Article I, section 8, clause 2 of the Constitution gives Congress the power to regulate foreign commerce. Congress historically has exercised that power through legislation regulating imports of goods, services, and investment into the United States.

Beginning with the Reciprocal Trade Agreements Act of 1934, Congress delegated authority to the President to proclaim changes in U.S. tariffs, within prescribed limits, based on the results of mutually beneficial trade agreements concluded with our foreign trading partners. Congress set the overall objectives of the negotiation but offered the President and our trading partners the assurance that, if the agreement reached were consistent with the objectives and conditions set by Congress, the agreement would be implemented in U.S. law. The result was significant reductions in both foreign and U.S. tariffs. As tariff levels fell, particularly after the Kennedy Round of tariff negotiations concluded in 1967, it became clear that future rounds of trade talks would focus on the panoply of nontariff measures (for example, tax and regulatory practices) that our trading partners used to bar or inhibit U.S. exports from reaching their markets.

This recognition, in turn, posed a problem in terms of the implementation of any agreement that called for a reciprocal reduction in U.S. nontariff measures limiting imports of foreign goods, services, and investment. In the view of the Finance Committee, Congress could not, consistent with its constitutional responsibilities, delegate authority to the President to revise U.S. domestic law by proclamation in the manner it had delegated the authority to proclaim changes in tariffs. At the same time, Congress recognized that the President, as a practical matter, might be unable to conclude future trade agreements unless he could assure our trading partners that the agreement would not be amended by Congress after the fact.

The Trade Act of 1974: "Fast Track" Procedures

Accordingly, Congress introduced in the Trade Act of 1974 provisions now known as the "fast track" procedures for implementing trade agreements. These procedures, referred to in S. 1269 as the "trade agreement approval procedures," were designed to preserve Congress's constitutional role in the regulation of foreign commerce, while offering the President and our trading partners the assurance that a trade agreement requiring changes in U.S. law would receive an up-or-down vote within a time certain when brought before Congress. However, those procedures were not designed and were never intended to provide a means to revise the fundamental objectives and contours of U.S. domestic law.

Consistent with the approach established by the 1934 Act, Congress set the President's negotiating objectives in the 1974 Act. It obliged the President to notify Congress prior to entry into any trade agreement, consult on the nature and scope of the accord, and submit the President's findings as to how the pact met the objectives set by Congress, together with legislation needed to implement the agreement in U.S. law.

Congress has preserved the basic structure of the 1974 Act each time it has renewed the trade agreement approval procedures. The procedures were renewed once for eight years by the Trade Agreements Act of 1979, and a second time for five years in the Omnibus Trade and Competitiveness Act of 1988. The authority granted by the 1988 Act was extended in 1993 for an additional six months in order to complete the Uruguay Round of multilateral trade negotiations under the General Agreement on Tariffs and Trade (GATT). It has not been renewed since it expired in early 1994.

Fast track authority has been used on five occasions: to implement the Tokyo and Uruguay Rounds of GATT multilateral trade negotiations, in 1979 and 1994 respectively; to implement free trade accords with Israel in 1985 and Canada in 1988; and to implement the North American Free Trade Agreement (NAFTA) in 1993.

• S. 1269 retains the same basic structure and authority for the President contained in prior extensions of the trade agreement approval procedures. However, it makes several important changes designed to reemphasize the original purpose of the authority:
• to reduce trade barriers and expand market access for U.S. exports; and
• strengthen Congress's role in the process.
• The bill clarifies that fast track procedures are available only to those measures necessary to approve and implement a trade agreement and those trade-related measures that are otherwise related to the implementation, enforcement, or adjustment to the effects of such agreement. (Prior law allowed provisions in implementing legislation that were "necessary or appropriate" to the approval of the agreement or its implementation in U.S. law.) Accordingly --
• Fast track procedures would be available for amendments to the unfair trade laws needed to ensure that U.S. goods and services do not face unfair competition from imports as well as for implementation of the Trade Adjustment Assistance (TAA) programs reauthorized with this legislation.

• Conversely, fast track procedures would not be available for the purpose of circumventing normal procedures for enacting unrelated domestic legislation, for example, in the areas of labor or environmental regulation
• S. 1269 sets out specific negotiating objectives for the President to pursue with our trading partners.
• S. 1269 mandates consultations at the outset and at every succeeding stage of the negotiations.
• It provides a process by which Congress may disapprove of new negotiations that might otherwise be eligible for implementation under the fast track procedures.
• The bill limits the application of the fast track procedures to agreements that achieve one or more of the negotiating objectives set by Congress and those provisions that are directly related to trade and otherwise related to the implementation, enforcement, and adjustment to the effects of any such accord.

Section 1. Short Title.

This Act may be cited as the "Reciprocal Trade Agreements Act of 1997".

Section 2. Trade Negotiating Objectives of the United States

This section specifies Congress's underlying rationale for enacting trade agreement approval procedures, its trade negotiating objectives, and its international economic policy objectives, as follows:

Statement of Purposes: Section 2(a) sets out the purposes for which Congress grants trade agreement approval procedures, notably: expanding U.S. access to foreign markets, reducing trade barriers, and creating more effective international trade rules.

Trade Negotiating Objectives: Section 2(b) details negotiating objectives for agreements subject to the provisions of Section 3 (i.e., tariff proclamation authority and fast track), including:

• Trade in Goods. The principal objective of the United States with respect to trade in goods is reducing barriers to U.S. exports.
• Trade in Services. The principal objective with respect to trade in services is to expand access to foreign markets for U.S. service providers.
• Foreign Investment. The principal objective is the reduction of barriers to U.S. investment and establishment of effective means for the equitable resolution of investment disputes.
• Protection of Intellectual Property. The principal objective is the enactment and enforcement of adequate intellectual property protections abroad.
• Agriculture. The Committee is concerned that the international agricultural section remains blighted by the trade-distorting policies of foreign governments. The principal objective of S. 1269 in agriculture is achieving more open and fair conditions of trade by reducing barriers to trade in agricultural products.
• Unfair Trade Practices. The bill intends that U.S. negotiators should focus on the elimination of unfair trade practices abroad, not changes in or weakening of U.S. law at home. The goal should be to enhance existing international disciplines against unfair trade practices such as dumping (i.e., selling in a foreign market at below cost) and trade-distorting subsidies and ensuring effective enforcement of these disciplines.
• Improvement of the WTO and Multilateral Trade Agreements. The WTO (World Trade Organization) is an international trade dispute resolution organization established pursuant to the 1994 Uruguay Round of GATT. The bill states that expanding the coverage of and participation in the WTO agreements is of paramount importance to U.S. trade policy.
• Dispute Settlement. The principal objective is to ensure the effectiveness of trade dispute settlement procedures for the enforcement of U.S. rights, particularly within the WTO.
• Transparency. The President is expected to ensure appropriate public access in trade laws, regulations, and processes among our trading partners as well as in dispute settlement processes within international institutions like the WTO.
• Regulatory Competition. In using the authority conferred in S. 1269, the President is to address foreign government regulatory practices that discriminate against U.S. goods, services, and investment abroad, or that lower or derogate from existing health, safety, labor, environmental, or other regulatory standards to attract investment or inhibit exports.

International Economic Policy Objectives Designed to Reinforce the Trade Agreements Process. Section 2(c) outlines four international economic policy objectives that would reinforce the trade negotiations process. This provision is meant to ensure that nothing in the statement of international economic policy objectives should be construed to authorize the use of fast track procedures to modify U.S. law in the areas specified. The four objectives are:

• Currency stability and coordination with international monetary institutions;
• Intellectual property rights protection in international organizations other than the WTO;
• Respect for workers' rights, including an analysis and reporting mechanism in the International Labor Organization (ILO); and
• Optimal use of resources, while seeking to protect and preserve the environment.

Section 3. Trade Agreement Negotiating Authority.

This section would enact Presidential tariff proclamation authority and fast track procedures through September 2001, with possible extension through September 2005, as follows:

Tariff Proclamation Authority. Section 3(a) grants the President two different types of Presidential tariff proclamation authority:

• Traditional Authority. The President would be authorized to proclaim changes to U.S. tariffs that result from trade negotiations within certain limits (for example, a maximum 50-percent tariff cut for any tariff over 5 percent and a requirement that most tariff cuts be staged over a maximum 10-year period). This type of authority has been a feature of previous fast track legislation.
• "Zero-for-Zero" Negotiating Authority. In a new type of authority, the President would be authorized to proclaim changes to U.S. tariffs, without the limitations of the traditional tariff proclamation authority (described above), on articles for which an affected U.S. industry has requested tariff elimination negotiations ("tariff harmonization," or "zero-for-zero"). This authority is subject to notification and consultation requirements in section 4 of S. 1269 and consultation and procedural requirements of section 115 of the 1994 Uruguay Round [of GATT] Agreements Act (19 U.S.C. 3524).

Fast Track Procedures. Section 3(b) authorizes the President to enter into trade agreements that reduce foreign trade barriers to U.S. goods and services. To be eligible for fast track treatment, a trade agreement must reduce, eliminate, or prohibit the establishment of trade barriers or distortions, and make progress toward one or more of the negotiating objectives set out in section 2. In addition, the President must have satisfied the notice and consultation requirements of section 4. Implementing bills may contain only those provisions that:

• Approve such a trade agreement and a related statement of Administration action regarding the trade negotiation objectives of section 2;
• Are necessary to implement the trade agreement that has been negotiated;
• Are otherwise related to the implementation, enforcement, and adjustment to the effects of such trade agreement and are directly related to trade (for example, amendments to U.S. unfair trade laws or trade adjustment assistance to U.S. industries impacted by the agreement); and
• Are necessary to comply with the 1985 Balanced Budget and Emergency Deficit Control Act.

The Committee report emphasizes that these procedures are available only for trade purposes, not to circumvent normal procedures for enacting unrelated domestic legislation (for example, in the areas of labor or environmental regulation):

"[These] procedures were not designed and were never intended to provide a means to revise the fundamental objectives and contours of U.S. domestic law. Rather, the procedures are designed to implement changes in U.S. law necessary to conform to our obligations under a trade agreement. Prior law allowed provisions in implementing legislation that were 'necessary or appropriate' to the approval of the agreement or its implementation in U.S. law. The Committee's bill would clarify that the trade agreement approval procedures are available only to those measures necessary to approve and implement a trade agreement and those trade-related measures that are otherwise related to the implementation, enforcement, or adjustment to the effects of such agreement." [S. Rept. 105-102, p. 3, emphasis added]

This revised standard effectively denies fast track consideration to matters that may be "appropriate" but not "necessary" to the implementation or enforcement of trade agreements or adjustment to their effects.

Committee and Floor Consideration. The fast track procedures themselves remain unchanged from previous legislation. Found in section 151 of the Trade Act of 1974 (19 U.S.C. 2191), they require the President to submit, after an agreement has been entered into, to both houses of Congress a draft of implementing legislation, a statement of administrative action proposed to implement the agreement, and various items of supporting information. The law does not set a deadline for such submission. Identical implementing bills must be introduced in each house on the day it is submitted by the President; the bills then are referred, respectively, to the Senate Committee on Finance and to the House Committee on Ways and Means, as well as to such additional committees as may claim jurisdiction. The bill -- which is not a resolution of treaty ratification (subject to a two-thirds Senate vote) but a domestic bill requiring a majority in each house -- may not be amended at any legislative step and eventually must be voted up or down in its entirety as introduced. In general, the rules provide for the bill to be reported from committee within 45 session days -- or to be automatically discharged thereafter if no committee action has been taken -- with certain extensions and procedures relevant to revenue measures. In either house, debate is limited to 20 hours; the bill must be voted on in either house within 15 session days and may not be sent back to committee. The maximum total time for the fast track enactment of an implementing bill (from its introduction to final vote) is 60 session days, although implementing revenue bills may take an additional 30 days.

Possible Four-Year Extension. Under section 3(c), the tariff proclamation authority of section 3(a) and the fast track procedure of section 3(b) would apply to agreements entered into by October 1, 2001, with the possibility of a four-year extension to October 1, 2005, if the President requests an extension, submits written reports from the Administration and a private sector Advisory Committee for Trade Policy and Negotiations established under the Trade Act of 1974. If neither house adopts a resolution of disapproval of the extension under specified expedited procedures found in sections 152(d) and (e) of the Trade Act of 1974 (19 U.S.C. 2192(d) and (e)), the extension goes into effect. NOTE: This procedure is not considered a violation of the Supreme Court's Chadha decision, which invalidated the "one-house veto," because this procedure is deemed an exercise of the rulemaking power of each house, not an invalidation of statute.

Section 4. Notice and Consultations.

Section 4 of S. 1269 strengthens the traditional consultation provisions from previous legislation and applies them to both tariff proclamation authority and trade agreements eligible for fast track treatment. These provisions are as follows:

Notice and Consultation Before Negotiation. Section 4(a) requires that the President notify Congress within 90 calendar days of his intention to begin negotiations for any agreement subject to the provisions of section 3 and to identify specific negotiating objectives, with specified consultations with the relevant committees in both houses. NOTE: Under section 6, this requirement is waived with respect to WTO negotiations on information technology products and other work programs initiated pursuant to the Uruguay Round Agreement and negotiations with Chile that were commenced before the effective date of S. 1269.

Consultation with Congress Before Agreement Entered Into. Section 4(b) requires the President to consult the relevant committees before and after notifying Congress of his intention to enter into negotiations.

Advisory Committee Reports. Section 4(c) requires private-sector advisory committee consultations before beginning negotiations.

Consultation Before Agreement Initialed. Under section 4(d), the United States Trade Representative (USTR) is required to consult with the relevant Congressional committees before entering into any trade agreement, including disclosure of any other agreement the USTR intends to or has entered into with the country (or countries) in question. USTR is also required to consult with Congress during negotiations and immediately before the President initials an agreement.

Section 5. Implementation of Trade Agreements.

Section 5 incorporates the fast track procedures in the Trade Act of 1974 and provides for enhanced procedures which the President must follow to receive fast track consideration and for Congress's ability to disapprove the availability of fast track procedures, as follows:

Negotiation and Submission. Consistent with the Trade Act of 1974, section 5(a) of S. 1260 would require the President to:

• Notify Congress of his intention to enter into a trade agreement at least 90 calendar days before doing so (with private-sector advisory committee reports required 30 days after such notice is given); and
• Provide Congress, within 60 calendar days of entering into the agreement, a description of changes to U.S. law that will be required by the agreement.

Limitations on Trade Agreement Approval Procedures. Under section 5(b), fast track procedures are not available for specific trade agreements which Congress has disapproved under one of the following procedures:

• Disapproval of the Negotiation. This provision allows for the disapproval of any negotiation that otherwise would be eligible for fast track treatment if both the Senate Committee on Finance and the House Committee on Ways and Means disapprove of a negotiation within the close of the 90-day period following the President's notification of his intent to enter into negotiations.
• Disapproval for Lack of Notice of Consultation. This provision allows for disapproval of lack of notice or consultations of any negotiation that would otherwise be eligible for fast track treatment if both houses of Congress pass a resolution of disapproval under expedited procedures within any 60-session-day period.

Section 6. Treatment of Certain Trade Agreements.

Section 6 of S. 1269 waives the initial notice otherwise required under section 4(c) for WTO negotiations on information technology products and other work programs initiated pursuant to the Uruguay Round Agreement and negotiations with Chile that were commenced before the effective date of S. 1269.

Section 7. Conforming Amendments.

Section 7 enacts certain changes in existing law, notably the Trade Act of 1974.

Section 8. Trade Adjustment Assistance.

Section 8 of S. 1269 extends three Trade Adjustment Assistance (TAA) programs established pursuant to the Trade Act of 1974 -- for workers, for affected firms, and for the NAFTA worker adjustment assistance program -- from September 30, 1998, to September 30, 2000.

Section 9. Fees for Certain Customs Services.

Section 9 of S. 1269 extends at a reduced rate (five dollars) the passenger processing fee applicable to passengers arriving on vessels and aircraft from Canada, Mexico, and the Caribbean until August 1, 1998, to offset the costs of the extension of the TAA programs under section 8.

Section 10. Definitions.

In the Committee report, Senator Murkowski expresses his views on using the passenger processing fee (section 9) to finance TAA's (section 8). He says (in part):

"While I am a very strong supporter of the TAA program, I believe that the way the Committee funded this program is inappropriate. . . . I believe the Committee should have turned to spending cuts, not new user fees or taxes, to pay for extension of a program related to expansion of trade agreements." [S. Rept. 105-102, p. 24]

No Statement of Administration Policy had been received by press time, but the Clinton Administration is on record as favoring extension of the President's tariff proclamation and fast track negotiating authority.

Dorgan. In order to deal with increases in trade deficits, the amendment would allow the United States to withdraw from any trade agreement reached under fast track if the merchandise trade deficit with a trading partner in that agreement were to double in a three-year period or less. (Several amendments)

Murkowski. To amend section 9 regarding use of passenger processing fees to finance TAA's.

Daschle. To create a Special 301 procedure for identifying barriers to trade in agricultural products.

Craig. To prohibit further expansion of Chapter 19 of NAFTA (binational panel review of anti-dumping and countervailing duty claims in lieu of U.S. court review).

Akaka. Place limits on duty-free and quota-free entry of textiles produced in the Northern Mariana Islands in the absence of a showing that the goods were produced with a specified percentage of U.S. labor.

Kerrey (NE). To require the President to submit an International Trade Commission study on trade agreement's likely effects when he submits the agreement to Congress.