September 24,2002

Grassley on Implementing Trade Agreements

Sen. Chuck Grassley, ranking member of the Committee on Finance, submitted the following
statement into the Senate record today.

Mr. President, This year marks an historic turning point for U.S. international trade policy.
For the first time in over eight years the Congress renewed the President’s authority to negotiate new
trade agreements. This authority, called Trade Promotion Authority, re-establishes the traditional
partnership on trade between the Congress and the Executive branch. It allows us to work together
to open new markets for American exports, set fair rules of conduct for U.S. investors overseas, and
help raise the standard of living for millions of people around the world.

The negotiating objectives and procedures laid out in the Bipartisan Trade Promotion
Authority Act represent a very careful substantive and political balance on some very complex and
difficult issues such as investment, labor and the environment, and the relationship between
Congress and the Executive branch during international trade negotiations.

Because this balance is so delicate, I was somewhat dismayed to learn recently that some
groups and Members of Congress are trying to push for interpretations of certain provisions of the
TPA bill that do not comport with the negotiating objectives laid out in the Bipartisan Trade
Promotion Authority Act. For example, an article in the September 18, 2002, edition of National
Journal’s CongressDaily noted that “a group of labor officials who were active in the fight against
[TPA] are meeting in the offices of the AFL-CIO. At the top of their agenda: mapping a plan to
ensure future trade agreements include strong provisions on labor rights and the environment. Labor
officials plan to hold future agreements to standards set in an earlier free-trade agreement reached
with Jordan, which they consider a model of backing up labor and environmental provisions with
enforceable sanctions.” Some Members of Congress are even arguing that future agreements must
follow the “Jordan Standard” on labor and environment in order to meet the objectives laid out in
the TPA bill. Perhaps even more ominous were the public remarks of the Chairman of the Senate
Finance Committee who urged the administration to follow the model of the Jordan Free Trade
Agreement “exactly” in implementing the labor and environment provisions of the Bipartisan Trade
Promotion Authority Act.

On this issue, I respectfully disagree with my colleague from Montana. In fact, I think this
would be a serious mistake. The negotiating objectives in the TPA bill set the parameters for future
trade negotiations, not some past agreement like the Jordan FTA that was negotiated during the
Clinton Administration. To follow the provisions of this past agreement “exactly” would ignore the
clear will of Congress as set forth in the TPA bill. Even more disconcerting is that such a stark
litmus test ignores that basic premise that the most appropriate mechanisms to improve labor and
environment standards abroad differ from country to country and agreement to agreement. In short,
one does not fit all.

Trying to solve complex environmental and labor issues with rigid constructs will do nothing
to actually improve environmental or labor standards abroad. At the same time, demanding that our
trading partners accept specific language laid out in past agreements during trade negotiations will
come at a heavy price for our farmers and workers, as our trading partners can demand significant
concessions on other issues, such as agriculture, in exchange for our rigid insistence that they accept
specific language from our trade negotiators. The Administration and Members of Congress need
to remember that the underlying premise of the TPA Act is to provide the President and our trade
negotiators with flexibility so they can negotiate the best trade agreements for the American people.
It is not intended, nor should it be used, to try to tie the President’s hands on any particular issue.

It is also troubling that some advocacy groups are pushing to ensure that future free trade
agreements adhere to their version of a so-called “Jordan Standard.” I think it bears repeating that
it is the negotiating objectives laid out in the Trade Promotion Authority bill that should guide the
Administration in future trade negotiations, not a single free trade agreement that was concluded
long before TPA became law.

I also believe it would be a political miscalculation to insist that new trade agreements must
follow the “Jordan Standard” to gain support in Congress. First, no one really knows what the
“Jordan Standard” is. In fact, when we held a hearing on the Jordan Free Trade Agreement on March
20, 2001, in the Senate Finance Committee, one of the most controversial issues raised was what the
labor and environmental provisions of the Jordan Free Trade Agreement actually mean. For
example, former United States Trade Representative Charlene Barshefsky testified that the labor and
environment provisions in the Jordan FTA “while restating the existing commitment of both
countries to environmental protection and the ILO’s core labor standards, neither imposes new
standards nor bars change or reform of national laws as each country sees fit.”

Ambassador Michael Smith, former Deputy United States Trade Representative and the first
American Ambassador to the General Agreement on Tariffs and Trade, testified that “Articles 5 and
6 [of the Jordan FTA] as written are largely fluff, open to widely differing (even if plausible)
interpretations and, as such, causes for possible unfortunate differences between Jordan and the
United States in the years ahead as the agreement is implemented. Articles 5 and 6 do not advance
the “cause” of either international environmental or labor affairs and add only confusion to what
should be a straightforward free trade agreement. Indeed, the only result I can foresee is countries
adopting lower environmental and labor standards for fear of themselves being unable to effectively
enforce higher standards – hardly a desired result.”

During the hearing it became clear that labor and environment provisions, and their
relationship to the dispute settlement procedures established in the Jordan FTA, are highly
controversial. A number of groups, including the American Farm Bureau Federation and the U.S.
Chamber of Commerce, strongly opposed including the labor and environment provisions in the
Jordan FTA without some clarification from the Administration that these provisions would not be
implemented in a trade restrictive manner. Many members of the Republican party, including
myself, shared these concerns. Had the U.S. Government not agreed to side letters with the
Hashemite Kingdom of Jordan, clarifying that these and other provisions would not be implemented
in a manner that results in blocking trade, it is highly likely that the agreement would not have gained
the support of the Republican caucus in the Senate, and may not have passed the Senate at all. And,
if the proposed agreement had not been with our good friend and ally Jordan, side letters may not
have been enough.

I think this represents an important political reality which the Administration must gauge in
entering into new free trade agreements. Almost 90% of the Republican Caucus in the House and
Senate supported passage of Trade Promotion Authority. In contrast, only 12% of the House
Democratic Caucus and 40% of the Senate Democratic Caucus supported the bill. And the price for
that support was high. Clearly, if future free trade agreements are going to pass Congress, the strong
support of the Republican caucus will be key.

In short, I am deeply concerned that some advocacy groups and Members of Congress are
pushing the Administration to adhere to a highly controversial and vague “Jordan Standard” which
does not have the strong support of the Congress and that is not clearly reflected in the Trade
Promotion Authority negotiating objectives. While the labor, environment, and dispute settlement
negotiating objectives in the Bipartisan Trade Promotion Authority Act are loosely based on
provisions found in the Jordan Free Trade Agreement, there is clearly a distinction between the two.

In implementing the will of Congress as embodied in the Trade Promotion Authority Act, it is
critically important for the administration to keep this distinction in mind if future agreements are
to gain the support of myself and other strong supporters of free trade in the Congress.
Mr. President, before I conclude I would like to talk about another important development
in U.S. trade policy. Last week, for the very first time, the bipartisan, bicameral Congressional
Oversight Group (COG) met with Ambassador Zoellick to discuss pending and future trade
agreements. The COG was created by the Trade Promotion Authority Act to provide an additional
consultative mechanism for Members of Congress and to provide advice to the U.S. Trade
Representative on trade negotiations.

The COG is comprised of: the Chairmen and Ranking Members of the Finance and Ways and
Means Committees; three additional members from the Senate Finance Committee, no more than
two of whom may be of the same political party; three additional Members of the House Ways and
Means Committee, no more than two of whom may be of the same political party; and the Chairman
and Ranking Member or their designees of the committees of the House or Senate which would
have, under the Rules of the House or Senate, “jurisdiction over provisions of law affected by a trade
agreement negotiations for which are conducted at any time during that Congress.”

The purpose of the COG is to “consult and provide advice to the Trade Representative
regarding the formulation of specific objectives, negotiating strategies and positions, the
development of the applicable trade agreement, and compliance and enforcement of the negotiated
commitments under the trade agreement.” In addition, each member of the COG is to be accredited
as an official adviser to the United States delegation in the negotiations. However, those Senators
or Members who are Members of the COG because they are the Chairman or Ranking Member of
a Committee which has “jurisdiction over provisions of law affected by trade negotiations” are to
be accredited as advisors only on those provisions which would fall under their Committee’s

The TPA bill makes it clear that the COG is a mechanism for enhanced consultations and that
it is not designed to serve as a referendum on new agreements or on particular negotiating positions.
I am pleased to report that our first meeting was a great success. A number of Senators and
Members of the House from both political parties attended the meeting, including the Chairmen and
Ranking Members of both the Senate Finance and House Ways and Means Committees. During the
meeting Ambassador Zoellick expressed his strong support for enhanced consultations and his keen
interest in meeting with the COG on a regular basis. I certainly would support his enthusiastic

The TPA bill also requires the Chairmen and Ranking Members of both the Finance and
Ways and Means Committees to establish guidelines for the exchange of information between the
Congress and the Executive branch. I plan to work diligently to ensure that these guidelines are
feasible and that the resulting exchange of information is meaningful.

Mr. President, with the passage of the Bipartisan Trade Promotion Authority Act of 2002,
we begin a new phase in the history of U.S. trade policy. Although the bill contains some new
buttons and bows, the underlying premise of the bill remains the same as it was decades ago – to give the administration the tools it needs to liberalize trade and create new opportunities for America’s farmers, ranchers and workers. As the Ranking Member of the Senate Finance Committee, I intend to ensure that the Trade Promotion Authority Act is implemented in a manner that does just that.