Securing America's Borders Act

SECURING AMERICA'S BORDERS ACT

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DOHA ROUND

Mr. GRASSLEY. Mr. President, as chairman of the Senate Committee on Finance, I chair a committee that has jurisdiction over international trade. We find ourselves being both a participant and an observer of Doha Round negotiations under the World Trade Organization. Those negotiations are in a very determinative state; success will be made, I believe, during the month of April or the Doha Round, for all practical purposes, would end--not in the minds of the WTO or in the minds of the 148 nations other than the United States but as a practical matter. If things are not done by the end of 2006 and the President's authority for trade promotion running out in July of 2007, there will not be time for us to get something done before trade promotion authority runs out.

I would like to have trade promotion authority for the President continued beyond July 2007. I would try to promote that, but we saw very close votes on CAFTA and other trade agreements; there is a protectionist trend in the Congress--maybe not in the Nation as a whole but at least in Congress--that might keep us from getting trade promotion authority reauthorized.

I comment in these few minutes on where we are on the Doha Round and what I expect to happen and leave the message, if it does not happen very soon, this round could be dead.

As we enter the final months of the WTO Doha negotiations, I am very concerned the bright promise of a world far less burdened with often crippling, market-distorting trade barriers may be slipping from our grasp. In particular, I am very troubled by the fact that nearly 5 years after WTO members adopted the Doha ministerial declaration that launched this round of global trade talks, some of our WTO negotiating partners still seem willing to forgo this very historic opportunity that Doha represents to open highly protected agricultural markets.

We now have less than 4 weeks to go to meet the WTO's new April 30 deadline to reach agreement on what is referred to as modalities or, another way to put it, a roadmap for how we will achieve our specific market-opening objectives in the agricultural negotiations. This deadline, similar to most of the others, also appears to be elusive.

The Doha Round is a historic opportunity because global trade rounds are relatively rare events. We have had only nine of them since the creation of the global trading regime back in 1947, what we then called the General Agreement on Tariffs and Trade, or GATT.

Agriculture, which was ignored for almost the first 40 years of GATT, was only first addressed at all during the last round, which was the eighth round, which was called the Uruguay Round because it started in Montevideo and finished and passed by Congress in 1993.

So here we are, 13 years later, trying to make some progress--but not making very much progress--toward what we would hope would be a 10th successful round since the regime started in 1947. Because many trade-distorting barriers were untouched or minimally reduced at the end of the Uruguay Round in 1993, much was left to be done, particularly in agriculture, but we are negotiating manufacturing, we are negotiating services, so a lot needs to be done.

In light of the lack of progress in the World Trade Organization, I briefly address a few points. First, as chairman of this Senate Committee on Finance, I reaffirm, as strongly as I can, the basic elements of the Trade Act of 2002, especially the legislation crafted by this committee that renewed the President's trade promotion authority in 2002, after it had lapsed for about 7 years.

The underlying premise of our trade promotion authority legislation, which gives Congress enhanced oversight authority over trade negotiations conducted under that act, is that the United States will pursue a very ambitious, very comprehensive trade negotiation, particularly in agriculture. This was the cornerstone of the Doha Round--ambitious, comprehensive negotiations and nothing less.

The reason I fought so hard for trade promotion authority is simple. The benefits from ending decades of trade-distorting practices in the global agricultural trade are overwhelming. The U.S. Department of Agriculture has estimated getting rid of market-disrupting agricultural protection could increase the value of U.S. agricultural exports by at least 19 percent. In addition, the Department of Agriculture study also concludes that agricultural liberalization would increase global economic welfare by $56 billion each year.

I know well how vital trade is to farming families anyplace in America, but I am particularly knowledgeable about my State of Iowa because I happen to be a family farmer, farming jointly with my son Robin. Our farmers and agricultural producers sold over $3.6 billion in agricultural exports in overseas markets last year. Although importers and consumers from all over the world seek out Iowa's agricultural products, this is also true of American agriculture generally.

Moreover, more than $3 trillion of economic activity in our $12 trillion economy is derived from trade. Think of that: More than 25 percent of our economy is based upon international trade. That is why an ambitious, comprehensive result in the Doha negotiations is the only kind of result that makes sense, both for my State of Iowa and the United States.

President Bush and Ambassador Portman have done a very good job--in fact, a remarkable job, in my view,--of pursuing an ambitious, comprehensive agricultural deal, especially in the difficult period prior to and during the Hong Kong Ministerial Conference last December.

Nevertheless, some World Trade Organization members, principally the European Union, now apparently want to stop short of that ambitious, comprehensive, result-seeking agreement that was previously reached in opening Doha Round, and they particularly want to shortchange the negotiations in the area of agricultural market access. That is why, when pressed by the United States and other World Trade Organization members, the European Union appears to be changing the subject away from ambitious market access to secondary issues such as food aid, on which we are now having protracted discussions.

I am not even sure our own negotiators should be participating in something as fringe as food aid as compared to the massive discussions and decisions that need to be made in trade-distorting export subsidies by the European Union or by, in the case of the United States, production-related subsidies that we do for American agriculture, not subsidies for agriculture generally but those which are trade distorted. We find our American negotiators getting all nervous about food aid as somehow being a major item. No. What it is is an effort on the part of the European Union to detract attention from the really big export subsidies and production-oriented subsidies.

Perhaps that is because of the intense political pressure European trade and agricultural officials think they face at home. It seems to me that the European Trade Minister wants to open up and do really good trade negotiations. It seems like there is a hangup by the European Agricultural Minister. And it seems to be really a hangup by French farmers. According to one account by former European Commission officials, European farm groups described one compromise agricultural agreement as a death warrant for European farmers. However, that was in 1992, connected with the Uruguay Round negotiations, and the agricultural agreement that drew so much protest in Europe was back then, not today, when that description was made. Ultimately, of course, Europe accepted the Uruguay agreement in 1993. Now the European Union is right back where they were 13 years ago, citing that same agreement as a model for the type of agreement they would like to see today, at least in terms of linear tariff reductions.

So we have seen this type of reaction from Europe before.

Today, once again, the European Union thinks that ambitious market access too politically painful to achieve or to even thoroughly negotiate, but they got over that hurdle in Uruguay. Why can't they get over that hurdle in Doha? So we are back at the European tactic. It appears that what they are really trying to do is a minimal deal somehow being seen as a good deal. Apparently, they think it is a good result if they can get something that is marginally better than the status quo, end negotiations, declare victory, and go home.

Other WTO Members such as Brazil appear reluctant to agree to an ambitious outcome in agricultural market access because they may believe that they can achieve their objectives through other means, such as litigation. You know about the cotton case. Brazil recently was successful in that case. So it may give them false hopes that they can achieve, through legal briefs in Geneva, what they do not appear to win at the negotiating table of the Doha Round.

I would like to say a word about both of those situations.

First, a minimal deal in the Doha agricultural negotiations is not something that can be considered a victory in any sense of the term, even in a political sense. What do I mean by a minimal deal? A deal that goes just beyond the 36-percent average tariff reduction of the Uruguay Round, a deal that leaves tariff peaks in place, or a deal that undermines market access by long lists of special exemptions.

I will not try, as chairman of the Finance Committee, to spin some minimalist deal into some sort of political victory. In fact, I will not even allow it to be brought up for consideration in the Finance Committee or, if I was overruled by my own committee, I would fight it on the floor, if it ever got that far.

So let me make that as clear as I can. A bad deal for agriculture in Doha negotiations is worse than no deal. That was my position at the start of these negotiations, and that is my position now. All those people spending all their time negotiating on food aid when they ought to be negotiating on export subsidies, when they ought to be negotiating on subsidies encouraging overproduction, that is not going to take my eye off the ball.

A minimalist outcome in the Doha negotiations, after years of effort and high-level political engagement, would send a terrible message that real reform in agriculture is too hard to achieve and may set us back for decades.

It would make meaningless a key element of the agricultural component of the Doha Ministerial Declaration where WTO member countries committed themselves to ``comprehensive negotiations aimed at substantial improvement in market access.'' That is what U.S. agriculture demands for giving up our subsidies connected to production. Farmers want their income from the marketplace, not from the Federal Treasury. But we cannot do that without market access, where there are 62 percent average tariffs around the world on agriculture compared to our 12 percent. If that happened, it would reward countries such as the European Union that have big farm spending, highly inefficient production----

The PRESIDING OFFICER. The Senator has used his time in morning business.

Mr. GRASSLEY. I ask unanimous consent for 4 more minutes.

The PRESIDING OFFICER. Without objection, it is so ordered.

Mr. GRASSLEY. If we went this route, it would reward countries such as the European Union that have big farm spending, highly inefficient production, and use nontariff barriers to thwart trade. And even though this round is known as the Doha Development Round because it is supposed to help poor countries, a bad deal that keeps high trade barriers in place would tell developing countries that they can forget about seeing fair opportunity to export their products.

As for World Trade Organization members that see litigation in dispute settlement--as Brazil did in the cotton case--as a practical alternative to negotiations, I would remind those who are tempted to adopt this position that litigation, even under the new, improved WTO rules, is unpredictable, costly, time-consuming, and not the way to resolve unfair trade.

Moreover, litigation is not always the most effective way to open markets and eliminate trade barriers, especially over the long haul. Historically, we have also depended on negotiations and the everyday management of trade and commercial relations as much better ways to achieve and maintain open markets.

Make no mistake, we can and will defend our interests through dispute settlement when it is necessary to do so, and we have done so as the United States in the World Trade Organization quite successfully. But substituting litigation for negotiations or for management of our commercial relations is neither practical nor desirable, nor is it the way to bolster confidence in the World Trade Organization as an effective negotiating forum.

I began by saying that this round of trade negotiations is a historic opportunity. It can be historic in the sense that we achieve a result that truly benefits the global community by increasing global prosperity, and it can be historic in the sense that we miss a great opportunity to promote prosperity and open markets throughout the world.

Unfortunately, we have made enormous mistakes before when we missed important opportunities to fight for comprehensive global trade liberalization. In the early years of the General Agreement on Tariffs and Trade, going as far back as 1947, it was the developed nations, particularly the United States, that created exceptions for agriculture, that exempted it from liberalization under the GATT regime. It has taken us decades to shift gears to try to bring agriculture under the discipline of global trade rules. That is why it is so important for us to continue to make real progress in this round of global trade talks.

Achieving real, meaningful results in these talks is something I am as strongly committed to now as ever before. It is also why I will continue to oppose any outcome in the WTO that, in my judgment, fails to accomplish these goals, even if it is a minimalist approach. Don't expect me to bring such an agreement before the Senate as chairman of the Finance Committee.

I yield the floor.

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