Chile and Singapore Trade Agreements

Mr. GRASSLEY. Mr. President, I rise in strong support of these two trade bills.

The Chile and Singapore trade agreements are state-of-the-art agreements that will provide real economic and strategic benefits to America's workers, farmers, consumers and industry.

S. 1416, the U.S.-Chile Free Trade Agreement Implementation Act, implements into law our first bilateral free trade agreement with a South American country. And I think it is appropriate that Chile be one of the first.

Chile's open economy is a model for much of Latin America. Because of its free market philosophy, Chile is one of the fastest growing economies in the world. Over the past decade it has established itself not only as a strong democracy, but also as a leading advocate of free trade.

Chile already has trade agreements with sixteen other countries, including Mexico, Canada, Mercosur, and the European Union. As a result, its trade with these economies has grown while the U.S. share of Chilean imports has dropped over 30 percent between 1998 and 2002. Years of delay in reaching a free trade agreement with Chile has reportedly cost U.S. companies over $1 billion in lost export potential. Clearly, it is time for us to get back in the game.

I also want to note how pleased I am about the strong agriculture market access provisions found in the U.S.-Chile FTA. More than three-quarters of U.S. farm goods exported to Chile will be duty free within 4 years of the agreement's implementation. Immediate elimination of tariffs on U.S. products will provide up-front gains to U.S. exporters and, importantly, will level the playing field for our farmers, ranchers and workers as they compete with products from the EU and Canada. These provisions are complemented by the removal of unnecessary sanitary and phytosanitary barriers to U.S. agriculture exports.

But this agreement doesn't just benefit U.S. agriculture. It also provides groundbreaking market access across the board. The agreement will immediately eliminate tariffs on more than 85 percent of all U.S. goods, with most of the remaining tariffs eliminated within four years.

The U.S.-Chile FTA also opens new opportunities for U.S. banks, insurance, and telecommunications services. It provides new protections for U.S. investors and high levels of intellectual property rights protection. The U.S.-Chile FTA can also strengthen momentum in the ongoing negotiations to create a Free Trade Area of the Americas. In short, the agreement vastly enhances our economic opportunities in a growing and important region of the world.

S. 1417, the U.S.-Singapore Free Trade Agreement Implementation Act, implements into law our first free-trade agreement with an Asian Pacific nation. Singapore is our largest trading partner in Southeast Asia and our twelfth largest in the world. Singapore is also a strong ally in the war against terrorism.

The U.S.-Singapore FTA is good for America. It opens up new markets and creates new opportunities for many sectors of our economy.

This FTA will guarantee fair and non-discriminatory treatment for U.S. services firms. This benefits our service industries, such as banking, insurance and the telecommunication industries.

The agreement also includes state-of-the-art provisions on e-commerce, transparency and competition, and strong intellectual property rights protection. This agreement continues our goal toward greater trade liberalization and higher standards, not only in the Pacific, but throughout the world.

Both agreements we are discussing today are the first to be considered under Trade Promotion Authority, or TPA, procedures. This is the first time in our history that the Senate has approved two free trade agreements in a single day. The fact that we were able to achieve this goal is a testament not only to the high quality of these agreements, but also to the power of Trade Promotion Authority.

It was almost a year ago today that the House and Senate gave final approval to the conference report for the Trade Act of 2002. This historic piece of legislation empowered the President, for the first time in almost a decade, to negotiate free trade agreements utilizing Trade Promotion Authority procedures. Today, with the passage of these two agreements, we are using TPA to take some of our first steps toward reengaging the world through international trade. It is a welcome development.

A fundamental part of TPA procedures is consultations. The TPA act requires that the Administration consult closely with Congress throughout the negotiating process. I know the Bush administration took these consultation requirements to heart. A number of modifications to the agreements and to the implementing legislation were adopted as a result of these procedures. That is the way the process is supposed to work—a partnership between the Congressional and executive branch to craft the best trade agreements for the American people.

Like any partnership, the more you put into it, the more you get out of it. I am disappointed that some of my colleagues who did not engage on these agreements early in the process are now complaining about some of the provisions they contain. I hope we can avoid similar problems as we work on future agreements.

Without Trade Promotion Authority, the United States fell behind on trade. But now we are back on track. The goal of TPA is to knock down barriers to trade and allow U.S. companies to compete on a level playing field around the world. These two agreements achieve that goal and more. I strongly urge my colleagues to join with me today and vote to approve these two solid agreements.

Mr. President, at this time I wish to highlight a number of the ways in which we stand to benefit from the United States-Chile Free Trade Agreement and the United States-Singapore Free Trade Agreement. I have spoken previously on how our farmers will benefit from improved market access for our agricultural exports as a result of these agreements. I want to elaborate on the benefits to agriculture, particularly with respect to sanitary and phytosanitary measures. I also want to take a moment to focus on some of the other benefits of these agreements, specifically the benefits of the telecommunications, services, and intellectual property provisions in the agreements, as well as the benefits for U.S. exporters of manufactured goods. Finally, I want to clarify how the short supply mechanisms for textiles will operate in these agreements.

With respect to agriculture, the agreement with Singapore commits Singapore to maintain its current open market for the importation of farm products from the United States, while the Agreement with Chile removes numerous barriers that previously limited U.S. exports of agricultural goods to that country. Chilean tariffs on 75 percent of U.S. agricultural products will go to zero within four years. These products include soybeans, corn, pork, and beef, all of which are major Iowa commodities.

Chile is committed to removing its price band on edible vegetable oils, wheat, wheat flour, and sugar under the FTA. Chile used its price band mechanism to protect its domestic producers of these products by keeping domestic prices within a predetermined range through the use of additional duties. As recently as 2000, this price band caused effective tariffs on wheat imported into Chile to rise as high as 90 percent. With the implementation of the agreement, Chile will eliminate its price band mechanism with respect to U.S. exports over a 12 year period.

U.S. agriculture will benefit in yet other ways under the Chile agreement. For example, up until now, the failure of Chile to recognize U.S. beef grading programs effectively blocked U.S. beef in consumer cuts from entering the Chilean market. This situation will change with the implementation of the agreement, as Chile is committed to recognize the equivalency of U.S. beef grading programs.

As a result of talks held in conjunction with negotiations of the free-trade agreement, Chile agreed to remove various non-science based barriers to imports of U.S. agricultural products. Of particular interest to Iowa's hog and cattle producers, Chile agreed to recognize the equivalency of the U.S. meat inspection system. Prior to this decision, Chile prohibited the importation of pork, beef, and lamb from U.S. facilities unless those facilities paid for Chilean inspectors to travel to the United States to inspect and certify them. Given the costs involved with this process, few U.S. plants were eligible to export meat to Chile.

With Chile's new meat inspection equivalency policy, and with duties going to zero under the agreement, barriers to the entry of U.S. pork, beef, and lamb into Chile will be removed. Following further review of its sanitary and phytosanitary, SPS, measures in conjunction with talks with the United States, Chile also agreed to permit the importation of grapefruit from Florida and cherries and stonefruit from California.

Achieving the removal of unjustified SPS measures through talks with Chile demonstrates that enhancing our trade relations with other countries can indeed provide the impetus for our trading partners to remove non-science based barriers to imports of U.S. agricultural products. Our experience with Chile creates an important precedent for other trade agreements the United States is negotiating, such as the Australia FTA, the Central America FTA, and the Free Trade Area of the Americas. The fact is, without the removal of scientifically unfounded barriers to trade, duty-free treatment under future trade agreements will mean little. I'm pleased that talks with Chile led to the lifting of these unjustified SPS measures.

With respect to telecommunications, these agreements introduce an important new concept on flexibility of choice and technology neutrality. Under Article 13.14 of the agreement with Chile, and Article 9.13 of the agreement with Singapore, Chile and Singapore will endeavor to not prevent suppliers of public telecommunications services from having the flexibility to choose the technologies that they use to supply their services, including commercial mobile wireless services. This technology neutral approach to the regulation of commercial wireless mobile services is consistent with the practices of the U.S. Federal Communications Commission, FCC, which neither promote nor impede the use of particular wireless technologies in the U.S. market.

These provisions constitute an important first step. They introduce a key regulatory concept into free trade negotiations that can help to enhance competition and consumer choice. These provisions can also create export opportunities for U.S. manufacturers of communications equipment and thereby preserve U.S. jobs that depend on trade in technology products.

However, I view these provisions as only a first step because they are non-binding commitments. As such, they should be viewed as a floor, and not a ceiling, on standards for future free trade agreements. Going forward, we should strive to negotiate binding and enforceable commitments in our free trade agreements, to ensure that suppliers of commercial mobile wireless communications services are not prevented by governmental action from using the technology of their choosing to provide such services. Only then will we guarantee that U.S. technology suppliers enjoy market opportunities and benefits similar to those that foreign suppliers receive in the U.S. market.

Services are another critical component of our economy. Services now account for 65 percent of the U.S. economy, and 28 percent of the value of our exports. With respect to services, the agreements establish an important precedent by adopting a comprehensive "negative list" approach, whereby any exception to the liberalization obligations contained in the agreements must be specified. This broad approach is preferable to that contained in the WTO General Agreement on Trade in Services GATS, whereby countries specify their commitments rather than exceptions. The negative list approach means more obligations for Chile and Singapore to liberalize their services exports and more jobs right here in the United States. The agreements also broaden commitments, so that they apply to government-owned or government-controlled enterprises.

With respect to intellectual property protection, these agreements generally set out among the highest standards of protection and enforcement for copyrights and other intellectual property yet to be achieved in a bilateral or multilateral trade agreement. These protections will permit the growth of trade in digital technologies and products while still protecting the legitimate rights of copyright owners. Strong enforcement provisions require the application of criminal procedures and penalties in cases of trademark counterfeiting or copyright piracy on a commercial scale, and both Chile and Singapore commit to seize, forfeit, and destroy counterfeit and pirated goods and the equipment used to produce them. These protections will apply to goods-in-transit and mandate both statutory and actual damages under Chilean and Singaporean law for intellectual property rights violations.

The agreements also incorporate a principle of "first in time, first in right" to trademarks, whereby the first to file for a trademark is granted the exclusive right to that name, phrase, or geographical place name. This approach creates an important precedent that we should seek to replicate regionally and globally, particularly in the face of efforts by the European Union to unduly expand protections for geographical indications in the WTO.

With respect to manufactured goods, Chile's commitment to eliminate tariffs immediately on 85 percent of U.S. exports, including such key sectors as computers and other information technology products, provides immediate benefits to U.S. manufacturers. By entering into this agreement, Chile will embrace the duty reduction commitments reflected in the 1996 Information Technology Agreement. These commitments can create new export opportunities for our manufacturers, which is critical in this period of increasing unemployment.

The National Association of Manufacturers has estimated that the absence of a free trade agreement with Chile has cost us about 20,000 job opportunities annually, and over $1 billion dollars in export potential. Well, that's about to change with the implementation of this agreement. And that is just the start. We need to aggressively pursue additional free trade agreements that will expand market access opportunities for our farmers and our manufacturers, to help add jobs to our economy and reverse the current trend in unemployment.

Finally, I note that the Finance Committee has received inquiries regarding the textile commercial availability provisions in the Chile and Singapore Agreements. I asked the Office of the United States Trade Representative to clarify the operation of the short supply provisions in these agreements, and I want to share that clarification today.

All products designated as not commerically available prior to November 2002 under the African Growth and Opportunity Act, AGOA, and Caribbean Basin Trade Partnership Act, CBTPA, preference programs would be deemed as not commercially available under the Singapore agreement. The Chile agreement does not incorporate such a provision. In the future, for both the Chile and Singapore agreements, to designate an item as not commerically available would require consultations under the provisions for revision of the rules of origin contained in each agreement. These provisions require the parties to consult, upon request, to consider whether particular goods should be subject to different rules of origin to address issues of availability of the supply for fibers, yarns, or fabrics in the free trade area, and require the parties to endeavor to conclude their consultations within 60 days. I hope that this clarification proves helpful.

In sum, I strongly support the Chile and Singapore free-trade agreements. I support them because they open markets for U.S. exports of agricultural products and manufactured goods. I support them because they open markets for U.S. exports of a wide array of services. I support them because they will create opportunities for job growth here in the United States. I support them because they enhance protections for intellectual property rights holders here in the United States. And I support them because they establish important precedents for future negotiations. For these reasons, I urge each of my colleagues to support the implementing bills before us today.

Mr. President, I rise to address the benefits to U.S. agriculture from the United States-Chile Free-Trade Agreement. U.S. agriculture needs trade agreements to expand sales and farm incomes. Since 96 percent of the world's population resides outside the United States, access to foreign markets is essential for the continued growth and viability of U.S. agriculture. Bilateral agreements such as the Chile FTA are essential because they provide strong benefits to U.S. farmers.

This agreement will provide America's farmers and ranchers new access to Chile's market of 15 million consumers. This agreement is comprehensive, calling for eventual duty-free, quota-free access for all products.

On tariffs, more than three-quarters of U.S. farm goods exported to Chile will be duty free within 4 years of the agreement's implementation. Let me just name some of the specific U.S. products that will benefit. Under the FTA, Chile will provide immediate duty-free access for soybeans and pork, two major Iowa products. Chile will also immediately eliminate its tariffs on U.S. apples, pears, cherries, breakfast cereals, pasta, and bread. Corn grown in Iowa and other States will receive duty-free treatment in 2 years. The agreement provides for duty-free access for beef offal immediately, and for all U.S. beef products within 4 years.

Under the FTA, Chile commits to recognize U.S. beef grading programs. I should note as well that, through talks held in conjunction with the FTA negotiations, Chile agreed to recognize the equivalency of the U.S. meat inspection system. Chile's recognition of the equivalency of U.S. meat inspections and U.S. beef grading should greatly facilitate the export of U.S. pork and beef to Chile.

Chile's price band mechanism has been a major concern to many U.S. agricultural exporters. Well, under this agreement Chile will not only allow U.S. exports of durum wheat and pasta to enter duty free, but will also eliminate its price band mechanism for common wheat and flour in 12 years. This will open Chile's market to U.S. exporters for wheat and wheat flour.

American agriculture recognizes a good deal when it sees one. Let me read an excerpt from a July 9 letter from 32 agriculture organizations:

Mr. Majority Leader, the undersigned organizations urge your support and vote for the Free Trade Agreement with Chile. The U.S.-Chile FTA, provides new market opportunities for U.S. agriculture products and resolution to outstanding trade concerns that U.S. producers have experienced with Chile.

And the letter is signed by such groups as the American Farm Bureau, the American Soybean Association, the National Corn Growers Association, the National Pork Producers Council, and many, many others.

This is a strong agreement for American agriculture. It sets a new standard for what we can achieve for American agriculture in a free-trade agreement. I urge my colleagues to do the right thing for American agriculture and support this strong trade agreement.

I yield the floor.