NEWS FOCUS
Push for Legislation To Toughen U.S. Trade Laws Gains Momentum Proposed bills transfer some authority from President to U.S. Trade Representative, but key to chemical industry is legislation's effect on Administration's authority to strike bargains in current trade talks
Earl V. Anderson, C&EN New York
Despite a sharply weaker dollar, which should have helped the U.S. trade picture by now, the mammoth U.S. trade deficit still weighs heavy on official Washington. If anything, international trade is more of a political hot potato this year than it was last year, when Congress tried but failed to squeeze out a new trade bill. As a result, the push to get major trade legislation through Congress and onto the President's desk this year is picking up momentum. Certainly the country's trade problems are the major reason for this legisla tive flurry. But not the only one. The Uruguay round of multilateral trade talks already has been launched and negotiations soon will be getting under way in Geneva. The Administration needs legislative author ity to strike bargains in these trade talks, which are being held under the auspices of the General Agree ment on Tariffs & Trade (GATT). The prospects for trade legislation reaching the Pres ident's desk, then, seem reasonably good. Whether it will be legislation that he can sign is still an open question. "If I were a betting man," says one promi nent trade official, "I'd bet that [Congress] will give him a bill he can sign." But, he points out, more than one Congressman could make political hay out of a Presidential veto, and would be more than willing to do so. One reason for the optimism is that the Admin istration seems more willing to work with Congress this year in fashioning a trade bill—something it was unwilling to do last year. For the trade experts who follow such things for the chemical industry, all of this means long, hectic days and plenty of midnight oil. Already, interna tional trade committees of the major chemical indus try trade associations are meeting more often—and longer. Why the chemical industry's preoccupation with trade legislation? Simply because international trade
is important to U.S. chemical companies. More than 10% ($22.8 billion) of last year's $216 billion chemical shipments were exported. Another $15 billion worth of chemicals came into the U.S. as imports. Now trade is expected to become even more impor tant. As the concept of a one-world economy becomes even more of a reality, U.S. trade policy and the legislation that guides it become critical issues for the chemical industry. Conversely, how the chemical industry feels about trade policy should pique the interest of those in government that develop that policy and put it into practice. Last year, when the U.S. trade deficit ballooned to $153 billion ($170 billion if imports are measured on a c.i.f.—cost, insurance, and freight—basis), only three of the 10 major product categories managed to
Chemical trade surplus improved slightly last year $ Billions 25 Chemical exports
Chemical imports
ο
J
1977
78
J
L 79
80
81
82
83
L 84
85
86
Source: Bureau of the Census
April 27, 1987 C&EN
7
News Focus
How proposed legislation treats the Uruguay round of multilateral trade talks The Administration needs legislative authority to negotiate on tariffs, nontariff barriers, and other items in the Uruguay round of multilateral trade talks. Here's how the current law and various legislative proposals stack up: Current law The President's authority to negotiate and proclaim tariff changes expired on Jan. 2, 1982. However, his authority to negotiate and proclaim changes in nontariff barriers doesn't expire until Jan. 3,1988. Still, this doesn't give the Administration enough time to negotiate nontariff barriers, because the Uruguay round is expected to last at least four more years. This makes it especially important for pending trade legislation to grant the necessary tariff and nontariff negotiating authority. Current legislation requires the Presi-
dent to consult with Congress before entering into agreements and to obtain "fast-track" approval of negotiated agreements. A "fast track" is a Congressional procedure used to expedite approval or disapproval of trade agreements as is; that is, without amendments. Other key provisions of existing legislation spell out specific negotiating objectives for service industries, high technology, and investment. They also apply certain restrictions to agreements with nonmarket economies. H.R. 3. Trade & International Economic Policy Reform Act of 1987 This House omnibus trade bill renews tariff and nontariff barrier negotiating authority needed to proceed with the Uruguay round. It links use of nontariff authority to many negotiating objectives and other objectives that are not re-
end the year with a trade surplus. Chemicals were one—the biggest one—of the three. The chemical industry traditionally has held bragging rights to a lopsided trade surplus (exports minus imports). But for the past several years, the bragging has been noticeably muffled. The U.S. chemical trade surplus hit its zenith in 1980 when exports topped imports by a hefty $12.1 billion. Since then, the U.S. chemical trade surplus has gone inexorably downhill— until last year. By 1985, the chemical trade surplus had slipped to $7.2 billion, on exports of $21.7 billion and imports of $14.5 billion. Last year, however, the chemical industry's trade fortunes staged a mild recovery. Chemical exports advanced 4.6% to $22.8 billion; imports grew only 3.2% to $15 billion. As a result, the chemical trade balance rebounded to $7.8 billion—not so high as in "the good old days" but a welcome change in direction nonetheless. Much of the credit goes to the sharp decline in the value of the dollar against the currencies of other major trading nations. But U.S. chemical companies know they cannot rely on the dollar falling much further, if at all. Remaining competitive—even strengthening their competitive muscle—will be allimportant to their success in the international trade game. Just as important, however, will be the rules that dictate how the game is played. That's why the legislation now gathering steam in Congress is so important to the chemical industry. And there's no doubt that trade legislation is, indeed, gathering steam. There are dozens upon dozens of trade-related bills crowding the Congressional hop8
April 27, 1987 C&EN
quired under current law. Key provisions of this bill: • Extend tariff negotiating authority until Jan. 3, 1989, but provide for a three-year extension. • Extend authority to negotiate nontariff barriers also to Jan. 3, 1989, but do not allow this authority to be used until an international monetary conference is convened, or until the President convinces Congress that such a conference cannot be held. • List many negotiating objectives, including dispute settlement, services, agriculture, natural resources, "graduation" of developing countries, intellectual property, escape clause procedures (safeguards), dealing with countries with consistently large trade surpluses, coordinating international trade and monetary policies, investment, countertrade, and rules on workers' rights. • Require changes for items not on
per. But the focus is on only two of them. One is H.R. 3 (the Trade & International Economic Policy Reform Act of 1987). This is the House version of an omnibus trade bill. The other is S. 490 (the Omnibus Trade Act of 1987), which is the Senate's counterpart. Both, in their own way, toughen U.S. trade laws. They transfer some authority that now rests with the President to the U.S. Trade Representative. And they set the tone for the Uruguay round and give the President the authority he needs to negotiate. Although both bills are, in many ways, milder than their predecessors in the 99th Congress, there nevertheless is still much in them the Administration doesn't like. The Administration, of course, has proposed its own trade legislation as part of its broad-ranging "competitiveness" package. The Administration's entry is represented as identical bills, H.R. 1155 in the House and S. 539 in the Senate. However, these two bills probably will command very little attention. Both the House and the Senate will have their legislative hands full just dealing with their own respective trade bills. Then, a joint HouseSenate conference committee will have to iron out differences between the two bills. With luck, H.R. 3 could reach the House floor for a vote this week as scheduled. It has been delayed in reaching the House Rules Committee, which will decide how it will be treated by the full House. The bill was to have reached the Rules Committee last week, but probably won't get there until sometime this week. Even with this delay, however, H.R. 3 still could be put on the House floor later in the week. More than likely, the bill will receive a "modified
the GSP (Generalized System of Preferences) list to receive "fast-track" approval by Congress. • Extend authority for ongoing bilateral trade talks (tariff reduction) with Canada for five years. H.R. 3. Cochalrman's mark This modified, and less restrictive version of the original H.R. 3 was worked up by Rep. Dan Rostenkowski (D.-lll.), chairman of the House Ways & Means Committee, and Rep. Sam Gibbons (D.Fla.), chairman of the trade subcommittee. Legislative language for this "jn&rk" hasn't been written yet, but this version appears to provide greater negotiating authority to the President than the original H.R. 3. However, it does retain some conditions and Congressional consultation requirements not included in present law. This bill's key provisions: • Provide four-year nontariff "fast-
track" authority, with two-year renewal subject to Congressional disapproval. • Provide six-year tariff-cutting authority, with a 60% limit on certain products and a 10-year phase-in for the tariff reductions. • Compromise with the Administration on negotiating objectives. • Exclude Canada from its extension of bilateral free trade agreement authority. S. 490. Omnibus Trade Act of 1987 In many ways, the Senate omnibus trade bill is a tougher bill than H.R. 3. It imposes many additional conditions on the President before Congress permits him to negotiate and implement trade agreements. It mandates strong accountability to Congress. It requires a nation's state trading enterprises to act as commercial enterprises (as defined in U.S. antidumping laws) before
closed" rule, which means that only limited amendments will be permitted from the floor. One of those is almost certain to be the Gephardt amendment. Introduced by Presidential candidate Rep. Richard A. Gephardt (D.-Mo.), this controversial amendment would mandate retaliation against trading partners with excessive and unwarranted trade surpluses. But the H.R. 3 that reaches the House floor will not be the same H.R. 3 that was originally introduced early in January. Primary sponsor of the original H.R. 3 was Rep. Gephardt. The bill had almost 180 cosponsors. It is an exact replica of H.R. 4800, the omnibus trade bill that was passed overwhelmingly by the House last year but which drew undiluted criticism from the Administration. H.R. 3 contains many changes in U.S. trade law, including section 301 of the Trade Act of 1974 that deals with unfair trade practices, section 201 (escape clause), antidumping and countervailing duty enforcement, and section 232 of the Trade Expansion Act of 1962 (imports that threaten national security). But there are three particularly controversial proposals in the original H.R. 3. One, of course, is the Gephardt amendment. Aimed primarily at Japan, which had a lopsided $55 billion trade surplus with the U.S. last year, it requires the Administration to determine which countries have "excessive and unwarranted" trade surpluses with the U.S. and maintain a consistent pattern of unfair trade practices. It also requires the Administration to negotiate bilaterally with these countries in an effort to reduce the trade surpluses 10% per year. If these efforts fail, the Gephardt amendment mandates retaliation.
the U.S. could enter into a trade agreement with that nation. To get "fasttrack" approval, the U.S. Trade Representative (USTR) would be required to submit to Congress a lengthy report detailing the effect of U.S. trade policy on many aspects of the economy. Key provisions: • Extend tariff and nontariff negotiating authority for 10 years. • Require periodic Presidential and USTR consultation with any Congressional committee with jurisdiction over matters to be covered in the agreement. • Permit the trade agreement to be implemented only if the President provides 90-day advance notice to Congress that he intends to enter into an agreement, submits implementing legislation and administrative actions, and the legislation is enacted. • List many negotiating objectives similar to those contained in H.R. 3.
However, the President can avoid retaliating if he thinks it is in the national economic interest. Another controversial provision deals with "private right of action." This provision would allow U.S. industries injured by imports that were "dumped" into the country to file civil suits in the Court of International Trade and collect damages. A third controversial proposal in H.R. 3 would make it an unfair trade practice if countries violated internationally recognized workers' rights. These violations would be actionable under section 301, but such action would be at the President's discretion rather than mandatory. If H.R. 3 reached the President's desk as written, he almost certainly would veto it, just as he threatened to veto H.R. 4800 last year. Well aware of this, Rep. Dan Rostenkowski (D.-lll.), chairman of the House Ways & Means Committee, and Rep. Sam M. Gibbons (D.-Fla.), chairman of the trade subcommittee, launched an allout effort to reach a legislative compromise. Together, they developed an "outline of cochairmen's mark for markup on H.R. 3." This so-called cochairmen's mark does not contain provisions to protect specific sectors of the industry, such as textiles. The lone exception deals with telecommunications. It also tones down the most controversial provisions in the original H.R. 3. For instance, although it contains Gephardt-type provisions aimed at countries with excessive trade surpluses, it does not mandate that these surpluses be reduced 10% per year. Instead it tries only to eliminate the unfair trade practices that contribute to those surpluses. The cochairmen's mark also tries to compromise on the "private right of action" provisions. What it does April 27, 1987 C&EN
9
News Focus
Rostenkowski (above): legislative compromise. Baker (center): offers better opportunities for chemical industry. Bentsen: tougher than House bill is narrow the private right of action to those cases that involve multiple offenders; that is, those with three or more dumping offenses within 10 years. It also clarifies that the "workers' rights" amendment would be based on international norms adopted by the International Labor Organization (ILO). And it takes into account the economic development level of a country in taking workers' rights action under section 301. When the House Ways & Means Committee completed action on the cochairmen's mark late last month, it was not written in polished, legislative language. This official, legislative language was completed just before press time and, as a result, C&EN has not had access to it. However, trade officials with a pipeline into the Ways & Means Committee indicate that the cochairmen's mark is a good barometer of what will be contained in the final legislative language of the Ways & Means Committee's sections of H.R. 3. This is the version that will be brought to the floor for a vote of the full House. Ways & Means Committee members ordered the cochairmen's mark reported out of committee by an impressive 34-to-2 vote, a good indication that the measure has strong bipartisan support. It also is a good indication that H.R. 3 will breeze through the full House. Although Ways & Means is the primary committee dealing with trade legislation, it is far from the only one. In fact, six different House committees have contributed sections to H.R. 3, and a few more may try for a piece of the action before the bill reaches the Rules Committee. In addition to Ways & Means, the other committees that are principal actors in House trade legislation include Agriculture, Energy & Commerce, Foreign Affairs, and Banking. Meanwhile, the Education & Labor, Judiciary, and Small Business committees may chip in with pieces for the House trade bill. 10
April 27, 1987 C&EN
Out of the Energy & Commerce Committee have come proposals to establish a Department of Trade and to authorize the President to void foreign takeovers of U.S. companies if he finds that the acquisition harms the national interest. The committee also wants U.S. exporters to report on countertrade deals and seeks to amend the Foreign Corrupt Practices Act (FCPA). The Foreign Affairs Committee also deals with FCPA and countertrade. And, in an effort to increase U.S. exports, it wants to improve the Commerce Department's Foreign Commercial Service. Other amendments to H.R. 3 out of Foreign Affairs would require the Secretary of Commerce to regulate so-called "preshipment" inspections of U.S. exports and extend the ban on exports of Alaskan crude oil. Among the Banking Committee's proposals is one that would require the President to seek negotiations to stabilize the dollar against other foreign currencies, particularly those of countries whose currencies are pegged to the dollar and are not allowed to float freely. Yet another Banking proposal deals with Third World debt. With so many House committees involved in patching together a comprehensive trade bill, confusion and jurisdictional disputes are bound to break out. In fact, a jurisdictional dispute already has erupted between the two main players, the Ways & Means Committee and the Energy & Commerce Committee. It will be the Rules Committee's job to resolve these disputes before the trade bill reaches the House floor. If it can, a clean package of trade proposals should be ready for House floor action by the end of the month. If it can't unruffle these Congressional feathers, then the Rules Committee must decide who can offer amendments on the floor, and which ones can be offered. For trade experts in the chemical industry trying to
keep track of the legislation, the number of House committees involved and the jurisdictional wrangling among them make a confusing situation even more confusing. Says one top industry trade official, "I'm far more confused and uncertain now, and that's without even considering the actual legislative language. The fact that the Rules Committee will have to take the output from six or more committees, put it together, and send it to the House floor is beyond belief." Another chemical company executive thinks the resulting House trade bill will be so broad and farreaching that nobody will be able to comprehend it. "With so many committees involved, I have to think it will be a terrible bill," he says. Whatever the Rules Committee decides, it's fairly certain that it will make room for Rep. Gephardt to reintroduce his controversial amendment. Last year, a similar Gephardt amendment overwhelmingly passed in the House. Sentiment is running high on both sides of the issue and there are political heavyweights working both for and against it. Rep. Gephardt believes he will have enough votes to pass his amendment. Others say it is too close to call. Although individual chemical companies may have their own opinions about the Gephardt amendment, the industry as a whole has taken no position on it one way or the other. One school voices concern that the chemical industry will get hit with the retaliatory bricks that other countries throw if Gephardt action is applied to them. For instance, Japan, with its ominous $55 billion trade surplus with the U.S. last year, would certainly be a Gephardt target. If hit, Japan would retaliate, and it would shoot at U.S. industries that are doing well in their trade with Japan. One of those is the U.S. chemical industry. It had a $1.3 billion trade surplus with Japan last year, exporting almost twice as much to Japan as it imported from it. Others, however, believe the retaliation argument is overdone. For chemical industry trade advisers, it's difficult enough to keep track of these rapidly changing trade developments in the House. Yet, they also must keep their eye on the Senate, where trade legislation also is about to reach the front burner. The Senate Finance Committee has accelerated its schedule and started marking up its trade bill, S. 490, last week. The committee could report out a bill a few weeks after the full House passes its bill. Even if they can't keep to this schedule, legislators want to get a bill through a joint House-Senate conference committee and up to the White House by late July or early August—before Congress recesses. S.490, the Omnibus Trade Act of 1987, was introduced by Sen. Lloyd Bentsen (D.-Tex.), chairman of the Senate Finance Committee, which has primary jurisdiction over trade matters in the Senate. In many ways, S.490 is a tougher trade bill than H.R. 3 in the House. One of its basic underlying assumptions is that existing trade laws are inadequate to cope with foreign unfair trade practices. This Senate bill goes H.R. 3 one better in reducing Presidential discretion and in requiring the Administration to respond to
both unfair trade practices and fairly traded imports that injure domestic industry. Because S. 490 is an omnibus bill, it too covers a wide array of trade subjects. Among them: industrial targeting, trade by state-owned or -controlled companies, "diversionary" dumping, and dumping by nonmarket economy countries. It also covers intellectual property rights, imports that threaten national security, and agricultural export promotion programs. In addition, S. 490 would slap a 1% tariff on imports to finance a "trade competitiveness assistance" program for workers who lose their jobs as a result of imports. S. 490 has no Gephardt-type amendment, but it does have an equally controversial provision—the socalled adversarial trade provision. It requires negotiations with countries, including Japan, that maintain a consistent pattern of unfair trade practices (adversarial trade). However, it has no automatic sanction if the foreign government refuses to eliminate those practices. Unlike the Gephardt amendment in the House, the adversarial trade provision of S. 490 does not require a mandatory, scheduled reduction in a country's balance of trade surplus. But it's entirely possible that an attempt will be made to write such language into S. 490. It's unlikely that a Gephardt-type amendment would make it through the Senate Finance Committee. Chairman Bentsen has said that he wants a broad-based bill with bipartisan support. The Administration already
Chemical industry one of few with a trade surplus Animal & vegetable oils & fats Beverages & tobacco Chemicals Food & live animals Inedible crude materials3 Machinery & transport equipment Manufactured goodsb Miscellaneous manufactured articles Minerals, fuels & related materials All others —80
—60
—40
—20
0
20
1986 trade balance, $ billions 0 a Except fuels, b Classified by material, c Exports minus imports. Source: Bureau of the Census
April 27, 1987 C&EN
11
News Focus has criticized the adversarial trade provision as written. If it were toughened, the Administration's opposition to it would go up a couple of notches. Several Finance Committee members have said that the committee doesn't want to report out a bill that the Administration can't support. But whether tougher language will be added to the adversarial trade provision on the Senate floor is anybody's guess. There is no guessing, however, about where the chemical industry stands on the two major pieces of trade legislation. Earlier this month, Dexter F. Baker, chairman and chief executive officer of Air Products & Chemicals and head of the Office of the Chemical Industry Trade Adviser (OCITA), told the Senate Finance Committee that OCITA supports S. 490 because "it contains provisions which will offer better opportunities for U.S. industry, including chemicals, to operate worldwide in a climate of fair competition." OCITA, of course, doesn't speak for the entire chemical industry. But because its members include four major industry trade associations, its position comes as close to an industry position as anything can be. Those member associations are the Chemical Manufacturers Association (CMA), National Agricultural Chemicals Association (NACA), Synthetic Organic Chemical Manufacturers Association (SOCMA), and the Society of the Plastics Industry (SPI). Significantly, OCITA also submitted testimony to
the House Ways & Means Committee on H.R. 3. But open support for that bill is conspicuously absent. Baker explains that the main thrust of OCITA's interest in trade legislation is that it keep the market system open and do all that it can to give U.S. industry an opportunity to compete. For the most part, he adds, S. 490 does this. "There is some strong language in the bill, and if I were writing it, I might have written it differently," Baker says. However, he adds that OCITA believes that S. 490 is probably the best piece of trade legislation around, because "its main thrust is the market access thrust." Because the chemical industry is so internationally oriented, it is concerned with all aspects of trade legislation. This includes such subjects as section 201, section 301, antidumping, and countervailing duties. Chemical companies have used these legislative trade remedies in the past and there's no doubt that they will use them again in the future. But, says Myron T. Foveaux, there is only so much the industry can cover with the manpower it has available. Foveaux, who is Baker's chief lieutenant in OCITA and is also CMA's assistant director of government relations, says the industry is concentrating on only a small part of the trade legislation—only those issues that it considers critical. At the top of the list: negotiating authority for the Uruguay round of trade negotiations. Other issues that the chemical industry
How the chemical industry looks at tariff cuts For the U.S. chemical industry, the most important aspect of pending trade legislation is me trade negotiating authority that it gives the Administration to use when the hard bargaining of the Uruguay round of multilateral trade negotiations (MTN) begins. The Uruguay round, the eighth MTN to be held under the auspices of the General Agreement on Tariffs & Trade (GATT), was launched in Punta del Este last fall. The negotiations, however, will be held in Geneva, and probably will stretch over the next four years. The industry's primary concern: that tariff cutting doesn't get out of hand in the Uruguay round. Most chemical trade officials believe that it did in the previous two GATT trade talks (the Kennedy round m 1962-67 and the Tokyo round in 1973-79), Industry leaders are urging that U.S. negotiators whack away at nontariff and investment barriers in an effort to open up new export opportunities for U.S. chemicals. Tariff cuts, they argue, won't do that.
12
April 27, 1987 C&EN
Here's what the chemical industry wants as far as tariffs are concerned: • Emphasis in the Uruguay round should not be on tariff cutting. What cuts are negotiated should be welljustified» modest, and phased in over an "appropriate" time period. • Chemical tariff cuts should be negotiated only on the basis of request lists, rather than by using an across-the-board formula or by automatically eliminating tariffs below certain specified levels. • The U.S. should not offer to reduce or eliminate chemical tariffs in exchange for concessions in nonchemical sectors. • import-sensitive products should be exempted from tariffs. The Office of the Chemical Industry Trade Adviser (OCITA) doesn't put a cap, or upper limit, on the amount that tariffs should be cut. it does, however, want exceptions for import-sensitive products, and it wants these exceptions written specifically into legislation that gives the Administration tariff-negotiating authority. The Synthetic Organic Chemical
Manufacturers Association, which is an OCITA member, agrees that there should be exemptions for import* sensitive products, but goes one step further. It recommends that tariffs be cut no more than 2 5 % of the final Tokyo round tariff levels. OCITA has drafted proposed legislative language that would require the International Trade Commission (ITC) to determine if a negotiated duty reduction on a product will seriously injure domestic producers of "a directly competitive article." It also would pro* hibit the President from cutting the duty on such a product unless he determines that it is in the interest of national security. Then, he would be required to explain why he overrode ITC's determination. OCITA's proposed legislative language limiting the Administration's tariff-cutting authority was written as a possible amendment to either H,R. 3 or S, 490. It could, however, be adopted to amend any other pending trade legislation, or it could be introduced independently.
considers top priority are protection of intellectual property rights, industrial targeting, and imports that threaten national security. The chemical industry's attitude toward the Uruguay round of multilateral trade negotiations (MTN) can be summed up in one sentence: The emphasis should not be on tariff cutting but on efforts to eliminate or reduce significant nontariff barriers to trade. These nontariff barriers, such as import licensing schemes that restrict access to foreign markets, are considered crucial to the long-range competitive position of the industry. The industry is prepared, says Baker, to support tariff reductions, on a product-by-product basis, in return for similar concessions on chemicals. But, he says, "We do not believe that tariff cuts by themselves will provide any opportunity to reduce the large U.S. trade deficit." Tariff cuts, he emphasizes, must be accompanied by enforceable nontariff agreements. The key word here, he says, is "enforceable." OCITA's position on the Uruguay round is simple and straightforward. It believes that U.S. international trade interests should be given priority over foreign policy concerns during the MTN. International politics, other than that which affects national security, should take a back seat to trade policy. GATT's procedures for settling trade disputes must be improved, says OCITA. The improvements must include binding, time-certain requirements for resolving disagreements on issues covered by GATT rules. The best place to start, it says, is to resolve the disputes that already exist and have been placed before GATT. OCITA wants a GATT code on foreign investment practices, an issue that long has been on the chemical industry's priority list. This code, says Baker, should make sure that foreign investors receive the same treatment that national, or domestic, investors do. OCITA also wants the code to eliminate, or substantially reduce, the trade distortions that current foreign investment policies cause. Some countries, for instance, prohibit foreign investment in certain industries, such as chemicals. Others limit the dollar amount or equity percentage that can be owned by foreigners. Still others tack on performance requirements, such as the share of production that must go to exports and what amount of raw materials must be bought locally. U.S. negotiators at the Uruguay round, says OCITA, also must make sure that protection of intellectual property rights is a prominent part of the trade talks. What's more, when the U.S. makes a trade agreement with another country, it should bring into the equation just how effective that country's laws are in protecting the intellectual property of U.S. companies. OCITA has drawn up a hefty list of 15 objectives that U.S. officials should consider in negotiating intellectual property rights at the MTN. OCITA also wants industrial targeting covered in the trade bill and included in the MTN agenda for negotiation. The group endorses the International Trade Commission (ITC) definition of targeting: "coordinated government actions taken to direct productive re-
sources to help domestic producers in selected industries become more competitive." To OCITA, this means government intervention in international trade flows. It wants to see section 301 of the 1974 Trade Act amended to identify targeting as an unfair trade practice. Special consideration should be given to developing countries to help them through their economic problems. If targeting injures a U.S. industry, OCITA says, remedies should be mandatory. And the amount of relief granted to the U.S. industry should be equal to the injury that the targeting caused. The chemical industry, through OCITA, also recommends that legislators strengthen section 232 of the Trade Expansion Act of 1962, which deals with imports that threaten national security. OCITA suggests that petitions for section 232 investigations be reviewed by the Secretary of Commerce and that mandatory deadlines be set for these investigations. How close a final trade bill comes to the chemical industry's trade position remains to be seen. There are just too many uncertainties littering the legislative path that it must follow. Despite the rhetoric about how H.R. 3 has been watered down in the House, one knowledgeable Washington observer is not greatly impressed. "By making the bill less bad than it was before, everybody is saying how good it is." But he thinks that it still is a bad (read protectionist) bill. Last month, U.S. Trade Representative Clayton Yeutter warned the Ways & Means Committee that H.R. 3 would be vetoed because it contained no fewer than nine objectionable provisions. The bill has been amended since then, but probably not enough to change Yeutter's—and the Administration's—opinion of it. Among the provisions in H.R. 3 that rub the Administration the wrong way are the sector-specific provisions on telecommunications and those dealing with the transfer of Presidential authority, workers' rights, and private right of action in dumping law. Some of the provisions that the Administration finds objectionable have been toned down in the cochairmen's mark. But probably not enough to erase the veto threat. Meanwhile, if the Senate bill is really tougher than the House bill, as it has been described, the prospects of getting a trade bill out of Congress become even cloudier. It's all a question of how many objectionable provisions can be weeded out of the bill before it goes to the White House. This much is certain: The trade bill is one that the President does not want to veto. The outcome could boil down to eleventh-hour decisions made in the joint Senate-House conference committee. This has happened before on trade legislation. Washington observers are betting the Administration will wait until the conference committee meets before it starts spending its political chips to fashion a trade bill more to its liking. And the majority of these observers believe the conference committee will squeeze out a bill "clean enough" for the President to sign. "It's not what goes into the conference," they say, "it's what comes out of it." D April 27, 1987 C&EN
13
