At a March 6 appearance before the Senate Finance Committee, U.S. Trade Representative Susan Schwab outlined the Bush administration’s 2008 trade policy agenda and responded to senators’ questions on a wide range of trade issues.
FTAs. Schwab first advocated the administration’s main priority, which is to implement the pending free trade agreements with Colombia, Panama and South Korea. She pointed to the positive impact of existing agreements such as the WTO Uruguay Round Agreement and NAFTA, stating that the years following their enactment was characterized by stronger U.S. economic growth, higher manufacturing output and lower unemployment. She also said that the FTAs with Colombia and Panama would provide a “level playing field” by transforming one-way trade preferences - those countries’ duty-free exports to the U.S. - into two-way free trade. Schwab testified that Colombia has made progress in addressing lawmakers’ concerns, including reducing violence against labor unionists and combating the criminal drug trade. In responding to questions regarding Korea’s ban on U.S. beef, she confirmed that market access for beef is a priority for the administration.
In his hearing statement, ranking committee member Charles Grassley, R-Iowa, agreed with Schwab that the pending FTAs present an opportunity for expanding U.S. exports. He showed particular support for Colombia, claiming that it is critical for Congress to demonstrate solidarity with that country by implementing the FTA. Committee Chairman Max Baucus, D-Mont., said each of the pending FTAs has the “potential for passage.”
Doha Round. Schwab testified that a successful conclusion to the Doha Round is another top priority for the administration and that the central focus of the round is the need for continued work on the draft negotiating texts on agriculture, non-agricultural market access and services. She noted concern about the “serious potential erosion of ambition” in the agriculture and NAMA texts and said the services negotiations need to progress to a place where WTO members commit to binding levels of market access. Grassley was hopeful for a successful outcome to the round but warned that U.S. concessions must be met with meaningful market access opportunities for U.S. farmers, manufacturers and service providers.
Trade Adjustment Assistance. Baucus firmly stated at the hearing that FTAs and other trade initiatives will not be implemented unless an expanded and reformed version of the Trade Adjustment Assistance program is approved. According to Baucus, TAA must cover services workers and workers whose jobs are offshored, enhance the health care tax credit, boost retraining funds and assist communities negatively affected by unfair trade. Other senators at the hearing, including Grassley, also expressed support for TAA authorization. Schwab acknowledged that, along with the FTAs, TAA is a high priority for the administration and that USTR will work with congressional leaders to reform and reauthorize the program.
Trade Enforcement. In her written testimony and in responses to senators’ questions, Schwab said the U.S. will continue to “aggressively enforce existing agreements,” first with bilateral talks and then with litigation if needed. She pointed to China as an example, noting that bilateral dialogue, including at the Joint Commission on Commerce and Trade, has generated results but that the U.S. has also resorted to litigation where that dialogue has failed, such as the six WTO cases filed against China since 2004. Baucus, also supporting strong trade enforcement, highlighted his bill to create a Senate-confirmed enforcement officer at USTR and increase oversight of dispute settlement implementation. He also endorsed enforcement on issues such as undervalued currencies and intellectual property rights provisions in trade agreements.
Environmental Issues. In what she described as an emerging issue, Schwab said it is “high time we played up the important benefits trade can bring to environmental stewardship.” For example, she said, the U.S. recently proposed to eliminate worldwide tariff and non-tariff barriers on trade in environmental technologies and services. This proposal includes using a negotiation in the NAMA segment of the Doha Round to grow trade in climate-friendly technologies and eliminating or reducing subsidies that lead to overfishing.
But Schwab also warned that “attempting to force others to act on climate change through trade saber-rattling carries enormous risks.” Unilateral restrictions can lead to reprisals, she said, and those responsible for trade policymaking should “carefully review the implications and risks of some of the trade ideas being drawn up by those who lay claim to authority over environmental issues.” Sen. Jeff Bingaman, D-N.M., a member of the Committee on Energy and Natural Resources, responded by saying that he supports measures to reduce greenhouse gas emissions, including two existing bills, one of which he co-sponsors, that would subject imported goods to the same limits as domestically-produced goods.
Investment. The U.S., through its bilateral investment treaty program, is pushing an investment policy agenda to open investment markets and create strong protections for U.S. investors, according to Schwab’s statement.
CBP Reauthorization. Baucus noted the importance of border enforcement and security and stated that the Finance Committee will work on a reauthorization bill for U.S. Customs and Border Protection. A hearing on this issue has been scheduled for March 13. Baucus said this bill will include tools for identifying pirated and counterfeit goods as well as ensuring that CBP collects revenue due to the U.S.
Softwood Lumber Agreement. Schwab responded to questions on enforcement of the U.S.-Canada softwood lumber agreement and the recent arbitration decision that denied the U.S. a remedy on certain Canadian exports. Schwab responded that full enforcement of the lumber agreement is important to the U.S. and that a mechanism to adjust export taxes to address “surges” beyond allowed exports will be considered.
Trade Preferences. Baucus said that this year’s trade agenda will include extending trade preference programs such as the Generalized System of Preferences. Schwab stated that Congress has an opportunity to eliminate the temporary aspect of these programs and make the benefits permanent. Baucus said the committee may also review trade sanctions on countries that act against U.S. interests such as Burma and Iran.
World Trade/Interactive
