*EPF212 02/12/2002
Text: Senator Baucus on TPA, Labor and Environmental Standards
(Senate adds requirements on sensitive issues, he says) (3090)

Proposals to impose U.S. labor and environmental standards on developing countries are unrealistic, says Senate Finance Committee Chairman Max Baucus.

But the United States can create incentives for less developed countries to raise their standards, and can provide technical assistance to help them improve their practices, he told members of the Democratic Leadership Council February 12.

Baucus, Democrat of Montana, emphasized that labor and environmental standards are now on the agenda. He said that Trade Promotion Authority (TPA) legislation he and Senator Chuck Grassley, Republican of Iowa, have introduced in the Senate addresses these issues effectively by requiring all parties to a trade agreement to work on improving these standards.

Under TPA, also know as fast track, Congress restricts itself to approve or reject a negotiated trade agreement, within strict time limits and without amendments. Labor and environmental issues have been a major stumbling block to the renewal of TPA since the previous grant expired in 1994. In December the House of Representatives passed its version of the TPA legislation by a 215-214 vote.

Baucus said that a Senate TPA bill that was passed by the Finance Committee contains provisions that were not in the House bill. They require the administration to conduct reviews of labor rights and environmental practices of U.S. trading partners in order to "clearly identify the problems to be addressed in negotiations," he said.

Another Senate addition, Baucus said, makes it clear that international agreements do not weaken U.S. trade laws by authorizing the Congress to review all provisions requiring changes in these laws before an agreement is concluded.

"If the administration does not walk away from a bad deal on trade laws, I can say with great certainty that I -- and many of my colleagues -- will do everything in our power to bring that agreement down," Baucus said.

He emphasized that fast track is critical to the expansion of market access for U.S. farmers, which he considers his top priority.

But to create support for expanded trade, Baucus added, the Congress needs to expand Trade Adjustment Assistance (TAA), a program that covers workers adversely affected by trade. Negotiations with the White House on this issue are going well, he said answering a question. "I believe we have turned the corner," he added.

Baucus said that the Senate will consider TAA as part of a trade package that also includes legislation related to fast track, Andean trade and duty-free benefits, or GSP. "I believe these issues move forward together -- or they don't move forward at all," he added.

In response to a question, Baucus said that Senate Democratic Majority Leader Tom Daschle is likely to schedule a vote on the omnibus bill in March.

Following is the text of the Baucus's remarks as prepared for delivery:

(begin text)

A New Trade Policy for New Democrats
Senator Max Baucus
Chairman, Senate Finance Committee

Democratic Leadership Council
February 12, 2002

I want to thank Cal Dooley for that kind introduction. Congressman Dooley and I have long shared many of the same goals on trade. We also have worked to develop a vibrant, dynamic, and diverse Democratic party.

And while Cal has always demonstrated leadership on trade policy -- his leadership was particularly important this year. I thank him for his dedication to this issue.

And I thank the DLC for hosting this event -- in particular, Claude Fontheim, who has been a partner with all pro-trade Democrats in addressing the critical issues raised by trade. And my former staffer, Ed Gresser, who helped pull this event together. Ed has been a terrific addition to the DLC.

TAA and TPA

I want to begin today by talking about Trade Adjustment Assistance, which will be considered in the Senate along with fast track, Andean trade, and GSP as part of a comprehensive trade package.

I begin with TAA for a simple reason. The fast track bill that we passed out of the Senate Finance Committee is a very good bill -- in fact, the most progressive bill that has any chance of actually being signed into law. And I believe that the President will sign it into law.

But I've said over and over again -- rebuilding the consensus on trade will require a sustained effort over many years. We may pass fast track this year, but fast track alone doesn't bring the benefits of expanded trade. Trade agreements do. And if this Administration wants to pass agreements, it needs to build a record of trust -- handling trade in a way that advances the interests of all Americans. They can start with TAA.

As most people now know, TAA is a program for workers who are adversely affected by trade. It is a program that recognizes that while expansion of trade creates enormous benefits, trade also has some negatives and forces painful choices.

The benefits of trade are widely dispersed -- almost every single American benefits in some way from trade. Trade creates jobs. Trade-related jobs pay more. Trade provides more choice and cheaper products.

But the costs of trade in lost jobs and closed factories are very focused, hitting individual industries and workers -- affecting some regions much more than others.

And those costs attract public attention. There are few headlines about the benefits of trade. But if a lumber mill in my home state shuts down because of unfair trade practices, it affects every single person in that town. And that will be a front-page headline -- in every newspaper in the area.

So -- creating support for expanded trade requires hard work -- and that means doing much more to address the down-side of trade. If we don't, people won't support trade -- and ultimately Congress won't support trade. It's that simple.

When it comes to TAA reform, I think we all share the same goal of getting people back into good-paying jobs as quickly as possible.

In our TAA legislation, we've done that by cutting down on bureaucracy. We currently have two separate TAA programs -- one for trade that involves Canada and Mexico, one for every other country. Our bill consolidates these programs and reduces the confusion.

We cut down on the time for certifying workers. The sooner we get workers into training, the sooner they find jobs.

We create a system to evaluate TAA. If we're going to improve the program, we have to constantly analyze what works and what doesn't.

Our bill also has a program to help communities adjust. In small towns, if a factory goes out of business, that affects the entire community. And in most small towns, there just aren't that many jobs. You can provide all the training in the world, but it means little if the jobs aren't there. The provisions in this bill are based on the program that's used when military bases shut down. That program has proven effective, and it's an important part of this bill.

Some critics have suggested that we can't make TAA a more effective program, quote, "just by throwing money at it."

I agree with that point. But TAA reform will not come for free. We will expand this program to secondary workers. We will include health care coverage as a part of this bill. And we will provide funds to ensure that workers can complete their training. These changes will cost money -- but they are also essential.

I would note here that every one of these proposals stems from recommendations made by the Trade Deficit Review Commission. That Commission was bipartisan; and these reforms have bipartisan support in the Senate.

Now, I know you want to hear about fast track today. But I want to impress upon this group the importance of TAA. Combining both bills is what makes this package bipartisan and responsible. TAA also makes fast track much more politically attractive to many Democrats.

Indeed, I believe these issues move forward together -- or they don't move forward at all.

Fast Track

The fast track bill that passed the Committee is a great bill -- the bipartisan 18-3 vote sends a strong message that we are headed in the right direction.

Most people have focused on the progressive labor and environment provisions -- and I will discuss those today as well.

But it's also important not to lose sight of the key negotiating objectives of this bill. It is, after all, a bill designed to expand market access for American farmers, workers, and business.

Trade is particularly important for farmers. U.S. agricultural exports support an estimated 765,000 American jobs. Indeed, one in every three U.S. acres is planted for export.

Expanding market access for our farmers is one of my top trade priorities. Fast track is critical to achieving that goal.

First, fast track is necessary to complete the negotiations in the World Trade Organization. We have started those negotiations without it -- but fast track will be critical when an agreement is reached several years from now.

Reducing trade barriers in agriculture will be the focus of the next round of WTO negotiations. And it should be - agriculture tariffs average more than 60% worldwide. By comparison, average tariffs on industrial goods are less than 5%. Non-tariff trade barriers like quotas have all but vanished from trade in manufacturing -- but these barriers remain common in agriculture.

If we want to export more agricultural products, we have to knock down these barriers.

The fast track legislation contains specific guidance for achieving that -- both within the WTO, and for other agreements.

We must, for example, reduce trade-distorting; subsidies, especially export subsidies. We must fight to open foreign markets by lowering tariffs and removing non-tariff barriers. And we must defend our trade laws.

This is an area where I believe the Senate bill is particularly strong.

The bill makes it clear that international agreements must do nothing to weaken trade laws. It requires U.S. negotiators to address the underlying causes of unfair trade, and it requires the Administration to create a strategy for correcting some of the bad decisions that the WTO has recently made regarding trade laws. In addition, Congress must review all provisions impacting trade laws in advance of an agreement's conclusion -- to ensure that these laws are not undermined.

This is also an area where I would caution the Administration. Last year, nearly two-thirds of the Senate wrote a letter to President Bush with a clear message: There can be no weakening of our trade laws.

If the Administration does not walk away from a bad deal on trade laws, I can say with great certainty that I -- and many of my colleagues -- will do everything in our power to bring that agreement down. These laws are simply too important for American farmers and workers.

The Senate bill also recognizes the importance of new industries - where U.S. ingenuity leads the world biotechnology, environmental technology, e-commerce, and services, just to name a few.

And we include a negotiating objective to level the playing field in the area of international tax. This is an issue where the Administration should be working hard to find a negotiated solution, and this legislation reaffirms that message.

In other words, this is a bill that will help our leading industries be more competitive. It is a bill that recognizes we must expand U.S. exports if we are to grow the economy.

Labor/Environment

But the focus of the debate this year has been labor and the environment. This is the issue that has stalled fast track for seven years.

Last year, however, we found the solution to move forward. That solution is defined in the U.S.-Jordan Free Trade Agreement, which passed the Senate and the House by voice vote -- in other words, it passed without objection.

That agreement does two things. First, both countries agree to work toward better labor and environmental standards. In the area of labor, we agreed to promote respect for worker rights and the rights of children -- consistent with the core labor standards of the International Labor Organization.

We also agreed to protect and preserve the environment, and to pursue trade and environmental policies that are mutually supportive.

Moreover, both countries agreed that we would not lower labor or environmental standards in an effort to improve our positions on trade. That provision of the agreement has equal weight with all other provisions of the agreement -- it is just as important; it is just as enforceable.

Now, I want to be crystal clear on this point. By necessity, the language in the fast track bill is not and cannot be identical to the Jordan Agreement. The Jordan Agreement is limited to two countries. The fast track bill sets the agenda for all of our trade agreements.

That said, the fast track language incorporates all of the elements of the Jordan Agreement. Of course, this language can always be improved. But those who criticize the fast track bill as not meeting the Jordan standard are simply wrong. Either they are exaggerating the provisions of the Jordan Agreement, or they are mischaracterizing the bill.

In several cases, critics ignore language in the overall negotiating objectives or in other parts of the bill that are just as binding -- and have the same legal status -- as the principal negotiating objectives.

This legislation would direct the Administration to negotiate Jordan-like provisions as it completes negotiations with Chile and Singapore, and as it moves forward on the Free Trade Area of the Americas. And it makes Jordan the model for new negotiations -- with Central America, Australia, and others.

There are also key provisions on labor and the environment added to the Senate bill that were not in the House bill. First, in addition to an environmental report, the legislation includes a new report on trading partners' labor practices. These reports should clearly identify the problems to be addressed in negotiations.

Second, the Senate bill contains important language to ensure that new investor-state provisions, like NAFTA Chapter 11, are transparent and accessible to the public. The bill also addresses concerns that investor-state provisions may give foreign interests more rights than U.S. investors. Our bill strikes the appropriate balance between the legitimate concerns of environmental and citizens groups and the legitimate concerns of American investors overseas.

Some have said that this legislation does not go far enough on labor and the environment. Many critics, I believe, will never be satisfied. They simply oppose trade. That's fine, of course. Some will be for trade. Some will be against it. I respect the right to take either position.

But as we move forward on these issues, we must be realistic. It is not realistic to suggest that we can take our labor and environmental laws -- impose them on developing countries -- and slap sanctions on them if their laws don't live up to our standards by 2006. Many of these countries are at a level of development that the United States was at 100 years ago. And at that time, our labor and environmental laws also looked much different.

That's not to say that we must wait a century for progress; labor and environmental standards are on the agenda now, and every trade agreement must recognize that reality. We can lock in positive changes that have already been achieved. And we can create positive incentives for countries to raise their standards. For example, we can phase in benefits more quickly for countries that make progress on labor and environment issues. We can provide technical assistance to help those countries improve their practices.

And we can trade with them. Economic growth and stability often go hand-in-hand with progress on labor and environmental standards. Our own country is the best example of that. Isolating developing countries will not help them -- and it will not help us.

Moving Beyond Fast Track

While fast track sets the Congressional agenda on trade -- and provides for expedited consideration of agreements, it should not be viewed for more than it is. It is a tool -- nothing more; nothing less.

What will be more important are the actions of those who administer our trade policy. Here, I believe, the Administration has a great opportunity to demonstrate leadership. They also face significant risks.

As I have said before, Jordan constitutes a practical floor for future agreements. And as the Congress moves toward action on fast track legislation, it is critical that the Administration work to ensure that similar meaningful labor and environment provisions be included in agreements being negotiated with Chile and Singapore.

There are other things we should do outside of the context of free trade agreements. The ILO has recommended actions against Burma because of rampant prison labor. Senator Harkin has a bill that would ban imports from Burma. This is a place where the Administration should be doing more.

We should be working harder to help countries achieve higher labor and environmental standards. We can do this, for example, through technical assistance. Unfortunately, the Administration cut the budget for the bureau at the Labor Department that is responsible for doing this. That sends the wrong signal about this Administration's commitment on this issue, and should be revised.

Tomorrow we will hold a hearing on the steel and lumber disputes. I expect that there will be a straightforward message: Enforcing our trade laws is also an important part of the consensus on trade.

Conclusion

Commitment to a consensus-based trade policy will require much work on all sides. It will require a sustained commitment over many years.

The trade package that the Senate will take up this year is a big part of that commitment.

Of course, there will always be those that say the fast track bill doesn't do enough on labor and environment. To them I say that this bill is an enormous step forward. It is far stronger on these issues than any previous grant of fast track.

Can we do more on these issues? Sure. And I will always work to make improvements. But some critics are letting their notion of perfection be the enemy of the very good.

There will also be critics of TAA. Some will work hard to derail our efforts of reform. But they do so at the risk of undermining the whole package and stopping progress.

At the end of the day, though, I believe there is something in this bill for everyone. And I believe those who are truly for trade wll work hard to pass this comprehensive trade package.

(end text)

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

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