*EPF312 01/09/2002
Byliner: Senate Finance Committee Chairman Baucus on WTO
(He cites need for more rigorous congressional oversight) (1650)

(begin byliner)

(This byliner was published in the January edition of Economic Perspectives entitled "Trade in the Post-Doha Global Economy." The full journal can be found at http://usinfo.state.gov/journals/journals.htm.)

Doha and Beyond: The Role of Congress in a New Trade Round
By Senator Max Baucus

(The author, a Montana Democrat, is chairman of the Finance Committee, which has primary Senate jurisdiction over trade issues.)

The new round of trade negotiations launched at November's World Trade Organization (WTO) Ministerial represents an important step forward for the global trading system. In the wake of the stalemate that emerged during the Seattle Ministerial, a number of commentators expressed concern for the continued viability of globalization and, specifically, trade liberalization. The consensus that was struck at Doha, therefore, is a significant blueprint for expanding trade and creating an integrated global economy.

The substance of this blueprint, however, points to the continuing need for the United States Congress to play an active and forward-looking role in developing U.S. trade policy.

The accession of China and Taiwan to membership in the WTO, which took place during the Doha Ministerial, points to just how effectively Congress, in conjunction with the president, can work to advance a proactive trade agenda. The United States was an early proponent of China's and Taiwan's membership bids and worked hard to gain support for them both domestically and internationally. This process culminated in a contentious vote granting permanent normal trade relations to China -- a vote that, despite the controversy, turned out to be largely bipartisan.

China's and Taiwan's successful membership bids are particularly significant in light of the fact that U.S. and international negotiators were able to reach a consensus on launching a new round of trade negotiations at Doha. Despite a few notable exceptions -- such as Russia -- this round will be the most inclusive trade negotiation ever undertaken.

POSITIVE NEGOTIATING POINTS

The agenda for these talks contains a number of promising negotiating points that have the potential to benefit not only the United States but the rest of the world as well. At the core of these objectives is increasing market access in a number of sectors that have traditionally been closed to U.S. exporters, such as services and agriculture.

Increasing market access in the services sector is particularly important from the United States' perspective. In 2000, the United States was the largest exporter (and one of the largest importers) of services to the world. Despite this, a number of important markets remain closed, simply for protectionist reasons. If a level playing field is ever to be established, U.S. negotiators must work to open these markets as well as ones in other significant sectors.

Another important victory for the United States was the important role that environmental issues will play in the upcoming negotiations. Increasing access for environmental goods, reducing trade-distorting fish subsidies, and recommitting the WTO to promoting sustainable development are all important additions to the negotiating agenda that will likely receive strong support from both Congress and the American people. But the commitment to explore the linkages between Multilateral Environment Agreements (MEAs) and trade and trade agreements represents a particularly significant step into the 21st century for the WTO. A number of dispute-settlement cases have examined potential conflicts between commitments countries have made under MEAs and the WTO. Indeed, this has been a particular source of concern in the United States, where the perception that the WTO is undermining domestic environmental standards has gained greater currency over the past several years.

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.

Agriculture, of course, remains one of the most consistently controversial trade issues, both in the United States and abroad. The negotiating language in the Ministerial Declaration is extremely promising, and U.S. negotiators are to be commended for their work in guaranteeing that export subsidies remain on the agenda.

However, 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. U.S. farmers have been extremely hard hit by the trade distortions caused by European agricultural subsidies over the past decade, and it is essential that a plan for their elimination is developed. Indeed, these subsidies are more appropriate for a 19th century mercantilist system than for today's open trading system.

NEGATIVE ISSUES

Despite these positive negotiating objectives, several extremely disturbing items were also included on the future negotiating agenda -- items that threaten to undermine the support of a number of members of Congress and a vast majority of the American people for launching a new round.

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.

CONGRESSIONAL OVERSIGHT

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. Although the fact is often overlooked, the U.S. Constitution grants Congress, not the president or the administrative branch, the power to regulate trade. The administration may do the actual negotiating, but responsibility for making sure that trade agreements reflect the broad needs of the American people lies ultimately in the hands of the Congress. If negotiations are to move forward, Congress needs to be assured that its concerns are reflected in the U.S. agenda, particularly when contentious issues arise.

Along with reopening negotiations on trade laws, there are a number of issues addressed by the new round that could fundamentally affect the laws and regulations of the United States. Work on competition policy holds the potential for reshaping the antitrust system that has evolved over more than a hundred years. Negotiations on intellectual property could undermine protections that the United States has sought to make an integral part of the world trading system. Even issues that hold great potential for benefiting the United States also hold the potential to create trade-offs that are simply unacceptable.

These issues 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.

The administration has asked Congress to grant it Trade Promotion Authority (TPA, formerly known as fast track), so that any agreement that emerges from the new round of negotiations is voted on a strict "yes" or "no" basis. A number of commentators, both inside and outside of government, have argued that, without such authority in place, the new round is doomed before it begins.

In fact, I have always maintained that the president should have such authority. But it is essential 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.

In sum, the launch of a new round offers several promising opportunities for expanding U.S. trade and further liberalizing the global trading system. But it is essential that the negotiations move forward on terms that do not compromise the structures needed to maintain public support for trade. This means that U.S. trade laws need to be strengthened, not undermined, by any negotiation, and that labor and environmental concerns need to be taken into consideration. If the president is to be granted TPA in the new year, Congress and the administration need to work together to make sure that the negotiations reflect the concerns expressed by a vast majority of Americans by making sure that trade is both free and fair.

(end byliner)

(Distributed by the Office of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

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