion in 1996 and accounted for 21.9 percent of
Australia's total imports in 1995.
The Government of Australia is continuing a policy of economic reform begun in the 1980s to
make Australia a more competitive global economy. Australia was an active participant in the
Uruguay Round negotiations and is an original member of the WTO. In addition, like New
Zealand, Australia is an important advocate of international trade liberalization in the Asia-Pacific
region, particularly through its participation in APEC.
As calculated for Australia's WTO trade policy review, the trade weighted average tariff was 4.1
percent in 1993/94; a projected 2.8 percent in 1996/97; and a projected 2.2 percent in 2000/01.
This represents a 72 percent tariff reduction compared to 1987. With the conclusion of the
Uruguay Round, Australia bound over 94 percent of its industrial tariff lines. As part of its APEC
Individual Action Plan (IAP), Australia has committed to further tariff liberalization.
New Zealand: New Zealand is the fourteenth largest economy among the United States' major
export markets in the Asia-Pacific region, with a GDP/GNP of $46.7 billion in 1994. Shipments of
U.S. merchandise to New Zealand were valued at $1.7 billion in 1996 and accounted for 18.7
percent of New Zealand's total imports in 1995.
New Zealand unilaterally instituted a program of significant tariff liberalization in December 1985,
announcing that tariffs on goods not produced in New Zealand would be cut to zero unless trade
policy considerations dictated otherwise. In 1988, the government reported that 93 percent of
imports entered duty-free and instituted a multi-year program to reduce remaining tariffs. By July
1, 1996, the tariffs on most goods manufactured in New Zealand fell within the range of 5 to 15
percent. On December 16, 1994, New Zealand a announced further unilateral tariff reduction plan
for July 1, 1997 through July 1, 2000, that will reduce all remaining tariffs to no more than 15
percent.
It is the stated policy of the government that opening the New Zealand economy to competition,
particularly international competition, is a key element of a successful growth and employment
strategy. Thus, tariff reductions after 2000 are scheduled for review in 1998. Under the terms of
the new Coalition Agreement establishing the present government, the 1998 review is to proceed
"taking into account the policies and progress of other trading partners."
Other APEC: The market opening measures in the Asia-Pacific region have had a significant
effect on U.S. exports. Since 1990, U.S. exports to Asia have grown by over 70 percent. In 1996,
U.S. trade across the Pacific is estimated to have exceeded our trans-Atlantic trade by more than
75 percent. This section provides information on some of the economies in the Asia-Pacific
region.
22
Future Free Trade Area Negotiations
Japan: Japan, with a GDP of $4.3 trillion in 1994, is the world's second largest economy and
largest trading partner for the United States' in the Asia-Pacific region. Shipments of U.S.
merchandise to Japan were valued at $67.5 billion in 1996 and accounted for 22.6 percent of
Japan's total imports in 1995.
The Joint Statement on the United States - Japan Framework for a New Economic Partnership
(the Framework), signed on July 12, 1993, continues to serve as the fundamental basis for U.S.
trade policy towards Japan. The Framework addresses both sectoral and structural issues with the
objective of substantially increasing access and sales of competitive foreign goods and services
through market-opening and macroeconomic measures.
The United States and Japan have concluded 25 agreements since President Clinton took office,
including the following agreements under the Framework: auto and auto parts, insurance and
financial services, and government procurement of telecommunications and medical technologies.
The United States places a high priority on implementation of our trade agreements and U.S.
exports in those sectors covered by these agreements have increased at a rate significantly faster
than in other sectors.
Nevertheless, there remain substantial barriers to market access in Japan. Over a period of
decades, Japan erected a complex system of government support policies and regulations,
combined with lax competition policy enforcement, which effectively hinders foreign goods and
services from fairly competing in Japan. The United States is utilizing both bilateral and
multilateral means to address these issues. The United States filed a case with the WTO dispute
settlement body regarding Japan's consumer photographic film and paper market which details
many of these practices on the part of the Japanese Government. In addition, the United States
also continues to pursue greater market access through bilateral talks in a several sectors,
including civil aviation, telecommunications, and paper.
China: China is the second largest economy among the United States' major export markets in the
Asia-Pacific region, with a GDP/GNP of $631.2 billion in 1994. Shipments of U.S. merchandise
to China were valued at $12.0 billion in 1996 and accounted for 12.2 percent of China's total
imports in 1995.
Since 1992, the United States has made progress toward opening China's market to U.S. goods
and services. Over the past five years, the United States has successfully negotiated landmark
trade agreements with China that have resulted in increased market access for a range of goods
and services through reduced tariff and non-tariff barriers.
On October 10, 1992, the United States and China signed a Memorandum of Understanding
(MOU) on market access that commits China to significant liberalization of key aspects of its
import administration, including reduction of trade barriers and gradual opening of its market to
U.S. exports. This MOU resolved a 301 investigation initiated by the U.S. Government that
started on October 10, 1991. The investigation examined four broad areas: the absence of
Report on Significant Market Opening
23
transparency; import licensing requirements; import quotas, restrictions, and controls; and
standards and certification requirements.
In 1992, the United States and China signed an MOU that committed China to strengthen its
intellectual property rights (IPR) legal regime. On February 26, 1995, the United States and China
signed an IPR Agreement designed to ensure both a crackdown on piracy and real market access
for the intellectual property industry. In May 1996, when it became clear that China was not fully
implementing this MOU, the Clinton Administration threatened to impose approximately $2
billion worth of sanctions on Chinese goods if China did not take action to stop piracy and
improve market access. Subsequently, China closed 15 illegal CD factories and, in June 1996, the
United States and China exchanged information in an IPR Accord that detailed the steps that
China had taken and would take in the future to ensure effective implementation of the 1995
Agreement. Over the past 10 months, China has taken significant steps to crack down on piracy
including closing 9 more factories between May and June 1996, and 28 production facilities
between September 1996 and March 1997.
In February 1997, the United States and China renewed their bilateral textile agreement. The new
agreement enhances market access opportunities for U.S. exports of textiles and apparel, includes
additional protection against circumvention, and effectively controls China's exports to the United
States.
These bilateral agreements demonstrate the significant progress that has been made in China.
However, there remains a great deal of work to be done before China's market is sufficiently open
to U.S. exports. China's growing economic strength, coupled with its focus on boosting
competitiveness in certain export-oriented industries, requires continued vigilance by the
Administration to ensure China's policies and practices are consistent with existing bilateral
agreements and are in line with international rules.
In this light, the Administration is committed to supporting China's accession to the World Trade
Organization (WTO) -- but only on the basis of a commercially meaningful protocol package.
Recognizing that China is undergoing complex economic reform, USTR has approached WTO
accession negotiations flexibly and pragmatically, with the understanding that the outcome must
secure solid commitments from China to provide market access and follow WTO rules.
Taiwan: Taiwan is the sixth largest economy among the United States' major export markets in
the Asia-Pacific region, with a GDP/GNP of $257.0 billion in 1994. Shipments of U.S.
merchandise to Taiwan were valued at $18.4 billion in 1996 and accounted for 18.6 percent of
Taiwan's total imports in 1995.
In March 1994 and July 1995, the Taiwan authorities cut tariffs on many industrial products at the
behest of the United States. Taiwan's average nominal tariff rate is 8.6 percent, and the trade-
weighted rate is 4.7 percent. Taiwan's participation in the Information Technology Agreement
will result in further tariff reductions in information technology products.
24
Future Free Trade Area Negotiations
Taiwan wishes to accede to the World Trade Organization (WTO). The United States has
conducted extensive bilateral negotiations with Taiwan, especially during 1996 and early 1997. In
these negotiations, Taiwan has agreed to further lower tariffs on some U.S. agricultural products,
to open its services market significantly, to liberalize restrictions on U.S. beer and distilled spirits
products, and to remove restrictions in its government procurement market.
In recent bilateral discussions, Taiwan has agreed to tighten further enforcement of intellectual
property rights. Other bilateral talks resulted in substantial market opening in terms of
telecommunications services and medical equipment.
Taiwan also aims to develop into an Asia-Pacific regional operations center, creating a further
drive toward trade, investment, and financial liberalization. Continuing growth in the Taiwan
economy of about 6 percent per year together with on-going trade liberalization provide
opportunities for increasing U.S. exports, especially in the agricultural area.
Korea: Korea is the third largest economy among the United States' major export markets in the
Asia-Pacific region, with a GDP/GNP of $367.6 billion in 1994. Shipments of U.S. merchandise
to Korea were valued at $26.6 billion in 1996 and accounted for 22.5 percent of Korea's total
imports in 1995.
Korea is the United States' fifth largest export market, and our third largest agricultural market.
Although the United States enjoyed a $3.9 billion trade surplus with Korea in 1996, U.S. industry
describes Korea as one of the toughest markets in the world for doing business. In the past
decade, Korea removed a wide range of quantitative restrictions and average tariffs have been
lowered to 7.9 percent. The Korean economy has grown significantly as a result of this relatively
more open domestic market, and U.S. exports have expanded rapidly. However, access to the
Korean market continues to be hindered by trade barriers rooted in ambiguous and non-
transparent regulations which affect food safety and labeling, licensing, inspections, type approval,
and other standards. Many of these technical barriers to trade are inconsistent with international
norms.
In 1996, Korea became the twenty-ninth member of the OECD. In the context of its accession
negotiations, Korea committed to certain financial and investment-related reforms. Korea
participated in both the Information Technology Agreement and the WTO agreement on basic
telecommunications services in early 1997, with modest trade and investment liberalizing results.
The United States is consulting bilaterally with Korea on government interference in Korea's
telecom sector and under WTO auspices on customs clearance problems. Korea has made
progress on improving IPR protection, but deficiencies remain and Korea has claimed developing
country status to delay implementation of its WTO TRIPS commitments.
South Asia
Summary: The countries of South Asia (India, Pakistan, Bangladesh, Sri Lanka, Nepal, the
Maldives, and Bhutan) have a combined GDP of over $390 billion with 1996 imports from the
Report on Significant Market Opening
25
United States of over $5 billion. The seven countries discuss economic and trade issues
periodically in an arrangement known as the South Asian Association for Regional Cooperation
(SAARC). In addition, in March 1997, the first meeting of the Indian Ocean Rim Association for
Regional Cooperation (IORARC) was held. Its fourteen members are committed to promoting
liberalization of goods, services, investment and technology within the region. India and Australia
played a major role in creating the organization. India and Pakistan are the dominant U.S. trading
partners in the region.
India: India is the fifth largest economy among the United States' major export markets in the
Asia-Pacific region, with a GDP/GNP of $292.4 billion in 1994. Shipments of U.S. merchandise
to India in 1996 were valued at $3.3 billion and accounted for 9.7 percent of India's total imports
in 1995.
Following a severe balance of payments crisis in 1991, the Indian Government introduced a
number of significant economic reforms and also sought closer commercial and diplomatic ties
with the United States. Subsequent governments have publicly articulated their economic policies
as reform orientated at a more deliberate pace. Economic and commercial relations have
improved considerably as a result of Indian efforts at economic reform and the attraction of India
for the U.S. export of goods, services, and investment. India's enormous market coupled with the
promise of further economic liberalization have resulted in increasing interest in India. However,
the considerable economic and commercial potential of India still remains to be realized.
Until recently, India's complex web of market access barriers was a serious and longstanding
impediment to most U.S. exports and investment. Although considerable progress has been
realized since 1991, significant access barriers remain, especially for goods that can be produced
domestically such as agricultural and consumer items. India's average tariff rate is still high by
East Asian standards at 20 percent. Approximately 40 percent of India's import line items are
subject to licensing restrictions, the vast majority of which India attempts to justify under the
WTO balance of payments (BOP) provisions. This matter is the subject of consultations with the
WTO BOP Committee.
India has been on the Special 301 "priority watch list" since 1994 and the United States and India
are litigating in a WTO dispute settlement panel India's failure to implement the "mailbox"
provisions of the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights
(TRIPs). India joined the ITA in March of 1997 and made a modest offer in the WTO
telecommunications services negotiations that concluded in February 1997.
Pakistan: Pakistan is the thirteenth largest economy among the United States' major export
markets in the Asia-Pacific region, with a GDP/GNP of $54.3 billion in 1994. Shipments of U.S.
merchandise to Pakistan in 1996 were valued at $1.3 billion and accounted for 9.3 percent of
Pakistan's total imports in 1995.
Pakistan has made progress in recent years in liberalizing import restrictions, but tariffs remain
high -- up to 65 percent -- on many products, and some items still are subject to bans or
quantitative restrictions. On March 31, 1997, the Pakistani Government announced a tariff
26
Future Free Trade Area Negotiations
simplification reform, including lowering maximum tariffs to 45 percent, as part of a broader
structural adjustment plan.
Pakistan provides statutory national treatment to foreign investment in most industrial sectors, but
not in non-industrial sectors. Local content requirements have been reported in the automobile,
electronics, electrical products, and engineering industries under Pakistan's "deletion program,"
although participation in that program ostensibly is not compulsory. Pakistan's investment barriers
are especially severe in services sectors such as banking, insurance, transportation, and
telecommunications In the WTO Agreement on Basic Telecommunications Services, Pakistan
made commitments on basic telecommunications services, with phase-in of some obligations. In
that agreement, Pakistan agreed to permit foreign ownership or control of all telecommunications
services and facilities by 2004.
Copyright piracy remains a particularly serious problem in Pakistan. Strengthened law
enforcement has had some impact against video piracy, but IPR piracy of computer software,
textile designs, and reprinted books continues virtually unabated. In February, 1997, Pakistan
implemented its obligation under the WTO Agreement on Trade-Related Aspects of Intellectual
Property Rights (TRIPs) to establish a "mailbox" system for agricultural chemical and
pharmaceutical product patent applications. Pakistan remains on the Special 301 "watch list."
Sub-Saharan Africa
Overview
Economic Reforms and Growth
While political turmoil and violence continue to hold back development in various African
countries, there has been a clear shift among some thirty Sub-Saharan countries from political
instability and economic exploitation to political and market reform in this decade. Over the
years, Sub-Saharan countries have tried many approaches to economic coordination of their
economies. Some, such as the Organization for African Unity, are continental in breadth with 53
countries as members and long range in objectives, that is a free trade area by the year 2020.
Others are more narrowly defined, such as the South African Customs Union (SACU)³ which was
founded in 1910 to deal with tariff and trade flows through South Africa to its small neighbors,
some of which are landlocked (Botswana, Lesotho and Swaziland). Some efforts, like the Cross
Border Initiative (CBI) have mixed membership--regional integration organizations and individual
country members.
3
SACU comprises Botswana, South Africa, Lesotho, Namibia, and Swaziland.
Report on Significant Market Opening
27
U.S. Trade
Sub-Saharan Africa⁴ comprises 48 countries with a total population of 574 million. Its total GDP
of $259 billion in 1994, as estimated by the World Bank, resulted in a per-capita GDP of $451. Its
large population and low income make the African sub-continent a market of enormous needs, but
limited effective demand. Its rich endowment of natural resources--petroleum and other minerals,
including diamonds and gold--have made Africa a source of over $15 billion dollars of U.S.
imports in 1996, up 37 percent since 1994. The Sub-Saharan market for U.S. goods is much
less, $6 billion in 1996, up 20 percent since 1994. A significant portion of these exports are
destined for investment in oil production facilities. Growth in U.S. trade with Sub-Saharan Africa
will depend on the ability of its countries to broaden the scope of political and economic reforms.
The progress some countries have made in furthering regional market integration serves as an
indicator or their readiness to trade more openly not only with their neighbors but, in time, with
global trading partners.
Sub Regions
Southern Africa (SADC)
Summary: The Southern African Development Community (SADC) was founded initially to
counter South Africa's apartheid policies. South Africa (now a dynamic participant in SADC) and
its eleven southern African neighbors signed a free trade protocol last August, which aims to
eliminate tariffs within eight years and adopt other trade liberalizing measures. As they proceed to
reduce trade barriers between their borders, SADC members, which now comprise a market of
130 million people, are expected to become more open to global competition so that U.S.
producers can anticipate wider market opportunities in southern Africa.
South Africa: South Africa took on a new leadership role following the release of Nelson
Mandela from prison and the subsequent establishment of a racially free democracy. The United
States lifted its trade embargo with South Africa and trade has resumed between the United States
and South Africa. South Africa is the single largest economy among the United States' major
export markets in the Sub-Saharan Africa region, with a GDP/GNP of $123.1 billion in 1994.
Shipments of U.S. merchandise to South Africa were valued at $3.1 billion in 1996 and accounted
for 10.9 percent of South Africa's total imports in 1995.
Southern African Development Community
South Africa is now a dynamic participant in the Southern African Development Community
(SADC) which was founded initially to give its members a collective voice in addressing donors
4
Sub-Saharan Africa comprises Angola, Benin, Botswana, Burkina Faso, Burundi, Cameroon, Cape Verde, Central
African Republic, Chad, Comoros, Congo, Cote d'Ivoire, Djibouti, Equatorial Guinea, Ethiopia, Gabon, Gambia, Ghana,
Guinea, Guinea-Bissau, Kenya, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mauritius, Mozambique, Namibia,
Niger, Nigeria, Rwanda, Sao Tome, and Principe, Senegal, Seychelles, Sierra Leone, Somalia, South Africa, Sudan,
Swaziland, Tanzania, Togo, Uganda, Zambia, Zaire, and Zimbabwe.
28
Future Free Trade Area Negotiations
to help develop a regional infrastructure independent of that in South Africa. SADC struck a
unique chord in economic harmony in that it rose above country competition in the siting of
facilities and developed a regional strategy on key topics such as communications, transportation,
and industrial development. After South Africa joined its eleven southern African neighbors in
SADC, they signed a free trade protocol in August 1996, which aims to eliminate tariffs within
eight years and adopt other trade liberalizing measures. As they proceed to reduce trade barriers
between their borders, SADC members, which now comprise a market of 130 million people, are
expected to become more open to global competition so that U.S. producers can anticipate wider
market opportunities in southern Africa.
West African Economic and Monetary Union
The West African Economic and Monetary Union (WAEMU) emerged in 1994 from earlier
integration efforts and a pre-existing monetary union. Its members--Benin, Burkina, Cote
d'Ivoire, Mali, Niger, Senegal, and Togo-- are pursuing full economic integration with a common
external tariff, community value-added tax, and harmonized legal, regulatory and economic
policies. Its total population of 60 million in an integrated market with minimal trade barriers
could become a significant market for U.S. producers if it can loosen its ties to its European
patrons. Currently Cote d'Ivoire, with a population of 13 million, is the largest of the group and
U.S. exports doubled to $172 million between 1993 and 1995, although they declined to $142 in
1996.
If Nigeria, which was a member of WAEMU's predecessor, were to join the new effort, its 100
million people would more than double this West African market. U.S. imports from Nigeria
average $5 billion a year, mainly oil imports. By comparison, Nigeria's imports from the United
States are relatively small, but growing, rising from $602 million in 1995 to $816 million in 1996.
This hefty 36 percent increase in exports to Nigeria, together with a 13 percent increase in U.S.
exports to South Africa, accounted for 78 percent of the total increase of U.S. exports to Sub-
Saharan Africa.
Common Market for Eastern and Southern Africa
The Common Market for Eastern and Southern Africa (COMESA)5 was established in 1994 to
revive the work of its predecessor, the Preferential Trading Area. However, because COMESA's
membership includes ten members of SADC, there has been some concern about duplication of
efforts. A more recent and more limited effort at integration in East Africa was effected by
Kenya, Tanzania and Uganda, which set up once again the Permanent Tripartite Commission of
the East African Community which had previously been a close union from 1967 to 1977. The
currencies of these countries have been made convertible and priority is being given to develop
transportation and communications, as well as harmonization of fiscal and monetary policies.
5
COMESA members include SADC members (except South Africa and Botswana) and Burkina Faso, Comoros, Eritrea,
Kenya, and Madagascar.
Report on Significant Market Opening
29
Cross Border Initiative
A different approach to trade liberalization has been sponsored as an umbrella effort by the
multilateral banks which will provide some funding to facilitate its success. Called the Cross
Border Initiative (CBI)⁶, it seeks to coordinate the efforts of existing regional integration
organizations such as SADC, COMESA and the Indian Ocean Commission, and involves fourteen
individual countries. CBI is guided by four principles: deep integration by removing barriers to
factor flows; establishment of comparative advantage; achievement of integration; through
external trade liberalization; and self-selected pace of liberalization. If CBI can deal with the
concerns caused by disparities in the pace of and approaches to liberalization, CBI may accelerate
liberalization and widen the scope of participation, even though it lacks political autonomy. This
in turn is likely to open African markets to U.S. producers, but it is unlikely to develop into an
integrated market area with which a free trade agreement could be negotiated. It would appear
that the regional units will remain the candidates for any such agreements.
Middle East
While significant obstacles to increased trade and investment exist throughout the Middle East,
many countries in the region are taking steps to integrate their economies into the world trading
system. Most countries of the region are members of the World Trade Organization. Saudi
Arabia, Oman, and Jordan are currently in the WTO accession process.
Inadequate protection of intellectual property rights remains a serious problem throughout the
region, causing hundreds of millions of dollars in lost sales of U.S. videocassettes, software, and
pharmaceuticals. Some countries in the region continue to maintain high tariffs and a range of
non-tariff barriers in order to protect their domestic markets.
The United States favors strengthening common action among Gulf Cooperation Council
members (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates), as well as
enhancing U.S.-GCC economic and commercial ties. The U.S. Government engages in high-level
economic policy talks with GCC members through the U.S.-GCC Economic Dialogue.
Israel remains a key U.S. trading partner in the region. The United States negotiated a free trade
agreement with Israel in 1985. The tariff reductions in the agreement were fully phased in by
January 1, 1995. Under the Free Trade Area Agreement, the United States and Israel had differing
interpretations as to the meaning of certain rights and obligations related to agricultural products,
and Israel maintained significant restrictions on imports of many of these U.S. products.
In the interest of achieving practical improvements in agricultural trade between the two
countries, the United States and Israel entered into an agreement on a five-year program of
6
CBI member countries are Burundi, Comoros, Kenya, Madagascar, Malawi, Mauritius, Namibia, Rwanda, Seychelles,
Swaziland, Tanzania, Uganda, Zambia, and Zimbabwe.
30
Future Free Trade Area Negotiations
gradual and steady improvement in agricultural market access, signed on November 4, 1996.
Israel is now undertaking to make concessions on a wide range of priority U.S. commodities.
In 1996, the President also signed legislation and a subsequent proclamation which initiated duty-
free treatment of products from the West Bank and Gaza Strip. The intent of the legislation is to
spur export-related economic development in the region. This trade initiative is one element of
tangible U.S. support for the Middle-East peace process, facilitating enhanced economic
cooperation among Israel, Jordan, Egypt and the Palestinian Authority. Products of the West
Bank and Gaza Strip and of industrial zones established on the borders of Israel and Jordan and
Israel and Egypt will enjoy duty-free entry into the United States, treatment identical to that
currently provided products of Israel under the Israel-U.S. Free Trade Agreement.
Egypt is also an important market in the region for U.S. products, especially agriculture. In 1991,
Egypt began a program of trade liberalization, eliminating many non-tariff barriers and
significantly reducing tariffs. Continuing liberalization promises now opportunities for U.S.
exporters. The U.S. considers Egypt's economic reform and trade liberalization to be a key
element of the Gore/Mubarak Economic Partnership.
Western Europe
European Union
The European Union (EU), composed of 15 industrialized western European countries -- Austria,
Belgium, Denmark, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, the
Netherlands, Portugal, Spain, Sweden, and the United Kingdom -- is the world's largest trading
entity. The EU is also our second largest trading partner, with two-way merchandise trade
totaling about $270 billion after. In 1996, U.S. merchandise exports to, and imports from, the EU
increased, and for the fourth consecutive year, the United States ran a merchandise trade deficit
with the EU, though services trade has in recent years tended to more than compensate for the
goods trade deficit.
The United States and the EU are the world's largest zones of prosperity and both have mature,
highly-diversified economies. There is a rough equivalence in merchandise trade in almost every
large sector and the EU is an important consumer of high-value added U.S. products. The EU is a
large purchaser of goods and services from U.S. growth industries, including telecommunications,
financial services, aerospace, pharmaceuticals, audiovisual, and computers.
The U.S. and EU economies have also become increasingly interdependent through direct
investment and joint ventures. Direct investment in the EU amounted to $320 billion in 1995,
representing about 45 percent of total U.S. direct foreign investment. The growing
interdependence of the two economies has created pressure for closer harmonization of the two
trading regimes and regulatory structures, resulting in far greater attention to such items as mutual
recognition of standards, protection of intellectual property rights, and coordination of
approaches to labor standards and environmental concerns.
Report on Significant Market Opening
31
In most sectors, U.S. producers have good access to EU markets and can compete on a fair basis,
The EU's implementation of the Single Market program (EC-92) has been generally beneficial to
U.S. investors and exporters by breaking down internal EU barriers to trade, thereby creating a
more cohesive market. This transformation of the EU's internal market is in turn fostering a more
efficient allocation of U.S. firms' resources among the EU member states, thereby improving these
firms' competitiveness.
Because of the similarity in the economies of the U.S. and EU, our ability to compete is often
strongly affected by EU sectoral policies. Fortunately, many of the EU's most restrictive trade
practices were eliminated through the Uruguay Round's tariff cuts and extension of GATT
disciplines to services, intellectual property and investment. However, though the EU has a largely
open trading regime, there are still a number of sectors which are not sufficiently open to U.S.
producers. These sectors tend to be politically or symbolically powerful and heavily reliant on
government subsidies. The EU Utilities Procurement Directive limits access to the enormous
public telecommunications network and market for telecommunications equipment (e.g. central
switches) and services. The EU Broadcast Directive limits access to the lucrative audio-visual
market by reserving 50 percent of broadcast programming for European works. The EU also
heavily subsidizes certain industries, to the competitive detriment of U.S. producers; these sectors
include civil aircraft, steel, shipbuilding, and coal.
European Free Trade Area
The European Free Trade Area (EFTA) was established in 1960 as an alternative to the European
Economic Community (EU) and now includes only Norway, Switzerland, Iceland, and
Liechtenstein. Austria, Finland, and Sweden are the most recent former EFTA members to have
negotiated respective terms of accession and now are EU members. In 1994 the separate
European Economic Area (EEA) was established to encourage European economic integration
and includes Norway, Iceland, Liechtenstein and all EU member states. The EEA brings over 70
percent of EFTA's trade regulations into conformity with those of the EU. This is providing, on
balance, opportunities to U.S. businesses. Many regulations now conform to EU norms, making
investment easier. Barriers to U.S. trade have fallen in many areas as the former EFTA states
adopt EU regulations and as the Uruguay Round continues to be implemented.
Switzerland's application of GATT norms provides excellent opportunities and guarantees for
trade and investment. However, Switzerland does continue to maintain significant barriers to
agricultural trade, and Switzerland's banking sector continues to lack adequate transparency.
Switzerland also provides certain trade advantages to EU and EFTA firms through a series of
bilateral treaties.
32
Future Free Trade Area Negotiations
Central and Eastern Europe
Overview
Economic Reforms and Growth
During 1996, most Central European countries continued to make progress in their efforts to
transform centrally planned economies into market-oriented systems. Since the formal dissolution
of the Soviet Union at the end of 1991, each of the independent republics has also been working
towards this goal; however, progress in some of these countries is limited. The nature of the
reforms adopted and the speed with which they are being implemented varies considerably from
country to country.
The United States has actively supported political and economic reforms in Central and Eastern
Europe. The United States continues to provide financial, technical, and administrative assistance
designed to support movement toward democracy and market economies.
A primary focus of U.S. efforts has been to construct a framework for the rapid expansion of
trade and investment between the United States and Central and Eastern Europe. This framework
includes negotiating trade agreements to extend most-favored-nation (MFN) tariff treatment and
intellectual property rights (IPR) protection, extending Generalized System of Preferences (GSP)
benefits to eligible countries, encouraging adoption of WTO provisions in these countries' trade
regimes, and negotiating bilateral investment treaties which guarantee compensation for
expropriation, transfers in convertible currency, and the use of appropriate dispute settlement
procedures.
U.S. Trade
Two-way trade between the United States and Central and Eastern Europe has expanded at a
rapid pace in recent years. U.S. exports to Central and Eastern Europe have fluctuated in a
generally upward trend since 1990, while U.S. imports from this region have surged. Accordingly,
the U.S. trade balance has shifted from a surplus to, beginning in 1994, a deficit.
U.S. exports to Central and Eastern Europe are primarily food items (principally meat and wheat)
and machinery and transport equipment (principally aircraft and telecommunications equipment).
U.S. imports from this region include manufactured goods (principally articles of aluminum, iron,
and nonalloy steel) and chemicals (principally radioactive materials and inorganic chemicals).
Report on Significant Market Opening
33
Sub Regions
Central Europe
Bulgaria, the Czech Republic, Hungary, Poland, Romania, Slovakia, and Slovenia are members of
the WTO. WTO accession working parties have been established for Albania, Croatia,
Macedonia, and the Baltic Republics (Estonia, Latvia, and Lithuania).
All Central European countries have MFN status. The United States has trade agreements with all
Central European countries except the Republics of the former Yugoslavia and Poland. Where
these countries are covered by the Jackson-Vanik Amendment to the Trade Act of 1974, the
President has either certified that these countries are in compliance with the freedom of
emigration provision or has waived the requirement. In December 1991, Congress affirmed that
Title IV of the Trade Act of 1974 does not apply to the Baltic Republics. Pursuant to special
legislation, the President removed the following countries from Title IV and accorded them
unconditional MFN status: the Czech and Slovak Federal Republic (April 1992), Hungary (April
1992), Bulgaria (September 1996), and Romania (November 1996). The Jackson-Vanik
Amendment never applied to Poland or the former Yugoslavia. As part of U.S. sanctions policy,
the President revoked MFN from Serbia; on January 16, 1996, certain sanctions were dropped
pursuant to the peace accords negotiated in Dayton, Ohio, although MFN was not restored.
In Central Europe, the United States has BITs in force with Bulgaria, the Czech Republic,
Estonia, Latvia, Poland, Romania, and Slovakia. The BIT with Albania awaits an exchange of
instruments ratification, while the BIT with Croatia has not yet been ratified by either party.
The United States is a major investor in many countries in the region, and is the principal foreign
investor in Hungary and Poland. In trade of goods, however, the size of U.S. exports to and
imports from the Central European countries is dwarfed by trade between those countries and the
countries of the EU. By the end of 1994, most of the Central European countries had concluded
Association Agreements with the EU. These include tariff preferences both for Central European
countries' imports from the EU and EU imports from the Central European countries.
Russia
Russia is in the process of acceding to the World Trade Organization (WTO). Russia is the single
largest economy among the United States' major export markets in the Central and Eastern
Europe region, with a GDP/GNP of $393.0 billion in 1994. Shipments of U.S. merchandise to
Russia were valued at $3.3 billion in 1996 and accounted for 5.7 percent of Russia's total imports
in 1995.
Trade relations between the United States and Russia are governed by the U.S.-Russia trade
agreement, signed in June 1990 with the USSR and approved by the U.S. Congress in November
1991. The USSR ceased to exist before ratification of the agreement, but the United States
offered the agreement (with minor technical changes) to each of the emerging states of the former
Soviet Union. The Russian Parliament approved the agreement, making it possible for the United
34
Future Free Trade Area Negotiations
States to extend most-favored-nation status to Russia on June 17, 1992. A BIT with Russia has
been approved by the U.S. Senate but is awaiting Russian ratification.
Ukraine
A WTO accession working parties have been established for Ukraine. Ukraine is the second
largest economy among the United States' major export markets in the Central and Eastern
Europe region, with a GDP/GNP of $99.1 billion in 1994. Shipments of U.S. merchandise to
Ukraine were valued at $394 million in 1996 and accounted for 1.7 percent of Ukraine's total
imports in 1995.
Most MFN tariffs in Ukraine range from zero to 30 percent, although tariffs on some items are
40-50 percent. In November 1996, Ukraine raised its tariffs on a number of agricultural products.
Imports are also assessed a 20 percent VAT and, in some instances, an excise tax. Ukraine has
implemented over the last two years a set of intellectual property laws, including laws covering
patents, industrial designs, trademarks, plant varieties, and copyrights. Enforcement remains
sporadic and inadequate, however. Ukraine passed a law on foreign investment in 1996 which
provides certain protections, including general guarantees against expropriations, unhindered
transfer of profits and post-tax revenues, and a ten-year guarantee against changes in legislation
that affect companies operating in Ukraine.
Other Newly Independent States (NIS)
The countries reviewed in this section are: Armenia, Azerbaijan, Belarus, Georgia, Kazakstan,
Kyrgyzstan, Moldova, Tajikistan, Turkmenistan, and Uzbekistan. WTO accession working parties
have been established for Armenia, Belarus, Georgia, Kazakstan, Kyrgyzstan, and Uzbekistan.
All NIS republics have MFN status. In addition, the United States has trade agreements with all of
the NIS republics.
The United States has BITs in force with five NIS countries -- Armenia, Moldova, Kazakstan,
Kyrgyzstan, and Ukraine. Belarus, Georgia, and Uzbekistan have also signed BITs with the
United States. The BITs with Belarus and Georgia are awaiting exchange of the instruments of
ratification, while the BIT with Uzbekistan has not yet been ratified by either party. Discussions
for BITs are underway with the majority of other NIS countries.
Trade with the NIS has been growing from a small base, but is restricted due to the limited
infrastructure, income and foreign exchange resources in these countries. In addition to changing
legal structures and banking systems, the NIS are struggling with currency convertibility
problems, inflation, and unemployment. Many of these countries also lack adequate road systems,
power supplies, and communication structures. However, despite difficult commercial
environments, U.S. companies are pursuing business opportunities.
Report on Significant Market Opening
35
36
Future Free Trade Area Negotiations
PART II:
ECONOMIC DATA ON
U.S. TRADING PARTNERS
Table 1: Data on the 100 largest national markets for U.S. exports (ranked by U.S.
export value)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
1. Canada
132,584
569.7
156,506
80.4
2. Japan
67,536
4,328.8
115,218
22.6
3. Mexico
56,761
369.9
72,963
74.5
4. United Kingdom
30,916
1,071.1
28,892
12.2
5. Korea (Republic of)
26,583
367.6
22,667
22.5
6. Germany
23,474
2,084.8
38,943
7.5
7. Taiwan
18,413
257.0
29,911
18.6
8. Singapore
16,685
65.3
20,340
15.1
9. Netherlands
16,615
339.0
6,617
3.8
10. France
14,428
1,356.0
18,630
5.8
11. Hong Kong
13,956
132.1
9,867
21.8
12. Brazil
12,699
472.5
8,762
21.1
13. Belgium
12,520
231.0
6,799
8.5
14. Australia
11,992
320.4
3,323
21.9
15. China (PRC)
11,978
631.2
51,495
12.2
16. Italy
8,785
1,102.0
18,222
4.8
17. Malaysia
8,521
68.6
17,825
21.3
Report on Significant Market Opening
37
Table 1: Data on the 100 largest national markets for U.S. exports (ranked by U.S.
export value)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
18. Switzerland
8,370
265.5
7,793
6.4
19. Saudi Arabia
7,295
125.5
8,781
21.4
20. Thailand
7,211
139.8
11,336
11.5
21. Philippines
6,125
63.7
8,162
18.4
22. Israel
6,009
78.5
6,426
17.8
23. Spain
5,486
525.5
4,281
6.4
24. Venezuela
4,741
58.5
12,903
42.1
25. Colombia
4,709
60.6
4,273
39.1
26. Argentina
4,516
277.4
2,278
22.9
27. Chile
4,132
49.3
2,256
24.7
28. Indonesia
3,965
167.6
8,213
9.5
29. Ireland
3,660
48.7
4,798
17.7
30. Sweden
3,429
207.1
7,158
5.3
31. Russia
3,340
393.0
3,561
5.7
32. India
3,318
292.4
6,169
9.7
33. Dominican Republic
3,183
10.1
3,575
44.1
34. Egypt
3,146
40.9
665
18.9
35. South Africa
3,106
123.1
2,323
10.9
36. Turkey
2,886
152.0
1,777
10.4
37. United Arab Emirates
2,527
36.2
496
8.1
38. Finland
2,438
96.1
2,345
7.1
39. Austria
2,009
197.0
2,199
3.3
40. Kuwait
1,979
31.1
1,640
23.5
41. Costa Rica
1,814
7.9
1,974
52.3
38
Future Free Trade Area Negotiations
Table 1: Data on the 100 largest national markets for U.S. exports (ranked by U.S.
export value)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
42. Peru
1,767
49.0
1,261
26.7
43. Denmark
1,730
145.4
2,137
3.8
44. New Zealand
1,727
46.7
1,464
18.7
45. Honduras
1,641
3.5
1,796
55.5
46. Guatemala
1,564
12.4
1,673
46.8
47. Norway
1,558
113.5
3,869
6.7
48. Jamaica
1,491
3.9
839
75.9
49. Panama
1,378
6.7
346
12.5
50. Pakistan
1,277
54.3
1,266
9.3
51. Ecuador
1,257
14.3
1,916
30.8
52. El Salvador
1,072
7.6
1,074
40.2
53. Poland
968
92.8
627
3.9
54. Portugal
960
92.3
1,016
3.3
55. Paraguay
897
7.6
42
19.3
56. Greece
820
80.1
496
6.2
57. Nigeria
816
30.2
5,849
11.1
58. Bahamas
725
4.4
165
29.4
59. Trinidad and Tobago
665
4.9
1,017
50.6
60. Algeria
632
45.2
2,103
8.0
61. Lebanon
627
15.8
41
10.1
62. Vietnam
616
14.4
319
10.6
63. Netherlands Antilles
528
1.9
663
28.4
64. Uruguay
484
14.9
260
9.9
Report on Significant Market Opening
39
Table 1: Data on the 100 largest national markets for U.S. exports (ranked by U.S.
export value)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
65. Morocco
476
30.1
252
6.6
66. Haiti
474
1.6
143
65.0
67. Czech Republic
410
33.0
482
2.2
68. Ukraine
394
99.1
507
1.7
69. Brunei
375
4.4
49
5.9
70. Uzbekistan
352
21.5
157
2.8
71. Jordan
345
5.8
25
9.3
72. Hungary
331
39.6
677
3.1
73. French Guiana
301
0.8
5
3.3
74. Ghana
295
6.8
171
6.9
75. Bermuda
282
1.7
11
41.5
76. Bolivia
269
5.5
275
20.9
77. Angola
268
6.1
2,687
15.9
78. Romania
266
28.8
249
4.2
79. Nicaragua
262
1.4
350
26.3
80. Iceland
257
6.2
236
8.4
81. Cyprus
257
7.3
17
13.0
82. Yemen
256
4.1
27
7.7
83. Bahrain
244
4.9
115
6.8
84. Luxembourg
242
16.4
203
N/A
85. Syria
226
4.4
15
4.1
86. Aruba
225
1.1
558
N/A
87. Suriname
222
1.2
97
42.4
88. Barbados
222
1.7
41
35.5
40
Future Free Trade Area Negotiations
Table 1: Data on the 100 largest national markets for U.S. exports (ranked by U.S.
export value)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
89. Oman
215
10.8
411
5.0
90. Sri Lanka
211
11.5
1,393
15.0
91. Bangladesh
210
25.9
1,343
6.1
92. Cayman Islands
208
0.7
17
N/A
93. Qatar
207
10.7
157
8.4
94. Turkmenistan
201
N/A
0
2.7
95. Tunisia
189
15.8
76
5.9
96. Latvia
165
5.8
99
1.9
97. Ethiopia
148
5.1
35
12.0
98. Cote d'Ivoire
141
7.5
397
5.9
99. Kazakstan
138
55.2
114
1.6
100. Bulgaria
137
10.5
126
2.6
Total Presented
614,796
784,118
World
622,827
791,315
Note - GDP/GNP data have been converted to U.S. dollars at market exchange rates
except for the following countries (for which GDP/GNP data were converted to U.S.
dollars at purchasing power parity exchange rates): Angola, Aruba, Bahamas, Bermuda,
Brunei, Cayman Islands, French Guiana, Lebanon, Netherlands Antilles, Qatar, and
Suriname. For the following countries, the most recent reliable GDP/GNP data available
were from 1993: Aruba, Brunei, Cayman Islands, and French Guiana.
Source: Compiled from the World Bank Development Report 1996, the IMF Direction of
Trade Yearbook 1996, the U.S. Bureau of the Census, and other sources.
Report on Significant Market Opening
41
Table 2: Data on the 100 largest national markets for U.S. exports (ranked by size of
domestic economy)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
1. Japan
67,536
4,328.8
115,218
22.6
2. Germany
23,474
2,084.8
38,943
7.5
3. France
14,428
1,356.0
18,630
5.8
4. Italy
8,785
1,102.0
18,222
4.8
5. United Kingdom
30,916
1,071.1
28,892
12.2
6. China (PRC)
11,978
631.2
51,495
12.2
7. Canada
132,584
569.7
156,506
80.4
8. Spain
5,486
525.5
4,281
6.4
9. Brazil
12,699
472.5
8,762
21.1
10. Russia
3,340
393.0
3,561
5.7
11. Mexico
56,761
369.9
72,963
74.5
12. Korea (Republic of)
26,583
367.6
22,667
22.5
13. Netherlands
16,615
339.0
6,617
3.8
14. Australia
11,992
320.4
3,323
21.9
15. India
3,318
292.4
6,169
9.7
16. Argentina
4,516
277.4
2,278
22.9
17. Switzerland
8,370
265.5
7,793
6.4
18. Taiwan
18,413
257.0
29,911
18.6
19. Belgium
12,520
231.0
6,799
8.5
20. Sweden
3,429
207.1
7,158
5.3
21. Austria
2,009
197.0
2,199
3.3
22. Indonesia
3,965
167.6
8,213
9.5
23. Turkey
2,886
152.0
1,777
10.4
24. Denmark
1,730
145.4
2,137
3.8
42
Future Free Trade Area Negotiations
Table 2: Data on the 100 largest national markets for U.S. exports (ranked by size of
domestic economy)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
25. Thailand
7,211
139.8
11,336
11.5
26. Hong Kong
13,956
132.1
9,867
21.8
27. Saudi Arabia
7,295
125.5
8,781
21.4
28. South Africa
3,106
123.1
2,323
10.9
29. Norway
1,558
113.5
3,869
6.7
30. Ukraine
394
99.1
507
1.7
31. Finland
2,438
96.1
2,345
7.1
32. Poland
968
92.8
627
3.9
33. Portugal
960
92.3
1,016
3.3
34. Greece
820
80.1
496
6.2
35. Israel
6,009
78.5
6,426
17.8
36. Malaysia
8,521
68.6
17,825
21.3
37. Singapore
16,685
65.3
20,340
15.1
38. Philippines
6,125
63.7
8,162
18.4
39. Colombia
4,709
60.6
4,273
39.1
40. Venezuela
4,741
58.5
12,903
42.1
41. Kazakstan
138
55.2
114
1.6
42. Pakistan
1,277
54.3
1,266
9.3
43. Chile
4,132
49.3
2,256
24.7
44. Peru
1,767
49.0
1,261
26.7
45. Ireland
3,660
48.7
4,798
17.7
46. New Zealand
1,727
46.7
1,464
18.7
47. Algeria
632
45.2
2,103
8.0
Report on Significant Market Opening
43
Table 2: Data on the 100 largest national markets for U.S. exports (ranked by size of
domestic economy)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
48. Egypt
3146
40.9
665
18.9
49. Hungary
331
39.6
677
3.1
50. United Arab Emirates
2,527
36.2
496
8.1
51. Czech Republic
410
33.0
482
2.2
52. Kuwait
1,979
31.1
1,640
23.5
53. Nigeria
816
30.2
5,849
11.1
54. Morocco
476
30.1
252
6.6
55. Romania
266
28.8
249
4.2
56. Bangladesh
210
25.9
1,343
6.1
57. Uzbekistan
352
21.5
157
2.8
58. Luxembourg
242
16.4
203
N/A
59. Lebanon
627
15.8
41
10.1
60. Tunisia
189
15.8
76
5.9
61. Uruguay
484
14.9
260
9.9
62. Vietnam
616
14.4
319
10.6
63. Ecuador
1,257
14.3
1,916
30.8
64. Guatemala
1,564
12.4
1,673
46.8
65. Sri Lanka
211
11.5
1,393
15.0
66. Oman
215
10.8
411
5.0
67. Qatar
207
10.7
157
8.4
68. Bulgaria
137
10.5
126
2.6
69. Dominican Republic
3,183
10.1
3,575
44.1
44
Future Free Trade Area Negotiations
Table 2: Data on the 100 largest national markets for U.S. exports (ranked by size of
domestic economy)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
70. Costa Rica
1,814
7.9
1,974
52.3
71. El Salvador
1,072
7.6
1,074
40.2
72. Paraguay
897
7.6
42
19.3
73. Cote d'Ivoire
141
7.5
397
5.9
74. Cyprus
257
7.3
17
13.0
75. Ghana
295
6.8
171
6.9
76. Panama
1,378
6.7
346
12.5
77. Iceland
257
6.2
236
8.4
78. Angola
268
6.1
2,687
15.9
79. Latvia
165
5.8
99
1.9
80. Jordan
345
5.8
25
9.3
81. Bolivia
269
5.5
275
20.9
82. Ethiopia
148
5.1
35
12.0
83. Bahrain
244
4.9
115
6.8
84. Trinidad and Tobago
665
4.9
1,017
50.6
85. Bahamas
725
4.4
165
29.4
86. Syria
226
4.4
15
4.1
87. Brunei
375
4.4
49
5.9
88. Yemen
256
4.1
27
7.7
89 Jamaica
1,491
3.9
839
75.9
90. Honduras
1,641
3.5
1,796
55.5
91. Netherlands Antilles
528
1.9
663
28.4
Report on Significant Market Opening
45
Table 2: Data on the 100 largest national markets for U.S. exports (ranked by size of
domestic economy)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
92. Barbados
222
1.7
41
35.5
93. Bermuda
282
1.7
11
41.5
94. Haiti
474
1.6
143
65.0
95. Nicaragua
262
1.4
350
26.3
96. Suriname
222
1.2
97
42.4
97. Aruba
225
1.1
558
N/A
98. French Guiana
301
0.8
5
3.3
99. Cayman Islands
208
0.7
17
N/A
100. Turkmenistan
201
N/A
0
2.7
Total Presented
614,796
784,118
World
622,827
791,315
Note * - GDP/GNP data have been converted to U.S. dollars at market exchange rates
except for the following countries (for which GDP/GNP data were converted to U.S.
dollars at purchasing power parity exchange rates): Angola, Aruba, Bahamas,
Bermuda, Brunei, Cayman Islands, French Guiana, Lebanon, Netherlands Antilles,
Qatar, and Suriname. For the following countries, the most recent reliable GDP/GNP
data available were from 1993: Aruba, Brunei, Cayman Islands, and French Guiana.
Source: Compiled from the World Bank Development Report 1996, the IMF Direction
of Trade Yearbook 1996, the U.S. Bureau of the Census, and other sources.
46
Future Free Trade Area Negotiations
Table 3: Data on the 100 largest national markets for U.S. exports (ranked by U.S. share
of imports)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
1. Canada
132,584
569.7
156,506
80.4
2. Jamaica
1,491
3.9
839
75.9
3. Mexico
56,761
369.9
72,963
74.5
4. Haiti
474
1.6
143
65.0
5. Honduras
1,641
3.5
1,796
55.5
6. Costa Rica
1,814
7.9
1,974
52.3
7. Trinidad and Tobago
665
4.9
1,017
50.6
8. Guatemala
1,564
12.4
1,673
46.8
9. Dominican Republic
3,183
10.1
3,575
44.1
10. Suriname
222
1.2
97
42.4
11. Venezuela
4,741
58.5
12,903
42.1
12. Bermuda
282
1.7
11
41.5
13. El Salvador
1,072
7.6
1,074
40.2
14. Colombia
4,709
60.6
4,273
39.1
15. Barbados
222
1.7
41
35.5
16. Ecuador
1,257
14.3
1,916
30.8
17. Bahamas
725
4.4
165
29.4
18. Netherlands Antilles
528
1.9
663
28.4
19. Peru
1,767
49.0
1,261
26.7
20. Nicaragua
262
1.4
350
26.3
21. Chile
4,132
49.3
2,256
24.7
22. Kuwait
1,979
31.1
1,640
23.5
23. Argentina
4,516
277.4
2,278
22.9
Report on Significant Market Opening
47
Table 3: Data on the 100 largest national markets for U.S. exports (ranked by U.S. share
of imports)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
24. Japan
67,536
4,328.8
115,218
22.6
25. Korea (Republic of)
26,583
367.6
22,667
22.5
26. Australia
11,992
320.4
3,323
21.9
27. Hong Kong
13,956
132.1
9,867
21.8
28. Saudi Arabia
7,295
125.5
8,781
21.4
29. Malaysia
8,521
68.6
17,825
21.3
30. Brazil
12,699
472.5
8,762
21.1
31. Bolivia
269
5.5
275
20.9
32. Paraguay
897
7.6
42
19.3
33. Egypt
3,146
40.9
665
18.9
34. New Zealand
1,727
46.7
1,464
18.7
35. Taiwan
18,413
257.0
29,911
18.6
36. Philippines
6,125
63.7
8,162
18.4
37. Israel
6,009
78.5
6,426
17.8
38. Ireland
3,660
48.7
4,798
17.7
39. Angola
268
6.1
2,687
15.9
40. Singapore
16,685
65.3
20,340
15.1
41. Sri Lanka
211
11.5
1,393
15.0
42. Cyprus
257
7.3
17
13.0
43. Panama
1,378
6.7
346
12.5
44. China (PRC)
11,978
631.2
51,495
12.2
45. United Kingdom
30,916
1,071.1
28,892
12.2
46. Ethiopia
148
5.1
35
12.0
47. Thailand
7,211
139.8
11,336
11.5
48
Future Free Trade Area Negotiations
Table 3: Data on the 100 largest national markets for U.S. exports (ranked by U.S. share
of imports)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
48. Nigeria
816
30.2
5,849
11.1
49. South Africa
3,106
123.1
2,323
10.9
50. Vietnam
616
14.4
319
10.6
51. Turkey
2,886
152.0
1,777
10.4
52. Lebanon
627
15.8
41
10.1
53. Uruguay
484
14.9
260
9.9
54. India
3,318
292.4
6,169
9.7
55. Indonesia
3,965
167.6
8,213
9.5
56. Jordan
345
5.8
25
9.3
57. Pakistan
1,277
54.3
1,266
9.3
58. Belgium
12,520
231.0
6,799
8.5
59. Qatar
207
10.7
157
8.4
60. Iceland
257
6.2
236
8.4
61. United Arab Emirates
2,527
36.2
496
8.1
62. Algeria
632
45.2
2,103
8.0
63. Yemen
256
4.1
27
7.7
64. Germany
23,474
2,084.8
38,943
7.5
65. Finland
2,438
96.1
2,345
7.1
66. Ghana
295
6.8
171
6.9
67. Bahrain
244
4.9
115
6.8
68. Norway
1,558
113.5
3,869
6.7
69. Morocco
476
30.1
252
6.6
70. Spain
5,486
525.5
4,281
6.4
Report on Significant Market Opening
49
Table 3: Data on the 100 largest national markets for U.S. exports (ranked by U.S. share
of imports)
U.S. Exports
GDP/GNP
U.S. Imports
U.S. Share of
in 1996
in 1994
in 1996
Imports in
Partner
($ Million)
($ Billion)
($ Million)
1995 (%)
71. Switzerland
8,370
265.5
7,793
6.4
72. Greece
820
80.1
496
6.2
73. Bangladesh
210
25.9
1,343
6.1
74. Cote d'Ivoire
141
7.5
397
5.9
75. Brunei
375
4.4
49
5.9
76. Tunisia
189
15.8
76
5.9
77. France
14,428
1,356.0
18,630
5.8
78. Russia
3,340
393.0
3,561
5.7
79. Sweden
3,429
207.1
7,158
5.3
80. Oman
215
10.8
411
5.0
81. Italy
8,785
1,102.0
18,222
4.8
82. Romania
266
28.8
249
4.2
83. Syria
226
4.4
15
4.1
84. Poland
968
92.8
627
3.9
85. Netherlands
16,615
339.0
6,617
3.8
86. Denmark
1,730
145.4
2,137
3.8
87. Portugal
960
92.3
1,016
3.3
88. French Guiana
301
0.8
5
3.3
89. Austria
2,009
197.0
2,199
3.3
90. Hungary
331
39.6
677
3.1
91. Uzbekistan
352
21.5
157
2.8
92. Turkmenistan
201
N/A
0
2.7
93. Bulgaria
137
10.5
126
2.6
94. Czech Republic
410
33.0
482
2.2
50
Future Free Trade Area Negotiations
Table 3: Data on the 100 largest national markets for U.S. exports (ranked by U.S. share
of imports)
95. Latvia
165
5.8
99
1.9
96. Ukraine
394
99.1
507
1.7
97. Kazakstan
138
55.2
114
1.6
98. Aruba
225
1.1
558
N/A
99. Cayman Islands
208
0.7
17
N/A
100. Luxembourg
242
16.4
203
N/A
Total Presented
614,796
784,118
World
622,827
791,315
Note . **** GDP/GNP data have been converted to U.S. dollars at market exchange rates
except for the following countries (for which GDP/GNP data were converted to U.S.
dollars at purchasing power parity exchange rates): Angola, Aruba, Bahamas, Bermuda,
Brunei, Cayman Islands, French Guiana, Lebanon, Netherlands Antilles, Qatar, and
Suriname. For the following countries, the most recent reliable GDP/GNP data available
were from 1993: Aruba, Brunei, Cayman Islands, and French Guiana.
Source: Compiled from the World Bank Development Report 1996, the IMF Direction of
Trade Yearbook 1996, the U.S. Bureau of the Census, and other sources.
Report on Significant Market Opening
51
52
Future Free Trade Area Negotiations
TALKING POINTS ON FAST TRACK TIMING
The President has been involved in discussions and meetings on the priorities for this
year and what the best way to sequence those priorities in order to address them in a
prudent and pragmatic way so as to maximize our chances of success.
SUMMER
Balanced Budget. The Administration's efforts have been focused on achieving a
balanced budget agreement -- and that has been our number one priority.
China's Normal Trading Status. We are also working hard to ensure that China's
normal trading status is renewed.
During the course of the summer, we will focus on working towards completion of
the budget agreement and securing normal trading status for China.
We expect action on the budget to be active through most of the summer.
As you know, Congress must act 90 days from June 3 on our decision to
continue normal trading status for China.
These will require a significant time commitment of the President's time
and Administration resources.
FALL
Fast Track. Beginning in the fall, we will take up Fast Track in full force to ensure that
Fast Track legislation is passed this year. We will use the summer to begin building the
groundwork for Fast Track legislation.
DETAILS OF FAST TRACK TIMING
Erskine Bowles, Charlene Barshefsky and others called key Democratic and Republican
leaders to get their views on whether they agreed that taking up Fast Track in September
made sense.
Key members of Congress, both Democrats and Republicans were pleased to hear of
the President's commitment to move forward and conveyed that pushing hard
beginning in September for a vote on Fast Track this year seemed a prudent and sensible
plan.
OTHER IMPORTANT ISSUES
Once the balance budget agreement is complete, the President will also continue his
policy of investing in our people while pursuing policies of fiscal responsibility.
Entitlement Reform. This year, we will work on creating a bipartisan process on
long-term entitlement issues.
Children's Issues. We will also begin focusing on additional children's issues
including additional health care initiatives, 0-3 childhood development, pre-
school initiatives and other education issues.
Comp. Time, Juvenile Crime. Clearly, issues such as comp. time and juvenile
crime legislation are two of more the Administration and Congress will be dealing
with.
An
Inside U.S. Trade
Inside
Washington
Publication
Anexclusive weekly report on major government and industry trade action
stats
Vol. 15, No. 21 - May 23, 1997
ADMINISTRATION DECIDES TO DELAY FAST TRACK UNTIL SEPTEMBER
President Clinton this week formally decided to delay action on fast-track negotiating legislation until Sep-
tember, and to use the summer to consult with members of Congress on the substance of the bill, according to
Administration officials. The Administration plans to devote a lot of resources to the initiative in September,
according to these officials.
The decision was made at a high-level meeting on May 21 involving the President, Vice President Al Gore,
Treasury Secretary Bob Rubin and his deputy Larry Summers, as well as U.S. Trade Representative Charlene
Barshefsky and Gene Sperling, the director of the National Economic Council.
The decision to delay fast-track consideration until later in the year came after weeks of indications that the
Administration believed it could not expend the political capital for fast track when Congress faced votes on the
continued on page 19
EU SUBMITS STATEMENT OF OBJECTIONS ON PROPOSED BOEING-MD MERGER
European Union competition authorities this week presented to the Boeing Co. a 60-page statement of
objections to the proposed merger between Boeing and McDonnell Douglas Corp. (MDC), according to
informed sources. The statement charged that the merger would further strengthen Boeing's already dominant
position in the large commercial aircraft market with unfair advantages over its only remaining competitor,
Airbus Industrie, sources said.
Commission officials handed the statement to Boeing's lawyers in Brussels on May 21, these sources said.
As is consistent with EU regulations, the EU statement does not propose steps Boeing could take to
satisfy the EU's objections, informed sources said. The EU and Boeing will likely discuss ways to resolve the
EU's objections next month.
continued on page 16
CHINA MFN OPPONENTS LAUNCH CAMPAIGN TO OVERRIDE CLINTON DECISION
Opponents of renewing most-favored nation status for China this week kicked off a campaign to override the
decision by President Clinton announced earlier to extend MFN for another year. The launch of the two campaigns
for extension and revocation came amid indications that a vote in the House is not likely until at least mid-July.
Supporters of MFN extension would prefer to have the vote as early as possible, but recognize the political
difficulties of holding it before the reversion of Hong Kong to Chinese sovereignty on July 1, these sources said. A
vote before then is "not out of the realm of the possible but a risky political move" because if "Hong Kong goes to
hell" the leadership would suffer politically, one source said.
MFN opponents have emphasized the need for an extensive debate on China policy before a House vote. At a
May 21 press conference announcing the opposition of a diverse coalition of groups to MFN renewal, Family
continued on page 17
CHINA WTO TALKS BRING NO BREAKTHROUGHS, BUT MORE PROGRESS POSSIBLE
Negotiations this week in Geneva on China's accession to the World Trade Organization are unlikely to
produce a major breakthrough that would help conclude talks by the end of this year or early next year, according
to a preliminary assessment by negotiators. But these officials held out the hope that China's chief negotiator Long
Yongtu might announce some new concessions at the formal session of the working party today (May 23).
"We have not seen anything substantially new or meaningful," a Japanese official said. "We are waiting for
additional good news."
But even if there were an announcement of additional concessions, it would be unlikely to mark a significant
breakthrough in the talks, according to negotiators. Much of the informal sessions this week were taken up by
technical talks on statutory inspections, agricultural trade and subsidies, official said. There was also little progress
continued on next page
Inside U.S. Trade published a Special Report on the outcome of the
FTAA ministerial on May 20
Archer Letter on Fast Track
May 15, 1997
recently offered an opportunity to the Administration to mark-up a
bipartisan consensus on a fast-track proposal before the Memorial
The Honorable William J. Clinton
Day recess. Because there is still no movement from the White
President
House on this important issue, and because Democrats have voiced
The White House
strong opposition to moving fast-track legislation now, it proved
Washington, D.C.
impossible to mark-up consensus fast-track
legislation during this critical window of opportunity.
Dear Mr. President:
Ambassador Barshefsky has done admirable work on Capitol
Hill in meeting with Members, especially Democrats, to lay the
As you know, I am a strong supporter of extending your
groundwork for House consideration of fast-track authority. But
Administration fast-track authority to negotiate and implement
there comes a time when the preparatory work must end and we
trade agreements. Since early this year, I have waited patiently for
move ahead, especially when the congressional schedule requires
the Administration to present to Congress a proposal demonstrating
such timely action.
that the White House was serious about negotiating trade agree-
Fast-track authority is vital if the United States is to exercise
ments designed to remove barriers to U.S. exports, to the benefit of
a leadership role in international negotiations in order to protect and
American companies, workers, and consumers.
promote the interests of U.S. producers, workers and consumers.
I have been urging an early focus on fast-track in order to
Indeed, our trading partners have already moved forward without
avoid direct conflict with congressional action on the budget and
the United States by signing more than a hundred trade agreements
extension of MFN status for China that will occur in June or July as
since fast-track authority expired. The United States was not at the
well as to provide sufficient time for Senate action so that we may
table for those discussions and played no role in shaping their
have fast-track in place by the end of the year. I have repeatedly said
provisions.
that receiving a proposal from the Administration even during the
I am deeply disappointed that your Administration's delay in
summer would make it extraordinarily difficult to enact fast-
seeking fast-track authority will translate directly into missed op-
track. However, although voicing strong support for fast-track
portunities for our companies and our workers. Every month that
authority, no concrete steps have been taken by your Administra-
goes by means more lost contracts and more job opportunities
tion to reach our objective of enacting trade negotiating authority.
foregone for Americans. It is unfortunate that the Administration is
Accordingly, your actions dictate that discussion on renewal of fast-
unable to give what should be a major trade priority - early
track negotiating
renewal of fast-track negotiating authority - the attention it de-
authority be set aside.
serves.
Despite our efforts, your Administration has not accepted the
proposed timetable that I am confident would have allowed fast-
Sincerely,
track renewal to be enacted into law this year. I, together with
Bill Archer (R-TX)
Congressman Crane, Chairman of the Subcommittee on Trade,
Chairman
In This Issue
Administration decides to delay fast track until
Executive order banning Burma investment
September
p.1
spares existing contracts
p.8
EU submits statement of objections on proposed
Fujitsu withdraws from U.S. supercomputer
Boeing-MD merger
p.1
dumping investigation
p.10
China MFN opponents launch campaign to
OECD members to open investment pact
override Clinton decision
p.1
negotiation to non-members
p.11
China WTO talks bring no breakthroughs, but more
U.S. outlines WTO case against EU on
progress possible
p.1
high-tech classification fight
p.12
EU to seek WTO talks on poultry fight, warns
Roth to introduce bill for permanent China
of ending vet deal
p.3
MFN after annual cycle
p.13
Administration calling for industry input on
WTO competition policy group prepares work
tech transfer initiative
p.4
plan for coming year
p.13
Senators say delay of fast track endangers
Shapiro to leave USTR next month to join
passage this year
p.5
Washington law firm
p.14
Administration may have to sue to solve
Kantor testimony sought in suit against
Massachusetts sanctions fight
p.6
Commerce Department
p.14
U.S., Mercosur agree on relation of FTAA to other
U.S. delegation presses China for strong
trade accords
p.6
agriculture concessions
p.14
Coalition steps up fight against NAFTA
AD/CVD panel system
p.7
Saft
20
INSIDE U.S.TRADE - May 23, 1997
03/17/97 MON 11:57 FAX 202 456 9280
THE WHITE HOUSE: NSC/NEC
001
03/17/97
12:31
2024569170
NSC LEGISLATIVE
002/005
FAST TRACK CALLS TO DEMS (either voted for GATT, NAFTA, or both or need to be
called because of seniority)
BARSHEFSKY
LEADERSHIP
Gephardt, Bonior, Fazio, Lewis, Kennelly. Skaggs, Davis (Freshman Pres.). DeLauro
WAYS AND MEANS COMM.
Rangel, Matsui, Stark, Coyne, Levin, Cardin, McDermott, Kleczka, Neal, McNulty, Jefferson,
Tanner, Becerra, Thurman
RULES COMM
Frost, Slaughter, Hall
NEW DEMOCRATIC COALITION
Doooley, Moran, Roemer, Stenholm
CONGRESSIONAL BLACK CAUCUS
Waters, Lee, Johnson, McDonald
HISPANIC CAUCUS
Paster, Ortiz, Serrano, Torres, Martinez
OTHERS
Dingell, Baldacci, Blumenauer, Fazio, Sawyer, Spratt, Ackerman, Minge, Pelosi
TARULLO
INTERNATIONAL RELATIONS COMM.
Hamilton, Gejdenson, Berman, Hastings, Martinez, Payne, Andrews, McKinney. Menendez, Kim,
Wynn
OTHERS
Dixon, Farr, Hefner, Hoyer, Lowey, Pickett, Scott, Skelton, Visclosky, Yates
RUBIN
BANKING COMM.
LaFalce, Maloney, Roybal-Allard, Bentsen, Jackson, Barrett, Flake, J.Kennedy, Schumer, Vento
OTHERS
Clement, Dicks, Doggett, Edwards, Filner, Harman, Kildee, Mascara, Borski, G. Brown, P.
Kennedy, Parker
03/17/97 MON 11:57 FAX 202 456 9280
THE WHITE HOUSE: NSC/NEC
$
002
03/17/97 12:32
52024569170
NSC LEGISLATIVE
003/005
DALEY
COMMERCE COMM.
Markey, Gordon, Furse, Deutsch, Eshoo, Klink, Green, Boucher, Manton
Mascara, OTHERS Meek, Murtha, Pomeroy, Rivers, Sabo, Baesler, Bishop, Olver, Abercrombie, C.
Brown, Clayton, Clyburn, Poshard, Evans
Key Fast Track Components
Proclamation authority:
authority for President to
lower U.S. tariffs without
seeking implementing
legislation (1988 Act: up to
50% reduction in tariffs over
5% ad val., and elimination of
tariffs below 5%)
Negotiating objectives:
general and/or specific or
sectoral goals or
recommendations for future
negotiations (spelled out in
detail in both 1974 and 1988
trade acts)
Scope of implementing bills:
types of provisions that may
be included in bills
implementing fast-track trade
agreements (since 1974,
Congress has permitted all
legislative changes "necessary
or appropriate" to implement
the trade agreement)
Amendments:
fast-track rules have
traditionally barred
amendments once a fast-track
implementing bill was
introduced.
Notification and consultations:
previous fast-track rules
imposed various requirements
on the President to notify and
consult with Congress
concerning trade negotiations.
Duration, extension:
Congress has limited the
period during which fast track
agreements may be negotiated.
The 1988 act provided for a
two-year extension subject to
disapproval by either House.
Congressional disapproval:
under 1984 and 1988 Acts
Congress could disapprove fast
track for particular
agreements.
Possible Approaches
Proclamation authority:
Up to 50% reduction in tariffs
over 5% ad val., and
elimination of tariffs below
5% (1988 act).
Authority to do sectoral
"zero-for-zero deals", tariff
harmonization.
Negotiating objectives:
None. General negotiating
objectives specified in
Presidential statement.
None. Bill contains very
general Congressional
"findings and recommendations"
along lines of 1974 Act.
General objectives specified
in Presidential statement.
None. General objectives
specified in Presidential
statement. Administration is
required to spell out specific
objectives each time it
notifies Congress of intent to
begin negotiations (as
provided in 1995 W&M draft)
Bill includes "overall"
negotiating objectives,
including very general labor
and environment language.
Bill includes "overall" and
"principal" (i.e., sectoral)
negotiating objectives,
including overall or principal
labor and environment
objectives.
" NADBANK
Scope of implementing bills:
all changes "necessary or
appropriate" to implement the
trade agreement.
all changes "necessary for or
directly related to"
implementation, plus PAYGO.
Key categories of "directly
related" provisions set out in
legislative history (e.g.,
private rights of action,
federal-state issues,
reporting requirements).
Amendments:
No amendments permitted.
No amendments, except that
PAYGO provisions may be (Lugar)
stricken (by majority or two-
thirds vote) if equal or
greater funding is provided
through amendment.
No amendments, except that
either House may remove any
specific provision that a
majority (or two-thirds) of
members consider not to be
"appropriate" (or "directly
related") to implementation.
Notification and consultations:
President must consult with
committees of jurisdiction in
advance of signing agreement
and must give 90 days notice
to Congress before signing
(1974 act) won't fly
Foreign country must request
negotiations; President must
notify and consult with Ways &
Means and Finance committees
concerning negotiations 180
days in advance of signing
agreement; President must
consult during negotiations
with committees of
jurisdiction; must notify
Congress at least 90 days in
advance of signing (1988 act
requirements for bilateral
agreements)
President must provide 90-day
advance notice of negotiations
to Congress, with written
statement of principal
negotiating objectives;
consultation before and during
negotiations with key
committees; President must
notify Congress and consult
with committees of
jurisdiction at least 90 days
before signing (1995 W&M
draft) -
Duration, extension:
four years (1974 act: 5 years)
four years, with four-year
extension subject to
disapproval by either House
(1988 act provided three
years, plus two-year extension
subject to disapproval by
either House)
eight years
Congressional disapproval:
None (1974 act) .
Fast track procedures do not
apply to an agreement if:
1) either the W&M or Finance
committees adopts a
disapproval resolution within
60 days after the President
notifies committees of the
negotiations; or 2) both
Houses adopt disapproval
resolutions stating that the
President has failed to
consult adequately (1988 act) .
Statement of intent (mght Leep -fo-mal) (SAP)
diswss w/srcher first
esp. L+C use a
Enviros: readires critic
(vat Bratthelma Bob Itimuek
Lael F'II
UNCLASSIFIED
Bat
FAST TRACK
Lael
LEGISLATIVE STRATEGY
I. GOAL
The goal of our legislative strategy is to secure passage of fast
track legislation this session of Congress.
II. PRESIDENTIAL INVOLVEMENT
The President is likely to need to devote significant time to
persuading members of Congress of the need to reinstate fast
track authority. Specifically, we would suggest the following
steps:
A. Mention at bipartisan foreign policy meeting.
B. Mention in State of the Union
C. Statement on introduction of legislation.
C. Calls and possible meetings with key members, particularly
Senate Finance Committee and House Ways and Means Committee.
III. OTHER AGENCY ACTIVITY
A. Vice President calls to key members and small group meetings
as needed with members.
B. USTR lead on interagency process in securing passage of fast
track.
C. Introduction of legislation by bipartisan/bicameral group.
D. Focus on Committee Action:
1. USTR lead effort to work with Ways and Means and Finance
on hearings.
2. Work to secure passage of fast track legislation out of
committees.
E. Key agencies to work their committees-- i.e. State: foreign
relations committees and 150 appropriation subcommittees;
Treasury: Banking and their appropriators, etc.
F. Brief various caucuses and informal House groups.
UNCLASSIFIED
UNCLASSIFIED
G. Divide up House members among agencies to work with throughout
the process of securing passage of legislation.
H. Divide up Senate among agencies to work with throughout the
process of securing passage of legislation.
I. Work with bipartisan House whip group on a regular basis.
J. Work with Senate leadership.
K. Set up "war room" as House and Senate votes near.
L. Work conference committee on bill.
IV. KEY DATES
A. February/March: Introduction of legislation.
B. March/April/May: Committee hearings on legislation.
C. May/June/July: Possible House and Senate consideration of
bill.
D. August/September: Possible conference committee consideration
of legislation.
E. September/October: Possible vote on conference committee
report.
UNCLASSIFIED
0000
February 8, 1997
INFORMATION
MEMORANDUM FOR GENE SPERLING
DAN TARULLO
JIM STEINBERG
FROM:
BOB KYLE
SUBJECT:
Fast Track Meeting
This small Principals meeting on fast track is should begin addressing some of the big issues
involved in the effort and to bring additional agencies into the process. I recommend we cover
five topics:
Status
You might begin by letting Charlene update on talks with Congress, labor, business and others.
Ira Shapiro and I have met with staffs from Gingrich and both sides of Ways & Means and
Finance. The mood has been highly cooperative, with little posturing. Charlene's talk with
Sweeney went well, although AFL staff (Mark Anderson) called Ira on Friday to say that
Sweeney's affability toward Charlene's initial thoughts on labor/environment should not be taken
as acceptance. At the staff level, it seems AFL is talking to Gephardt and moving more toward a
harder line. Business reaction to the State of the Union was favorable, with a wait-and-see
attitude toward labor/environment.
Labor/Environment
Regarding our substantive approach, Charlene is considering a Presidential Statement of
Intentions regarding labor/environment that would spell out our objectives. Some Administration
statement (after finding a bipartisan consensus) is probably wise. Earlier efforts to resolve this
issue devolved too quickly into a search for statutory language that could mean all things to all
people. As a result, no compromise ever stuck because parties interpreted the language
differently. This time, all parties agree we need a more solid understanding of our approach, with
specific language to follow.
Regardless what vehicle enunciates our policy, there are several issues we should address: 1) our
position toward future labor/environment side agreements; 2) our position toward multilateral
efforts in the WTO, OECD, etc.; 3) other international efforts that might advance our agenda.
Charlene seems to want to channel our policy into some type of global effort (category 3). You
might explore what she has in mind. My sense is that much of this debate will return to our
2
position toward side agreements and specifically whether we will accept or forswear the use of
trade sanctions to enforce the agreements.
More fundamentally, we need to develop and articulate a more coherent statement of our policy in
this area. This could include: 1) reiteration that labor/environment has long been a bipartisan part
of our trade policy (e.g., GSP/labor rights); 2) that pressing this agenda can be pro-trade (e.g.,
more equal distribution of worker income creates a more lucrative market); and 3) a statement of
our agenda and what we will not do. You might ask USTR to take a first cut at such a document.
I can work with them.
Tactically, I support Charlene's strategy of working quietly at first with all parties (labor,
business, environmental groups, both parties on the Hill) to develop a consensus. Rather than
have the Administration then float a proposal (which might simply become a target) we might
seek an Archer-Rangel compromise. (Charlene hopes this might include Roth-Moynihan too;
great if you can get it, but difficult). During this process, all parties should keep their rhetoric
muted. You might reiterate that Charlene should be our chief spokesperson on this issue, with
others simply saying we will work in a bipartisan manner with all parties to find a solution. We
also need to underscore to business, labor and the Hill to avoid taking hardline public positions.
Other Substantive Issues
You might discuss Hill concerns that future implementing legislation contain only provisions
"necessary" (not "necessary and appropriate") to implement the trade agreement. Our Hill
discussions reflected general agreement that the legislative process needs some flexibility to
secure votes, but some limit on dealmaking too. I suggest we agree to this principle, consider any
ideas Charlene may present, then leave it to be negotiated.
You might also consider Congress' likely request that any future free trade negotiation be subject
to a vote by the full House and Senate before negotiations start. Currently, the Ways & Means
and Finance committees have authority to deny an individual negotiation. Full body envy of this
privilege is likely to lead to a full body veto. However, this is a substantial concession and we
should move there only over time. If we do, we can use it to justify less Administration precision
on what future agreements we will negotiate.
Message/Communications Strategy
USTR has prepared a draft message document (attached), which needs work. You might ask Ira
and I to work on a redraft. My general sense is we should take a fairly low-key approach to this
initiative, now that the President has spoken. But we should: 1) have Charlene give a speech
sounding our themes (which would provide a good document for use by allies); 2) quietly contact
economic and foreign policy elites to build a base of support; 3) develop good documents (e.g.,
general message, fact sheets).
Uses of Fast Track
3
The attached document also purports to set forth the agreements we seek, but it is short on
specifics. It references upcoming GATT negotiations: agriculture (1999), services (2000) and
intellectual property (2000), and more near-term reviews in many areas. Chile is the only Latin
country referenced, APEC lists no specific agreements and Russia and Africa are referenced more
generally as long-term free trade candidates.
You might address several issues. How specific should we be? What other candidates could we
reference? What regions should we emphasize or not emphasize (some Hill soundings suggest
that Latin America yields a negative reaction in the wake of NAFTA)? Given that Congress may
insert greater pre-negotiation vetoes, we can afford less specificity but this risks losing business
support as the bill picks up barnacles. At the least, we need to look carefully at potential
candidates (Singapore, Australia), then have a better answer about what agreements we favor and
what criteria we would use to pursue further agreements.
Attachment