Mr. President, today I introduce the Emergency Trade Program Extension Act of 2006. For more than 30 years, the United States has opened its vast market to developing countries through trade…
Mr. President, today I introduce the Emergency Trade Program Extension Act of 2006.
For more than 30 years, the United States has opened its vast market to developing countries through trade preference programs. We have done so to encourage greater economic development and openness in those countries. The United States is the largest market in the world. And it is also one of the most open. And this openness has played an important role in economic development, both in the United States and around the globe.
Two important preference programs are set to expire at the end of this year: the Generalized System of Preferences and the Andean Trade Preference Act.
I know that some have criticized these programs, GSP in particular, for being unnecessary, inefficient, or counterproductive. They argue that the majority of the imports that benefit from GSP come from just a handful of middle-income countries. And they argue that the truly poorest developing countries barely use the program at all. Many of the most active users of GSP--like Brazil, Thailand, Indonesia, and Argentina--have developed strong export sectors. This raises the question of whether they even need preference programs to compete on the world market.
And critics charge that big GSP beneficiary countries like India and Brazil were among the most recalcitrant in supporting greater market access in the Doha Round negotiations. They claim that the active efforts of these countries contributed to the collapse of the Round. Why, they ask, should we keep our markets open to such countries, if they will not open their markets to us?
I am not deaf to these criticisms. I think that there is much truth in them. But before we allow these important programs simply to expire, I believe that we should examine them in detail. We should explore whether and how they might be changed to address valid criticisms. We should understand the effect that canceling them might have on the U.S. image around the world, U.S. diplomatic efforts, and our trade priorities in the Doha Round and elsewhere. And we should give those in the United States who rely upon these programs an opportunity to explain how their interests might be adversely affected by cancelling GSP and ATPA.
The Office of the U.S. Trade Representative recently began a review of the GSP program to look at many of these very issues. That review will not be completed until mid-November, at the earliest. I believe that we should preserve the status quo until we in the Congress have had an opportunity to digest the outcome of that review and conduct our own analysis.
GSP is important to keeping countries engaged in the trade liberalization dialogue. For one thing, these countries are interested in maintaining benefits under the program. As a result, they are more willing to address concerns that we may raise with them. GSP- eligibility has given us leverage to address bilateral trade problems-- such as intellectual property protection--and to persuade beneficiary countries to respect international norms on labor rights, human rights, and other matters. And as they gain more experience in international markets, they can see the benefits of liberalization in action. Without GSP, those countries might see China or other big exporters take over their share of our market.
Most of the imports from GSP beneficiaries occur outside the program. U.S. imports from GSP beneficiary countries in 2005 exceeded $248 billion. Of that, less than $27 billion--less than 10 percent--entered duty-free under the GSP program.
GSP is much more important to the least developed countries. One- third of the total imports from these countries were under GSP preferences. Many of the least developed countries depend on
GSP to sell their products into the American market. They have worked hard to establish export-oriented industries, but still need the extra boost provided by GSP or other preference programs.
Some of our other preference programs target these very poor countries, including the preferences under the African Growth and Opportunity Act and the Caribbean Basin programs. But for a large number of countries--including Afghanistan, Armenia, Bangladesh, Bosnia-Herzegovina, Cambodia, and Pakistan--there are no other programs to help them compete against other exporters in the U.S. market.
GSP is also important to U.S. competitiveness. Raw materials and components for further processing make up more than two-thirds of the products imported under GSP. For example, GSP imports make up a significant percentage of U.S. total imports of leather processed after tanning--45 percent, ferroalloys--37 percent, aluminum sheets--25 percent, and copper wire--25 percent.
American retailers have taken advantage of the programs to find new products and new sources of supply. And every year, U.S. consumers save millions of dollars because of GSP duty savings.
Trade preferences for our Andean partners have helped curb the production and smuggling of drugs. Trade can encourage diversification out of drug crops, and offer an economic future to people who otherwise are easy prey for narcotraffickers. The Andean preference programs play a significant role in facilitating exports from Colombia, Peru, Ecuador and Bolivia. Almost 60 percent of exports from those countries are covered by these preferences.
Some argue that trade preferences for the Andean countries are now both unnecessary and ill-advised. They say that the preferences are unnecessary because the United States has negotiated free trade agreements with Peru and Colombia. And they say that the preferences are ill-advised in extending benefits to Bolivia and Ecuador, both of which have taken actions and made statements recently at variance with U.S. interests.
While we have negotiated free trade agreements with Peru and Colombia, neither has passed the U.S. Congress. It is far from clear that the U.S.-Peru agreement will even be considered in Congress before the Andean preference program expires at the end of this year, and there is no chance at all that the U.S.-Colombia agreement will be. We should extend the Andean preference program for these countries to avoid a lapse in benefits prior to the implementation of any free-trade agreement with them. Such a lapse would be disruptive to Peru and Colombia. And such a lapse would be disruptive to U.S. businesses, as well.
It may be that there are good arguments for ending the program with respect to Bolivia and Ecuador. But again, I believe that we should give Congress time to examine these arguments as well as any counterarguments and make a reasoned judgment about the future of the program.
That is why I am sponsoring the Emergency Trade Program Extension Act of 2006. This bill will extend both GSP and the Andean Trade Preference Act for 2 years. This is a short-term extension to allow the Congress to have hearings and consider in depth what should be done with these programs. I do not believe that we should let these programs expire without the benefit of a thorough analysis of their merits and failings.
Some may argue that this legislation is unnecessary. They may say that we can allow these programs to expire, consider them in depth next year, and then renew them retroactively if we so decide. Indeed, we have done that before. But that is very disruptive, both to U.S. businesses and the countries that rely upon these programs. The uncertainty of whether the programs will be renewed retroactively, or renewed at all, undermines the goals of encouraging investment in the beneficiary countries. So we should pass this legislation to maintain the integrity of these programs while we consider what to do with them.
This legislation also includes a 1-year extension of the third- country fabric provisions in the African Growth and Opportunity Act, or AGOA. These provisions are currently set to expire in September of next year. Those provisions allow Africa's poorest countries to import fabric from countries outside of Africa for use in their apparel industries. These third-country fabric provisions have helped create jobs in desperately poor countries like Lesotho, where one textile worker supports numerous family members. U.S. retailers looking to next year's products are making their sourcing decisions now. If they cannot be confident that Africa will continue to be able to import third- country fabric, then they will stop sourcing from Africa. And tens of thousands of jobs could be lost.
This bill is not intended as the final word on AGOA. I fully expect that the next Congress will consider a comprehensive reform of AGOA. Many worthwhile ideas have been proposed. But we do not have time to consider them before Africa will begin to feel the effects of the expiration of third-country fabric provisions next fall. We should give Africa breathing space while Congress completes its work.
The suspension of the Doha Round negotiations at the World Trade Organization has sparked a period of soul searching and debate in the trade community both here and abroad. Our trade preference programs should be part of that debate. It simply makes no sense to look at these programs in isolation from the wider discussion about the future of trade policy. And we cannot look at the future of the trading system without considering the treatment of developing countries in that system.
For all of these reasons, I am proud to sponsor the Emergency Trade Program Extension Act of 2006. I am proud to note, as well, that this bill is a companion to an identical bill introduced yesterday in the House of Representatives by my friend the ranking Democratic member of the Ways and Means Committee, Mr. Rangel. I applaud his leadership on these issues. And I look forward to working with him to get this important legislation passed into law.
