SENATOR BAUCUS & CONDITIONS ON TRADE PROMOTION AUTHORITY

The question of Trade Promotion Authority or fast track being granted to President Bush by the US Congress still needs to be resolved. Despite the 215-214 vote in the House of Representatives in early December 2001, the Senate has yet to seize the issue. It is quite likely that the Senate will be able to bring the matter to a vote in the first quarter of 2002. However, the final resolution may need to occur on the basis of a joint House-Senate reconciliation of views. Specifically, the battle in the Senate will feature veterans of previous trade campaigns, including the Democratic Senator from Montana, Mr. Max Baucus.

In an article titled "Doha and Beyond: The Role of Congress in a New Trade Round," which was published in the January 2002 edition of Economic Perspectives, Senator Max Baucus, Chairman, Senate Finance Committee takes issue with the Bush Administration's handling of issues at Doha.

According to the Senator, the WTO round launched in Doha, Qatar, in November presents opportunities for opening markets, especially in agriculture and services, as well as advancing environmental goals, though ambiguity in the Doha Declaration on Agriculture makes a good outcome far from certain. The agreement to reopen negotiations over antidumping and other unfair-trade laws, opposed by a majority of the Senate, demonstrates a need for Congress to reassert more influence during the course of trade negotiations, he says.

Senator Baucus considers both "Positive Negotiating Points" and "Negative Negotating Points" in his presentation. On the positive side, are market access objectives "in a number of sectors that have traditionally been closed to U.S. exporters, such as services and agriculture."

He notes the role that environmental issues will play in the upcoming negotiations, including increasing access for environmental goods, reducing trade-distorting fish subsidies, recommitting the WTO to promoting sustainable development, and exploring the linkages between Multilateral Environment Agreements (MEAs) and trade agreements. In his view, the US Congress is likely to give strong support to these elements of the negotiating agenda. He offers a specific warning to Mr. Zoellick:

"While the WTO's work is not guaranteed to lead to concrete negotiations, it is nevertheless an important acknowledgment of the linkage between trade and the environment. Indeed, any trade agreement that does not explicitly acknowledge this important connection will most likely face an extremely difficult time being ratified by the Congress. Now the WTO and its members need to take the next important step and begin examining the role labor rights play in liberalizing trade -- another step that is essential in shaping a negotiating agenda for the 21st century."

Looking for the positive side of agriculture, Senator Baucus struggles to find a silver lining. Although the negotiating language in the Ministerial Declaration regarding agriculture is "extremely promising", the Senator finds "the details of the actual negotiation remain vague, and there is great concern that the final outcome may not adequately address the issues raised at the Ministerial. Specifically, there is increasing trepidation that a clear agenda for eliminating export subsidies, though called for in the Ministerial Declaration, might be blocked, using the vague language of the declaration as a wedge."

The "Negative Issues" he identifies are regarded as potentially significant hurdles to achieving agreement on granting President Bush Trade Promotion Authority. According to Senator Baucus,

Foremost among these issues is the inclusion of U.S. trade laws, specifically antidumping and countervailing duty laws, on the negotiating agenda. Antidumping and countervailing duty laws have been part of the international trading system since its inception in 1948 and were renegotiated at the international level during the Uruguay Round. Upon completion of the Uruguay Round, the United States made a number of revisions to its existing trade laws to bring them into compliance with the newly established international system.

Further, the trade distortions that make these laws necessary continue to plague the U.S. economy. Industries ranging from steel to semiconductors to a variety of agricultural sectors have been victimized by dumped and subsidized exports from a number of countries, a problem that grows worse during economic downturns, when U.S. industries are at their most vulnerable. The trade laws currently on the books are the only effective means of addressing these unfair exports.

This issue was deemed so significant that two-thirds of the Senate signed a letter to U.S. Trade Representative Robert Zoellick specifically requesting that our trade laws not be on the table during a new round of negotiations. Despite this urging, however, the United States' antidumping and countervailing duty laws will be reopened, leading to the possibility that they will need to be significantly revised yet again…. The failure of U.S. negotiators to leave this item off the agenda points to the continuing need for Congress to take an aggressive role in shaping U.S. trade policy.

Clearly, the Senator and a majority of his colleagues are displeased with this outcome from Doha. His conclusion is that "Congressional oversight"is essential in the Doha Round not only because of the further negotiation of trade laws but also because there are issues on the agenda bearing on competition policy and intellectual property that "remain too important for the Congress to hand them off."

"The fact that U.S. negotiators ignored the express request of a majority of the Senate to keep U.S. trade laws off the table only serves to illustrate just how significant a role congressional oversight needs to play in any future negotiation." Accordingly, he concludes that,

…any grant of TPA be structured so as to maintain the integrity of Congress's role in regulating trade. In part, this means the inclusion of labor and environmental rights in any future trading agreements. These issues have become so pressing that it seems unlikely that any trade agreement can garner bipartisan support without allowances being made for these issues. More importantly, however, is making sure that the essential oversight role played by Congress is maintained.

On the face of it, the language of the TPA bill will need to provide for the strengthening of trade laws through negotiation, and the inclusion of labour and environmental provisions in the final agreements.