[Pages S8178-S8217]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

UNITED STATES-AUSTRALIA FREE TRADE AGREEMENT IMPLEMENTATION ACT

Mr. GRASSLEY. I now ask unanimous consent that the FSC bill be
temporarily set aside and I now move to proceed to H.R. 4759, the
Australia Free Trade Agreement. I further ask consent that there be 6
hours equally divided between the chairman and ranking member or their
designees; provided further that all other provisions of the statute
remain applicable to the bill.
Further, I ask unanimous consent that following the use or yielding
back of the time the Senate proceed to a vote on the passage of H.R.
4759, and immediately following that vote the Senate resume
consideration of the FSC bill and proceed to a vote in relation to the
DeWine amendment as provided under the order.
Finally, I ask unanimous consent that there be 2 minutes equally
divided for debate prior to the second vote.
The PRESIDING OFFICER. Is there objection?
The Senator from Nevada.
Mr. REID. Mr. President, it is my understanding that we would have 2
minutes on each side, if there is opposition to this, which I think
there will be. Is that right?
Mr. GRASSLEY. Yes. That would be on the DeWine amendment?
Mr. REID. Yes.
The PRESIDING OFFICER. Does the Senator modify his request?
Mr. GRASSLEY. Yes.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Before the distinguished chairman makes his statement, for
the

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3 hours on our side, I would ask that 90 minutes of that time be
assigned to Senator Dorgan, 60 minutes to Senator Conrad, 15 minutes to
Senator Dayton, and 10 minutes to Senator Feingold.
The PRESIDING OFFICER. Without objection, it is so ordered.
The question is on agreeing to the motion.
The motion was agreed to.
The PRESIDING OFFICER. The Senate will now proceed with 6 hours of
debate equally divided.
The Senator from Iowa.
Mr. GRASSLEY. Mr. President, for staff and Senators who are not on
the floor, I call attention to the fact that we are starting the debate
on the United States-Australia Free Trade Agreement. We have 3 hours on
this side. I have not had many requests for time, and I know that two
or three Members want to speak. I urge those Members to come over early
to speak because if we can yield back time we do want to do so.
I was only going to speak about 7 or 8 minutes. The Senator from
Oklahoma wanted to speak 5 minutes. Is there any problem if I give the
Senator from Oklahoma 5 minutes right now and then I speak 7 or 8
minutes and then the Senator from North Dakota can have the floor?
Mr. DORGAN. No problem.
Mr. GRASSLEY. I yield 5 minutes to the Senator from Oklahoma.
The PRESIDING OFFICER. The clerk will report the bill by title.
The assistant legislative clerk read as follows:

A bill (H.R. 4759) to implement the United States-Australia
Free Trade Agreement.

The PRESIDING OFFICER. The Senator from Oklahoma.
Mr. NICKLES. Mr. President, I congratulate Senator Grassley and
Senator Baucus for the way they have managed this bill. They have
conducted their work in a very appropriate way. They had hearings on
this bill. I want to compliment Ambassador Zoellick. Our trade
negotiator did an outstanding job in putting this together.
This trade agreement is a win/win. It is a win for Australia and it
is a win for the United States. I am pleased to see the Senate work as
it is supposed to work. We had hearings on it. We had a markup in
committee. We are now having it considered on the floor.
This is going to open additional markets and reduce tariffs for the
United States. It is going to be a win for Australia as well. Both
countries, strong allies, will benefit as a result.
Prime Minister Howard of Australia has been a good friend and ally of
the United States. He has been steadfast in helping us in many ways,
trade being one of them. Again, free trade, equal trade, open access,
we are winning or gaining more because the tariffs were higher on their
side in many respects and so this is positive for United States
consumers and for Australian consumers.
Again, I want to compliment the administration for proposing this
agreement, for the work that was done by our trade negotiators, and
also by Senator Grassley and Senator Baucus for bringing this up so
quickly on the floor, getting it through the Finance Committee and
ultimately through the Senate today. I also want to compliment our
leader, Senator Frist, for making this happen.
I led a delegation to Australia earlier this year. We felt very
strongly in our support not only for this agreement but frankly in
strengthening our relationships with such a great ally and friend as
Australia. So I am very pleased to support this agreement. I urge our
colleagues to support it with an overwhelming vote later this
afternoon.
I yield the floor.
Mr. GRASSLEY. Mr. President, I yield 2 minutes to the Senate majority
leader.
The PRESIDING OFFICER. The majority leader.

Unanimous Consent Request--authorizing the Judiciary Committee to meet

Mr. FRIST. Mr. President, the agreement we have underway provides for
two votes later this afternoon. The first is final passage of the
Australia free-trade bill and the second is the DeWine amendment to the
FSC legislation. I hope we will not need all 6 hours set aside for the
Australia bill. Some members have already spoken over the course of
yesterday, and therefore we may be able to expedite consideration of
this bill over the course of the afternoon by yielding back some time.
In any event, for the benefit of Senators, I wanted to notify them we
will be stacking these two votes later today.
On another matter, I have been notified that the minority objected to
the Judiciary Committee meeting today at 2. The other 12 committee
requests were granted, and that one request was objected to. There is a
lot of important work to be done by the Judiciary Committee. As I look
at it, the chairman has four judges on the agenda, as well as
legislation. As I look at the schedule, I note that the Hatch-Feinstein
constitutional amendment on flag desecration was scheduled as well
today. I feel it is important to get to both the nominations as well as
the legislation.
It was only the other day there were complaints on the floor about
not taking constitutional amendments through committee, and that is on
their agenda today. Now we have objections to going through the process
of having the committee meet to consider the nominations and
legislation. I hope my colleagues on the Democratic side will rethink
their objection so we can proceed and the Judiciary Committee can
proceed with this important business and allow these committees to do
their work.
I ask unanimous consent that the Committee on the Judiciary be
authorized to meet to continue its markup on Thursday, July 15, 2004,
at 2 p.m. in the Dirksen Senate Office Building, Room 226.
Mr. REID. I object.
The PRESIDING OFFICER. The objection is heard.
Mr. REID. Mr. President, while the distinguished majority leader is
on the floor, we have already started receiving calls in the cloakroom
and I am sure the Republican cloakroom has received similar calls. If
we are able to finish the work on the trade bill and the FSC conference
legislation that is now before the body, will we have votes tomorrow?
Mr. FRIST. Mr. President, before I commit to no votes tomorrow, these
two bills we are voting on today are very important and I would think
we would not have votes tomorrow, but before people take that and sort
of run with it, let me have some conversations over the next 30 minutes
or so.
Mr. REID. Also, I ask the leader, through the Chair, would he also
give some indication before the day is out as to what he plans on
Monday?
Mr. FRIST. We will. There are a lot of Members whose schedules very
much depend on when we vote either tomorrow or later tonight--hopefully
not later tonight, but earlier tonight as well as on Monday night or
Tuesday morning. We will work all of that out within the next hour or
so, so we can notify Members.
Mr. DORGAN. Will the majority leader yield for a question?
Mr. FRIST. Be happy to.
Mr. DORGAN. Mr. President, the majority leader is speaking of
schedules, in this case the schedule of the Senate Judiciary Committee.
I inquire of the majority leader about the schedule with respect to
legislation he and I have spoken about at great length. The last
occasion was about midnight on the floor of the Senate, after which I
allowed the nomination of Dr. McClellan to proceed. As a result of
that, the issue of allowing prescription drug reimportation in this
country and legislation that is bipartisan in scope with over 30
Senators now cosponsoring it, I had intended and hoped we would have an
opportunity to vote on that on the Senate floor. I have not had the
opportunity to speak with the majority leader at length in recent days,
but my hope would be we could go back and revisit what is put in the
Congressional Record. And my hope is what was put in the Congressional
Record will then allow us to have an opportunity on the floor of the
Senate to advance the legislation that we previously discussed dealing
with the reimportation of prescription drugs and allowing us to put
downward pressure on prescription drug prices in this country.

I ask the majority leader whether he has had an opportunity to go
through that and whether he could give me some advice as to when he
would allow that to be debated on the floor of the Senate?

[[Page S8180]]

Mr. FRIST. Mr. President, I will be happy to be in discussion with my
colleague. Since our discussion, now many weeks ago, we have made real
progress in terms of understanding the potential impact of allowing the
reimportation of drugs. I think there has been a lot of discussion on
both sides of the aisle. We had an extended meeting yesterday talking
about the safety issue surrounding it.
Since our discussion, there have been hearings in the appropriate
Health, Education, Labor and Pension Committee. There has been a bill
put together by the principals in the committee, the responsible
committee. There have been scheduled markups, and I believe there is a
markup scheduled for next week on that particular bill. So progress is
being made.
It is a very important issue. We are talking about not just
reimportation and the cost of drugs, but we are talking about the
safety of drugs being used. I think we have made a huge amount of
progress over the last several weeks, so in terms of scheduling and
looking at what time that might be considered on the floor of the
Senate, I will be happy to be in discussion with my colleague.
I yield the floor.
The PRESIDING OFFICER (Mr. Crapo). The Senator from Iowa.
Mr. GRASSLEY. Mr. President, I am happy to bring to my colleagues the
United States-Australia Free Trade Agreement Implementation Act. This
is a bill that Congress must pass to actually implement what has been
negotiated as the United States-Australia Free Trade Agreement. This is
under the process that we call trade promotion authority. This is a
process by which Congress, which has the constitutional power to
regulate interstate and foreign commerce, has delegated negotiating
authority to the President to negotiate certain trade agreements. But
because we have that constitutional authority, we cannot give to the
President of the United States the authority to change U.S. law as it
might be negotiated.
So we are now dealing with legislation that changes U.S. law and
makes the United States-Australia Free Trade Agreement not a treaty
approved just by the Senate of the United States, as we know treaties
are, by two-thirds vote, but this is basic law. It has passed the House
of Representatives by a majority vote, hopefully it will pass the
Senate by a majority vote, and it is to be signed by the President.
We are dealing with the constitutional authority of the Congress to
regulate foreign and interstate commerce, but understanding that it is
not reasonable to expect 535 Members of Congress to deal with foreign
countries, we have asked the President to do that for us but under
guidelines that we have set down and with Congress having the final
authority. We are in the process of exercising that final authority.
As is true of almost any agreement, this one might not be perfect.
However, I believe it will provide significant benefits to the United
States, our economy, and particularly to the economy and the people of
my home State of Iowa.
During committee consideration of the agreement, we heard from a
number of different sectors of the economy which stand to benefit from
the agreement. At the top of the list is the U.S. manufacturing sector
and all the jobs that exist in that sector that will be stabilized and
enhanced as a result of American manufacturing selling a lot more to
Australia because certain duties that now are on those products will be
gone.
Under the agreement, more than 99 percent of U.S. manufacturing
exports to Australia will become duty free immediately after this
agreement is signed by the President. This is the most significant
reduction of manufacturing tariffs ever achieved in any U.S. free-trade
agreement.
This is very good news for manufacturers such as the Al-jon company
of Ottumwa, IA, employing 100 people. Today, about 10 to 15 percent of
Al-jon's production is exported. They are confident that with a level
playing field they can do even better. This bill helps level that
field.
During testimony before my committee, John Kneen, chairman of the
board of Al-jon, testified that while they have had some success
selling in Australia, their exports are currently limited by two
factors: First, Australia currently imposes a 5-percent tariff on their
exports. And, second, the cost of shipping heavy equipment to Australia
is very high. While we cannot do much about the cost of shipping, we
surely can eliminate the 5-percent barrier with the enactment of this
trade agreement.
It is not just the company of Al-jon that will benefit. Mr. Kneen
testified that over 19,000 U.S. companies that currently export to
Australia are likely to benefit from what he termed the ``instant
competitive advantage'' provided by the elimination of these tariff
barriers on U.S. manufacturing exports.

These companies include other Iowa manufacturers such as John Deere,
which has four manufacturing plants in my State. John Deere anticipates
increased exports to Australia on account of this free-trade agreement.
The U.S. agricultural sector stands to benefit from the agreement as
well, as duties on all U.S. farm exports will be eliminated, reducing
tariffs on U.S. agricultural exports by over $700 million. Processed
food, soybeans, oilseed products, fresh and processed fruits and
vegetables, all will benefit from these duty reductions. For U.S.
farmers and our ranchers who compete with Australian agriculture,
special safeguards and tariff rate quotas are included as part of the
agreement to make sure that trade is not only free but fair.
The free-trade agreement negotiating process also opened the door to
eliminate scientifically unfounded barriers to the importation of U.S.
pork and U.S. pork for processing. These are all major Iowa products
because we are No. 1 of the 50 States in the production of pork. While
Australia made its scientific determination regarding pork outside of
the free-trade agreement negotiations, the intensive consultation
process that naturally flows from engaging in bilateral trade
negotiations helped in the resolution of that very important matter.
Dermot Hayes, an economist at Iowa State University, estimates that the
elimination of these unfounded barriers could increase U.S. exports of
pork to Australia by over $50 million annually.
The United States-Australia Committee on Sanitary and Phytosanitary
Measures, and the Standing Technical Working Group on Animal and Plant
Health Measures, which are established under the FTA, will help to
ensure that all Australian standards on United States agricultural
imports are based on sound science and are not used as a basis for
protectionism.
Iowa's service providers will also benefit from new market-access
openings in Australia for our service exports. These commitments, along
with new, transparent trading rules, should provide a lot of important
new market opportunities for Iowa's service exports.
And, for the first time, this agreement opens much of Australia's
lucrative government procurement market to United States exporters. The
government procurement provisions are especially important, as
Australia is one of only a few developed countries that are not members
of the World Trade Organization Agreement on Government Procurement.
In sum, the United States will benefit from the United States-
Australia Free Trade Agreement. I urge my colleagues to vote for S.
2610, the United States-Australia Free Trade Agreement Implementation
Act.
(At the request of Mr. Daschle, the following statement was ordered
to be printed in the Record.)
<bullet> Mr. BAUCUS. Mr. President, today the Senate begins
consideration of the U.S.-Australia Free Trade Agreement. I support
this agreement for one simple reason: Trade means jobs.
The U.S. economy is the most flexible, vibrant, and dynamic in the
world. We owe that to the ingenuity of the American people and their
relentless thirst to create and to innovate.
We also owe it to the policies we have put in place to support the
innovation that keeps our economy growing and creating jobs. That
includes embracing open trade.
Twelve million Americans--1 out of every 10 workers--depend on
exports for their jobs. And these jobs pay thousands of dollars more
than jobs unrelated to trade.
Now, some think of trade as helping only big multinational companies.
In reality, trade helps companies of all sizes. Firms with fewer than
20 workers

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make up two-thirds of American exporters.
Trade also creates benefits for communities across the country. In
Montana, nearly 6,000 jobs depend on manufacturing exports. And more
than 730 Montana companies, mostly small and medium-sized businesses,
export products overseas.
Despite the well-known benefits of trade and the vibrancy of the U.S.
economy, the last few years have been difficult ones.
Since January 2001, the American private sector has lost nearly 2
million jobs--mainly in manufacturing. And service-sector jobs--once
virtually immune to international competition--have begun to move
offshore in increasing numbers.
When people talk about jobs moving overseas, they frequently talk
about trade. Too often, the proposed solution is to retreat into
isolationism and raise barriers to trade. In my view, that's exactly
the wrong approach. We should engage in more trade, not less.
But we must be smart about trade. We must enforce our trade laws and
our trade agreements. We must ensure that markets remain open to U.S.
companies, and that U.S. companies can compete on a level playing
field.
We should reject the notion that we must lower standards in this
country to compete. Instead, we must look to raise standards in the
countries we trade with. The Trade Act of 2002 made tremendous progress
in this regard, but we must continue to ``race to the top.''
The free trade agreement with Australia is the kind of agreement we
should be negotiating. It offers both broad commercial benefits and
high standards.
Australia is one of the few countries with whom the U.S. enjoys a
trade surplus, with the bulk of this surplus in manufactured goods.
With this agreement, U.S. manufacturers predict that U.S. exports
will grow by an additional 20 percent--$2 billion per year. Montana
already exports $3.4 million per year in industrial goods to Australia.
And these exports will grow with this agreement.
This is great news to manufacturing workers who have been hard hit by
massive job losses. It is especially important in a State like Montana,
where we have lost 3,300 manufacturing jobs in the past 4 years. These
losses represented 15 percent of the Montana manufacturing workforce.
But it's not just about manufacturing. This agreement will also
benefit U.S. service providers. Australia will expand access for cross-
border services, and to enhance regulatory transparency. That will mean
greater opportunities in financial services as well as those services
provided through new and innovative technology.
Beyond these benefits, the agreement also increases protections for
intellectual property. And it requires Australia to offer greater
opportunities to U.S. bidders in government procurement.
All of these improvements will translate into a more fair and open
market for U.S. producers. That will mean more jobs and higher wages
for U.S. workers.
At the same time, this agreement opens the door to a greater
relationship with one of the most vibrant and promising economies in
the world. Australia stands as a gateway to the fast growing markets of
Southeast Asia. This agreement will help U.S. companies further develop
their export potential.
Now, some have expressed concerns regarding agriculture. Australia
exports many of the same commodities that the U.S. produces--most
notably, beef, dairy, and sugar. Yet Australia offers a much smaller
consumer market in return.
Those of us from States that produce these commodities were
concerned. However, given the close relationship between the U.S. and
Australia, and given the substantial benefits to the manufacturing and
service sectors, it was clear to me that Congress would approve an
Australia agreement.
The only solution to this challenge for U.S. agriculture was good,
old-fashioned tough negotiating. I urged Ambassador Zoellick to work
hard to preserve the interests of rural America, by treating U.S.
commodities sensitively.
I pushed him to ensure a long transition period, and to provide
strong safeguards where necessary. I am pleased to report that U.S.
negotiators responded to these concerns and met me more than half way.
For beef, there is an 18-year transition period and two automatic
safeguards. As we drafted the implementing legislation for this
agreement, I worked hard to ensure that there were significant
protections for Montana's ranchers.
For dairy, the agreement ensures a slow pace for increased market
access, while maintaining over-quota tariffs--a chief priority for U.S.
producers.
Finally, U.S. negotiators preserved current sugar policy, in order to
enhance our prospects to achieve global reform in the WTO.
These protections help shape an agreement that is balanced and sound.
It enhances opportunities for U.S. companies and workers, while also
being sensitive to the interests of our farmers and ranchers.
Let me turn to one final issue that has been receiving attention
lately. In the last couple of days, some Members have questioned
whether this agreement affects U.S. government regulation of
prescription drugs.
These concerns involve the potential impact of trade agreements on
U.S. healthcare programs, including Medicare, Medicaid and the VA and
DOD programs, and the implications of the agreement on the adoption of
drug reimportation legislation in the future.
USTR has assured Congress that the provisions in the agreement will
not require any changes to the administration of U.S. health programs.
And that no changes to current U.S. law or administrative practice are
necessary to implement the agreement.
Furthermore, because Australia itself does not permit most
pharmaceuticals to be exported, we are assured that this agreement will
not impede Congress from considering and enacting reimportation
legislation.
My own view is that the concerns raised by these provisions are more
hypothetical in nature than concrete. Nonetheless, this is an issue
that Congress--and the Finance Committee--should explore more
thoroughly as we move forward on trade negotiations in the future.
I urge my colleagues to vote for this agreement. This is an agreement
that will help our long-term competitiveness. This is an agreement that
will create jobs. This is an agreement that is good for Montana and
good for America. I hope it will receive strong support.<bullet>
The PRESIDING OFFICER. The Senator from North Dakota.
Mr. DORGAN. Mr. President, we meet here in the Senate again to talk
about the issue of international trade, a very important issue for our
own country.
I would like to follow up on my colleague's comments about the
Constitution. The Constitution does, indeed, talk about trade. It talks
about who is responsible for international trade in this country. It is
article I, section 8 of the Constitution. It says:

The Congress shall have power to regulate commerce with
foreign nations.

Yet Congress has largely given away that opportunity and the
responsibility with respect to trade.
What the Congress has done, strangely enough, is to put itself in a
straitjacket by voting and passing legislation called ``fast track''--
which doesn't sound like English, perhaps, to most people--fast-track
trade authority.
Fast track means that Members of Congress will promise that when a
trade agreement is negotiated somewhere else in the world in secret,
behind closed doors, by our trade ambassador, when it is finally
brought back to the Senate for a vote up or down, the Congress will
prevent itself from ever being able to offer amendments to change it if
it thinks something in it is wrong. That is fast track. The Congress
has decided to limit its own ability to fix problems. I didn't vote for
fast track, but the majority of my colleagues did.
So we have a situation where we have a rather innocuous trade
agreement today between the United States and Australia. There is not
much in this agreement that is of great moment. There are a couple of
bad things in it that should be taken out. We should have a vote on the
provision dealing with pharmaceutical drugs. We ought to have an
opportunity to amend this trade agreement in a way that deals with
trading authorities, such as the

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Australian Wheat Board and the authority in Australia that deals with
the sale of cattle. These are state trading enterprises that would be
illegal in this country. We are actually having to say, let's trade
with someone else who has a monopoly in marketing operations in
agriculture, and we will consider that fair. It is not fair at all. I
will talk about that at some length.
In any event, the Congress, through its lack of wisdom, I must say,
has decided to use what is called fast-track trade authority, which
means this agreement is here now and no one may offer any amendments
because Congress decided to put itself in a straitjacket. So we have a
circumstance with no amendments.
Let me at least describe where we are with international trade. Most
people do not want to talk about it.
This is a massive failure. This is a colossal failure of this country
on international trade.
This chart shows the countries with which we have trade surpluses.
They are not in red, they are in green. All these countries in red are
countries with which we have trade deficits--some very large. You look
at a map of the world and you will see that we have on only a very few
occasions trade surpluses. One of them happens to be with Australia.
That will soon be gone after we pass this trade agreement. That is the
case with every trade agreement we have done. But Australia, Egypt,
Belgium--there are just a few countries with whom we have a surplus.
With the rest of the world, of course, we have a large, abiding,
substantial trade deficit.
Last month, I put this on a chart and showed it on the floor of the
Senate. The Washington Post says, ``U.S. Trade Deficit Set Another
Record In April.'' That trade deficit was $48 billion in 1 month,
almost $50 billion in 1 single month. Month after month after month we
see this trade deficit.
Let me go through a bit and perhaps show some charts that might give
us the opportunity to ask the question, Are we really doing well here?
This is all about jobs, as you know. It is about where the jobs are
located. It is about outsourcing. It is about moving jobs from here to
another country.
Let us look at what is happening to our trade balance. This is the
merchandise trade deficit. You will see this is dangerous, in my
judgment, and very alarming. You won't hear anybody come to talk much
about it. This is sort of the unseen, the hidden part of our policy
that will cause, in my judgment, substantial problems in the future.
You can make a case that the budget deficit, the big budget deficit--
incidentally, it is the biggest in history--will be repaid. It is a
deficit the American people will repay to themselves. You can make that
point. But you cannot make that point with the trade deficit. This
large trade deficit will inevitably be repaid by a lower standard of
living in this country. It is getting worse and worse year after year
after year. And every single year, when another trade agreement is
brought to the Senate floor, we are told what a wonderful agreement it
is and how much we are going to sell and what good times we are going
to have as a result of this agreement. Yet in every single case our
trade deficit grows, jobs leave this country, and you will see that we
are mortgaging this country's future.
Let me talk about some specifics, if I might. This is our trading
partner to the north, Canada, a country with which we have a wonderful
relationship. They, of course, have a terrific relationship with us
with respect to this trade balance.
When we passed something called the North American Free Trade
Agreement, we had a relatively modest trade deficit with Canada--
somewhere in here. But now it has grown to be a very substantial trade
deficit with Canada. I will talk a little about why in a few moments.
China is the granddaddy of trade deficits. You will see what is
happening in China. We are seeing massive and record trade deficits, of
$130 billion a year. It is getting worse, worse, worse, and it is going
to hurt this country.
What about the European Union? We used to actually have a bit of a
trade surplus with the European Union. That has gotten worse and worse.
It is now nearly as large as the merchandise trade deficit we have with
China.
Japan is another interesting one. Japan, while not quite as large as
Europe and China, demonstrates the fundamental and relentless
incompetence of policymakers in trade. Over and over again, year after
year, every single year, we have this deficit with Japan, somewhere
between $50 billion, $60 billion, $70 billion a year, every single
year.
Now Mexico. We had this big old NAFTA, North American Free Trade
Agreement we negotiated with Mexico and Canada. When we negotiated it,
we had a trade surplus with Mexico and a modest deficit with Canada. We
turned that into a big deficit with Mexico and a larger deficit with
Canada. So much for whether this North American Free Trade Agreement
worked.
We could not offer any amendments to any of these agreements because
of this foolishness called fast track, which, incidentally, inhibits us
today in the Senate on this trade agreement with Australia.
I will go through some of the examples. I could start by talking
about Japan. I mentioned the circumstance with Japan. We have a large
trade deficit with Japan, and it just keeps on going every single year,
$45, $60, $70 billion, forever. Europe will not allow that, by the way,
but we do. I am talking about Europe and its relationship with Japan.
We are a country that, in most cases, converts what should be hard
economic policy--that is, trade policy--into softheaded foreign policy
and we do not want to take action anywhere to stand up for America's
interests.
I will talk about Japan in the context of my State. We produce a lot
of beef. We have a lot of ranchers who work hard. They get up in the
morning and work on that ranch. They are hoping to make a decent
living. They want to sell some beef to Japan. But guess what. Nearly 15
years after a beef agreement with Japan between our country and Japan,
which was trumpeted on the pages of all the newspapers--the United
States and Japanese trade negotiators reach agreement on beef--15 years
later, there is a 50-percent tariff on every single pound of American
beef that goes into Japan. That would be considered a failure under any
circumstance here, but in our relationship with Japan, it is just
fine--a 50-percent tariff on every pound of beef. Should we be able to
send more T-bones to Tokyo? I think so, sure. The tariff actually went
down to 38 percent, and because we got a little more beef in to Japan,
it snapped back to 50 percent. It is symbolic of the trade problems we
have.
Does anyone want to do anything? Do we hear anyone rushing off to try
to solve that problem? No. No one talks about that problem.
Let me use the Chinese tariffs on cars for a moment. Two years ago we
did a bilateral agreement with China--actually, almost 3 years ago,
now--a bilateral trade agreement with China. Our country decided,
through our negotiators with China--a country with which we have a
large deficit and it is growing dangerously high--we decided in our
bilateral trade in automobiles we would agree to the following: China,
you can put a 25-percent tariff on any cars that we try to sell in
China after a long phase-in and we will apply a 2.5-percent tariff to
any cars that you might want to sell in our marketplace.
In other words, our negotiators signed up to a deal that said, we
know you have a really big surplus with us, or we have a big deficit
with you, but with respect to automobile trade, you go ahead and impose
a tariff that is 10 times higher than the one we will impose on
automobiles going back and forth between China and the United States.
Of course, right now, China is gearing up an auto industry for
exports and our negotiators said it is fine for them to have a tariff
that is 10 times higher than we would have. That is fundamentally
incompetent. We do not know who negotiated that, of course. This is not
a matter of Democrats or Republicans. It is just incompetence, gross
incompetence.
I will talk a little about Korea and automobiles, and I have used
this example many times. I don't have the latest year's data, but trust
me, it is about the same. Over 600,000 Korean vehicles are coming into
this country. Ships are on the high seas, packed with Korean cars,
coming in so the American consumers can purchase them.

[[Page S8183]]

Good for our consumers. But when 618,000 Korean cars come into our
country for our consumers to purchase, guess how many American cars are
in the Korean marketplace for Koreans to purchase? There are 2,800 U.S.
cars able to be sold in Korea and over 600,000 Korean cars in the
United States.

With respect to Korea, I might point out that we actually were making
some progress recently. It was with a vehicle called the Dodge Dakota.
When it looked as if that was beginning to pick up, we were actually
going to be able to sell some in Korea, they did not like that and took
action quickly to begin to shut that down.
The question is, Why will this country, when all of this translates
to jobs here or there, why will this country decide it is all right in
our relationship with Korea to have them ship 600,000 cars this way and
then keep American cars out of Korea? It does not make any sense to me.
What that means is fewer jobs in the United States and more in Korea.
That means people are laid off here and people are hired there.
I know the agreement we are debating involves Australia, and I will
talk about Australia in a couple of minutes, but it is important to put
this discussion in a frame of reference. We will hear today by those
who support this trade agreement that this is a wonderful agreement,
this is nirvana, and if we just step back and we can see into the
future, this will be new jobs, new economic growth, new opportunity.
Nonsense. Total nonsense.
In each and every circumstance, our trade negotiations have resulted
in trade agreements that have undermined our jobs and undermined our
economic growth.
Want to talk about specifics? I will put the charts back up. Europe,
Japan, China, Korea, Canada, Mexico--show me one of these circumstances
where the trade agreement has buttressed the producers in this country,
the employers in this country, the workers in this country toward new
opportunities. In the aggregate, with each of those circumstances, we
have lost ground rather than gained ground.
I know when we talk about this, people, especially the more
institutional thinkers on this subject, say, well, your discussion
demonstrates you do not get it, you do not see over the horizon, you do
not understand what is happening internationally. This is a global
economy. Why not shape up and listen and you will finally begin to
understand this. You are nothing but a xenophobic isolationist stooge.
Join the rest of the protectionists and just sit down.
I am not a protectionist, unless that means you want to protect the
economic interests of this country, and if so I plead guilty and demand
to be called that. I want to protect the economic interests of this
country. I believe it is in this country's best interest to expand
opportunities to trade. I believe that strongly.
For the first 25 years after the Second World War, our trade policy
was almost exclusively foreign policy because we were trying to help
others get back on their feet. But in the second 25 years after the
Second World War, trade policy continued to be foreign policy when, in
fact, it should have been harder nosed economic policy.
I began to raise questions about trade as a result of a trade
agreement with Canada some long time ago. I suppose it was around 14
years ago. I was serving in the House of Representatives and I was on
the Ways and Means committee. They were going to vote on the United
States-Canada Free-Trade Agreement. It, too, was done with fast track,
where no one was able to offer an amendment. A little provision was
stuck in that agreement that allowed the Canadian Wheat Board, a
sanctioned monopoly in Canada and which sells Canadian wheat through
the monopoly--and that would be illegal in this country--to continue to
move massive quantities of Canadian grain, underselling our farmers
with unfair prices and secret prices into our country, into our
marketplace. I raised those issues but to no avail.
So we came to the final vote on the United States-Canada Free-Trade
Agreement and the vote in the Ways and Means Committee of the House of
Representatives was 34 to 1. I was the one who opposed it.
I was told by all my colleagues: We want this to be a unanimous vote.
It is very important for our committee. You must join us to get a
unanimous vote on this trade agreement. I said: But the agreement is
bad. The agreement is wrong. The agreement is going to hurt farmers and
ranchers in an awful way in this country. So I voted no.
About 3 years later, I drove to the Canadian border one day, the
border between North Dakota and Canada. I rode with Earl Jensen, who
was driving a 12-year-old orange truck. It was a little old 2-ton
orange truck. We rumbled up to border with some durum wheat on the back
of his truck, all the way to the Canadian border.
On this windy day, we saw 18-wheel trucks coming from Canada to the
United States, all loaded with Canadian grain, all of them headed to
our marketplace, all of them with secret pricing, all marketed by the
Canadian Wheat Board--a monopoly--which would be illegal in this
country. All the way to the border we saw those trucks, dozens and
dozens of trucks. The Canadians were saturating our marketplace,
injuring our farmers in dramatic ways.
Well, we got to the border in this little old orange 12-year-old
truck. We had about, I guess, 100 bushels of durum wheat in the back.
When we got to the border station, the Canadian folks said: What do you
have in the back of this truck? We said: We have durum wheat from North
Dakota.
Remember, all the way to the border, we had 18-wheel trucks full of
durum wheat from Canada going into our marketplace at secret prices. We
found later, incidentally, they were at prices that were dumped prices
that were designed to undermine our farmers. But we were told at the
border station entering Canada we could not get just a small amount of
wheat from the United States into Canada. Why? Because you just cannot.
It is the way this works. It is a trade agreement. One side gets to
dump all their products into our marketplace, and a little orange truck
gets stopped going into their's.
A woman from Bowman, ND, married a Canadian. She told me she came
home to Bowman one day, and because she liked to make whole wheat
bread, her dad from the farm loaded up some grain in a couple grocery
sacks. She drove back to Canada after Thanksgiving. She got to the
border. Again, all these 18-wheel trucks were hauling Canadian durum
south. She got to the border, and they forced her to throw out these
two bags of wheat from a North Dakota farm that she was going to take
back into Canada to make whole wheat bread. It was because you could
not take that into Canada.
There is not one person in this Congress, in my judgment, not one in
the U.S. House, not one in U.S. Senate, who will stand up and say: Yes,
that is fair. That is right. We support it. We stand by it. That is
what we intended. Not one. Yet none will lift a finger to change it.
And that is just one small example that got me involved in this
question of fair trade. Why on Earth will this Congress not stand up
for this country's economic interest?
When it comes to international trade issues with respect to the
production of manufactured goods--I have mentioned before and let me do
it again because I am not at all embarrassed by repetition, so let me
do it again and again and again--the Huffy bicycles that are made in
this country, which I have spoken about repeatedly, are a wonderful
bicycle, but they are no longer American bicycles. Huffy bicycles, most
people know, are bought at K-Mart and Wal-Mart and Sears. They are 20
percent of America's marketplace for bicycles. They were made in Ohio
by workers who made $11 an hour. They were proud of their jobs. In
fact, the Huffy bicycles had a decal on the front just below the
handlebar with the American flag. But those workers in Ohio do not make
$11 an hour. They were fired. Huffy bicycles are made in China for 33
cents an hour by people who work 7 days a week, in some cases 12 to 14
hours a day. And the people in Ohio, who were proud to make these
bicycles, had to go home one day to say to their spouse: Honey, I've
lost my job. It wasn't because I didn't do a good job. It wasn't
because I didn't like my job. It was because I can't compete with 33-
cents-an-hour labor.

I don't know, I guess this truly is a globalized economy.
Globalization has galloped along, and we are not going to change it.
Have the rules for globalization moved along quite so

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quickly? I don't think so. What are the rules for globalization?
The next picture is of a little red wagon most of us have ridden in.
The little red wagon is called the Radio Flyer. This little red wagon
was an American fixture for 100 years. For 100 years, they made the
little red wagon in our country. Not anymore. It is gone. You buy labor
for pennies an hour somewhere and have them make the little red wagon,
and then make sure you have them make it in a way that allows them to
sell it back into the American marketplace.
Yes, you can still buy the little red wagon. You can still buy Huffy
bicycles in the American marketplace. But they are not made here. They
show up as a big red bar on that trade chart I showed you, and that big
red bar means jobs, and it means jobs that left here and went there. It
means a worker in Ohio who made the Huffy bicycle now does not have a
job. Because they are bad workers? No. Because they will not work for
33 cents an hour. They cannot do that.
So there are all kinds of elements to this issue of international
trade, something that, in my judgment, is going to impose a substantial
burden on this country with the kind of Federal deficits and kind of
trade deficits we are now waging. You cannot experience these deficits
year after year after year and not be forced, at some point, to turn to
them, face them, and deal with them.
We ought not, in my judgment, deal with them by saying that we want
to retreat from trade. Our country, in my judgment, should lead the
world in trade--but lead the world in saying to others: There is an
admission price to the American marketplace. There is an admission
price here. You cannot, as a country, decide you are going to hire
kids, pay them pennies, put them in unsafe plants, fire them if they
try to form a labor union, and then produce your product and ship it to
Pittsburgh or Fargo or Los Angeles or Denver. You cannot do that
because we won't let you do that.
I will give you an example in China. This is a story from the
Washington Post that I was interested in. It is a tragic story, but it
is a story that mirrors a story of a couple of young women who came to
a hearing I held a few months ago from Honduras who worked in a
factory. You can find them all over the country--the young kids who
work in a carpet plant at age 11. They tell us they have their
fingertips burnt deliberately so that when these young kids are making
these carpets with needles and they stick their fingers, it won't hurt
because the burning of the fingertips creates scarring, so it does not
hurt the kids when they stick themselves. You can find this all over
the world.
Let me describe this story. This happened to be in China. In this
article, it says:

On the night she died, Li Chunmei must have been exhausted.
Co-workers said she had been on her feet for nearly 16
hours, running back and forth inside the Bainan Toy Factory,
carrying toy parts from machine to machine.
It was the busy season before Christmas. Orders peaked from
Japan and the U.S. for stuffed animals.
Long hours were mandatory, and at least two months had
passed since Li and the other workers had enjoyed even a
Sunday off.
Lying in her bed that night, staring at the bunk, the 19-
year-old claimed she felt worn out.
The factory food was so bad, she said she felt as if she
had not eaten at all.
``I want to quit,'' one of her roommates . . . remembered
her saying. ``I want to go home.''
Finally the lights went out. [She] started coughing up
blood. They found her in the bathroom a few hours later,
curled up on the floor, moaning softly in the dark, bleeding
from her nose and mouth. Someone called an ambulance, but she
died before it arrived.
The cause of Li's death remains unknown. But what happened
to her last November . . . in southeastern Guangdong province
is described by family, friends and co-workers as an example
of what China's more daring newspapers call guolaosi.
The phrase means ``over-work death,'' and applies to young
workers who suddenly collapse and die after working
exceedingly long hour days, day after day.

Stories of these deaths highlight labor conditions that are the norm
for a new generation of workers in China. Tens of millions of migrants
have flocked from the nation's impoverished countryside to its
prospering coast.
Perhaps more evidence is in a story about child labor in El
Salvador--a country that our trade ambassador has just signed a new
trade deal with:
Jesus Franco has scars crisscrossing his legs from his ankles to his
thighs, and many more on his small hands. For more than half of his
young life--he is age 14--he has spent long days cutting sugar cane,
and he has the machete scars to prove it. And so do his four brothers
age 9 to 19.
The point of this is simple: The rules of trade, in my judgment, have
to be rules that recognize what we have accomplished in this country.
We had people die on the streets in this country, demonstrating for the
right to organize as workers. We had people demonstrate and die in the
streets over that principle. It was a hard-fought battle to demand that
workplaces be safe for workers in this country but which got there. It
was not easy to get kids out of coal mines and kids out of
manufacturing plants with child labor laws, but we did it.
This country battled long and hard on the question of what is fair
compensation, and we have a minimum wage. We fought all of those issues
and established standards. Do we now believe the conditions of
international trade shall be that anyone who produces anything anywhere
should have admission to the American marketplace to sell that product
in our marketplace? I don't think so. We ought to lead on the basis of
what fair trade relationships really are.
There are so many more issues dealing with international trade, many
of them that affect our farmers, affect ranchers, affect workers. They
affect businesses, small businesses trying to make a living.
The Australia trade agreement is brought to us as an innocent, rather
innocuous agreement. It is not the CAFTA agreement, the Central
American Free Trade Agreement, which is completed but will not be
brought to this Congress before the election. That, of course, is for
political reasons. The Australia agreement, despite the fact that I
will vote no--and perhaps a few of my colleagues will vote no--will
pass today. It is not as controversial as the Central American Free
Trade Agreement, which is going to have difficulty in the Senate. But
CAFTA won't come before the Senate in the coming months, because the
President and the trade ambassador decided they don't want to bring it
here before the election. They don't want to have this debate.
I want to have this debate. I don't think that is a Republican or
Democratic problem. I think both political parties have shortchanged
the country over two decades on trade policy. But we ought to have the
debate now because it is about jobs, growth, and opportunity in the
future.
Let me talk for a moment about Australia. As I indicated earlier, the
Australia trade agreement is with a country that is similar to ours in
many respects, a much smaller economy but similar. I don't allege this
is the kind of problem we had when we were trying to connect a trade
agreement with the country of Mexico, where you were trying to connect
two countries with dissimilar wages and dissimilar standards. That is
not the case with Australia. Australia is a wonderful country with
great people. I would love to visit Australia. I have not yet visited
Australia and would love to do that at some point.
My complaint is that we reach a trade agreement that consigns farmers
and ranchers to great jeopardy. Let me tell you why. The Australians,
like the Canadians, sell their grain, their wheat, through an
Australian wheat board. In fact, it is the second largest exporter in
the world, with 16 percent of the global share. Every grain of that
that is sold internationally is sold through the Australian wheat board
which is a sanctioned state monopoly, a state trading enterprise that
would be illegal in our country.
We have been told time and again by the trade ambassador that we are
going to deal with that. In future trade agreements we will not allow
state trading enterprises to exist in circumstances where they can
undercut our prices and dump their products into our country.
I described the circumstance in Canada with the massive quantity of
grain coming down to our country and my not being able to get into
Canada with a little orange truck with a few bushels. We have for years
attempted to get

[[Page S8185]]

information from the Canadian wheat board about the conditions under
which they are selling into our marketplace at secret prices, and they
have said: Go take a hike. We don't intend to tell you a thing. The
prices are secret. We don't intend to disclose them. Get out of here.
They told that to the GAO, which went up there at my request: We don't
intend to tell you a thing.
What evidence we do have suggests that they, as most monopolists will
do, abused their pricing power and decided at secret prices to undercut
our marketplace, and they have dramatically injured our farmers. That
is not only me speaking. That is from studies that have been done by
the Center for Agriculture and Trade Research. They have calculated the
dramatic amount of money lost by family farmers as a result of unfair
trade.

Now we have an Australia trade agreement. The Australian wheat board
continues to exist in this trade agreement. There is nothing in this
agreement that says, as we hitch together and connect our two countries
in a trade relationship, you must divest yourself or create a
circumstance where you are not using a state trading authority
unfairly. Nothing here prevents them from doing exactly what the
Canadians do.
The Australians are also positioned to do great harm to our country
on beef trade. There are almost no export benefits for our cattle and
beef producers with this free-trade agreement. Given Australia's
relatively small population, its very large cattle herd, and its
position as the world's largest beef exporter, the potential of
Australia becoming any kind of an importer of our beef is almost nil.
Instead, the only significant benefit I can see and many can see as a
result of this with respect to cross-beef trade will be the U.S. beef
packing industry which will profit from increased imports brought in
under this agreement.
The beef industry is highly concentrated in a way that is pretty
dangerous. I mean dangerous to consumers because the more concentration
you have, the more pricing power they have and the more they price
profits away from ranchers and towards themselves. They price it in a
way that is disadvantageous to consumers.
There are serious problems that could exist with respect to
agriculture, and there is nothing anybody can do about that. I would
love to offer an amendment that deals with these two issues, but you
can't because of fast track.
Finally, there is a provision in this agreement that is particularly
pernicious. This is a trade agreement with Australia that includes a
provision on prescription drugs. This is from the New York Times:

Congress is poised to approve an international trade
agreement that could have the effect of thwarting a goal
pursued by many lawmakers of both parties: The import of
expensive prescription drugs to help millions of Americans
without health insurance.
The agreement, negotiated with Australia by the Bush
administration, would allow pharmaceutical companies to
prevent imports of drugs to the United States.

This is a trade agreement, and they stick in a provision about
prescription drugs. They did the same in Singapore. My guess is, they
will do it every chance they get. What is this? It is anticonsumer,
pro-pharmaceutical industry. It is an attempt to thwart those in this
country who want to find a way to put downward pressure on prescription
drug prices. How might one do that? By allowing the market system to
act.
We pay the highest prices for prescription drugs in the world, and
yet we are not able to purchase the identical prescription drug, the
same pill put in the same bottle, made by the same manufacturer, from a
pharmacist who is 5 miles north of the United States-Canada border.
A man talked to me the other day in North Dakota. He said his wife
had breast cancer and she has taken the drug Tamoxifen for her breast
cancer for 5 years and has just finished. She is now off the drug. For
5 years they traveled to Canada to buy their 90-day supply of Tamoxifen
and bring it back across the border because they will allow 90 days of
importation for personal use of prescription drugs. A pharmacist can't
do it, but an individual can if they live near the border. So for 5
years they traveled to Canada. Why? Because you can buy Tamoxifen in
Canada for 10 percent or 20 percent of the price you will pay in the
United States.
Why can't a pharmacist or a distributor go to Canada and buy that
prescription drug? It is FDA approved, a drug that is put in the same
bottle, made by the same company.
Another example is Lipitor. Lipitor is made in Ireland. It is one of
the best-selling drugs in our country for the lowering of cholesterol.
It is sent from Ireland to two places. It is made in Ireland in an FDA-
approved plant. It is sent to Winnipeg and then Grand Forks, ND, and
all over the world, of course. But the difference between the same
bottles that are sent to Grand Forks, ND and Winnipeg is in Winnipeg
you will pay $1.01 per tablet, and in Grand Forks you pay $1.81 per
tablet. What is the difference? About 100 miles and a border and a
provision that protects the pharmaceutical industry from reimportation.
That is helped, with respect to Australia and other countries this
administration intends to negotiate trade agreements with, by their
sticking in this trade agreement a provision dealing with the
reimportation of prescription drugs. It is anticonsumer, and it shows
how little regard those who negotiated this have for the marketplace.
Let's let the marketplace be the arbiter of consumer prices on
prescription drugs. Let consumers have opportunities to access
prescription drugs in other areas where there is a safe supply.

The Australia Free Trade Agreement is going to be passed by the
Congress today--not with my vote, I might add, because I think it
undercuts and potentially injures family farmers and ranchers and our
senior citizens who need affordable prescription drugs.
I hope that even as we do this, as the Congress addresses this issue,
those who care about the long-term economy, long-term economic health
of this country, opportunities and growth of this country--I hope they
will take a hard look at these trade relationships and about our
aggregate trade deficits that are growing alarmingly. I am not asking
that we today do anything that is particularly radical. I am saying we
need to address these things. Can we, will we, should we address the
trade deficit with Europe that is growing rapidly? Should we, can we
address the trade deficit with China that is moving rapidly up, the
highest in the world? Mexico? Canada? Korea? Can we address any of
those? All of them relate to American jobs.
It is safe to say there is not one Member of the Senate who comes to
work with a blue suit every day and takes a shower in the morning, not
at night, because that's the nature of our job--it is safe to say there
is not one Member of the Senate that ever lost his or her job because
of a bad trade agreement. It is probably safe to say there is not one
journalist in this country who consistently writes about trade issues
and seldom talks about these trade balances. It is safe to say they
have never lost their job because of a bad trade agreement. But we can
talk about a lot of people who have. We have a chart that shows the
number of people who have lost their jobs with respect to NAFTA. This
is not my speculation; these are companies that actually applied to the
Department of Labor as a result of laying off workers due to the North
American Free Trade Agreement. There was a provision in NAFTA that if
you lay off workers as a result of NAFTA, you can apply for trade
adjustment assistance. Here are the top 100 companies certifying they
laid off United States workers due to our trade agreement with Mexico
and Canada--mostly Mexico in this case.
Levi Strauss is No. 2. They laid off 15,676 people. Levis are all-
American. That is like bicycles and little red wagons, right? When you
buy Levis these days, you are not buying American.
Fruit of the Loom shorts and T-shirts used to be made in America. I
always said it is one thing to lose your shirt but now Fruit of the
Loom is gone.
From these 100 companies alone, a couple hundred thousand people lost
their jobs. They all had hopes, dreams, and aspirations. They love this
country and try to do their best. They were told by any one of these
companies, sorry, you are out of work, we are moving to Mexico.
Next time you buy a Fig Newton cookie, guess what. You are eating

[[Page S8186]]

Mexican food. Fig Newtons were made in America for a long, long, long
time. But Fig Newtons, like Levis, like Fruit of the Loom, are now
Mexican. When somebody says let's have Mexican food, go buy some Fig
Newtons.
The point is this: We had people working in all these areas producing
these products. I will go back to the chart that I used when I began
about what has happened in the aggregate to our trade deficit year
after year after year. It shows this very substantial failure. All of
these big deficits represent jobs that moved, jobs that should have
been here but are not, jobs that could have been created here but
weren't, or jobs that were here and left.
Let me again say I don't believe the solution to this is putting up
walls, deciding that we are isolationist, that this is not an
international economy. I believe the answer to this is to finally use
the term fairness in the context in which it ought to really mean fair
trade for all countries. Trade agreements should be mutually
beneficial. But these trade agreements, the ones I have described,
consistently and relentlessly have been unfair to this country. We were
big and strong enough in the 25 years after the Second World War to
withstand that. We were the biggest, strongest, and best in the world,
and we could take any country on in economic competition and beat them
with one hand tied behind our back. After World War II, we were that
good. As other countries grew and became stronger and better, they
became tough international, economic competitors. Our trade policy
never changed. It largely remained foreign policy.

Last year, the administration's Trade Policy Review Group recommended
take action against China, for failing to live up to its obligations on
China trade. But the administration didn't. Why? Because the
administration concluded that this would upset the Chinese. That is
foreign policy; it has nothing to do with hardnosed economic policy.
This country lives in a world in which we have incredibly tough
competitors. It requires us, it seems to me--if we are going to
maintain this standard of living, it requires us to care a little about
the preservation of that standard of living, and that in turn depends
on both the entrepreneurs and those who work, the producers and the
workers.
We have not done nearly what we should do in this country to stand up
for our economic interests on international trade. I believe trade can
be good, but much of the trade we have been engaged in in recent years
has resulted in the largest trade deficit in history and will
inevitably detract from this country's opportunity to grow, prosper,
and create new jobs in the future, unless and until this Congress and
this administration stand up and understand we need to take action on
behalf of our country to protect our economic interests. All I ask for
is fair trade.
I will vote against the Australia Free Trade Agreement because it
contains three bad trade provisions, because we cannot get these
removed due to fast track, which itself is an unfairness perpetrated in
the Congress.
My expectation is that, even without my vote, this free-trade
agreement will pass. But I will be back to talk about trade issues in
the future.
I yield the floor.
The PRESIDING OFFICER (Mr. Smith). The Senator from Ohio.
Mr. VOINOVICH. Mr. President, with a sense of regret, I come to the
Senate floor to speak in opposition to the legislation before us to
implement the free-trade agreement negotiated by the administration
with our good friend and ally, Australia.
One thing I have made clear throughout my career in Government is the
fact that I believe in free trade. As Governor of Ohio, I supported
NAFTA and the establishment of the WTO. As a Senator, I supported
permanent normal trade relations for China, the Andean Trade Preference
Expansion Act, and the so-called ``fast track'' trade negotiating
authority. I also supported our FTAs with Jordan, Chile, and Singapore.
Until very recently, our economy has been bleeding jobs--23,000
manufacturing jobs lost in my State of Ohio between May of 2003 and May
of 2004, which is over half of the total 41,000 jobs lost in all
sectors.
While I still firmly believe in free trade, I cannot stand idly by
while our trade laws are ignored by other countries and go unenforced
by our own. I will no longer allow the illegal trade practices of other
countries that put good, hard-working Americans in the unemployment
lines to be disregarded, because that is exactly what is happening.
When it comes to trade, China is the elephant in the room that
everyone is afraid to acknowledge because they fear it will rear its
ugly head. It seems as if we want to waltz with the Chinese and, for
some reason, we are afraid to step on their toes for fear they might
get mad.
As I and many of my colleagues see it, the two most prevalent trade
issues we face are the manipulation of China's currency and their
resistance to reform and enforcement of their intellectual property
rights laws as required by their WTO accession agreement.
My good friend and colleague from South Carolina, Senator Lindsay
Graham, and I held a press conference last month to highlight a finding
in a report by the United States-China Economic and Security Review
Commission, a Commission we in Congress created to suggest changes to
current U.S. policies with regard to China.
The report issued by the Commission was quite alarming, and I suggest
that every Member of both this and the other body read the trade
sections of that report.
The Commission reinforces what I have been hearing from Ohio
businesses and what I have been saying for years: China is not trading
fairly and is hurting Ohio workers and American workers. As we know,
since the early 1990s--this is the early 1990s--China has pegged its
currency at 8.28 yuan per dollar, which is believed to be anywhere
between 15 and 40 percent lower than it should.
This action has the effect of making U.S. products more expensive
than items produced domestically. It also makes the retail prices paid
here in the United States for Chinese goods artificially low,
generating less demand for our domestic products. If demand is lowered
both here and overseas of U.S.-manufactured goods, companies will lose
money and lay off workers. They already have.
The Commission's report states that if China were to end its currency
manipulation, it is believed other East Asian countries, such as Japan,
Taiwan, and South Korea that have also manipulated their currencies in
order to remain competitive with China, would also follow suit and end
their manipulation.
The Commission has arrived at a unique solution to China's currency
manipulation. They do not believe China's currency should be floated,
as are most developed countries' currencies, because China's banking
system and financial markets are simply not prepared. Instead, they
recommend that it be pegged to a ``market basket'' of several trade-
weighted currencies to avoid fluctuation of any one country. That is
exactly the kind of ``outside the box'' thinking Congress had in mind
when we created the Commission as part of the fiscal year 2001 Defense
authorization bill.
The Commission recommends that the administration take strong action
to thwart China's exchange rate practices, something I have repeatedly
urged the administration to do myself.
Last fall, I introduced the Currency Harmonization Initiative through
Neutralizing Action, CHINA, of 2003. This legislation requires the
Secretary of the Treasury to analyze and report to Congress within 60
days whether China is manipulating its currency to achieve an advantage
in trade. The CHINA Act also expresses the sense of Congress that the
administration should pursue all means available to remedy China's
currency manipulation.

The other pressing trade issue is China's lack of enforcement of
intellectual property rights laws. This issue at least is getting some
traction in the Senate. Unfortunately, not enough of my colleagues are
aware of how bad this situation is or of how long the situation has
persisted.
In April 1991, China was named a priority foreign country by the USTR
under section 301. After further investigation, the U.S. threatened to
impose $1.5 billion in trade sanctions if an IPR agreement was not
reached by January

[[Page S8187]]

1992. While that deadline was met, by 1994, the USTR again listed China
as a priority foreign country because they failed to properly enforce
their laws. New talks failed for almost a year before a new agreement
regarding Chinese IPR laws was reached.
As part of their new commitment, China agreed to take immediate steps
within 3 months, establish mechanisms for long-term, effective
enforcement, and provide greater market access for U.S. products. In
1996, USTR again listed China as a priority foreign country for not
fully complying with the latest agreement. Talks stalled until China
was threatened with $2 billion in sanctions when they reportedly
satisfied U.S. demands.
However, the problem remains as estimates show the piracy rate for
IPR-related products in China to be around 90 percent. Chinese law
enforcement officials often lack the resources or the will needed to
vigorously enforce IPR laws. Under the terms of the Chinese accession
to the WTO, they were to immediately bring their IPR laws into
compliance with the WTO Agreement on Trade Related Aspect of
Intellectual Property Rights.
This also has not happened as promised. U.S. firms are still losing
billions of dollars per year in China alone, and all we have to show
for it is a string of broken promises that started in 1991.
I remember being in China in 1995 with a trade mission and speaking
to the Chinese Government about the importance of enforcing their
intellectual property rights. They said: Yes, we are going to do it.
Here we are, 2004, and they have not continued to do the job they are
supposed to be doing.
Regardless of China's staggering piracy and counterfeiting
operations, they are far from being the only problem area in the world.
The U.S. Trade Representative lists 18 countries as ones with which we
have ``significant concerns'' with respect to their IPR laws and
enforcement. In my opinion, this is far too many countries flouting
their international obligations.
In the Governmental Affairs Subcommittee which I chair, I held a
hearing on April 20, 2004, that focused on intellectual property
violations in the manufacturing sector of the economy, and another on
December 9, 2003, which examined the ability of the Department of
Commerce and the U.S. Trade Representative to negotiate, monitor, and
enforce our complex trade laws in a rapidly shifting global trade
environment.
Also, just last month, I participated in a hearing held by Chairman
Lugar in the Foreign Relations Committee which focused on China's
inability to enforce intellectual property rights when it comes to
music, films, and software. To quote the testimony of Jack Valenti, the
head of the Motion Picture Association of America:

Piracy problems are only becoming more severe. In 2002, the
piracy rate in China for American films, home videos, and
television programs was about 91 percent. In 2003, the
pirates captured at least 95 percent of that market. The
current level of piracy is worse than it has been at any time
since 1995 when it was 100 percent.

But these industries are only the beginning of those suffering from
China's disregard for international standards.
Perhaps the greatest problem to overcome is to change the perception
in many countries that intellectual property rights do not exist. For
U.S. manufacturers, artists, filmmakers, and others, the protection of
intellectual property is not an abstract concept because at stake are
their livelihoods and those of the people who work with them and for
them.
We must make it clear we will not tolerate these trade violations. If
the United States were to, in some way, violate a trade pact, the whole
world would be beating down our door demanding we change our ways and
pay for damages. But when we ask that countries follow the trade pacts
to which they already agreed, we are denounced as bullies. Well, I say,
let's be bullies.
My concern is that we may not be able to be bullies because, as I
learned in my hearings, we do not have the mechanism in place to
enforce our trade laws. In other words, we do not know who we should
bully around because we do not know who is breaking what agreement.
Moreover, testimony indicated that our Government is not doing anything
to help the companies that are having their intellectual property
stolen.
The state of enforcement is nothing short of abysmal. Amazingly, USTR
only employs a grand total of 225 people. It has become painfully
obvious that this is an insufficient number of employees to negotiate,
monitor, and enforce our trade deals.
Given the impact of changing global economic forces, it is important
for our trade agencies to have the right people with the right skills
and knowledge to effectively monitor and enforce our complex trade
agreements.
It was clear from the testimony delivered at the hearing that our
Department of Commerce, the Customs and Border Protection Agency at the
Department of Homeland Security, the USTR, and the rest of the 17 or
more Federal agencies responsible for monitoring and enforcement of our
trade agreements cannot do so effectively.
This could accurately be described as a case of the left hand not
knowing what the right hand is doing. In my days of service in
government as a Senator, Governor, and mayor, I have never seen such a
hodgepodge of agencies and departments struggle with a relatively
simple mission to enforce our trade laws.
Following my April hearing, I visited the Web site given as an
example of what the Federal Government was going to do to help
manufacturers that had become victims of counterfeiting. On that Web
site was a telephone number, which I called. However, the person on the
other end of the line had no idea that anyone but those with problems
relating to immigration would ever be calling that number.
So I called later and I told them who I was, George Voinovich, U.S.
Senator, and that I wanted to know what resources were available to
victims of counterfeiting, and eventually I was connected to the
correct person. Small business owners should not have to deal with such
nonsense when asking their Government for assistance.
I am pleased to say that those answering the line are now aware of
this other function. But the way it works is, if I am an Ohioan who has
an IPR problem, I call this number and then they give me the number of
my local Customs office and ask me to call them to begin my complaint.
That is ridiculous. It is absolutely no help whatsoever to smaller
manufacturers in this country.
I have been pressuring this administration at the highest levels to
address the many issues we have with China. In March of this year,
along with Senators Lindsey Graham, Schumer, and Durbin, I sent a
letter to President Bush requesting an emergency meeting with the
President, Treasury Secretary Snow, and Ambassador Zoellick to discuss
concrete action regarding continuing illegal undervaluation of China's
currency. That was 5 months after I wrote to Ambassador Zoellick,
Secretary Snow, and Commerce Secretary Evans urging them to initiate a
301 investigation into China's practice of currency manipulation.
The response we received from the administration? None. Nothing was
known about the stance of this administration until April 28 of this
year when Secretaries Snow, Chao, Evans, and Ambassador Zoellick held a
press conference to announce they would reject a yet-to-be-filed 301
petition requesting an investigation into China's currency
manipulation. Needless to say, I was extremely disappointed that the
administration would announce such a position before even receiving the
petition documents.
China continues to tolerate rampant piracy of copyrighted U.S.
material, with rates of piracy running above 90 percent across all
copyright industries for 2003.
This year, piracy is estimated to cost U.S. industries $2.6 billion.
Technology has made it much easier to copy or steal the engineering,
packaging, and so forth of a product than in the past.

I was talking with a shareholder in a golf club manufacturing outfit
6 months ago. He said that within 3 days after they put a golf club out
on the market they were already counterfeiting it in China and sending
it to the United States.
Another example, in my own State, Gorman-Rupp Company of Mansfield,
which testified at my April hearing,

[[Page S8188]]

since 1933 has designed and manufactured pumps used for many
applications, including water, wastewater, petroleum, government uses,
and agriculture. A Chinese company has not only copied and exploited
Gorman-Rupp product manuals and performance specifications, but the
Gorman-Rupp logo is still displayed on the products in the Chinese
company's literature. In other words, this is a case where they copied
the machine, the pump, to a ``T,'' then they used the same promotional
material that Gorman-Rupp uses for their material. They copied it line
and verse and are using it to promote their pirated product.
Unfortunately, patents do not protect American manufacturers.
America's competitive edge is derived from innovation and the
resulting steady influx of new products and services. Intellectual
property rights protect and promote this innovative spirit. In too many
cases with too many foreign countries, our intellectual property is the
last edge we have because of a fundamentally unbalanced playing field.
Many of our competitors do not have to consider environmental
standards, labor laws, employee safety, litigation costs--and this
Congress has to do something about litigation costs in this country. It
is a tornado cutting through the economy and we just sit here and do
nothing--health care costs. Losing our intellectual property is the
last edge we have.
The United States-China Economic and Security Review Commission
believes the administration should file a WTO dispute on the matter of
China's failure to protect IPR and to promulgate and enforce WTO-
required laws. To quote the report:

Follow through and action have been limited. . . . The
Commission believes that immediate U.S. action is warranted.

I hope my colleagues read the report. The Commission believes that
immediate U.S. action is warranted on this issue. There is a sense of
urgency. We are just going to Tweedledee Tweedledum? We have done
nothing since 1991 on IPR and it is now 2004 and we are still doing
nothing?
As I said, I believe in a fair playing field in which competitive and
comparative advantage wins the day. We cannot continue to let countries
walk all over us. The one country that everyone seems to be afraid to
call on the carpet for flagrant violations of their international
agreements is China. I do agree with some of my colleagues that maybe
the reason we are not doing it is because of foreign policy decisions,
but we have to put a stop to China's illegal and unethical trade
practices.
There are people who come into my office and literally shed tears,
people who have been in business for years, and they are going out of
business because of competition from China because of the fact they
have taken their patents. So we need to do something. We have to do
something now.
Despite these overwhelming problems facing our
Nation's manufacturers, I must say I have yet to see any significant
action on behalf of the administration to respond. Now I have talked to
some people and they say, oh, yes, George, we are working on this; we
are talking to people; we are negotiating and we are doing this.

Well, it is time to bring it to the surface. Let the American people
know what they are doing instead of hiding out. Make it an issue. Let
the Chinese know we are serious about this thing. Let them know the
U.S. Congress is serious about it. Let them know the administration is
serious about it. So we can get some action.
Last month I made it known that I would not support any new trade
agreements until there was a movement on these two fronts, and that
makes me feel very bad. I am a free trader. I believe in free trade.
But we do not have fair trade. Maybe the only way this Senator from
Ohio, who has a lot of people who are on the edge of losing their
businesses, can maybe get someone's attention in the administration to
get out and start talking about this the way they should be so the
American people, and particularly the voters in Ohio and the
manufacturers and the people losing their jobs, is to say to them I
will not support any other trade agreement on the Senate floor until
they do something about the currency manipulation in China and the
enforcement of intellectual property rights.
I yield the floor.
The PRESIDING OFFICER. The Senator from Tennessee is recognized.
Mr. ALEXANDER. Mr. President, I see the Senator from South Carolina.
I know he wants to speak so I will be succinct in my remarks.
I have listened to the Senator from Ohio, whom I greatly respect. I
believe there are good free-trade agreements and there are bad free-
trade agreements. I believe the proposed United States-Australia Free
Trade Agreement is a good free-trade agreement. I intend to vote for
it. I believe it will strengthen our economy. I believe it will create
more jobs in the United States and it will also strengthen the historic
close ties between our two countries.
I have a special fondness for Australia. In 1987, when I finished two
terms in the Governor's Mansion, our family moved to Australia and we
lived there for 6 months, my wife and I and three teenagers and a 7-
year-old. I remember my 7-year-old son wanting to know if there would
be McDonalds there. I remember fly fishing in Tasmania with my older
son Drew, and thinking I was about as far from Nashville as I could get
on Earth. I think maybe I was.

We didn't know much about Australia when we went, but we learned
about Australia there, and we found it a great place to learn more
about our own country. In spite of the distance between our countries,
our countries could not be closer. Australians and Americans are
literally cousins, almost first cousins. We are both pioneers. We both
started out as underprivileged people. In some cases, our ancestors
started out as prisoners, stuck in a new place, far from home, trying
to find a new life.
They lived hard lives, those earlier ancestors, but each generation
worked hard to make life better for the ones who came next. We
successfully settled continents and, from a patchwork of natives and
immigrants, created a unique identity, of which we are each proud.
It is our similarities that have led us to the close relationship we
enjoy today. Australia has been one of our staunchest allies in our
toughest times. We stood together in World War II, in Korea, in
Vietnam, in the first gulf war, and in Iraq today. Australia
contributed more than 2,000 troops to the effort in Iraq and has been a
strong supporter in the war on terror. Their F-18 fighter aircraft have
joined ours in air strikes on enemy military targets. Few countries in
this world have been stronger allies of ours than the Australians.
Even before this agreement, Australia has been one of our major
trading partners--$28 billion in two-way trade annually passes back and
forth between the United States and Australia. In fact, the United
States enjoys a rare trade surplus with Australia, $9 billion last
year.
This agreement means our relationship can only grow stronger. It is
good for us. It is good for them. The U.S. Trade Representative
estimates the agreement will generate at least $2 billion per year in
dollars for both countries by the year 2010. More than 99 percent of
United States exports of manufactured goods to Australia will become
duty free immediately upon ratification of this agreement--the most
significant, immediate reduction of industrial tariffs ever achieved in
a United States free-trade agreement. Australia in turn will see the
elimination of tariffs on more than 97 percent of its exports. U.S.
investment in Australia will increase, and closer ties with the United
States economy will generate investment in Australia from all over the
world.
I believe the United States-Australia Free Trade Agreement is good
for our economy and it is good for our alliance. It benefits the
farmers and manufacturers and investors and citizens of Australia as
well. It further opens the door to trade in Southeast Asia, one of the
fastest growing regions in the world.
I am pleased to add my voice in support of this momentous agreement
and to celebrate the further strengthening of the tie between the
United States and our first cousins in Australia.
The Senate will be talking about the tobacco buyout later today. I
will be voting for the proposed amendment when it comes up.

[[Page S8189]]

Tobacco farmers in Tennessee have increasingly struggled to succeed
under the antiquated federal supply and price controlled tobacco
programs. I grew up in East Tennessee, and small family tobacco farms
were a part of the lifestyle and economic vitality of that area where
my family has lived for seven generations. Because of the Depression-
era federal tobacco programs, the number of tobacco farmers in
Tennessee has decreased from more than 35,000 farms in 1980 to roughly
20,000 today. Revenue has gone down by $25 million. We have 80,000
Tennesseans who depend on quota lease payments for some part of their
income.
This legislation, that I intend to vote for, will provide a short
term bridge to tobacco growers and quota holders and the communities in
which they live. Tennesseans who own quotas will receive a fair
transition away from lease income they have received. Growers will
receive transition payments as well. The buyout would last over ten
years and mean roughly $1 billion to the family farmers, quota lease
owners, and communities in Tennessee.
I believe if we pass this legislation that it can be combined with
what has passed the House of Representatives to be a program that is
fair to the tobacco growers, good for the economy and doesn't cost the
American taxpayer one red cent. It's hard to come up with a combination
that good very often.
I have not been a fan historically of FDA regulation of tobacco, a
legal product, and while I am not 100 percent satisfied with the FDA
proposal, I am willing to accept this compromise in order to move the
tobacco buyout forward.
The PRESIDING OFFICER. The Senator from South Carolina is recognized.
Mr. HOLLINGS. Mr. President, I ask unanimous consent to speak for 20
minutes of the time under the control of the Democratic manager.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. HOLLINGS. Mr. President, right to the point with respect to the
Australia trade agreement, I join my friend from Tennessee in endorsing
this particular trade agreement. Trade is what we say it is, a trade
for the benefit of the particular countries involved. It is not aid.
People wonder why we are in such difficulty. The difficulty lies in the
proposition that the old David Ricardo doctrine of comparative
advantage has been superseded now, not by any doctrine of natural
advantages, such as Ricardo had in the early 19th century when he
enunciated that particular doctrine, but it is contrived and we are the
contrivers. We are looking at them, my colleagues in the Senate and the
House, the Government itself.
If anybody wants to improve our position on trade, we can go right to
the particular beef with respect to the distinguished Senator from
Ohio. He said he called the Secretary of Treasury and asked that there
be a petition for an investigation of China's trade practices, a 301
proceeding. He didn't get any results.
I see the distinguished ranking member, former chairman of our Budget
Committee, on the floor. If you looked at 11 o'clock this morning, the
public debt to the penny is $484 billion. Last year we ran a deficit of
$562 billion. Don't give me this off-budget and on-budget, public
budget, Government budget, private budget, or whatever else. No, that
is how much more we spent than what we took in. It is already $484
billion and I will take all bets it will exceed $600 billion.
In fact, although they talk about the war and everything else of that
kind, during the 5 years of World War II from 1941 to 1945, during that
5 years we added to the debt $200 billion, in the war to end all wars.
We add that every 4 months under this administration, some $200
billion.
I mean, we are up, up, and away. So when you call over to the
Secretary of Treasury and the Secretary of Treasury calls over to the
Minister of Finance in Beijing, China, and he says: You know, you have
good Senators. They are on my back. They are complaining. We have to
get something done.
He says: Well, I am sorry, but we will have to quit, we will have to
stop buying your bonds, quit financing your debt.
Japan has $400 billion of this Treasury. The Chinese have over $150
billion. So when we do not pay the bill and everybody says tax cuts,
got to have tax cuts to get reelected--you now meet yourself coming
around the corner. That is why you can't get the Secretary of Treasury
to do anything on trade.
But let me go to Australia. The general measure of a good trade
agreement is that it is with those countries that have relatively the
same standard of living. The reason I point this out is because they
would be amazed for me to come up in favor of a trade agreement. They
have me down as a textile protectionist, and I have passed four textile
bills that have gone through the House and Senate and been vetoed by
Presidents Carter, Reagan, and George Herbert Walker Bush.
But be that as it may, yes, I voted for the Canadian Free Trade
Agreement but against the Mexico Free Trade Agreement on NAFTA. Why? I
can see my friend Senator Moynihan from New York saying: Wait a minute,
down in Mexico they have to have a free market before they can have
free trade.
There was the common market approach in Europe. Before they allowed
Greece and Portugal into the common market, they taxed them as members
of the European Union over a period of years for $5 billion, so that it
could develop the entities of a free market, labor rights, respected
judiciary, property rights, and the other things that go along with
capitalism. Obviously, Australia, we always whine. I can hear my labor
friends: We have to have labor rights, we have to have environmental
protection. They have better labor rights in Australia and better
environmental protection in Australia. But they have relatively the
same standard of living.
Right to the point: We have a plus balance on trade. You don't get
every one of the protections. There are some protections in there for
beef, and there is a gradual opening. They phase out the tariff rate
quota on dairy products over an 18-year period. And they import sugar.
It is not liberalized in any way. That has been protected for the
United States. Australia has maintained its monopolies on wheat,
barley, and rice. They receive the right to maintain or restrict the
foreign content of television programs.
In other words, they protect local production and the
pharmaceuticals. We thought a bill was coming up shortly with respect
to pharmaceuticals in Australia. They subsidize the drugs for the
population there. Therefore, they wanted to restrict drugs coming from
Australia into the United States because they didn't want to start
subsidizing American consumers.
There are a few exceptions. But it is a solid agreement.
We don't have a better friend--whether we were going into Korea,
whether we were going into Vietnam, whether we were going into Iraq. I
am telling you right here and now that the best friend we have ever had
is Australia.
We have relatively the same standard of living with different
restrictions here, there, and yonder. If we can't get an agreement with
them, who?
Let me talk about another particular point. There is none better in
the Senate than my distinguished colleague from North Dakota, Senator
Byron Dorgan. He was talking about fairness.
After World War II, we started the Marshall Plan, and financed the
development of Europe and the Pacific rim countries. We sent the
equipment, the expertise, the money, the technology, and it worked. We
spread capitalism. It has prevailed over communism in the Cold War, and
everybody is happy. But in that 50-year period, instead of following
our example by giving up a good part of the textile industry, giving up
a good part of the automobile industry, giving up a major part of the
electronics industry--and I could go right on down the list, steel and
otherwise--they didn't follow suit.
When they talk about free trade, it is interesting to look at the
1992 foreign trade barriers. Some act like we have to set the example.
We tried that for 50 years and flunked. We have flunked the course.
In 1992, they had 265 pages of restrictions in the foreign trade
barriers--the Office of the U.S. Trade Representative. Then in 2002, 10
years later, they had exactly 455 pages. It went up by 200 pages. Since
I have been doing this, the Trade Representative has put out a

[[Page S8190]]

newer one in smaller print. No kidding. They are clever over there.
They don't think you are watching.
The movement is to protectionism. How in the Lord's world do you
think we are going to survive in a trade war? That is what we are in--
protectionism for free trade.
The question before this body is how to get there. Come on.
It is like world peace. Everybody is for world peace, but the best
way to preserve the peace is to prepare for war. The best way to attain
free trade is raise the barrier to a barrier. We then remove both. It
is competition.
It is trade. The word ``trade,'' free trade is an oxymoron. There is
nothing free. There is no free lunch.
I can tell you now in this globalization, come on. Senator, you don't
know anything about globalization. You don't want to compete. You don't
understand. We have globalized. We have globalization going on.
Did you know that the United States of America invented
globalization? We invented it under Alexander Hamilton. We had just won
our freedom as a fledgling colony.
The Brits said, Wait a minute, to Hamilton, we will trade with you
what Britain produces best, and you in the new United States of America
trade back with us what you produce the best. Hamilton started
globalization. He told the Brits to bug off in his Report on
Manufacturers.
We started globalization, and we have continued it.
Do you know what it takes for protectionism? We didn't even pass an
income tax until 1913. We financed government for 100 and some years.
Theodore Rex said, on page 21--this is the turn of the last century
under Teddy Roosevelt.

This first year of the new century found her worth twenty-
five billion dollars more than her nearest rival, Great
Britain, with a gross national product more than twice that
of Germany and Russia. The United States was already so rich
in goods and services that she was more self-sustaining than
any industrial power in history.
Indeed, it could consume only a fraction of what it
produced. The rest went overseas at prices other exporters
found hard to match. As Andrew Carnegie said, ``The nation
that makes the cheapest steel has other nations at its
feet.'' More than half the world's cotton, corn, copper, and
oil flowed from the American cornucopia, and at least one
third of all steel, iron, silver, and gold.
Even if the United States were not so blessed with raw
materials, the excellence of her manufactured products
guaranteed her dominance of world markets. Current
advertisements in British magazines gave the impression that
the typical Englishman woke to the ring of an Ingersoll
alarm, shaved with a Gillette razor, combed his hair with
Vaseline tonic, buttoned his Arrow shirt, hurried downstairs
for Quaker Oats, California figs, and Maxwell House coffee,
commuted in a Westinghouse tram (body by Fisher), rose to his
office in an Otis elevator, and worked all day with his
Waterman pen under the efficient glare of Edison lightbulbs.
``It only remains,'' one Fleet Street wag suggested, ``for
[us] to take American coal to Newcastle.'' Behind the joke
lay real concern: the United States was already supplying
beer to Germany, pottery to Bohemia, and oranges to Valencia.

We walked into the World War II Memorial and over on the right-hand
side you see a saying by President Roosevelt in 1942 of how we won that
war. He gave tribute to Rosie the Riveter, the American production
machine. That is how we built it, with protectionism.
Now for 50 years, we have given it away. We continue to want to give
it away and put ourselves in the hands of the Chinese and Japanese by
not paying our bill. They are financing our debt.
There you are. That is the reason for the situation we are in. We are
the ones to blame. Before you open up Smith Manufacturing, you have to
have clean air, clean war, Social Security, Medicare, Medicaid, minimum
wage, plant closing notice, parental leave, safe working place, safe
machinery, the Americans with Disabilities Act--I can keep on going.
But you can go to China for 58 cents an hour and have none of those
requirements.
America is leaving and organized against us and the U.S. Chamber of
Commerce has turned into the International Chamber of Commerce. The
multinationals are taking it over and they are all hollering, ``free
trade,'' ``free trade,'' continuing to produce overseas, dump back into
the United States. And we are in the hands of the Philistines; namely,
WTO.
Every time we bring a dumping case, they say it is violative of WTO.
You can't sell a product at less than cost in the United States but you
can take a foreign Lexus automobile and sell it for $35,000. That same
automobile sells for $45,000 back in the Tokyo market. The competition
is market share; it is not profit.
This is a very complicated subject. We have to come to grips with it.
There are going to be exceptions to those countries that have the same
standard of living. You have your national interests and national
concerns.
I voted for free trade with Jordan. She is our only friend out there
helping us with Israel in the Middle East. So you make those exceptions
because it is in our national interest to do so.
But the general rule of thumb is, it is the standard of living, and
on trade itself, we have to get organized. We need, instead of a
Department of Commerce, a Department of Trade and Commerce. We need to
transfer the special Trade Representative over there. We need to start
enforcing our laws, get a U.S. attorney, an assistant U.S. Secretary of
the Department of Justice as we have on the antitrust division and put
him in there in the trust division with us in trade.
We have to get more Customs agents. We have to get in and start
competing and quit whining against each other and understand we are not
getting anywhere. We are going out of business every day. Exports and
imports have been going up years on in, but, for the first time, our
exports, now, have gone down in the last 4 years, rather than up.
Yes, thank Heavens for the farmer. I see the American farmer on the
floor of the Senate. Thank Heavens we have the plus balance of trade
there. Other than that, we are not making anything anymore.
Of course, in Europe, which was a good market, they do not want to
buy anything from us on account of Iraq. We have turned them off. We
are not only having to pay for Iraq in human tragedy and otherwise, but
we have to pay for it in our trade balance now with Europe.
I could go right on down the list. Just one word. Yesterday, I picked
up the article with respect to William Safire. Safire said we had no
agents in Iraq, none. I have seen one figure $30 billion and another
figure $40 billion intelligence effort and we had nobody in Iraq. It
reminds me when I served for 8 years on the Intelligence Committee and
we came back in before the gulf storm--the ``we'' being Senator Bill
Cohen and myself--and we wanted to get briefing on Saddam going into
Kuwait. They told us the CIA didn't have anybody that could brief us.
We had to send over to the Defense Department.

George Tenet was the staff director at the particular time. Here,
some 10 years later, we still don't have anybody. Do you know what they
told me why we didn't have anybody? Because Israel will tell us. Mossad
is the best intelligence in the world. And all of this dog chasing its
tail about whether the intelligence was distorted or misinterpreted or
pressured or what have you, I can tell you now the survival of Israel,
our best friend, depends on having intelligence on what is going on in
downtown Baghdad, all over Iraq, all over Syria, all over Iran, and in
Egypt. They know. They got to know. And therein you do not need
intelligence. That is the dog that didn't bark.
My friend Bob Novak was talking about the dog that didn't bark. If
there had been any weapons of mass destruction, our friend, Israel,
would have said: Go there, go here, go there. They knew it. And George
Herbert Walker Bush said:

I firmly believe we should march into Baghdad. . . . It
would take us way beyond the imprimatur of the international
law bestowed by the resolutions of the Security Council,
assigning young soldiers to a fruitless hunt for a securely
entrenched dictator and condemning them to fight in what
would be an unwinnable urban guerilla war. It could only
plunge that part of the world into even greater instability
and destroy the credibility we were working so hard to
reestablish.

It would turn the whole Arab world against us.
That is where we are.
I yield the floor.
The PRESIDING OFFICER. The Senator from Wisconsin.

[[Page S8191]]

Mr. FEINGOLD. Mr. President, I thank the Senator from North Dakota
for his courtesy in letting me make a brief statement before he makes
his statement.
I rise today to express my strong opposition to the United States-
Australia Free Trade Agreement and the legislation that has been
introduced to implement it. This is the latest in a string of deeply
flawed trade agreements. It is a bad deal for dairy farmers, it is a
bad deal for consumers, and it is a bad deal for Wisconsin.
The agreement undermines our dairy industry by displacing the
domestic milk supply. It proposes to increase quota access to the U.S.
market for Australia's dairy producers, while failing to address the
flood of milk protein concentrate imports that is entering the country
through a tariff loophole and that has been harming U.S. dairy farmers
for some time. There can be no doubt that this agreement will put
downward pressure on dairy prices and will further accelerate the loss
of dairy farms in Wisconsin and across the Nation, which is something I
have been working hard to stop.
Wisconsin is still the No. 1 producer of cheese in the United States.
But this agreement will hurt Wisconsin cheesemakers as they attempt to
compete against the ever-rising flood of Australian imports. By signing
this agreement without addressing MPCs, the administration turned a
blind eye to the concerns of the Wisconsin dairy industry.
The adverse effects of the agreement are not limited to our dairy
farmers. During the informal mock markup, a majority of the Senate
Finance Committee expressed concerns about safeguards to protect
American ranchers and cattle producers from unfair imports of beef
products. Those concerns underscore the importance of the
administration consulting and working with Senators in the drafting of
the implementing legislation.
Instead of honoring the informal process set forward in the trade
promotion authority, the administration and the Senate leadership
ignored these concerns. The result is to further undermine the ability
of the Senate to weigh in on trade agreements, which was already
greatly weakened by the passage of fast-track authority.
This is not the only problem with the trade agreement between the
United States and Australia. As an original cosponsor of bipartisan
legislation that would allow Americans to safely purchase prescription
drugs from countries including Australia, I am particularly troubled by
reports that this agreement would effectively ban reimportation of
prescription drugs from Australia.
In February, I wrote to the Senate Finance Committee and urged them
to address this issue before the unamendable legislation implementing
the trade agreement was brought to the Senate floor for a vote. Now,
reports raise real questions about whether Congress can repeal the
trade agreement's ban on reimportation of prescription drugs from
Australia, even if it later passed legislation permitting
reimportation. I do not see why we should be voting now on a trade
agreement that would potentially tie the hands of both Australia and
the United States on this vitally important issue.
This legislation may well be a template for future trade agreements
to include similar provisions that restrict the safe reimportation of
drugs. I strongly disagree with efforts by trade negotiators to address
an issue that Congress is currently actively considering. Congress
should be setting policy on an issue as important as the importation
and the reimportation of prescription drugs, not our trade negotiators.
There continue to be many concerns about the impact of this agreement
on the U.S. health care system, particularly the Federal programs aimed
at helping our veterans, our seniors, and our neediest citizens. These
questions need to be resolved to ensure access to safe and affordable
prescription drugs.
I have introduced a bill, S. 1994, which would address what I believe
is one of the biggest flaws of the new Medicare prescription drug
benefit. My bill would allow Medicare to negotiate the prices of
prescription drugs offered under this new benefit. There is widespread
support for giving Medicare this authority. It only makes sense we let
Medicare use its considerable leverage to help lower the cost of
prescription medicines for seniors. But there are questions about how
this agreement would impact Medicare's ability to negotiate drug
prices, should legislation such as mine be passed by Congress.
We need more time to answer these questions and to fully understand
the possible interaction of this agreement with legislation to allow
the safe reimportation of prescription drugs. Trade promotion authority
provides expedited consideration of trade agreements, but we are well
ahead of any deadlines imposed. This Chamber could easily have waited
until next week or even into September to consider this measure. With
only 20 hours of debate allowed, the Senate should not have rushed
headlong into this debate today. There is simply no excuse for Congress
hastily taking up the Australia Free Trade Agreement before resolving
these questions.
The administration presented a bad deal to Congress and the American
people. Not only will this agreement hurt Wisconsin's dairy industry,
but the whole process has undermined Congress's constitutional
authority over trade policy and it has weakened our ability to make
policy. For those reasons, I will oppose the United States-Australia
Free Trade Agreement implementing legislation, and I urge my colleagues
to vote against this measure.
I yield the floor.
The PRESIDING OFFICER (Mr. Cornyn). The Senator from North Dakota.
Mr. CONRAD. Mr. President, I rise to express my strong opposition to
the so-called United States-Australia Free Trade Agreement. This is
really not a free-trade agreement at all. This is a negotiated trade
agreement, and our side, once again, lost the negotiation.
I believe the United States-Australia Free Trade Agreement is one
more example of the United States trading away its economic strength
for some other agenda. Somebody once said: The U.S. has never lost a
war and never won a negotiation. That certainly is true of this
agreement.
First, I believe the focus of our trade policy should be opening
markets to U.S. exports where we have the most to gain. We need to
level the playing field for our producers, and we need to open major
markets around the world that remain closed to us. Unfortunately, that
is not the trade policy or agenda being pursued by this administration.
Our current trade policy is completely off course. Our negotiators
have failed to secure a good deal for agriculture in the WTO talks.
Instead, they have opened trade talks with countries that offer few new
export opportunities for the United States.
Commercial gain should drive our trade policy. But it has become
clear that foreign policy considerations are the primary factor
influencing our trade agenda. It is no secret here in Washington what
this agreement is about. It is not about a trade advantage for the
United States. It is not about improving the economic strength of
America. This is a payoff. This is a payoff to Australia for backing
our Iraq policy. That is what this is about.
Not surprisingly, the results of this flawed trade policy are
abysmal. Our trade deficits are skyrocketing. Last year, the trade
deficit hit an all-time record of $497 billion. And this year, what do
we anticipate? Well, it is going to be much worse.
Mr. President and colleagues, we can look back and see what has
happened under this trade agenda. In 1997, we had a trade deficit of
$108 billion. That was only 7 years ago, and look what has happened.
Every year it has jumped, and jumped dramatically. From 1998 to 1999,
it went up almost $100 billion; from 1999 to 2000, almost $100 billion;
from 2001 to 2002, up, up, and away again, approaching $100 billion for
2002 to 2003. Goodness knows where it will be this year.
These developments have serious consequences for our economy. This is
not just numbers on a page. This is not just columns on a chart. This
has real-world consequences for the U.S. economy.
Earlier this year, the Washington Post carried an article expressing
the concerns of economists about our trade and budget deficits and the
falling value of the dollar. It reported:

The twin trade and budget deficits are both approaching a
half trillion dollars, and with

[[Page S8192]]

U.S. consumer debt also at record levels, it is up to
foreigners to keep the U.S. economy afloat.

Let me repeat that: ``it is up to foreigners to keep the U.S. economy
afloat.''
The U.S. economy now borrows $1.5 billion a day from foreign
investors, said Sung Won Sohn, chief economist of Wells Fargo & Co.,
and that level could reach $3 billion a day in the near future.
Where are we getting the money from? The Senator from South Carolina
had it right. We are approaching $600 billion from Japan, $150 billion
from China. We are even borrowing money from the so-called Caribbean
banking centers--$80 billion from the Caribbean banking centers. And we
have yet our tin cup out, even in South Korea. Who would have guessed
that the mighty and powerful United States would have to go hat in hand
to South Korea and borrow $40 billion?
The Washington Post article went on to say:

Currency traders fretting over that dependency have been
selling dollars fast and buying euros furiously. The fear is
that foreigners will tire of financing America's appetites.
Foreign investors will dump U.S. assets, especially stocks
and bonds, sending financial markets plummeting. Interest
rates will shoot up to entice them back. Heavily indebted
Americans will not be able to keep up with rising interest
payments. Inflation, bankruptcies and economic malaise will
follow.

On agricultural trade, the story, regrettably, is much the same.
Things are getting worse, not better. Our surpluses have gotten
steadily smaller since 1996. Always agricultural trade has been one of
our leading areas of surplus, but that surplus is shrinking and
shrinking steadily. Last year we had the smallest agricultural trade
surplus since 1987. We are going full speed in reverse in every sector.
This is an ominous warning to the American people of the direction of
this flawed and failed trade policy.
The fact is, this administration is not leveling the playing field
for our producers or opening major new markets for U.S. exports.
Instead, it is opening our markets to a flood of agricultural imports
unfairly traded that threaten American family farmers. To me, focusing
on this free-trade agreement and more like it and neglecting a
successful WTO agreement is a recipe for disaster for American
agriculture. Mark my words, friends: We are going in the wrong
direction.
Those with whom we compete are not playing according to some fair set
of rules. They are subsidizing at a rate, in Europe alone, five times
our rate here. They account for over 87 percent of the world's
agricultural export subsidy in Europe, 30 times the rate here. And the
results are clear. They are gaining market share year after year after
year and now rival our own share of the world market.
America needs to wake up to the gathering threat. I regret to say,
this agreement with Australia is a perfect example. On agriculture, the
United States had almost nothing to gain and a lot to lose. The simple
fact is that Australia is never going to be a large export market for
U.S. commodities, but it poses a serious threat to certain commodities
produced here at home such as beef and dairy. It is very clear. Any
objective analyst can look and see what was the opportunity for America
and what was the threat. The threat totally overwhelms the opportunity.
In addition, Australia has an export state trading enterprise known
as the Australian Wheat Board. Grain growers in my State have had a
bitter experience with these State trading enterprises. Ever since
passage of the so-called Canadian Free Trade Agreement--again, that was
no free-trade agreement; it was another negotiated trade agreement, and
our side lost the negotiation there as well, especially when it came to
agriculture--the United States has been flooded with a tidal wave of
unfairly traded Canadian grain, undercutting our producers,
undercutting our prices, putting our people at risk, costing my State
nearly half a billion dollars.
Our neighbor to the north maintains a government-sponsored monopoly
known as the Canadian Wheat Board. The Canadian Wheat Board is the only
exporter of western Canadian grain. It is a monopoly. It uses this
monopoly power to undercut prices to our producers, not just in my
State of North Dakota but in Montana, in Idaho, in Minnesota, and all
across the northern tier of the United States, undercutting through
unfair trade practices the family farmers who are the heart of the
heartland of America.
We have been fighting for 15 years to resolve problems created by the
Canadian Wheat Board, and we have learned a bitter lesson. We have
learned that once something is permitted in a trade agreement, it is
virtually impossible to fix. That is why I was disappointed to learn
that the Australia Free Trade Agreement does nothing--I hope my
colleagues are listening--to curb the unfair trading activities of the
Australian Wheat Board. This was a priority for many farmers. The U.S.
wheat industry has decided to oppose this agreement because of this one
defect alone.

Some will argue that we have a trade surplus with Australia, and,
therefore, it is a good country with which to enter into a trade
agreement. That argument sounds good, but history teaches us something
quite different. I remember so well when we debated NAFTA. I want to
make clear my own position on trade. I supported the agreement with
China. I supported WTO. I opposed NAFTA. I opposed the Canadian Free
Trade Agreement because in those cases, I believed our negotiators got
taken to the cleaners. I will tell you, our negotiators got taken to
the cleaners on this one as well.
The record, I believe, will be clear. Back in NAFTA, remember what we
were told. We were told: We have a trade surplus with Mexico, and if we
just approve this agreement, the surpluses will grow.
We can now go back and check the record. Did the $2 billion trade
surplus that existed with Mexico before NAFTA increase? No. Did it stay
the same? No. There is no trade surplus with Mexico anymore. Now we
have a trade deficit, not a small trade deficit, not $2 billion, not $4
billion, not $8 billion, but $40 billion of trade deficit. And some
come on this floor and call it a success. What would it take to call it
a failure? I am amazed to hear people come out on this floor and call
NAFTA a great success. We went from a $2 billion trade surplus to a $40
billion trade deficit, and they call that a success? What are they
thinking of? We are full speed in reverse in this country in terms of
our trade position in the world.
Trade agreements are no guarantee of trade surpluses, and opening our
market to further import competition without creating new export
opportunities is a serious mistake. That is exactly what this agreement
that is before us today does when it comes to agriculture. There will
be virtually no new agricultural exports to Australia as a result of
this agreement. But when it comes to the American beef and dairy
industries, there will be significant increases in imports that they
will face--and on an unfair basis--because we know of all the hidden
subsidies they have in Australia for those industries. We know how they
play the game.
I have concluded that from the perspective of the farmers and
ranchers I represent, this agreement is a bad deal.
Second, the mistake has been compounded by a massive loophole in
implementing this bill with regard to beef safeguards. Ever since the
Australia Free Trade Agreement was signed, the administration has said
over and over that the agreement had an automatic guaranteed safeguard
to protect our U.S. beef industry against unfairly traded imports. That
is what they told us. That is what they told American ranchers and
farmers, that it was automatic, that it was guaranteed. But check the
fine print. See what they have done in the final hours. They have
slipped you a Mickey. It is not guaranteed. It is not automatic. It is
all subject to a waiver and a decision by one person who doesn't happen
to be in the Congress of the United States.
We were told that the industry would not have to worry if imports of
Australian beef surged or prices in this country plummeted. The
safeguards were automatic and were guaranteed.
But now we find the safeguard is not automatic and not guaranteed. In
fact, this safeguard has a loophole big enough to drive a cattle truck
through. The implementing bill before us specifies that the USTR can
waive the beef safeguards whenever it determines that extraordinary
market conditions make it in the national interest to do so.

[[Page S8193]]

Here is what it says:

The United States Trade Representative is authorized to
waive the application of this subsection if the Trade
Representative determines that extraordinary market
conditions demonstrate that a waiver would be in the national
interest of the United States.

Who decides? The Trade Representative of the United States. That is
not what the Constitution says. The Constitution doesn't say the Trade
Representative decides these questions of international commerce. The
Constitution of the United States says:

The Congress shall have power . . . to regulate commerce
with foreign nations. . . .

Not the Trade Representative or Ambassador, but the Congress. And the
Congress has given away its responsibility in these free-trade
agreements with the fast-track procedure. We have done that based on a
promise that is being violated in this agreement for the first time in
a trade agreement.
Listen well, my friends. Listen well. Understand what is about to
happen on the floor of the Senate. For the first time, in an
unprecedented way, the role of Congress is being further reduced. The
legislation before us does not require the Trade Representative to even
consider the effect on the beef industry of waiving the safeguards. If
he or she determines that a lower price for hamburger is in the
national interest, it can waive the safeguard, even if doing so clearly
injures the U.S. beef industry, which the safeguards are supposed to
protect. The legislation doesn't give Congress, the body charged in our
Constitution with regulating tariffs, any meaningful say in this
decision.
As I show on this chart, Article I, section 8 of the Constitution
says Congress shall have the power. In this agreement, it is the Trade
Representative who has the power. The statement of administrative
action says, ``The United States Trade Representative will notify
Congress of its decision to waive the safeguard at least 5 days before
the waiver goes into effect.''
The Congress shall have the power to get a 5-day notice of what the
Trade Representative has decided. That is not what the Constitution of
the United States intended. It didn't intend for a Trade Representative
to give 5 days' notice to the Congress of the United States before
their decision is made, with no role for the Congress of the United
States. That is not what the Constitution says.
This agreement does not in any way commit the USTR to even listen if
the Congress expresses concerns or objections. I don't think that is
right. I don't think that is how this agreement had been sold to the
American people. I know that is not the way it was sold to the ranchers
and farmers of North Dakota, South Dakota, Montana, Idaho, and every
other State. They were told there was automatic guaranteed protection
for them.
That is why, when the Finance Committee conducted its markup of the
Australia agreement 2 weeks ago, I offered an amendment. My amendment
insisted that Congress have a say before the Trade Representative
decides unilaterally to waive this safeguard.

This is where it gets interesting, because my amendment was adopted
on a vote of 11-10. Here is the vote: 11 votes for the Conrad
amendment, 10 votes in opposition. The Conrad amendment is not in the
agreement that is before us. Have you ever heard of that happening
before? Have you ever heard of an amendment passing in a committee that
has jurisdiction and it is excluded when it comes out here on the
floor? It is as though those 11 Senators never voted.
The administration ignored the amendment passed in the Finance
Committee and, as a result, the legislation before us contains the very
same loophole that was rejected by a majority of the Senate Finance
Committee. That is profoundly unfair to America's ranchers and
cattlemen. It ignores the express will of the Senate Finance Committee,
and it is yet another example of why I have concluded this legislation
is a bad deal.
Before moving on to discuss why I find this process so troubling, let
me address one other issue that has been raised with respect to my
amendment. Some have argued that my beef safeguard amendment was
unconstitutional. That argument is simply a red herring designed to
avoid a discussion of the merits of the amendment. I have yet to hear
anyone argue that Congress should not have any say before the U.S.
Trade Representative unilaterally waives the safeguard that was
promised to America's cattlemen. The Finance Committee has a long
history of considering conceptual amendments rather than requiring
legislative language. That is how the Finance Committee of the United
States does its work. We offer conceptual amendments that are later
translated into legal language. That is the way it works.
My amendment said fundamentally that Congress must act before the
U.S. Trade Representative can waive the safeguards promised to the beef
industry. I have consulted with the Congressional Research Service,
because one of their staff members asserted there might be a
constitutional problem with what I proposed. I now have a memo from the
very same gentleman who raised the constitutional question saying there
were at least two ways to take my conceptual amendment and make it
constitutionally permissible. But that is not what happened. As I have
said, CRS has concluded in a memo to me that the concept expressed in
my amendment could have been implemented in at least two ways without
raising any constitutional problems.
First, the Conrad amendment could have been implemented through the
statement of administrative action. The statement of administrative
action is a document submitted to the Congress that explains the
agreement on how the administration intends to implement it. Since the
statement of administrative action is an executive branch document, it
explains how the executive branch will choose to operate. No separation
of powers problems would exist.
Moreover, this is precisely how a commitment to Senator Baucus with
respect to the beef safeguard was implemented. It was not included in
the legislation. It was put in the statement of administrative action.
Alternatively, it would have been entirely consistent with my
amendment to implement it through a congressional disapproval process.
This process is very familiar to Senators. For years, the Congress
voted annually on a resolution extending normal trade relations, or
most-favored-nation status, as it was then called, treatment for China.
There has never been any question that this waiver process was fully
constitutional. Thus, had there been any interest in making my
amendment work, it would have been easy to find a way to do it.
So I can only conclude that those who talk about the Constitution are
simply avoiding the real issue. The real issue is whether the U.S.
Trade Representative should be given the power unilaterally to revoke a
safeguard that was sold to our beef producers as an absolutely
automatic guaranteed protection against surges of unfairly traded
Australian beef imports that would damage our U.S. beef industry.
On that issue, a majority of the committee clearly said no. They
didn't just say no, they voted no. I have yet to hear anyone make a
persuasive argument why the USTR should be able to unilaterally take
away this safeguard. It is unfair to those who supported my amendment.
The process was short-circuited to drop the Conrad amendment. In
particular, it is unfair to our ranchers and cattlemen to take away
that safeguard.
Let me address the process the Finance Committee followed in dropping
my amendment, and why it is so troubling.
The chairman of the Senate Finance Committee is a fine man. He is, in
fact, a good friend of mine. But with all respect to the chairman, the
process that was followed to subvert the will of the majority of this
committee was egregious. It sets a very dangerous precedent that
threatens the underpinnings of the fast-track process.
As all Members of this body already know, the Constitution gives the
Congress--not the President--the responsibility for regulating foreign
trade. Yet in recognition that we cannot have 535 trade negotiators,
the Congress has agreed to the fast-track process for considering trade
agreements.
In agreeing to fast track, each Senator gives up the most fundamental
rights of a Senator. We give up our right to amend, the most
fundamental right of all Senators. And we give up our right to extended
debate, a second

[[Page S8194]]

of the most fundamental rights of any Senator. In essence, we are
giving up our right to protect our constituents.
In return, there is supposed to be a detailed consultation--a
detailed consultation--with the Congress throughout the process of
negotiating trade agreements and developing the implementing
legislation.
In practice, the Finance Committee in the Senate is the focus of this
consultation because the Finance Committee has jurisdiction over trade
policy. In theory, the committee has extensive input during the process
of negotiating trade agreements and developing the legislation to
implement them. Theoretically, it does not then need to amend the
implementing bill once it is formally introduced.
Understand, here we are on the floor of the Senate. There is a
treaty. Normally, every Senator would have the right to offer
amendments to it. We would have the right to extended debate. We have
given up those rights under the fast-track process. We do not have the
right to amend. This bill will be considered in less than 20 hours.
There is not the right to extended discussion, to illuminate, to
educate so that people fully understand what is happening. Those
fundamental rights of any Senator have been given up in the fast-track
process.
When it comes to developing the implementing bill, this consultation
occurs through what is known as the mock markup process because it is
not a real markup because we have given up those rights. Instead, we
have what is called a mock markup. The mock markup is the Finance
Committee's opportunity to amend the implementing bill before it is
formally introduced, and then cannot be amended under fast-track rules.
This informal process has a long history. For past agreements, the
process has lasted months and produced a host of changes. To give just
one example, 14 amendments were adopted during the mock markup of the
North American Free Trade Agreement. The amendments added during mock
markups were addressed in a mock conference and then included in the
final formal implementing bill. I recall this history to make several
points because people need to understand what is happening.

Everything has changed. We have never dealt with a trade matter in
the way we are dealing with it today. My colleagues need to understand
the consequences of what is about to happen because they are enormously
serious for every Senator, and they are enormously consequential for
this country.
First, in the past, the committees have always insisted on sufficient
time for all members of the committee to review the draft implementing
bill and have their concerns addressed.
Second, it is not at all unusual for changes to be made, for
amendments to be made during the mock markup process, including many
that did not have the support of the administration.
Third, when the mock markup process produced changes, it did not
spell doom for the agreement.
Fourth and finally, the chairman of the Finance Committee did not
vote down the package simply because it included a provision with which
the administration or the chairman disagreed.
But what happened during the mock markup of this bill, the Australia
free trade agreement, threatens to make a mockery--a mockery--of the
process of congressional consultation. In the Australia agreement, we
got the bum's rush.
The agreement was completed on February 13, but we did not see
implementing legislation until June 18. More than 4 months went by with
no implementing bill to review. And then after 4 months of delay, we
were told we would have 4 business days before the mock markup to
respond to a provision on the beef safeguards that was totally
unexpected.
When I indicated my intent to offer an amendment, the Trade
Representative made clear that my input was unwelcome. He simply did
not want to entertain a serious substantive concern that is important
to the ranchers and cattlemen whom I represent. Yet addressing these
concerns before an unamendable fast-track bill is precisely the purpose
of the mock markup process. That is the whole point of going through
this exercise, is to give Senators a chance in the committee of
jurisdiction to make changes if they prevail in a vote.
I did prevail in a vote. My side won, but it is not in this
agreement. That has never happened before. Mr. President, I say to
Senators, they better think long and hard about what that means. They
better think long and hard about what that means for the process. They
better think long and hard about what that means for fast track because
if this trade of giving up our right to amend and our right to extended
debate is a hollow one without meaning, that there is supposed to be a
congressional consultation, that there is supposed to be a parallel
process that allows Senators to alter the package before it comes to
this floor, if that is all hollow, if that is all a sham, if that is
all a phony exercise, then Senators better think long and hard about
giving up that power to amend and that right to extended debate because
the rest of this process has become an absolute sham.
I offered my amendment. It prevailed on an 11-to-10 vote, but the
normal process was not allowed to play out. Instead, the committee
followed the unprecedented course of voting down the amended
recommendation in its entirety. Then the administration submitted its
original proposal all over again without the amendment. That is good;
that is arrogant.
In essence, what the administration is saying is that voting down a
recommendation is tantamount to approving it. They are ignoring the
clearly expressed will of a majority of the members when it comes to
the language on beef safeguards. It is like voting down a bill on the
Senate floor after it has been amended and trying to claim that defeat
is the same as adopting the bill that was originally brought to the
floor. What a sham.
That strikes me as dangerous. It opens the process to abuse, and it
reduces the committee's role in crafting trade policy. It may have been
expedient in this instance, but I believe that we will come to regret
this precedent and this day. It invites a future President to ignore
any recommendations made by the committee on future trade-implementing
legislation.
Remember what the Constitution says? The power is with the Congress
on the question of regulating commerce with foreign nations.
This is not a dictatorship. This is not a circumstance where the
power was vested by the Constitution of the United States in the
President of the United States. The Constitution of the United States
says:

The Congress shall have the power . . . to regulate
commerce with foreign nations. . . .

The Australia Free Trade Agreement promises few, if any, benefits to
U.S. agriculture and has little or no positive effect on our overall
economy or perilously large trade deficits. Instead, it puts certain
sectors of American agriculture at extreme risk.
Before I move on, I remind my colleagues that the fast-track process
is up for renewal next year. To the extent that it becomes clear to
colleagues that the consultation promised in the fast-track process is
a sham, a snare, and a dilution, it will become infinitely more
difficult to extend fast track. Who is going to want to give up their
right to amend, who is going to want to give up their right to extended
debate, if there is no right to serious consultation by the committees
of jurisdiction; if it is all just a game and there is no meaning to
votes that are cast? That is what is about to happen. It is a sham.
Moreover, the safeguards that were supposed to protect ranchers and
cattlemen from excessive and unfairly traded Australian imports turned
out to be a false promise. They are not automatic or guaranteed as
promised. Instead, they can be waived at any time without any input
from Congress. That is unfair to our ranchers, our beef industry.
Finally, the process that the Finance Committee followed sets a
terrible precedent. No Senator should welcome the precedent that the
administration can simply ignore the votes of the committee of
jurisdiction on a particular trade issue important to the people we
represent, secure in the knowledge that a trade-implementing bill can
be pushed through as part of a larger take-it-or-leave-it package.
For all of these reasons, I will strongly oppose the Australia Free
Trade Agreement that is before us.

[[Page S8195]]

I conclude by saying to my colleagues if anybody does not think we
are setting a precedent that has enormous consequences down the road,
think again. I have been here long enough to see what happens when this
is done. For the purpose of expedient action one year, that precedent
can grow like a cancer. Right now, I believe what is being done is so
egregious and so wrong that it sows the seeds for undermining the
entire fast-track procedure.
When Senators awaken to what is being done, I think they will be very
reluctant to give up their fundamental rights to amend legislation
implementing a trade agreement. I think they will be very reluctant to
give up their right to extended debate. Those are the most fundamental
rights of any Senator.
There is a reason those rights were extended to Senators. It is so
they can protect the rights of the minority, so they could slow down a
process so people could think carefully about the effects and the
implications of legislation before this body. That is the fundamental
constitutional role of the Senate. It is being jeopardized by this
fast-track process that has become not just a fast track, it has become
a railroad job.
When votes do not matter, when consultation does not matter, when one
person decides the commerce with foreign nations, this country and this
body has gone off the track.
I yield the floor.
The PRESIDING OFFICER. The Senator from Iowa.
Mr. GRASSLEY. Mr. President, I was hoping that the Senator from North
Dakota would stay around. First, I support the Australia Free Trade
Agreement because it is for the sole purpose that it is in the economic
interest of the United States of America. I do it within our
constitutional power to regulate interstate and foreign commerce. I do
it in the tradition of the last 70 years, since the 1930s, of the
United States doing everything it could to lead the rest of the world
in the reduction of barriers to trade; to enhance not only the economy
of the United States of America but the economy of the entire world.
Let no one have any doubt in their mind, this is in the economic
interest of the United States and that is the only thing the United
States ought to be considering as we consider this legislation.
The charge was made that the only reason we are doing this is because
of the friendship of Australia and their support in our efforts in
Iraq. If I can do something in the economic interest of the United
States and at the same time enhance our relationships and show our
respect for a friend in the world community of nations, I am not going
to back away from doing that, because through almost 100 years of the
involvement of the United States in military activity for the promotion
of peace and liberty around the world Australia has been an ally on
which we could count.
Australia is not going to agree to this agreement because they might
like the United States of America. Australia is going to look at this
and ask: Is it in their economic interest? Now, their administration
has already said that it is because it is signed. I do not know whether
Congress has acted down in Australia, but nobody is going to be
concerned about the economic interests of America except Americans and
the elected representatives of America. Nobody is going to be concerned
about the economic interests of Australia except the people of
Australia and their elected representatives.
It just happens that everything does not have to be black and white,
that when we do things in public policy and in international trade and
in our foreign relations sometimes things can be done to accomplish
more than one thing, and it happens that we have an opportunity in this
vote today not only to do something in the economic interests of the
United States of America but also to enhance our relationship with a
friend in the world.
From a member of a political party who is always badmouthing our
President of the United States because he is engaged in world
activities, military activities without seeking enough help from other
nations and from the United Nations, I think it is talking out of both
sides of your mouth when you condemn us for trying to do something for
a nation that has been a friend of ours--in this case, Australia.
The other thing I noticed about the debate that just went on is the
charts that have been put up all afternoon by people on the other side
of the aisle bemoaning the unfavorable balance of trade we have. What
do they want to do? Do they want to tell the consumers of America that
you cannot buy from anywhere in the world you want? Why do we have the
balance of trade we do? It is because the U.S. consumers are king and
they can do anything they want to do and they are doing it. They are
exercising their economic freedom. They are also exercising the
opportunity of the marketplace to buy from what they think is the place
to get the best quality for a certain price. That opportunity happens
to be enhanced the greater the competition. The freer the trade around
the world and the fairer the trade around the world, the more
opportunities there are for our consumers to buy whatever they want to
buy, of the quality they want, at what they consider a fair price.
I don't know that any Member of this Congress who has been
complaining about the unfavorable balance of trade has introduced any
legislation saying the consumers of America cannot buy this product or
that product. Are they going to tell the consumers of North Dakota what
they can buy or not buy? Are they going to certify to their people that
their judgment as political leaders is better than the judgment of the
consumer of America and the marketplace, including the consumer of
North Dakota? I don't see them doing that.
The other thing is, why do we have an unfavorable balance of trade?
One of the reasons is the people of America are not saving as much. But
what do we get from the other side of the aisle when it comes to giving
the taxpayers of America an opportunity to have more discretionary
income? We hear complaints from the other side of the aisle that this
side of the aisle is giving too many tax cuts because they happen to
believe that 535 Members of Congress are smarter and better able to
decide how to spend the money than the 130 million taxpayers of
America. I don't believe that. But when taxes are high, there is less
discretion for savings, and it impacts negatively upon our balance of
trade.
The other thing I wonder about, with the other side of the aisle
talking about the high trade deficit--one-third of that trade deficit
comes from the importation of energy into America, mostly petroleum. We
had an energy bill up last November, and that energy bill is defeated
by a filibuster on the other side of the aisle. When we want to set an
energy policy, so we import less energy, so we reduce our unfavorable
balance of trade to some extent, they deliver 13 out of 49 Democrats to
break a filibuster. When they want to kill the confirmation of judges
who the President appoints, they can deliver 46 out of 49 Democrat
votes to kill those judges. But when their own leader votes for a
motion to bring about a national energy policy so we are not importing
so much energy, so the balance of trade is not so unfavorable, what do
we get from the other side? They don't even support their own leader
when he says he needs it for his State.
So don't complain about the unfavorable balance of trade in America
when you espouse policies that tend to make it worse, or question the
wisdom of the consumers of America, to put your judgment above the
judgment of 280 million people in America, that you know more than they
do about what they ought to be doing with their money.
Now I want to address whether Congress is giving up constitutional
power. I am addressing specifically the accusation that has been made
by the Senator from North Dakota, Mr. Conrad, who just finished his
remarks. First of all, I have yet to see the memo obtained by Senator
Conrad from the Congressional Research Service which he says supports
his claim that his amendment could be made constitutional. But in any
event, with respect to his argument that one way to implement his
amendment in a constitutional fashion would be in the statement of
administrative action--and it is on that point that I want to comment--
this is precisely the type of revisionist history that I warned of
earlier, yesterday, in our committee meeting.

[[Page S8196]]

I read from the amendment that he put before the committee:

The amendment enhances the consultation requirement in the
waiver provisions by adding a requirement in paragraphs
202(c)(4) and 202(d)(5) that the Finance and the Ways and
Means Committees must both affirmatively approve a proposed
waiver before the USTR can waive the application of a
safeguard.

This amendment calls for specific changes to two sections of the
implementing legislation. How could language added, then, to the
statement of administrative action possibly effectuate this amendment,
which calls for changes to the implementing bill? The answer is, very
clearly it couldn't. But even if it could, this argument ignores the
fact that the statement of administrative action is a statement of
administrative action, not a statement of congressional action. But the
amendment calls for action by two committees of Congress, not for
action by the administration.
I would like to remind my colleague from North Dakota of the
principle of separation of powers. In fact, that principle underlies
the Supreme Court Chadha case and is the reason why the amendment as
drafted and as voted on by the Finance Committee is unconstitutional.
So any argument that the statement of administrative action offered a
way to implement the amendment in a constitutional way is without
merit.
What about the argument that the amendment could have been
implemented in a constitutional way if requirements for action by the
full Congress and presentation to the President for his signature were
added, according to the decision of Chadha? In effect, under this
interpretation, the amendment would require additional legislation to
be enacted before a beef safeguard measure could be waived. That is the
only way you could remain consistent with our Constitution. And it
requires a contorted reading of the language of the amendment that was
actually introduced and was voted on by the committee that day.
But let us assume that a legislative procedure was intended by the
amendment, as contorted as that may be. The problem is, such a
procedure conflicts with the obligations assumed by the United States
in annex 3(a) of the agreement. In sections (b)(4) and (c)(5) of annex
3(a), the United States commits to retain the discretion not to apply a
beef safeguard measure.
If the President is required to wait for congressional action before
granting a waiver, that deprives the administration of the discretion
to grant a waiver. Even if the amendment were to be implemented
consistent with the U.S. Constitution, it would at the same time be
inconsistent with the terms of the agreement.
Again, we see this amendment for what it truly is. It was political
maneuvering, pure and simple. It was intended to obstruct the process.
It was intended to force the administration to explain its rejection of
an unconstitutional amendment or, based on these new arguments about
constitutionality, the administration would be forced to explain its
rejection of an amendment that was inconsistent with the agreement.
In either case, the administration's rejection of the amendment would
have been used by some to argue that the trade promotion authority
process was flawed, that the administration ignored the will of the
Finance Committee.
They would have also argued that the administration had not done
enough to protect the U.S. beef industry from imports, an allegation
that is completely without merit if you read the terms of this
agreement.
Any way that you revise the reading of the amendment, its purpose was
to delay formal consideration of the bill and give opponents a
political issue to try to exploit.
Again, as chairman of the Finance Committee, I did not want to see
that happen. I wanted to end the obstructionism, end the political
gamesmanship, and end the consideration of an unconstitutional
amendment.
The majority of the committee voiced their will, and the amended
recommendation was not approved. The trade promotion authority process
was on and the process moved forward, leading us to the consideration
of this very important legislation today, much in the economic
interests of our people.
Again, I call on my colleagues to recognize the value of the
underlying agreement with Australia and to support the implementation
bill when we vote on it in a short period of time.
I yield the floor.
The PRESIDING OFFICER. The Senator from New York.
Mr. SCHUMER. Mr. President, I will be brief. I thank my colleague
from Iowa. I don't want to get into a debate about the Energy bill
right now. We have our differences there. The only point I would make
is, without six Members on his side of the aisle, we never would have
succeeded. It was not just this side of the aisle.
I definitely want to reduce energy dependence, as do most of my
colleagues. The bill had virtually no conservation, which many of us
are for. I am for both new production and conservation. The bill had no
conservation, and, of course, there is the ``e'' word which is very
good for Iowa but not so good for New York. I will not get into the
``e'' word issue here. But there are different ways to increase
conservation.
In the views of many of us, this bill was not a bill that would have
reduced energy dependence the way it should have. Certainly, it didn't
get much bang for the buck. I don't want to get into a debate with my
colleague. I know we all want to vote. I appreciate the sincerity and
eloquence which he brings to all of the debates. I enjoy having them
with him, but today we will not.
I rise reluctantly against the US-Australia Free Trade Agreement
before us today, for one reason only. There have been other issues with
this agreement. In my State, we are very concerned about dairy. But I
think the people who put the agreement together were mindful of that.
While the dairy farmers of New York State are not overwhelmingly
pleased with the provisions in the agreement, they believe they have
come a long way. I think the agreement does do some good for
manufacturing export, and I care about that. But what bothers me is one
provision in this agreement. It bothers me so that it leads me to vote
against the agreement; that is, the provision dealing with the
importation of drugs.
It has become clear in recent weeks that the pharmaceutical industry
has not only done everything in its power to thwart drug reimportation
legislation before this Congress, but now they have hijacked the trade
agreement negotiation process as well. That practice has to end.
Given that we have fast-tracked, many of us, when we see an odious
provision put into the agreement, have no choice but to vote it down
and hope it will come back without that provision. Frankly, that
provision has very little to do with the guts of the Australia Free
Trade Agreement. Prescription drug reimportation is a policy that has
gained more and more bipartisan support as this year has progressed. My
guess is that if, say, the bill from the Senator from North Dakota
would get a vote on the floor, it would pass. It would pass in a
bipartisan way. That, of course, is because the cost of drugs is going
through the roof, and it is harder and harder for our citizens to pay
for these miracle drugs. They are great drugs. I salute the
pharmaceutical industry for coming up with them.
But one of the great problems we face is that the research is borne
not by the citizens of the world but only by the citizens of the United
States, even though the drugs are sold throughout the world. We have to
do something to change that.
But as usually happens these days, as a proconsumer idea such as
reimportation gains more and more momentum and support, the
pharmaceutical industry begins to see the writing on the wall, and they
look for every way possible to prevent it from becoming reality.
Now it seems, of all things, the US-Australia Free Trade Agreement
has become the perfect vehicle to begin the march to put the kibosh on
importation.
It is no longer enough that this administration refuses to stand up
to PhRMA and negotiate lower drug prices.
The Medicare prescription drug bill, now law, that we have before us,
is a failure. It is not even being mentioned by the President in his
campaign because they refuse to let Medicare negotiate with the
pharmaceutical industry

[[Page S8197]]

for lower prices. That costs about $200 billion, and that means there
was not enough money to create a good program. But that is not enough.

Now that we have come up with another way to deal with the high cost
of drugs, reimportation, the administration actively, through trade
agreements, is helping the big drug companies ensure that they can get
the same exorbitant prices in every market around the globe, and at the
same time putting up a barrier around our borders to prevent lower drug
costs from coming in. That has gone too far.
The administration says it is unacceptable that foreign price
controls leave American consumers paying most of the cost of
pharmaceutical research and development--I couldn't agree more. That
hits the nail on the head.
We have to relieve U.S. consumers of some of the burdens of the cost
of research and development by making sure that other equally developed
countries pay their fair share. But that is not what we are talking
about with the US-Australia Free Trade Agreement. Absolutely not.
What the administration is doing is giving the drug companies the
tools to raise prices in other countries while pushing policies that
keep low drug costs out of this country.
Is that fair? Does that provide any relief to the American consumer?
Absolutely not.
I have heard the argument that this provision doesn't have a
practical effect because the Australian Government doesn't allow the
exportation of its drugs anyway.
First of all, if you look closely at the way it is written, it isn't
limited to restricting importation from Australia.
As they say in Shakespeare, there's the rub.
If they really were just concerned with Australia, they would say
nothing in this provision would affect importation anywhere else. But
that is not the case.
This proposal creates an obligation for the United States to pass
laws that prohibit importation not just from Australia but from
everywhere, including Canada.
If it truly doesn't have a practical effect, or if it is not
reasonable to assume that Australia would hold us to our obligations--
who knows--for all we know, the Australian Government could make a deal
with the pharmaceutical company to lower their prices--why is the
provision in the agreement at all?
Why aren't pharmaceuticals at least exempted? Everyone knows what is
going on in this Chamber about reimportation. Everyone knows what is
going on in this country. In my State of New York, citizens from
Buffalo, Rochester, the North Country, and even New York City get on
buses and go for hours to buy drugs in Canada.
If this provision has no practical effect in this trade agreement,
then its only purpose must be to make it more difficult to pass a drug
importation bill. It can and might become precedential--we have it in
Australia; we should put it elsewhere.
The provision was put in the Australia Free Trade Agreement to set a
precedent, to lay the groundwork. The Industry Advisory Committee to
the USTR on these issues has clearly stated this purpose. Their report
states that ``each individual FTA should be viewed as setting a new
baseline for future FTA/s''--that this should be setting a floor, not a
ceiling.
If that is the case, that is bad news for the millions of Americans
who must pay for prescription drugs and had hoped lower costs of
imported drugs would prevail.
Simply put, this provision fortifies the administration's opposition
to importation and makes the law that much harder to change. Beyond
that, this trade agreement may even affect our ability to negotiate
prices in the few programs in which the Federal Government still has
some control.
The provision is nothing more than a backdoor opportunity to protect
the big pharmaceutical companies' profits and keep drug prices high for
U.S. consumers. I have had some talks with the heads of the
pharmaceutical industries. Some of the more forward-looking progressive
ones realize that something has to give; that the U.S. consumer cannot
pay for the cost of research for drugs for the whole world; that the
prices are getting so high that we have to do something; that the
balance between the dollars of profit that are put into research versus
the balance of dollars that are put into all kinds of salesmanship has
to change. I hope those leaders in industry understand that putting
this provision in this agreement undercuts that kind of view.
The nature of trade agreements is changing. They are not just about
tariffs anymore. They are getting into other substantive policy issues
which dictate the parameters for health care delivery around the world.
These are fundamental policy decisions with serious implications for
access to affordable health care which can and will affect millions of
people both overseas and, of course, here at home. Yet PhRMA is the
only health care expert at the table for these negotiations. That has
to end.
I also argue that adding provisions such as this, virtually
extraneous provisions that come from someone else's agenda, and putting
them into trade agreements hurts the argument for fast track. This is
just what people who are opposing fast track said would happen. Here it
is, a year later, it has.
There are all kinds of questions swirling about how this trade
agreement may affect Medicare, Medicaid, the VA, and DOD programs, and
to be honest, no one seems to be able to explain what its effects on
these programs will be.
My view is we cannot, we must not wait until after these agreements
are put together to consider their potential effects on U.S. policy. I
warn my colleagues, vote for this and then you find out that you have
locked yourself into something on drug policy that you never imagined.
This Member is not going to do that. This Senator is not going to do
that.
This provision can be stripped from the agreement and we can come
back and pass it next week, next month. We cannot have it as an
afterthought--something we are all scrambling to understand the day
before the vote.
Frankly, drugs are not the same as tractors. There are huge public
health implications to the decisions made by the USTR. It is
frightening to think these decisions are being made without the input
of a neutral public health advisory committee. We have to put an end to
the practice of PhRMA inserting provisions into trade agreements that
affect policy elsewhere. There must be someone at the table to protect
access to affordable drugs and other health care in this country. The
risks are too great to ignore.
For that reason, I will vote no on this agreement in the hopes we can
strip out this odious provision and then move forward with the proposal
which I will then support.
I ask unanimous consent that a related article from the New York
Times be printed in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:

[From the New York Times, July 12, 2004]

Trade Pact May Undercut Inexpensive Drug Imports

(By Elizabeth Becker and Robert Pear)

Washington, July 11.--Congress is poised to approve an
international trade agreement that have the effect of
thwarting a goal pursued by many lawmakers of both parties:
the import of inexpensive prescription drugs to help millions
of Americans without health insurance.
The agreement, negotiated with Australia by the Bush
administration, would allow pharmaceutical companies to
prevent imports of drugs to the United States and also to
challenge decisions by Australia about what drugs should be
covered by the country's health plan, the prices paid for
them and how they can be used.
It represents the administration's model for strengthening
the protection of expensive brand-name drugs in wealthy
countries, where the biggest profits can be made.
In negotiating the pact, the United States, for the first
time, challenged how a foreign industrialized country
operates its national health program to provide inexpensive
drugs to its own citizens. Americans without insurance pay
some of the world's highest prices for brand-name
prescription drugs, in part because the United States does
not have such a plan.
Only in the last few weeks have lawmakers realized that the
proposed Australia trade agreement--the Bush administration's
first free trade agreement with a developed country--could
have major implications for health policy and programs in the
United States.
The debate over drug imports, an issue with immense
political appeal, has been raging for four years, with little
reference to the arcane details of trade policy. Most trade

[[Page S8198]]

agreements are so complex that lawmakers rarely investigate
all the provisions, which typically cover such diverse areas
as manufacturing, tourism, insurance, agriculture and,
increasingly, pharmaceuticals.
Bush administration officials oppose legalizing imports of
inexpensive prescription drugs, citing safety concerns.
Instead, with strong backing from the pharmaceutical
industry, they have said they want to raise the price of
drugs overseas to spread the burden of research and
development that is borne disproportionately by the United
States.
Many Democrats, with the support of AARP, consumer groups
and a substantial number of Republicans, are promoting
legislation to lower drug costs by importing less expensive
medicines from Europe, Canada, Australia, Japan and other
countries where prices are regulated through public health
programs.
These two competing approaches represent very different
ways of helping Americans who typically pay much more for
brand-name prescription drugs than people in the rest of the
industrialized world.
Leaders in both houses of Congress hope to approve the free
trade agreement in the next week or two. Last Thursday, the
House Ways and Means Committee endorsed the pact, which
promises to increase American manufacturing exports by as
much as $2 billion a year and preserve jobs here.
Health advocates and officials in developing countries have
intensely debated the effects of trade deals on the ability
of poor nations to provide inexpensive generic drugs to their
citizens, especially those with AIDS.
But in Congress, the significance of the agreement for
health policy has generally been lost in the trade debate.
The chief sponsor of the Senate bill, Senator Byron L.
Dorgan, Democrat of North Dakota, said: ``This administration
opposes re-importation even to the extent of writing barriers
to it into its trade agreements. I don't understand why our
trade ambassador is inserting this prohibition into trade
agreements before Congress settles the issue.''
Senator John McCain, an author of the drug-import bill,
sees the agreement with Australia as hampering consumers'
access to drugs from other countries. His spokesman said the
senator worried that ``it only protects powerful special
interests.''
Gary C. Hufbauer, a senior analyst at the Institute for
International Economics, said ``the Australia free trade
agreement is a skirmish in a larger war'' over how to reduce
the huge difference in prices paid for drugs in the United
States and the rest of the industrialized world.
Kevin Outterson, an associate law professor at West
Virginia University, agreed.
``The United States has put a marker down and is now using
trade agreements to tell countries how they can reimburse
their own citizens for prescription drugs,'' he said.
The United States does not import any significant amount of
low-cost prescription drugs from Australia, in part because
federal laws effectively prohibit such imports. But a number
of states are considering imports from Australia and Canada,
as a way to save money, and American officials have made
clear that the Australia agreement sets a precedent they hope
to follow in negotiations with other countries.
Trade experts and the pharmaceutical industry offer no
assurance that drug prices will fall in the United States if
they rise abroad.
Representative Sander M. Levin of Michigan, the senior
Democrat on the panel's trade subcommittee, voted for the
agreement, which could help industries in his state. But Mr.
Levin said the trade pact would give a potent weapon to
opponents of the drug-import bill, who could argue that
``passing it would violate our international obligations.''
Such violations could lead to trade sanctions costing the
United States and its exporters millions of dollars.
One provision of the trade agreement with Australia
protects the right of patent owners, like drug companies, to
``prevent importation'' of products on which they own the
patents. Mr. Dorgan's bill would eliminate this right.
The trade pact is ``almost completely inconsistent with
drug-import bills'' that have broad support in Congress, Mr.
Levin said.
But Representative Bill Thomas, the California Republican
who is chairman of the Ways and Means Committee, said, ``The
only workable procedure is to write trade agreements
according to current law.''
For years, drug companies have objected to Australia's
Pharmaceutical Benefits Scheme, under which government
officials decide which drugs to cover and how much to pay for
them. Before the government decides whether to cover a drug,
experts analyze its clinical benefits, safety and ``cost
effectiveness,'' compared with other treatments.
The trade pact would allow drug companies to challenge
decisions on coverage and payment.
Joseph M. Damond, an associate vice president of the
Pharmaceutical Research and Manufacturers of America, said
Australia's drug benefit system amounted to an unfair trade
practice.
``The solution is to get rid of these artificial price
controls in other developed countries and create real
marketplace incentives for innovation,'' Mr. Damond said.
While the trade pact has barely been noticed here, it has
touched off an impassioned national debate in Australia,
where the Parliament is also close to approving it.
The Australian trade minister, Mark Vaile, promised that
``there is nothing in the free trade agreement that would
increase drug prices in Australia.''
But a recent report from a committee of the Australian
Parliament saw a serious possibility that ``Australians would
pay more for certain medicines,'' and that drug companies
would gain more leverage over government decisions there.
Bush administration officials noted that the Trade Act of
2002 said its negotiators should try to eliminate price
controls and other regulations that limit access to foreign
markets.
Dr. Mark B. McClellan, the former commissioner of food and
drugs now in charge of Medicare and Medicaid, said last year
that foreign price controls left American consumers paying
most of the cost of pharmaceutical research and development,
and that, he said, was unacceptable.

Mr. SCHUMER. I yield the floor.
The PRESIDING OFFICER (Mr. Alexander). The Senator from Arizona.
Mr. McCAIN. Mr. President, the United States-Australia Free Trade
Agreement negotiated by the administration is not perfect. The
distinguished chairman and ranking member of the Finance Committee
would agree with me on that point.
It is often said around here that we should not let the perfect be
the enemy of the good. This agreement for which we vote on implementing
legislation today passes the ``good'' test, but barely.
Throughout my career in public service, I have been an ardent
supporter of free trade. Opening markets to the free flow of goods and
services benefits America, benefits our trading partners. Trade
liberalization creates jobs, expands economic growth, and provides
consumers with access to lower cost goods and services. The North
American Free Trade Agreement, despite criticism from some, has
increased our cross-border trade between our northern and southern
neighbors by incredible amounts of money, creating economic growth and
prosperity on both sides of the border.
In my judgment, free trade should mean truly free trade. There are
some portions of this agreement which take admirable steps in that
direction. For example, over 99 percent of the manufactured goods
traded between our two countries--manufactured goods--will be duty and
quota free and textile and apparel tariffs will be phased out.
According to the International Trade Commission, U.S. consumers will
receive a net welfare benefit increase of between $438 million and $639
million if the agreement is fully implemented.
Ideally, this free-trade agreement would reach 100-percent duty-free
treatment and tariff elimination immediately but I recognize that may
not be possible.
What I find truly offensive are protections for special interests
such as dairy, beef, and sugar. Even these protections, however, pale
in comparison with the language in this agreement that covers patented
pharmaceutical products.
I am astonished by the decision of the U.S. Trade Representative, Mr.
Zoellick, for whom I happen to have the greatest admiration and
appreciation. I am astonished that he would include language which
would impair our ability to pass and implement drug importation
legislation.
The Singapore Free Trade Agreement, which went into effect on January
1, was the first free-trade agreement to include language that could
impact drug importation. In a side letter of understanding between our
respective Trade Representatives, both nations agreed the language
would not prevent Singapore from engaging in the parallel importation
of pharmaceuticals. Thus, the U.S. Trade Representative effectively
made the provisions applicable only to the United States.
USTR claims this language is consistent with longstanding U.S. patent
law. If that is indeed the case, and if Singapore is not obligated to
abide by the language, then why is the language included in the
agreement? I suspect it was included in order to protect powerful
special interests and to provide a template on which to base
intellectual property provisions in future free-trade agreements.
In fact, the Industry Sector Advisory Committee for Chemicals and
Allied Products, which advised U.S. negotiators on this provision,
stated that this language ``should not be viewed as setting any
ceilings for the intellectual

[[Page S8199]]

property chapters for future free-trade agreements; rather, each
individual free-trade agreement should be viewed as setting a new
baseline for future free-trade agreements.''
This pharmaceutical language was slipped into the Singapore FTA below
the radar screen, without recognition of its potential implications for
drug importation. Since that time, similar drug provisions have cropped
up again in both the Australia FTA before us and the recently completed
Morocco FTA.
Let's be clear about this language. It is antithetical to the spirit
of free trade and serves only to block American consumers from
accessing lower cost goods and services.
Not only does the intellectual property language in the Australia FTA
offend all free traders, it also contravenes clear congressional
intent. Let's look at the facts. In 2000, Congress passed the Medicine
Equity and Drug Safety Act, MEDS Act, to allow American consumers to
import lower cost prescription drugs from 25 industrialized countries
with regulatory systems similar to ours. Although language added to
that law acted as a poison pill and effectively prevented importation
from taking place, congressional intent was crystal clear: We want to
allow Americans to import safe prescription drugs.
In the years after the MEDS Act passed, the cost of prescription
drugs has continued to rise, the number of uninsured Americans has
continued to grow, and Congress has continued to debate the issue of
drug importation. This week, a study from Boston University found that
drug spending, as a share of income, rose by 50 percent between 1998
and 2002.
In the last 3 years, several additional importation measures have
passed both Houses of Congress with substantial bipartisan support. In
States, cities, and counties across the country, governments are
implementing programs that would allow their residents to import lower
cost prescription drugs. Today, approximately two-thirds of Americans
believe they should be able to import lower cost drugs.
Where does this leave us? Congress has repeatedly voted, with
bipartisan majorities, to allow drug importation. States and local
governments are doing the same. An overwhelming majority of Americans
believe they have a right to import cheaper medicine. AARP, the leading
advocacy group for senior citizens, recently joined the battle.
So a simple question comes to mind: What is our U.S. Trade
Representative, who is charged with representing the interests of the
American people, doing? Why deliberately include language in bilateral
trade agreements that could thwart importation efforts? Why flagrantly
disregard the intent of Americans and their elected representatives? It
seems to me that the special interests have found friendly territory.
Now, supporters of this language will claim that nothing in this
agreement prevents the Congress from passing legislation with respect
to drug importation. They are absolutely correct. No trade agreement
can prevent Congress from exercising its constitutional right to pass
laws that govern our Nation. However, the language in this trade
agreement does tie the hands of Congress, further complicating our
efforts to pass a drug importation law.
The USTR general counsel, John Veroneau, testified along these lines
last month. He told the House Ways and Means Committee that new
legislation on drug importation ``could give rise to an inconsistency
between U.S. law and a commitment under this trade agreement.'' Given
that similar language is now in not one but three trade agreements, it
will presumably present the same problem for each.
Let's be intellectually honest here. It is simply bad policy to enter
into bilateral agreements knowing we want to modify domestic law and
thereby place ourselves in violation of these various agreements.
Imagine Americans' response if they knew that domestic health care
policy was being crafted not by their elected officials in Congress
but, instead, by free-trade negotiators.

Now that this language is in three agreements, a precedent has been
established for future FTAs. Indeed, USTR officials have indicated they
intend to pursue similar language in all future FTAs. This means that
future drug importation legislation will leave us in violation of our
obligations to an ever greater number of trading partners and allies,
undoubtedly creating a greater challenge to enacting and implementing
importation law.
When Americans wonder how this continues to happen, maybe they should
take a glance at the list of intellectual property ``advisors'' who
worked with the negotiators. These advisors include representatives
from--guess who--drug companies--guess who--the pharmaceutical industry
as a whole, and other lobbyists with a direct interest in blocking drug
importation. How many public health and consumer advocacy groups were
included on this committee? Zero.
There is a popular philosophy among coaches known as game slippage
which offers that you can make your team practice all you want, but,
invariably, come gametime, some of what was taught in practice will not
be applied during the game. I fear the administration is suffering from
game slippage. It appears that Congress's intent over the last several
years to address drug importation has slipped from the collective
conscience of the administration and the U.S. Trade Representative when
negotiating gametime comes around.
Our trade negotiators must be less mindful of special interests and
more responsive to the express intent of the Congress. We granted the
President trade promotion authority in 2002 to demonstrate our Nation's
reenergized commitment to negotiating strong free-trade agreements. TPA
was designed to lead to free trade, not more protection. Yet we have
protectionist measures in this FTA for the pharmaceutical, sugar, beef,
and dairy industries that will likely result in higher prices and, in
some cases, less supply.
This agreement is not the first in which the administration has made
use of TPA to promote its legislative priorities. Last year,
immigration provisions were included in the Singapore and Chile FTAs.
If the administration is to continue to enjoy the privilege of TPA,
trade agreements must no longer be vehicles that include items
rightfully addressed by Congress under the Constitution.
The United States has been and should be the leading promoter of an
open global marketplace. Steel tariffs, agricultural subsidies in the
farm bill, and other forms of protection, however, have damaged
America's free-trade credentials. If special interest carve-outs, as
the one for the pharmaceutical industry in this FTA, continue to
pollute our trade agreements, we will all be worse off. Our economy
will suffer and our leadership role on trade will further decline.
I have spoken at length about the very serious drawbacks of the
Australia FTA. I will reluctantly support this implementing legislation
because it, nevertheless, will have a net positive impact on the
American economy. I also will vote for it because of my profound
respect for the Government and the people of Australia. They have
bravely stood by us for many decades and have shown enormous courage in
helping us to fight the global war on terror. We are privileged to call
the Australian people friends, and my comments here today should in no
way reflect poorly on the proud nation with which we will embark on a
new trading relationship.

Mr. President, I will vote yes. But the administration must
understand that continuing down a protectionist path harms American
consumers and engenders ill will among our allies and trading partners.
I support passage of this legislation, but should another FTA being
negotiated now or in the future come before the Senate with similar
protections for special interests, I will find it extremely difficult
to do so again.

FSC/ETI Tax Bill

Mr. President, before I continue, I would like to mention just a word
about the FSC/ETI tax bill that we apparently have an agreement to go
to conference.
The June 19 editorial in the Washington Times, not known for liberal
propaganda, stated:

The ideal solution would have been a quick, simple repeal
of FSC-ETI, which is bad economic policy in any case. . . .

Unfortunately, both the House and the Senate versions of the bill
became magnets for special interests. A steady train of lobbyists
tacked on $167 billion

[[Page S8200]]

in tax breaks over the next 10 years to the Senate bill, while the
House bill expanded by $143 billion in similar additions. The Senate
bill, for example, includes breaks for NASCAR racetracks and foreign
dog-race gamblers, while the House version lavishes its attention upon
tobacco growers, timber owners and alcohol distillers. The imminent
House-Senate conference, predictably, promises to be a de facto food
fight between congressmen, lobbyists and tax watchdogs. And so while
the lobbyists duke it out, EU sanctions will continue to rise, and
American manufacturers and the U.S. economy will deal with the
consequences.
There are many other editorials about how incredible this bill has
become and how we have lost any possible sense of what we are doing to
our deficit and to the American people. If we pass this bill in its
present form, I will do whatever I can to make sure every American
knows what we have done here for the special interests in this town.
Despite the passage of campaign finance reform, they rule in a way
which is almost unprecedented at least in the 22 years I have been a
Member of Congress.
I yield the floor.
The PRESIDING OFFICER. Who yields time?
Mr. REID. Mr. President, I 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 dispensed with.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. REID. Mr. President, I ask for the yeas and nays.
The PRESIDING OFFICER. Is there a sufficient second?
There is a sufficient second.
The yeas and nays were ordered.
Mr. REID. Mr. President, there is an order in effect allowing 2
minutes per side on the matter that will follow the Australia Free
Trade Agreement, the tobacco amendment. I ask unanimous consent that
there be a total of 4 minutes on each side.
The PRESIDING OFFICER. Is there objection?
Mr. INHOFE. Reserving the right to object, when would this time
begin?
Mr. REID. I would say through the Chair to my friend, we are going to
vote immediately on the free-trade agreement. We yield back any time on
this side.
The PRESIDING OFFICER. Without objection, it is so ordered.
Mr. GRASSLEY. I yield back time on this side.
The PRESIDING OFFICER. The question is on the third reading and
passage of the bill.
The bill (H.R. 4759) was ordered to a third reading and was read the
third time.
Mr. HATCH. Mr. President, I rise today to support the United States-
Australia Free Trade Agreement. I do so because it is good for the
cause of free and fair trade, it is good for the United States, and it
is good for Utah.
I wish to commend my colleagues on the Senate Finance Committee,
particularly Chairman Grassley and ranking minority member Baucus. They
have assiduously worked with the administration to complete the
legislation implementing years of negotiations. Working with our
colleagues on the Ways and Means Committee, we have prepared
legislation that, I believe, will pass overwhelmingly in both Houses.
That it does so reflects on the strengths of this agreement, and on the
hard work of members in both committees. To date, the process for
putting this agreement in place has been fair. Members have been given
ample opportunity to voice any concerns they may have about the
substance of this agreement both on the Senate floor and in briefings
with the U.S. Trade Representative's office. No one can legitimately
say this has been a partisan process. No one can legitimately say they
have not had a chance to review and comment on this historic agreement.
However, this agreement would not have been completed had Congress
failed to provide the President with fast-track trade promotion
authority. These agreements are complex, and the interests are vast,
and, as we know, Congress can slow the process by endlessly nitpicking
details for political advantage. Without trade promotion authority
granted by a majority of this body to the President in 2002, the
President would have failed to advance his agenda of creating American
jobs by leveraging the strength of our economy into free and fair trade
regimes created by us.
Toward that last point, I wish to commend the small team at the
United States Trade Representative's Office, led by the extremely able
Robert Zoellick, for their work through these years in advancing the
President's free trade agenda. The Australia Free Trade Agreement
before the Senate will boost our economy while advancing bilateral
relations with our strongest partner in Asia as a result of the
dedication of Bob Zoellick and the people at USTR.
Australia stood with us in our foreign policy challenges throughout
the 20th century. In the beginning of this century, which was marked so
soon after by the attacks of September 11, and our response with the
global war on terror and the war to destroy the regime of Saddam
Hussein, Australia has continued to stand with us. We have a history of
friendship, based on shared civic values of democracy, individual
freedom and free markets. We have no closer ally in Asia.
Of course this is not a sufficient reason to grant a free trade
agreement, or FTA. The necessary and sufficient agreements in granting
FTAs have to do with opening markets in a way that will fairly allow
U.S. products to compete. I am pleased to observe that in this area,
the Australia FTA does a superb job. In fact, the Australia FTA
eliminates 99 percent of Australia's manufacturing tariffs immediately,
giving U.S. firms an average 5 percent price advantage over
international competitors in the Australian market. As well, the FTA
grants tariff-free access to Australia's agricultural market for U.S.
exporters, grants enhanced preferential access to U.S. services
exporters to Australia, and removes foreign investment screening for
several types of U.S. investment.
For my home State, this FTA gives Utah businesses a distinct
advantage over their international rivals when trading with Australia.
Australia's market is the 12th largest market for Utah goods, with
total exports valued at over $67 million in 2003. The implementation of
the Australia FTA will provide a large boost to Utah's auto parts,
processed foods, sports equipment and medical equipment companies.
These important and large industries within the State of Utah will now
be able to export 99 percent of their goods to without facing
manufacturing tariffs, this gives them, on average, a 5 percent price
advantage over international competitors in the Australian market.
There are nine Australian-owned companies currently operating in Utah
which insource several hundred jobs for Utahns. In all, there are over
320 jobs in Utah that are directly supported by trade with Australia,
and hundreds more that are indirectly supported by Australian trade.
No agreement is perfect, whether it is with a developing economy, or
a modern and developed economy, like Australia's. This FTA will provide
an immediate opening to Australia's large market for agricultural
products from our States. Currently, our prolific U.S. agricultural
producers export more than $400 million in products to Australia.
In terms of granting access for Australian beef, the agreement allows
for us to increase the beef import quota over an 18-year period. Quota
increases to be granted in the first 3 years are conditional upon U.S.
beef exports reaching 2003 levels, so that Australian beef exporters
will not be able to exploit recent drops in U.S. beef exports caused by
the mad cow scare. While quotas within tariffs will be removed, above-
quota tariffs will also be phased out over time. The Congressional
Research Service reports that ``initial quota increases represent an
estimated $50 million in additional imports--less than \1/4\ of 1
percent of the value of annual U.S. beef output, and 1.6 percent of the
value of U.S. beef imports.'' In addition, the agreement provides
safeguards that will protect U.S. beef producers from surges in imports
from Australia. These safeguards are permanent and apply to the
transition periods, as well as after the transition periods.

[[Page S8201]]

This agreement is going to be good for the American economy. In
addition to manufacturing and agricultural products, it provides an
immediate opening in Australian markets for financial services,
electronic commerce and U.S. investment. In the latter category, we
should appreciate the implications of allowing U.S. investment to now
use Australia as a base for greater expansion into the rapidly growing
Asian markets. The benefits of this FTA to the U.S. economy equate to
about $500 million per year. This translates into more U.S. jobs.
And, for me, this is the bottom line. Economic policymakers both in
Congress and in President Bush's administration recognize that the most
fundamental goal of economic policy is to support the economy and
create American jobs. American workers, farmers and cattlemen are the
most industrious and productive in the world. That is why, as the U.S.
has expanded trade regimes based on the principles of fairness and
transparency that define our economy, the U.S. has always been a net
winner. The rest of the world wants to buy our goods because they are
the best quality at the most affordable prices. The rest of the world
wants to sell in our markets, because to do so, they must create
products that compete in the most open and efficient market in the
world. Successful U.S. free trade agreements protect our principles,
advance our values, and provide opportunity for all those who compete
fairly. And fair competition is something the citizens of Utah support.
For these reasons and more I support the swift approval of this
implementing legislation.
Mr. DURBIN. Mr. President, I rise today in support of the United
States-Australia Free Trade Agreement. I maintain reservations about
certain sections of this agreement, but overall I believe that this
free-trade agreement succeeds in lowering tariffs on American goods
entering Australia and will benefit my home State of Illinois.
The United States-Australia Free Trade Agreement, FTA, includes
strong and comprehensive commitments by Australia to open their goods,
agricultural and services markets to U.S. producers. The agreement
would reduce a number of tariffs and duties currently affecting trade
between the United States and Australia, reduce barriers for services
and increase protections for intellectual property.
Under the trade agreement, as ratified by the bill, more than 99
percent of U.S. exports of manufactured goods to Australia would become
duty-free immediately upon entry into force of the agreement. This is
good for our country because increasing exports means more jobs here at
home. This is beneficial to U.S. manufacturers, who expect to realize
an additional $2 billion in exports a year.
Australia is a major trade and investment partner of the U.S. and is
the ninth largest market for the export of U.S. goods, with a total
trade close to $28 billion last year. Australia purchases more goods
from the U.S. than any other country, and the U.S. enjoys a bilateral
trade surplus of $9 billion. This is quite a difference from the $130
billion dollar trade deficit we have with China.
My home State of Illinois will benefit from the U.S.-Australia FTA.
In 2003, Illinois' export shipments of merchandise to Australia totaled
$925 million and Australia is the sixth largest export market for
Illinois in 2003. Australia is an important market for Illinois goods
as Illinois exports to Australia have grown significantly during a time
when Illinois exports have fallen. While exports of goods from Illinois
to Australia grew 12 percent over the 1999-2003 period, exports from
the States to the world declined 10 percent over the same time.
Illinois exports range from agricultural and construction machinery,
to engines, turbines and power transmission equipment, to motor vehicle
parts, to general purpose machinery and to agricultural products. In
short, people through nearly every sector of our economy will benefit
from this agreement.
Illinois has lost 140,000 manufacturing jobs since January 2001 to
many countries who do not have the same labor and environmental
standards as the U.S. However, labor and environment have not been a
source of controversy in this FTA. The Australian and U.S. economies
are both modern and industrialized, and are at similar levels of
development and environmental standards. In fact, Australia has a
higher minimum wage than the U.S.
This agreement also extends protections for all forms of intellectual
property rights. Australia agrees to extend the longevity of copyrights
in order to accord protections to existing U.S. standards. Both
countries also agree to ratify two international treaties involving
recorded music and copyrights.
This agreement also gives our farmers new opportunities. All U.S.
agricultural exports to Australia totaling more than $400 million will
receive immediate duty-free access. Key agricultural products that will
benefit from immediate tariff elimination include soybeans and oilseed
products, fresh and processed fruits, vegetables and nuts, and pork
products.
In addition, Australia also agreed to resolve outstanding sanitary
and phytosanitary, SPS, disputes, chiefly affecting U.S. pork, citrus
and corn. Since conclusion of the negotiations, Australia has taken
steps to lift the SPS barrier against U.S. pork. This is good news for
the many pork producers in Illinois.
While some of the provisions in these FTAs could serve as a model for
other agreements, a number of provisions clearly cannot be, nor should
they be. I believe that each country with whom we negotiate is unique;
and while the provisions contained in the Australia FTA work for
Australia, they may not be appropriate for FTAs with other countries,
where there may exist very different circumstances.
Concerns about labor and environmental standards, however, should
receive careful scrutiny on a case-by-case basis as different
circumstances and situations warrant. Use of the ``enforce your own
law'' standard is invalid as a precedent--indeed is a contradiction to
the purpose of promoting enforceable core labor standards--when a
country's laws clearly do not reflect international standards and when
there is a history, not only of nonenforcement, but of a hostile
environment towards the rights of workers to organize and bargain
collectively. Using a standard in totally different circumstances will
lead to totally different results. Many of us support the Australia
Free Trade Agreement not only because they have good labor laws, but
because they have the ability and willingness to enforce them.
I also noted that all commodities were not included in this FTA and
that sugar was excluded. This exclusion should not be a precedent for
future trade agreements as this could inhibit other export-oriented
industries from their opportunity to win market access in future FTAs.
Without a doubt, there are parts of this agreement that I feel are
less than perfect. This agreement has one very troublesome aspect to
it, which has U.S. pharmaceutical industry fingerprints all over it.
This agreement gives the exclusive right of a patent holder to
prevent the importation of a patented product without the consent of
the patent holder.
By including this provision in this agreement, the ban on
reimportation of prescription drugs into the United States becomes more
than just a U.S. law, it becomes a matter of trade law.
That means that we are giving another country the right to challenge
us if we pass the important Dorgan-Snowe bill allowing Americans to
reimport prescription drugs from other countries, many of which have
cheaper prices than the U.S. for the same drugs.
Congress is currently considering several bills to allow Americans to
safely reimport prescription drugs from other countries. In fact, there
was just a hearing in the Senate Judiciary Committee about this issue
and the Senate Health, Education, Labor and Pensions Committee will
mark up a proposal next week.
Why then is the trade negotiator for the Bush administration
negotiating an issue that is being actively debated in Congress?
Allowing this language in this agreement is effectively end-running the
legislative branch.
On July 23, John Veroneau, general counsel for the Office of the U.S.
Trade Representative, confirmed that new

[[Page S8202]]

legislation on drug reimportation ``could give rise to an inconsistency
between U.S. law and a commitment under this trade agreement.''
Once again, the Bush administration has chosen big pharmaceutical
companies over the American people. Prescription drug prices are rising
between 14 and 19 percent per year, making already expensive drugs
unaffordable for some. As Congress searches for solutions, the Bush
administration is preserving the protections from international price
competition for the prescription drug industry.
Further, this agreement may jeopardize the lower prices the Veterans
Administration and Medicaid are currently able to negotiate. Under
Article 15.11 of the agreement, ``suppliers'' have the right to
challenge VA procurement decisions, including listing and pricing
pharmaceuticals.
I do think, because of the positive provisions in this FTA relating
to manufacturing, agriculture services, that we should approve this
agreement. However, my vote for the Australia FTA should not be
interpreted as support for using this agreement as a model for future
trade negotiations. I will evaluate all future trade agreements on
their merits and their applicability to each country. We need to ensure
that core international labor rights and environmental standards are
addressed in a meaningful manner and the rights of American consumers
are protected.
Mr. KOHL. Mr. President, the writing appears to be on the wall where
the U.S. Australia Free Trade Agreement is concerned. I suspect it will
pass this body by a substantial margin. Still, I want to take a few
moments to reflect on this agreement and what it may mean for
Wisconsin.
Wisconsin has about 16,000 dairy farms. Altogether, production and
processing activities in the state generate close to $20 billion in
economic activity. Dairy accounts for about 200,000 Wisconsin jobs. I
could go on at length, but my colleagues already know that I care
deeply about Wisconsin agriculture and the families who depend on
dairy.
And that is why I will vote against the U.S.-Australia Free Trade
Agreement. While the final agreement maintains over-quota tariffs on
dairy products, I remain very concerned that the overall effect on
dairy farmers will be negative, particularly as it affects cheese
markets which are of critical importance to Wisconsin dairy.
I am also concerned that this agreement sets up roadblocks for us to
pass legislation that would allow Americans to buy less expensive
prescription drugs from other countries. It includes a provision that
protects the current right of drug companies to prevent importation of
its patented drugs by other parties, in this case, parties in
Australia.
I understand that his provision will have no practical effect in
Australia, since Australian law already prohibits drug exports.
However, I am concerned about the dangerous precedence this sets. A
bipartisan majority in Congress supports legislation to allow drug
importation from other countries, and I believe that at some point, it
will be the law of the land.
Even though it may not matter for Australia, the United States will
likely seek trade agreements with other countries in the future that do
allow exports. The pharmaceutical industry must be put on notice that
this kind of end-run around the will of Congress is not acceptable. And
the administration must be put on notice that future trade agreements
will have a hard time getting approval if we see these kinds of
provisions again.
Trade negotiations, simply put, are nothing more than an elaborate
process of setting priorities and making trade offs. Where the U.S.-
Australia trade agreement is concerned, it seems clear to me that U.S.
negotiators were willing to trade quite a bit away in order to protect
and promote the interests of pharmaceutical manufacturers.
Unfortunately, dairy interests ended up on the wrong side of that
deal. And though we avoided disaster after several of us made a final
push to get our negotiators to focus on the impact their deals could
have on our dairy industry, avoiding disaster is not enough to
recommend the final agreement. This implementing bill does not
improve--and probably harms--the chances for Wisconsin dairy producers
to enhance their markets. As such, I cannot support it.
I believe in free and fair trade. But this bill implements neither of
those principles. The massive benefits won by the pharmaceutical
industry were not free, they were bought by concessions from other
industries, dairy and I am sure others of importance in my colleagues'
States. And the economic balance struck by the deal--where some favored
industries do well at the expense of others--is not fair. I urge my
colleagues to look carefully at the trade-offs this deal represents
before casting your vote.
(At the request of Mr. Daschle, the following statement was ordered
to be printed in the Record.)
<bullet> Mr. BAUCUS. Mr. President, I appreciate the comments by my
colleagues on the importance of U.S. beef and the impact upon it by
this Agreement. The U.S. cattle industry is a cornerstone of rural
America. Virtually every rural community in America is supported, in
some way, by domestic beef production. This is especially true in
Montana, where cattle and beef account for 25 percent of our State's
economy. Nearly half of our State's economy depends on agriculture,
overall. Since it's pretty tough to survive on one-half of an economy,
it's easy to see how important this industry is to Montana. The cattle
industry creates thousands of jobs and supports thousands of families.
This is why I fought so hard to ensure that this agreement reflected
the particular needs and interests of Montana and U.S. cattlemen. When
the administration first indicated their intention to negotiate an
agreement with Australia, I was frankly concerned. Australia is one of
the world's largest exporters of beef, offering a relatively small
consumer market in exchange for access to ours.
I was faced with a choice. I could oppose the agreement from the
beginning, or I could engage the process and try to forge as strong an
agreement as possible. Opposing the agreement from the beginning would
mean taking myself out of the process. At that point, I would be unable
to best defend the interests of my constituents who had much at stake
in the negotiations. Engaging the process would allow me a seat at the
table, and an opportunity to insist on provisions that preserve the
interests of Montana's cattlemen. Thus, engagement was the better
choice.
After nearly a year and a half of tough negotiations, including
countless meetings and conversations with U.S. negotiators, and
Australian officials, as well, I am satisfied that we got as good a
deal as we could. The agreement treats beef as a particularly sensitive
product, taking into account the loss of U.S. global exports due to the
discovery last year of BSE. It provides a long transition period for
duty phase-out, and a slow, gradual increase in beef access to
Australia. Most importantly, the agreement creates two safeguards that
are triggered automatically whenever the volume or price-based
conditions are met.
While the administration is given authority to waive the application
of a safeguard--if certain, rare conditions are met--I also worked with
Ambassador Zoellick and his staff to establish procedural requirements
that must be met before a safeguard could be waived.
All in all, I am confident that the provisions in the agreement are
strong and adequate. Still, our efforts illustrate the importance of
these issues, not just for this FTA but for future agreements, as well.
The United States traditionally exports 10 percent of its beef
production, and this figure was growing until our export markets were
blocked in the wake of last December's discovery of a single dairy cow
infected with BSE.
Clearly, expanded trade is important to the U.S. cattle industry.
Yet, extreme distortions in global beef markets pose a serious threat
to the future of U.S. ranchers. All the hard work in the world won't
amount to a hill of beans if we don't tackle the sources of these
distortions--such as massive subsidies, high tariffs, and the like. I
ask that a position paper, describing distortions in the global cattle
and beef markets, be printed in the Record.

[[Page S8203]]

There being no objection, the material was ordered to be printed in
the Record, as follows:

Grossly Distorted Global Cattle and Beef Markets--Harming U.S. Cattle
and Beef Producers and Rural America: Immediate Steps Needed To Level
the Playing Field

i. introduction

The global market place for cattle and beef trade is
amongst the most heavily distorted of any sector of economic
activity. The distortions have seriously harmed US cattle
producers by reducing prices paid for U.S. product in the
U.S. and around the world and by limiting export
opportunities other than the United States for other major
producing nations. The domestic cattle industry suffered
staggering losses since the early 1990s measured in the
billions of dollars, with more than 100,000 cattle ranches
and farms ceasing operation or ceasing handling cattle in
that time. The decline of the cattle industry in America--the
largest part of American agriculture, has decimated rural
communities across the country which depend on a healthy
agricultural sector for survival.
While the United States market is very open (we are the
largest importing nation despite being the largest producing
nation and have very low tariffs on cattle and large volumes
of beef that enter duty free under a TRQ system) and is
characterized by little government support and science-based
sanitary and phytosanitary measures, this is not true of most
of the rest of the world. Our trading partners often employ
(1) high tariffs, (2) massive subsidies (for some), (3)
unscientific SPS measures, (4) misuse of state trading
enterprises in grains to artificially lower costs of
production in certain major exporting nations and (5) failure
to open markets even where FTAs have been negotiated through
the exclusion of large segments of agricultural trade
(including cattle and beef) in violation of WTO obligations
and requirements. Such actions ensure that many markets are
closed, US exports are limited and global export prices and
prices in the U.S. are lower than they would be in an
environment of harmonized tariff levels, elimination of
export and domestic subsidies and harmonized SPS standards.
While the European Union is the worst offender with
combination tariffs well north of 100% ad valorem, more than
$9.5 billion in subsidies to the sector and SPS measures that
have been found inconsistent with WTO obligations, they are
not alone. The U.S. government has estimated that bound
tariffs in the sector by our trading partners average 85%.
Subsidies are provided to expand exports and build up
industries in major producing nations, such as Australia,
Brazil, Canada as well as the EU. Two major trading partners,
Australia and Canada, have state-trading enterprises for
grains which are believed to distort prices for major inputs
to domestic cattle production in those countries. Indeed, the
Australian Wheat Board has acknowledged publicly that they do
so. Fifty-eight countries closed their markets in whole or
in part to U.S. exports after a single imported cow from
Canada was found in Washington state to have BSE and have
maintained restrictions without risk assessments to
justify such action and contrary to the international
standards established by the OIE. The result is
artificially high prices in major consuming markets like
Europe and Japan (in 2002 the average slaughter steer
price in the EU was $127.42/cwt and in Japan Holstein
steers sold at $171.57/cwt while U.S. steer prices never
went above $75/cwt in any month of the year) and
artificially low prices in open markets like the United
States. U.S. producers who are blessed with abundant land
and are highly educated and entrepreneurial are being
destroyed not because they are not competitive but because
the global market place is stacked against them.
While tariffs and subsidies are being negotiated as part of
the ongoing WTO Doha Development Round, it is critical that
the United States obtain parity for U.S. producers with both
developed and developing countries on these critical issues
through the negotiations. Based on discussions to date, such
parity is unlikely without a sectoral approach being adopted
for cattle and beef within the Doha Round.
Similarly, it is critical that other distortions be
eliminated through harmonization of SPS standards actually
applied by major consuming nations, that state trading
enterprises be eliminated (or forced to end their distortive
practices) and that countries not be allowed to maintain FTAs
where in fact substantially all trade is not covered.
Without such comprehensive actions, current efforts to
negotiate FTAs with many countries including most of the
major producing nations--but few of the major consuming
nations--has the potential perverse consequence of worsening
the position of U.S. cattle producers and the rural
communities which depend on them by further opening the U.S.
market without ensuring that U.S. producers (and other
producers) can compete in a non-distorted manner globally.
Finally, Congress has recognized that perishable products
like live cattle and beef need special rules included in
trade agreements to facilitate trade and provide the tools
necessary to address pricing or volume problems quickly when
they occur. The U.S.-Australia FTA includes such a provision
for beef. It is critical that every trade agreement (whether
bilateral, plurilateral or multilateral) have such special
rules and that they be applicable to cattle and beef and be
automatic in operation.

II. GLOBAL DISTORTIONS

A. Tariffs
The United States allows various categories of beef to be
imported duty-free pursuant to free trade agreements (ex.
Mexico and Canada under NAFTA) and preferential treatment
programs (ex. Peru under Andean Trade Preference Act). Beef
from all other countries is subject to a Tariff Rate Quota
system and imports within the TRQ (covering 696,621 MT) are
subject to a tariff that is nearly zero. Import volume that
falls outside the TRQ is subject to a 26.4% duty. In
contrast, major consuming and several producing nations
maintain high tariffs and/or highly restrictive tariff-rate
quotas (TRQs) to limit market access, which limits both
export opportunities for U.S. producers, and leads to other
producing nations focusing on the same open beef markets like
the United States resulting in lower prices in the United
States than would otherwise be the case.

COMPARISON 2003 EFFECTIVE TARIFFS ON BEEF
--------------------------------------------------------------------------------------------------------------------------------------------------------
U.S.
Code Description effective Japan China Jamaica Korea EU \1\ Turkey
rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
020130.......... Meat of bovine animals, .274% 50% (safeguard) (normally 34% 40% 40.5% 79.5% 227.5%
fresh or chilled: Boneless. 38.5% of CIF).
020230.......... Meat of bovine animals, 2.15% 50% (safeguard) (normally 34% 40% 40.5% \2\ 93.1% 227.5%
frozen: Boneless. 38.5% of CIF).
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ EU effective rate based on 2002 data.
\2\ Based on tariff rates for 0202.30.10 and 0202.30.50.

B. Subsidies
Major beef producing nations have lavished billions of
dollars in aid to support and expand beef productions in
their respective countries. For example, the EU is largest
agricultural subsidizer in the world, projected to spend over
$9.5 billion for both export and domestic subsidies on their
beef and cattle sectors in 2005. Likewise, Brazil has spent
hundreds of millions of dollars to expand their beef sector
through both domestic and export subsidies and is understood
to be more than doubling the amount of subsidies to
the sector in 2004 to roughly a half billion dollars.
Further, both Australia and Canada are engaged in
providing hundreds of millions of dollars in support to
their respective cattle and beef sectors in an effort to
artificially prop up those industries:

Country Est. Subsidy per Head
EU...............................................................$87.94
Canada.............................................................6.12
Brazil.............................................................5.38
Australia..........................................................2.96

Conversely, outside of disaster assistance or drought
relief, the cattle and beef producer in the United States
receives no support from the government.
C. State Trading Enterprises
State Trading Enterprises maintained in Australia and
Canada operate to distort internal prices for key feedstuffs
through the use of wheat boards supporting larger herds than
would otherwise be the case. The Australian Wheat Board
Director has stated that: ``By controlling the export of
grains used as feeds--wheat, barley, and sorghum--these
entities are able to influence the domestic prices of feed,
and thus benefit Australian cattle producers.''
D. Unjustified Sanitary and Phytosanitary Measures
Many of the major consuming countries have imposed
restraints on U.S. exports of cattle and beef that are not
based on risk assessments or otherwise comply with WTO SPS
obligations. While all governments accept the fact that some
trade restrictions may be necessary to ensure food safety and
animal and plant health protection, the use of sanitary and
phytosanitary restrictions to shield domestic producers from
competition is unacceptable. For many years, the EU has
unjustifiably banned U.S. exports of beef on the grounds of
hormones despite adverse WTO panel and Appellate Body
reports. Beginning in December of last year U.S. beef has
been banned in fifty-eight markets around the world on the
basis of BSE without adequate scientific justification or WTO
notification. Such restrictive actions have largely
eliminated in 2004 the export markets for U.S. beef, markets
that have been built up over many years of business.
Global BSE Trade Ban in place as of Feb. 1, 2004
(a partially removed as of June 11, 2004;
b country joined EU and ban lifted; c
banned applies to Washington State only):
1. Argentina; 2. Australia; 3. Bahrain; 4. Barbados; 5.
Belize; 6. Bolivia; 7. Brazil; 8. Brunei; 9. Bulgaria; 10.
Canada a.

[[Page S8204]]

11. Cayman Islands; 12. Chile; 13. China; 14. Colombia; 15.
Costa Rica a; 16. Dominican Republic a;
17. Ecuador; 18. Egypt; 19. El Salvador; 20. Grenada.
21. Guatemala a; 22. Honduras; 23. Hong Kong;
24. Indonesia a; 25. Israel; 26. Jamaica; 27.
Japan; 28. Jordan; 29. Kenya; 30. Korea.
31. Kuwait; 32. Latvia b; 33. Macau; 34.
Malaysia; 35. Mexico a; 36. Nicaragua
a; 37. Oman; 38. Panama; 39. Peru; 40. Philippines
a.
41. Poland b; 42. Qatar; 43. Republic of South
Africa; 44. St. Kitts; 45. St. Vincent & Grenadines; 46.
Saudi Arabia c; 47. Russia; 48. Singapore; 49.
Surinam; 50. Taiwan.
51. Thailand; 52. Trinidad & Tobago a; 53.
Turkey; 54. Ukraine; 55. United Arab Emirates; 56. Uruguay;
57. Venezuela; 58. Vietnam.

III. WTO INCONSISTENT FTAs RESULT IN LARGE VOLUMES OF BEEF COMING TO
THE UNITED STATES THAN WOULD OTHERWISE BE THE CASE

Many countries have entered into free trade agreements
(FTAs) where large portions of agricultural trade, including
trade in cattle and beef, have been excluded from tariff
concessions. Such actions raise serious questions about FTA
compliance with obligations of GATT Article XXIV:8(b), which
requires that FTAs eliminate duties and other restrictions on
``substantially all'' of the trade between parties to the
FTA. Correct implementation of Article XXIV in the FTAs would
result in expanded market opportunities for FTA partners and
provides alternative markets to traditional export markets
such as the U.S. Lack of alternative markets funnels product
into the U.S. lowering prices here as well as into other
markets not covered by FTAs. An examination of five of the
EC's FTAs, as an example, shows the following product
exclusions:

PERCENTAGE OF PRODUCTS EXCLUDED FROM TARIFF CONCESSIONS IN FIVE EC-FTAs
----------------------------------------------------------------------------------------------------------------
HS 0201
Meat of HS 0202 Total % of
HS 0102 bovine Meat of agricultural
Country Live bovine animals, bovine products
animals fresh or animals, excluded
chilled frozen
----------------------------------------------------------------------------------------------------------------
Mexico..................................................... 100 100 100 35
South Africa............................................... 100 100 100 25
Tunisia.................................................... 100 100 100 68
Morocco.................................................... 100 100 100 67
Israel..................................................... 100 100 100 87
----------------------------------------------------------------------------------------------------------------

IV. SPECIAL RULES FOR PERISHABLE AND CYCLICAL AGRICULTURAL PRODUCTS

In 2002 Congress recognized that producers of perishable,
seasonal, and cyclical agricultural products, like cattle and
beef, face unique challenges in the market. Some proposals
have been made by the U.S. in the Doha Round in the Rules
area but to date nothing has been put forward in the
agriculture negotiations. In the United States-Australia Free
Trade Agreement (FTA) this requirement was recognized by the
Administration as it negotiated an agricultural safeguard for
beef. While the terms within the U.S.-Australia FTA are
discretionary and limited to beef, it is an important
precedent for the type of automatic provisions that should
be part of every FTA and part of the WTO.

V. THE HIGHLY DESTRUCTIVE EFFECT OF GLOBAL MARKET DISTORTIONS ON THE
U.S. CATTLE AND BEEF SECTOR

Cattle and beef production comprises the single largest
sector of U.S. agriculture. Cattle are raised in all fifty
states and half of all U.S. farms have beef cattle as part of
their operations.
Because cattle prices for U.S. producers are highly
sensitive to demand movements, the combination of an open
U.S. market, coupled with the global distortions outlined
above, has resulted in massive dislocations to U.S. producers
and the rural communities which depend on them in the last
fifteen years.

BEEF CATTLE OPERATIONS, LOSSES AND 2002 CATTLE RECEIPTS
----------------------------------------------------------------------------------------------------------------
No. of operations 2002 Cash
----------------------------- Declines Receipts
(% of ------------------
1993 2002 Declines 1993) (000s $s) Rank
----------------------------------------------------------------------------------------------------------------
AL................................................... 32000 24000 8000 25.0 2,378,278 14
AK................................................... 90 90 0 0.0 27,906 49
AZ................................................... 2600 2100 500 19.2 1,094,056 29
AR................................................... 27000 27000 0 0.0 2,951,745 10
CA................................................... 15000 12500 2500 16.7 6,241,632 2
CO................................................... 10500 10900 0 0.0 3,501,589 9
CT................................................... 800 800 0 0.0 154,364 45
DE................................................... 230 230 0 0.0 546,329 39
FL................................................... 18000 16500 1500 8.3 1,239,225 28
GA................................................... 23000 21000 2000 8.7 2,889,736 12
HI................................................... 800 650 150 18.8 84,789 46
ID................................................... 7500 7600 0 0.0 1,998,531 17
IL................................................... 21000 15800 5200 24.8 1,562,297 22
IN................................................... 17000 12000 5000 29.4 1,551,019 23
IA................................................... 29000 26000 3000 10.3 5,074,754 5
KS................................................... 29000 28000 1000 3.4 5,325,329 4
KY................................................... 44000 40000 4000 9.1 1,960,679 18
LA................................................... 18000 13000 5000 27.8 614,049 38
ME................................................... 1400 1000 400 28.6 230,471 42
MD................................................... 3800 2700 1100 28.9 810,343 32
MA................................................... 1000 750 250 25.0 83,250 47
MI................................................... 8000 8000 0 0.0 1,259,700 27
MN................................................... 16000 15500 500 3.1 3,644,854 8
MS................................................... 27000 20000 7000 25.9 1,949,698 19
MO................................................... 62000 58000 4000 6.5 2,302,053 15
MT................................................... 11800 11400 400 3.4 985,498 30
NE................................................... 23000 21000 2000 8.7 5,824,295 3
NV................................................... 1400 1300 100 7.1 211,157 43
NH................................................... 500 530 0 0.0 56,276 48
NJ................................................... 1200 700 500 41.7 192,609 44
NM................................................... 7000 6500 500 7.1 1,382,052 26
NY................................................... 7500 6200 1300 17.3 1,870,160 20
NC................................................... 26000 21000 5000 19.2 3,944,013 6
ND................................................... 13200 11500 1700 12.9 723,656 37
OH................................................... 19000 17000 2000 10.5 1,630,227 21
OK................................................... 51000 50000 1000 2.0 2,893,460 11
OR................................................... 16000 12800 3200 20.0 808,131 33
PA................................................... 12500 12200 300 2.4 2,682,401 13
RI................................................... 160 160 0 0.0 6,300 50
SC................................................... 13000 9500 3500 26.9 760,227 35
SD................................................... 18000 16500 1500 8.3 2,059,513 16
TN................................................... 55000 45000 10000 18.2 913,073 31
TX................................................... 130000 133000 0 0.0 8,087,670 1
UT................................................... 5000 5600 0 0.0 807,752 34
VT................................................... 1100 1200 0 0.0 400,174 40
VA................................................... 24000 23000 1000 4.2 1,451,127 25
WA................................................... 14000 9700 4300 30.7 1,495,317 24
WV................................................... 15000 11000 4000 26.7 300,197 41
WI................................................... 9800 12000 0 0.0 3,768,302 7
WY................................................... 5100 5200 0 0.0 749,571 36
----------------------------------------------------------------------------------------------------------------
No. of Operations are for Beef Cattle & Calves, from USDA NASS, ``Cattle Final Estimates'' 1994-98 & 1998-2002.
Cash receipts are for Livestock and products from USDA ERS.

For example, in a global market where there was a level
playing field for U.S. cattle producers, the U.S. would have
a huge and growing trade surplus as there are only a handful
of countries with the capacity to supply large quantities of
quality beef for export. Yet, prior to the BSE outbreak in
Canada in 2003, the U.S. has been running a trade deficit in
cattle and beef:

UNITED STATES BEEF AND CATTLE TRADE FLOWS, 1999-2003
[$1,000]
----------------------------------------------------------------------------------------------------------------
1999 2000 2001 2002 2003
----------------------------------------------------------------------------------------------------------------
Cattle Imports................................................. 1,007 1,157 1,464 1,448 867
Cattle Exports................................................. 174 272 270 131 64
------------------------------------------------
Total, Cattle............................................ -833 -886 -1,194 -1,317 -803
================================================
Beef, Imports.................................................. 1,904 2,205 2,514 2,513 2,364
Beef, Exports.................................................. 2,655 2,909 2,548 2,489 3,036
------------------------------------------------
Total, Beef.............................................. 751 704 34 -24 672
================================================
Total, Cattle & Beef Trade............................... -82 -182 -1,160 -1,341 -130
----------------------------------------------------------------------------------------------------------------
Data Source: Department of Commerce, U.S. Census Bureau, Foreign Trade Statistics, HS 0102 (cattle), 0201 (fresh
beef), and 0202 (frozen beef).

Limited U.S. exports, significant inflows of imports and
massive global distortions have led to long-term
unsustainable pricing and an unprecedented seven year decline
in cattle inventory in the United States. For example, during
the 1992-2001 decade USDA reports that financial returns for
cow/calf producers were a negative $30.40 per bred cow per
year, losses aggregating to the billions of dollars. With the
massive losses, cattle herds have declined.
While the partial closure of the Canadian border in 2003
because of the BSE outbreak in that country has provided a
temporary respite for US producers in terms of pricing
levels, only correction of the global distortions can restore
pricing equilibrium.
The unsustainable prices over the last fifteen years have
resulted in ranching families going bankrupt by the thousands
and being forced off of their land. In 1993, there were
nearly 900,000 beef operations in the United States. By 2003,
this number declined to 792,100 operations. In the late
1990s, auctions of equipment from ranches and farms were a
weekly event across rural America as families lost everything
they owned and saw the end of what was often generations-old
family businesses.
The depressed pricing in the marketplace over most of the
last fifteen years has meant a hollowing out of the ranching
communities across American and with it the destruction of
many of the rural communities dependent on ranch and farm
economic health for survival.

vi. action to reform distortions is critical

Eliminating the global distortions in cattle and beef trade
is important to every state in the United States, to
thousands of rural communities and to some eight hundred
thousand ranching and farming families that raise cattle in
America. Some distortions can be addressed through the WTO
Doha Negotiations but only if the level of ambition at least
for cattle and beef is substantially higher than appears to
be the direction of negotiations in mid-June 2004.
What is needed from the ongoing WTO Doha Development Round:
(a) elimination of all export subsidies (developed and
developing countries);
(b) elimination of all domestic subsidies (developed and
developing countries);
(c) harmonization of tariffs at a level comparable to that
existing in the U.S. for all major consuming and all major
producing nations; and
(d) maintenance of special safeguards on beef and/or the
negotiation of special rules for perishable and cyclical
agricultural products.
In addition, the U.S. must obtain through negotiation,
dispute resolution or otherwise:
(a) a harmonization of SPS measures as applied to cattle
and beef from all major consuming and producing nations;
(b) expansion of trading partners' FTAs to cover
substantially all trade in fact, including cattle and beef
where not presently covered; and
(c) elimination of state trading enterprises involved in
grains, cattle or beef to ensure products are traded
according to market principles without distortions.
Finally, it is critical that the United States include in
any future FTAs special rules for perishable and cyclical
agricultural products applicable to both cattle and beef that
are automatic and both price and volume triggered.

Mr. BAUCUS. Mr. President, this position paper has been prepared by
R-CALF USA, an industry association representing ranchers across the
country including Montana.
Future trade agreements must seek to eliminate the distortions that
undermine the prosperity of U.S. producers. That means the U.S. should
negotiate agreements that offer real and substantial opportunities.
That also means the U.S. must take a hard-nosed approach in the Doha
Round of WTO negotiations.

[[Page S8205]]

This matter is crucial to the future of rural America. It is worth
every ounce of effort we can pour into it, and I--for one--pledge to
press this fight.<bullet>
Mr. ROBERTS. Mr. President, I rise to make several important points
regarding the United States-Australia Free Trade Agreement.
As chairman of the Intelligence Committee and member of the Armed
Services Committee, I am well aware of the valuable friendship that our
two countries share. Australia's commitment to the fight in the Global
War on Terror is unwavering. Australia's support in liberating and
rebuilding Iraq has been crucial there.
This agreement provides better opportunities for Kansas
manufacturers, especially those in the aviation and transportation
sectors to increase exports to the Australians. I understand that there
is strong, bipartisan, interregional support for this agreement across
industries and across the country.
However, I feel compelled to share with my colleagues several things
which trouble Kansas about the way this agreement was constructed.
I must tell our colleagues that in all the years I have had the
privilege to serve Kansas and agriculture in the U.S. Senate and the
House of Representatives, there have been few, if any, times when there
was as much open hostility to trade as I sense in some areas today.
In Dodge City terms, ``The bloom is off the lily, and the lily was
run over by a lawn mower.''
I have had more than one producer ask me just what we are doing being
involved in all these trade agreements when it seems that agriculture
is under attack.
We have dealt with and continue to deal with the BSE hurdles for our
beef products, our farm and export programs are under attack through
the Brazilian cotton case and our food aid programs are being attacked
by others in the Doha round of WTO negotiations.
We have now completed, and this body is considering a free trade
agreement with Australia that exempts a single commodity--sugar--at the
expense of others, particularly wheat and beef.
Kansas producers, who do pay close attention to trade matters, are
taking a look at this list of issues and saying: Hold on a minute, Pat.
What is going on here?
I will share with you and the rest of our colleagues what I tell the
folks at the coffee klatch in Dodge.
In addition to setting a dangerous precedent for future trade
agreements, exempting sugar from the Australian FTA also sets a
dangerous precedence for agriculture, especially for sugar itself. In
the past, whether in trade agreements or trade disputes, whether it be
in farm bills or budget reconciliations, the commodity and producer
groups have sank or swam together.
Sugar's insistence on not participating in this free trade agreement
makes it very likely that the rest of US agriculture will opt not to
participate in sugar's defense the next time that program faces a WTO
challenge, budget reconciliation measure, or amendment to end sugar's
support program during the next farm bill.
Simply put, if sugar falls or jumps off the ag-boat in the future, it
may very well find itself treading water while watching the rest of US
agriculture drift away silently. Our producers will insist that we
extract real concessions on state-traded enterprises, quotas, tariffs,
etc. in future trade negotiations for their support for concessions on
imports of agricultural goods here at home.
Simply put, you don't bring a knife to a gun-fight and expect our
producers to stand with you.
I intend to support the United States-Australia Free Trade Agreement.
I believe that it is in the best interest of our relationship with our
friend and ally, Australia. However, singling out individual
commodities in future trade agreements is not in the best interest of
our Nation and threatens agriculture's support and, therefore, my
support for future trade agreements.
(At the request of Mr. Daschle, the following statement was ordered
to be printed in the Record.)
<bullet> Mr. KERRY. Mr. President, I placed in the Record a statement
addressing the United States-Australia Free Trade Agreement when the
Finance Committee first passed it. Today, I want to offer some
additional thoughts on two issues that have arisen since then.
As I have said, I believe the agreement will promote our economic
interests and job creation here in America. In addition, Australia is
an important ally, and we must do all we can to ensure a healthy and
vibrant relationship between our two nations. Overall, the agreement
deserves our support.
However, I am disappointed that the administration has included
provisions relating to pharmaceuticals in this agreement. It has been
suggested that these provisions might block proposals to reimport drugs
or undermine our Medicare and Medicaid programs. These provisions do
not belong in this agreement and should not be considered as precedent
for future agreements. The record should reflect that the U.S. Trade
Representative has confirmed to the Congress that these provisions will
not harm our domestic health programs or efforts to reimport drugs. And
if the Trade Representative's claims in this matter should turn out to
be wrong, I believe that a future administration and the Congress
should act immediately to correct the agreement through whatever
process is needed.
Second, I am disappointed that the Bush administration did not do
more to ensure a level playing field for our important beef and dairy
farmers. Further, the administration ignored the will of the Senate
Finance Committee on this important issue. I was happy to support an
amendment in the Finance Committee that helps ensure a level playing
field for our domestic beef farmers. Unfortunately, the administration
ignored this action and failed to include those enhanced protections in
its final proposal. It would seem the administration is content with
listening only to itself and a few select industries as it negotiates
trade pacts for all of America. This is not consistent with our
expectations under fast-track procedures.
Finally, as I have stated before, I am disappointed that the Bush
administration did not build on the model of the United States-Jordan
agreement by including strong and enforceable labor standards in the
core of the agreement. Although Australia already has very strong labor
rights and an effective enforcement regime, the agreement represents a
missed opportunity to set a higher benchmark for future trade
agreements by cementing the principle that labor and environmental
standards are in the core of all new agreements.<bullet>
Ms. COLLINS. Mr. President, I rise in support of the Australia Free
Trade Agreement. On balance, this agreement is overwhelmingly
beneficial to the State of Maine, and to the country as a whole.
Critical to my decision to support this agreement is the fact that it
will provide new and expanded opportunities to Maine businesses that
want to expand into the Australian market. This agreement will create
and support good jobs in my State.
It is clear that businesses across Maine are interested in initiating
or expanding trade with Australia. The Maine International Trade Center
held a seminar recently on export market opportunities in Australia.
Representatives from more than fifty Maine companies, including many
small businesses and manufacturers, attended.
It is no wonder: the United States has a trade surplus with Australia
of $9.1 billion, the second largest trade surplus of any U.S. trading
partner. Australia is a net consumer of United States exports and
particularly United States manufactured goods. Ninety-three percent of
United States exports to Australia are manufactured goods, and 99
percent of these goods will be duty-free if the agreement is
implemented. The National Association of Manufacturers predicts that
the agreement could result in nearly $2 billion per year in new United
States exports of manufactured goods to Australia, a boost to our hard-
pressed manufacturers.
In addition, Australia is the 15th largest economy in the world and
has been growing over the past few years while the rest of the world is
in recession. This means more Australian buying power--and many new
opportunities for Maine and United States companies to export their
products to Australia.

[[Page S8206]]

Australia has a strong and vibrant trading relationship with Maine.
Australia is Maine's 12th largest export market, and in 2003, Maine
exported nearly $29 million in high-value goods, such as electrical
equipment, computers, and paper products, to the country. The agreement
will make these goods 99.25 percent duty free, on average, in the
Australian market.
Maine's forest and paper products industry will be stronger and will
be able to grow as a result of this agreement. The agreement lifts all
Australian tariffs on all U.S. forest products, which currently face
tariffs up to 5 percent. This is important, because the United States
is Australia's second largest supplier of paper and paperboard, with
exports totaling $178 million in paper products in 2003.
Expanded access to the Australian market will directly benefit Maine
mills. For example, International Paper's mill in Jay ME, exports about
1,200 tons of paper to Australia every year. These exports currently
face a 5 percent tariff. If the free trade agreement is implemented,
the tariff will be eliminated, and International Paper will be able to
fulfill its plans to increase the amount of paper it exports to
Australia from Maine, preserving and even increasing the number of jobs
supported by the mill.
The agreement will benefit other Maine companies as well. The
elimination of tariffs will enable FMC Coporation's Rockland plant to
significantly expand its export of carrageenan products to Australia.
In Southern Maine, National Semiconductor and Fairchild Semiconductor
will benefit from the agreement's elimination of tariffs on all U.S.
high-tech manufactured goods and from expanded opportunities for U.S.
suppliers to compete for a broad range of Australian government
contracts.
The Maine Potato Board has endorsed the agreement because it will
open and expand Australian markets for Maine potato products. The MPB
notes that the long-term success of the Maine potato industry is
absolutely dependent on the growth of new markets.

Despite the overwhelming benefits of this pact, I do have some
concerns with this agreement. While Maine does stand to reap
substantial benefits, I am disappointed that the United States Trade
Representative has included language that conflicts with the goal of
drug reimportation.
One of the greatest challenges facing American consumers is the high
cost of prescription drugs. That is why I have long supported
legislation to allow Americans to benefit from international price
competition on prescription drugs by permitting FDA-approved medicines
made in FDA-approved facilities to be imported into this country.
Despite the ongoing debate in Congress and the strong support for
drug reimportation on the part of the American public, I am
disappointed that our trade representatives have insisted on including
language in this trade agreement that is contrary to these critically
important efforts.
The Australian government already bans the export of drugs subsidized
under the Australian Pharmaceutical Benefits Scheme. Since 90 percent
of the drugs prescribed in Australia are subsidized, Australia would
not be a significant source of supply of imported drugs into the United
States, with or without this agreement. Drugs imported into the United
States are far more likely to come from Canada and Western Europe.
I am concerned, however, that these provisions set a bad precedent.
While Australia itself is not necessarily a good source for imported
drugs, this language could become a template for future agreements.
I am also disappointed that this agreement provided some additional
market access for Australian dairy products in the U.S. market.
However, I am pleased the final version of the agreement includes
marked improvements over initial drafts. For example, the agreement
gradually phases in limited increases in dairy imports over an 18-year
period. In addition, the agreement maintains the current U.S. above-
quota tariffs on dairy products indefinitely. These improvements were
included in the agreement after I joined with my colleagues in sending
a letter to U.S. Trade Representative Robert Zoellick asking that the
interests of our dairy farmers be taken into account as the agreement
was negotiated. The inclusion of these provisions, in addition to my
consultations with Maine's agricultural leaders, has led me to conclude
that this agreement will not have a significant impact on Maine's dairy
industry. Moreover, Australia currently exports only a small amount of
MPCs to the United States, and this agreement will not change this.
Australia is one of our oldest and most reliable partners. The
country is a growing market for high-value U.S. exports from both Maine
and the country. The free trade agreement we are considering today will
strengthen the economic and diplomatic ties between our countries. On
balance, it is good for Maine, and for both countries.
Mrs. CLINTON. Mr. President, today the Senate will vote on the
Australia Free Trade Agreement. Because I believe this agreement offers
greater access to Australian markets for U.S. manufacturers as well
help solidify a long-term relationship with Australia, a leading ally
of the United States on a whole host of international challenges, I
will vote in support of this agreement.
The Australia Free Trade Agreement will offer new opportunities for
U.S. manufacturers as well as granting substantial access to U.S.
services suppliers, including telecoms, financial services, express
delivery, and professional services providers. These sectors are a
critical part of New York's economy. Furthermore, Australia has been a
stalwart ally of the U.S. and this agreement is another step in
cementing that relationship.
I share the concerns raised by some of my colleagues regarding the
drug importation language in the agreement. Quite simply, the United
States Trade Representative should not be negotiating agreements that
could impact on the drug importation debate and I have grave concerns
about the inclusion of this language in the agreement. Similarly, in
the Chile and Singapore agreements, I raised concerns about the
inclusion of immigration provisions in those agreements. The continuing
practice of the United States Trade Representative of including
provisions in trade agreements which are rightfully in the jurisdiction
of Congress is deeply troubling.
During my tenure as a Senator, I have voted for every trade agreement
that has come before the Senate. However, I will find it difficult to
support future trade agreements which contain language that impedes the
jurisdiction of Congress regarding drug importation or other issues
While I wish the agreement had included provisions that provided
greater market access for New York agriculture, I believe that a
genuine effort was made to address the legitimate concerns of New York
and other States' farmers and that, on balance, New York's economy will
benefit from this agreement.
Despite my concerns over the drug importation provisions, I believe
that, in the aggregate, New York will benefit more from having this
agreement pass than if it failed. I also believe it sends a positive
signal to Australia about the importance of the United States-Australia
relationship. The Trade Representative should not make the mistake of
concluding that a vote for the Australia Free Trade Agreement is a vote
in support of this troubling drug importation provision.
When deciding how to vote on trade agreements, I look at each
agreement in its totality and measure the impact of each agreement on
the New Yorkers that I am privileged to represent. Because I believe
that passage of the Australia Free Trade agreement will lead to more
jobs and greater economic growth in industries that are an important
part of New York's economy as well as strengthening the U.S.
relationship with Australia, I will vote in support of this agreement.
Mr. LEVIN. Mr. President, article 17.9.4 of the United States-
Australia Free Trade Agreement implementing legislation allowing patent
holders to prevent the import of their patented products is redundant
and should not have been included in the agreement. Australian law
already bans the export of pharmaceuticals if such drugs are purchased
under its Pharmaceutical Benefits Scheme, PBS, and PBS drugs account
for over 90 percent of all drugs sold in Australia.

[[Page S8207]]

This language does not establish a precedent for other free trade
agreements. According to the Senate Finance Committee, it is
appropriate to raise objections if this language is included in a free
trade agreement negotiated with a country that does not forbid the
export of low cost pharmaceuticals. Therefore, I will support this
agreement.

Mr. JEFFORDS. Mr. President, I firmly believe that free and fair
economic relations between nations will accrue to the benefit of all
parties. Our country was founded on the principle that all States would
benefit from the free flow of commerce between equal parties. And our
national economy has proved this to be true.
These same dynamics now operate on a global scale. Commerce can now
reach around the globe with ease. Communications are instantaneous,
even in the most isolated places. Our trading laws must keep pace with
the emerging patterns. We must move to shape the emerging global
marketplace into a productive and fair system--not sit back and condemn
its advances and decry the loss of old economic structures. We can
either be in the lead of this evolution, or we will be sidelined by it.
I believe that America can and must exert leadership. One way we must
assert leadership is by the negotiation of trade agreements that will
lower the barriers to trade and level the playing fields for all
players.
Trade agreements come together more naturally with developed nations
that share our commitment to rule of law, strong worker protections and
strict environmental controls. Australia is such a country. Even so, it
has been difficult to resolve the differences in our two economies and
allow protections for particularly vulnerable elements of each economy.
Negotiations have taken place over a considerable length of time, and
no side has gotten everything they want.
The provisions in the agreement relating to dairy, for instance, are
an example of not getting all that we would like. I joined a bipartisan
group of 30 Senators in a letter to the chief US trade negotiator,
Ambassador Robert Zoellick, expressing our concerns for our Nation's
dairy farmers and requesting favorable treatment for this struggling
national industry. Under this agreement, imports may amount to two-
tenths of 1 percent of U.S. dairy production. While I would have
preferred no market penetration by Australian dairy imports, I am
confident that our industry is strong enough to meet this competition.
Additionally, this agreement will open up new markets for Vermont's
dairy products. I am confident Vermont farmers will be able to take
strong advantage of this opportunity.
Some concerns have been raised about provisions relating to
prescription drugs. Transparency provisions in this agreement related
to Government procurement decisions are designed to provide equal
rights of appeal. The US Trade Representative, USTR, has indicated that
these provisions will not require any changes in U.S. pharmaceutical
purchasing programs. There has also been discussion about a provision
in this agreement related to drug reimportation. As a strong supporter
of passing drug reimportation legislation, I would not want to endorse
any curtailment of future drug reimportation opportunities. In this
case, however, Australian law prohibits the export of any drugs
purchased through its government-subsidized program, the majority of
all drugs sold in Australia. As a central part of the Australian
Government's drug program, there is no reason to think that this
prohibition would change. But I also warn USTR that it would be
unacceptable to include language similar to article 17.9.4 in future
trade agreements where reimportation might be an option in the event of
a change in U.S. law. I am sure that the intense discussions around
these provisions over the last few days have made this point quite
clearly.
As with all significant agreements, we will find flaws and challenges
with this agreement as it unfolds. But as international dispute
mechanisms are perfected, we become better at settling them equitably
and expeditiously. The future of our economy and the health of the
global economy are dependent upon us improving our ability to devise
more equitable and open trading systems.
The disparities between the economies of the developed world and the
less-developed world continue to grow. This agreement comes between
economies of equal strength, even though not of equal size. The
experience we gain here in how to remove barriers to trade while
protecting vital interests will inform us of how to more successfully
tackle the difficult trade relations between our economy and those
less-stable economies. Some would argue that the easiest way to relate
to weaker economies is to put up greater barriers to trade--to prevent
the export of any U.S. capital and prevent the entrance of any lower-
priced goods into our market. I am more of an optimist than that. I
believe that we can do better than lock out whole sectors of the global
economy. I believe we must make efforts, learn from our mistakes, and
move ahead to strengthen the flow of commerce, the equity of business
and the opportunity for all people to earn a living.
Mr. KYL. Mr. President, I am pleased to join many of my colleagues in
supporting this landmark United States-Australia Free Trade Agreement,
FTA. I say ``landmark'' because it is both historic in that it
underscores the invaluable relationship between the United States and
Australia--a relationship that is built on friendship, loyalty, and
mutual support for economic and political freedoms--but also because it
breaks new ground for an FTA.
For the first time, a free trade agreement negotiated by the United
States has addressed the worldwide problem of prescription drug price
controls. The United States is virtually the only developed nation that
does not regulate pharmaceutical prices. American consumers, who
finance the bulk of research and development for the entire world,
should be very pleased that the U.S. Government has begun broaching the
subject with other developed countries. Because some of my colleagues
have raised concerns about the pharmaceutical section, I want to
briefly review what the FTA does, and what it does not do, in the area
of pharmaceuticals.
First, it is important to note that Americans will only benefit from
the drug provisions and, in truth, so will Australians. The FTA makes
suitable progress on addressing Australia's drug price controls; the
U.S. did not have to make any concessions in exchange. I say suitable
progress because, while the agreement makes important progress,
Australia does not embrace a free market for drug pricing with the
accord.
I joined a number of my colleagues on a Congressional delegation trip
to Australia at the beginning of the year. During our meetings with
Australian government officials we had the opportunity to debate the
Australian drug pricing system. I believe the agreement we will approve
today was possible, in part, because of those discussions.
In the FTA, the U.S. and Australia state that they ``recognize'' the
importance of innovative pharmaceuticals in delivering high-quality
health care. Incorporated in this, both countries agree to set
pharmaceutical prices based on the ``objectively demonstrated
therapeutic significance of the pharmaceutical.'' In practice, the U.S.
Government is already in compliance with this provision because our
Government does not ``mandate'' prices; certain Government agencies may
negotiate prices with drug companies, but by and large, we allow the
free market, including negotiations between drug companies, and
insurance companies, to determine prices. While Australia could not
take the next step and price drugs accordingly or adopt market-pricing,
this is still an important first step. If the U.S. can convince our
friends and trading partners to agree that innovative pharmaceuticals
benefit everyone and that R&D is both costly and necessary to our
health, then we can begin arguing for better burden sharing of R&D
costs.
I want to talk for a moment about price controls and the effect they
have on research and development. Some of my colleagues argue that the
U.S. should adopt prescription drug price controls indirectly by
importing price-controlled drugs from other countries as a means of
reducing drug costs for American consumers. I believe this would be a
terrible mistake for a number of reasons, one of which is the effect it
would have on R&D. To date, the

[[Page S8208]]

U.S. has seen private pharmaceutical research move to the U.S. from
Europe specifically because of price controls. Companies are able to
recoup their R&D costs in the U.S. market and are consequently more
likely to develop their new, breakthrough pharmaceuticals in the U.S.
Americans like having the R&D performed in our country--we like the
quality jobs it brings and we like having first access to new
products--but we do not like the fact that Americans pay for almost all
of the R&D for the world. Americans know this is simply not fair. If
the U.S. adopts price controls, we will see the development of new,
innovative pharmaceuticals drop off because there will be no one left
to fund R&D. Rather, we must begin persuading other developed, market
economies to begin shouldering their share of the burden. That is why
the fact that the agreement recognizes the importance of R&D is so
critical.
The FTA also commits Australia to make both transparency and
timeliness improvements to their Pharmaceutical Benefits Scheme, PBS,
that are intended to make the listing process for new pharmaceuticals
more open and fair. The PBS is the system by which the Australian
government sets price controls and provides subsidies for nearly all
drugs sold in Australia. To improve transparency, Australia agrees to
establish an independent review board to hear appeals of PBS listing
decisions. This will enhance transparency and accountability in the
operation of the PBS. Companies will gain a better idea of how and why
decisions were made regarding their drug submissions. Prior to this
agreement, U.S. drug companies would submit information on a new drug
for listing by the PBS, the PBS would set the price, and the company
would be left with a ``take it or leave it'' situation.
Some of my colleagues have asked whether the U.S. will have to
establish a similar independent review board, but the general counsel
of the USTR clarified for the Senate Finance Committee, during the July
14, 2004 consideration of the FTA, that because our processes are
already open and transparent, no independent review board is required
for any U.S. Government purchases of pharmaceuticals, by the Veterans'
Administration, for example).
Finally, the FTA establishes a ``medicines working group'' that will
provide a forum for continued dialogue between the United States and
Australia on pharmaceutical issues. During our meetings in Australia we
suggested such a working group as a way to guarantee that, if our
pricing concerns could not be resolved in the FTA, we could continue to
discuss the issue. The subject matters that the group might consider
are not limited by the agreement, and therefore can be expected to
include the importance of market-based pricing.
Now, to address the concerns of my colleagues. First, the FTA does
not ban the importation of price-controlled drugs. As my colleagues
know, it is already illegal for individuals to import prescription
drugs into the United States. Now, Congress may vote to amend U.S. law
to allow individuals to import prescription drugs from foreign
countries. I would strongly oppose this, but we may do it. This
agreement would in no way prohibit Congress from changing U.S. law to
allow drug importation. The new U.S. law would supercede the agreement
and would take effect despite any inconsistencies with the agreement.
Also as some of my colleagues know, Australian law prohibits the export
from Australia of drugs that are subsidized by the Australian
government. This only makes sense, from the perspective of Australian
taxpayers. Australian law does allow nonsubsidized drugs to be
exported; but in reality, most of the drugs marketed and sold in
Australia are under the subsidized system. As a consequence, Australia
is not likely to be a significant exporter of low-priced drugs to U.S.
consumers, should Congress allow drug importation, regardless of what
this FTA says.
Another charge raised by some of my colleagues is that the patent
protections in the FTA will in some way prohibit drug importation. The
patent protections included in the FTA merely state that both nations
agree to protect the patent owners' rights to determine how, by
contract or other means, their patent is used by a licensed third
party. It is not specific to pharmaceuticals, nor is it unique to this
FTA; other U.S. trade agreements include similar language that merely
reiterates and is consistent with existing U.S. patent laws. That is,
under U.S. law patent holders already have the right through contracts
and by other means to limit the use of their products. If an
unscrupulous person wanted to steal a U.S. company's drug patent,
illegally make the drug, and sell it into the United States, it would
be a violation of U.S. law, regardless of whether the U.S. entered into
this FTA or not.
I urge all of my colleagues to review the facts if they have concerns
with the drug provisions of this FTA because this agreement will not
increase drug prices in the U.S., it will not increase drug prices in
Australia, and it will not prevent the U.S. from changing our laws in
any way. It will, however, begin an important dialogue with our
Australian friends about the importance of R&D and of paying for R&D;
this is an important first step. I urge all of my colleagues to support
the agreement.
Mr. GRAHAM of South Carolina. Mr. President, I do not consider myself
a protectionist, nor a free trader, but a balanced trader.
Having said that, I have not been a supporter of so-called free trade
agreements in the past. I have been very skeptical of the free trade
agreements--FTAs--our country has signed due to the detrimental impact
that I believe they've had on our economy, especially the manufacturing
industry. Most of the trade agreements we have signed since I have been
involved in politics under both Democrat and Republican leadership have
put American workers at an unfair disadvantage because they have
encouraged trade with countries that have no labor standards, lack
environmental and intellectual property laws, and violate agreements
under the WTO.
Free trade only works when both countries play fairly. That is why I
can support the U.S.-Australian Free Trade Agreement--USAFTA. Australia
is a country that holds true to their word and will live up to their
commitments in the agreement. Australia lives by the same rules of law
that we as Americans live by. By maintaining an equivalent cost of
production and standard of living to that of the United States, the
USAFTA will improve the competitive advantages of both countries
without encouraging the displacement of hard-working Americans.
I am extremely concerned about the negative impacts that unfair trade
agreements have had on the manufacturing industry. South Carolina,
particularly the textile industry, has been decimated by unfair trade,
first with NAFTA and now with the People's Republic of China. We have
lost thousands of jobs at home. In the last six years, nearly 230,000
U.S. textile jobs have been lost. Since 1997, the U.S. textile industry
has closed more than 250 textile plants in the country. These mass
layoffs and plant closings are a direct result of unfairly traded
imports, especially from China. China's access to the U.S. textile and
apparel market more than doubled in 2002, growing 117 percent and grew
an additional 114 percent in 2003, according to the American Textile
Manufacturers Institute.
During the negotiations on the Australian Free Trade Agreement, the
Bush Administration negotiated a good deal for the textile industry and
I appreciate their efforts in this regard. The USAFTA contains a strict
yarn-forward rule of origin with no loopholes, exceptions, or
carveouts. Therefore, the benefits of the USAFTA are limited to the
participating countries only, effectively denying China the loophole
through which they annually transship billions of dollars of
manufacturing goods into this country. This is the first FTA to contain
such a strict yarn-forward rule of origin and I hope that it is the
first of many.
While I recognize the need to examine the problems with our current
trade agreements, I support the USAFTA because I feel it has the
opportunity to serve as a model for future FTAs. Furthermore, the
implementation of the USAFTA will further strengthen the U.S.
relationship with Australia, one of our most important and reliable
strategic partners.
Mr. BURNS. Mr. President, today we are considering the United States-
Australia Free Trade Agreement. There is

[[Page S8209]]

a lot to commend in the agreement before us. This deal is expected to
add over $490 million annually to the U.S. economy. The benefits of
this agreement to the manufacturing sector of America are significant.
Tariffs on nearly all U.S. exports of manufactured goods are
immediately eliminated. Intellectual property rights protections will
be expanded, as will progress towards enhanced trade through e-
commerce. I commend Ambassador Zoellick for his hard work on this deal.
I have been to Australia many times, and I have met with Prime
Minister John Howard. The U.S. and Australia share many interests. We
share similar values, similar standards of living, and similar goals.
Australia is a close friend and important ally in the war on terror,
and I recognize the value of our relationship. Because of the overall
benefit to our economy and the close friendship the U.S. shares with
Australia, I will be supporting this agreement today.
However, I have some reservations about the impact of this deal on
Montana farmers, and I want to take a moment to address those.
While the beef industry has achieved a generally balanced phase-in of
changes, the Australian Wheat Board remains a trade-distorting monopoly
that could harm our domestic grain producers. I recognize that
Australia has offered to reconsider the role of its Wheat Board in the
context of the Doha negotiations, and I applaud that decision. But the
Australia Free Trade Agreement provides no immediate benefit for
Montana farmers.
Provisions relating to cattle are somewhat better than those for
grains, but I want to take a moment and address an issue of concern for
some in the beef industry. The automatic safeguards provided for in
this agreement are subject to waiver, and that is troubling for some of
our producers. While the Office of the U.S. Trade Representative has
been clear that the waiver would be used only in extraordinary
circumstances, I want to stress my belief that those safeguards are
there for a reason. Should the Senate approve this agreement before us
today, I expect USTR to use caution when considering waiving the
safeguards. I appreciate the provisions in the implementing language
that require USTR to consult with the Senate Finance Committee, the
House Ways and Means Committee, and private sector advisory groups
prior to taking action. Consultation requirements like these ensure
that the best interests of our cattle producers will be protected. The
inclusion of price and quantity safeguards represent real progress in
achieving a balanced phase-in of free trade agreements, and I want to
make sure they are properly used.
Despite these issues, I do believe that the Australia agreement is,
in general, beneficial to the United States, and to Montana. It could
certainly be improved, but Australia comes closer to a balanced deal
than most FTAs have.
Again, I will vote for this agreement, but I call on Ambassador
Zoellick to aggressively defend the interests of our agricultural
sector in the Doha talks so that the future of free trade looks
brighter for America's farmers and ranchers. Multi-lateral agreements,
like the Doha talks, provide real opportunities for farmers and
ranchers--and in that context, the United States and Australia will
work together to liberalize trade for the benefit of all.
Mrs. LINCOLN. Mr. President, throughout my public service, I have
been a supporter of free but fair trade. Trade is important to the
Arkansas economy because it creates jobs by opening new foreign markets
to Arkansas' largest exports. In 2003 alone, Arkansas employers and
farmers benefitted from over $2.9 billion in manufacturing and
agricultural exports sold around the world. From 1999 to 2003, Arkansas
exports to Australia totaled some $246 million, according to data
compiled by the International Trade Administration within the
Department of Commerce.
With numbers like these, it is easy to recognize the benefits of
freer trade. It is also easy to see that as tariffs are reduced and
trade barriers are removed, these numbers can grow.
The benefits of trade don't stop there. Through trade we can improve
economies throughout the world, not only making the world an even
better customer to all the good products Arkansas has to offer, but
improving the lives, working conditions, and environmental standards
for millions of people around the globe.
However, while there are certainly benefits, there are usually other
important factors that must be considered. As a supporter of freer and
fairer trade, I remain passionate that our trade policies must be
crafted to ensure that all U.S. industries remain competitive in a
world marketplace that is not always free and, all too often, not
always fair.
I remain passionate that each step towards freer trade must also be a
step towards fairer trade and a more level global playing field. As a
member of the Senate Finance Committee, I am pleased to have the
opportunity to influence our Nation's trade agreements. In fact,
jurisdiction of international trade is a large reason why I sought a
seat on the committee, because while I certainly recognize the benefits
that free trade creates, I also know the concerns we must address.
All too often, we are faced with the news of the loss of more
manufacturing jobs. For Arkansas, the pictures of plant closings and
news articles of job loss are more than just stories in the media, they
are a harsh reality.
Since July 2000, my State has encountered an enormous loss of
manufacturing jobs--nearly 35,000 to be exact, according to data
provided by the National Association of Manufacturers.
I am deeply troubled that so many Arkansans have lost their jobs, not
because they can't compete on a level playing field but because the
cards have been stacked against them. That's what the jobs bill is all
about--keeping jobs where they belong here at home.
Does that mean that we should shy away from a pro-trade agenda
completely? The answer is no. Without a progressive agenda we are left
with the status quo, which simply doesn't work.
With the status quo international labor and environmental standards
remain low while tariffs and barriers for goods produced here in the
United States remain unacceptably high.
Agriculture is a great example of this. When U.S. farmers look out at
the world around them, they see an average bound tariff of 62 percent
against their products while foreign farmers see just 12 percent
imposed against their products coming into the United States. And when
U.S. farmers look around the world, they see Europeans with subsidies
as high as $400 per acre while our help to our farmers sit at less than
$40 per acre. That is why we need a strong domestic farm policy.
The bottom line is that under the status quo jobs don't stay here in
the United States where they belong. They move overseas. Throughout the
negotiation of the Australia Free Trade Agreement, it became clear that
this was a very unique agreement that presented both opportunities and
challenges. A snapshot of Australia shows a highly developed country
with comparable environmental and labor standards. Additionally,
Australia is one of the few countries with which the United States
enjoys a trade surplus--some $6 to 7 billion annually.
With the reduction of tariffs and the elimination of other trade
barriers we can look forward to sending more U.S. manufactured and
agriculture products to Australia. And that is exactly what happens in
portions of this agreement.
In the Australia FTA, 99 percent of the tariffs on manufactured goods
go to zero on day one. I have heard this agreement called the best
agreement for manufacturers. With immediate free trade for 99 percent
of U.S. manufactured goods, I would have to agree, especially when 93
percent of what we sell to that country is manufactured goods.
In addition, U.S. agricultural exports to Australia, totaling $400
million annually, would also gain immediate duty free access,
benefitting Arkansas soybean farmers, for example.
However, given that total U.S. agriculture sales to Australia account
for less than 1 percent of our worldwide sales, my message to United
States Trade Representative Robert Zoellick has been that the United
States' No. 1 responsibility to Arkansas farm families is, first do no
harm.
There is a significant upside for Arkansas manufacturers and the more
than 200,000 Arkansas families who make a good living because of this
industry. However, there was not as much to be gained under this
agreement in the area of agriculture, and

[[Page S8210]]

there could have been some risk, particularly to my cattlemen who are
very important to me and my State. Now, Arkansas cattlemen can take on
any country around the world in a fair global market, but a bilateral
agreement like this cannot create that kind of fairness. That is why
the Doha Round of the WTO is so important.
In the meantime, as the Senior Senator from Arkansas, my priority
throughout this bilateral agreement was simple--ensure protections to
safeguard the interest of Arkansas cattlemen and, second, get
assurances from Australian trade negotiators that they will assist the
United States in our effort to reform government export programs around
the world.
While I still have concerns that I intend to continue to work to
address with Arkansas cattlemen, my colleagues in the Senate, and
Ambassador Zoellick in addressing, the Australia FTA does work to
minimize any adverse impact on U.S. agriculture, and beef in
particular.
Specifically, Australian access to U.S. markets for beef is opened
slowly over an 18-year transition period. Increased imports from
Australia are estimated to be limited to about 0.17 percent of U.S.
beef production and 1.6 percent of beef imports to the U.S.
In addition, several important safeguards are included to ensure that
additional Australian beef imports will not disrupt the domestic beef
industry or depress American beef prices. For example, while the
proposed FTA would gradually phase up Australia's quota of duty-free
beef imports over 18 years, this phase up cannot begin until American
beef exports return to levels seen prior to the discovery of bovine
spongiform encephalopathy, BSE in the U.S. last January.
Moreover, the first reduction in the tariff will not occur for 9
years and not reach zero for 19 years after enactment of the FTA. Our
trade officials also worked to include two additional safeguards in
this agreement that will further protect the domestic beef industry.
The first safeguard is ``volume-based'' and would be in effect during
the 18-year transition period. This means that Australian beef imports
cannot exceed 110 percent of total imports coming in ``duty-free'' at
any point during this time period. If this does occur, the tariff rate
will automatically snap back to the higher tariff we currently impose
on imports from other countries with which we do not have free trade
agreements.
The second safeguard--and the most important in my view--is ``price-
based'' and goes into effect at the end of the 18-year period. This
means that a tariff is reimposed on Australian beef imports if domestic
beef prices drop to a certain level after tariffs have been eliminated.
Both of these safeguards are automatically enforced at our borders
based on the established import volume or domestic price levels. No
additional review by Congress or the Administration is required to
enforce these protective safeguards.
In short, I feel that our trade officials did a fair job of
accentuating the positives for Arkansas while minimizing any negatives.
I am supporting this agreement because on the whole I believe our
trade team showed sensitivity to Arkansas farm families. I am
supporting this agreement because I am willing to find common ground
with our negotiators when I feel they have listened to my concerns and
acted on them. And I am supporting this agreement with the
understanding that our negotiators will now turn to the WTO and other
agreements whose benefits to my cattlemen will be substantial and
certain.
I have been proud to work with my Arkansas cattlemen on a wide range
of issues over the years. Whether it has been on disaster assistance,
animal identification, trade, conservation, food safety, taxes or
regulations, we have stood shoulder to shoulder. With the passage of
this agreement we must now turn our attention to these and other
important issues, starting with the opening of market places around the
world that will be truly beneficial to the Arkansas cattlemen.
With the passage of this agreement, I am committed to doing exactly
that.
Finally, I would be remiss if I didn't briefly touch on the
pharmaceutical provisions in this trade agreement and my concern for
the precedent that they may set.
While I am told, and I trust, that this will have no implication on
the reimportation legislation that I and many of my colleagues support;
while I am told, and I trust, that this will have no implication on how
our Medicare and Medicaid programs operate; while I am told, and I
trust, that this agreement will have no implication on the way the
Department of Veteran's Affairs purchases their prescription drugs, I
must restate that I am concerned.
Nonetheless, I want to reiterate that I am fully committed to
pursuing Federal policies that will make prescription medications in
the United States sale and affordable through legislation and future
trade agreements.
We have a crisis here in America when it comes to the price of
prescription drugs and I'm looking for solutions. Furthermore, I'm
putting the Administration on notice that efforts to block access to
cheaper drugs for my constituents will be met with resistance by this
Senator until we make some real progress of our own here in this
country.
Mr. NELSON of Florida. Mr. President, I would like to speak briefly
about the Australia FTA. On balance, this agreement will benefit the
United States and benefit Florida, and I will vote in favor of it. This
is consistent with my record of supporting fair trade, opening overseas
markets to Florida exports, creating jobs and economic growth in this
country.
This agreement eliminates Australia's manufacturing tariffs, giving
companies access to Australian markets. Florida exports a significant
amount of goods and services, such as fertilizers, high technology
computer simulators and aircraft parts. Florida companies and
businesses support this agreement, because exports to Australia will
create jobs in across many sectors.
Now, this agreement has important provisions relating to Florida's
citrus industry that merit attention and oversight. The citrus industry
is Florida's second largest--90,000 jobs depend on it, and the industry
has a $9 billion economic impact on the State.
First, I would like to take a moment to reiterate the importance of
preserving the tariff on imported frozen concentrated orange juice in
the FTAA and WTO negotiations. I have spoken often in the past about
this issue and I am going to continue to fight to preserve the tariff.
Senator Kerry has already acknowledged how important the tariff is to
Florida. I would also like to again urge the President to state
publicly, in clear language, that we will not negotiate any reduction
of the tariff.
In fact, I am pleased to see that the administration worked with
Australia in this agreement to address another sensitive commodity,
sugar. Sugar was excluded from the agreement, because of the unique
circumstance surrounding the trade of sugar. We must reform
international sugar trade not on a regional, or bilateral basis, but
with the WTO. I would hope that the unique circumstances surrounding
Brazil's manipulation of the citrus trade will lend it similar
treatment in an FTAA.
With respect to the Australia FTA, this agreement presents an
opportunity to resolve an outstanding issue between the U.S. and
Australia that could pave the way for increased exports of Florida
citrus. For the past 13 years, Florida's Department of Agriculture has
worked with Australia to develop a protocol for the export of citrus to
that country. Unfortunately, we have achieved only limited progress
because Australia has effectively stonewalled the process at every
step. Florida's citrus industry has worked hard to meet the import
protocol requirements set by Australia, only to have Australia change
them.
This administration must work with Australia to resolve issues
inhibiting exports of Florida grapefruit in a timely fashion. This is
important to the implementation of this agreement.
Most recently, after Florida's industry addressed the concern raised
by the Australians on canker, they raised the issue of ``post-bloom
fruit drop,'' PFD. This is more a weather condition anomaly, not a
major disease concern that exists in a great deal of citrus production
around the world, and it very difficult to transmit. And although PFD
transmission to Australia is not

[[Page S8211]]

100 percent impossible, it is as close to impossible as anything the
industry has seen. Australia must not put excessive protocols on
Florida's producers because it could be a disastrous precedent for
Florida's grapefruit industry, as other foreign markets could adopt
this same non-tariff trade barrier.
The Australia FTA calls for the development of protocols to address
many standing trade issues that have existed over the last several
years--including Florida citrus. The agreement calls for negotiators to
complete this process within a six month timeframe. This administration
should seize this opportunity to resolve this issue in order to pave
the way for increased Florida citrus exports to Australia.
The U.S. Government should remain committed to producing a
reasonable, scientifically-based protocol that will not jeopardize
other export markets or opportunities. Moreover, it is important that
this process be completed on a timely basis to enable Florida's
industry to enter the Australian market next season, which opens this
November.
While I am a supporting the Australia trade agreement, I would like
to take this opportunity to express my concern over other provisions
included in it that could hamper congressional efforts to allow the
importation of cheaper drugs from other nations.
I am a strong supporter of importation simply because I can no longer
defend the exorbitant drug prices paid for by our Nation's citizens.
The language in the agreement does not expressly prohibit the
importation of drugs from other nations. However, because it is based
on current law, any changes allowing importation would be in conflict
with the terms of the agreement.
I am confident that the overall benefits of this agreement warrant my
support and that should similar provisions dealing with importation be
attempted in future trade agreements, enough opposition would rise to
ensure that Americans do not continue to subsidize the cost of drugs
for the rest of the world.
Mr. KENNEDY. Mr. President, I support the United States-Australia
Free Trade Agreement. It has significant benefits to American
manufacturers in all our States who have suffered too much in our
troubled economy. In the past 4 years this vital sector has shed 2.5
million good jobs that may well take years to replace.
The agreement will immediately remove all Australian tariffs on
virtually all goods manufactured in the United States. In doing so, it
will provide a modest competitive advantage in the Australian market
for U.S. manufacturers over competing firms in Asia.
In the past 4 years, the administration has done very little to
combat the unfair trade practices of other nations to open their
markets to more U.S. goods, and this agreement will help at least in
part to redress the balance.
Massachusetts companies exported $254 million in goods to Australia
last year, much of which were products in modern high-tech fields. If
this agreement had been in place then, 98 percent of those products
would have been duty free.
In addition, the fact that Australia has strong labor and
environmental laws mean that this agreement will not result in a ``race
to the bottom'' that drives down wages and degrades the environment.
Many of us are concerned that the administration, in negotiating the
agreement, was so reluctant, because of its ideology, to try to resolve
some of our differences with Australia on specific labor issues, but
those differences are not sufficient to cause rejection of the
agreement. Good-paying jobs in the United States will not be replaced
by low-wage jobs abroad in harsh and exploitive conditions.
In other trade agreements, that problem can be extremely serious, and
we must continue to be vigilant that trade agreements respect the need
for strong protection for labor conditions and for the environment as
well.
A more serious problem in this agreement however, is its treatment of
prescription drugs. These provisions are a blatant attempt by the
administration to bypass Congress and set an irresponsible precedent
for blocking the reimportation of prescription drugs. They build on
similar provisions in the Singapore trade agreement. They are a
statement of the priorities of the Bush administration that put profits
of drug companies first and affordable drugs for patients last.
The current rules on importation or reimportation of FDA-approved
drugs manufactured in FDA-approved plants are indefensible. They
prohibit anyone except a drug manufacturer from importing drugs into
the United States. They create a shameful double standard under which
Canadians, Europeans and other foreign patients can buy American drugs
at affordable prices, while American drug companies charge exorbitant
prices to American patients.
The central issue is fairness for millions of Americans struggling to
afford the soaring cost of prescription drugs. Americans understand
fairness. They know it's wrong that for the same prescription drugs,
U.S. patients pay 60 percent more than the British or the Swiss, two-
thirds more than Canadians, 75 percent more than Germans, and twice as
much as Italians.

Prescription drugs often mean the difference between health and
sickness--or even life and death--for millions of Americans. Drug
companies are consistently the most profitable industry in the Nation,
yet they overcharge countless families. It's wrong for patients to go
without the drugs they need because the Bush administration won't stand
up for patients against the price-gouging of the pharmaceutical
industry.
Senator Snowe, Senator Dorgan, Senator McCain, Senator Daschle, and I
and other colleagues have proposed legislation to give American
patients a fair deal at long last. Our proposal will legalize imports
of safe U.S.-approved drugs manufactured in U.S.-approved plants. U.S.
consumers will be able to buy FDA-approved drugs at the same fair
prices as they are sold abroad.
The drug industry and the Bush administration argue that imported
drugs jeopardize the health of American consumers because of the
possibility of counterfeiting or adulteration. Under our proposal, that
argument can't pass the laugh test.
Our proposal sets up iron-clad safety procedures to guarantee that
every drug imported legally into the United States is the same FDA-
approved drug originally manufactured in an FDA-approved plant--whether
the drug is manufactured abroad and shipped to the United States, or
whether it is manufactured in the United States, shipped abroad and
then imported back into the United States.
Compare our rigorous requirements with what happens today. Fraudulent
dealers throughout the world can establish Web sites or advertise low-
cost drugs in other ways and claim to be Canadian pharmacies.
Individuals have no way of knowing whether they are purchasing safe or
unsafe drugs or whether the seller is legitimate or not. All such sales
are illegal. The only rule is let the buyer beware.
The FDA has eloquently testified about the Wild West situation that
American consumers face every day under the current rules. As long as
it is illegal to buy safe drugs at low prices, the trade in unsafe
drugs will flourish. As long as we bury our heads in the sand and fail
to guarantee the availability of safe and legal imported drugs,
millions of American patients will continue to risk their health on
potentially unsafe, unapproved, and counterfeit drugs. Our bipartisan
proposal gives patients access to drugs at prices they can afford, and
it protects them against the danger of the essentially uncontrolled and
uncontrollable counterfeit drugs they face today.
It is because of the rigorous safeguards in our bill that Dr. David
Kessler, who served under both Republican and Democratic Presidents as
Commissioner of the FDA, has stated that our proposal ``provides a
sound framework for assuring that imported drugs are safe and
effective.''
Dr. Philip Lee, one of the Nation's leading authorities on
prescription drugs, a physician who served as the Assistant Secretary
of Health under two Presidents, and a former Chancellor of the
University of California at San Francisco, has emphasized that our
proposal ``will reduce rather than increase the likelihood of
counterfeit drugs entering the U.S. supply chain from abroad and that
drugs imported under the program will meet FDA standards for safety and
effectiveness.''
On imported drugs, safety is the first responsibility--and it is a
responsibility that our bipartisan proposal fulfills. But legalizing
safe drug imports is

[[Page S8212]]

only half the battle to bring fair prices to consumers. Legalization is
meaningless unless it is backed by strong measures to prevent drug
manufacturers from manipulating the market to subvert the law.
Already, American drug companies are retaliating against imports from
Canada by limiting the amount of drugs they sell to Canada and denying
drugs to pharmacies that re-sell them to American patients. A few weeks
ago, a group of senior citizens was forced to cancel a bus trip to
Canada because the Canadian pharmacies they relied on for affordable
drugs were effectively shut down by U.S. drug companies.
Our proposal includes strict rules to close the loopholes that drug
companies use to evade the law. Violations will be considered unfair
trade practices, and violators will be subject to treble damages. Any
proposal that does not include comparable protections is a fig leaf,
not a solution.
The provisions of the Australian Free Trade Agreement, however, opens
a gaping hole in these protections. One way that a drug company can
circumvent an importation law is by claiming that an American importer
who purchases a drug from a European wholesaler has violated the patent
held by the drug company.
It has long been a settled feature of patent law that the first sale
of a product in the domestic market exhausts the patent. If you buy a
car and then resell it to a friend, the car manufacturer can't sue you
for violating its patent. A recent court decision, however, stated that
the rule of exhaustion through first sale does not apply to
international sales. Therefore, a drug company can make a condition of
its contract that a foreign buyer won't resell a drug to a United
States importer. If the foreign buyer does so, the importer could be
sued for a violation of the patent.
Broad application of this rule to drug company sales would nullify
any reimportation bill that Congress passes. That is why our
legislation specifically states that reimportation of a prescription
drug is not a patent infringement. The Australia Trade Agreement,
however, states that it is an obligation of the United States to
``provide that the exclusive right of the patent owner to prevent
importation of a patented product . . . without the consent of the
patent owner shall not be limited by the sale or distribution of the
product outside its territory.'' This obligation does not apply just to
drugs imported from Australia, but to drugs imported from anywhere in
the world. If this obligation could be enforced, it would nullify any
drug importation bill passed by Congress, and guarantee that drug
makers could continue gouging American consumers, no matter what the
Congress does.
This prohibition was not added to the agreement because the
Australians wanted it. Their domestic drug industry is small, and their
own laws generally do not allow reimportation to the United States. The
prohibition was added because the U.S. Trade Representative insisted on
it.
It's there because the pharmaceutical industry wanted it as a model
for future agreements. It's there because the Bush administration puts
the interests of drug companies higher than the interests of American
patients.
Fortunately, this provision has limited practical significance. The
only party with standing to enforce the agreement is the Australian
Government, and it is unlikely to bring any enforcement action. But it
puts our country in the awkward position of endorsing a principle
against the best interests of our people, and it is an ominous
indication of what the Bush administration will try to do in future
agreements.
I intend to vote for this agreement, because of the advantages it
offers to American business and consumers. The attempts to bar drug
reimportation included in the agreement are not enforceable in any
meaningful way. But we must be vigilant against attempts to include any
such provision in future trade agreements.
Year in and year out, drug industry profits are the highest of any
industry in the United States. Yet year in and year out, patients are
denied life-saving drugs because those astronomical profits are
possible only with astronomical prices--prices that drug companies
can't charge anywhere else in the world, because no other country in
the world would let them.
A broad coalition of groups representing senior citizens and
consumers have endorsed our bipartisan proposal. It's time to end the
shameful price gouging. It's time for basic fairness in drug prices.
It's time for this Congress to pass a genuine drug import bill. It's
time for the U.S. Trade Representative to start standing up for the
interests of the American people, not just the interests of the
pharmaceutical industry.
Mr. BINGAMAN. Mr. President, I am of the view that a basic
precondition to the U.S. trade agenda operating on the right track is
having a consistent and coherent policy foundation. I have always
argued that expanded trade can be a powerful tool to promote economic
growth and improved standards of living in the United States and around
the world. It can help countries develop, ease poverty, raise standards
of living, and eliminate instability. It can encourage the high-wage
job growth and technological innovation in the United States. In
general, I consider myself to be someone that supports trade. In fact,
my record shows that I have.
But I also believe that trade policy must shape the rules by which
trade and international economic policy is conducted to maximize its
benefits and minimize its liabilities, both domestically and
internationally. Trade liberalization is not inevitably better for the
United States. But it can be better for the United States, and
frequently is better for the United States, and we should pursue it
under the right conditions.
Based on the results of U.S. trade policy, I am not sure we are doing
that right now. In fact, I have to wonder if we are on the wrong track
completely. Here is the bottom line:
Over two million U.S. manufacturing jobs lost; record and rising U.S.
trade and budget deficits, so large that the IMF has warned that they
could destabilize the global economy; moving from a trade surplus to a
trade deficit in one of the few areas we still have a competitive
advantage--high-technology products; major cuts by the administration
in the education, workforce, and science and technology programs that
ensure we have a competitive edge in these products in the future;
major increases in outsourcing in the services sector, with no clear
indication of whether this provides net benefits for the U.S. economy;
continued major barriers to American products in foreign markets--both
as a result of tariff and nontariff barriers; a distinct lack of effort
on the part of the administration to pursue dispute settlement at the
WTO for countries in direct violation of trade laws; a one-size-fits-
all approach to U.S. trade policy, where little consideration is given
to the actual ability of individual countries to implement agreements
or whether the agreements will actually provide long-term benefits; a
knee-jerk subordination of U.S. economic security to U.S. foreign
policy concerns; insufficient consultation with Congress by the
administration during the fast-track process; insufficient explanation
by the administration of the potential impacts of trade agreements on
our own economic system, including the environment, taxation,
healthcare, and so on; and insufficient attention to the impact of
trade agreements on American workers, in particular the provision of
trade adjustment assistance so workers can increase their skill-set and
sustain U.S. competitiveness.
I would argue what we are doing in U.S. trade policy at this point in
time is following a policy where trade agreements are assumed to be
good, with little regard for the actual implications of the agreement
for our country's overall economic security. I would not suggest that
economic considerations can be the only rationale for trade agreements,
but certainly it must be the primary rationale.
In my State of New Mexico, I have seen directly the unintended but
very negative consequences of trade agreements in areas typically not
considered to be an important part of them--things like housing, health
care, the environment, immigration, and so on. These issues are what
many people call the ``externalities'' of trade. We have not paid close
enough attention to these issues in trade agreements, but from where I
sit we cannot afford to do

[[Page S8213]]

this any longer. Small provisions in trade agreements have had
substantial unanticipated consequences over time. Trade agreements must
look at the overall implications of trade on countries, not just trade
flows.
As an example, the United States-Australia Free Trade Agreement
contains language that could have a potentially negative impact on the
U.S. health care industry. Although the Finance Committee leadership
received assurances from the Bush administration that this language is
consistent with our normal obligations under the Government Procurement
Agreement, I believe the language is ambiguous at best.
To this end, at yesterday's Finance Committee executive session I
requested a letter from the Department of Health and Human Services
stating specifically that this program would not negatively impact our
current efforts to obtain lower cost prescription drugs for Americans.
I received the letter this morning, and I will include it for the
Record.. I have received assurances from the Secretary that the
provisions under Annex 2-C of the agreement related to pharmaceuticals
do not require changes in any U.S. Government health care programs.
However, I requested assurances from the Secretary that Chapter 15.11
related to Domestic Review of Supplier Challenges do not require
changes in any U.S. Government health care programs, nor does the
Secretary intend to use the agreement--Annex 2-C or Chapter 15--to
change any U.S. Government health care programs. I did not receive this
assurance, but I want to make it clear that I have an expectation to do
so. If the administration does not intend to use this free trade
agreement, there is no real reason that they shouldn't state so
explicitly. I request again at this time that they do so, and I believe
that request is compatible with the statements made by my colleagues on
the floor this afternoon.
There is another problem with this agreement. I am extremely
disappointed that the Conrad amendment related to beef safeguards that
was adopted during the markup in the Finance Committee was not included
in the final language. I feel very strongly that the vote was
indicative of the will of the Finance Committee on the FTA and that the
revised version would have offered additional protections for American
ranchers and should have been included. The fact it was not included in
the final language is a violation of the spirit of the Trade Promotion
Authority, or fast-track, legislation passed in 2002. Combined with the
lack of attention on the pharmaceutical issue, I think this is a
mistake on the part of the administration in that it makes the
formation of bipartisan consensus on trade policy problematic in the
future.
These specific criticisms aside, after careful consideration, I felt
the benefits of this agreement outweighed its liabilities. It is my
view that the FTA gives a strong boost for trade and investment between
United States and Australia that will ultimately benefit the economic
security interests of our country. The FTA eliminates 99 percent of
Australia's manufacturing tariffs immediately, grants incremental
tariff-free access to Australia's market for U.S. farmers and ranchers,
provides enhanced preferential access for U.S. telecommunications and
service companies, and removes existing foreign investment screening
procedures that have been a market barrier for U.S. firms.
Significantly, labor and environment standards in Australia are
compatible with the International Labor Organization and the laws we
have in the United States. I believe there is an economic
complementarity between the United States and Australia that is unique,
and it should be encouraged.
So while I have some concerns, I will support the United States-
Australia Free Trade Agreement. I look forward to working with my
colleagues in the future to ensure that the Administration and the
Congress work together to establish a broad bipartisan effort to ensure
we work together more effectively in the future. The goal is to bring
about expanded international trade so we have economic growth and jobs
for the American people. That is the bottom line.
I ask unanimous consent to print the letter to which I referred in
the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
The Secretary of Health and

Human Services,

Washington, DC, July 15, 2004.
Hon. Charles Grassley,
Chairman, Finance Committee,
U.S. Senate, Washington, DC.
Dear Chairman Grassley: Thank you for your interest in
federal and state health care programs, and particularly for
your leadership in expanding access to affordable
prescription drugs for seniors under the Medicare
Modernization Act.
I understand that in yesterday's markup on the Australia
free trade agreement Senator Bingaman asked whether the
commitments in this agreement would affect US government
health care programs. It is our belief that the provisions of
Annex 2-C do not require any change in how US government
health care programs are operated--either the Annex does not
apply to them by its terms or the programs are operated
consistently with the Annex's provisions.
I am providing a copy of this response to Senator Bingaman
as well. Thank you again for your efforts.
Sincerely,
Tommy G. Thompson.

Mr. DODD. Mr. President, I rise today to speak about the United
States-Australia Free Trade Agreement, FTA, which is currently pending
before this body. This agreement is the culmination of nearly two years
of difficult negotiations and hard work by U.S. and Australian
officials. Today we have the opportunity to pass the implementing
legislation that would pave the way for formal adoption of this FTA,
and when that vote occurs, I intend to support this agreement.
As my colleagues are aware, U.S. exports to Australia totaled over
$13 billion in 2003. According to the United States Trade
Representative, USTR, Australia is quickly growing as a major
destination for U.S. goods. For example, over the past 5 years, the
rate of growth for U.S. exports to that nation has increased more than
twofold over U.S. exports to the rest of the world. And during these
years, aerospace products and parts--a sector vital to U.S.
manufacturing and our national security--have been the leading growth
category. In 2003, the aerospace sector exported an impressive $2.4
billion in merchandise to Australia.
Since 1999, my home State of Connecticut has witnessed a 72.8 percent
increase in the value of its exports to Australia. Trade with that
nation directly supports more than 1,800 jobs in Connecticut. Other
States have benefited similarly. Indeed, during this same time period,
U.S. exports as measured by dollar increases have grown faster in only
seven other nations.
But these figures and the potential impact of this agreement are even
more striking when one examines the types of items that we export to
Australia. I point out to my colleagues that a full 92 percent of U.S.
exports to that nation are manufactured goods. I know that I don't need
to remind my colleagues that over the past several years, more than two
million manufacturing jobs have been lost here in the U.S. More than
30,000 people in my home State of Connecticut have lost jobs in the
manufacturing sector.
In a variety of ways, we here in Congress have sought to address the
domestic loss of manufacturing jobs and infrastructure. I have worked
hard to affect a turnaround in the conditions of this sector--long the
lynchpin of the U.S. economy. It doesn't take an economist to realize
that this agreement will likely help to strengthen U.S. manufacturing.
That is not to say that a United States-Australia FTA will be a
panacea for our manufacturing woes here at home. It will not. But in my
view, the steady growth and large manufacturing component of United
States-Australia bilateral trade suggest that it will help. For this
Senator, that fact is one of the most compelling reasons to support a
United States-Australia FTA.
Moreover, it should not go without mention that in 2001, 86 percent
of U.S. exports to Australia were from small and medium-sized
businesses. That figure--86 percent--amounted to more than 16,000 U.S.
firms. If this trend continues, with the passage of this agreement,
tens of thousands of small and medium-sized businesses here in the U.S.
also stand to benefit.
Nearly 2 years ago, I voted against final passage of fast track
authority

[[Page S8214]]

for the President. I did so because I didn't believe that legislation
included adequate language making it crystal clear that a primary
negotiating objective of future trade agreements must be to ensure that
our trading partners live up to internationally accepted labor and
environmental standards.
In that context, I believe that Australia is a model of what we
should expect from other governments with whom we craft trade
agreements. Australia is more than just a staunch ally--it is also a
nation that has substantial labor and environmental protections. These
protections will help to safeguard the lives of workers globally and
the natural resources on which we all depend. Equally as important,
they will help to ensure that American workers are given a level
playing field on which to compete.
Despite my overall support for this agreement, I feel that it is
important to mention one item of concern. As my colleagues are aware,
the United States-Australia FTA includes language that would allow
prescription drug manufacturers to prevent the reimportation of their
products.
We do not currently import drugs from Australia, and that is unlikely
to change given that Australian law prohibits the exportation of
prescription drugs. So as a practical matter, this provision of the FTA
will not affect drug prices in this country. But I want to make it
perfectly clear that this should not set a precedent, nor prevent us
from adopting a law that would allow drug reimportation in the future.
While I will live with this provision in the context of a bilateral
agreement with Australia, I do not believe that it should have broader
global implications.
This concern aside, I look forward to voting on the implementing
legislation for the United States-Australia FTA. I intend to cast my
vote in favor of this agreement, and I encourage my colleagues to do
the same.
Mr. JOHNSON. Mr. President, in my home State of South Dakota and
across America, hardworking producers tirelessly contribute to the
production of our Nation's food supply. Our Nation's producers
consistently preserve the safety and wholesomeness of the commodities
they produce, ensuring America's food security and contributing to our
overall well-being. It is because of our producers and ranchers that we
enjoy the safest food supply in the world, and we owe them our thanks.
It is the well-being of the agricultural community which I am
concerned for, and it is the well-being of our rural communities that
is threatened with the possible implementation of the Australian-United
States Free Trade Agreement.
It is evident that while Australia could stand to benefit
substantially from a free trade agreement with the United States,
limited opportunities exist for the U.S. livestock industry and
agricultural sector. For example, in 2003, agricultural and food
exports to Australia accounted for only $611 million. This figure
accounts for only one percent of U.S. worldwide sales. The overall
value of U.S. agricultural imports from Australia equaled an astounding
$2.1 billion. These numbers speak loudly for the type of economic
opportunity this agreement poses for Australia, at the detriment of our
domestic producers.
Our South Dakotan beef producers are dedicated to producing a
quality, wholesome, and nutritious product. They are successful even in
the face of market concentration, packer ownership issues, and an ever-
changing agricultural landscape. The FTA with Australia poses yet
another burden for our agriculture producers. Phasing out U.S. above-
quota duties on beef over an 18-year period and gradually increasing
and lifting quota levels by the end of that period will not encourage
growth in our own agriculture economy, and instead, provide a valuable
market for the Australian agricultural sector.
The quota increases will take effect when U.S. beef exports return to
their 2003 level, the level before the discovery of ``mad cow'' disease
levels, or three years after the effective date of the agreement,
whichever is earlier. After the transition period, a price-based
safeguard should be available. Such action, even with supposed
safeguards after the transition period for market disruptions, will be
harmful to U.S. beef producers. I have several concerns about how these
safeguards would be utilized, and the actual effect on our producers.
Along with my colleagues, I have written to President Bush, as well
as United States Trade Representative Robert Zoellick, to convey my
concern about this agreement. While sugar was excluded from the
agreement, I, and a number of my Senate colleagues, had requested that
beef and cattle be excluded from negotiations of the Australia FTA as
well. This request was not heeded. Additionally, a letter was sent
concerning Australian imports of dairy, yet another sensitive
agriculture commodity that was included in the FTA, and the potentially
significant impacts on our pricing system it will have and the
inconsistencies it presents with respect to our Federal efforts to
financially assist producers.
Our beef industry is a crucial component of the agricultural sector
in South Dakota, and we should not enter into trade agreements with
Australia, or any other country, that would further damage our
agriculture industry. Given our weak economy, we cannot afford to lose
more jobs, and we must guard against economic hardships in our rural
communities.
Another disturbing component to the FTA with Australia is the
prescription drug language. United States citizens continue to pay the
highest prices in the world for prescription drugs. A study by Families
USA found that for the 50 drugs most frequently used by seniors that
year, prices rose 3.4 times the rate of inflation in 2002. Such
statistics are staggering, and meaningful solutions are needed now.
That is why I am a cosponsor of S. 2328, the Pharmaceutical Market
Access and Fair Trade Act, legislation that will provide American
consumers access to affordable, life-saving medications through
prescription drug reimportation.
This legislation would provide South Dakotans with access to
reimported drugs through personal importation of up to a 90-day supply
of a drug from Canada, and eventually, once the Food and Drug
Administration puts safety protocols in place, individuals would be
able to purchase drugs directly from Canadian and U.S. wholesalers and
pharmacies would be able to import drugs from facilities in several
countries that are registered, fully inspected and approved by FDA.
Unfortunately, the trade agreement before us today threatens to
dismantle the efforts we are now taking to provide more affordable
drugs in our country. The agreement includes provisions which require
that the two governments ensure that brand-name drug companies have the
right to prevent the importation of their products.
While supporters of the trade agreement claim that we should not be
concerned about this provision because Australian law already bans the
export of subsidized prescription drugs, this sets a dangerous
precedent for future trade agreements, which we cannot ignore.
This seems to be yet another attempt by the Bush administration to
prevent reimportation. Two-thirds of Americans support reimportation as
an effective strategy to reduce the cost of prescription drugs. The
President is clearly sending a signal that he cares more about the
pharmaceutical industry's profits, than access to life-saving medicines
for U.S. citizens.
Ms. MIKULSKI. Mr. President, I am proud to support the United States-
Australia Free Trade Agreement. I have opposed some trade agreements in
the past because I am not willing to put American jobs on a slow boat
to China or a fast track to Mexico. However, I am ready to support free
trade when it is fair trade, and that is what we are talking about
today.
This agreement ensures fair trade with one of our closest allies. It
will also bring an expansion of opportunities for American workers and
American businesses.
America's relationship with Australia is about our shared history and
shared values. Australia has been one of America's staunchest allies in
times of war, sending troops to fight beside our own in both World War
I and II, the Korean war, the Vietnam war, Afghanistan and now Iraq. In
sending troops to fight alongside our own in Iraq, Australia was one of
only three countries to fight along with America from the outset of
war.

[[Page S8215]]

America and Australia share a common terrorist threat. Al-Qaida
attacked America on September 11, and 10 Australian citizens died that
day. A group linked to al-Qaida also killed almost 100 Australians in
the Bali bombings. Our security relationship is strengthened by the
ANZUS treaty, through which we work together for our mutual security.
Now is the time to strengthen our economic partnership with a free-
trade agreement.
I stand in support of this free-trade agreement because it is good
for America and good for Maryland. It will protect and even create
American jobs, and my first priority is fighting for jobs today and
jobs tomorrow. This free-trade agreement will boost trade, increase
efficiency and competitiveness, and result in additional foreign
investment.
By eliminating Australian tariffs on our manufactured goods, American
companies will be able to sell goods without penalty to our Australian
allies. In my own State of Maryland, this means semiconductors, medical
equipment, and fiber optic cable and switching equipment. This could
mean as much as $2 billion for the U.S. economy in just the first year
of agreement.
This free-trade agreement will also provide new opportunities for
American farmers. The United States is now the second largest exporter
of food to Australia, an exchange with a value of almost $400 million a
year.
However, I do have concerns about the United States-Australia Free
Trade Agreement. I am concerned about what this agreement might mean
for America's families trying to buy prescription drugs. Instead of
making America's families a priority, this agreement protects drug
companies and prioritizes the rights of prescription drug patent
holders.
We cannot use this as an excuse for Congress not to pass prescription
drug reimportation legislation. We need a regulated framework for drug
reimportation so drug reimportation can take place out in the sunshine,
rather than underground. Congress must act this year to control the
spiraling cost of prescription drugs for our families.
With regard to labor rights, I think free-trade agreements should
always include enforceable and high labor and environmental standards.
This will ensure that the workers don't miss out and the environment
doesn't suffer when businesses boom.
The Australian and American systems have much in common. We share
democratic processes and labor rights such as freedom of association,
the right to collective bargain, and the right to strike. We could have
set the bar higher for workers around the world. Instead the United
States-Australia Free Trade Agreement is a missed opportunity. It
contains no enforceable standards to protect labor rights or the
environment.
The free-trade agreement with Jordan included a minimum standard of
labor rights and environmental protection. People now talk about the
``Jordan standard.'' We finally had an opportunity to create an even
higher standard, an ``Australia standard'' of labor rights. We could
have used this standard if we renegotiated CAFTA and for future trade
agreements. While we ensured our intellectual property rights are
enforceable, we did nothing about our labor rights in this trade
agreement.
I am willing to support the Australia Free Trade Agreement only
because Australia's own laws are so strong. When I visited Australia, I
saw that Australia stands up for its families, its workers and its
environment. Almost 25 percent of Australian employees are union
members. That's nearly double the level of union representation here.
Australian workers are paid a livable minimum wage, receive 4 weeks of
annual leave and are guaranteed high standards of workplace safety.
Australia's world-class health-care system offers first-rate maternity
care to its new mothers, with extra time in the hospital and a public
health nurse to teach first time moms how to care for their newborns.
The United States-Australia Free Trade Agreement isn't perfect. Yet I
support it because it will mean jobs for America.
(At the request of Mr. Daschle, the following statement was ordered
to be printed in the Record.)
<bullet> Mr. BAUCUS. Mr. President, before we conclude today's debate,
I just take a minute to thank some of the staff who have worked very
hard on this agreement.
I first thank Ambassador Zoellick's team, particularly Ralph Ives,
Matt Niemeyer, Lisa Coen, and Ted Posner. We worked closely with them
for nearly 2 years, and I have appreciated their dedication to getting
a good agreement.
I also thank the staff of the Senate Finance Committee. On the
Republican side, Everett Eissenstat, Stephen Schaefer, and David
Johanson.
And finally I thank my own staff on the Finance Committee, Russ
Sullivan and Bill Dauster, who head up our Committee staff. Our trade
team: Tim Punke, Shara Aranoff, Brian Pomper, and Sara Andrews. Liz
Fowler, who worked on the pharmaceutical provisions. And I especially
thank John Gilliland, one of our International Trade Counsels who has
done a tremendous job, particularly on the difficult and sensitive
agriculture issues.<bullet>
Mr. DASCHLE. Mr. President, Australia is a very important ally and
trading partner. As we all know, Australia joined the U.S. in our
military efforts in both Iraq and Afghanistan. This support is vital,
and it is appreciated.
While it is important to continue our cooperative relations, I am
extremely concerned about the negative impact the free trade agreement
could have on my State of South Dakota and the rest of rural America,
particularly on the agricultural sector of our economy.
For many months, I urged our negotiators to exclude beef and cattle
from the agreement. I am disappointed that they have not only rejected
this suggestion, but have proposed that we allow the Australians
additional access to our beef markets.
The FTA would establish an 18-year phase-in of increased Australian
access to American markets. While 18 years may seem like a long time to
some people, I know many ranchers in South Dakota to whom it will not
seem so long when the phase-in starts and depresses our beef and cattle
markets.
Both beef and cattle are very sensitive sectors, and they have become
even more so with the recent mad cow disease scare. Beef and cattle are
more sensitively traded items because they are both perishable and have
cyclical market dynamics--leaving beef and cattle off the table seemed
to make a lot of sense.
The administration refused and included beef provisions in the
agreement. To add insult to injury to ranchers in South Dakota and
across the country, the administration ignored an amendment on the beef
safeguards in the agreement that Senator Conrad offered in the Finance
Committee.
The administration's actions were wrong on process and wrong on
substance, in my view.
The Congress delegates substantial constitutional authority through
the fast-track procedures. It retains, however, an informal ability to
recommend changes to the implementing legislation of trade agreements.
Senator Conrad had a very simple amendment. He said if the
administration was going to waive critical safeguards for ranchers,
then the Senate Finance and the Ways and Means Committee must concur.
This was well in the bounds of the agreement and supported by a
majority of the members of the Finance Committee.
The committee then went through the contorted exercise of voting the
agreement down to make it easier for the administration to ignore the
Conrad amendment, which they did.
This action makes it more clear that this agreement is not good for
the ranchers in South Dakota, and that is the main reason why I oppose
it.
Additionally, the U.S. dairy industry should not be faced with added
unfair competition by allowing the Australians increased access to our
dairy markets. Dairy producers from around the Nation have expressed
this concern to me.
The increased access to our U.S. dairy markets is particularly
troubling for South Dakota, as we have been working aggressively to
expand our dairy operations.
I am also concerned about the current U.S. tariffs on wool that our
negotiators have agreed should be gradually eliminated over 4 years. We
have a small, but important, wool industry in

[[Page S8216]]

South Dakota, and anyone familiar with lamb and wool knows that it is a
very import-sensitive industry. Most producers have struggled over the
last decade to simply stay in business.
While it is only indirectly related to the FTA, I also want the
record to reflect my continuing concern about the treatment of some
contracts awarded to Australia under the Iraq Oil-for-Food Program. I
know that several of my colleagues, including Senator Graham of South
Carolina, are reviewing contracts under the Oil-for-Food Program, and I
hope that their inquiry will include a review of the wheat contracts
awarded under that program.
To that end, my recent exchange of letters with Agriculture Secretary
Veneman specifically reference contracts awarded to Australian
producers since the liberation of Iraq, and press reports indicate that
the specifics of these contracts--in particular the price of wheat--
were the same as those negotiated under the Oil-for-Food Program during
Saddam's regime.
According to her letter to me, Secretary Veneman has had USDA
personnel review these contracts and has assured me that she is certain
that no preferential treatment was granted to Australian producers at
the risk of American producers. I hope that is the case, but to ensure
that it is the case, I am urging Secretary Veneman to provide all the
research and analysis her staff did to Senator Graham for his Oil-for-
Food investigation and to Paul Voelker who is undertaking an
investigation on behalf of UN Secretary General Annan.
In addition, the patent provisions in this agreement raise troubling
implications. Many of us in Congress--on both sides of the aisle--have
been working to legalize the safe importation of lower-cost
prescription drugs from Canada and other industrialized countries.
It is no secret that the administration has opposed our efforts. And
what I see in this agreement relating to patents may be of concern in
how it affects drug importation.
Simply put, the administration should not use trade agreements as a
back-door way to impede the safe importation of FDA-approved drugs at
lower prices. The administration needs to make clear that this
agreement does not do just that.
I am also concerned about other provisions in this agreement relating
to pharmaceuticals and how they may impact other program, such as
Medicaid, and whether the agreement may impede our ability to alter or
improve the deeply flawed Medicare drug benefit enacted last year.
Finally, let me reiterate that, in my judgment, the Australia FTA
goes too far and treats our farmers and ranchers unfairly.
Not only am I dissatisfied with both the treatment of our agriculture
sector in the agreement, but I also have concerns about the process
executed to implement our negotiated terms.
It is extremely important that we have a level playing field on which
American producers can compete. Given a fair chance, American producers
are among the world's finest. But the deck must not be stacked against
them.
I have concluded that this FTA is not in the interests of South
Dakota. Regrettably, I must oppose it.
Mr. FRIST. Mr. President, I rise to speak in support of the H.R.
4759, legislation to implement the United States-Australian Free Trade
Agreement.
I am excited by the new opportunities for both the United States and
Australia that will be created under this important agreement. I
strongly support its passage.
I thank all my colleagues in the Senate and the other body for their
hard work. In particular, I thank Chairman Grassley and Senator Baucus
and their staff for working together in a bipartisan way to get us to
this moment.
I also thank the U.S. Trade Representative and his team and the
Australian Embassy for bringing us to this moment.
Our two economies are closely linked. Australia is one of our most
important trade partners. The facts speak for themselves.
Two-way trade between our nations in goods and services totals $28
billion annually. We have a $9 billion trade surplus with Australia,
our greatest with any nation. More than 99 percent of our exports to
Australia will enter duty-free once the agreement goes into effect.
According to the National Association of Manufacturers, more than
19,000 U.S. firms are already selling into the Australian market.
Ninety-three percent of U.S. exports to Australia are manufactured
goods. As many have pointed out, this is indeed a ``Manufacturer's Free
Trade Agreement.''
This agreement is expected to produce an increase in $2 billion
annually in trade for both nations by 2010. That means the creation of
as many as 40,000 new jobs directly related to this agreement.
In my home State of Tennessee, Australia is an important market for
our goods. Tennesseans export more to Australia than to France. Last
year, Tennessean companies exported $225 million to Australia, a 10-
percent increase from 1999.
In turn, The United States is already Australia's largest source of
imports and second-largest export destination. So this agreement will
benefit both our countries.
U.S. farmers benefit from this agreement, too. The United States
exports $400 million annually in agricultural goods to Australia. These
exports will receive immediate duty-free access.
This agreement will offer substantial new markets for U.S. services
as well. The agreement will provide new openings for
telecommunications, express delivery, energy, construction,
engineering, financial services, and many other sectors. And this
agreement lifts restrictions on U.S. investment in Australia.
In addition to opening new markets, there are other benefits to U.S.
and Australian businesses. Australia is the gateway for U.S. businesses
to Asia. The Australians have close ties to their Asian neighbors.
This agreement will pave the way for new, dynamic partnerships
between United States and Australian firms. And with the elimination of
tariffs and lowering of trade barriers for most industrial products
under the agreement, U.S. firms, partnering with Australian firms, will
be able to better compete in the growing Asian markets.
But this agreement is about more than increasing business
opportunities. Australia is one of our most steadfast allies and a key
partner in the war on terror. Australians have fought beside Americans
in every major conflict in the last 100 years. This agreement
strengthens an already close bond forged between two old friends.
This agreement is strongly supported by the business community. The
U.S. Chamber, the world's largest business federation, representing
more than three million businesses, strongly supports this agreement.
The National Association of Manufacturers, the leading voice on
manufacturing in the United States, has called for its immediate
passage. I am pleased that we are ready to do that today.
The PRESIDING OFFICER. The bill having been read the third time, the
question is, Shall the bill pass?
The yeas and nays have been ordered. The clerk will call the roll.
Mr. McCONNELL. I announce that the Senator from New Mexico (Mr.
Domenici) is necessarily absent.
Mr. REID. I announce that the Senator from Montana (Mr. Baucus), the
Senator from North Carolina (Mr. Edwards), and the Senator from
Massachusetts (Mr. Kerry) are necessarily absent.
The PRESIDING OFFICER. Are there any other Senators in the Chamber
desiring to vote?
The result was announced--yeas 80, nays 16, as follows:

[Rollcall Vote No. 156 Leg.]

YEAS--80

Alexander
Allard
Allen
Bayh
Bennett
Biden
Bingaman
Bond
Boxer
Breaux
Brownback
Bunning
Burns
Campbell
Cantwell
Carper
Chafee
Chambliss
Clinton
Cochran
Coleman
Collins
Cornyn
Corzine
Craig
Crapo
DeWine
Dodd
Dole
Durbin
Ensign
Enzi
Feinstein
Fitzgerald
Frist
Graham (FL)
Graham (SC)
Grassley
Gregg
Hagel
Harkin
Hatch
Hollings
Hutchison
Inhofe
Jeffords
Kennedy
Kyl
Landrieu
Lautenberg
Levin
Lieberman
Lincoln
Lott
Lugar
McCain
McConnell
Mikulski
Miller
Murkowski
Murray
Nelson (FL)
Nelson (NE)
Nickles
Pryor
Reed
Roberts
Santorum
Sarbanes

[[Page S8217]]

Sessions
Shelby
Smith
Specter
Stabenow
Stevens
Sununu
Talent
Thomas
Warner
Wyden

NAYS--16

Akaka
Byrd
Conrad
Daschle
Dayton
Dorgan
Feingold
Inouye
Johnson
Kohl
Leahy
Reid
Rockefeller
Schumer
Snowe
Voinovich

NOT VOTING--4

Baucus
Domenici
Edwards
Kerry
The bill (H.R. 4759) was passed.
Mr. GRASSLEY. Mr. President, I move to reconsider the vote.
Mr. REID. I move to lay that motion on the table.
The motion to lay on the table was agreed to.

____________________