Dominican Republic-Central America-United States Free Trade Agreement Implementation Act

DOMINICAN REPUBLIC-CENTRAL AMERICA-UNITED STATES FREE TRADE AGREEMENT IMPLEMENTATION ACT

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Mr. GRASSLEY. Mr. President, before I begin my remarks I want to thank the Senator from Montana, the ranking Democrat on the committee, and the former chairman of the committee for his cooperation and good-faith effort to have the Senate and our committee work to get its job done. Even though he has a different view on this legislation than I do, he has been very cooperative in helping things happen, even though he disagreed. I think it is that spirit that gets things done in the Senate. It is kind of the tradition of our committee, but I think it is particularly true of his and my working relationship. So I thank him very much.

Mr. BAUCUS. Mr. President, I must respond to that gracious statement by my good friend from Iowa. No member of this body can be more blessed to have a partner to work with in such cooperation and good spirit than I. I am lucky--more importantly the Senate is lucky--to have the chairman of the Finance Committee. He is a wonderful person to work with. We work very closely together. We are a real team and we think that our States are better for it. We also think that the country is better served as well.

For whatever reason, whether it is true or not, I want to very much give my utmost thanks and compliments to the senior Senator from Iowa.

Mr. GRASSLEY. I thank the Senator. Following on the spirit of the statement that he made and probably not directly germane to this discussion, though, is also the fact that too often the public draws conclusions that all we do is have partisan fights, Republican and Democrat, and that we are always at each other's throats.

I think people, including my constituents in Iowa, get that view because conflict makes news. They never hear of the cooperative efforts that we have made.

In fact, the very week this bill was voted out of committee, we had some differences that were not entirely partisan. There were some Republicans who agreed with Senator Baucus and some Democrats who agreed with me on this bill. It was a very narrow margin in our committee. But that very same week we voted out a bipartisan Energy bill on a 20-to-0 vote, which shows one gets a lot of attention and the other one doesn't. But I think it shows you can have differences and still make the system work.

As you would expect, I have talked about this legislation over a long period of time. I am glad we are to the point of the Senate consideration of it, so it is no surprise to you or anybody else that I support what is referred to as the Dominican Republic-Central America-United States Free Trade Agreement Implementation Act. I am just going to shortly call that the Central American Free Trade Agreement or CAFTA for short.

The bill before us, then, implements the trade agreement that was negotiated between our executive branch and the leaders of these five countries over the past several months. Our President gets the authority to negotiate through what we call the trade promotion authority legislation, where Congress has the constitutional control over international trade; it is our constitutional responsibility. But since it is impossible for 535 Members of Congress to negotiate legislation, we delegate, under strict procedures, the President making those negotiations. These negotiations went on for several months, maybe even over a period longer than a year, and was signed a year ago.

Congress then has the responsibility of considering it. In most cases, we end up agreeing to it, but we pass these free-trade agreements--whether they are bilateral, multilateral or regional--in the form of legislation, so Congress has control over the final product and implements our constitutional responsibility through the agreements being passed by Congress in the form of legislation.

That is where we are now: The Senate's final consideration of adopting a law that includes the contents of the negotiated agreement between the United States and these five countries of Central America.

This agreement strengthens the ties of friendship, cooperation, and economic growth between our Nation and the growing economies of Central America and the Dominican Republic. It is also an agreement that is fundamentally in our national economic and security interests. If it were not in our national economic and security interests, obviously we would have no business having our President negotiate it. Or if it were not in our interests and he did negotiate it, the Congress should not be passing it as law.

Today, when it comes to the economic interests that we have with this legislation, most imports from the region enter our market duty free. They come from those countries into our market duty free. In contrast, exports from the United States to those countries face a myriad of tariffs and nontariff barriers in the region. That is where we are now. That is the status quo.

I have a chart here that obviously is not going to contain every product. I am not going to have on the chart every product that goes back and forth between our countries. But this chart illustrates, on this side where you see various products--let's say just on grains. I will just go to the first line. We pay now a 10.6-percent tariff to get our products into these countries. If those countries were shipping the same product to us, they would be paying zero tariffs.

Now, with this agreement before the Senate that we are considering, when it is fully implemented--because some of these are phased in--you will see that we will not have any tariffs that we now pay for getting our products into the countries. And of course it has not changed anything for them.

But this chart shows, if we do not do anything, what the status quo is. The status quo is on that side of the chart. It is kind of a one-way street. All the advantages are from products coming from Central America into America. All of the impediments are against products going from the United States down to those countries. So on this side of the chart, after the legislation is passed, you see a two-way street. You see the status quo has ended.

Let's be clear. A vote against this agreement is a vote for the status quo. It is a vote to maintain unilateral trade and to keep tariff barriers to our exports very high. I could say this another way by saying that the ``F'' in Central American Free Trade Agreement, the ``F'' in CAFTA, once we pass it, is really going to make it a Central American Fair Trade Agreement.

You can see what is unfair to American producers now. What is very unfair to American producers now, shipping to those countries down there, becomes a level playing field. It becomes a fair agreement, a fair, level playing field.

A vote against this agreement is a vote that denies logic. Make no mistake, these tariff barriers to our exports are real. They affect everyday Americans, maybe not in a way that they know, but when you study it, you see how it impacts them.

Under the status quo, an off-road loader manufactured by Caterpillar in Peoria and exported to Costa Rica must pay a 14-percent tariff. This is equal to a $140,000 tax on our export. With CAFTA, the tariff goes to zero--not tomorrow, but immediately. This is good news then for those UAW workers at Caterpillar, in Peoria, who make this vehicle within the United States.

On another example under the status quo is microchips produced in New Mexico and/or Oregon face a 10-percent tariff today. With this Central American Free Trade Agreement this tariff barrier is eliminated.

Under the status quo, manufactured auto parts cannot even sell in the Central American market. You don't get them in. It isn't a question of how high is the tariff; you can't get them into the market. Under CAFTA, we will be able to export these manufactured goods to the Central American market. So this means new opportunities for companies such as CARDONE Industries and their workers in Philadelphia, PA.

Under the status quo--in other words, if we didn't pass this agreement--DVDs produced across the country would be subject to tariffs of up to 20 percent before they can be sold to consumers in Central America. But with this agreement becoming law, those DVDs become tariff free, leveling the playing field, being fair to workers in America.

The story is very similar for products that I am very much involved in, in my State of Iowa, products from U.S. farms. Today, over 99 percent of the food and agricultural products that we import from the region of Central America come into the United States duty free, as evidenced by the zeroes there on the second column. Meanwhile, our food and agricultural exports to Central America are hit with an average 11-percent tariff, with some tariffs ranging as high as 150 percent.

CAFTA levels the playing field for U.S. farmers. It takes one-way trade and makes that one-way trade into a two-way street. It tears down unfair barriers to our agricultural exports. It gives our farmers a chance to compete in a growing and vibrant market of 40 million consumers.

If anybody thinks that globalization is bad, do you know what they are saying? They are saying that the United States ought to concentrate on selling to Americans. We make up 5 percent of the world's population; 95 percent of the world's population is outside the United States. That is a market that we need to be competing in. We are an exporting nation--agriculture, manufacturing, services. If we are an exporting Nation and our market is 95 percent of the people in the rest of the world, we have to be playing on that field. This gives us an opportunity to play on that field, not with all the other 95 percent of the people in the world, but at least with 40 million of those consumers who live in these five countries.

These barriers I have just referred to are real for our U.S. farmers. Pork producers in my home State of Iowa face import tariffs from 15 percent to 40 percent. When we have full implementation of this agreement, Iowa producers will be able to export pork products duty and quota free.

Today, rice producers from across the South must overcome in-quota tariff rates of from 15 percent to 60 percent. These tariffs are phased out and eventually eliminated under this agreement.

Prohibitive tariffs of up to 40 percent lock our beef exports out of the Central American market. This agreement provides immediate duty-free, quota-free access for high-quality U.S. beef, with eventual elimination of all tariffs on U.S. beef. And value-added agricultural products, such as breakfast cereal, will see tariffs reduced from 32 percent to zero immediately, providing new opportunities for U.S. workers.

The fact is, virtually every major agricultural producer in the country, in the United States, will benefit from the passage of this agreement, including dairy, Vermont; poultry, Arkansas; apples, Oregon and New York; barley, Montana; frozen french fries, Maine; nuts, New Mexico; dried beans, Wyoming.

All in all, the total given to us by economists at the American Farm Bureau Federation is an estimated net gain to U.S. agriculture of nearly $1.5 billion each year upon full implementation.

The agreement also opens the services market to U.S. service exports. Key sector opportunities include telecommunications, banking, insurance distribution, audiovisual and entertainment, energy, transport and construction.

Our high-tech sector stands to benefit; the Dominican Republic, Guatemala, Honduras, Costa Rica, and El Salvador will join the agreement and eliminate tariffs on imports of high-technology products, thereby saving United States exporters more than $7 million annually on import duties that would be paid today.

The agreement goes far beyond reducing important tariffs, putting into place strong investment protections, anticorruption provisions, intellectual property protections, strong provisions on labor in the environment. This agreement is a solid win for the U.S. economy. It is a solid win also for the neighbors of these Central American countries.

For a third time, I say, let's be very clear. The alternative to this agreement is nothing but the continuation of the status quo. It is unilateral access to our markets and nothing in return for American exports. I don't think the status quo is good enough for our farmers and our workers. I don't think Congress should vote to keep barriers to our exports to these countries high when they can be eliminated. This is what this vote on the Central American Fair Trade Agreement is all about. It all boils down to a vote for unilateral trade and the status quo or a vote to reduce barriers for our farmers and workers. To me it is a very simple answer. Get this agreement passed as fast as we can and bring this level playing field for our farmers, our service industries, our manufacturers.

Too often, we talk in economic terms about trade. There are other compelling reasons to support this agreement. Over 20 years ago, Congress first opened our markets to products from Central America and the Caribbean. Why did we do that? That part of the world was in turmoil. Central America was a region in great political and economic upheaval. Civil strife, civil war, and political violence were part of daily life. As a result, too many innocent people lost their lives and many more lost their livelihood.

I have a chart of headlines accurately reflecting that gruesome and chaotic violence that was going on at that time. Whether it was Nicaragua, Honduras, or El Salvador, it was constant conflict. The headlines accurately reflect that violence.

So where are we 20 years later? We see a very different Central America. Through sustained political and economic engagement with the region, including the continuation of the unilateral trade preferences for over 20 years, the United States of America has helped this part of the world develop a very different story today. Today, that story is that with progressive leadership of these democratic governments, the people of Central America are enjoying the fruits of freedom, the fruits of democracy that we would describe as elected governments, participatory democracy, choice for the voters, and, as a result, generally stable civil societies.

Now we have this situation in Central America. These leaders, who many of us have had an opportunity to meet with, have given us confidence that this sort of leadership will continue in the future, but these leaders want more for their country. They want to cement the gains of the last 20 years since the civil wars have ended. They want to build a better foundation for that future. Part of that better foundation is the progressive ideas that are articulated in the CAFTA agreement. These ideas came not from the United States but from the leaders of Central America who first approached us with the idea of strengthening our trade relations at the Quebec Summit of the Americas in April 2001.

The fact is that passage of CAFTA is good both for our geopolitical and economic interests. We have very little to lose. We have much to gain with its passage. In contrast, we have much to lose and we have little to gain if this agreement is defeated.

I have a letter displayed from President Carter. He makes the point I just made very well. In that letter he recently wrote, saying through CAFTA:

Our own national security and hemispheric influence will be improved with enhanced, improved stability, democracy and development in our poor fragile neighbors in Central America and the Caribbean.

Continuing from President Carter:

There are now democratically elected governments in each of the countries covered by CAFTA. In negotiating this agreement, the Presidents of the six nations had to contend with their own companies that fear competition with United States firms. They have put their credibility on the line, not only with this trade agreement but more broadly by promoting market reforms that have been urged for decades by United States presidents of both parties. If the U.S. Congress were to turn its back on CAFTA, it would undercut these fragile democracies, compel them to retreat to protectionism, and make it harder for them to cooperate with the United States.

The stakes are high. President Carter, being a President with a global view, saying the stakes are high, lends a great deal of credibility in a bipartisan way--he is a Democrat, I am a Republican--to the reasons and rationale behind this. That going beyond the economics of trade to the good that comes from trade.

I often say during debates on trade in this body we as political leaders, as Senators, our President of the United States, the Cabinet, our diplomatic corps, we always think we are negotiating all these things, we are making decisions that are going to bring about world peace.

Obviously, we set a standard or at least create an environment for either a peaceful society or a less peaceful society to exist. Our efforts are a spit in the ocean compared to what business men and women in America and other countries do in millions of transactions and the dialog they have in the process, breaking down, misunderstanding, creating friendship through what they do at their level, their citizen level of participating much more so than we can.

The things that are evidenced by our trade agreements over the last 50 years--and this is a little part of this 50-year effort to promote international commerce--have set a stage where business and commerce is doing more to bring about world peace than we as political leaders can do.

The United States, I suppose, has about 300 million people now; 40 million people down there. It is a small part of the world.

How do you make progress in peace? You make progress in peace by inches, not by miles. This may be a couple inches of helping us down the path to world peace, but we need to take every opportunity we can to encourage commerce. Yes, it creates jobs. It creates prosperity. It is also going to help bring about greater world understanding.

This is a very good agreement. I hope it receives very broad support in the Senate. I hope through my views I have helped colleagues understand the importance of it. I hope those colleagues will join me to ensure that we do not undermine the significant progress that has been made in this region of Central America over the last 20 years and to ensure our American exporters can enjoy the benefits of this agreement.

I suggest the absence of a quorum.

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