US/ Caribbean Trade Bill

"ON HOLD"

If the trade promotion bill gets through the US Congress, it will pave the way for Caribbean textiles to enter the US and compete with Mexican clothing exporters.

Despite intense lobbying by the White House, US lawmakers said they would have to wait until Congress re-opens in January, 2000 to extend new trade privileges to Africa, the Caribbean and Central America.

The delay deprived President Clinton of a rare trade policy victory at the scheduled November 30- December 3 meeting of World Trade Organization (WTO) ministers in Seattle.
Congressional aides said the legislation, while popular with both Republicans and Democrats, became bogged down in a dispute over textile imports and broader budget issues.
"Some progress is being made," Senate Republican Leader, Trent Lott of Mississippi told reporters. "But, in the end, there are some tough issues to work through. I think we can do that early this year."
Some aides had held out hope of a last-minute compromise before Congress adjourned for the year 2000. Congress had adjourned in mid-November and would not reconvene until January.
Approved overwhelmingly by the Senate last November, the legislation would grant more than 70 countries in sub-Saharan Africa, the Caribbean and Central America greater duty-free access to US markets.
A more narrowly-tailored bill was approved by the House of Representatives last July. It offered trade privileges to African nations, but did not include benefits for countries in the Caribbean or Central America.
If a House-Senate compromise can be hammered out, it would be the first significant trade bill to be approved by Congress since 1994, when it authorized US participation in the World Trade Organisation (WTO.)
Clinton and US Trade Representative, Charlene Barshefsky had hoped for final passage before the Republican-controlled Congress adjourned for the year.
Barshefsky said the legislation would help US negotiators shape a new round of global trade negotiations, which started at the WTO meeting in Seattle.
Congressional aides said progress has been made in staff-level negotiations. But they said Lott has, so far, refused to move toward the House version, dimming chances of a compromise.
Under the Senate bill, eligible African countries would be able to ship more goods to the United States through the General System of Preferences program, which gives developing countries duty-free access to US markets for some goods.
It would also reduce duties on apparel made in the Caribbean and Central America. The benefits would be similar to those already enjoyed by Mexico under the North American Free Trade Agreement (NAFTA).
To appease the US textile industry, the Senate bill would limit duty-free treatment to apparel made from US yarn, fabric and thread.
The American Textile Manufacturers Institute warned that the competing bill in the House did not include the same protections, and could result in massive US job losses and an explosion of illegal shipments into the United States.
Lott said the House would have to accept the Senate provision on US fabric. "The Senate bill is very carefully crafted. It's good legislation, and in the end the House is going to have to go with the Senate provision."
Despite Lott's endorsement, the failure of this important part of the bill is a symptom of weakening domestic support for Free Trade. Clinton's bill barely made it through the Senate in time for the next round of World Trade Organization negotiations.
Dissatisfied with the pace of trade reforms and liberalization around the globe, President Clinton had called for a new round of market opening trade negotiations with Africa and the Caribbean.
The legislation, backed by the Democratic White House and free-trade Republicans in Congress, would grant selected countries in sub-Saharan Africa and the Caribbean expanded duty-free access to U.S. markets.
"This historic legislation will help build a partnership that will strengthen economic and political ties, increase trade, and boost economic growth and opportunity in both the United States Africa and the Caribbean," Clinton said in a statement after the Senate opened debate.
Opponents said the legislation would benefit multinational corporations at the expense of workers and the environment.
"This is not a trade bill; it's an aid bill. It's unilateral. It's a one-way street," said Senator Ernest Hollings, a South Carolina Democrat. Senator Lott had also threatened to pull the bill from the floor if Democrats insisted on adding unrelated amendments.
Free Trade and the United States participation in the WTO has always been a hot issue with law-makers. A defeat would have set back Clinton's trade agenda in Seattle, and weakened Washington's hand in the new round of global trade negotiations to follow.
That's because Clinton and his successor in the White House would have needed congressional support to complete market-opening agreements rising out of the new round.
"Support has been waning in Congress for free trade," said Greg Mastel, a trade expert at the Washington-based New America Foundation. "This is something that has been noticed by the rest of the world."
Congressional backers of the African and Caribbean trade initiative see it as an important first step that would benefit some of the world's poorest nations, while expanding on Clinton's proposal to forgive their debts.
"Africa has, for too long been neglected in our trade policy," Senate Finance Committee Chairman, William Roth, a Delaware Republican, told reporters. "This is the right thing to do."
Congressional aides also feared that the Africa and Caribbean trade initiative would get bogged down in non-trade disputes, including a heated Senate fight over a proposed increase in the U.S. minimum wage.
But supporters said they were confident it would pass. The Senate voted 90-8 to open the debate. To appease the U.S. textile industry, duty-free treatment would be limited in the Senate bill to apparel products made from U.S. yarn, fabric and thread.
Citing a recent analysis, Roth said the bill could increase U.S. textile shipments by US$8.8 billion and increase U.S. textile and textile-related employment by 121,400 jobs over the next five years. But other lawmakers were skeptical.
Senator Jim Bunning (Republican, Kentucky), said the legislation was an ill-conceived expansion of NAFTA. Some lawmakers say the free trade policy has caused massive US job losses.
"We keep talking about creating a level playing field, when it comes to free trade, but this bill pulls the field right out from under the U.S. industries which have already had an uphill fight just to stay alive," Bunning said.
"It doesn't make any sense, NAFTA should have taught us a very big lesson," he added.
Other critics argued that the legislation would undermine the sovereignty of African and Caribbean nations because the benefits would be linked to governments undertaking market reforms. Some Democrats said they would press for stronger labour and environmental protections.
"What kind of message are we now conveying, with about a month to go before this critical WTO meeting, when we are talking about a bilateral trade agreement which does not have any enforceable labour and environmental standards," Senator Paul Wellstone (Democrat -Minnesota) had said in October.
Under the legislation, eligible Caribbean and African countries would be able to ship more goods to the United States through the General System of Preferences program, which gives developing countries duty-free access to U.S. markets for some goods.
It also would reduce duties on apparel made in the Caribbean and Central America. The benefits would be similar to those already enjoyed by Mexico under NAFTA.

Executive Time "Online" also has a printed version which is available throughout the Caribbean and some selected North American cities.