Max Baucus

Mr. BAUCUS

Mr. BAUCUS. If the Senator will yield, I very much thank the distinguished chairman of the Agriculture Committee. He has put in such long hours to get a good agriculture bill passed and working through the conference. It is above and beyond the call of duty. I thank the Senator very much for his indication of holding a hearing soon in the Agriculture Committee and reporting out a bill that gets disaster assistance to the people in our State.

Mr. BAUCUS. Montana and Idaho and Wyoming are shown on the map in red, which means severe. But also look at parts of Texas, Oklahoma, Kansas, and New Mexico, look at the eastern seaboard, and these yellow areas, which are areas that are strained. We all know that since January--actually, this is dated December 8, 2001, to January 10, 2002--it has been worse. A little intermittent moisture here and there, but it is worse. So I say to my colleagues, I support the conference report to the farm bill. I deeply regret that the other body did not agree to include agricultural disaster assistance in the bill, even though it was adopted in the Senate with 69 votes. I pledge to my people in Montana that I am going to use every ounce of energy at my command to get agricultural disaster assistance legislation passed this year, because our people so desperately need it. I urge my colleagues to sit back and listen and be supportive of what we need so much in our part of the country. I thank the Chair and thank my good friend, the Senator from Iowa.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I would like to take this time to talk in some detail about the Trade Adjustment Assistance Reform Act, the underlying bill. This is a bill which is a renamed version of S. 1209, which was reported out of the Finance Committee last December. It is the first part of a trade package to which the pending motion--actually it is the first part of the substitute underlying the bill. I think it is important to put this bill in context. That is why I want to spend some time reviewing the history of the TAA program, its purpose, and recent proposals for reform, and how those factors are reflected in the bill. I also want to review some important points about what this bill does and does not do. Unfortunately, there is a lot of misinformation out there. I want to clear up some of the inaccuracies that have cropped up about specific parts of the bill. Last, I want to review my efforts to make this a bill with bipartisan appeal. That has been my goal--and, I think, one I share with Senator Daschle and Senator Bingaman--from the beginning. I really believe we have achieved that goal. So I want to touch on how that happened as well. First, I will start with a little history. Trade Adjustment Assistance--what we call TAA--was created in the Trade Expansion Act of 1962 and revised to its current form in the Trade Act of 1974. It was last revised in the 1993 NAFTA Implementation Act, which created a special program for NAFTA-impacted workers. The purpose of the TAA program is to help workers who lose their jobs and firms that face layoffs as a consequence of international trade. In 1962, President Kennedy said. Those injured by . . . trade competition should not be required to bear the full brunt of the impact. There is an obligation [for the Federal Government] to render assistance to those who suffer as a result of national trade policy. When President Kennedy said those words, the United States had a trade surplus. Imports amounted to less than 5 percent of GDP. But the President and a bipartisan majority of the Congress were wise enough to realize that the benefits of increased trade are not evenly distributed. They realized that we, as a government, have an obligation to help those who are displaced by trade policy to get back on their feet. Today, as well all know, there is a huge trade deficit. Imports as a share of GDP have tripled. These facts can lead to only one conclusion--the rationale for having a strong, effective trade adjustment assistance program are even stronger today than they were when the program was created. That is why 66 percent of Americans responding to a recent poll agreed with the following statement: I favor free trade, and I believe that it is necessary for the government to have programs to help workers who lose their jobs. Congress has regularly reauthorized the TAA program--about every 5 years--and always with bipartisan support. It was with that history in mind that Senator Bingaman, Senator Daschle, and I embarked on this current exercise to reauthorize and reform the program. But before turning to the specific provisions of the bill, I want to spend a moment on what the current TAA program does. There are currently three TAA programs: regular TAA for workers, NAFTA-TAA for workers, and TAA for firms. The two worker programs run out of the Department of Labor. They help workers who lose their jobs due to trade to get retrained for new careers. To achieve that goal, TAA provides a very modest level of income support to tide over workers while they retrain. It also pays for training and provides job search and relocation assistance where needed. The TAA for firms program provides technical assistance to mostly small- and medium-sized businesses that face layoffs due to import competition. The program helps firms become more competitive so they can retain and expand employment. People sometimes call TAA the ``Cadillac'' of U.S. displaced worker programs. I find that misleading. It is true that TAA provides more benefits that other U.S. programs for displaced workers. But please remember that no one wants to be in TAA. The prospect of a government check for about $250 a week is not an incentive to linger in this program when you have a mortgage to pay, a family to feed, and medical expenses to pay. I hope we can get past this ``Cadillac'' discussion and get down to the real issues. The TAA program has a 40-year history, and we have learned some things from experience. Over the last few years there has been a growing consensus that it was time to take another look at this program and see how it could work better. In the past 2 years, the GAO has done four very comprehensive studies of every aspect of the TAA program. GAO has noted some problems in the way the program operates and made some concrete recommendations for reform. In addition, the bipartisan Trade Deficit Review Commission has looked at TAA. The Commission included our current USTR, Ambassador Zoellick, as well as Secretary Rumsfeld, former USTR Carla Hills, and others representing a wide range of views. As you probably know, they did not agree on much of anything. But their report contains one unanimous chapter recommending revision and expansion of the TAA program. The GAO and the Trade Deficit Review Commission's recommendations for improving the TAA program include expanding TAA to cover secondary workers and assisting TAA participants with health insurance. Also, they recommend making sure income support lasts as long as training. After all, you need work while you are getting trained. They recommend creating a performance evaluation system to track program outcomes to see if it is working. They recommend providing wage insurance. They recommend assisting trade-impacted communities and assuring adequate funds for training. That is the unanimous recommendation of the Trade Commission. That, in a nutshell, is how this bill began. We didn't start out trying to add as many bells and whistles as possible to this program. We didn't add too much in the expectation of negotiating down later. We simply took the nonpartisan and bipartisan recommendations of the GAO and the Trade Deficit Review Commission and wrote them into statutory language. This is basically what we did along with Senators Daschle and Bingaman. And we tried to do it in a fair and sensible way that would make the program work better and treat all trade-impacted workers equally. Let me take a few minutes now to walk through some of the major provisions of the bill. The first thing this bill does is unify the two TAA programs for workers--regular TAA and NAFTA-TAA. The unified TAA program pretty much adopts the existing NAFTA-TAA rules, which are the more recent. Consolidating these two programs creates a single set of application procedures, eligibility criteria, and training requirements. This makes the program a lot more user friendly for workers and easier for the Department of Labor to run. Unlike current law, the unified program will provide income support for the full length of training. That way workers can finish the training they need instead of dropping out when income support runs out. The Administration supports these changes. The second thing this bill does is extend TAA coverage to workers who lost their jobs when their plants relocate abroad. Right now, these so-called ``shifts in production'' are covered under NAFTA-TAA, but not under regular TAA. That means that if a factory relocates to Mexico or Canada, the displaced American workers are covered. But if the factory relocates to Thailand or Chile, they are not. That is not fair. It is not sensible. This is not a fair or sensible way to run a trade adjustment program. There is no difference between a worker whose job moves to Mexico and one whose job moves to China. Their adjustment needs are exactly the same. The bill cures the unfairness of current law by extending TAA to cover shifts in production to any country. The third thing this bill does is extend TAA coverage to secondary workers. Secondary workers are workers who supply parts to or perform finishing operations on a product produced by another so-called ``primary'' firm. Right now, regular TAA does not cover secondary workers. Think about a case where an auto assembly plant closes because of import competition from Japan or Korea and that forces the nearby plant that supplies tires for the cars to close. All these worker lost their jobs for the same reason. But right now, the auto plant workers get TAA benefits while the workers at the nearby tire plant do not. In 1993, secondary worker coverage was added in NAFTA-TAA. But workers can only get the benefits when the imports are from Mexico or Canada. At that time, it made some sense to extend this coverage for trade between the three countries in the new NAFTA agreement. But now, nearly ten years later, it is time to extend the same benefits to all secondary workers. When we added secondary workers in NAFTA, it was understood that eventually it would only make sense to do it for everyone. Since then, the WTO Uruguay Round agreements have expanded trade with 145 countries, we have granted permanent normal trading relations status to China, and we have entered an FTA with Jordan and a trade agreement with Vietnam. It doesn't make sense anymore to limit these benefits to imports from Mexico and Canada. It is time to apply them across the board. Now there have been a lot of misunderstandings about the secondary worker coverage in this bill. You have probably heard someone say that this is a radical expansion of the concept of secondary workers--that it will sweep in all sorts of people with very tenuous ties to the imports at issue. I have to say that the people making those claims have not read the bill very carefully. The definitions of secondary workers in the bill are based closely on the definitions used in the NAFTA. We have broadened the definition of supplier firms slightly, to catch some people we think are unfairly left out under current law. But other than that, this bill does not change how secondary workers are defined--it just makes secondary worker coverage universal. The fourth thing this bill does is reauthorize the TAA for firms program. This is a jewel of a little program that operates out of the Commerce Department. It has helped small- and medium-sized companies in Montana and nationwide that face layoffs due to import competition. Technical assistance provided under this program helps these firms become more competitive so they can retain and expand employment. The program is very cost effective. It requires the firms being helped to pay a share of the cost of assistance, and it pays the government back in federal and state tax revenues when the firms succeed. The fifth feature of the bill is a new TAA program for communities. Communities that experience mass layoffs due to trade competition are really in a bind. This is especially true in smaller and rural communities, such as we have in Montana. These communities may not have a lot of job opportunities for displaced workers, even with TAA retraining. Indeed, one of the main criticisms of the current TAA program is that it does nothing to make sure there are jobs for workers at the end of the retraining process. There are a number of federal programs out there that might offer some help. They are all over the map--in Commerce, Treasury, Labor, Agriculture, HUD, and the SBA, just to name a few. But these communities have no way to start, no go-to person or resource to guide them through the maze of potential help. And the federal government doesn't make it any easier. There is very little coordination of response among the various agencies. Finally, even if communities can find these Federal resources, most existing programs are not tailored to the special needs of trade-impacted communities. This bill tries to make federal economic assistance work better for trade-impacted distressed communities in a few simple ways. It creates a single office responsibility for coordinating the federal response. And it creates a single point of contact for the community throughout its recovery process. It gives communities the technical assistance they need to develop a strategic plan--basically a roadmap for economic recovery. That helps ensure that Federal resources are being used in the most coordinated and cost-effective way possible. Finally, it makes sure that there are expertise and resources tailored to the special needs of trade-impacted communities. The next real innovation in this bill is the TAA program for farmers, ranchers, and fishermen. Family farmers, ranchers and fishermen are nominally covered by the current TAA programs for workers. But hardly any have participated. They usually can't qualify, because they don't become unemployed in the traditional sense and they often don't qualify for unemployment insurance--two TAA prerequisites. In NAFTA-TAA, there was an attempt to shoe-horn family farmers into the program by waiving some of the eligibility requirements. But even that has not worked to bring trade-impacted farmers into the program. After several decades of trying with little success to squeeze farmers into eligibility rules designed for manufacturing workers it is time to try something new. What this bill does is create a TAA program better tailored to the needs of farmers, ranchers, and fishermen. Basically, the program creates a new trigger for eligibility. Instead of having to show a layoff, the farmer, rancher or fisherman has to show commodity price declines related to imports. The trigger is different, but the program serves the same purposes. It is basically a hybrid of the TAA for workers and TAA for firms programs, using parts of each that make sense for agricultural producers. It assists the farmer, rancher or fisherman to adjust to import competition, to retrain, to obtain technical assistance, and to have access to income support to tide them over during the process. And the income support is capped and is subject to gross income limitations to make sure that the program is not being abused. The last important innovation in this bill deals with health insurance. One common criticism of the existing program is that it does nothing to help workers with health insurance. It is virtually impossible for a worker to pay the mortgage, feed his family, and pay health insurance premiums on $250 a week. The worker faces a terrible choice. He can retrain under TAA in the hope of a better job--but risk going without health insurance for his family for up to two years. Or he can pass up the opportunity to retrain for a better future and take a dead-end job right away to make ends meet. The bipartisan Trade Deficit Review Commission concluded that lack of assistance with health insurance is a significant disincentive to complete TAA training. As I said before, this group unanimously recommended that the Government help workers bridge the insurance gap between old and new jobs. And that is what we have done with this bill. Again, Secretary Rumsfeld, Ambassador Hills, and Ambassador Zoellick agreed to this point. The bill before us today includes a 73-percent advanceable, refundable tax credit for COBRA premiums for workers eligible for TAA benefits. TAA participants who are not eligible for COBRA can use the tax credit to purchase health insurance from various State-sponsored group plans. This issue has been surprisingly controversial. I am not saying that there is only one right way to address this issue. But what has shocked me is the number of voices suggesting that we should do nothing at all; that is, that we not help people, who are displaced on account of trade, with health insurance. That is just not acceptable. I hope we are past that now and headed toward a reasonable compromise and that we can move forward constructively to help people who need health insurance. Now that I have gone over the main parts of the bill, I want to speak a little about the tradition of bipartisanship on trade adjustment assistance. Since its inception, the TAA program has always enjoyed wide bipartisan support. As I said before, a lot of work has gone into making sure this bill is no exception. Before the bill was drafted, we consulted widely with our colleagues on both sides of the aisle. We have continued that outreach throughout the process. I thank again, Senator Bingaman and Senator Daschle for their leadership on this issue. But I also thank Senator Grassley, whose proposal with Senator Conrad for a TAA for farmers program became the core of the farmers and fishermen portions of this bill. And I thank Senator Snowe, who has made some very important contributions to the bill dealing with fishermen, small businesses, and other issues. Her support and cosponsorship are very much appreciated. We have also talked with the administration. They raised some technical and not-so-technical issues, and we have been able to come to understandings on many of them. The administration wanted us to tighten up training waivers, and we did. They wanted us to cap the wage insurance program, and we did. They wanted us to revise TAA's on-the-job training provisions to work more like WIA. We did. They wanted us to clarify the definition of secondary workers and to make sure the Department of Labor has enough time to consider secondary worker petitions. We did that, too. This process of give and take has been healthy. It has been useful. And I think the result is a good, solid, thoughtful bill, one that will make this program more fair, more efficient, and more user friendly. If we want to rebuild the center on trade, improving trade adjustment assistance is critical. It is an integral part. It is a necessary part. I urge all my colleagues to support this provision and support the larger trade package, particularly when we proceed to consider it at a later point either this week or next. I thank the Chair. And I particularly thank my friend from Alaska for his indulgence.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I would like to say a few words about the pending amendment offered by my good friend from North Dakota, Senator Dorgan. It was offered yesterday evening. His amendment calls for greater transparency in dispute settlement under NAFTA chapter 11--that is the so-called investor-State dispute settlement. I think that is a very important objective. I agree that lack of transparency is one of the major flaws in how chapter 11 has operated. It is clear that it makes no sense whatsoever that when the United States is negotiating or companies are negotiating or trying to resolve a dispute with a Canadian company, the proceedings are, in effect, secret, that they are not open to the public. That makes no sense. I might say, too, that the issues in dispute before chapter 11 tribunals clearly implicate essential functions of Government, including protection of the environment. They raise issues concerning public health and safety. I think any body deliberating on such important questions--it is axiomatic; it is a priority--should be open to the public. That is just a given. Moreover, interested parties must be able to convey their views in such a body, as is the case in our judicial process, where an interested party can file a brief, say, an amicus curiae brief, say, with the Supreme Court. Fortunately, this is a matter under which I think there is a growing consensus. I note that last year the United States, Canada, and Mexico adopted an interpretive note that provides for greater transparency in chapter 11 proceedings. The parties agreed, ``to make available to the public in a timely manner all documents submitted to, or issued by, a Chapter eleven tribunal,'' subject to redaction of confidential material. The United States, Canada, and Mexico did agree, in an interpretive note, to provide for greater transparency, at least with respect to making public documents more available. I think this interpretive note is a good start, but it is clear it is only a start. We have far more to do in opening up proceedings. I might say, I raised this issue with European negotiators at the infamous Seattle administerial on trade not so long ago, and I was surprised at the resistance I received, particularly from European negotiators. They did not seem to be automatically agreeing that, yes, that is good for the process. To me, it indicates we are going to have to move further and work a little more aggressively to help accomplish our objective, and that is transparency. For that reason, the Finance Committee bill currently on the floor included in the TPA bill a detailed negotiating objective precisely on this subject. Let me read it. These are the primary negotiating objectives contained in the bill: provide for ensuring that all requests for dispute settlement, and all proceedings, submissions, findings, and decisions in dispute settlement are promptly made public; ensuring that all hearings are open to the public; and establishing a mechanism for acceptance of amicus curiae briefs from businesses, unions, and nongovernmental organizations. It is a huge step, frankly. It is very clear that this is a primary negotiating objective on the part of the U.S. Government. I think we in America sometimes take it for granted that important decisions--that is, judicial decisions, legislative, and executive decisions--are made openly, made in public, with adequate opportunity for all sides to be heard. I think we take that for granted; it is so common in our country. I think the same ought to be true when important Government regulations are being considered in international dispute settlements. I firmly believe the trade bill makes that objective clear. Having said that, I must say I have some concerns about the amendment of my friend from North Dakota. And that is because his amendment would mandate that the President pursue negotiations with Canada and Mexico and require that the Trade Representative certify that the negotiations have been accomplished within 12 months. There is no mandating language in this bill--for good reason. First, it is unconstitutional. The courts will strike it because the legislative branch cannot mandate the executive branch what to do in negotiating agreements. It is unconstitutional. That is No. 1. No. 2, even if it were constitutional, if we mandate in one area, we necessarily give up significantly in other areas. One other area would be the agricultural provisions. We are trying to get Canada, for example, to dismantle its trading commission, the Wheat Board. It is an unfair trade barrier and hurts our American farmers. If you mandate transparency, what will happen? First, the Canadians will say, if you want us to do that, we will ask you to give up someplace else or we will not be as amenable to your suggestion that we give up on the Canadian Wheat Board. It does not make good sense in trying to get good, solid trade agreements. We have avoided using mandates in the bill. Rather, in the tradition of these kinds of measures, we laid out negotiated objectives and agreed to consider implementing legislation under special rules; that is, if the President makes progress in achieving these objectives. I think it should give all Senators some concern that this mandate also requires the President to, in 1 year, certify that the USTR has fulfilled the requirements set forth in this section. I don't know how in the world the President of the United States in 1 year will be able to certify that the mandate called for in this amendment is fully implemented; that is, full transparency. It is just not going to happen. It is unconstitutional anyway because the legislative branch, under the Constitution, cannot mandate to the executive branch what to do in negotiating agreements with other countries. That is an unconstitutional provision. I very much hope my friend from North Dakota will work to modify the amendment. I strongly agree with the intent and the import of what he is trying to do. This puts me in a very difficult position because I do agree with what he is trying to do. But the goal here is to be effective. The goal here is to get the job done. Frankly, I would like to ask the Senator from North Dakota if he would yield for a question; that is, if there is some way we can modify this amendment to make it effective, because the current draft is unconstitutional and also because of the flaws of the mandating approach and the impracticality of getting this accomplished within 1 year. I ask my good friend from North Dakota if he is willing to modify given those flaws?

Mr. BAUCUS. Mr. President, yesterday the Senate began debate on the Trade Act of 2002. This legislation includes three bills reported by the Senate Finance Committee last year: No. 1, an extension of fast track negotiating authority--also known as trade promotion authority; No. 2, an expansion and improvement of the Trade Adjustment Assistance Program and No. 3, the Finance Committee's version of the Andean Trade Preferences Act, or ATPA. As the debate moves forward, I suspect other international trade matters may also appropriately be attached to this bill. The Trade Act of 2002 will be the first major rewrite of international trade legislation in 14 years. If passed, it will be, as the National Journal has said, ``a historic breakthrough.'' Why are we taking up a trade bill? What does this bill--and the expanded trade that will follow--mean for this country? Trade means jobs. Twelve million Americans--one out of every ten workers--depend on exports for their jobs. These are jobs that pay more--thousands of dollars more per year--than jobs unrelated to trade. Trade supports jobs in all sectors. We often think of trade as helping big multi- national companies. In fact, firms with fewer than 20 workers represent two-thirds of American exporters; and U.S. agriculture exports support more than 750,000 jobs. Trade also means choice. It means more affordable products and more variety for American families. It means that hard-earned paychecks go further. In many ways, new trade agreements are like a tax cut for working families. Studies have suggested that the average family of four sees annual benefits of between $1,300 and $2,000 because of the agreements we negotiated in the last decade. And according to a recent University of Michigan study, if we complete the next round of negotiations under the World Trade Organization, it could increase that benefit by as much as $2,500--per family, per year. But trade is about more than simple economics. When we trade with countries, we do not just export corn and cars, we export our ideas, we export our values. We export freedom, in a sense. Trade between nations creates opportunities for both parties--it can help lift countries out of poverty, while strengthening our relationships around the world. I think Adlai Stevenson probably said it best 50 years ago: It is not possible for this nation to be at once politically internationalist and economically isolationist. Look at our agreement with Jordan as one example. It has a relatively small effect on our economy--our trade with Jordan is only about $600 million per year. But it has an important impact on Jordan's economy-- and it has cemented our relationship with a key Middle East ally. Similarly, part of this legislation provides trades benefits to Andean countries. The main benefit of this legislation will be to help move workers out of the illegal drug business, and into legitimate lines of work. It is not going to solve the problem entirely, but it will help. But to do that, they need more access to our market. So that is what's at stake in this debate. Let me turn to the bill itself. The most talked-about provision of this legislation, of course, is the extension of fast track trade negotiating authority to the President. At its core, the fast track grant in this legislation is very similar to the legislation that first granted fast track to President Ford in 1974. I am often asked why we need fast track--and why now? In essence, fast track is a contract between Congress and the administration. It allows the President to negotiate trade agreements with foreign trading partners with a guarantee that Congress will consider agreement as a single package--no amendments and a guarantee of an up-or-down vote by a date certain. In return, the president must pursue a number of negotiating objectives that Congress has outlined in the legislation. And he must make Congress a full partner in these negotiations, fully consulting with Members as the talks proceed. Now make no mistake, fast track is a significant grant of congressional power to the President. But it is excruciatingly difficult to negotiate the best possible multilateral trade agreements unless our trading partners know that Congress will vote on the agreement negotiated. Indeed, it was our experience in the 1970s--when the Europeans refused to negotiate with us after Congress failed to implement an agreement--that led to the creation of fast track. Without fast track, our trading partners learned that they could anticipate one round of negotiations with the President and a second with Congress. The reverse is not true. Other countries, because of their parliamentary forms of government, have a single legislative body where the majority of the legislative body is also the government, so we did not have that problem with them. Fast track also demonstrates that the President and Congress go into negotiations with clearly defined and unified objectives. Again, that is critical. If our trading partners are uncertain that the deal will stick, they won't put their best deal on the table. Is it possible to negotiate some agreements without fast track? It is certainly possible with simple bilateral agreements, as was the case with Jordan. But, while Jordan is a landmark agreement in many areas, it has to be put in context when talking about fast track procedure. The Jordan Agreement, as I noted earlier, was a relatively easy agreement. It involved only two countries and affects a very small amount of trade--roughly $600 million. Major multilateral agreements can affect many more countries and billions in trade. The FTAA is an agreement involving 34 countries; the WTO involves nearly 150. For these agreements, fast track remains a necessity. Even bilateral agreements will go much more smoothly with fast track. In the case of Chile, for example, we are still talking about a much more complex agreement than Jordan. It will affect approximately $6 billion in trade, ten times more than the Jordan Agreement. And improving the chances of agreements like Chile is vital to our economy. Let me give you one example. Canada has already signed free trade agreements with several countries, including Chile. That has an impact on U.S. competitiveness. As a result of the Canada-Chile agreement, Chile eliminated its tariffs on Canadian wheat. U.S. wheat exports to Chile, on the other hand, still face tariffs as high as 30 percent, making Canadian wheat much more attractive to Chilean buyers. We must negotiate these agreements if we are going to compete, and fast track will make it easier. People often note that we don't have fast track for treaties, such as nuclear arms treaties. That is true. And while these treaties are important, they are often less complex in the sense that they don't involve literally thousands of interrelating trade-offs and concessions as trade agreements do. I remember the last arms treaty that came before the Senate. There were two or three annexes in it but not all of the host of other complications involved in trade agreements. But let me turn to the bill itself, and specifically to the negotiating objectives on a number of topics. With regard to agriculture, a topic near and dear to many in this body, and certainly one of my highest priorities--the legislation directs the President to seek new markets for American agricultural products and to continue to work to lower the trade-distorting subsidies of our trading partners. That is vitally important for American agriculture. On a more traditional topic, the legislation also directs the President to continue to negotiate the reduction and elimination of tariffs, while recognizing the sensitivity of tariffs in a few sectors. The United States has already lowered its average tariff rate to about 3 percent. Generally, tariffs are similarly low in major developed countries. In a few important cases, however, such as Japanese tariffs on wood products, and Europe's tariffs on semiconductors, tariffs remain a significant trade barrier. And in many developing countries, tariffs remain at levels that stifle trade, in some cases 100 percent or more. The bill also directs the President to address some of the new issues, such as e-commerce. By acting to negotiate agreements now, before protectionism has taken root, hopefully trade in e-commerce can remain relatively free. Each of these objectives is critically important. However, most of the debate in the other body and in the press has focused not on the important issues I have listed, but on three trouble spots in trade negotiations: No. 1, labor rights and environmental issues in trade agreements; No. 2, protection of the right of the U.S. to promulgate environmental and other regulations in connection with so-called investor-state dispute settlement provisions, commonly know as ``Chapter 11'' provisions; and, No. 3, the integrity of US trade laws. Let me turn to those difficult issues now. First, labor rights and environmental protection issues: These issues have now firmly and irreversibly made their way on to the trade negotiating agenda. They are here. The world has changed. Those who continue to ignore that reality are simply burying their heads in the sand. The appropriate manner to address those issues, however, is not obvious, and it has been the subject of heated debate for more than a decade. The dispute over this issue has kept the Congress deadlocked on fast track for nearly a decade. Fortunately, U.S. trade negotiators have made some important progress. In negotiating a free trade agreement with Jordan, the United States brought labor rights and environmental protection into the core of the trade agreement. Two central approaches were taken on these issues. First, both parties agreed to strive for the labor standards articulated by the International Labor Organization, and for similar improvement in environmental protection. Second, both countries agreed to faithfully enforce their existing environmental and labor laws and not waive them to gain a trade advantage. That is in the agreement. In addition, both parties to the Jordan Agreement agreed to pursue a number of cooperative efforts to improve labor rights and environmental protection. In my opinion, these provisions of the Jordan Agreement provide a concrete demonstration of the way to break the deadlock on labor rights and the environment. Last year, I encouraged some of my colleagues in the other body to pursue Jordan-like provisions as the basic model for a fast track bill. In drafting the fast track legislation, the House New Democrats and Republicans wisely agreed to use those provisions as a model for the language in the fast track legislation. In the Senate bill, we accepted the legislation on this topic and made clear in the report that the legislation fully adopts the Jordan standard on labor and environment matters. Unfortunately, some in the House opposed this language as not going far enough and urged legislation to force compliance with ILO labor standards. I support the ILO, and I believe the Jordan-based approach moves the trading regime in the right direction; that is, looking to the ILO for guidance on appropriate labor standards. With due respect, however, I believe that those who advanced this proposal and those who may later advance it in the Senate debate are simply going too far. The ILO standards are a starting point, but they were not meant to be used in this manner. It may be that through experimentation we can strengthen the linkages between trade agreements and the ILO. Indeed, that is the ultimate goal of this legislation. But trying to accomplish this in one fell swoop will only set back both agreements and the ILO. Quite frankly, whatever the intentions of the authors, proposals like this are likely to be fatal both to fast track and future trade negotiations. Another environment-related issue that has arisen in recent months pertains to investor-state dispute settlement, also known as ``Chapter 11,'' in reference to the provisions of this topic in NAFTA. The genesis of Chapter 11 is the legitimate concern of some U.S. investors that other countries often do not provide adequate protections of their investments. Investors have had many experiences of being poorly treated and having little recourse to air their legitimate concerns. NAFTA's Chapter 11, and similar provisions in other agreements, are designed to address this problem. They define a basic set of investor rights under international law. The concepts are comparable to basic rights under U.S. law. They include the right to just compensation when the government takes your property, and the right to be treated fairly and equitably by the government. Significantly, Chapter 11 provides an alternative to local courts for the adjudication of complaints about a government's actions. Investors are allowed to challenge such actions before special arbitration panels. It is appropriate to pursue such provisions in trade agreements. But investor rights are not the only concern. Unfortunately, some of the complaints brought under chapter 11 have clearly been aimed at stifling legitimate regulations. The challenge by the Canadian company Methanex against a legitimate California regulation on a gasoline additive is the most visible case in point. Defenders of Chapter 11 note that most of these cases have not resulted in panel rulings against regulatory authorities. This is correct. But it is also part of the problem. Chapter 11 panels have demonstrated no ability to rapidly dismiss frivolous cases. This results in extended litigation on claims that should simply be thrown out, such as the Methanex case. These legitimate concerns must also be addressed. The bill before us today attempts to balance the needs of U.S. investors with the legitimate needs of regulatory agencies, and the concerns of environmental and public interest groups. The bill directs trade negotiators to seek provisions that keep Chapter 11-type standards in line with the standards articulated by U.S. courts on similar matters. It urges the creation of a mechanism to rapidly dispose of and deter frivolous cases. And it urges the creation of a unified appellate body to correct legal errors and ensure consistent interpretation of key provisions. I know some would like to go further in striking a new balance on investor-state issues. As the debate proceeds, I look forward to working with them on the issue. But I urge my colleagues to keep in mind there are several legitimate interests that need to be balanced; that if we go too far in one direction, it is going to upset the balance in another. But I very much want to work with Senators who have other amendments on this issue. The second difficult issue within fast track is how we ensure fair trade. After being involved in international trade policy for more than two decades, I am struck by how often the issues that shape congressional thinking on trade are not trade negotiations but rather are the administration's effort to enforce trade laws. Although the point is often lost, the United States is the most open market in the world. That has to be remembered. Our tariffs are quite low, and there are very few nontariff barriers to trade in the United States. There are some, but they are few. We do not wear white hats. We are not totally pure. Other countries do not wear dark hats. They are not Darth Vaders. But it is true the shade of gray of our hat is a lot lighter than the shade of gray of other countries; that is, we are more open compared to other countries. Despite complaints from some of our trading partners, the U.S. market is clearly far more open than that of our major trading partners, such as Japan and Europe--both of which cast stones at the United States from behind titanic barriers of their own to agricultural trade. To keep the playing field relatively equal and battle foreign protectionism in the form of subsidies and dumping--selling at cut- throat prices--the United States and most other developed countries maintain antidumping and countervailing duty laws. Another critical U.S. law is section 201. It aims to give industries that are seriously injured by import surges time to adapt. Section 201 was recently employed to good effect to provide the steel industry with that breathing room, but it has previously been used on a range of other products, from lamb meat to motorcycles. Indeed, that is why Harley-Davidson is doing well today. They were given a breather. Although the exact percentages can vary from year to year, over the last two decades, these laws collectively have applied duties to less than 1 percent of total imports; that is, our trade laws, when enforced, when in action, have applied duties to less than 1 percent of total imports. And they are completely consistent with U.S. obligations under the WTO--a point that must be remembered by all Americans who are a little concerned about some of these actions our Government, I think in most cases, legitimately takes to protect the United States of America because other countries' trade laws and barriers are so heinous by comparison and so unfair to Americans. Yet somehow the United States has lost the public relations war on this topic. Somehow our trading partners and importers have convinced some editorial writers that these laws are protectionist. Nothing could be further from the truth. They are not protectionist. Antidumping and countervailing duty laws combat trading practices that have been condemned for a century. Subsidies and dumping are too frequently used by foreign countries and companies to devastate U.S. industries. Consider the U.S. semiconductor industry in the mid-1980s and the U.S. lumber industry today. Rather than being protectionist, these laws are the remedy to protectionism. That dumping, those subsidies, are trade barriers. They are trade barriers. They are barriers to free trade. So our trade laws are meant to remedy that protectionism, remedy those trade barriers, by knocking down those trade barriers. That is what our trade laws do. It is a very important point for all of us to remember. On a political level, these laws also serve as a guarantee to U.S. industries and U.S. citizens. They say that trade will be fair as well as free, and that temporary relief is available if imports rise to unexpected levels. Without those critical reassurances, I suspect the already sagging public support for free trade would evaporate and new trade agreements would simply become impossible. Our trade laws help us, not hurt us, and help other countries, too. It keeps them honest and keeps them on their toes. To address this issue, the bill takes two important steps: First, it identifies several recent dispute settlement panels under the WTO that have ruled against U.S. trade laws and limited their operation in unreasonable ways. These decisions clearly go beyond the obligations agreed to in the WTO and undermine the credibility of the world trading system. If they are not addressed, I suspect public support for trade will erode further. That is why our concerns regarding these cases are identified at the very outset of the bill as findings and why the administration is directed to develop a strategy to counter or reverse these decisions or lose fast track. This bill also directs negotiators not to negotiate new trade agreements that undermine U.S. trade laws. We cannot do that. I am, frankly, concerned that this administration has already put itself in a position in which U.S. trading partners will push hard to weaken U.S. trade laws in WTO negotiations. We cannot put ourselves in that situation. This issue is serious enough that I carefully weighed whether the benefits of new trade agreements are worth that risk. I went forward only because I believe there are strong majorities in both Houses of Congress to block efforts to weaken U.S. trade laws. I am concerned that additional steps on U.S. trade laws may go too far, but I hope the administration's trade negotiators take careful note of these directions; otherwise, they are headed for conflict with the Congress. Mr. President, that describes the fast-track portions of this bill. They are not perfect. Were it not for the need to address the concerns of Senators on the other side of the aisle, I would have gone further in several areas. There are also provisions I think are unnecessary. That, after all, is the nature of bipartisan compromise. In the end, though, the Finance Committee reported the fast-track bill by a vote of 18 to 3, indicating to me that we are close to finding that balance. One final point, especially for my friends on the left. This is the most progressive fast-track bill that Congress has ever moved to pass, by far. It is a vast improvement over past grants of fast track on many of the issues I have just highlighted. It is not perfect, but it is a good bill. I urge my colleagues not to allow the perfect to become the enemy of the good. When I began my remarks, I noted that many people have asked a simple question: Why a trade bill? Why now? A big part of the reason is that we now have the unique opportunity to expand and approve trade adjustment assistance--not TPA, trade promotion authority, but trade adjustment assistance. Quite frankly, this would be impossible absent fast track. We can only do this in the context of a larger trade bill. So let me turn now to what I view as the most important part of this legislation--and certainly the part I am most proud of--trade adjustment assistance. Trade adjustment assistance, sometimes known as TAA, is a program with a simple but admirable objective: to assist workers injured by imports to adjust and find new jobs. It is that simple. This is an objective I suspect almost all Americans support. TAA was created back in 1962 as part of an effort to implement the results of the so-called Kennedy round agreement to expand world trade. That is its genesis, 1962. President Kennedy and the Congress agreed there were significant benefits to the country as a whole from expanded trade. They also recognized, however, that workers and firms would inevitably lose out to increased import competition. TAA was then created as part of the new social compact that obliged the Nation to attend to the legitimate needs of those who lose from trade as part of the price for enjoying the benefits from increased trade. Unfortunately, we have not always upheld the bargain in pursuing new trade agreements because, over the years, we have failed to provide adequate funding for TAA. We have scaled back some benefits. We have tightened eligibility requirements. We have neglected to recognize the need for expanded training and health care assistance. We have not kept up our part of the deal. This legislation aims to fulfill the bargain struck in 1962. It does not, as some voices have asserted, make TAA more attractive than having a job. That is just not accurate. I think anybody would rather have a job, that is clear. But in the end, TAA recipients must still get by on about $250 per week while receiving retraining for a new job. But it does make several important changes in the TAA program to make it more effective. First, it extends the period for which TAA pays out income support from 52 weeks to 74 weeks. It is extended. This allows TAA recipients to stay in the program long enough to complete training for new jobs. It also remedies a shortcoming in the current program that many observers, including the General Accounting Office, have pointed out. Second, this legislation expands eligibility for TAA benefits to so- called secondary workers. This has been a controversial provision, so I will explain it. Secondary workers are secondary only in the minds of some of the bureaucrats administering TAA. These are workers who have lost their jobs due to imports just as surely as those receiving TAA benefits now, but they have the misfortune of working for a company or a plant that supplies input products to a plant that closed or reduced production because of trade. They are so-called secondary workers. The shortcomings of current law are demonstrated in this example: If an auto plant must close down because of competition from Japanese imports, the workers at that plant would be covered by TAA. That is clear. The workers down the road, however--those who make windshield wipers or tires for the now closed plant--would be secondary workers and not covered. This is simply unjust, and it is why so many, including the GAO and the Trade Deficit Review Commission, which included two members of the Bush Cabinet, have advocated expanding TAA to cover secondary workers. When Congress passed the NAFTA in 1994, President Clinton agreed to expand TAA to secondary workers for imports from NAFTA countries. We also agreed to extend TAA when a U.S. manufacturing plant moves abroad to one of the NAFTA countries. These limited applications demonstrate that both provision on secondary workers and plant shifts are workable. They have been the law and are working. It was the expectation at the time that we passed NAFTA that these provisions would be expanded to all trade. As Mickey Kantor, who was USTR at the time, has said: At the time [that NAFTA was passed] it was everyone's expectation that these programs would be extended to non- NAFTA countries. And that makes sense--workers who lose their jobs because of imports from Europe, for example, are just as deserving of assistance as workers who lose their jobs because of imports from Canada. The legislation before the Senate harmonizes these programs. This is long overdue. Third, this legislation expands benefits for TAA workers. This legislation authorizes $300 million for training workers receiving TAA--nearly tripling the program. The legislation will also extend assistance in obtaining healthcare insurance to TAA recipients. Now, the call for extending healthcare insurance assistance has proven the most controversial aspect of this legislation. But it is important for all Senators to understand that this concept was originally advanced by the bipartisan Trade Deficit Review Commission--a group that had many prominent Republican members, including Ambassador Robert Zoellick, Secretary of Defense Donald Rumsfeld, and former USTR Carla Hills. They recommended health insurance benefits for dislocated workers. I would emphasize that the recommendation for transitional health insurance was supported unanimously by the Commission. In our bill, we have tried to find an appropriate middle ground. For workers who are eligible for COBRA, this bill would provide a 73 percent tax credit for those payments. For workers not eligible for COBRA, this bill would provide a 73 percent tax credit for the purchase of certain State-based group coverage options. The tax credits for both categories of workers would be fully advanceable and refundable. In addition, in recognition of the fact that it may take States some time to get these group-coverage options up and running, we provide interim assistance through the NEG program. Fourth, this legislation also extends TAA programs specifically targeted to family farmers, ranchers, and fishermen. The legislation aims to correct some problems in the current legislation that have kept farmers and fishermen--who are typically self-employed--from benefitting from TAA. The provision on farmers is taken from legislation introduced by Senator Conrad and the ranking member of the Finance Committee, Senator Grassley. The provisions on fishermen were prepared by Senator Snowe, who has contributed immensely to this legislation. Finally, this bill creates what amounts to a pilot program on wage insurance. Wage insurance is essentially an alternative approach to addressing worker adjustment. In essence, wage insurance provides a Government payment to older workers who lose their jobs because of trade and decide to take a lower paying job rather than go through training. The Government payment would run for up to two years and would make up half of the difference between the new wage and the old wage. The concept is that workers may actually be able to adjust more quickly if they move back into the workforce and learn new skills on the job. Experience suggests that the workers that do take a lower paying job are often able to make up much of the difference between the new wage and the old wage as they gain experience. There are those who would like to abandon traditional TAA entirely in favor of wage insurance. If this experiment succeeds, that may be just the course we decide to take in a few years. At this point, however, there are just too many questions to be answered to turn TAA entirely into a wage insurance program. That would not be right. One final point on cost. I should note--we often talk about the vast benefits of trade: more jobs, higher paying jobs, cheaper products. I indicated earlier that the average family of four sees annual benefits in the thousands of dollars. Yet I am sure that some of my colleagues on the other side of the aisle will complain that TAA costs too much. But the reality is, it would cost the average family of four about $12. It is an inexpensive way to build support for trade. All told, this bill amounts to a major expansion and a historic re- tooling of TAA--a step that is long overdue. It attempts to adopt the positive experiences we have had with expanding TAA to secondary workers in the NAFTA, adopt the recommendations of the GAO and the Trade Deficit Review Commission, adopt good ideas from the academic world, and generally turn TAA into a program that truly works. I suspect when we look back on this legislation in 20 years it will be these provisions on TAA, which attempt to fulfill the promise made by President Kennedy nearly 40 years ago, that are found to be truly historically significant. Finally, this legislation also extends and expands the trade preferences given to the Andean countries--Peru, Bolivia, Colombia, and Eduador. The United States had extended these preferences to our friends in Andean America until they expired last year because we wanted to provide the citizens of those countries with an alternative to the illegal drug trade and to shore up our relationship with important allies. In the legislation we are considering today, the Finance Committee chose to expand ATPA to new products, such as textiles and apparel and canned tuna. I know these expansions are controversial, but they are critical to the beneficiary countries. Fighting the war on drugs is an uphill battle for these countries. It is tough. They cannot fight that battle unless legitimate, value-added sectors of their economies are encouraged and developed. This bill expands ATPA in a responsible way. The legislation also creates a petition process to give interested parties a channel for bringing to the administration's attention issues that may warrant limitation of a country's benefits. That could happen. This will ensure that the United States pays adequate attention to other issues in these relationships, such as labor rights and enforcement or arbitral awards. Finally, this legislation includes technical changes from the committee mark, including an exclusion of certain footwear products. Let me end by talking about the importance of trade in my home State of Montana. As in most States, trade plays a critical role in Montana's economy. From 1993 to 2000, Montana's exports grew by 126 percent--nearly double the 68 percent growth in total U.S. exports of goods. We have expanded proportionately faster than has the Nation. According to the U.S. Department of Commerce, nearly 6,000 Montana jobs depend on exports of manufactured goods. And more than 730 companies, mostly small- and medium-sized businesses, export from Montana. Farmers and ranchers are also increasingly dependent on trade and continuing to open foreign markets. One in every three U.S. acres is planted for export--making U.S. farmers 2\1/2\ times more reliant on trade than the rest of the economy. Unfortunately, barriers to U.S. agriculture products remain extremely high. Agriculture tariffs average more than 60 percent worldwide. By comparison, average tariffs on industrial goods are less than 5 percent. Non-tariff trade barriers, like quotas, have all but vanished from trade in manufacturing, but these barriers remain common in agriculture. U.S. agriculture exports have suffered as a result of these barriers. Indeed, because agriculture is the most distorted sector of the global economy, it is also the sector most in need of trade liberalization. Some existing agreements have provided significant improvements. NAFTA--while far from perfect--has resulted in increased agriculture exports to Mexico and Canada. In 1993, the year that NAFTA was passed, Montana's agriculture exports to Mexico totaled $1.2 million. In 2000, that number had increased to nearly $4.7 million. Montana's agriculture exports to Canada have increased even more dramatically--from roughly $12 million in 1993 to $110 million in 2000. The U.S. must make agriculture a priority in future negotiations, and in fact, agriculture is the highest priority for new global trade negotiations under the WTO. Countries have agreed to work toward phasing out all export subsidies; make improvements in market access; and eliminate disguised trade barriers such as in the beef hormones dispute with the Europe Union. These negotiations can only help in leveling the playing field for American farmers and ranchers and open markets overseas since 60 percent of the tariffs are in agriculture and 5 percent are in manufacturing. Trade is clearly important for Montana's farmers, ranchers, and workers. Support for Montana ranchers and small businesses is important for our people. Yet support for trade in Montana--as in the rest of the Nation--I think has faded in recent years. Part of that is because people are more aware of the downside of trade rather than the upside of trade. When workers are laid off as a result of imports, that is highly publicized and widely noticed. Yet few people realize that trade agreements have provided, by some accounts, benefits to families worth thousands of dollars annually. We have not done enough in this country to help those workers displaced because of trade. That is why a comprehensive bill--one that includes both fast track and TAA is so important. This legislation is certainly controversial. As I have noted, fast track alone has proven so divisive that it has been deadlocked in the Congress for most of the decade. I know some of my distinguished colleagues--Senators Byrd and Hollings, for example--have both substantive and procedural concerns. I deeply respect their views, and I value their insight. They are very good people. We disagree, however, about trade. But their concerns are heard. I will address their concerns more fully as this debate continues. In the end, though, it can be said that everybody would like to see changes in this bill, in one direction or the other. But I believe strongly that this legislation represents a sound balance on all fronts. Forty years ago, President Kennedy asked Congress to grant him new trade negotiating authority. It was a much simpler bill, at a time when trade issues were more narrowly defined. But it was still quite controversial, for many of the same reasons that trade remains controversial today. President Kennedy emphasized the importance of trade for our economy, for our workers, and for American leadership. Yet he recognized even then that trade also creates dislocation and that a new program, trade adjustment assistance, was needed to aid workers adversely affected by trade. President John F. Kennedy, urging support for his proposal, said this: At rare moments in the life of this Nation, an opportunity comes along to fashion out of the confusion of current events a clear and bold action to show the world what we stand for. Such an opportunity is before us now. Congress seized that opportunity and passed the Trade Expansion Act of 1962. Today, we too can show the world--and America--what we stand for. Building not only on the vision of President Kennedy, but on the efforts of the Presidents who followed him, we can show the world that America can lead the way in building a new consensus on international trade. We, too, must seize this opportunity.

Mr. BAUCUS. I thank my good friend, but it is just a matter of judgment. It clearly is unconstitutional because Congress cannot mandate to the President telling the President what he must do in negotiating agreements with other countries. That is clearly an unconstitutional mandate of authority. I must say, I doubt this provision will survive in conference for those reasons. I fully understand the Senator. The goal here is to be as effective as we possibly can because the Senator and I agree with the same objective. The objective is full transparency in these proceedings. That is clearly going to be in the public interest. It is going to help Americans and help people all around the world. I thank my good friend and yield the floor.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I commend the Senator from North Dakota who organized the preceding discussion with respect to the high price of drugs and unavailability of prescription drugs. I asked the General Accounting Office to do a study of coverage of prescription drugs in my home State of Montana. The conclusions were for those seniors in our State who are not covered by health insurance, those seniors pay more for prescription drugs than do seniors anyplace else on the face of this Earth. That is more than any other part of the United States and certainly more than people overseas, as has been demonstrated ably by the Senator from North Dakota. The same drug by the same company is less expensive to someone overseas as compared with the United States. This is a critical issue. I thank my friend from North Dakota as well as the Senator from Michigan, Ms. Stabenow, and others.

Mr. BAUCUS

Mr. BAUCUS. Madam President, I ask unanimous consent that privileges of the floor be granted to Shara Aranoff, a fellow with the Senate Finance Committee trade staff, during the duration of the debate on the trade bill.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to respond to a recent recommendation by the Administration to end fixed-rate consolidations of federal student loans in order to address a $1.3 billion shortfall in Pell Grant funds. I fully agree with the President that we need to fund the Pell Grant program. But, as a constituent of mine in Montana recently said, ``It makes no sense to rob Peter to pay Pell.'' Pell Grants are just one of the federal government's efforts to help students afford the rising costs of a college education. Moreover, Pell Grants are only available to low-income students. Importantly, the federal government offers a variety of student aid, often in the form of subsidized or low-interest loans, to extend help to low- and middle-income students and families that don't qualify for Pell Grants. In fact, many Pell Grant recipients must also apply for loans in order to meet their education costs. These loans offer hope to students as they seek the advanced education, exposure to new ideas, and acquisition of new skills they require to secure good paying jobs. We need to be consistent in sending that message of hope to students. In fact, we need to be more vigilant in sending that message in states like Montana, where the average cost of attending a public university has increased by 228 percent for in-state students and 257 percent for non-residents over the past 10 years. Those increases mean larger student loans, larger student debt, and greater student sacrifice. And I am very concerned about the kind of sacrifices Montana students must make to pay back an $18,000 student loan in a state whose average per capita income barely surpasses $20,000. Simply put, we need to do more to help students invest in themselves, not less. Offering a fixed-rate interest on consolidated loans helps students; eliminating that option places additional financial stress on students. Good common sense tells me that we can not close this door on our students.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that the order for the quorum call be rescinded.

Mr. BAUCUS

Mr. BAUCUS. The Senator from Florida asks a reasonable question, but he need not be concerned about the differences between these two sections. The commercial building deduction is constructed as a performance-based incentive for energy efficiency. The bill does not specify which materials should be used because different buildings may require different components to meet efficiency standards. Construction need not adhere to a specific list of energy efficient components.

Mr. BAUCUS. Mr. President, I appreciate the Senator from Iowa's concern and his persistence. However, because the provision is not an energy tax proposal, it is not appropriate for it to be included in this energy bill. But I do want the Senator to know that there is sympathy for the proposal, and I do plan to consider its inclusion on an appropriate measure in the near future. development of high temperature superconductor technologies

Mr. BAUCUS. The Senator from Arizona can count on my support in ensuring that guidance with respect to the finalization of regulations relating to the definition of private activity bonds for public power entities is provided at the earliest opportunity and most certainly in conference. Regarding the ability to allocate private business use to equity, I look forward to working with my colleague to fashion an appropriate remedy for this important issue.

Mr. BAUCUS. The Senator is correct. In fact, the efficiency requirements laid out in this legislation essentially require that building construction include a combination of highly energy efficient property. Energy efficient insulation would almost certainly be included among these components.

Mr. BAUCUS. I thank my friend from West Virginia, and I congratulate him on his leadership on this legislation. I agree that broadband technology is extremely important for this country. It will help ensure that our productivity remains high and that our citizens receive the best services modern telecommunications have to offer. I think some of these services that you have already discussed there today-- telemedicine, distance learning, and videoconferencing, for example-- will be absolutely life altering for many Americans. In rural areas, we will find even more ways to use broadband--televeterinary services, remote monitoring of crops, remote livestock auctions, etc. The fact is that when the underlying broadband infrastructure is there, you can do amazing things with relatively simple equipment--a digital video camera and a computer. And, taking a moment to indulge a point of home-state pride, I want to ask my colleagues if they know where this idea originated? I see my colleague from Montana, and he is smiling. He knows where it came from.

Mr. BAUCUS. Exactly. The State of Montana enacted the first broadband credit in the nation in 1999. It was the brainchild of one of our public utility commissioners, Bob Rowe, and of state senator Mignon Waterman and others in the legislature. It was in effect for only two years, I believe, before being temporarily suspended, along with a number of other tax breaks, due to the State's budget shortfall. But in the short time it was in effect, it had very positive results. I want to quote from an article by Bob Rowe in one of our State newspapers, The Missoulian, in June 2001, in which Bob was describing the effect of the Montana broadband credit: The results are impressive. Dozens of projects were awarded tax credits, most of them in rural Montana--places like Circle, Crow Agency, Superior and Big Timber. Projects included DSL, cable modems, and wireless. They also included projects to provide `redundant' access that is critical to many technology businesses in case service goes out. Now as you might surmise, Circle, Montana is not a very big place. It had 644 people in the last census. None of those communities mentioned in that article has more than 1,600 people. If a broadband credit can help bring broadband to rural communities like those, then it is a worthy piece of legislation. But the problem is, even when the Montana broadband credit is reinstated, it will not be enough to ensure broadband deployment to all communities in a State like Montana, so we will need Federal incentives, too. And that is where measures like the federal broadband credit we are discussing now come in. It is important that we adopt this kind of incentive on a national basis, so that all communities may benefit from it. And along with the incentives that various States may enact, and along with other measures like low-interest loans and grants and so forth, we can really accelerate broadband deployment to all communities in the country. So I applaud the efforts of my friends who have worked so diligently on this bill. I stand with you and am committed to moving this bill this year. The support is clearly there, with 64 cosponsors in the Senate and 193 in the House. There aren't many bills with that much support. So I think the time has come. We need broadband, and we need it now, and I think this bill will help a great deal. We will work together to get it done this year. I want to turn to the Senator from Iowa, my Ranking Member on the Finance Committee. I used to be his Ranking Member when he was Chairman, and now the roles are reversed. But regardless of which of us is sitting in the Chairman's seat, we always confer with one another and work closely together, and I know he cares as much about getting broadband technology out to rural areas as I do. Senator Grassley, do you have any thoughts on this issue?

Mr. BAUCUS. I can confirm for the Senator from Florida that the intention of this provision is to include all those components that would produce levels of energy efficiency sufficient to meet the standard laid out by this amendment.

Mr. BAUCUS

Mr. BAUCUS. The Finance Committee has examined this amendment, and we approve it. I think it is a good idea to encourage greater research into fuel cell development. It is clearly a technology of the future. The sooner we begin, the better. This is a very modest amendment, but it is an important amendment, and I urge the Senate to adopt it. I yield the floor.

Mr. BAUCUS. Madam President, I ask that the Senator from Washington yield.

Mr. BAUCUS. Madam President, on the face of it, everyone would agree, this is to give a stimulus, a boost, to alternative fuels, alternative fuel vehicles, and alternative fuel vehicle infrastructure. About two- thirds of the petroleum we consume today in America is consumed in the transportation sector--cars, trucks, railroads, and so forth. Clearly, we are trying as Americans to wean ourselves a bit from our overreliance on OPEC. That is the whole point of this energy bill. We will not make ourselves completely self-reliant. No one claims that. At least on the margin, we are making a step or two difference to become more energy self-sufficient. Clearly, helping alternative fuel development and alternative fuel vehicle development, alternative fuel vehicle infrastructure development--pumps and so forth--will help. It is also important we not act precipitously, that we act measurably, thoughtfully. Through the very able assistance of my good friend from Arizona, we have worked closely with the Arizona Department of Transportation. Unfortunately, in the State of Arizona, which attempted something similar a year or two ago, there were people who took advantage of the situation to such a degree that it became a bit of an outrage. We don't want to repeat those mistakes. I don't think anyone in this body wants to repeat those mistakes. As the Senator said, our staff spent quite a bit of time talking with the Arizona Department over what problems and recommendations they have so the problems do not recur in the provisions enacted here. As a consequence of those discussions, we have dramatically tightened up this bill regarding credits. They cannot be used in the aftermarket by people who alter vehicles. They cannot be used for vehicles that use conventional fuels. This credit is only available to vehicles dedicated to alternative fuels. We made that clear. I add the primary sponsors of this amendment are Senators who worked hard: Senators Hatch, Rockefeller, Kerry, and Snowe. They are the primary sponsors of this provision. It has the support of both the auto manufacturing industry and the conservation community, the Environmental Defense Fund, the Union of Concerned Scientists support this amendment, NRDC, Ford Motor Company, Lance Auto Manufacturing, and others too numerous to name. The main point is, we are trying to wean ourselves from OPEC. This provision is a step, a start. It helps. We have tailored the amendment based upon the experience in Arizona to help assure this works. It will probably not work as well as many think, and it may work better than some Members think, but we are undertaking a good effort to make this right. I appreciate the concerns of my friend from Arizona. They are legitimate concerns and concerns we all have. We have attempted to address these concerns. I thank the good State of Arizona for helping address these matters. I urge not adopting the amendment that strikes, but to work together to see what works and what doesn't work and change or modify or delete as the case in Arizona. I thank my good friend for helping draw out what is going on in this debate.

Mr. BAUCUS

Mr. BAUCUS. Once again, I would like to state my intention of dealing with the ``5.3-cent problem'' as soon as possible. I look forward to working with these Senators and others as we work to protect the highway trust fund our Nation's source of funding for our surface transportation system. Exhibit 1 Renewable Fuels Association, Washington, DC, March 22, 2002. Hon. James M. Inhofe, Russell Senate Office Building, Washington, DC. Dear Senators Inhofe, Baucus, Smith, Conrad, Grassley, Jeffords, Reid and Daschle: The Renewable Fuels Association (RFA) appreciates your leadership on including a ``Renewable Fuel Standard'' in the Energy Policy Act of 2002 (S. 517). This program will provide significant energy, environmental and economic benefits for the Nation. At the same time, we recognize that an increase in the production and use of renewable fuels, including ethanol, will have an impact on Federal highway excise tax receipts. The RFA does not believe any state should be penalized by the use of renewable fuels. Sound transportation policy and sound energy policy should not be mutually exclusive. Thus, as Congress works to reauthorize highway and transportation funding next year, we wholeheartedly encourage Congress to work towards addressing the issues surrounding the Highway Trust Fund and other transportation trust funds as they relate to ethanol. Much has been made of ethanol's impact on Highway Trust Fund receipts in FY 2003, and at the appropriate time, prior to or during the reauthorization of the Transportation Equity Act for the 21st Century (TEA-21), Public Law 105-178, we look forward to working with the United States Senate, the House of Representatives and the Administration, to create the appropriate program to address the needs of these programs. Additionally, we support transferring the 2.5 cents currently directed to the General Fund for deficit reduction, back to the Highway Trust Fund as is included in the ``Energy Tax Incentives Act of 2002'' (S. 1979), which has been approved by the Senate Finance Committee earlier this year. Transportation funding issues are not simple, and we look forward to working with you on this important issue on a unified front to address the many needs of the transportation, petroleum, and renewable fuels industries. Sincerely, Bob Dinneen, President.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent the order for the quorum call be rescinded.

Mr. BAUCUS. Mr. President, what is the pending business?

Mr. BAUCUS. I thank the Chair.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, the cloture vote has been suspended until 2:30 this afternoon. I think that is very wise. There are a few provisions that various Senators are trying to work out. I hope very much that they are worked out. One of the big provisions is the Finance Committee-passed tax package which I believe members of the Finance Committee believe very much should be part of this bill. The Finance Committee has worked long and hard on tax provisions to help wean America from OPEC. They are not huge incentives, but on the margin they will help a bit. They are divided roughly equally between conservation incentives on the one hand and production incentives on the other. The conservation incentives are renewable energy provisions. For example, they extend and modify what is called the section 45 credit. In addition, the alternative fuels and alternative-fuel vehicles credit is to help America develop automobiles that are much more fuel efficient so we will consume fewer gallons of gasoline for every mile driven. There are a lot of great ideas, whether hybrids or fuel cells, but it is important to give those incentives. There are also some conservation and energy-efficiency incentives for energy efficiency in existing homes, for new home construction, a credit for residential solar, for example, wind, fuel cell properties, a credit for more efficient air-conditioners, water heaters, heat pumps, and the list goes on. That is the conservation side. As I said, it is about half of the total package. The tax incentives for 1 year total about $8 billion and over the life of the bill--that is 10 years--$14 billion. Half of that, as I mentioned, is renewables and conservation. The other half is production incentives. The production incentives are for clean coal technologies. We know we can utilize coal significantly in the future. It makes sense that we use cleaner technologies so that there is less pollution. There are oil and gas conventional incentives as well as some electric industry restructuring incentives. I might say, for our Native Americans on Indian reservations, we have provided accelerated depreciation and wage credit benefits for businesses that are on Indian reservations. This provision was thrashed out in committee. It passed out of the committee unanimously, albeit on a voice vote. I believe that, by and large, most Members of the Senate support--and support strongly--these provisions. They do help, on the margin, wean us a bit from our dependency on OPEC because they provide a little more self-sufficiency and have actual, honest to goodness provisions; that is, the myriad of conservation measures I mentioned. I take my hat off to our leader Senator Daschle, to Senator Reid, and to Senator Lott for trying to figure out ways to put this together so we can finally pass the energy bill. It is an almost impossible situation. You have 100 Senators, each with a different point of view. But as to the Finance Committee provisions, by and large, the President proposed many of them in his proposed energy tax package. Senator Bingaman, chairman of the Energy Committee, has proposed energy tax incentives. Senator Murkowski has proposed energy tax incentives. That is some indication why we in the Finance Committee passed this measure out unanimously. It is bipartisan by definition. It is broad based, but it is not germane, obviously. That is why I hope we can get the agreement in some responsible fashion to take up and pass the Finance Committee package in a posture so it will be included in the bill, that it is not excluded perhaps because cloture is invoked, therefore making the provision not germane. It is a good provision, the Finance Committee package. I think it is also important we pass it because there may be scoping issues in conference. I cannot guarantee 100 percent, just because the House has about $30 billion in tax incentives, that necessarily any provision the Senate has in mind would be within the scope; it may not be. Second, if we do not pass our energy tax incentive package, we will be disadvantaged in negotiating with the House. The House will have passed $33 billion, the Senate zero. One can argue, look at what is in the Finance Committee package, but I can tell you, having worked with the chairman of the Ways and Means Committee in conference many times, I know what he is going to say. I know it is going to give him a leg up. It is going to give him an advantage. And it is going to make it more different for us in the Senate to get provisions we want. Third, that is no way to operate. The Finance Committee has done its business. We had many hearings. We have had a markup. We have debated these issues. We passed out our provision incentives to add, to complement--in fact, supplement--the underlying energy bill. We waited until the rest of the bill was about ready to pass to bring up our package. I think it is only appropriate--in fact, it is for the good of the country, definitely--that these provisions be included. So with great respect I urge all my colleagues, in the next couple hours, to help all of us together, as 100 Senators, figure out a way we can bring up and pass the Finance Committee tax incentives. They are good. They are good for America--half conservation, half production. I think it is basically by and large agreed to. I yield the floor.