March 10,2004

Sen. Baucus Working to Establish Trade Preference Program for Middle East

Trade Opportunities Will Help Create Jobs and Enhance Security

(WASHINGTON, D.C.) During the U.S. Senate Finance Committee's hearing on theadministration's economic and trade policy with the Middle East, U.S. Senator Max Baucustoday pressed for passage of Baucus-McCain legislation that would implement a trade preferenceprogram with Middle East countries.

Last May, Baucus introduced the "Middle East Trade and Engagement Act" with SenatorJohn McCain (R-Ariz.), who also testified at today’s hearing. Under the Baucus-McCain bill,countries that meet certain criteria, such as supporting the war on terrorism and having a marketbasedeconomy, would be able to export specific goods to the United States tariff free. The tradeprogram with the Middle East would be modeled on successful existing trade programs for sub-Saharan Africa and the Andean region.

President Bush has proposed a Middle East trade plan that would create a U.S.-MiddleEast free trade area by 2013, but Baucus believes a comprehensive trade policy needs to beimplemented sooner.

“A trade preference program like the one Senator McCain and I are proposing will helpcountries in the Middle East now, in the short-term,” Baucus said during the hearing. “MyMiddle East proposal is comprehensive in its scope – it offers economic help through increasedtrade to the entire region at once, rather than gradually. And even more importantly, my bill willprepare Middle Eastern economies to enter into free trade agreements with the United States,which is the cornerstone of the administration’s Middle East trade policy.”

Senator Baucus’s full statement follows:

Statement of U.S. Senator Max Baucus

Hearing on United States Economic and Trade Policy in the Middle East

“Thank you, Mr. Chairman. Thank you for convening a hearing on such an importanttopic. And I want to thank all of the witnesses who have come to testify here today. We have avery impressive panel. I’m looking forward to hearing what they have to say, so I will keep myremarks short.

In particular, let me thank Senator McCain for testifying this afternoon. Last year,Senator McCain and I introduced the Middle East Trade and Engagement Act, better known as“Baucus-McCain,” or “the Silk Road bill.” That bill seeks to establish a trade preferenceprogram for the countries of the Middle East similar to programs we now have for sub-SaharanAfrica, the Andean region, and the Caribbean basin. It would give the president the power toallow Middle Eastern countries that meet certain conditions, such as supporting the war onterrorism and reforming their economies, to export products the president approves duty free.

A trade preference program like the one we are proposing will help countries in theMiddle East now, in the short-term. It is comprehensive in its scope – it offers economic helpthrough increased trade to the entire region at once, rather than gradually, country by country. Itwill also help prepare Middle Eastern economies to enter into free trade agreements (FTA) withthe United States that are the cornerstone of the administration’s Middle East trade policy.

That’s an important point. Far from competing with the administration’s policies, Ibelieve the Baucus-McCain bill complements and supports the administration’s attempt toestablish a Middle East free trade area. Just look at the history of preference programs. TheUnited States has essentially three regional trade preference programs. We passed the AfricaGrowth and Opportunity Act (AGOA) in 2000. Now we’re negotiating an FTA with five AGOAbeneficiaries – the Southern African Customs Union (SACU) countries.

We also have the Andean Trade Preferences Act (ATPA). For years ATPA has providedincentives for farmers to switch from growing coca to growing flowers, coffee, and other legalcrops. The United States Trade Representative (USTR) recently announced that it would takethe next step and negotiate FTAs with ATPA beneficiaries Colombia, Peru, Bolivia, andEcuador.

Finally, we have the Caribbean Basin Initiative (CBI). All five of the Central AmericaFree Trade Agreement (CAFTA) countries with which we just completed FTA negotiationsreceive benefits under CBI. So does Panama, another future FTA partner according to theUSTR. The evidence is clear. Preference programs help countries reform and develop theireconomies to the point where a FTA with the United States can become a realistic option.

In its recently released Annual Report, the USTR stated that, quote “AGOA hasprompted important economic and social reforms across sub-Saharan Africa and delivered newjobs and opportunities for economic growth and development to the region.” This is preciselywhat the United States seeks to accomplish in the Middle East. If a preference programdelivered these impressive results for sub-Saharan Africa, why wouldn’t we develop a preferenceprogram for the Middle East? Surely it can’t be said that the Middle East is somehow lessimportant than sub-Saharan Africa.

The USTR also said in its Annual Report that, quote “AGOA successes are also creatingnew commercial opportunities for U.S. exporters, as African exporters explore new input sourcesin the United States.” New commercial opportunities for U.S. companies means jobs for U.S.citizens.

In short, a preference program for the Middle East will help stimulate economies in theMiddle East, create jobs both in the Middle East and here at home, and improve America’ssecurity in the process. I urge the administration to support a preference program in the MiddleEast, and to work with Senator McCain and me on the Baucus-McCain bill.”