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Environmental Trade Issues
(Released March 1999)


Review Article

The Congressional Research Service (CRS) Issue Briefs: China-U.S. Trade Issues (November 10, 1998) and Trade and the Americas (November 6, 1998) outline the main points regarding the growing U.S. trade imbalance with China and the goal of hemispheric free trade, respectively.

Technical barriers to trade (TBTs) are widely divergent measures that countries use to regulate rnarkets, protect their consumers, and preserve natural resources, but which can also discriminate against imports in favor of domestic products. TBTs in agriculture are measures designed to protect humans, animals, and plants from contaminants, diseases, and pests. In the wake of new trade agreements, the CRS report: Agricultural Exports: Technical Barriers to Trade (October 21, 1997) examines the concerns for agricultural exporters and policymakers regarding TBTs.

Environmental concerns surround many of these recent trade agreements. The last CRS report: NAFTA: Related Environmental Issues and Initiatives (May 9, 1997), reviews NAFTA's environmental provisions and the status of associated agreements.

© Copyright 1999, All Rights Reserved, CSA


CRS Reports

91121: China-U.S. Trade Issues


The growing U.S. trade imbalance with China and the restrictive state of China's trade regime have become of major concern to many U.S. policymakers. Over the past few years, the U.S. trade deficit with China has surged; it rose to nearly $50 billion in 1997 and could top or exceed $60 billion in 1998.

China's trade policies have become a focal point in the annual congressional debate over renewing China's most-favored-nation (MFN) status (re-designated as "normal trade relations" by law on July 22, 1998), along with other non-trade issues, such as human rights. Over the past several years, efforts have been made in Congress to terminate, or attach additional conditions to China's MFN status, although none have succeeded.

The United States has pressed China to improve protection of U.S. intellectual property rights (IPR). Under the threat of trade sanctions, China agreed to improve IPR protection and to expand market access for IPR-related products. For example, China has closed several plants producing pirated products. Despite recent Chinese enforcement efforts, IPR piracy remains a significant problem in China.

The United States has also pressed China to lower its trade barriers. Under an October 1992 agreement, China pledged to reform major aspects of its trade regime by the end of 1997. The U.S. Trade Representative (USTR) has noted that China has implemented some, but not all, aspects of the agreement.

China has made its entry into the World Trade Organization (WTO) a top priority. The United States contends that China needs to substantially reform its trade regime before it is allowed to enter the WTO, while China has argued for more lenient accession terms, which would allow it to gradually phase in reforms over time.

Several economic and trade issues were discussed during the October 1997 U.S.-China summit. Both sides agreed to intensify WTO talks in certain priority areas. In addition, the United States agreed to begin selling nuclear power generating equipment to China, while China agreed to purchase 50 Boeing aircraft.

On June 25, 1998, President Clinton began an 9-day summit visit to China. No major breakthrough on China's WTO membership was reached. However, the two countries agreed to expand cooperation in helping to strengthen the rule of law in China and to further reform its economy.

U.S.-China commercial issues will likely continue to be of major interest to Congress in 1998, especially if the U.S.-China trade imbalance continues to grow. Trade friction could arise over a number of issues. Some Members of Congress have argued that the United States should threaten China with trade sanctions if it fails to take action to reduce its trade barriers. Press reports alleging that the Clinton Administration improperly allowed China to acquire sensitive U.S. missile technology (by allowing China to launch U.S.-made satellites) and supercomputers have lead to congressional legislation which could affect the future level of high technology exports to China. Finally, an interim rule issued by the U.S. Agriculture Department to prohibit untreated solid wood packing materials from China could affect up to half of China's exports to the United States.

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95017: Trade and the Americas


At the Summit of the Americas held in Miami during December 1994, 34 hemispheric leaders agreed to create a "Free Trade Area of the Americas" (FTAA) by 2005. Nearly four years later, at the second Summit of the Americas held April 18-19 in Santiago, Chile, the leaders formally launched the FTAA negotiations, in accordance with the March 1998 Ministerial Declaration of San Jose. The first meeting of nine negotiating committees took place in Miami during September 1998.

The summitry process initiated in Miami has led to on-going Congressional interest and action bearing on three inter-related trade policy issues. The first involves an invitation extended to Chile following the Miami Summit to join the North America Free Trade Area (NAFTA). The second focuses on preferential tariff treatment for countries of the Caribbean and Central America. And the third concerns movement towards an FTAA.

In a separate action following the Miami Summit, the United States, Canada, and Mexico invited Chile to enter into negotiations to accede to NAFTA. Envisioned by the Clinton Administration as the first concrete step towards creation of an FTAA, preliminary negotiations started in July 1995. Chile, however, shortly thereafter suspended the negotiations pending renewal of U.S. "fast-track" negotiating authority. As efforts to pass "fast-track" legislation continue to be unsuccessful, negotiations to allow Chile to accede to NAFTA or to negotiate a free trade agreement with the United States remain on hold. Despite the impasse, the Clinton Administration remains committed to establishing a special economic relationship with Chile, while the battle in Congress over the terms of any fast-track renewal remain the primary constraint on moving in this direction.

A second issue concerns the treatment of the Caribbean and Central American countries that may have been hurt in trade and investment terms as a result of the implementation of NAFTA. Legislation to grant these countries the same treatment Mexico receives under NAFTA was included in the House passed budget reconciliation tax bill (HR 2014) in 1997. No parity measure was included in the Senate passed version and it was dropped in conference. Subsequently, a nearly identical bill (H.R. 2644) was approved by the House Ways and Means Committee on October 9, but rejected by the full House on November 4, 1997. Floor votes on the parity legislation did not occur in 1998.

The third issue involves movement towards hemispheric free trade. While the U.S. and Brazil have different interests, an agreement was reached at a trade ministers meeting in Costa Rica in March 1998 on the principles and objectives that will guide the negotiations. Moreover, at the Second Summit of the Americas, the 34 leaders of the hemisphere agreed to launch the negotiations in September 1998, and to make concrete progress by the year 2000. How the absence of U.S. fast track negotiating authority may affect this timetable remains an issue subject to considerable debate, together with the role of public support for the negotiations. While many supporters in the U.S. and Latin America view hemispheric integration as contributing to greater prosperity throughout the hemisphere, many opponents are concerned that hemispheric free trade will export jobs and lower living standards of many workers.

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97-952: Agricultural Exports: Technical Barriers to Trade


Technical barriers to trade (TBTs) are widely divergent measures that countries use to regulate rnarkets, protect their consumers, and preserve natural resources, but which can also discriminate against imports in favor of domestic products. Most TBTs in agriculture are sanitary and phytosanitary (SPS) measures designed to protect humans, animals, and plants from contaminants, diseases, and pests. In the wake of new trade agreements aimed at reducing tariffs, import quotas, and other trade barriers, TBTs have become more prominent concerns for agricultural exporters and policymakers.

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97-291 NAFTA: Related Environmental Issues and Initiatives


The North American Free Trade Agreement (NAFTA) included several environmental provisions unprecedented for trade agreements. Nonetheless, certain concerns persisted and became the subject of supplemental negotiations. Ultimately, the NAFTA parties agreed to a side accord that includes provisions to address a party's failure to enforce environmental laws. Also, the United States and Mexico established a Border Environment Cooperation Commission and a North American Development Bank to help border communities finance environmental infrastructure. The United States and Mexico also developed a cooperative plan to address a range of border environmental issues; phase two, the Border XXI Program, began in 1996.

In the 105th Congress, one issue involves Chile's potential accession to NAFTA which largely depends on Congress granting the President authority to negotiate trade agreements under fast-track procedures. Other issues concern NAFTA's possible environmental effects, border funding, and the implementation and function of related initiatives. This report briefly reviews NAFTA's environmental provisions and the status of associated agreements. Although systematic analyses of NAFTA's environmental impacts have not yet been done, NAFTA implementing legislation requires the President to report to Congress on NAFTA's effects by July 1, 1997.

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