The House Ways and Means Committee and Senate Finance Committee
have approved fast-track legislation which resolves problems in the
original bill submitted by President Bill Clinton on September 16,
1997. Congressional leaders wisely refused to give the President
broad authority to include labor and environmental issues unrelated
to trade in any future trade agreements negotiated under fast
track. Instead, they forged a bipartisan compromise with the
Administration that will enable the President to undertake new
trade negotiations around the world without being encumbered by
extraneous issues.
S. 1269 and H.R. 2621, approved on October 1 and October 8,
1997, respectively, would allow the President to negotiate trade
agreements which cut tariffs (or taxes) worldwide, dismantle
non-tariff barriers to trade, and reduce regulations hindering the
free flow of goods, services, and investment. Initially, President
Clinton sought to add provisions on labor standards and the
environment to negotiating objectives for trade agreements
considered under fast-track authority. Specifically, two new
objectives added by Clinton's draft bill would be to "promote
sustainable development" and to ensure that trade and environmental
protection are "mutually supportive." Clinton also sought to
"establish in the International Labor Organization (ILO) a
mechanism for the systematic examination of, reporting on, and
accountability for the extent to which member governments promote
and enforce core labor standards." Thus, the Administration's
proposal would have given President Clinton, as well as his
successor after the year 2000, very broad authority to incorporate
environmental and labor standards into future trade agreements.
While H.R. 2621 and S. 1269 take slightly different approaches,
both bills would:
• Limit the President's trade negotiating objectives to
trade-related matters. Under the language of H.R. 2621, along with
nearly identical provisions of S. 1269, for any trade agreement
which may be considered under fast-track procedures, the President
may include only provisions to prevent countries from using their
environmental, health, labor, and safety regulations in a
discriminatory manner to hinder American exports and investment.
Both bills deleted the Clinton Administration's negotiating
objectives of "sustainable development" and ILO labor standards
enforcement.
• Tighten the link between trade negotiating objectives and
what may be in trade agreements. Both H.R. 2621 and S. 1269 would
prevent the President from inserting other provisions into trade
agreements considered under fast track by tying what might be
included in future bills implementing agreements negotiated under
fast track directly to trade negotiating objectives. This new
language effectively prevents the President from including
objectionable environmental and labor standards in trade
agreements.
• Ensure that international agreements which include
environmental and labor standards may not be considered under
fast-track procedures. To persuade the Administration to drop its
demands for wide-ranging environmental and labor standards
provisions in future trade deals negotiated under fast-track
authority, both H.R. 2621 and S. 1269 provide the Administration
and its allies with a political fig leaf: a new section entitled
"International Economic Policy Objectives." Two of the four goals
for U.S. international economic policy established by this section
address the issues of labor standards and the environment. However,
H.R. 2621 and S. 1269 expressly forbid fast-track consideration of
any agreement that would modify U.S. law to achieve these
objectives. This new section reiterates the President's existing
authority under Article II of the U.S. Constitution to negotiate
with other nations at any time on agreements that are unrelated to
free trade. However, such agreements would not be on a fast track;
they would be subject to normal treaty or agreement approval
procedures which allow for amendment by Congress.
The fast-track bills approved by the Senate Finance Committee
(S. 1269) and the House Ways and Means Committee (H.R. 2621) are
entirely consistent with conservative economic principles regarding
free trade, open markets, and deregulation. Moreover, trade
agreements based on open markets, free trade, and unrestricted
investment are essential if the process of economic and political
reform is to continue in the developing countries. Such agreements
would lock in free-market reforms in these countries and help
prevent backsliding by foreign governments when their countries
suffer economic and political turmoil. Mexico proved this in 1995
following the collapse of the peso. The North American Free Trade
Agreement (NAFTA) enabled Mexico, instead of raising tariff
barriers, to stay on course with free-market policies that ended
its financial crisis in just seven months. Today, Mexico has
replaced Japan as the second-largest U.S. trading partner. It also
has made significant progress in advancing democratic and electoral
reforms.
The evidence that free trade spurs economic growth, higher
productivity, and better paying jobs in the United States is
overwhelming. Total U.S. two-way trade has expanded rapidly, from
13 percent of gross domestic product (GDP) in 1970 to 30 percent in
1996, for a record $2.3 trillion. From 1986 to 1992, according to
the U.S. Department of Commerce, exports accounted for nearly 50
percent of the U.S. economy's total growth. From 1992 to 1996, the
dynamic U.S. economy created over 12 million net new jobs, while
industrial production increased nearly 18 percent.
Fast-track trade authority plays a vital role in spurring U.S.
economic growth, maintaining U.S. global leads in competitiveness
and high technology into the next century, and assuring continued
U.S. leadership throughout the world. Prompt renewal of the
President's fast-track negotiating authority will send other
countries the message that Congress and the Administration stand
united in pursuit of free-trade agreements which best advance
American economic interests and values.