The Africa and Caribbean Free Trade Bill overwhelmingly passed both the House
(309-110) and Senate (77-19), and was quickly signed into law by the president. This bill
is the first major trade measure enacted in the US since approval of the Uruguay Round in
1994 that set up the WTO.
Overall the legislation will reduce or eliminate tariffs and quotas on thousands of goods
from 49 African nations that make up a market of 700 million people. It also provides the
23 independent Caribbean Basin countries with trade benefits similar to those Mexico
receives under the NAFTA. The duty-free treatment will remain in effect through
September 30, 2008. It is expected that these agreements will lead to $8 billion in new
sales and 120,000 jobs for the US over the next five years.
However, most of the measure's provisions will not take effect for several months or until
trade officials can determine which countries and products are eligible for the new
privileges. The USTR intends to complete its review and publish a final list of designated
duty-free products by this winter. On the list of consideration are virtually all carbon, alloy
and stainless steel products, including rod, wire and wire products. Comments are being
solicited now, with a public hearing scheduled for September 7.
In making the final decision, USTR will consider the comments received, as well as an
ITC report addressing: 1) the probable economic effect of duty-free treatment on the US
industry making the products and on consumers; and 2) the level of US sensitivity, if any,
to imports of such products from Africa.
As for the specific impacts on the domestic wire-producing industry with respect to
Africa, here are some provisions to consider:
1. Qualifying Countries
Only those countries which "have established, or are making continual progress toward
establishing, a market-based economy that protects private property rights, incorporates
an open rules-based trading system, and minimizes government interference in the
economy through measures such as price controls, subsidies and government ownership
of economic assets," will be considered as eligible for free trade benefits.
These countries must also be committed to the elimination of barriers to US trade and
investment, including the resolution of bilateral trade and investment disputes. If the
President determines that an eligible African country is not making continual progress in
meeting the requirements, then he shall terminate that country as a beneficiary of this
agreement.
2. Articles to Receive Preferential Tariff Treatment
"The President may provide duty-free treatment for any articles manufactured in a
beneficiary sub-Saharan African country if, after receiving the advice of the ITC, the
President determines that this product is not import-sensitive." Articles deemed "import
sensitive" will be excluded from duty-free eligibility. It has been reported that the
Commission considers some steel articles to be import sensitive, although specific
products have not been identified.
3. Increasing US Exports
In order to encourage the export of US goods to these African countries, the ITC "shall
make a special effort to identify US goods which are the best prospects for export;
identify tariff and non-tariff barriers that are preventing or hindering sales of US goods;
and hold discussions with appropriate authorities in Africa with the aim of securing
increased market access for US exporters."
4. Retaliation List
This list includes products of a foreign country that have failed to comply with WTO rules,
and upon which the USTR can impose higher duties. The list could include reciprocal or
similar goods produced by the industries affected by the unfair trade practices.
In another big international trade success, the House of Representatives approved
(237-197) a bill which establishes permanent normal trade relations (PNTR) with China
(HR 4444). Proponents argued that normalizing trade relations with this nation was crucial
to American businesses large and small that want to take advantage of 1.3 billion potential
customers. (80% of the 7600 companies that export to China are small- to medium-sized
businesses.) The number of companies exporting to China doubled in the last five years, and the total will double again in the next
five. China remains one of the fastest growing economies in the world, with five times the
population of the US, and 20% of the total world population.
The approved bill does include a "safeguard" provision which states that the president may
decide that granting relief is "not in the national economic interest if it would have an
adverse impact on the US economy clearly greater than the benefits of such action."
The bill now goes before the Senate. The Majority Leader Trent Lott (R-MS) announced
he would not rush to pass the bill until after the Independence Day recess. Instead, the
Senate will be focusing on pending appropriations bills. The Republican did admit that the
China bill should be passed without amendments to avoid another House vote. If the
Senate completely accepts the House version, the bill would go straight to the president
for his certain signature.
A recent poll showed 63 Senators would vote in favor of the legislation. That margin is
enough to overcome a filibuster and ensure passage of the bill.
On a related note, because PNTR will not go into effect until after China's formal
accession into the WTO, interim normal trade relations would need to be awarded to
China. On June 3rd, the president submitted his recommendation that PNTR be granted
to China for another year. In late June, Representative Dana Rohrabacher (R-CA)
introduced a "resolution of disapproval" that now requires a congressional vote on the
interim approval. The vote will take place this summer.
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