United States-Oman Free Trade Agreement Implementation Act

UNITED STATES-OMAN FREE TRADE AGREEMENT IMPLEMENTATION ACT -- (Senate - June 29, 2006)

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Mr. GRASSLEY. Mr. President, before I speak to the issue of the Oman Free Trade Agreement, I wish to take advantage of the opportunity to remind the public that trade agreements are not treaties, as we usually think of treaties, with just the Senate approving treaties with a two-thirds vote and the House of Representatives having nothing to do with a treaty. A free-trade agreement is negotiated by the President but must be approved by both Houses of Congress the same way that legislation is passed, except it is done under a time agreement under law with the idea that the agreement will be voted up or down and not amended.

But when the dust settles, it is the law of our land, just like any other law that Congress would pass.

Taking that into consideration then, the rationale behind that is the fact that the Constitution gives the Congress of the United States, as one of its specific 17 powers, the power to regulate interstate and foreign commerce. A free-trade agreement is foreign commerce. Congress has the authority completely--no questions asked--about what our trade laws are going to be.

Until the 1930s, for the most part, Congress passed those pieces of legislation, and that was the law after the President signed them. But starting in the 1930s, Congress would, to a greater extent or lesser extent from time to time, give the President the authority to negotiate certain agreements, and then Congress would approve them.

Since World War II, we have had a regime for 45 years that we called the General Agreement of Tariffs and Trades. Since about 1993, it has been referred to as the World Trade Organization, or WTO.

In not exactly the same way, but from time to time, Congress, in order to negotiate agreements since World War II, has extended authority to the President to negotiate those agreements, not because Congress wanted to give up any congressional authority as the Constitution prescribes over foreign trade, but, as a practical matter, if you are going to negotiate with another country, rather than unilaterally setting policy, Congress, as a body of 535 people, can't negotiate with another country or, for sure, with the World Trade Organization that has 149 members very efficiently, and never even tried. So from time to time we have negotiated--or we have delegated--to the President of the United States, under strict guidelines, the authority to negotiate for Congress with an understanding that--well, under the Constitution with the practical end result that it has to be passed by the Congress of the United States by a majority vote in both Houses to become the law of the land.

Congress doesn't just willy-nilly say to the President: You negotiate any sort of an agreement you want. In the basic law, there are some stipulations--not very many but some--but, more importantly, for the Congress to preserve its power and not give the President of the United States free reign. We have a consultation process within what we now call Trade Promotion Authority where, during the process of negotiating multilaterally under the World Trade Organization, or negotiating bilaterally with another country, that the President and his negotiators would come to Congress whenever we would invite them, or even on their own initiative, and sit down and talk, sometimes in informal sessions, sometimes in regular committee meetings, to find out how the negotiations are going and what the problems are.

But the most important thing is for that negotiator and that agency to hear what Congress says needs to be done, what our input is, with the idea that if they don't negotiate something that Congress can pass, what good is doing the negotiation? So that consultation process is very important.

Now, sometimes I feel that there has not been enough consultation, and because I am chairman of the committee that has jurisdiction over that, sometimes I can legitimately claim fault for not having enough consultation, although we have considerable. And any members of the committee should likewise--the other 19 members of the committee should likewise feel that if there is not enough consultation, then maybe they have not been forward enough in preserving the constitutional power of the Congress and the specific authority of our committee to make that consultation happen.

Now, what sometimes happens--maybe every time--in bringing a Free Trade Agreement before our committee before it comes to the floor, there is an outburst on both sides of the aisle about not having consulted enough and that the process might be a sham. Well, the extent to which people feel that is the situation, then I guess I plead with myself as chairman of the committee, I plead with members of the committee, that we need to make more specific requests of the administration to come and talk to us about these agreements.

That can be going on right now in regard to the Doha round of negotiations that are going on between the United States as part of the World Trade Organization involving another 148 countries, or it can be going on right now anytime the committee members want it to happen in our process of negotiations with Thailand bilaterally, South Korea bilaterally, Egypt bilaterally, and there are other countries as well.

So I hope that each one of us in Congress feels that we are adequately safeguarding our constitutional authority. But I hope nobody lives in the wonderland that somehow Congress ought to be negotiating directly with these other countries because we don't have that capability or the time. But we ought to make sure that we don't compromise one iota the constitutional power that we have been given and that we have to cherish and protect.

I rise in strong support of the United States-Oman Free Trade Agreement. The agreement will help cement our ties with a strong ally in the Middle East. It will contribute to greater economic opportunity and prosperity in the region. It will serve as a strong model for other economies in the region, and it will create new market access openings for farmers, manufacturers, and service providers in the United States. So I urge my colleagues to support the agreement in a strong bipartisan fashion.

We have enjoyed beneficial relations with Oman for nearly 200 years. In 1833, Oman was one of the first Arab states to sign a Treaty of Amity and Commerce with the United States. It was also the first Arab country to send an ambassador to our country. Our agreement with Oman is the fifth trade agreement that we concluded with a country in the Middle East.

It brings us one step closer to our President's vision of having a Middle East free trade area by 2013. The President's goal is very simply the same as every other free-trade agreement: to foster economic growth. But it isn't just an economic issue. It has something to do with promoting democracy, and millions of people every day doing business agreements around the world is going to do more for world peace than what we who are elected and our diplomats can do. So you ought to see a free-trade agreement not only economically in our interests, but promoting moral principles of democracy and peace through enhanced commercial ties with the world generally; in this case, to a greater extent with the Middle East.

The fact is, open economies that are actively engaged in international commerce tend to grow at much higher rates than closed economies, and that translates into greater economic opportunity. So a free trade area is in the best interests of the people of the Middle East, and it is in our best interests as well, but it is also in the interests of stabilizing that area and having peaceful relations and greater peace around the world.

This agreement enjoys strong support in the business community and in the agricultural community. It has been endorsed by a number of groups. I can't name them all, but I think it is important to note that the American Farm Bureau Federation, the American Chemistry Council, the Association of Equipment Manufacturers, the National Foreign Trade Council, and the U.S.-Middle East Free Trade Coalition are among those of over 110 companies and associations supporting trade expansion in the Middle East, including this agreement.

These groups recognize that this is a commercially meaningful agreement that is leveling the playing field for U.S. businesses. In the United States, Omani products already receive a substantial market access, with most duties ranging from zero to 5 percent. Without this agreement, U.S. exports won't have a level playing field, and haven't up until now had a level playing field, because they would continue to face those steep tariffs that Oman now has and will be giving up with this agreement.

While the economic effect of the agreement may be small in total world trade, it will certainly be possible. Upon entering into force--in other words, when it becomes the law of our land--this agreement will have Oman grant immediate, duty-free entry to virtually all U.S. industrial and consumer products. As examples, in agriculture, 87 percent of Oman's tariff lines will go to zero for U.S. agricultural exports on day one of the agreement and the remaining tariffs will be phased out over 10 years. U.S. service providers will also receive substantial improvement in market access. I have constituents who are interested in seeing this agreement implemented, and I expect many of my colleagues do as well.

I will give you just a few examples. A small business located in Cedar Rapids, IA, Midamar Corporation, will benefit from new opportunities and low costs for specialty food exports that are specifically processed for Muslim diets. The HNI Corporation in Muscatine, the second largest manufacturer of office furniture in North America, will benefit. It has a fast-growing market in the Middle East. HNI expects to forge new business ties in Oman once the agreement enters into force.

Another company is Lennox in Marshalltown, IA, manufacturing heating and cooling products. This agreement will promote increased exports for Lennox.

In sum, I expect this agreement will have a real and positive impact for my constituents in Iowa, preserving or establishing good-paying jobs, because exporting jobs pay 15 percent above the national average, and if it does that in the State of Iowa, it will be the same across the United States.

In addition to pointing out the benefits of the agreement, I would respond to just a few criticisms. Some are alleging that this agreement will provide foreign port operators an absolute right to establish and acquire operations to run port facilities in the United States. That is just plain wrong.

The truth is, nothing in our agreement with Oman diminishes our right to determine for ourselves whether to block or unwind any foreign investment in the United States when the protection of essential security interests are at stake.

That includes any potential investment in land or site aspects of port activity in the United States. So our ability to advance our national security and promote it and protect it as we see fit remains fully protected under this agreement.

Separately, some colleagues have been critical of the process by which this agreement has come before the Senate. In this respect, I am repetitive of how I opened my remarks. In other words, I want to make it clear that this has received substantial consideration by the Congress of the United States. We concluded our negotiations with Oman on October 13, 2005, with 7 months at the negotiating table and opportunities for Congress to be consulted during that period of time. The administration did that, both at the Member and staff level, throughout negotiations. The agreement was signed January 19, this year, and our own Government's agency, called the International Trade Commission, issued its report on likely economic effects of the agreement in February of this year.

The International Trade Subcommittee of my Finance Committee held hearings on this agreement on March 6. The Finance Committee met May 18 to informally consider proposed legislation implementing this agreement--the proposal that is pretty much as we have it before our body this very minute.

During the committee's informal consideration, I introduced a chairman's modification to the proposed statement of administrative action. My modification called upon the administration to monitor and report on the Omani efforts to prohibit compulsory or coerced labor.

The administration took my modification and broadened it. The statement of administration action that accompanies the bill to the floor of the Senate this very day contains a commitment from the administration to update Congress periodically on the progress that Oman achieves in realizing all commitments made to labor law reform. I believe that is an improvement, even on my own modification. It is an example of how the process of trade promotion authority worked in this case and is a specific case of what I was trying to describe in the opening of my statement.

In sum, this is a strong trade agreement with an important ally. I urge my colleagues to enthusiastically support the implementation of legislation before the Senate.

I yield the floor under the previous unanimous consent agreement so that Senator Dorgan can have it.

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Mr. GRASSLEY. Mr. President, I want to respond to some of the points made by my colleagues today.

First, I have heard concerns that the United States-Oman Free Trade Agreement will give foreign port operators an absolute right to establish or acquire operations to run port facilities in the United States. As I explained earlier, that is just wrong. The United States clearly has the right to prohibit foreign investments in the United States that would harm our national security. Nothing in the United States-Oman Free Trade Agreement changes that.

Some of my colleagues have also expressed concerns about the process by which the bill we are considering was brought to the Senate floor. They focus on a proposed amendment adopted by the Finance Committee during its informal consideration of proposed legislation to implement our trade agreement with Oman. This amendment was offered by Senator Conrad. It was meant to withhold benefits under the agreement to products made with the benefit of forced or indentured labor. I voted for the amendment because I shared some of Senator Conrad's concerns, and I subsequently transmitted the text of the adopted amendment to the U.S. Trade Representative.

In addition to voting for the Conrad amendment, I introduced a chairman's modification to the proposed statement of administrative action which was approved by the committee. My modification called upon the administration to monitor or report on the efforts of the Government of Oman to prohibit compulsory or coerced labor.

Separately, the House Ways and Means Committee had approved the same draft implementing legislation but without approving any amendments. So we had a situation where the Finance Committee and the Ways and Means Committee sent different versions of informal nonbinding recommendations to the President. In this case the differences were limited and discrete. They were not of the type and degree that would warrant a mock conference.

The administration made the determination that existing law already precluded the legal importation of products made with forced or indentured labor. The administration therefore concluded that the Conrad amendment was not necessary or appropriate to implementation of the agreement. I received a letter from the general counsel of the Office of U.S. Trade Representative articulating the legal basis for the administration's position. I distributed this letter to all members of the Finance Committee prior to the committee's formal markup of this implementing legislation. I will ask unanimous consent that this letter be included in the record with my remarks.

I understand that some of my colleagues are upset that the proposed Conrad amendment isn't included in S. 3569. I believe that the process concerns raised by my colleagues could have been avoided if we had had more consultations by the U.S. Trade Representative with members of the Finance Committee. I am going to make it a point to see that there is better dialogue between the Finance Committee and the U.S. Trade Representative in the future. I want to see improved dialogue both during the negotiation of a trade agreements and prior to the point that the administration sends implementing legislation for a trade agreement to the Congress. I am confident that improved consultation and communication will help avoid such process concerns in the future.

With that, Mr. President, I say again that this is a very good trade agreement for both Oman and the United States. I urge my colleagues to lend their enthusiastic support to the bill before the Senate to implement this agreement.

I ask unanimous consent that the letter to which I referred be printed in the RECORD.

There being no objection, the material was ordered to be printed in the RECORD, as follows:

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Mr. GRASSLEY. With today's passage of S. 3569, the U.S.-Oman Free Trade Agreement Implementation Act, we have solidified our commercial relations with Oman, a longstanding friend and ally for over 200 years. The agreement will result in new economic opportunities for U.S. farmers, manufacturers, and service providers.

None of this would have been possible without the support of my colleagues. In particular, the Senator from Montana, ranking Democrat of the Committee on Finance, Senator Max Baucus. I want to thank Senator Baucus for his cooperation and good faith in moving this legislation through the Senate with bipartisan support. We would not be here today without his strong commitment to raising the living standards of people in the United States and abroad.

Senator Baucus's trade staff deserves recognition. The Democratic Staff Director on the Finance Committee, Russ Sullivan, and the Deputy Staff Director, Bill Dauster, worked well with my staff and provided helpful insight throughout the process. I also appreciate the efforts of Brian Pomper, Chief International Trade Counsel, as well as Demetrios Marantis, Anya Landau, Janis Lazda, and Chelsea Thomas.

I would also like to thank President Bush for his leadership. His commitment to improving the U.S. economy through increased access to foreign markets has made this agreement a reality. Oman is just one of his latest successes on this front.

The dedication of two former United States Trade Representatives, Robert Zoellick and Rob Portman, merits special thanks. Their efforts at the negotiating table produced a comprehensive, commercially-meaningful agreement. I would like to recognize the current United States Trade Representative, Susan Schwab. Ms. Schwab was confirmed in her current position after negotiations of the agreement were concluded. Her consultations with the U.S. Congress are appreciated. Her negotiating skills and experience make her well suited for future talks. I also appreciate the service and hard work of Assistant United States Trade Representative for Europe and the Middle East Shaun Donnelly.

My trade staff on the Finance Committee deserves recognition. First, my Chief Counsel and Staff Director, Kolan Davis, merits special mention. His legislative expertise has been instrumental in moving countless bills. The work of the Finance Committee's International Trade Counsel, David Johanson and Stephen Schaefer, is invaluable. Their depth of knowledge, dedication, and ability to juggle several policy issues at that same time is key in advancing the Committee's trade agenda. Their long hours are much appreciated. I would like to recognize my former Chief International Trade Counsel, Everett Eissenstat. While on my staff, he worked diligently on this agreement and others. I want also want to thank Tiffany McCullen Atwell, International Trade Policy Advisor on the Committee for her hard work that produces results behind the scenes. Claudia Bridgeford, International Trade Policy Assistant, has also contributed significantly to the Committee's work. Russ Ugone, my detailee from Customs and Border Protection, has lent us his technical expertise.

I am grateful to Justin McCarthy, Assistant United States Trade Representative for Congressional Affairs, and Andy Olson, Deputy Assistant United States Trade Representative for Congressional Affairs, for their work with Congress on the U.S-Oman Free Trade Agreement.

Finally, I would like to thank Polly Craighill of the Office of the Senate Legislative Counsel for the long hours she put into working on this legislation. Without her patience and hard work, today's vote would not have been possible.

I look forward to the signing of this legislation into law by President Bush.

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