Bridges Weekly Trade News Digest • Volume 6 • Number 29 • 6th August 2002
Doha Round Receives Boost As US Congress Approves Fast-Track; Groups Question Environmental Impact
US trade negotiators received a strengthened mandate on 1 August as the US Senate approved by a vote of 64-34 legislation granting the White House so-called fast-track authority (now called Trade Promotion Authority, or TPA) to negotiate trade pacts for the first time since 1994. The Senate’s approval came just days after the measure edged through the House of Representatives by a highly partisan vote of 215- 212. The bill, which President George W. Bush is expected to sign into law on 6 August, provides impetus to negotiations involving the US currently underway at the multilateral, regional and bilateral levels. TPA allows the President’s administration to hammer out trade deals that Congress can either accept or reject but not alter.
The Senate vote marks the end of a long process that followed an initial ballot on TPA last December in the US House of Representatives, which supporters won by one vote (see BRIDGES Weekly, 12 December 2001 and BRIDGES Weekly, 28 May 2002).
The vote comes at an important time for US trade relations, as negotiations at the WTO are now entering their substantive phase towards an agreement on the Doha mandate by 1 January 2005. Negotiations on the Free Trade Area of the Americas (FTAA) are also due to conclude by then, while bilateral agreements with Chile and Singapore are underway. Passage of the bill should also provide impetus to the official launching of FTA negotiations with Central America and Morocco. "What it does immediately is unblock a whole series of trade negotiations and restores US negotiators to the forefront of talks," said Jeffrey Schott, a senior fellow with the Institute for International Economics. Without TPA, "US negotiators faced a lot of questions from our trading partners about their ability to put our sensitive trade barriers on the table," Schott said. The legislation’s passage was welcomed by the US’ major trading partners. European Trade Commissioner Pascal Lamy said it meant the removal of an "important roadblock" to WTO talks launched in Doha last year. "We have to use this important development to generate real momentum in these negotiations," he said in a statement.
Trade provisions in the bill include renewal of an Andean tariff-relief program aimed at supporting Bolivia, Colombia, Ecuador and Peru in their campaigns against illegal drugs (see BRIDGES Weekly, 22 May 2002). The bill also includes tariff relief for textile operations in parts of Africa, the Caribbean and South America that make products from US dyed and finished fabric, though those benefits are limited to concessions made with lawmakers from textile states. TPA approval renews the US’ Generalised System of Preferences, extending preferential market access to the US market to over 100 developing countries.
Nevertheless, the bill is not without its detractors. Lori Wallach, director of US non-governmental group Public Citizen’s Global Trade Watch, said it was outrageous that, just a week after Congress passed legislation to crack down on corporate crime, it was "approving corporate deregulation across the board on a global basis." House Representative Sander Levin, a Michigan Democrat, said the bill was "fatally flawed," and that negotiating objectives covering labour and environmental issues in future trade agreements were not tough enough. He also charged that the compromise trade package would put US anti-dumping protections against unfair imports "on the chopping block" in world trade talks.
The version of the bill passed in May in the Senate held a provision (the Dayton-Craig amendment) that empowered Congress to remove parts of any agreement that alter US antidumping and subsidy laws. This amendment, which would have effectively negated any concessions made by the US at Doha on reforming trade remedies, was dropped following subsequent pressure from the Bush administration, which threatened to veto if Dayton-Craig remained. Final negotiations between the House and Senate focused on provisions to aid workers who lose jobs as a result of foreign competition resulting from trade agreements. The bill nearly triples trade adjustment assistance for domestic workers displaced by imports to a projected USD 10-12 billion over ten years.
Environmentalists concerned about investment language
In addition to the Dayton-Craig amendment, the House struck from the bill language that would have restricted the ability of foreign companies to obtain compensation through international tribunals for government actions that harmed their investments. The bill now says that investors should have "no greater substantive rights" than is available to US investors in the US. "We weren’t trying to say you can’t have Chapter 11 through the backdoor," said a Senate aide, referring to the North American Free Trade Agreement (NAFTA) chapter outlining investor-state procedures, including compensation for measures "tantamount to expropriation". "We’re saying Chapter 11 can’t give you a more lenient standard than what is available through US courts," the official said. The final TPA legislation also calls for an appellate procedure "or similar mechanism" for investor-state disputes in future trade agreements.
NAFTA Chapter 11 critics, including environmentalists concerned about the threat to domestic legislation, criticised the final bill’s investor-state provisions, saying they failed to ensure that foreign investors would not be granted sweeping protections that US companies do not have access to. In a joint letter, 12 major environmental groups including Greenpeace, Friends of the Earth, and the Center for International Environmental Law said the bill failed to promote environmental stewardship and guard against the weakening of environmental standards (see http://www.ciel.org/Tae/Fast_Track_29Jul02.html). "[The TPA bill] fails to provide adequate protection for Multilateral Environmental Agreements, and provides only minimal assistance to help other countries improve their environmental standards," the letter said.
Labour
Strong Senate language on labour standards, which would have directed the US to seek commitments from other countries to bring their child labour laws into line with international standards, was also watered down. The final TPA bill instead instructs US negotiators to seek commitments from trading partners to vigorously enforce their own existing legislation prohibiting the worst forms of child labour.
The bill number is H.R. 3009, available online at: http://thomas.loc.gov/.
ICTSD reporting; "US trade bill passes House, moves to Senate," REUTERS, 27 July 2002; "Bush wins vote fast-track trade bill," FINANCIAL TIMES, 28 July 2002; "US senate leaders expect final trade vote this week," DOW JONES, 31 July 2002; "Senate delivers trade bill victory to Bush," REUTERS, 1 August 2002.