Jim Kolbe

Mr. KOLBE

Mr. KOLBE. Mr. Speaker, just to correct the record, and I am sure the gentlewoman misspoke, the United States does not have a free trade agreement with China. We have normal trade relations but no free trade agreement with China. Mr. Speaker, I do rise in support of this U.S.-Morocco free trade agreement and thank the gentleman from Illinois for his leadership on this. Today, I am not going to talk about the merits of the agreement. I think there are plenty of them; but instead, I want to point out what I think this agreement means in the context of U.S. policy for the broader Middle East. This agreement would be the second free trade agreement that we would have with a country in the Middle East, and it would be another cornerstone of U.S. free trade efforts in this region. Achieving free trade and integrating this region into the global economy is of critical concern to the United States. Economically, socially, this region faces enormous problems, enormous dilemmas. Inequality in many Middle Eastern countries has grown. It has not diminished in recent decades. Political, economic, and social systems are intertwined and appear closed to those in the outside world. For those who are not already a part of the system, improvement in their lives is only a distant dream. In July 2002, the United Nations Development Program released a report with some discouraging statistics. Middle Eastern regional growth over the last 2 decades has been the lowest in the world except for sub-Saharan Africa. Labor productivity has been on the decline since 1960. 65 million people are illiterate. One of every two women can neither read nor write. Ten million children are not in school. Unemployment has reached 15 percent with many areas experiencing much higher rates. The Middle East cannot be healthy socially or politically so long as its economies are in crisis. The United States has a strong interest in helping to stimulate the economies and promote stability in the region. Now, the U.S.-Morocco free trade agreement cannot by itself solve the deep and widespread economic and social inequalities which permeate this region, but the U.S.-Morocco free trade agreement is a step in helping one country in this region deepen its integration into the world trading system and reach its aspirations for development. Passing this agreement will help this North African country develop and practice a system of the rule of law that will have implications far beyond trade and the commercial sector. I urge my colleagues to support this agreement. It is more than just an agreement. It symbolizes our efforts, the efforts of the United States, to integrate this country and this region in partnership with shared aspirations and expectations. I thank the gentleman for yielding me time.

Mr. KOLBE

Mr. KOLBE. Mr. Chairman, I rise in opposition to H.R. 3574, the Stock Option Accounting Reform Act. This is a highly complex issue with compelling arguments on each side. But after carefully weighing these views, I oppose H.R. 3574 because it is not good public policy nor is it good for investors. H.R. 3574 interferes with the independence of the Financial Accounting Standards Board (FASB) and the financial accounting standard-setting process. Just 2 years ago this body overwhelmingly passed and the President signed into law the Sarbanes-Oxley Act of 2002, which recognized the importance of an independent standard- setting process free of political pressures. H.R. 3574 risks damaging the investor confidence in and the credibility of our capital markets that the Sarbanes-Oxley Act sought to restore. FASB--not Congress--has the expertise to set accounting standards through an independent deliberative process. In the wake of recent corporate scandals we have not interfered with FASB rulemaking; it is not prudent to begin doing it now. FASB's rule will provide greater protections to investors and shareholders. Supporters of H.R. 3574 state that expensing stock options will hurt the economy; I believe the opposite is true. Allowing FASB to promulgate its rule to expense stock options will improve investor confidence and increase investment. It will institute a standardized approach that will help all investors evaluate the effects of stock options upon company earnings on a uniform basis. Even the shareholders of Intel Corporation, one of the companies leading the fight against stock options expensing, passed a resolution calling for employee stock options to be treated as an expense. Apart from the issue of FASB independence, another key question is whether stock options should be accounted for as an expense or as dilution to equity. In the final analysis, I agree with Warren Buffett: since both employer and employee place a value on options granted in lieu of other compensation, they should be treated as an expense. The FASB rule does not prevent companies from using broad-based stock option plans. A company can, and should, as good corporate policy, continue to grant ownership to its employees with stock options. Healthy companies that previously disclosed the intrinsic value of compensatory options in the footnotes of financial statements as currently required should not suffer from a fall in stock price solely as a result of FASB's new rule. Several studies have indicated that, provided there is full disclosure, company stock prices will not be affected by expensing compensatory stock options. Absent from the Sarbanes-Oxley bill was any provision regarding the accounting treatment of stock options. Recognizing the need to address this issue, I was a cosponsor in the 107th Congress of H.R. 5147, the Stock Options Accountability Reform Act, to develop standards of financial accounting and reporting related to the treatment of stock options. The FASB rule accomplishes this objective, and I cannot support Congressional efforts to interfere.

Mr. KOLBE

Mr. KOLBE. Reclaiming my time, Mr. Chairman, I realize they could be coming under State Department, the White House and others that are not funded under this bill; but there are a number from USAID, Treasury, and others that would be funded and could be affected as a result of this. So I just have real concerns about that, and we will try to work that out. Mr. Chairman, I yield back the balance of my time.

Mr. KOLBE. Mr. Chairman, I rise to claim the time in opposition, and I do not rise in opposition to it. I think we all support the promotion of small business. We certainly need to have small enterprises get a fair shot at getting contracts and getting every business opportunity. And one of the things we have been pushing through AID is to do more with small businesses, both here and abroad. The agency says that it has been essentially following the requirements of the proposed amendment now; and since it does simply restate current law, and in the interest of expediting business here in the House, I would accept this amendment and ask that we review it in conference. So I am prepared to vote right now. Mr. Chairman, I yield back the balance of my time.

Mr. KOLBE. Mr. Chairman, I will not even take the 60 seconds. It seems to me there is a lot of misconceptions about this amendment here. Yes, we do welcome observers to our elections. We welcome people coming into this country. We have thousands of them come in every year. We invite them to come. They come under various plans, journalists, politicians, all kinds of people, who look at elections at the local level, at the State level, at the national level at our conventions. I have hosted those people in my district on election day, on primary day, on general election day. We should want those people to come here. What we are talking about is whether we have people come here that have some kind of official capacity to determine the validity of our elections. We have a uniquely, unlike most other countries which have national elections, a National Elections Supervisory Board. Ours are so scattered. Every State has the responsibility for determining the elections. So it would not be possible or not be wise to do that, and that is why this amendment is a very simple amendment that makes sense. Yes, come and observe, but you are not going to be here to determine the validity of the elections.

Mr. KOLBE. Mr. Chairman, I yield myself such time as I may consume; and I will not take 5 minutes, but just want to say that I would have serious concerns about this amendment. I think it is something that we can work with and perhaps solve in conference, but I would have severe heartburn about an amendment that is as arbitrary as this. Let us say we were, for example, to have a major conference, like the Camp David Accords, or what we had in the Sinai a few years ago, where we came very close to a settlement on the peace accords. Obviously, hundreds of people were involved in that. This would arbitrarily limit any of the funding here from being spent to send people to a conference of that nature.

Mr. KOLBE. Mr. Chairman, I rise in opposition to the amendment.

Mr. KOLBE. I yield to the gentleman from New Jersey, briefly.

Mr. KOLBE. Mr. Chairman, I yield 1 minute to the gentleman from Indiana (Mr. Souder). (Mr. SOUDER asked and was given permission to revise and extend his remarks.)

Mr. KOLBE. Reclaiming my time, Mr. Chairman, the gentlewoman is correct in her characterization. Assuming the availability of funds, we will seek to include report language that, at a minimum, would continue the program in Laos at the fiscal year 2004 level; but, if possible, at a higher level of $3 million.

Mr. KOLBE. Mr. Chairman, I yield back the balance of my time.

Mr. KOLBE. I yield to the gentlewoman from Minnesota.

Mr. KOLBE. Mr. Chairman, I claim the time in opposition to the amendment, and I reserve the balance of my time.

Mr. KOLBE. Mr. Chairman, will the gentlewoman yield?

Mr. KOLBE. Mr. Chairman, I yield myself such time as I may consume. Mr. Chairman, I do rise in opposition to this amendment, which would limit the number of U.S. military and contractor personnel in Colombia. While I certainly can and would debate this on policy grounds, let me instead debate it on process, which I think is just as important here. This is an issue, and Members ought to know this, being currently decided in conference by the House and Senate Committee on Armed Services. Permanent law limits the number of U.S. military and contractor personnel in Colombia to 400 each. That was enacted in the fiscal year 2002 foreign operations appropriations bill. The House Committee on Armed Services in their 2005 defense authorization bill included an increase in the number of military personnel to 500 and left the cap of 400 on contractor personnel. The Senate included in their bill an increase in military personnel to 800 and contractor personnel to 600, as the administration requested. Then on the floor of the other body, an amendment to limit these increases failed by a 40 to 58 vote. This Committee was consulted by the administration on the personnel cap increase, and the House leadership decided that the authorizers would take the lead, which I think is appropriate. The number of personnel in Colombia ought to be an issue of authorization. We provide the funds, but they should decide how many personnel may be in that country. While my colleague may say this will allow the United States to get more deeply involved in Colombia, if one looks at the appropriation levels, that is not true. The Andean Counterdrug Initiative is streamlined from last year's $731 million. So a vote in favor of this amendment would put this subcommittee right in the middle of the conference negotiations between the Armed Services Committees. I do not think we should be in that position. Let me say a word on policy. Until recently, the agencies involved were able to work comfortably within the ceilings. The increased pace of implementation for all the programs we support being undertaken by the Uribe Administration offers an opportunity for real progress. The current cap levels have recently come to hurt management efficiency and planning and prevent full implementation of programs. The average number of U.S. military and U.S. civilian contractors has grown as programs have been fully implemented or as new programs have started, such as the anti-kidnapping program started with the supplemental funds we appropriated last year. During 2003, the number of U.S. military varied from 128 to 396; that of civilian contractors from 246 to 400. Requirements in our bill requiring human rights vetting and the prohibition on combat will be maintained. Let me just say, in conclusion, that we have had some significant achievements in our efforts to eradicate coca in Colombia. Cultivation has been reduced by 21 percent in the last year on top of 15 percent in the year 2002. We have reduced potential production of cocaine by over 20 percent. The number of communities that have voluntarily and manually eradicated cocaine is over 8,000 hectares in the year 2003. So these are some of the reasons, but we will hear more in a little bit, why we ought to not support this amendment. I urge my colleagues not to do so. Mr. Chairman, I reserve the balance of my time.

Mr. KOLBE. Let me say I appreciate the gentleman calling this to our attention, and I agree with the importance of this program. I certainly would be happy to work with my friend from California as the bill moves to conference.

Mr. KOLBE. Mr. Chairman, I rise in opposition to the amendment. Mr. Chairman, I yield 1 minute to the gentlewoman from New York (Mrs. Lowey).

Mr. KOLBE. Mr. Chairman, I yield myself such time as I may consume. I thank the gentleman from Oregon (Mr. Blumenauer) for his dedication to environmental issues and raising the funding for the Global Environmental Facility today. As my colleague knows, the bill before the House today is bipartisan, as the gentlewoman has indicated, and of course that means that we do not get everything we want here. Given the priorities of the President, the priorities of both sides of the House, we did cut funding for the Global Environmental Facility by $13 million from the President's request. But we did fund the entire regularly scheduled contribution of $107.5 million to the GEF so that we do not go further into arrears. Just so my colleague understands that the GEF was not the one that was targeted specifically. The International Development Association, or IDA, which we just discussed in the last amendment, the concessional arm of the World Bank was cut $211 million from the administration's request. So I appreciate my colleague raising the issue, and I appreciate his withdrawing the amendment and the bipartisan spirit within which the gentlewoman from New York (Mrs. Lowey) and I have worked during the course of the year, and I thank the gentleman. Mr. Chairman, I reserve the balance of my time.

Mr. KOLBE. Mr. Chairman, I rise in opposition to the amendment and claim the time in opposition. Because I am going to close, unless the gentlewoman from New York wishes to say something on this amendment, I reserve the balance of my time.

Mr. KOLBE. Mr. Chairman, I yield myself such time as I may consume. I do rise in opposition to this amendment. I find it ironic that a few moments ago we had an amendment offered by the gentleman from Minnesota to take money out of IDA and put it into the Millennium Challenge Corporation. Now we are having an amendment to take everything out of the Millennium Challenge Corporation, which suggests to me that maybe the subcommittee is just in the right place here in regards to the amount of the funds that we have. I also find it ironic that the gentleman from Texas, who is a strong fiscal conservative, is offering this amendment. If ever there was anything in foreign assistance that made sense, it is the Millennium Challenge Corporation. I believe that it is the most dramatic departure from the way we have administered and provided foreign assistance since the Marshall Plan at the end of World War II, and I think it has a real opportunity to make a difference in the way that countries approach foreign assistance. In fact, we are already finding that to be the case, that countries that are not on the list of those who are eligible yet for consideration for the Millennium Challenge grants are saying what do we have to do to get on that, what kind of reforms do we have to undertake, and this is exactly what this Millennium Challenge Corporation, which we carried in our bill last year, does. It is different than any other foreign assistance account that we have. It is different for four essential reasons. First, the MCC will act as an incentive for countries to govern justly, to invest in their own people and create the right policy framework for economic growth. In short, it rewards good governance. No other development or economic assistance administered by USAID or the Department of State currently provides that kind of incentive. Second, the MCC will offer up a laser focus on economic growth and poverty reduction. That is unlike current development assistance efforts where the U.S. government and other donors try to do a little bit of everything. Third, the MCC recognizes that successful reforms have to be internally led. As I said a moment ago, this goes to countries where they have made a commitment to rooting out corruption, where they have openness and transparency, where they have a commitment to the rule of law, where they have a commitment to the protection of property rights. So it has to come internally in order to make this work. These are incentive kinds of grants, technical kinds of grants, things that will help the country do exactly what they need in order to have sustainable, long-term economic growth. Fourth, the Congress has given the program the flexibility to meet the needs of the MCC countries as presented by the countries themselves. In other words, it offers countries the prospect of local ownership and accountability for their own development, and that is why I believe this is critically important. The MCC promises to be one of America's best tools to help us address poverty, and I hope we can defeat this amendment. I urge my colleagues to defeat the amendment. Mr. Chairman, I submit for the Record a copy of the letter sent to me by the Board of Directors of the MCC: Millennium Challenge Corporation, Arlington, VA. Hon. Jim Kolbe, Chairman, Subcommittee on Foreign Operations, Committee on Appropriations, House of Representatives, Washington, DC. Dear Mr. Chairman: As the members of the Board of Directors of the Millennium Challenge Corporation, we greatly appreciate your leadership and support for the Millennium Challenge Account (MCA), a key Presidential priority. The President's request will accelerate growth and opportunity for countries that govern justly, invest in their people and encourage economic freedom. We are concerned, however, that the limitations on your Subcommittee's appropriations allocation caused a reduction in MCA levels to $1.25 billion, half of the President's $2.5 billion request. This level of funding may compromise the Corporation's opportunity to commit to full multi-year support to all countries that qualified to compete for MCA assistance this year and could have an impact on the support for countries that may qualify in 2005. For this reason, we would strongly oppose any amendments which would impose additional reductions, and will work with you to achieve the necessary resources for this Presidential foreign assistance initiative. Such amendments could call into question our commitment to support those countries that have taken responsibility for their own development through adoption of sound policies. We look forward to working with you to assure MCA is adequately funded as we proceed with our critical mission in the developing world. Sincerely, Colin L. Powell, Chairman of the Board. John Snow, Vice Chairman of the Board. Robert Zoellick, U.S. Trade Representative. Paul V. Applegarth, CEO, Millennium Challenge Corporation. Andrew S. Natsios, Administrator, U.S. Agency of International Development. Mr. Chairman, I yield back the balance of my time.

Mr. KOLBE. I yield to the gentleman from California.

Mr. KOLBE

Mr. KOLBE. I thank the gentlewoman for yielding. Let me say I share the disappointment that the gentlewoman has that we have been unable to reach a resolution of this issue with regards to the funding and the use of funds by the UNFPA. I feel very strongly, as the gentlewoman does herself, that we should continue to invest in multilateral efforts to improve the health of women and families in the developing world. And that is exactly what the programs of UNFPA go for. I have been a long-time supporter of family planning programs and specifically of the United Nations Family Planning Agency. I feel that the administration's position has hurt our efforts to support valuable life-saving programs. Nonetheless, that is a position that has been taken, and that is the reality of where we are. As we take this bill to conference, however, if there continues to be no resolution of the U.S. contribution to UNFPA, I want the gentlewoman to know I will be happy to work with her in an effort to make sure that the increased resources that would not be available to UNFPA are set aside for bilateral family planning programs.

Mr. KOLBE. Mr. Chairman, I move to strike the last word.

Mr. KOLBE. Mr. Chairman, I reserve a point of order on this amendment, and I claim the time in opposition.

Mr. KOLBE

Mr. KOLBE. Mr. Chairman, I am pleased to yield 4 minutes to the gentleman from Michigan (Mr. Knollenberg), one of the very distinguished members of the subcommittee who has made some very significant contributions to this bill and has been one of our most valuable members through the years.