[Congressional Record Volume 150, Number 93 (Thursday, July 8, 2004)]
[Senate]
[Pages S7819-S7821]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]




                            TRADE AGREEMENTS

  Mr. BAUCUS. Mr. President, I rise to address the value of free trade, 
and of the process by which we get it.
  From ancient times, people have learned that trade among nations 
means more economic growth and higher incomes. People have better 
standards of living, thanks to trade.
  Free trade allows each nation to devote more resources and energy to 
those things for which it has a comparative advantage. Partners to free 
trade thereby get goods and services at lower cost than they would in 
isolation.
  Conversely, protectionism stunts growth and reduces income. Tariffs 
are taxes. And like other taxes, they can impede the efficient 
allocation of resources. Where nations impose quotas and tariffs, goods 
and services cost more. People live less well than they would with free 
trade.
  But you don't have to take my word for it. Look at the record. Take 
America's two biggest recent trade agreements.
  America entered into the North American Free Trade Agreement, NAFTA, 
in 1993, and the Uruguay Round Agreements, the WTO, in 1994. In the 
years following those major trade agreements, America experienced one 
of its strongest economic expansions.
  Yes, balancing the budget and funding education also had something to 
do with it. But trade helped.
  America experienced 8 years of economic growth. The American economy 
created more than 20 million new jobs. The average household's real 
income rose 15 percent. Americans' standard of living improved.
  Put the other way around: The opponents of free trade have a 
difficult job to explain how those major trade agreements hurt the 
American economy in the 1990s.
  I am a proud advocate of trade. I am an advocate of stronger economic 
growth and higher incomes. I want a better standard of living for 
Americans.
  So how can we achieve freer trade? How do we lower barriers to trade? 
That brings us to a discussion of trade procedures.
  The Senate considers trade agreements under somewhat unique 
procedures. These special procedures go by several names: fast-track, 
trade negotiating authority, or trade promotion authority.
  Under these procedures, legislation to implement a trade agreement 
gets an up-or-down vote within a limited time. Debate is limited to 20 
hours. No amendments. No filibusters.
  The Senate is about to consider legislation under these procedures to 
implement the United States-Australia Free Trade Agreement. We may also 
soon consider legislation under these procedures to implement the 
United States-Morocco Free Trade Agreement.
  Two other agreements with six Central American countries and Bahrain 
are signed and ready for us to consider whenever the administration 
chooses to move them.
  With so much trade activity, it is a good time to review the 
applicable procedures.
  It all begins with the Constitution. Article I, section 8, clause 3 
says that: ``The Congress shall have the power . . . to regulate 
Commerce with foreign Nations.'' Since the founding of our Country, it 
is, and has always been, Congress that holds primary responsibility for 
trade.
  Now, 535 Members of Congress cannot negotiate trade agreements. The 
logistics are unimaginable. So our predecessors figured out fairly 
early that the actual negotiating would have to be delegated to the 
executive branch.
  But that does not mean that Congress has delegated its Constitutional 
responsibilities. To the contrary, under United States law no trade 
agreement is self-executing. It has no effect on domestic law until 
Congress passes implementing legislation.

[[Page S7820]]

  A system where one branch of government negotiates trade agreements 
and another must accept them and turn them into domestic law presents 
challenges.
  The system worked well enough in the early days of the General 
Agreement on Tariffs and Trade. Back then, the executive branch was 
negotiating agreements to reduce tariffs. Congress would delegate 
authority to the President to agree to cuts within a specific range. 
All the President had to do was proclaim those changes once agreed to.
  In the 1960s, however, the United States and its trading partners in 
the GATT began to expand the scope of trade negotiations to non-tariff 
measures. Without any advance authorization from Congress, the 
administration negotiated several deals on non-tariff measures in the 
GATT's Kennedy Round.
  It brought those agreements back to Congress. Congress rejected the 
agreements, refusing to implement them into domestic law. This 
embarrassed the administration. And it frustrated our trading partners. 
They learned that negotiating with the executive branch is not enough. 
The final word lies with Congress.
  Our trading partners became wary. They didn't want to devote years of 
effort to another round of trade negotiations in the GATT if American 
negotiators could not keep the promises they made. The executive branch 
wanted advance authorization from Congress to negotiate non-tariff 
trade agreements.
  The administration proposed treating tariff and non-tariff agreements 
the same. The executive branch said: Congress should simply authorize 
the President in advance to negotiate and implement the deals that the 
President makes.
  The Finance Committee resisted. Yes, tariff deals are easy to approve 
in advance. All Congress has to do for a tariff deal is to tell the 
Executive how low the negotiators can go.
  But non-tariff deals are more complicated. They can cover things like 
Customs rules, trade remedies, food safety rules, and intellectual 
property rights. It would be too difficult for Congress to approve 
parameters for these kinds of agreements in advance. Congress would 
want to see the details before deciding to approve and implement these 
deals.
  Congress and the President reached a compromise and enacted it in the 
Trade Act of 1974. That Act created the so-called ``fast-track'' 
process.
  Fast-track has something for everyone. It gives the Executive express 
authority to negotiate tariff and non-tariff agreements, so long as our 
trade representatives meet general negotiating objectives set out by 
Congress. And it guarantees our trade partners that any agreement will 
receive an up-or-down vote by a date certain. That way, when they 
negotiate with the United States, they know that Congress cannot later 
amend the agreement or kill it with a filibuster.
  But, most importantly, fast-track preserves Congress's Constitutional 
primacy on trade. No agreement gets implemented unless a majority of 
Congress approves.
  Fast-track procedures require close collaboration between the 
Executive and Congress at every stage. The President must notify 
committees of jurisdiction and consult with them before a negotiation 
begins and regularly throughout the negotiations. Once talks are 
complete, the President must notify Congress 90 days before signing the 
agreement, to permit Congress time to review the terms of the deal.
  Once the agreement is signed, the President must submit it to 
Congress, along with a draft implementing bill, for approval. Congress 
has no more than 90 days in which the Congress is in session to act. 
And amendments are not in order.
  But the time when close coordination between the Executive and 
Congress is most critical is the period between when the agreement is 
signed and when the President submits the agreement to Congress.
  This is the time when the administration and the trade committees sit 
down together to craft an implementing bill. The law requires the 
Executive to consult with the committees of jurisdiction. But because 
the details of this consultative process are not spelled out by law, 
some call this stage the ``informal process'' or the ``mock process.''
  No one should be fooled by these titles. This cooperative drafting 
venture--while not spelled out in the law--is the centerpiece of the 
fast-track process.
  It is at this stage--before the implementing bill becomes 
unamendable--that the trade committees can weigh in and bring their own 
ideas to the table.
  Congress and the President first used the procedures adopted in the 
Trade Act of 1974 to implement the GATT Tokyo Round agreements in 1979. 
The Government has since used these procedures to implement the WTO 
Uruguay Round Agreements, as well as free trade agreements with Israel, 
Canada, Mexico, Singapore, and Chile.
  From the beginning, the Finance Committee has strived to make the 
informal process operate as much as possible like the normal 
legislative process.
  For that reason, the Finance Committee always holds a mock markup of 
the draft implementing bill. Like any markup, this event is open to the 
public. And Members are free to offer amendments to the draft bill that 
has been developed by the administration and committee staff.
  The committee holds a recorded vote on each amendment offered. It 
then votes on whether to approve the draft bill, as amended, in a 
recorded vote.
  Amendments are common events at mock markups. When the Committee 
considered the United States-Israel Free Trade Agreement in 1984, 
committee members offered 13 amendments, and the Committee adopted 3. 
In 1988, when the committee considered the Canada-United States Free 
Trade Agreement, members offered 9 amendments, all of which were 
adopted. When the Finance Committee considered draft implementing 
legislation for the North American Free Trade Agreement in 1993, 
members offered at least 15 amendments, of which 14 were adopted. There 
were more than 30 differences between the Senate and House versions of 
the bill at the end of the mock markups.
  By contrast, no amendments were offered last year when the committee 
considered the Singapore and Chile implementing bills. That was 
unusual.
  In each of these cases, consideration of amendments was followed by a 
committee vote to approve the draft bill, as amended.
  In every case except Singapore and Chile, amendments added in the 
mock markup led to differences between the versions of the draft bill 
approved by the Finance Committee and the bill approved by the Ways and 
Means Committee.
  Consistent with normal legislative practice, the two committees 
resolved these differences in an informal or ``mock'' conference. Each 
House appointed conferees to participate.
  To begin the conference process, staff from both parties and both 
Houses jointly prepared a document identifying all the differences 
between the two versions of the draft bill. Where agreement was 
possible, staff recommended a resolution.
  Typically, the House and Senate exchanged offers on more difficult 
issues, which were then resolved at the Member level. In each case, 
Members and staff were able to resolve all or virtually all conflicts. 
Both committees could then recommend identical draft bills to the 
administration for formal submission.
  This time-tested process really works. It allows Congress to exercise 
its Constitutional prerogatives in full, while still guaranteeing the 
President and our trading partners a timely vote on trade agreements.
  Although these informal procedures are not statutory, they were 
certainly on my mind when I worked to secure a renewal of the 
President's trade negotiating authority in the Trade Act of 2002. I 
firmly believe that Congress should continue to insist on a meaningful 
and robust informal process.
  One of the keys to a meaningful informal process is time. In the case 
of the U.S.-Canada Free Trade Agreement, the informal process took 7 
months. That is how much time elapsed between when the U.S. signed the 
agreement and when the President formally submitted the implementing 
bill to Congress. During that time, the

[[Page S7821]]

Finance Committee held hearings, conducted several weeks of informal 
drafting, and held four mock markup sessions. The informal conference 
alone included 3 days of Member-level meetings and took close to 2 
months to complete.
  The informal process for NAFTA lasted a full year. It included five 
hearings in the Finance Committee as well as hearings in five other 
committees. The Finance Committee staff worked with the administration 
for months on legislative drafting. The Finance Committee's markup 
involved 3 sessions over 2 weeks, followed by a conference.
  The informal process for the Uruguay Round Agreements Act took about 
9 months.
  The Singapore and Chile FTAs took less time. That makes sense. The 
agreements required many fewer changes to U.S. law than those that came 
before.
  After walking through the draft bills in detail with the 
administration, with Committee staff, and with legislative counsel, 
Members were satisfied. They chose not to offer any amendments at the 
mock markups. No conference was necessary.
  Affording sufficient time to the process pays off. After the 
President formally submits an implementing bill, the fast-track 
procedures allow Congress up to 90 days to complete action. That is 90 
days on which Congress is in session not calendar days.
  But nowhere near that much time has ever been used. The formal 
process took 56 calendar days for the U.S.-Canada Agreement--including 
the August recess. NAFTA, Singapore, and Chile took a mere 16 days 
each.
  What lesson can we learn from all this experience? Process matters.
  Congress needs to be engaged throughout the negotiations. The trade 
committees need to play an active role in drafting implementing 
legislation. Committee members need to have enough time to give 
meaningful consideration to amendments and to resolve any differences 
between the Houses before the Government completes an implementing 
bill. When that happens, the formal fast-track process goes quite 
smoothly.
  What does this mean for the future? First, we should not get 
overconfident. Just because the process works smoothly and quickly for 
some agreements, like Singapore and Chile, doesn't mean we can start 
skipping steps. In fact, with a vote on whether to extend the 
President's trade promotion authority for an additional 2 years 
possible next summer, now is no time to get sloppy.
  More complex agreements may be ahead. CAFTA involves six countries 
and could raise controversial new issues. Any agreements that come out 
of the WTO Doha Round or the FTAA talks could require extensive new 
implementing legislation. In sum, we would be foolish to assume the 
process of developing implementing bills will always be as easy in 
future as our recent experience with Singapore and Chile.
  Second, timing should always be Member-driven. Members should have 
the time that they need to review the relevant materials and 
participate in the informal process. We should never cut that time 
short just to meet artificial deadlines.
  When we shortchange the process, we shortchange the Constitution. 
When we start cutting corners on process, we begin to abdicate 
Congress's constitutional role in making trade law.
  A good agreement is no excuse for bad process. A good agreement is no 
excuse for Congress to surrender its Constitutional role. The ends do 
not justify the means.
  Let us work together to advance the process of free trade. Let us 
ensure a fair process for reaching our trade agreements, and thereby 
make future trade agreements easier to achieve. And by advancing those 
agreements, let us work together to earn those benefits of free trade 
of greater economic growth and higher standards of living for 
generations of Americans yet to come.

                          ____________________