WASHINGTON POLICY

Update Date: April 28, 2003

US-Vietnam Textile Agreement: The U.S. and Vietnam signed a bilateral textile agreement late April 25 despite last minute allegations by the U.S. that Vietnam was transshipping textiles produced in China. The agreement which runs from May 1, 2003 through the end of 2004, was opposed by the U.S. textile industry which argued the quotas set under the agreement are too generous and will result in some U.S. plants going out of business.

Vietnam Human Rights Act: Representative Chris Smith (R-NJ), a member of the House International Relations Committee has reintroduced the Vietnam Human Rights Act. The bill would prohibit the U.S. from providing any non-humanitarian aid to Vietnam until Hanoi makes significant progress toward releasing political and religious prisoners and respecting the human rights of ethnic minorities. The bill would also authorize funding to overcome Vietnam's jamming of Radio Free Asia, establishes a commission to monitor human rights, and expands outreach to Vietnamese refugees to ensure they have access to resettlement programs. Last year the bill passed the House 410 - 1, but died in the Senate due to a hold placed by Senator John Kerry (D-MA). Smith has vowed that he will work to see the legislation passed by the House and the Senate.

U.S. - Singapore FTA: May 6 has been set as the official date for the signing of the agreement. Prime Minister Goh Chok Tong will be at the White House to join President Bush in signing the agreement.

U.S.-Australia FTA: U.S. and Australian negotiators held the first round of free trade agreement talks in Canberra March 17-21. The talks covered 13 areas including goods, rules of origin, agriculture, services, investment, intellectual property, competition policy, standards, technical barriers, trade remedies, labor standards, environment, dispute settlement and administrative provisions. Talks on government procurement and financial services were conducted by videoconference.
During the first round of talks, agriculture played a significant role -- taking the majority of time allotted for the discussions. Sources have indicated that both the U.S. and Australia have committed to negotiating an agreement that eventually leaves no barriers in place on any agricultural product.
The next negotiating rounds are scheduled for May 19 in Hawaii and July 21, also in Hawaii. Both the U.S. and Australia are aiming to conclude negotiations some time in 2004, although that could easily slip into the next year.

U.S. - New Zealand FTA: Nineteen Senators led by Senate Finance Committee Chairman Charles Grassley (R-IA) signed a letter urging the Administration to begin negotiations on an FTA with New Zealand as soon as possible. The letter was nearly identical to a letter sent in February by fifty House members. The letters describe an FTA with New Zealand as a natural compliment to the FTA with Australia where negotiations have recently begun.

Other signatories of the letter included Senate Majority Leader and Finance Committee member Bill Frist (R-TN), Foreign Relations Committee Chairman Richard Lugar (R-IN), Budget Committee Chairman Don Nickles (R-OK), Select Committee on Intelligence Chairman Pat Roberts (R-KS), Agriculture Committee Chairman Thad Cochran (R-MS), Commerce, Science and Transportation Committee Chairman John McCain (R-AZ), and Judiciary Committee Chairman Orrin Hatch (R-UT). Nickles and Hatch are also members of the Finance Committee. Three other Senate Finance Committee members signed the letter -- John Breaux (D-LA), Craig Thomas (R-WY) and Jon Kyl (R-AZ). It was also signed by Sens. Maria Cantwell (D-WA), Peter Fitzgerald (R-IL), Jim Talent (R-MO), Ron Wyden (D-OR), Sam Brownback (R-KS), Zell Miller (D-GA), Gordon Smith (R-OR) and Chuck Hagel (R-NE).

Foreign Sales Corporation (FSC): The European Commission is tackling one of the final procedural steps before imposing $4 billion in retaliatory sanctions. The Commission requested that the WTO dispute settlement body meet for a special session on May 7 to approve the list of retaliatory tariffs. A WTO dispute settlement body found the FSC to be a prohibited export subsidy. Once the tariff list is approved, the final step is for the members of the European Commission to approve the implementation of the tariffs. This final step will be difficult and will probably not lead to the imposition of tariffs any time this year. House Ways and Means Chairman Bill Thomas (R-CA) is expected to use the threat of sanctions to move a bill forward that would repeal the FSC. Ranking Democrat on the House Ways & Means Committee Charles Rangel (D-NY) and Trade Subcommittee Chairman Phil Crane (R-IL) introduced legislation earlier this month, which would repeal the FSC and its successor regime, ETI. The bill would replace the FSC with an income tax reduction for manufacturers, which would ignore whether or not they export their products. The bill contrasts with Thomas' repeal bill which he plans to re-introduce sometime this spring. The bill died at the end of the last session of Congress due to criticism from across the aisle and Republican members of the Ways & Means committee. The Thomas version, supported by the Administration, is limited in offering new tax breaks to compensate for the losses that manufacturers would suffer as a result of the FSC repeal. It is opposed by companies that do the bulk of their manufacturing in the United States, including Boeing and Caterpillar. The FSC and it successor regime, ETI, were ruled illegal export subsidies by a WTO dispute settlement panel and the EU has been authorized to retaliate in the amount of $4 billion.

Byrd Law: Offering a potential solution to the ongoing consternation over the Byrd law, Sens. Jeff Bingaman (D-NM) and Olympia Snowe (R-ME) plan to introduce legislation that will repeal the Byrd law and use the funds collected in countervailing and antidumping cases to fund economic development projects in communities adversely affected by trade. The bill would face steep resistance from companies and industries, which are currently receiving the funds from countervailing and antidumping cases. The Byrd law or Continued Dumping Offset Act funneled funds received in countervailing and antidumping cases to the companies that filed the cases. The WTO ruled the Byrd law violates WTO rules and therefore must be repealed, an action sought by the Bush Administration. Administration hopes were quashed when seventy Senators signed a letter to the President calling on him to look for a negotiated or other solution to the impasse rather than the outright repeal of the law.

USTR Negotiating Texts: In response to a recent court decision, USTR will begin classifying its documents and negotiating texts so as to prevent them from falling under the Freedom of Information Act. With classification, the documents and texts will be available to USTR and a small group of cleared private sector advisors only. USTR does not want to classify their documents, but feels that this is the only way that the court will allow them to maintain their secrecy during negotiations. USTR is also defending its tighter policies restricting the access to negotiating texts and documents. USTR argues that they are attempting to prevent frivolous lawsuits and to respond to Congressional pressure which has criticized USTR for giving information to one group without providing it to others at the same time. USTR acknowledged that it must be responsive to private sector needs and demands as well as Congressional requests because both groups ultimately are required to move any free trade agreement.

Export - Import Bank Nominations: The White House announced its nomination of Susan Schwab as first Vice President of the Export-Import Bank to complete the remainder of a term expiring January 20, 2005. She will replace Eduardo Aguirre who is moving to the Department of Homeland Security to be the Director of Citizenship and Immigration Services. Schwab is currently the Dean of the University of Maryland School of Public Affairs. During the first Bush Administration, she served as assistant secretary of Commerce and Director General of the United States and Foreign Commercial Service in the Commerce Department.

Trade Advisory Committee Nominations: President Bush announced the nomination of four members to the Advisory Committee for Trade Policy and Negotiations for two- year terms. They are Kevin Rollins, Chief Operating Officer of Dell Computer Company; Charles Krause, President of the Missouri Farm Bureau; and Robert Wright, founder of Dimensions International, a Virginia information technology company, and Steven McCormick, President of the Nature Conservancy. The committee now has 38 members.

USTR Staff: Peter Collins, Deputy Assistant USTR for Services has left his position to pursue opportunities outside of Washington. In the USTR agricultural office, Barbara Chattin is moving to USDA to a new position that will coordinate U.S. free trade agreement negotiations. Associate U.S. Trade Representative Josette Shiner will be nominated to replace Ambassador Jon Huntsman as Deputy USTR. Huntsman left USTR to return to Utah and some speculate that he may run for state office. Shiner is expected to take over Huntsman's portfolio which includes responsibility for Africa and Asia in addition to retaining her current responsibilities.

Executive Nominations: The President nominated Assistant Secretary of Commerce for Export Administration James Jochum to succeed Faryar Shirzad as Assistant Secretary for Import Administration. Shirzad is moving to the National Security Council. Before moving to the Commerce Department, Jochum served on the staff of Senate Finance Committee Chairman Charles Grassley (R-IA).