Trade Legislation 

  The year 2001 and the 107th Congress began with the pro-free trade George W. Bush entering the White House and his party controlling both congressional chambers.  It was the first time the party in the White House controlled both chambers since President Clinton’s first two years in office.                       

   From its earliest days, the administration has laid out an aggressive free trade agenda, including negotiations for the Free Trade Area of the Americas , a free trade agreement with Chile , and perhaps most importantly, trade promotion authority for the president.  The administration’s free trade agenda has been based on the declared necessity of expanding U.S. access to overseas markets for our economic growth and the creation of jobs.  The administration has even linked free trade to the war against terrorism.

  Trade promotion authority, formerly known as fast track authority, has been the administration’s top trade priority, mainly because it is perceived as an important tool in negotiating trade agreements.  TPA allows the president to utilize his incumbent right to negotiate free trade agreements while limiting Congress’ role to mere approval or disapproval of a negotiated agreement, without the power to amend an agreement.

  On Dec. 6, 2001 , the House passed TPA legislation by a single vote.  That vote belonged to Rep. Jim DeMint (R-SC), concerned with the diminishing textile industry in his state, who gave his vote to the House leadership in return for a written promise from leadership “to bring no future bills with trade provisions to the House floor until the Trade and Development Act of 2000 is corrected to require that U.S. knit and woven fabrics be required to undergo all dyeing, finishing, and printing procedures in the United States in order to qualify for the benefits under the Caribbean Basin Trade Partnership Act.”

  That’s right—the Trade and Development Act of 2000—the most significant legislation to come out of the 106th Congress, has been rife with controversy and calls for amendment since its inception.  The calls have come from both sides of the free trade fence, with some like Rep. DeMint and Sen. Jesse Helms (R-NC) arguing to limit benefits by requiring U.S. dyeing and finishing of fabric, while others seek to expand existing benefits, for example, by allowing certain knit-to-shape articles to qualify for preferential treatment.  Such amendments have yet to be accomplished, and it remains unclear whether the promise of the House leadership to Rep. DeMint means that we will have an amendment of the CBTPA or trade legislation gridlock.

  TPA is now pending in the Senate, where Republicans are no longer in control. The Senate Finance Committee approved TPA by a vote of 18-3, yet it is uncertain whether Senate Majority Leader Daschle will allow TPA to come to a vote before the full Senate and whether debate on the Senate floor will lead to significant amendments.  Recent political focus on the war against terrorism, taxes, and budget deficits will not improve TPA’s chances for success.  Democrats may recall that the Republican-controlled House repeatedly denied President Clinton fast track authority.

  There is a much better chance of the less controversial Andean Trade Promotion and Drug Eradication Act, H.R. 3009, which passed the House on Nov. 16, 2001 , and has been reported favorably from the Senate Finance Committee, to become law early in this legislative session.  In addition to causing Customs lawyers difficulties because of its unworkable acronym, the ATPDEA would extend the now-expired benefits afforded to most items produced in Columbia , Ecuador , Peru , and Bolivia under the Andean Trade Preference Act.  In addition, the ATPDEA would expand the preference to certain items that have been excluded, namely footwear, oil, watches, luggage, and apparel. 

  The apparel provisions of the ATPDEA are similar to the CBTPA, but, unlike CBTPA, it includes a regional fabric provision that allows for the use of regional yarn.  This benefit is important to integrated textile and apparel manufacturers in the Andean region that hope to use local cotton. The ATPDEA is also a legislative vehicle for clarifying, and generally liberalizing, amendments to the CBTPA and the African Growth and Opportunity Act, but Helms, a staunch defender of the U.S. textile industry his entire career, may make one last stand in his final year in the Senate, and the promise made to DeMint lurks in the House. 

  There remains a good chance that the relatively uncontroversial Generalized System of Preferences, which affords preferred duty treatment to a number of products produced in developing countries, will be promptly renewed early in this session.  It expired Sept. 30, 2001 , meaning that importers normally taking advantage of the law have been forced to pay ordinary duties.  It is expected to be renewed with retroactive effect, thus allowing importers to obtain refunds of duties paid during the lapse period.

  Even if the Senate gives Bush TPA, successful negotiation of the FTAA, satisfying the concerns of 34 countries at different stages of economic development with differing trade priorities, is a daunting task.  The United States Trade Representative has invited the interested public to comment on FTAA.  Comments are due by May 1, 2002 .  Companies with an interest in the terms of FTAA with respect to their products or investments should consider filing comments.  The governments of other negotiating countries have issued similar calls. 

  In what may be a preview of a strategy to gradually move towards FTAA, the administration announced in January its plans to negotiate a U.S.-Central America Free Trade Agreement.  Certain products of many of the countries in Central America already enjoy preferential duty treatment under the Caribbean Basin Economic Recovery Act and the CBTPA.  The administration has also continued negotiation of a U.S.-Chile Free Trade Agreement, the 10th round of negotiations being completed Jan. 25, 2002 in Santiago . 

  Details on both of these possible Free Trade Agreements are sparse, but the relationship of these potential new trading partners to the NAFTA bloc is sure to create some difficulties as Mexican manufacturers aim to maintain their current competitive advantage while at the same time being a part of any new liberalizing regime. 

  Some trade measures have been enacted by the administration and the 107th Congress.  Congress passed, and the administration has now implemented, the U.S.-Jordan Free Trade Agreement, extending preferential treatment to products of Jordan under specified rules, and the U.S.-Vietnam Bilateral Trade Agreement, extending Normal Trade Relations status to Vietnam . 

  The administration also completed negotiations on an agreement with China on its accession to the WTO, then supported that accession, along with the other 141 member countries, at the WTO Ministerial Conference in Doha , Qatar on Nov. 10, 2001 .  On Dec. 11, 2001 , China became an official member of the WTO.  Meanwhile, Congress’ extension of NTR status for China made its accession to the WTO meaningful.  The accession now entitles China to permanent NTR status.

  The administration reached an agreement with Canada and Mexico to accelerate tariff elimination under the NAFTA on certain products. NAFTA provides gradual reduction and elimination of tariffs on all originating goods.  Most goods that properly qualify as originating goods under NAFTA are already duty free, but some still are not.  Under the agreement, effective Jan. 1, 2002 , the United States eliminated duties on certain rubber and plastic footwear items, while Mexico eliminated duties on certain motor vehicles, electrical and electronic goods, toys and chemicals.

  On Dec. 18, 2001 , the president signed a transportation appropriations bill, H.R. 2299, that provides funding for a U.S.-Mexico border safety program directed at Mexican motor carriers.  It is intended to provide Mexican motor carriers access to U.S. transportation routes as required under the NAFTA, while addressing the concerns of certain U.S. parties that have opposed access, ostensibly for transportation safety reasons.  It remains to be seen whether the law will accomplish either of these goals.

  In what remains of the 107th Congress, legislation, administrative action, and international negotiation on free trade will continue to abound. As is increasingly the case, these matters create unusual political alliances and are often the subject of substantial acrimony and last-minute compromise.  At the time this article goes to press, the administration has yet to accomplish any of its major trade goals and Congress has failed to pass even the non-controversial clarifying amendments and renewals of existing trade laws. 

Jason Waite is an attorney with Alston & Bird LLP. He practices customs and international trade law and can be reached at jwaite@alston.com or at (202) 756-3300. With more than 600 lawyers in Washington , Atlanta , Charlotte , Research Triangle and New York , Alston & Bird represents a broad range of clients in virtually every area of practice related to international business and trade.