Chuck Grassley

United States Senator from Iowa





International Trade Initiatives

Feb 05, 1998

International Trade Initiatives

As we start the second session of the 105th Congress I want to outline my priorities on international trade issues from my vantage point of Chairman of the Finance Committee's International Trade Subcommittee. Some of these are legislative initiatives that began in the 1st session and others are things that we should be doing everyday.

The first thing we need to do, Mr. President, is restore the United States to its rightful position of leading the world in liberalizing global trade. We can do this by granting the president new trade negotiating authority. The failure to pass fast track last year was harmful to American workers, American farmers and American consumers.

Why? Free trade not only creates new, high-paying jobs it helps preserve existing jobs. When high trade barriers prohibit U.S. companies from exporting to a foreign market, the company may choose to relocate in that other country in order to sell its product.

The United States has one of the most open economies in the world. Our average tariff is about 2.8 percent. Many other countries have virtually closed markets. According to the World Bank, for instance, China's average tariff is 23 percent. Thailand's is 26 percent, the Philippines 19 percent, Peru almost 15 percent, and Chile has a flat 11 percent tariff.

It can be difficult for American companies to export to a country, like China, that places a 23 percent tariff on our goods. The tariff prices our goods out of the market. So these companies move their plant to China and avoid paying the tariff.

The preferred alternative -- for American workers -- is negotiating with China to lower its tariffs. Bring their tariffs down to our level. Then the companies can stay here -- employ American workers -- and export their goods to China.

But we can't negotiate these tariffs down without fast track authority. That's why fast track is so important. It leads to lower tariffs in foreign countries and the preservation of American jobs.

Fast track also leads to the creation of new jobs. Exports already support 11 million jobs in the U.S. Each additional $1 billion in exports creates between 15,000 and 20,000 new jobs. These jobs pay 15 to 20 percent higher than non-export related jobs. And, in Iowa, companies that export provide their employees 32 percent greater benefits than non-exporters. All of this is in jeopardy without fast track. And it's the American worker who will suffer.

. What I'm most concerned about is the vacuum of leadership on international issues that is left by the United States relinquishing this traditional role. Ever since the first Reciprocal Trade Agreements Act of 1934, the United States has led the world in reducing barriers to trade. And we have benefitted greatly from this leadership.

American workers are the most productive, highest-paid workers in the world. American companies produce the highest quality products. And American consumers have more choices of goods and pay less of their income on necessities, such as food, than consumers of any other country. These are the benefits that we have enjoyed because we've been willing to lead on trade.

This leadership is now being questioned by our trading partners. They are moving on without us. They're forming regional and bilateral trading arrangements that don't include the United States.

What are the consequences for the United States? The European Union, Japan and developing countries will have a greater influence in shaping world trade policies. Should we trust Japan and the European Union to advance our interests? How hard will they push for opening markets?

I'd ask my colleagues who voted against fast track because of labor and environmental concerns, how hard do you think other nations will push for raising these standards? I'd ask my colleagues from rural states, do you trust the European Union and Japan to push for open markets at the 1999 WTO agriculture talks?

Only we can advance our interests. Only the United States can influence other countries to improve their environment and labor standards, to improve human rights, and to embrace democracy through international trade. That's why the president should renew his effort for fast track authority and Congress should pass it this year.

Congress also included reauthorization of the Trade Adjustment Assistance program in the Senate's fast track bill. This program assures that every American who loses their job due to a free trade agreement receives the job training and assistance they deserve. No American will be left behind by our participation in the global economy. My second initiative is to secure passage of the TAA this year.

My third priority is to keep markets open in the troubled Southeast Asian countries. I support IMF assistance of the nations in crisis. But as part of the economic reforms that the IMF requires, we must insist that the Asian countries open their markets to our exports. Countries have a natural inclination to close their markets in time of crisis. But this only accelerates the downward spiral they find themselves in. For their own good, they should resist the temptation to raise trade barriers.

Also, some of these countries will attempt to increase their exports to our market in order to help their economies. If that's the case, they have a moral obligation to open their markets to our exports. And I will work to make sure that happens.

Last week I joined with 19 of my fellow senators on a letter led by Senators Roberts and Baucus requesting a meeting with Treasury Secretary Rubin to discuss the pervasive trade barriers that remain in the Asian countries. Hopefully, that meeting will lead to a cooperative effort between Congress and the administration to remove these barriers.

The fourth area I'll be focusing on in 1998 is persuading our trading partners to live up to the commitments they've made in prior trade agreements. Getting a good agreement is one thing. But we must demand compliance with our agreements on a daily basis. Many markets we thought we had opened are still closed.

I will monitor our existing agreements and strongly urge the administration to bring enforcement actions when necessary. Trade agreements aren't worth the paper they're written on unless we put some force behind them.

The last two initiatives I will pursue in 1998 involve agriculture trade. Which is so important to my state and many others. Exports now account for over 30 percent of farm income in this country. Take away foreign markets, and we'd have to idle one-third of America's productive cropland.

In recognition of the importance of foreign trade to the agriculture economy, last year Senator Daschle and I introduced S. 219 a bill creating a "Special 301" process for agriculture. This new 301 procedure requires the U.S. Trade Representative to identify and remove the most onerous barriers to U.S. ag exports. It will put other countries on notice that we are serious about gaining access to their markets.

This bill was made part of the fast track legislation that was on the floor of the Senate at the end of last year. It is my intent to move this bill again as a part of fast track legislation or independently, if necessary.

Finally, agriculture is preparing for another round of market access negotiations at the World Trade Organization beginning in 1999. These talks will lay down the rules on agriculture trade for the next century. I pledge to work with the administration to ensure the United States sets the agenda for these talks.

Our trading partners don't necessarily want to remove their barriers to our ag exports. Because our farmers produce the highest quality products at the lowest cost. So American farmers will gain access to new markets only if the United States leads these negotiations and persuades other countries to open their markets.

Free and fair trade creates good, high-paying jobs. It raises the income of our farmers and the standard of living for our workers and consumers. Trade has contributed significantly to our strong economic growth and record low unemployment. I will continue to pursue an agenda of free and fair trade through this Second Session of the 105th Congress.