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PRESIDENT'S NEGOTIATING AUTHORITY/RECIPROCAL TRADE AGREEMENTS
The U.S. Congress has the ultimate authority to decide whether the United
States will raise or cut tariffs, erect or remove other trade barriers, or enter
into bilateral or multilateral trade agreements.
In the post-World War II period, the Congress and the president have
generally supported a more liberal and open world trading regime. This has been
reflected by U.S. support and advocacy for the successive rounds of multilateral
trade negotiations that took place from the establishment of the GATT in 1948
through creation of the WTO in 1995.
Congress grants the authority to the president and the executive branch to
negotiate trade agreements. Congress must then approve the legislation to
implement the agreements the president has negotiated.
Fast Track Trade Agreement Negotiating Authority: To make trade
agreement negotiation more effective, Congress has on several occasions passed
legislation giving the president "fast-track" authority for this process.
Under this authority, the Congress agrees in advance to approve or reject the
legislation that implements a trade agreement negotiated by the executive
branch, without possibility of amendment. This rule thus avoids amendments that
can change the terms of the agreement, requiring that it be renegotiated.
Amendments can kill an agreement.
In return for fast-track authority, the president agrees to extensive
consultations with Congress while the agreement is being negotiated. This is
important because large agreements, such as those that established the WTO or
implemented NAFTA, can require many changes to U.S. laws.
Past laws granting fast-track authority have required executive branch
consultations, such as:
-- Meetings with the House of Representatives Ways and Means Committee, the
Senate Finance Committee, and every other congressional committee with
jurisdiction over matters affected by the agreement, as well as consultations
with industry groups;
-- Advance notice to Congress of at least 90 calendar days -- 120 days in the
case of the Uruguay Round Agreements -- of the administration's intention to
enter into a trade agreement;
-- Submission of a final copy of agreement's legal text to the Congress,
together with draft implementing legislation, a statement of any administrative
action proposed to implement the agreement, and information supporting the
proposed action.
The most recent fast-track authority law expired in December 1993. The
implementing legislation for both the Uruguay Round agreements and NAFTA were
approved under fast track.
U.S. Trade Representative Charlene Barshefsky has announced that the Clinton
administration will send a proposal for renewal of fast-track authority to the
Congress in September.
Uruguay Round Agreements/Uruguay Round Agreements Act: The Uruguay
Round Agreements represented the culmination of negotiations among 125 countries
over eight years. These negotiations began in Punta del Este, Uruguay, in
September 1986, under the auspices of the GATT, and concluded in Geneva,
Switzerland, in December 1993. The agreements were signed in Marrakesh, Morocco,
on April 15, 1994, by 111 countries, including the United States, that committed
themselves to gaining approval of the accords by their respective legislatures.
The Uruguay Round Agreements are the broadest, most comprehensive trade
agreements in history. They contain commitments to reduce tariffs worldwide and
to eliminate numerous other nontariff measures such as quotas, restrictive
licensing systems, and discriminatory product standards.
The agreements also contain multilateral rules covering such matters as
technical barriers to trade, trade-related investment measures (TRIMs), rules of
origin, import licensing procedures, safeguards against import surges,
trade-related aspects of intellectual property rights (TRIPs), antidumping and
countervailing duties, agricultural trade and government procurement.
A framework of rules for trade and investment in services was set up by the
General Agreement on Trade in Services (GATS).
The agreement that established the structure of the World Trade Organization
incorporated the previous GATT institutions while expanding the organization to
include new offices for services, intellectual property protection, and
investment.
The Understanding on Rules and Procedures Governing the Settlement of
Disputes established a new dispute-settlement procedure. This procedure is
considerably different from its GATT predecessor in that its decisions are
enforceable by the WTO.
The Uruguay Round Agreements Act, the U.S. law that incorporates all the
trade agreements resulting from Uruguay Round, requires the USTR to report to
Congress on the actions and operations of the WTO. The act also changed U.S.
laws where necessary to conform to the Uruguay Round agreements.
North American Free Trade Agreement/NAFTA Implementation Act: The
North American Free Trade Agreement, which links the United States, Canada, and
Mexico, created the world's largest market for goods and services.
Following approval by the legislatures of each country, NAFTA went into
effect on January 1, 1994.
NAFTA incorporates or otherwise carries forward most provisions of the
U.S.-Canada Free Trade Agreement (FTA), which went into effect on January 1,
1989. The United States and Canada suspended the operation of the bilateral
agreement upon entry into force of NAFTA. NAFTA supersedes certain provisions of
the U.S.-Canada FTA, such as for rules of origin.
Upon implementation, NAFTA required the immediate elimination of tariffs on
more than one-half of U.S. imports from Mexico and more than one-third of U.S.
exports to Mexico.
NAFTA committed all parties to ending restrictions on NAFTA-member foreign
investors, providing a high-level of intellectual property rights protection,
and liberalizing trade in services. It also established its own dispute
settlement mechanisms. NAFTA was accompanied by side agreements on environmental
and labor standards and cooperation, making it the first U.S. trade accord to be
formally linked to such commitments.
NAFTA's central oversight body is the North American Free Trade Commission,
made up of the U.S. Trade Representative, the Canadian minister for
international trade, and the Mexican secretary of commerce and industrial
development. This commission has established working groups and advisory bodies
to handle the day-to-day operation of the agreement.
NAFTA has its own rules governing trade and investment liberalization that
are used in addition to or in place of the WTO rules. NAFTA rules apply in areas
that include openness to government procurement, product standards, protection
of intellectual property rights, telecommunications standards, investment, rules
of origin, safeguards against import surges, and services.
United States-Israel Free Trade Area Agreement: This trade agreement
was signed into law in June 1985. It was the first such agreement negotiated by
the United States with a foreign country. The main elements of the agreement are
the reciprocal elimination of tariffs on all products traded between the two
countries over a 10-year period and the elimination of other regulations that
restrict bilateral trade. A joint committee reviews and administers the
agreement and provides for dispute settlement.
Telecommunications Trade: Section 1377 of the Omnibus Trade and
Competitiveness Act of 1988 requires the USTR to review by March 31 of each year
the operation and effectiveness of U.S. telecommunications trade agreements.
The Section 1377 review seeks to determine whether any act, policy, or
practice of a foreign country that has a telecommunications-related agreement
with the United States is not in compliance with the agreement, or otherwise
denies -- within the context of the agreement -- market opportunities to U.S.
firms. An affirmative determination is to be treated as a trade agreement
violation under Section 301.
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