AWPA Wireline - April 2007

The US and S. Korea reached an agreement just before midnight on April 1st and in time for Congress to consider an FTA before the expiration of TPA at the end of June. Areas of contention included Korea’s auto and rice markets and the status of South Korean goods manufactured in North Korea. The US got what the liberalization in the Korean auto sector that it was seeking, but had to give up its demands on rice. Goods manufactured in N. Korea will not be included in the FTA.

The US-UAE negotiations remain “paused” according to US Commerce Under Secretary for International Trade Frank Lavin. The talks are hung up on US demands for UAE labor market reforms and liberalization of that country’s services sector. The Peru, Colombia, and Panama FTAs are still awaiting Congressional approval.

Doha Update

Pascal Lamy, Director General of the WTO, recently warned that the Doha rounds are at serious risk of failure. “It is do-able, it’s not yet done and we need political traction for a final breakthrough,” Lamy told delegates at a Barcelona retail summit. But he added: “Failure of the round is a scenario which we all need to have in mind. If we are really responsible, given the state of negotiations, we need to consider this scenario.” The talks continued to be deadlocked over agriculture.

On another front, the Government Accountability Office (GAO) recently released a report that assessed the chances for a successful conclusion to the Doha Round of multilateral trade negotiations. The study determined that the future of the round hinges on Congress’ willingness to renew TPA and its choices in the 2007 Farm Bill.

According to the report, agriculture and development are the main issues of contention among World Trade Organization (WTO) members, specifically agricultural tariffs and subsidies and market liberalization. Since agricultural interests have great power and popular support in developed countries, making any concessions on agriculture is proving to be extremely difficult. If the 149 member countries of the WTO are unable to reach a consensus, the round will fail, and the US will most likely continue negotiations on a regional and/or bilateral level. The failure of the Doha round will throw into doubt the utility and future of the WTO.

Senators Prepared to Introduce New China Legislation

In a recent Senate Finance Committee hearing, Ranking Republican Sen. Chuck Grassley (IA) said that he was eager to begin working with Committee Chairman Max Baucus (D-MT) and Senators Schumer (D-NY) and Graham (R-SC) to draft WTO-compliant legislation that would address the practice of currency manipulation, not only in China, but in all countries. He stated that he hoped the legislation would give the Treasury Department power “to respond more forcefully to significant currency imbalances.” Witness Stephen Roach, chief economist at Morgan Stanley, pointed out to the Committee that currency is only part of the equation. China is also competing via cheap labor costs, modern infrastructure, access to advanced technologies, and increased investment in human capital and basic research. Roach addressed the committee members, “You in the Congress need to ask yourselves an important hypothetical question: How would you feel if you got your way on the Chinese currency adjustment but found that after three or four years the pressures bearing down on American workers had only intensified?” Roach said. “As I see it, that’s a very real risk that should not be taken lightly.”

ENVIRONMENTAL

Setback for TRI Reform

Under pressure from Democratic senators, the Bush Administration has modified its proposal to ease public reporting requirements for companies that handle or release toxic chemicals. In exchange for keeping the Toxics Release Inventory (TRI) reporting frequency intact, Sens. Frank Lautenberg (D-NJ) and Robert Menendez (D-NJ) released their hold on the conformation of Bush’s nominee to head the EPA’s Office of Environmental Information Molly O’Neill.

However, other EPA changes to the TRI program remain in place, yet under pressure. Several legislative proposals have already been introduced in response to these other changes to the program. This includes finalizing a proposed increase in thresholds for detailed reporting from 500 pounds to 5,000 pounds per chemical handled by facilities each year. This proposal would also raise the number of facilities eligible to submit a shorter form instead of a full statement on releases.

Sen. Frank Lautenberg (D-NJ) on the Senate side and Reps. Frank Pallone (D-NJ) and Hilda Solis (D-CA) on the House side introduced the bills. Both prevent EPA from changing the reporting frequency and keep the reporting threshold at 500 pounds per chemical.

TRI was originally authored by Lautenberg and passed into law in 1986 as part of the Emergency Planning and Community Right-to-Know Act (EPCRA) after a tragic disaster at a Union Carbide facility in Bhopal, India killed thousands of people. Congress passed EP- CRA to ensure that communities know how much of the most dangerous industrial chemicals are being released into the air, water and the ground. Sen. Lautenberg serves on the Senate Environment and Public Works Committee, and will be pushing hard to get this legislation passed quickly.

Experts say that it is more likely that the measure will be attached as an appropriations amendment that would essentially block EPA from spending any money to finalize, implement or enforce the proposed changes. Another option is to use the Congressional Review Act (CRA) to essentially strike and change the administration’s proposed rule once it is finalized. To pass, a CRA resolution must garner a simple majority in both chambers of Congress and the president’s signature. As with a bill, Congress could override an executive branch veto under CRA.

TRI reporting covers about 650 chemicals that 24,000 facilities release into the air, land and water. EPA estimated the changes would save industry $2 million per year by halving the number of annual reports, and another $7.4 million by not having to report releases under 5,000 pounds, or under 50 pounds for persistent toxics.

OSHA Must Finalize PPE Rule

A United States Court of Appeals ordered the Department of Labor to respond in 30 days to a suit requesting the court to order OSHA to implement a long-delayed standard that would require employers to pay the costs of protective clothing, face shields, gloves and other equipment used by an estimated 20 million workers to protect them from job hazards.

The United Food and Commercial workers and the AFL-CIO sued the Labor Department over an eight-year delay in implementing an Occupational Safety and Health Administration (OSHA) rule requiring employers to pay for personal protective equipment (PPE).

The lawsuit asserts that the Bush Administration’s failure to act is putting workers in danger. By OSHA’s own estimates, 400,000 workers have been injured and 50 have died due to the absence of this rule.

The rule was first announced in 1997 and proposed in 1999 by OSHA after a ruling by the Occupational Safety and Health Review Commission that OSHA’s existing PPE standard could not be interpreted to require employers to pay for protective equipment.

The new rule would not impose any new obligations on employers to provide safety equipment, it simply confirmed OSHA’s longstanding policy that employers, not employees, have the responsibility to pay for it.

In 1999, OSHA promised to issue the final PPE rule in July 2000. But it missed that deadline and has missed every self-imposed deadline since.

Pelosi Says Dems May Consider Tax Hike on Wealthiest

House Speaker Nancy Pelosi (D-CA) said that Democrats might consider hiking taxes on individuals making more than $500,000 per year to raise revenue for such Democratic initiatives as tax credits for college tuition and curtailing the reach of the alternative minimum tax (AMT).

However, in searching for revenue sources to balance the budget, Democrats will first look to collect taxes that are already owed and reducing waste, fraud and abuse. But if those efforts are not enough to close the gap, Democrats will not rule out a tax increase on the wealthiest Americans, Pelosi stated. “It’s an option, it’s not a first resort,” Pelosi added.

Other prominent Democrats have avoided discussions of increasing individual tax rates to balance the budget. House Ways and Means Chairman Charles Rangel (D-NY) said tax code overhaul might be the best way to finance changes in the AMT.

Meanwhile House Majority Leader Steny Hoyer (D-MD) also said it might be possible to scale back the AMT by making changes in the alternative tax system itself, without relying on outside revenue sources.

Inside Washington