Max Baucus

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I yield to the Senator from Nebraska, 4 or 5 minutes?

Mr. BAUCUS. I yield 5 minutes with the recognition there is only 3 minutes left after the 5 minutes are used.

Mr. BAUCUS. Mr. President, I understand that we only have 2\1/2\ minutes.

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 President, I ask unanimous consent the order for the quorum call be rescinded.

Mr. BAUCUS. Mr. President, I want to say a few words about these letters, since many have referred to them as the U.S.-Jordan Agreement has moved through the Congress. First, this exchange of letters should not have been necessary. We should have passed this legislation months ago, without the exchange of letters. Second, the exchange of letters does not change the U.S.-Jordan Agreement one jot. It simply reflects the views of the current Administration and the Government of Jordan. It is not an amendment to the Agreement. Indeed, it is not even binding on future Administrations. Clearly, the number of disputes between our two countries will be few, if any. In the unlikely event we do go to formal dispute settlement, we should avoid resorting to sanctions, whatever the subject of the dispute. The exchange of letters expresses that view. However, if in a particular case a future Administration should decide that sanctions are appropriate, it will be free to act accordingly. Nothing in this exchange of letters changes that. Mr. President, I now would like to read into the Record article 5 of the agreement, pertaining to the environment. 1. The Parties recognize that it is inappropriate to encourage trade by relaxing domestic environmental laws. Accordingly, each Party shall strive to ensure that it does not waive or otherwise derogate from, or offer to waive or otherwise derogate from, such laws as an encouragement for trade with the other Party. 2. Recognizing the right of each Party to establish its own levels of domestic environmental protection and environmental development policies and priorities, and to adopt or modify accordingly its environmental laws, each Party shall strive to ensure that its laws provide for high levels of environmental protection and shall strive to continue to improve those laws. 3. (a) A Party shall not fail to effectively enforce its environmental laws, through a sustained or recurring course of action or inaction, in a manner affecting trade between the Parties, after the date of entry into force of this Agreement. (b) The Parties recognize that each Party retains the right to exercise discretion with respect to investigatory, prosecutorial, regulatory, and compliance matters and to make decisions regarding the allocation of resources to enforcement with respect to other environmental matters determined to have higher priorities. Accordingly, the Parties understand that a Party is in compliance with subparagraph (a) where a course of action or inaction reflects a reasonable exercise of such discretion, or results from a bona fide decision regarding the allocation of resources. 4. for purposes of this Article, ``environmental laws'' mean any statutes or regulations of a Party, or provision thereof, the primary purpose of which is the protection of the environment, or the prevention of a danger to human, animal, or plant life or health, through: (a) the prevention, abatement or control of the release, discharge, or emission of pollutants or environmental contaminants; (b) the control of environmentally hazardous or toxic chemicals, substances, materials and wastes, and the dissemination of information related thereto; or (c) the protection or conservation of wild flora or fauna, including endangered species, their habitat, and specially protected natural areas in the Party's territory, but does not include any statutes or regulations, or provision thereof, directly related to worker safety or health. Again, to summarize, Mr. President, the labor and environmental provisions are somewhat contentious. They are framed in such a way that I think it helps labor and the environment in both the United States and Jordan, and in a way that does not in any way intrude upon American sovereignty. Let me repeat: The simple obligation that the United States and Jordan make reflects a recognition that as the more glaring tariff and non-tariff barriers come down, measures such as labor and environmental standards may have an effect on trade. Measures that may have a trade- distorting effect have been dealt with in past trade agreements. Since a lowering or a suppression of labor and environmental standards may distort trade, these too should be dealt with in trade agreements. The idea here is to encourage countries to protect labor and labor rights and to protect the environment in ways that do not distort trade. The provisions of this agreement do not in any way prevent us from enacting and enforcing the laws and regulations that we decide are appropriate to protect our environment and the health and safety of our workers. For a labor or environmental measure to be challenged under the agreement, it must meet three conditions. I think it is important to re-state what those three conditions are. First, a measure must constitute a sustained or recurring action or inaction. It can't be just a single act by the President or by the Congress. It has to be a sustained or recurring action in order for a labor or environmental provision to be deemed trade distorting. Second, it must affect trade. An environmental action or labor action which may have a significant effect on the United States but does not affect trade is not actionable. Third, it must be beyond the bounds of a reasonable exercise of discretion. There are certainly matters that may slightly distort trade, and may arguably be sustained or recurring. But if the action is within the bounds of a reasonable exercise of discretion by the United States, then no action is permissible. Even if those tests are met, we move to the question of what sort of dispute settlement is provided for in this agreement. In this agreement there is no binding dispute settlement. There is consultation, but that is it. There is no arbitration in this agreement. There is no arbitration panel, no judge, and no tribunal. Rather, under this agreement, if one country thinks each of the three conditions is met, it may request non-binding mediation, and not arbitration. If a mediator finds that an action is inappropriate under this agreement, that finding is non-binding. And the parties will then move toward consultation, trying to work out what seems to make the most sense. Even if the mediator finds against the United States, the United States cannot be forced to follow the recommendation of the mediator. The argument against this provision is that it intrudes upon American sovereignty, that it commits the United States to at least listen to a mediator, and at least consult with Jordan on labor and environmental matters. I think that is not much of an argument against the agreement, because I think we want to encourage labor and environmental standards that are non-trade-distorting between the two countries. Let's say in this case that Jordan implements a labor or environmental action that is trade distorting. Absent the provisions of the agreement, it would be totally within bounds of Jordan to do so. But at least here we would have the opportunity to discuss the matter with Jordan. Consider what would happen if there were no labor or environment provisions in this agreement. In that case, could enact a trade-distorting labor law or an environmental law that hurts American trade and workers, and that hurts our economy, and we would have no recourse whatsoever. I think we want some recourse. The provisions in this agreement allow some recourse, in that both sides obligate themselves not to enact trade- distorting measures on labor and the environment. If one country does, there is at least a process whereby the countries can discuss it. The action by the mediator, if he takes any action, is not binding upon either party. So I think these are very good provisions. I think they are wise, and therefore, the agreement is something our country should approve and the President should sign very quickly. Mr. President, I suggest the absence of a quorum.

Mr. BAUCUS. I am happy to yield.

Mr. BAUCUS. Mr. President, I thank my good friend from North Dakota. He raises a very good point. Clearly, currency fluctuation certainly in the short term distorts trade almost to the magnitude which he suggested, a 30 to 40 percent differential. It is also true that, as imperfect as markets are in the long-term, the relative economic strength of countries tends to reflect the value of a country's currency--not entirely but tends to. There have been times when the dollar is low; there are times when the dollar is high. It is very difficult to write into an agreement how to manage currency fluctuations, extremely difficult, particularly with larger countries such as the United States, Japan, the EU, with a single-currency market. If the United States were to peg exchange rates vis-a-vis those other countries, it would be difficult for those countries to agree. I doubt that they would. Japan tends to like a low yen. It kind of likes the United States having a high dollar. I doubt that Japan would want to address exchange rates in a trade agreement. Could we force them to in a trade agreement? I don't know. It would be difficult. The same applies to the EU. Let's say we were able to peg an exchange rate. Let's say it happened that the countries all agreed. Let's say that one of the country's economies deteriorates, for example, the United States or Japan or some other one. If the currencies are pegged, then it is going to be harder for that country to retain its economic strength, at least with respect to trade. There will be other distortions. It is like a balloon. If we stop natural competitive pressures worldwide from operating through exchange rates, the problem is going to pop up someplace else. I don't know that we have fully thought through where the ``someplace else'' might be in any rational discussion of exchange rates to include an attempt to address that consideration. I might add that, to some degree, this is an external-internal matter. It is much more complicated than what meets the eye. The U.S. Government, in many administrations, tends not to discourage a high dollar policy. Why is that? The reason is because the U.S. Government tends to be worried about inflation, as well as other considerations, in addition to the trade imbalance, the current imbalances. As my friend from North Dakota said--and he is right--trade deficits have been burgeoning, and it is a problem. To say that currency exchange provisions will solve the problem, I think, doesn't quite do it. The U.S. tends to be a country with a favored currency. We are perceived to be strong and to be dynamic, even in the wake of the events in the last several weeks. Investors worldwide tend to like dollars as opposed to other currencies. That tends to drive up the value of the dollar. There are a lot of factors to be considered here. Having said all that, I do agree with the Senator that at least an attempt should be made. We should at least have a more open discussion of these issues. I don't think our Treasury Secretary, or our President, or anybody else of stature in the executive branch, or the Chairman of the Federal Reserve should have an open discussion of these matters, for fear of people misinterpreting what they may be saying. But I do think it is important for the Congress, in the appropriate setting and in the appropriate situation, to begin to examine all the ramifications of exchange rates. It is extremely complicated. In smaller countries we can deal with it, but in larger countries, as in Japan, and with the EU beginning next January, it is going to be difficult.

Mr. BAUCUS. Mr. President, I will let the Senator speak for a few more minutes. Progress is progress. This is the first time the Senator has supported a trade agreement. I know in the future he will support others. I very much appreciate his taking the time to support this agreement. I yield the Senator another couple minutes.

Mr. BAUCUS. I might ask how much time remains on our side?

Mr. BAUCUS. Ten minutes.

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

Mr. BAUCUS. Mr. President, I rise to urge the adoption of H.R. 2603. That is a bill to implement the United States-Jordan Free Trade Agreement. The House passed the bill by a voice vote just before the August recess. The Finance Committee reported a virtually identical bill, also immediately before the August recess. Only two Members dissented when the Finance Committee reported that bill out. I have advocated the approval of this agreement since it was negotiated by the Clinton administration last year. Finally, after a number of hitches, a number of setbacks, the administration and Congress appear poised to give final approval to the United States- Jordan Free Trade Agreement. This implementing bill sends an unmistakable signal of support for an important friend, an important ally in the Middle East. That signal was important when the agreement was signed last October. It is even more important now. Jordan has been a steadfast friend in its support for the United States' efforts to bring peace to the Middle East. We all remember the critical role played by King Hussein a few years ago. King Abdullah has maintained that support. As we all know, Jordan has been steadfast in its support for America in the wake of the terrorist attacks against us. In a September 12 letter to President Bush, the King condemned the attacks and pledged Jordan's support in our fight against terrorism. As he put it, Jordan is committed to work with the United States, ``to ensure that the enemies of peace and freedom do not prevail.'' This is precisely the kind of commitment we now need from our friends and our allies. Accordingly, we should do whatever we can to reinforce Jordan's support. By implementing the free trade agreement, we will do just that. But that is not the only reason we should pass the implementing bill. To put it simply, it is a solid agreement that is not only good for Jordan but it is also good for the United States and good for the world trading system. The agreement itself is closely modeled upon the United States-Israel Free Trade Agreement. It provides for the staged elimination of tariffs and other trade barriers, provides for extensive intellectual property protection, and extends trading rules to new issues such as electronic commerce. The United States-Jordan Free Trade Agreement is truly a 21st century free trade agreement. But I do not just mean it addresses high- technology trade issues. Our free trade agreement with Jordan also demonstrates a commitment to a progressive trade agenda, an agenda that recognizes the links between trade and environmental standards and between trade and labor standards, an agenda that puts these important matters on the same plane as market access, the protection of intellectual property rights, and other matters. Some Senators have criticized the labor and environmental provisions in the Jordan agreement. Let me respond and explain why these provisions are, in fact, positive developments that point the way toward further progress. In the areas of labor and environment, the United States and Jordan have undertaken a straightforward, common-sense obligation. Both countries have strong labor and environmental laws. Recognizing this, both countries agree to effectively enforce their own laws. This simple obligation reflects a recognition that as the more glaring tariff and nontariff barriers come down, measures such as a lowering of labor and environmental standards can have a trade distorting effect as well. Some have charged that the labor and environmental provisions in the Jordan agreement encroach on the sovereignty of the United States. That charge is basically--in fact, it is plainly--wrong. The provisions of the agreement do not in any way prevent us from enacting and enforcing the laws and regulations that we decide are appropriate to protect our environment and the health and safety of our own workers. This is a critical issue, so I want to be specific. For a labor or environmental measure to be challenged under the agreement, it must meet each of three conditions. Remember, this is for a labor or environmental measure to be challenged under the agreement. I will now briefly go over the three conditions that must be met. First, it must constitute a sustained or recurring course of action or inaction--a sustained or recurring course of action or inaction. Second, it must affect trade. It cannot be something that does not affect trade. It must affect trade. Third, it must be beyond the bounds of the reasonable exercise of discretion in such matters. Further, no arbitrator can order the United States to change its practices pursuant to the agreement. Let me repeat that. No arbitrator can order the United States to change its practices pursuant to the agreement. Under the agreement, dispute settlement will be based on nonbinding mediation--not arbitration but nonbinding mediation. That is very important. In other words, even in the unlikely event that the three conditions are met, and a mediator--not an arbitrator--and a mediator finds against the United States, that determination is purely advisory, intended only to guide the parties in resolving any disputes through consultation. To my mind, the approach to labor and environment in the Jordan agreement makes perfect sense. Consider the alternative. Would we really want to enter into a trade agreement with a country intent on weakening enforcement of its labor and environmental laws in order to gain a trade advantage? I don't think so. Yet the opponents of the labor and environmental provisions would permit precisely that result. That is not just bad policy, it is bad environmental policy, it is bad labor policy, and bad trade policy. Indeed, I hope that by including labor and environmental provisions in the Jordan agreement we will set a precedent for future trade agreements. In conclusion, let me stress that getting the United States-Jordan agreement off the ground would be essential even if we were not currently mobilizing support for a global campaign against terrorism. The agreement represents an important expression of American support for a key partner in the Middle East as well as a model of a progressive free trade agreement. I hope the President will sign it immediately so the benefits to both the United States and Jordan can begin to flow. Mr. President, I suggest the absence of a quorum.

Mr. BAUCUS. Mr. President, in order to avoid dead time in the Senate while we are waiting for other Senators to speak, I would like to read into the Record two letters. One by our United States Trade Representative, Ambassador Robert Zoellick, to Jordan's Ambassador to the United States, and the other by Ambassador Muasher to USTR Zoellick. The letters are identical. They were exchanged on July 23 of this year in order to demonstrate common agreement on a critical point. Should any differences arise under the Agreement, my Government will make every effort to resolve them without recourse to formal dispute settlement procedures. In particular, my Government would not expect or intend to apply the Agreement's dispute settlement enforcement procedures to secure its rights under the Agreement in a manner that results in blocking trade. In light of the wide range of our bilateral ties and the spirit of collaboration that characterizes our relations, my government considers that appropriate measures for resolving any differences that may arise regarding the Agreement would be bilateral consultations and other procedures, particularly alternative mechanisms, that will help to secure compliance without recourse to traditional trade sanctions. Mr. President, again, this is an exchange of letters between Ambassador Zoellick and the Ambassador representing Jordan. I ask unanimous consent to have those letters printed in the Record.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to join my colleagues, Senator Bunning in strong support of Amendment 1622. This important provision would prevent military base closures through 2003. In the light of the recent, tragic events, implementing another round of base closures could be a dangerous decision. We are entering a new phase of heightened national security in our great Nation. And President Bush has correctly warned of the continued threat to the security of the United States and its allies from terrorist groups and rogue states. I believe that base closures would not be in our country's best interest any time in the near future. While the defense budget can be increased in a matter of days for increased intelligence efforts or readiness assistance, the same is not true of the force structure or the base structure. Once property is converted to civilian use, as it would be under another round of Base Closures, it is, for all practical purposes, permanently lost as a military asset. I would like to draw attention to Malmstrom Air Force Base in my home State of Montana. After two weeks of rigorous evaluations, the 341st Space Wing's operations, security, maintenance, communications personnel, and equipment were recently given an ``excellent'' overall rating for Combat Capability Assessment. A very high mark! I'd like to congratulate them on a job well done. It would take months or even years to reach this state of effectiveness if we had to start from scratch to re-engage the base. To lose this asset in moments of heightened national security could permanently scar our force capability to respond. While protection of our national security and military readiness is enough of a reason to halt base closures, there are additional concerns to address, as well: first, while reducing spending is the main motivation behind base closures, studies have shown that the additional funds are never realized. The majority of savings comes from reduction of personnel, which is not directly tied to base closures. And reduction of personnel shouldn't be an option given the current circumstances. Second, there is no procedure for selecting which bases are closed. And that is very troubling. ``Military value'' is only the definition currently used and is open to interpretation. A concrete set of criteria must be developed before any further base closures are conducted. Since September 11, we have seen that our economic security is clearly tied to our national security. In order to bring strength to our economy, we must maintain strength in our military. We do not have months or years to wait while our bases are refurnished with military personnel, equipment and missions. If additional bases were closed, we would waste valuable resources as we scrambled to reinstate a base during a time of high security. Now is not the time to limit our military's ability to respond. I urge my colleagues to vote against further base closures and support amendment 1622.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise to urge the Senate to act very swiftly to confirm the nomination of Robert Bonner to be Commissioner of Customs. I remind my colleagues that Customs is one of the first lines of defense we have in our country. They inspect baggage and the goods of people coming into the United States. They help to assure that we are safe by inspecting any item that might threaten our national security and public welfare. They do a good job. Last week's attacks demonstrate how important it is that Customs and all of our agencies have our full support. We must make sure that the agency is as robust as we possibly can. What is the problem? The problem is that the Finance Committee has reported out Mr. Bonner to be Customs Commissioner, and someone on the Senate floor is holding him up. We cannot put him in place because there are a few Senators who for some reason don't want him to be Customs Commissioner. I strongly urge this body to quickly and immediately confirm Robert Bonner to be Commissioner of Customs. He is more than eminently qualified. I cannot think of a more qualified person. He has been a Federal district judge. He has been the head of the DEA. He has an extensive background and experience for the job. I have personally met with him. I have spoken with him. I have asked many questions of him. He is one of those people who--as soon as you sit down and talk with him--you immediately know has it. He is qualified. He is going to do a great job. I guarantee you that he will be terrific. This is the very time that we need him to get on the job. The Acting Commissioner, Mr. Winwood, is doing a great job. I met with him for a good couple of hours last week getting a security briefing on what Customs is doing. He is terrific, too. But he needs help. He very much urged me to do all I could to help the Senate confirm the nomination of Mr. Bonner. I call upon my colleagues. Come on. We are Americans. Let's work together. Let's get the job done. Mr. Bonner is a great man. Let's confirm him so we can get him on the job and so Customs can begin to do the things it wants to do and continue to do in helping protect our country. I also say that part of that is strengthening our Customs Service along the northern border. I am quite concerned. In my State of Montana there are reports of a lot more goods coming across the border-- sometimes, of all places, Glacier National Park because it is unprotected and particularly in the summertime. But there is a lot coming across. It is particularly drugs and illegal substances of all kinds. It is becoming a problem. We need stronger Customs enforcement along the northern border. But to sum up, I plead with my colleagues. Come on. Let's confirm him. He is a good man. I see my good friend from North Dakota on the floor. I think he has some of the same concerns. I yield the floor.

Mr. BAUCUS. Mr. President, if I might, I very much thank my colleague for his statements as well. This Senate, when it is business as usual, probably is not quite as efficient and productive as it could be. I am a firm believer in the basic underpinnings of democracy. We don't want to be too efficient, because as representatives of our people from different parts of the country, there are different aspirations, different hopes, and different points of view. We want a melting pot kind of basis to work together and pass legislation. But this is not the time for business as usual. We have a national crisis. We are virtually at war. There is a lot of talk of unity and of working together. There has been tremendous cooperation in both Houses, by both parties, and at both ends of Pennsylvania Avenue. But on something as vital as this, I just very much hope that whoever the one, or two, or three Senators are who for extraneous, independent, and separate reasons--whatever they may be--are holding up Mr. Bonner, that they will reconsider for the sake of our country, and particularly with an agency as important as this at this time. I yield the floor. I suggest the absence of a quorum.

Mr. BAUCUS

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

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise to address two important international trade issues raised in this bill: trade in conflict diamonds and trade adjustment assistance. I thank Senator Gregg and Senator Durbin for taking on the important issue of so-called ``conflict diamonds.'' As we have all seen reported in the press, the struggle for control of diamond mining areas in Africa by various rebel groups have led to the commission of some terrible atrocities against unarmed civilians. My colleagues Senator Gregg and Senator Durbin have both introduced bills aiming to stem the trade in conflict diamonds. I applaud them for their efforts. The appropriations measure that we are considering today includes language that would implement S. 1084, Senator Durbin's bill to halt U.S. imports of conflict diamonds. Some of the measures used in this legislation to respond to the conflict diamond problem fall within the jurisdiction of the Finance Committee. Therefore, the preferred method for considering this measure would be to hold a hearing and mark up the bill in the Finance Committee. In this case, however, there is a certain urgency to taking action on the issue of conflict diamonds in order to halt the atrocities that continue to take place in Africa and restore the confidence of the diamond-buying public in the United States. In addition, Senator Gregg and Senator Durbin have worked closely with me and with each other to make sure that the substance of this provision is acceptable to all concerned. Based on this close cooperation and the urgency of the issue, I have decided not to raise a jurisdictional objection. I therefore support the inclusion of S. 1084 in the bill before us. I will now say a few brief words about Trade Adjustment Assistance. The TAA program has been on the books since 1962 and has historically received wide bipartisan support. The purpose of the program is to help workers and firms that experience layoffs due to import competition. The portion of the Trade Adjustment Assistance program which assists trade-impacted businesses operates out of the Department of Commerce and its budget is included in the Commerce, Justice, and State appropriations bill. This program helps small- and medium-sized businesses that are facing layoffs due to import competition to get access to technical support and develop business plans that help them adjust to import competition, become more competitive, and maintain or increase employment. The TAA for firms program operates on a shoestring. Historically, the TAA for Firms program creates or preserves one job for every $861 spent. This is a bargain we cannot afford to pass up. In recognition of this program's track record, in every recent year the Senate has attempted to increase funding for this program in the CJS appropriations bill. Last year the amount that passed the Senate was about $24 million. Every year, the number gets reduced in conference. This is very frustrating, but certainly not a reason to give up. This year, however, much to my chagrin, the bill before us does not include any increase in funding for this program over the current level, so there is no basis even to go to conference on this issue. There is no doubt that the current funding level for the Trade Adjustment Assistance for Firms program is sorely inadequate. Every year more firms are certified eligible than there is money to provide even the most modest technical assistance. The result is that many qualified and deserving firms do not get the technical support they need to get back on their feet and keep jobs in their communities. For example, right now in Montana ten companies have 25 approved but unfunded projects for a total shortfall of over $351,000. This includes several companies that have been forced to severely reduce operations due to imports of dumped and subsidized softwood lumber from Canada. The communities where these businesses are located often do not offer many opportunities for alternate employment and it is important that we help companies and communities like these to get back on their feet. In conclusion, Mr. President, I want to express my profound disappointment that we in the Senate have not even made the attempt to provide a more adequate funding level for this valuable program in FY 2002, despite its extremely modest cost and proven benefits. I will certainly work to see that this mistake is not repeated next year. I will also work to see what solutions are available to this continuing problem when we mark up a bill to reauthorize the Trade Adjustment Assistance program this year in the Finance Committee.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, America, sadly, has a new date that will live in infamy for the rest of our lives and generations to come. Today, more than 24 hours after the first terrorist strike that took the lives of countless U.S. civilians, we are only now beginning to realize that we will spend many days, weeks, months and years trying to come to grips with the magnitude of yesterday's attack on our freedom. We are left with searing images of a horror that could not be contained, acts of terrorism that unfolded before our eyes, gripping this Nation and the world in raw and vivid devastation, touching all of us with feelings expressed in public and in private; from panic to helplessness; helplessness to anger; and anger to loss. This morning we stand in this capital as one to condemn these attacks, comfort the victims and their families and commit our full support to bring those responsible to justice. Our heartfelt thoughts and fervent prayers go out to those who have been lost. Our response in the days ahead to the mass murderers who planned and carried out the attack and to any nation or nations that gave them aid must be as decisive as was our steadfast determination to defend our homeland and punish the aggressors in the immediate aftermath of a day that we will remember as one of the worst in American history. The challenge ahead will require strengthening U.S. defenses and intelligence at home in ways consistent with American values. Embassies and military bases must be better defended along with domestic airports and other civilian targets. But this does not mean that we can allow terrorists to alter the fundamental openness of U.S. society or the government's respect for civil liberties. If we do so, they will have won. Some have rightfully declared that yesterday's attacks amount to an all out declaration of war against America. If so, then we will have to make sacrifices by accepting greater inconvenience in public places and perhaps developing and cultivating a heightened sense of awareness common in other free nations that have come to accept terrorist activity as a price for openness and democracy. But above all, a state of war means a national bipartisan commitment to attack and defeat our Nation's enemies. There can be no greater purpose to our foreign and defense policy in the years ahead. This means that we must embark on an unprecedented effort that will take us beyond arresting individual suspects or engaging in isolated attacks as has been done in response to previous incidents such as the attack on U.S. military in the 1996 Khobar towers bombing in Saudi Arabia, or the 1998 bombings of the U.S. embassies in Kenya and Tanzania by Osama bin Laden's network to name a few. In the past, the United States has failed to fully confront those linked to terrorist attacks against Americans. Yesterday, it was made clear that we can no longer afford to do so. The United States must now seek to assemble an international alliance to identify and eliminate all sources of support for the terrorist networks that would wage war on our nation including the identification and destruction of the larger networks behind these attacks. So many have drawn a comparison between September 11 and December 7, 1941. And while there are differences, what President Franklin D. Roosevelt said after Dec. 7 in Pearl Harbor, ``a date which will live in infamy,'' applies to yesterday just as well. ``Always will we remember the character of the onslaught against us,'' Mr. Roosevelt said. ``No matter how long it may take us to overcome this premeditated invasion, the American people in their righteous might will win through to absolute victory. I believe I interpret the will of the Congress and of the people when I assert that we will not only defend ourselves to the uttermost, but will make very certain that this form of treachery shall never endanger us again.'' Yesterday the world changed for every American. What those responsible for these barbaric acts will come to learn is that our resolve has not.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I ask unanimous consent that the Committee on the Judiciary be authorized to meet to conduct a markup on Thursday, September 6, 2001 at 10:00 a.m., in SD226.

Mr. BAUCUS. Mr. President, I ask unanimous consent that the Select Committee on Intelligence be authorized to meet during the session of the Senate on Thursday, September 6, 2001 at 9:30 a.m. to hold a mark- up.

Mr. BAUCUS

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

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise today to discuss the U.S.-Canadian dispute on softwood lumber. Although it might have escaped the attention of many in Washington, the Bush administration announced a critical trade policy decision over the August recess. After considering truck loads of evidence provided by a legion of lawyers, the Department of Commerce once again decided that Canadian provinces giving away timber at a fraction of its value was a subsidy to Canadian lumber production. Specifically, the Commerce Department issued a preliminary finding that these subsidies amounted to 19.3 percent of the value of Canadian lumber. Further, the Commerce Department took the unusual step of declaring critical circumstances, which back dates the duties by 90 days. It did this because it determined Canadian producers were flooding the U.S. market--in an attempt to take advantage of the expiration of the previous U.S.-Canada agreement on this topic. The Commerce Department is due to issue another preliminary finding under another U.S. fair trade law, antidumping law, in the middle of October. I agree with most observers that this will likely result in a substantial increase in the current duty. But I do not rise today to discuss the intricacies of U.S. trade laws. Nor, Mr. President, do I plan to discuss the details of Canadian lumber programs. I have never understood how giving away timber at a fraction of its market value and allowing government-set prices instead of market prices could be anything but a market distortion. But that is a debate that we have had for 20 years and I myself have discussed on the Senate floor at least a dozen times. I see little point in repeating facts that the Commerce Department and independent observers on both sides of the border have long acknowledged. I ask unanimous consent that the forward and executive summary of an excellent analysis of Canadian subsidy programs in British Columbia, prepared by a coalition of Canadian environmental group--``Cutting Subsides, or Subsidized Cutting?'' be printed in the Record after my statement.

Mr. BAUCUS. Instead I want to look to the future. I rise today to offer a true and lasting solution to what has become the world's largest bilateral trade dispute and, by far, the largest fly in the ointment in the U.S.-Canada relationship. Given some political changes on both sides of the border, I believe it is now possible to negotiate a lasting and real agreement on the U.S.-Canada softwood lumber dispute. In 1986, at a similar juncture in a trade case, the U.S. and Canada agreed to resolve the dispute by allowing Canada to collect an export duty--a duty the United States would have otherwise collected. At the same time, Canadian provincial officials agreed to a set of forestry program reforms to eliminate the underlying subsidies. This arrangement broke down when Canada unilaterally--and without explanation--withdrew from the arrangement. But with some adjustments, a similar approach could be pursued to a real solution. The basic concept is simple. Once the final preliminary duty is known, Canada would agree to collect this on its exports and thus gain the revenue that would otherwise go to the U.S. treasury. The antidumping element complicates this understanding, but it could be addressed through a minimum export price or a duty adjustment to account for the dumping. Once the basic export duty rate was set, both sides would agree that the duty would be lowered as Canadian provinces eliminated subsidies. For example, if Canada--or particular provinces--stopped artificially lowering the price of stumpage, the portion of the export duty aimed at offseting stumpage subsidies would be dropped. Unfortunately, evaluating the impact of proposed reforms in Canada's forestry subsidies is a complex task and, sadly, these complexities have been used to hide subsidies and replace old subsidies with new ones. In order to assist the trade negotiators from both countries in evaluating proposals for reform, I propose an ad hoc commission--made up of representatives of the forest industry from both countries, representatives of organized labor from both countries, and representatives of the environmental community form both countries. This panel would evaluate proposals for forestry reform in Canada and provide a non-binding evaluation of the proposed changes to relevant U.S. and Canadian government officials. I feel particularly strong that representatives from the environmental community be included in this group because they are the closest thing to truly independent observers of Canadian forestry practices. In addition to providing a fair and thorough evaluation of proposals for change, this group could be a watchdog against backsliding. And it could provide a forum to discuss cross-border cooperation on sustainable forestry practices, joint positions for international negotiations on trade and forestry issues, and joint approaches to problems, such as protection of endangered species. I believe such non-binding oversight could ensure real progress toward a final and lasting solution to this difficult trade problem. I have read in the Canadian press some statements that Canadian officials--or perhaps the U.S. lawyers that represent them--that Canada should pursue no such deal until after the issue is fully litigated before the World Trade Organization and perhaps the NAFTA. But the central fallacy of this position is that the U.S. would negotiate after it has turned back challenges. And there is no reason to believe that Canada would succeed in such litigation. Despite the rhetoric of some, Canada's record in past complaints is mixed, and U.S. law and practice has been refined to avoid past problems. If challenged, I believe the U.S. actions on softwood lumber will survive international scrutiny. Obviously, Canadian officials will choose whatever strategy they see fit, but such a litigate-at-all-costs strategy would result in the duty being in place for most of a year--at minimum. The bottom line is this: Out-of-court settlements are struck when neither party is certain of the outcome of litigation; no one settles after they have won the final appeal. If the U.S. duties survive Canadian challenges, I would then oppose any effort to settle the dispute along the lines I have laid out. If the U.S. is forced to litigate and succeeds, there will be no domestic support for a settlement, no export duty, and no compromise. A compromise is possible now, not later. Again, I congratulate the Commerce Department--and particularly the hard work of Secretary Don Evans, Undersecretary Grant Aldonas, and Assistant Secretary Faryar Shirzad--for decisive action in this case. Lumber mills and their workers in Montana and across the country have suffered because of Canadian lumber subsidies. I plan to work with the Commerce Department to ensure that the suffering is over so that efficient, environmentally sound U.S. mills can compete on a level playing field--one way or another. Exhibit 1 Cutting Subsidies, or Subsidized Cutting? Report Commissioned by BC Coalition for Sustainable Forestry Solutions, July 12, 2001. Prepared by: Tom L. Green, M.A., Ecological Economist; Lisa Matthaus, MSc, Resource Economist, Sierra Club of BC Foreward (By Dr. Michael M'Gonigle) Textiles, dairy products, newsmagazines, steel, airplanes, fish plants, forest products--throughout the world, subsidies exist for every industry imaginable. Talk of reducing these subsidies dominates for daily news with seemingly endless rounds of bilateral and multilateral trade talks. But despite the hype, and the rhetoric, the topic is rarely treated in the thoughtful manner it deserves. There are, of course, many good reasons for government subsidies. In today's increasingly homogenized mass-market world, it makes sense to protect a nation's ballet and local newspapers. So too it is important to keep the rural base vital by maintaining support for family farms,and even encouraging new organic producers. Indeed, subsidies are most useful in helping fledging industries make inroads against the predatory behaviour of much larger, and often inefficient, older industries. But subsidies are all too frequently destructive and unsustainable. Such subsidies can be the most difficult to undo because they are deeply embedded, hidden from view, and reward the most powerful interests in society. As Tom Green and Lisa Matthaus demonstrate in this paper, such is the case with the BC forest industry. Here is an industry that from its inception to the present day is supported by a raft of subsidies. Once designed as a way to develop the province, many of these subsidies are today almost completely invisible, propping up an industry against all economic and social logic, and determining the potential for good public policy. This paper only addresses this situation in British Columbia, but many of their arguments apply to the industry worldwide. The phrase ``perverse subsidies'' captures the situation admirably, perverse because government is spending money, or not collecting rents in a fashion that undermines economic as well as social (and environmental) interests. Take, for example, the hundreds of millions of dollars that have gone to prop up outdated mills in northern BC. These subsidies seemingly respond to the social need of keeping remote communities afloat. In fact, this money undercuts other, more efficient communities by artificially depressing their markets, while it robs even the host communities of the opportunity to direct that money, and the local industry, into creating new value-added industries that would foster more stable, longer-term, employment. Many subsidies are not so high profile, however. Undoubtedly, the most pernicious subsidy exists in the lax environmental standards that have long existed in BC. This situation permits the industry as a whole to shift a vast array of costs out of its own production processes, and impose them instead on logged out salmon streams, disrupted caribou habitat, and clearcut coastal watersheds. In such cases, the fishing industry, First Nations, and tourism operators pay the costs of this industry. The authors are self-described ``ecological economists.'' To many readers, this will be an unfamiliar phrase. But it signifies a new type of economic analysis, a critically important analysis if society is to weed out our landscape of perverse subsidies. As our common sense tells us, the human economic system is a subset of our natural ecological system. Creating a sustainable future means re-embedding our over- extended economy in the natural world. That challenge is, as the authors makes clear, structural. The forest industry is underpinned by a land tenure system that blankets the province. These long-term tenures artificially depress prices (through lack of market competition) while they discriminate against innovative new entrants (through exclusion from access to timber). Indeed, this is the very sort of state-chartered, state-protected, and bloated industry that, 200 years ago, Adam Smith railed against in his classic text, The Wealth of Nations. Only by taking away their privileged position, Smith argued, could the natural abilities of the citizenry to innovate, and prosper, be set loose. Smith's radical argument applies equally in British Columbia today. Indeed, in a thoughtful addition to the discussion of structural subsidies, the authors turn our attention to the failure to pay due regard to aboriginal entitlements to the resource base. As any economist will explain, market values reflect the existing distribution of wealth between sellers and buyers. In British Columbia today, a whole group of buyers (the forest industry) secures its products well below its potential costs because the seller (the provincial government) excludes another legitimate interest (First Nations) from the bargain. This situation dramatically skews the whole forest products market, drastically reducing the obligations of the corporate sector. The authors have bravely raised the flag on a critical topic for the new Liberal government in British Columbia. This paper is only a beginning, however. Much work remains to be done to ferret out the true costs of an industry that has for too long gotten by without public scrutiny. Despite its avowed commitment to the ``magic of the marketplace'', the new government will quickly find that it is easier to continue with the status quo than to challenge it fully and transparently. Forestry is a powerful industry in BC, its power coming from exactly those subsidies that must now be uncovered, re- examined and withdrawn. Remove the subsidies, and you transform the industry. This is no small task. But the future health of the BC economy, and the sustainability of its endangered ecosystems, depends upon our doing it.

Mr. BAUCUS

Mr. BAUCUS. Mr. President, I rise in support of S. 643, which implements the agreement between the United States and Jordan establishing a Free Trade Area. The legislation passed the Finance Committee and is now on the Senate calendar. Jordan has been one of the few Arab states to actively work with the United States to establish a real and lasting peace in the Middle East. The U.S.-Jordan FTA represents a solid trade agreement as well as a strong signal of support to a valued ally. Although Jordan is not currently a major trading partner of the United States, this agreement should open the door for increased trade and commerce between the U.S. and Jordan. More importantly, it is my sincere hope it will help to bring peace to the region through economic stability. The principal feature of the U.S.-Jordan FTA is the mutual elimination of tariffs within 10 years. Modeled after the U.S.-Israel FTA, it also limits other non-tariff trade barriers and establishes a mechanism for the settlement of disputes. The agreement is also unique. Most notably, it specifically states that each country shall strive to maintain and enforce its respective labor and environmental laws. I recognize that these particular provisions have sparked some debate. However, I see them as historic progress on a vexing issue. Not only have they established a reasonable standard that we should expect from any of our trading partners, they also have catapulted this Congress and this administration into a real dialogue toward defining a new international trade consensus. The Jordan agreement aside, I find it completely reasonable that we should expect our trading partners to maintain their labor and environmental standards. That's simply good business. To weaken such standards solely to gain a trade advantage would undermine a country's credibility--not to mention destabilize the very trade relationship the FTA was intended to benefit. The U.S.-Jordan FTA has been negotiated and signed. The Bush Administration supports it and has no intention or renegotiating a new agreement. The Jordanian Parliament ratified the Agreement last May. Our colleagues in the House have already approved the implementing legislation for the agreement. Jordan's King Abdullah II visits the U.S. next week to urge passage of the agreement. I hope his visit will encourage potential detractors to recognize the importance for swift action and agree not to stand in the way of immediate consideration of this vital legislation. Simply put, this is a good trade agreement. The time is right for the Senate to take up and pass it without amendment.