TRADE RELATIONS WITH LATIN AMERICA
(Senate - January 30, 2007)

Text available as:

Formatting necessary for an accurate reading of this text may be shown by tags (e.g., <DELETED> or <BOLD>) or may be missing from this TXT display. For complete and accurate display of this text, see the PDF.

[Pages S1322-S1324]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                   TRADE RELATIONS WITH LATIN AMERICA

  Mr. GRASSLEY. Mr. President, I rise to speak on the U.S. trade 
agenda. There are a number of important items on this year's trade 
agenda, including reauthorization of Trade Promotion Authority for the 
President and reauthorizing our trade adjustment assistance programs 
for workers who are displaced by trade. I will speak on those 
priorities another day.
  Today I want to focus on our trade relations with our neighbors in 
Central and South America. During my chairmanship of the Finance 
Committee, Congress passed implementing bills for trade agreements 
covering 12 countries. Out of these 12 countries, over half--7--are 
located in Latin America. I am pleased that Congress acted to 
strengthen our economic relations with Chile, the Dominican Republic, 
Guatemala, Honduras, El Salvador, Nicaragua, and Costa Rica, by 
implementing our trade agreements with these neighbors to the south. 
And I think we should all be pleased that these seven countries made it 
a priority to develop closer economic ties with us and to further 
commit themselves to transparency and the rule of law.
  I hope that the current Congress will continue working to strengthen 
economic relations between the United States and Latin America. 
Fortunately, we already have a roadmap for doing so. We have concluded 
free trade agreements with Peru and Colombia, and we are about to sign 
an agreement with Panama. It is up to this Congress to pass 
implementing legislation for these agreements. Failure to do so would 
only damage our relations with these important allies and embolden 
other southern neighbors who are increasingly hostile to the United 
States.
  Moreover, by implementing our trade agreements with Peru, Colombia, 
and Panama, we would provide an important boost for U.S. exporters. 
During my time in the Senate, I have heard many of my colleagues 
complain that the global trade situation reflects an uneven playing 
field. To some extent, I agree. In too many cases, the duties imposed 
on U.S. exports by our trading partners are much higher than our 
duties. That is certainly the situation with Peru, Colombia, and 
Panama. Right now, almost all imports from those three countries enter 
the United States duty free. Ninety percent of the value of our imports 
from Colombia enter duty-free. With respect to Panama, it is over 95 
percent, and with respect to Peru it is 97 percent.
  On the other hand, our exports to these countries face significant 
duties. Colombia's tariffs generally range from 10 to 20 percent, while 
those of Peru range from 12 to 25 percent. After Panama acceded to the 
World Trade Organization in 1997 its tariffs averaged 8 percent, but 
since then Panama has raised tariffs on certain agricultural products. 
For example, Panama's tariff on pork--a major Iowa product--is 
currently 74 percent, while its tariff on chicken imports is 273 
percent. Now that is what I call a one-way street.
  This imbalance is largely the result of unilateral trade benefits 
that we extend to these nations. Panama gets duty-free access to our 
markets under the Caribbean Basin Initiative, while Peru and Colombia 
are eligible under the Andean Trade Preference Act. And all three are 
eligible under our Generalized System of Preferences.
  The nonpartisan U.S. International Trade Commission, ITC, analyzed 
our trade agreements with Peru and Colombia. The ITC concluded that 
these agreements will help to level the playing field that is currently 
tilted against U.S. exporters.
  Here is what the ITC has to say about our trade promotion agreement 
with Peru:

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

  The ITC 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.
  The ITC's analysis of our trade promotion agreement with Colombia 
draws similar conclusions. The ITC report states that:

       Colombian exporters generally face substantially lower 
     tariffs in the U.S. market

[[Page S1323]]

     than do U.S. exporters in the Colombian market. . . . The TPA 
     is likely to result in a much larger increase in U.S. exports 
     to Colombia than in U.S. imports from Colombia.

  The ITC predicts that after implementing the agreement, U.S. exports 
to Colombia will be $1.1 billion higher than today, and U.S. imports 
from Colombia will be $487 million higher.
  The ITC has not yet completed its analysis of our trade agreement 
with Panama. But given the disparity in tariff levels between the 
United States and Panama, I think it is safe to assume that the ITC 
will reach similar conclusions regarding the likely economic impact of 
that agreement as well. And the benefits of these three trade 
agreements will be spread across all major sectors of our economy. U.S. 
agricultural producers, manufacturers, and service providers all stand 
to gain.
  According to the American Farm Bureau Federation, our trade agreement 
with Peru could increase U.S. agricultural exports by over $705 million 
annually. With respect to Colombia, the Farm Bureau predicts that full 
implementation of our trade agreement will have an annual net benefit 
of over $660 million for the U.S. agricultural sector. The Farm Bureau 
hasn't finished its analysis of the impact of our trade agreement with 
Panama, but I am confident that it will find major benefits for U.S. 
farmers.
  Our manufacturers stand to gain as well. According to the 
International Trade Commission, U.S. producers of machinery, chemicals, 
rubber, and plastic products will be among the biggest beneficiaries of 
these agreements. And Panama will eliminate tariffs on manufactured 
products within 10 years of implementing our trade agreement.
  U.S. service providers will also gain from increased trade with Peru, 
Colombia, and Panama. Under their respective agreements, each of those 
countries agree to exceed the commitments they made on services in the 
World Trade Organization.

  In addition, Panama is scheduled to initiate a $5.25 billion 
expansion project for the Panama Canal in 2008. Our trade agreement 
with Panama will help ensure market access for U.S. service providers 
for this major project.
  So to those of my colleagues who complain that the current world 
trading situation is unfair, here is a chance to help fix the problem. 
By implementing trade agreements with Peru, Colombia, and Panama, 
Congress will level the playing field for U.S. farmers, manufacturers, 
and service providers in these important markets. These agreements will 
boost U.S. exports and help create jobs. I think it is ironic that some 
of my colleagues oppose these free trade agreements and yet at the same 
time complain the loudest about the trade deficit and how the deck is 
stacked against U.S. exporters.
  These agreements level the playing field. It is beyond me as to how 
someone could oppose that. Now, I understand that there is rising 
protectionism in Congress. But let's look at the facts. Take as an 
example the Dominican Republic-Central America Free Trade Agreement, 
otherwise known as CAFTA.
  According to the U.S. Department of Commerce, our exports to the 
CAFTA countries were up 17 percent in the period January through 
November 2006, while our imports from the CAFTA countries were up 3 
percent. As a result, our trade balance swung from a $1.2 billion 
deficit 2 years ago to an annualized surplus of $1 billion last year. 
That is what happens when you level the playing field.
  And we are not the only ones who stand to benefit. Peru, Colombia, 
and Panama will also benefit from implementing our trade agreements. 
The leaders of these countries are to be commended. By pursuing trade 
agreements with the United States, they have demonstrated a commitment 
to locking in economic reforms, increasing economic freedoms, and 
enhancing transparency and respect for the rule of law.
  That leadership and foresight will be rewarded once our trade 
agreements are implemented. I read recently in the Wall Street Journal 
of a joint study conducted by the Journal and the Heritage Foundation. 
According to the article, their study found that ``economically free 
countries enjoy significantly greater prosperity than those burdened by 
heavy government intervention.''
  We certainly see examples of heavy-handed government intervention in 
some other Latin American countries. Instead of fostering individual 
and economic liberty, these governments are embracing the failed policy 
of statism. Chief among them is the Government of Venezuela.
  President Chavez has announced plans to turn Venezuela into a 
``socialist republic.'' To that end, he announced this month that he 
plans to nationalize Venezuela's telecommunications and electricity 
industries. That decision will directly impact U.S. companies with 
investments in those sectors of the Venezuelan economy.
  President Chavez also might nationalize Venezuela's mining sector, 
and he intends to increase state control over the oil industry as well. 
Significantly, President Chavez is demonstrating that those who 
withdraw economic rights often seek to withdraw political rights, and 
that those who centralize economic power tend to centralize political 
power. For example, he has stated that he plans to pull the 
broadcasting license of one of Venezuela's oldest television 
broadcasters, which also happens to be one of his major critics. 
President Chavez is also proposing changes in Venezuelan laws that will 
enable him to rule by decree for 18 months, permit his indefinite 
reelection as President, and reduce the power of state governors and 
mayors.
  Unfortunately, President Chavez is not alone. Two other countries in 
the region are moving toward increased state control of their 
economies. Bolivia and Ecuador each currently enjoy duty-free access to 
the U.S. market under the Andean Trade Preference Act. Yet last year 
Bolivia undertook a de facto nationalization of its natural gas 
industries, forcing companies to renegotiate their contracts with the 
state. Bolivian President Morales is also considering nationalizing the 
country's mining, electricity, and telecommunications sectors. In the 
case of Ecuador, last year the government revoked the operating license 
of a U.S. oil company and seized $1 billion of the company's assets.
  So Latin America is clearly divided. Some countries, led by 
Venezuela, are consolidating economic power in the state. President 
Chavez is also clearly seeking to centralize political power, and has 
demonstrated an active hostility to the United States.
  That stands in stark contrast to our allies and trading partners, 
Peru, Colombia, and Panama. The governments of these three countries 
have gone out on a limb. They have demonstrated they want closer 
economic ties with the United States. They appreciate that, by working 
with us, by building more links between businesses in their countries 
and ours, they can better improve the lives of their citizens. We need 
to reward that leadership. We should do so by implementing our 
respective trade agreements as soon as possible. If we don't, we will 
be turning our backs on allies in the region. We will be sending a 
signal to Latin America that we don't really care about opening markets 
and enhancing the rule of law. Instead, we'd help build the clout of 
Chavez and other leaders in the region who see the failed policy of 
statism as Latin America's future. And we would be shooting ourselves 
in the foot by giving up a chance to level the playing field. Why would 
we want to do that?
  Before concluding, I would like to address two other sets of issues 
that have arisen with respect to our trade agreements with Peru, 
Colombia, and Panama. First are the labor and environment chapters of 
the agreements, and second is the Andean Trade Preference Act.
  I understand that some in Congress would like to see the labor and 
environment chapters of these agreements renegotiated. I disagree. I 
believe that the provisions on labor and the environment are strong. 
And I note that renegotiation would effectively preclude implementation 
of these agreements under the current Trade Promotion Authority, which 
is set to expire on July 1.
  I question whether those who would insist on renegotiation aren't 
really trying to kill the agreements outright. In my view, the best 
thing we can do to advance labor rights and environmental protections 
in these countries is to implement our trade agreements with them. 
Implementation will increase the rate of economic growth and

[[Page S1324]]

prosperity in these countries. It will increase business activity and 
awareness of labor rights. It will create new bodies for more active 
oversight of labor and the environment.
  As important as labor and the environment are to some of my 
colleagues, I don't see how they can justify holding back these trade 
agreements that are so good for the United States. They should be 
embarrassed for holding them up. The sooner we implement these 
agreements, the sooner our farmers, manufacturers, and service 
providers will benefit from them. That being said, I understand that 
U.S. Trade Representative Susan Schwab is in discussions with some of 
my colleagues to explore ways to address their concerns regarding labor 
and the environment. I am willing to listen to any constructive 
proposals that are put forward.
  Separately, I note that the Andean Trade Preference Act has been 
extended until June 30. That leaves Congress sufficient time to 
implement our trade agreements with Peru and Colombia, so that their 
preferential access to the U.S. market does not terminate.
  But with respect to Bolivia and Ecuador, their preferential access to 
the U.S. market will terminate after June 30 because we don't have 
comprehensive trade agreements lined up with those two countries.
  Some of my colleagues are already talking about extending the Andean 
Trade Preference Act beyond June 30. I see no reason to do so. If 
Congress acts responsibly and implements our trade agreements with Peru 
and Colombia by June 30, neither of those countries will need 
unilateral preferential trade benefits.
  As far as Bolivia and Ecuador go, I see no reason to extend 
preferential trade benefits to them. Not only are they withholding 
market access from U.S. exporters, they are actively engaged in 
nationalizing industries and expropriating foreign assets.
  It wouldn't be right to treat imports from Bolivia and Ecuador the 
same as products from Peru and Colombia. Why should Congress be in the 
business of rewarding bad behavior? So I disagree with my colleagues 
who favor extending the Andean Trade Preference Act past June 30.
  In sum, Mr. President, I hope that the administration will soon be in 
a position to send implementing legislation for the U.S-Peru Trade 
Promotion Agreement to Congress. And I urge my colleagues to work with 
me to implement not only that agreement, but also our agreements with 
Colombia and Peru as soon as possible. Our agricultural producers, 
manufacturers, and 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. Now it is up to Congress. We have to execute our 
responsibilities without delay. We cannot let the opportunities 
embodied in these trade agreements slip us by.
  Mr. President, I yield the floor and suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. REID. Mr. President, I ask unanimous consent that the order for 
the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.

                          ____________________