United States-Peru Trade Promotion Agreement Implementation Act

Floor Speech

UNITED STATES-PERU TRADE PROMOTION AGREEMENT IMPLEMENTATION ACT -- (Senate - December 03, 2007)

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Mr. GRASSLEY. Mr. President, this day is long overdue. But the fact that this day has arrived for the consideration of the Peru Trade Promotion Agreement Implementation Act is still a good day to have happen, even though it should have happened several months ago. In fact, I would say it should have happened last year.

But the same problems that kept it from coming up this year were in place last year. I strongly support this bill. I urge my colleagues to do the same. Over the past 7 years, Congress has passed implementing bills for trade agreements with 12 countries. Of these 12, 7 are located in Latin America.

The implementation of those agreements demonstrated our commitment to strengthening our relations with our neighbors in Latin America. We now have an opportunity to build on that commitment by implementing our trade agreement with the country of Peru.

At the same time, these agreements serve to advance our national interest. Too often we talk in terms of the economic interests of the United States when it comes to trade. We ought to be looking at things beyond the economics of trade. I say these agreements advance more than our economic interests; they advance a broader national interest because they foster transparency and increased respect for the rule of law in international business transactions.

I think it goes beyond the business transactions, because with every business transaction, there are millions of people involved. And even though we in the political world or our diplomats feel we are more important than anybody else in bringing about peaceful relations, our work is kind of a spit in the ocean compared to what millions of business people every day do for America and for other countries interacting among each other, breaking down barriers that often lead to misunderstandings and an enhanced understanding between people. They have an awful lot to do with the promotion of international peace.

I think it goes even further, and I don't remember who I quote when I say this because I have been quoting it for so many years, but it is something such as: Nations that trade together do not war, or something of that nature. That is a paraphrasing of that concept. But I believe that. That is why I believe in breaking down trade barriers, as this Peru bill does. It enhances international understanding and peace as well as enhancing our economic interests.

This bill then creates more opportunities for increased economic growth and prosperity in neighboring economies which help to foster political stability which is important within those borders. But political stability within a country's borders also enhances international stability.

That is particularly important in the Western Hemisphere and the South American Continent, as well as the part of the Western Hemisphere we call Central America. Because we need meaningful alternatives to combat the production and trade of elicit narcotics, another factor that maybe applies to these countries more than a lot of countries we trade with.

Perhaps most importantly, these trade agreements level the playing field for U.S. producers and exporters. I had a chance, before speaking, to hear Senator Nelson of Florida speak. To hear this from the Democratic side of the aisle is very important because it is a fact: This bill levels the playing field to give our exporters and producers access to Peru the same way Peru has had access to our markets and our people for decades under trade preference.

During my time in the Senate, I have heard some of my colleagues complain that the global trade situation reflects an uneven playing field. Now, to some extent, I agree. That is why I am a promoter of more free trade agreements. The Doha round of the World Trade Organization negotiations is leveling this playing field.

So right now it is uneven. It is not as level for American exporters as it ought to be. But if you looked at the last 50 years when this process started, soon after World War II, under the General Agreement on Tariffs and Trade, you would find it was much more--or a lot less level than it is right now.

So we have made considerable progress and we need to build on what is a success, very much a success. Because in too many cases, the duties that our trading partners impose on U.S. exports are much higher than the duties we impose on theirs. As I have said, that is certainly the situation with Peru. Right now, some 97 percent of imports from Peru enter the United States duty free.

I do not know whether Senator Nelson used that specific percentage that I gave, but he was speaking of the fact that Peru had preference to coming into the United States. This bill gives our producers and exporters the same preference there. Our exports to Peru face duties that range from 12 to 25 percent. Specific examples: Peru's tariff on U.S. pork exports to that country, and this is a major product of my State of Iowa, is as high as 25 percent, while Peru's exports to the United States are duty free.

Now, that is what I call a one-way street. This unbalanced situation is largely the result of unilateral trade benefits that we extended to Peru under what I called the preference situation. But this is specifically under what we call the Andean Trade Preferences Act.

This trade agreement before the Senate today will restore balance to our trade relationships with Peru. I do not want you to take my word for it. The impartial U.S. International Trade Commission analyzed our trade agreement with Peru. The Agency found, and I quote:

Given the substantially larger tariffs faced by U.S. exporters to Peru, than Peruvian exporters to the United States, the trade agreement is likely to result in a much larger increase in U.S. Exports than U.S. imports.

The International Trade Commission of our U.S. Government goes on to state that:

The agreement will likely increase U.S. exports to Peru by 25 percent, while Peruvian exports to the United States will grow by 8 percent.

Now, that is a win-win situation for U.S. producers and exporters. And why anybody would vote against an agreement like that I could not understand, and I am not anticipating that people will vote against it, but I do know, in the months of this year that we have discussed trade, I have heard a lot of negative attitude toward trade, how harmful it is to the U.S. economy.

But if any Member who has said those things during the course of this year would look at the bill that is before the Senate right now, that is going to increase U.S. exports to Peru by 25 percent while Peruvian exports to the United States will grow by 8 percent, then if they vote against this, they are not addressing the concerns they are giving speeches about all this year. The benefits of this trade agreement are going to spread across all major sectors of the economy. I say that because I quoted agricultural benefits. But besides U.S. agricultural producers, manufacturers and service providers all stand to gain from this agreement. The ITC--the International Trade Commission--predicts the agreement will have a ``substantial, positive'' effect on U.S. exports to Peru of the major U.S. commodities of pork, beef, corn, wheat, and rice. The American Farm Bureau Federation predicts that U.S. farm sales to Peru could increase by more than $700 million with full implementation of the trade agreement. U.S. rice exports to Peru will grow tenfold to fifteenfold as a result of this agreement, while U.S. exports of corn will double.

The National Pork Producers Council says that the Peru trade agreement is a ``state-of-the-art agreement for pork producers to which all future trade agreements will be compared.'' Our manufacturers will enjoy significant benefits as well. For example, Whirlpool Corporation--this is a Michigan corporation which recently bought Maytag in Newton, IA, and closed that plant down, but they still have a massive manufacturing plant in Amana, IA--appeared before the Finance Committee to testify on behalf of this trade agreement. Whirlpool exports refrigerators, ranges, and clothes washers to Peru. It manufactures those products in several States besides Iowa, including Arkansas, Indiana, Ohio, and Tennessee. Whirlpool told the Finance Committee that the Peru agreement will eliminate the 15- to 20-percent tariffs Peru imposes on Whirlpool products. In part because of this agreement, Whirlpool expects its U.S. exports to Peru to increase 400 percent within the next 2 years. In Whirlpool's view, the elimination of Peru's tariffs on its products will allow Whirlpool to maintain jobs in the United States rather than relocating or expanding operations abroad.

Here again, how many times have we heard on this floor the legitimate concern--I am not finding fault--about outsourcing of manufacturing jobs to other countries? You can imagine why that might happen if we have a 10- to 12-percent tariff going into Peru. But people who say those things in this body ought to vote for this bill if it is going to level the playing field for Whirlpool workers so we can maintain those jobs in the States I cited.

U.S. service providers will also gain from this agreement because Peru has agreed to exceed the commitments it made on services, even in the World Trade Organization. So we get something better than we have under WTO rules right now when we have a free-trade agreement with Peru. Peru, thus, has agreed to accord substantial market access across the entire service regime, with very few exceptions, using the so-called negative list approach.

So to those of my colleagues who complain that the current world trade situation is unfair, here is a chance to improve that situation. By implementing this agreement, Congress will level the playing field for U.S. farmers, U.S. manufacturers, and U.S. service providers in this important market. The agreement will boost U.S. exports, creating jobs, keeping existing jobs in the United States. There have been studies, various studies, but the one I always quote says that jobs in the United States--that those products or services that are exported, those jobs are jobs that pay 15 percent above the national average. So they are not only jobs, they are good-paying jobs.

I understand there is a rising sense of protectionism in the Congress. I alluded to that in my remarks today. But I would like to have Members look at the facts. Take, for example, the Central American Free Trade Agreement, otherwise known as CAFTA. CAFTA entered into force for four of our trading partners last year. It is already possible to see the results of bringing their tariffs in line with ours. Guess what. As you might expect, leveling the playing field has brought positive results.

I wish to use the U.S. Department of Commerce as a source. They say our exports to the four countries increased 18 percent in 2006, while our imports were up 3 percent. I don't know how many Members voted against that last year, but I would imagine it was close to 40, give or take a few. I would like to have those 40 Members who probably voted against this, saying that free-trade agreements are not good, look at the facts. So far, our exports have increased 18 percent, while our imports from those countries of Central America were up 3 percent. Leveling the playing field helps American farmers, manufacturers, and service providers. Then maybe you would think it was wrong to vote against CAFTA last year. As a result of this increase of our exports by 18 percent, our trade balance swung from a $1.2 billion deficit in 2005 to a $1 billion surplus in 2006.

How many times on the Senate floor have we heard one of the examples of something that is bad about free-trade agreements is because of our terrible trade deficit? Our trade deficit is too high. If American consumers would quit spending on imports and if they would save some of their money, we wouldn't have as much of a trade deficit as we have. But the American consumer, including probably this consumer, lives too much for today and forgets about tomorrow. CHUCK GRASSLEY may be too materialistic for the good of our trade deficit. If we spend a little less money and save a little bit more, invest in Treasury bonds instead of letting foreign countries buy them up, we would be better off. But for those Senators who have made speeches against how terrible our trade deficit is and then use that as an excuse to vote against CAFTA, don't they feel they were wrong by voting against a bill that finally passed that brought us from a $1.2 billion trade deficit with these countries to a $1 billion surplus in just 1 year? That is what happens when you level the playing field.

We are not the only ones who stand to benefit from our agreement with Peru. Peruvians will benefit significantly as well. They have already benefited from the goodness of the U.S. people by letting them have trade preferences for all these decades. But even beyond what they have already had, a bill that is significantly much more benefit to the United States than it is to Peru, Peru is still going to benefit. The agreement will increase opportunities for continued economic growth in Peru and help Peru further develop and modernize its economy. By entering into the agreement, Peru has demonstrated its intention to strengthen its ties with the United States and lock in economic reform--economic reforms that they are going to benefit from, not us--and it is going to enhance their transparency and respect for the rule of law.

Agreements such as this are what the rule of law is all about. The rule of law in international trade is just as important as the rule of law for domestic America because within our own rule of law, everything is predictable. It has credibility and predictability. When you put the same regime in international trade, you have predictability and credibility. You enhance opportunities for people to work closer because they know what the other side is going to do, if you have equal respect for the law. All of this will serve to increase investor confidence in Peru and its economy.

These are critically important objectives. We live in a challenging time. There is a growing division in Latin America today. Venezuela's President is using oil wealth to lure allies to his socialist vision. He has announced plans to turn Venezuela into a socialist republic. He has nationalized Venezuela's telecom and electricity companies and wrested the oil industry from private companies. He has demonstrated once again that those who withdraw economic rights often seek to withdraw political rights. Those who centralize economic power tend to also centralize political power. For example, he pulled the broadcasting license of one of Venezuela's oldest television broadcasters, which also happens to be one of his major critics. He assumed new powers that allow him to rule by decree, and he pushed for a new constitution that would abolish Presidential term limits, allowing him to stay in power indefinitely. His former Defense Minister has called the plan ``fraudulent'' and akin to a coup. I don't know whether the final results are in, but he may have lost that referendum yesterday. At lease for my part, I hope that is what the final results show. But he is still going to be the dictator and the authoritarian that he has been for the last 9 years.

Chavez has said that this rejection, if it happens by the voters, is not a defeat, and he plans to proceed on whatever his goals are. His former Defense Minister has cautioned that he may seek to impose these changes through a different route than constitutional reform. So you lose an election, and you find some other way to accomplish the same thing.

I have talked about Venezuela and the environment of the Peru trade agreement because our relationships with Latin America will be enhanced through free-trade agreements. We ought to help countries like Peru that are not going in the direction of Venezuela as much as we should, particularly in light of the fact that two other countries in the region--Bolivia and Ecuador--are also trending in a similar direction.

Bolivia's President Morales nationalized the hydrocarbon sector by executive decree. As a result, investors were forced to sign new contracts that guarantee a greater percentage of revenue for the Government. He also seized a foreign-owned tin smelter without compensation. Instead of a free-trade agreement with the United States, President Morales joined President Chavez's so-called Bolivarian alternative for the Americas. He strengthened ties, at the same time, with Cuba and Iran.

President Correa of Ecuador has also reached out to Iran. He has called the United States ``the most protectionist country in history.'' He also said that free trade is ``dangerous'' for countries like Ecuador.

I hope Correa, the President of Ecuador, will remember these statements he has made about the United States, saying the United States is ``the most protectionist country in history.'' He also said that free trade is ``dangerous'' for countries like his.

I hope he remembers those things when he comes around to the Congress in about 2 or 3 months wanting an extension of the Andean trade pact, where he wants preferences from our taxpayers so he can say these dastardly things about our country, which obviously are not true, but they are good for the propaganda purposes that he makes them, because he said these things even though we give imports from Ecuador duty-free access to our markets under our unilateral preference programs.

Now, the difference between Peru and Ecuador is this: Ecuador and Peru have had the same trade preferences with our country to get their products in here duty free for the last several decades, but Ecuador stops negotiating with the United States on a free-trade agreement and Peru goes ahead and negotiates with us. Yet Ecuador is going to be coming to us in a couple months saying to us we ought to continue the trade preferences with them, when they say these things about us: They feel more comfortable with Chavez and the Cuban and Iranian dictators than they do with us Americans. I have questioned why we should continue providing such duty-free access to our markets, but that is an issue we will deal with in 2 or 3 months.

The point is, there is a growing divide in Latin America. On the other side of the divide you find countries such as Peru and Colombia, allies of the United States whose Governments have gone out on a limb to strengthen bilateral relations with us. It is imperative we respond in kind and not turn our backs on these important allies. I expect we will soon approve our trade agreement with Peru. After that, we should move as quickly as possible to implement our trade agreements with Colombia and Panama, for the same reasons we ought to be approving this Peruvian agreement. That is what I envisioned when the bipartisan compromise on trade was reached May 10. I will return to that point in just a moment.

I am not alone in calling for approval and implementation of the Peruvian agreement. Just last month, the New York Times called for passage of our trade agreement with Peru. They editorialized that ``it would be a folly for the United States to turn its back on trade.'' The paper also noted that all eight living former Secretaries of State have urged Congress to approve the Peru agreement.

In October, the Agriculture Coalition for Latin American Trade, which is comprised of 50 different agricultural organizations, called for congressional approval of the Peru trade agreement. This agreement is also supported by the National Association of Manufacturers and the Coalition of Service Industries, among other business groups.

In sum, there is widespread recognition of the benefits of this trade agreement for the United States.

Before concluding, I would like to address three other issues that have arisen with respect to free-trade agreements even beyond the Peruvian agreement. The first is the claim by some that these agreements undermine our food safety laws. The second is the charge that we are not enforcing our existing trade agreements. And the third is the May 10 bipartisan compromise on trade between the administration and the new congressional leadership that took over on the Hill in January.

In recent days, some of my Senate colleagues have criticized the passage of the Peru agreement in the House. One Senator went so far as to say the agreement ``will result in more unsafe food in our kitchens and consumer products in our children's bedrooms.'' Now, let's just think about that for a minute. That is quite an accusation. How could Congress possibly support such an agreement? The answer is simple: We are not supporting that position by voting for this agreement because the accusation is false. If you do not believe me, then just look at the text of the agreement. Chapter 6 of the agreement addresses the types of ``sanitary'' laws related to food safety. There is absolutely nothing in the chapter that would lead to a lowering of our food safety standards. In fact, one of the explicit objectives of the chapter is to ``protect human, animal, or plant life or health in the Parties' territories.'' ``[T]he Parties' territories'' means the United States and Peru. In addition, this chapter is not even subject to dispute settlement. So there is no way Peru could use the chapter to challenge our food safety laws, even if the chapter provided a basis to do so; and the agreement does not.

For over 20 years, opponents of our trade agreements have argued they would undermine our food and product safety laws. Yet, in those 20 years, there has not been a single challenge to any one of these laws--not a single challenge. That is because these complaints have no foundation. If people want to criticize our trade agreements, they are certainly free to do that. That is their right. But they should base their criticisms on facts, not on scare tactics.

I have also heard colleagues say that we should not enter into any trade agreements until the administration does a better job of enforcing existing agreements. In my view, the administration is doing a pretty good job of enforcing our trade agreements. But I suppose that even CHUCK GRASSLEY will look at specific problems we have. Maybe we ought to be doing more. But there are some examples that I think you ought to give the administration credit for.

The administration is challenging Europe's subsidies to Airbus, and up until last week it was pursuing at least four different cases against China in the World Trade Organization. So you might say: What has changed? Well, our U.S. Trade Representative, Ambassador Schwab, announced we had concluded an agreement by which China agreed to terminate eight subsidies we were challenging under World Trade Organization rules. This was just last Friday. The termination of those subsidies will bring significant relief to our manufacturers and exporters who have been confronting unfairly subsidized competition from the Chinese. In this case, we achieved our objectives without having to resort to that lengthy WTO process of litigation. That is a complete success story, in my book. As for the other three pending cases, we will continue to pursue our rights in the World Trade Organization.

If you ask me, the problem is not a shortage of enforcement. The bigger problem is that people are complaining about foreign government actions that are not yet subject to agreed-upon rules. In other words, the problem is not the failure to enforce the rules; it is that there are no rules to enforce in certain areas. If you want to solve problems that are not currently subject to rules, we should be negotiating more trade agreements, not fewer. Get the rules in place, and then get those rules violated--if that is what is going to happen, and you hope that does not happen--and then enforce them. But you cannot enforce a rule that is not there. For example, the administration recently announced it is negotiating a new anticounterfeiting trade agreement. That is a step in the right direction. Such an agreement would help get at problems such as the counterfeiting of the Underwriters Laboratories logo. That is an important safety issue.

If we are serious about wanting to get at these types of problems, we should give the President a new grant of trade promotion authority and send our negotiators out to solve those problems. If we turn our back on new agreements, our trading partners will continue negotiating among themselves, leaving us behind. That is what happened the last time Congress denied President Clinton trade promotion authority, I think in 1995. It was not reinstated until 2002. During that period of time, our trading partners concluded over 130 preferential trade agreements. We had only two.

So do you folks in this body who say we should not give the President trade promotion authority want to go back to the regime of other countries doing what they want to do? They will do it anyway, but we do not have an opportunity to keep up if we do not give our President that authority. Do you want to have the United States have an unlevel playing field in the case of the history of those 130 preferential trade agreements that were negotiated while our President did not have authority to do it, while we did, too, or do you think maybe our President ought to be negotiating the same number, to level the same playing field for the workers in America that other governments are giving their workers for an opportunity to have a level playing field? That cannot happen if the President does not have trade promotion authority.

We have only managed to regain some lost ground in the last 5 years. These agreements before the Senate--Peru and the 14 over the last few years--are examples. So the President needs to have trade promotion authority so he can continue to keep negotiating so we can create more jobs in America and export more and have a level playing field where we do not have that level playing field.

Finally, I want to mention the bipartisan May 10 agreement on trade that made it possible for us to move forward with this Peru agreement and, hopefully, makes it possible to move forward in the case of Panama and Colombia.

This year, the Democratic majorities in the House and Senate demanded additional provisions in our trade agreements before they would agree to implement them. That is the result of the last election. When people give their will to a different majority in this Congress, we have to respect that. I think the Democrats were fair and responsible in the agreements that were reached. I am willing to go along with them. Those are not necessarily things I would have agreed to if we had still been in a majority and probably would not have had to negotiate. But the Democrats won the last election.

So after lengthy negotiations, the administration agreed to a compromise that the House Democratic leadership announced with great fanfare on May 10, 2007. The Democratic leadership described the deal as a ``historic breakthrough'' and a ``fundamental shift in U.S. trade policy'' that achieved results they have been seeking for years. As a result of this compromise, the administration negotiated conforming changes in the labor and environment chapters and the provisions on Government procurement, investment, and intellectual property. For example, in the wake of the agreement, disputes arising under the labor and environment chapters are subject to the same dispute settlement procedures as every other obligation of the agreement. Now, we can debate whether that change was actually a good idea, but it satisfied a longstanding demand of the Democrats who have opposed our trade agreements in the past. The same goes for the other changes encompassed in the May 10 compromise.

The administration followed through by negotiating the necessary changes to incorporate the May 10 compromise into each of our pending trade agreements with Peru, Colombia, Panama, and South Korea. Now we are moving on Peru. But since the administration has carried out its responsibilities under the May 10 compromise with the Democrats and it is good enough to get Peru passed, it ought to be good enough to get Colombia and Panama passed real quickly and South Korea after some kinks are worked out in the South Korean negotiations.

Unfortunately, we have very little to show for those efforts other than Peru right now. It has been almost 7 months. We still have not implemented a single pending trade agreement. We will soon change that with our vote on the Peru trade agreement. But there is no sign of movement on the horizon for the next pending trade agreements, and our druthers there are to go with the agreement with Colombia first. The fact there is not movement in these other areas troubles me greatly.

I hope to see most of my Democratic colleagues join me in voting to implement this trade agreement with Peru. After we have done so, I very much hope they will join me again in supporting implementation of our trade agreement with Colombia as soon as possible in this Congress. Our agriculture producers, manufacturers, and our service providers are counting on us. Our allies are counting on us. It is in our economic interest, and it is in our national interest. It is in the interest of greater opportunities for international peace. We cannot let those opportunities embodied in these trade agreements slip by us.

One final, concluding remark, and it is repeating the same thing several times, and that is that Peru has had opportunities to come and bring their products to the United States without tariffs for decades. We have had to pay duties to get our products into Peru. This gives our manufacturers, our farmers, and our service providers the opportunity to finally get our products into Peru duty free.

I yield the floor.

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