Competing Visions of the Environment in U.S. Trade Promotion Authority

Rapporteur’s report

One of President Bush’s highest foreign policy goals before the events of September 11 was to secure fast track trade negotiating authority, which would enable the administration -- subject to congressional oversight -- to negotiate trade agreements that Congress could accept or reject, but not amend. Such authority is crucial if other countries are going to put their best offers down on the table. Fast track, or Trade Promotion Authority (TPA), is especially important now as the United States pushes for a new round of multilateral trade negotiations through the World Trade Organization, as well as for a hemispheric free-trade accord. Over the last two months, even as national security matters have dominated the headlines, the fight over TPA has grown in intensity as members of Congress have debated how fast track legislation should incorporate rules on the environment. House Ways and Means Committee Chairman Bill Thomas (R-Calif.) and Ranking Democrat Charles Rangel (D-N.Y.) have offered competing versions of TPA that both address the environment but diverge in subtle though important ways.

On Wednesday, November 7, on the eve of the WTO ministerial in Doha, Qatar, the Carnegie Endowment for International Peace convened a panel discussion on how the Thomas and Rangel bills address the concerns of the environmental and business communities. Speaking on behalf of the Thomas bill was Timothy Deal, senior vice president at the U.S. Council for International Business. Defending the Rangel legislation was Timothy Reif, minority counsel for the Ways and Means Committee. John Audley, senior associate at the Carnegie Endowment, moderated the session.

Audley spoke briefly about the evolution of the trade-environment debate over the last decade. Ten years ago, as the United States was negotiating both the Uruguay Round of the General Agreement on Tariffs and Trade and the North American Free Trade Agreement, the key question was whether or not the environment should even be discussed in a trade context. Now, Audley said, "tensions between trade and environment have surfaced in the form of trade disputes involving shrimps and turtles, investments throughout North America, and consumers ... have discovered that there’s a relationship between food safety and trade obligations." As citizens and government officials realized that trade and the environment were closely linked, the rhetoric shifted from whether to talk about environment and trade together to how to do so. Both versions of fast track legislation, Audley happily noted, reflect that change by substantively addressing the environment.

Representing the 300-member U.S. Council for International Business, Deal explained why he supports Thomas’ proposal, even as it offers far greater environmental protections than any previous trade bill. "We see this, this Thomas bill, as a reasonable and responsible compromise to a very complicated, controversial set of issues, and we believe its passage will spur economic growth and provide new opportunities at a time when growth is stagnating, as we all know.... It is a compromise bill, and obviously no one group, sector, company, organization got all that it wanted. But that’s the nature of political compromise, and I think the business community accepts that reality."

Deal went on to outline six reasons why environmentalists, who generally have been cool to the Thomas bill, should support the legislation:

1. The bill includes environmental objectives in the mandate for all future trade negotiations and makes parity among trade, labor and the environment a goal for U.S. negotiators.
2. It calls on U.S. negotiators to make sure that America’s trading partners do not fail to enforce their own environmental laws.
3. The bill encourages higher standards of environmental protection without infringements on national sovereignty, in the United States or other countries.
4. The bill makes reducing or eliminating government practices that harm sustainable development -- fishing subsidies, for example -- a U.S. negotiating objective.
5. It also establishes as a negotiating objective opening up foreign markets to U.S. environmental goods and services.
6. The bill’s dispute settlement and enforcement mechanisms follow a positive approach emphasizing compliance over punishment.

Deal then offered his objections to the Rangel bill favored by most Democrats. Primarily, he thinks it is too specific; its trade negotiating objectives are too detailed and demanding, in contrast to the broader language of the Thomas and previous bills, and in that sense limits negotiators’ ability to negotiate. "No U.S. official," he said, "no matter really how skillful, could really negotiate a successful trade agreement, or successfully a trade agreement, if he or she were forced to operate under the rather burdensome requirements of the Rangel bill.... It appears to me that this is congressional micromanagement of the executive branch, and I don’t think it’ll work. In short, many times, as we’ve said before, we think Trade Promotion Authority should empower negotiators, not tie them up in straitjackets."

Deal closed by offering several more specific objections to the Rangel bill: It empowers a designated set of congressional trade advisors to certify that TPA objectives have been met, potentially allowing a small minority of legislators to overturn a negotiated trade agreement; responsibilities under multilateral environmental agreements would be given preference over WTO rules; and it calls for re-opening the WTO Agreement on Sanitary and Phytosanitary Standards in a way that would undermine the treaty’s science-based methodology.

Before Tim Reif spoke, Chris Whaley, environment counsel at the British Embassy, asked how well the Thomas and Rangel bills square with the WTO draft ministerial text and the likely discussion on the environment at Doha. Deal replied that there were no inconsistencies, but that there might be in the future if European Union proposals, including the precautionary principle, were adopted.

Eric Biel from Fontheim International asked Tim Deal what the business community objected to in the investment provisions of the Rangel legislation. Deal said the main problem was that the bill instructed negotiators to include language in the Free Trade Area of the Americas agreement subjecting all investor-state disputes to home country approval. Deal said this would unfairly and unnecessarily politicize the process. A U.S. investor expropriate in another country, for example, might not receive justice if American officials thought that by letting the claim proceed, it would harm bilateral relations with that other country.

Tim Reif began his remarks by addressing the investor-state issue and agreeing with Deal that the disputes should not be politicized. He noted that the Thomas bill Deal favors also contains a provision that would screen out frivolous complaints, but that it is "four or five words long." In contrast, the Rangel bill provides specific language defining "frivolous" and proposing an independent, non-political authority -- composed, perhaps, of retired judges -- to review complaints. In that sense, the Rangel bill better achieves both bills’ objective of screening out frivolous complaints in a non-political way.

Reif expands this point to defend Rangel’s habit of giving more specific language to negotiators than Deal would like as a means of reducing uncertainty and ambiguity. "When we are accused of spending more text defining negotiating objectives, and when, as Tim mentioned, it is suggested that we are only establishing higher and higher and higher standards to trip up the executive branch so that, in fact, fast track will be difficult to ascertain, or retain for the negotiation, that is not the fact," he said. "What we did was try to find a sensible standard and articulate it in the legislation. And the fact that we took a few extra lines, we think, makes sense, because it gives clear guidance and articulated what Congress would like to do in this particular important area."

Deal responded that his constituents were nonetheless concerned about having to jump through another hoop, the U.S. government, in order to get their investor-state claims heard.

Jose Manuel Salazar, director of the trade unit at the Organization of American States, asked the panelists to describe how both bills addressed dispute settlement and enforcement. Reif said the Rangel approach emphasized having an effective remedy, though the bill does not address specific penalties, such as sanctions or fines. Instead, Reif said, it was important to help countries unable to comply with their trade and environment obligations by means of technical assistance. "Maybe they need some economists form the FTC or the FCC to go down there and advise them on how to deal with their former monopolists. It might also be in the area of environmental standards, you might send a technical team, or god forbid, you might actually send some lawyers," Reif quipped. Deal emphasized two points about the Thomas bill: It gives the environment parity with labor and trade in the dispute process, and that it rejects trade sanction in favor of more "positive" ways to resolve disputes.

John Audley then asked Tim Reif about the status of the two fast track bills. Reif said that neither had the votes to pass, but that supporters of the Rangel bill, for their part, had been engaged in an aggressive lobbying campaign to better explain the rationale for their positions to business constituencies who did not understand them, making some progress along the way.

Arbora Johnson from Itochu International asked both panelists about expected U.S. presence at the WTO ministerial in Doha. Both speakers replied that in light of U.S. military action in the region and heightened security concerns, regrettably, congressional and business community representation would be well below desired levels.

Audley began to bring the session to a close by remarking on how similar, at the end of the day, the Thomas and Rangel bills are to one another, with one key distinction. "I’m struck," he said, "by the level of agreement, actually, between these two approaches that in my opinion reflect a much deeper understanding of the relationship between trade policy and environmental policy than we have demonstrated to the rest of the world over the course of the last couple of years. I get the sense that a big distinction between the two, though, is the level of trust, if you will, that Congress would impart to the administration in terms of general guidance or specific guidance, and to what degree that oversight needs to be proactive as opposed to less proactive, or less involved. And if that, perhaps, is the difference, if I am correct ... as we move forward hopefully there can be some compromise between these two approaches, and this and future administrations can operate under fast track."