The Senate today failed to invoke cloture on a motion to proceed to consideration of S. 2035, the Free Flow of Information Act, i.e., the federal media shield bill. The vote was 51-43 (Roll Call No. 191), mostly partyline vote; Republicans want the Senate to concentrate on expanding energy.

Sens. Schumer and Specter have offered a substitute amendment in place of the original bill. You can read the text in the Congressional Record starting here. Sen. Leahy spoke on the bill yesterday (here), as did Sen. Schumer (here).

AP story.

Self-appointed consumer activist groups have issued a joint release hailing the final conference report on H.R. 4040, the CPSC litigation and regulation expansion bill. The statement has been posted on the USPIRG website here: “Consumer Groups Urge Final Passage of Product Safety Bill”

The talking points are all about toy safety, protecting the children. This obvious political sales job suggests there are many actual provisions in the bill the groups would prefer not to talk about and would rather not be examined in detail. (See this PointofLaw.com post for some substantive objections.)

And in this political world, you can expect the legislation to pass the House today — it’s on the House’s suspension calendar — go the Senate for a probable vote Friday and be signed into law by the President.

So that ends the debate, right? Oh, sure.

From a what-have-you-done-for-me-lately statement by Andy Igrejas, manager of the Pew Charitable Trusts’ Environmental Health campaign:

“That Congress responded to this health threat in lieu of Federal agencies is yet another illustration of the broken regulatory system. A better approach is to require chemical manufacturers to prove their products are safe before exposing consumers to them. The Kid-Safe Chemical Act, introduced in May by Senator Frank Lautenberg (D-N.J.) and Representatives Hilda Solis (D-Calif.) and Henry Waxman (D-Calif.) would do just that by overhauling how the EPA handles the 80,000+ chemicals in consumer products. Phthalates in toys are just the tip of the iceberg.”

Thus, with all its other purposes, the CPSC bill is also a stalking horse for the precautionary principle.  Some people just think Europe is better.

During President Bush’s visit to Lincoln Electric Holding on Tuesday (see below), he noted that company president John Stropki wasn’t in attendance. From the President’s remarks:

I’m sorry John is not with us, he is in Colombia. Isn’t that interesting? He’s in Colombia trying to make sure that Lincoln Welding can sell more products down there. One of the issues that in a time of economic uncertainty — and these are uncertain times, no question about it — they’re uncertain because you’re paying high prices at the gas pump. They’re uncertain because you’re reading the newspapers about the housing issue. They’re uncertain times.

And during uncertain times, we ought to be playing to our strengths, and implementing good common-sense policy. Well, one of our strengths is right here in this company. You’re good at making a product that people want. People want it here in the United States of America, and when people are introduced to it around the world, they want it as well.

So John is down there trying to get new business. The problem is that our government policy relative to a country like Colombia is backwards.

And…

We want our products, like those manufactured right here in Euclid, Ohio, going into that Colombia market without a special tax on it.

And Congress needs to pass that trade bill. It would be good for workers right here in this plant and good for workers all across America. This government ought to be working to make it easier for you to sell products. Because if you sell a product, you got people working here in steady jobs. (Applause.)

WKYC-TV had a nice feature on Lincoln Electric earlier in the month.

President Bush visited Lincoln Electric Holdings in Euclid, Ohio, on Tuesday, to talk about energy and the economy. (White House photo.)

In his remarks, President Bush argued for expanded domestic production AND conservation.

The American people must understand that new technologies make it easier to protect coral reefs, for example, when we drill offshore; that new technologies enable us to explore for oil and gas in ways that was not possible 20 years ago. You can have one platform and directionally drill from that platform. So I signed an executive order that said why don’t we explore for oil and gas offshore. If we’ve got a problem with not having enough oil, let’s go after some oil right here in the United States of America in environmentally friendly ways.

There was an executive order blocking that. I signed an executive order that unblocked it. Now it’s up to the United States Congress to make a decision as to whether or not you’re going to continue to face high gasoline prices at the pump or whether or not the United States ought to send a clear signal to the world: We’re tired of being dependent on oil from overseas, let’s find it right here in the United States of America. (Applause.)

I wish people could see the products you make here. What’s interesting is that not only would we send a clear signal that we’re going to do our part of increasing supply, but there’s also a direct correlation between investment and jobs. How do I know? I just saw a welding machine — actually, I was the guy that punched the button — (laughter) — on the welding machine that is making state of the art pipeline equipment to be able to move natural gas to market. The more active we are here in the United States to find our own oil reserves, the more business companies like yours will get.

So now there’s a double — there’s a dividend: more oil here in the United States, which takes pressure off gasoline prices and continuing good jobs in companies like Lincoln Electric.

The President’s fact sheet is available here.  News coverage:

• Cleveland Plain Dealer Blog: “Bush tries welding, promotes oil exploration, at Lincoln Electric“
• Cleveland Plain Dealer political blog: “Bush uses visit to Northeast Ohio to strong-arm Dems on energy, to fund-raise and to charm“
• Plain Dealer photo gallery: “Pres. Bush visits Northeast Ohio“
• Akron Beacon Journal: “Bush pushes offshore drilling to ease oil woes“
• Euclid News-Herald: “Bush visits Euclid”
   

The conference report for H.R. 4040, the CPSC regulation and litigation expansion bill, is now available here as a 1.8 MB .pdf download.

The bill is listed on the House’s suspension calendar for action today.

So what happened? Well, the proximate cause of the failure was the hang-up on India’s and China’s insistence that they and other developing countries be able to break their WTO tariff bindings if they felt they had to protect themselves against surges of food imports if prices fall.

Why was that such an important issue? Because tariff bindings are one of the pillars of the GATT-WTO system ever since 1947. A binding is an inalterable promise that you will never ever raise tariffs above that bound rate. You exchange concessions with other countries and bargain on rates, and what you end up with is the rate at which you will lock your tariff in.

If the Doha Round had permitted bindings to be violated for some food products, it would have meant loss of market access for existing food exports, but would also have meant that a basic premise of the WTO had been undone – with the inevitability that this undoing would spread.

The issue was so central that it really consumed full attention, a fire so intense that it drew the air out of other issues. Everything else halted. And in the end, the two sides could not agree. Those wanting protection just would not be satisfied with something within the present rules.

But more broadly, there was little meeting of minds here. Pascal Lamy, the Director-General, took a real risk in calling this meeting. He figured if there was any chance of doing a deal this year, the agreement on terms of negotiation had to be done now. If the basketball was going to go through the hoop, there had to be a backboard off which to bounce it – and that was this meeting of ministers.

But, to be trite, it was a bridge too far. Issues just weren’t ready, whether they were in manufactured goods or agriculture. Ministers were being asked to make decisions on matters on which their deputies had been unwilling to agree – and based on my experience, just because you bring in someone with a higher title, that country’s position is not going to change.

On NAMA – Non-Agricultural Market Access – we actually made a little progress. The non-tariff barrier text was so non-controversial that no one even mentioned it. On tariffs, we have known the tariff cutting formula is too weak to open markets for us, so we had to look for deeper cuts in major industrial sectors. The goal here in Geneva was to move Brazil, China, and India away from absolute refusal to even talk about sectorals and to a position where they would at least be willing to enter into beginning to negotiate sectorals.

This was the NAM’s bottom line. I don’t know if, had the Ministerial gotten to that point, we would actually have achieved that objective, but all three of the countries were moving somewhat in that direction. On the other hand, the terms were weakening somewhat, so we don’t know what would have come of this.

Where do we go from here? NAM President Governor Engler has called for a cooling-off period. Everyone must recognize that there is now no way to conclude these negotiations before the end of this Administration. The new Administration needs to come on board and begin looking at this, and there will also be a new EU Commission.

There is no point in picking up where we left off. People need to think about what they really want and what they are willing to give up for it. But we must resist the wags who can’t wait to pronounce this the end of the WTO. Absolutely not. And here I am going to agree with Indian Trade Minister Kamal Nath, who said, “My confidence in the institution of the WTO remains intact, and we will take this up and move forward.”

The World Trade system should actually be viewed the stronger for having just gone through a difficult process of disagreement. It is flexible enough to withstand this, so long as we do not become its enemies and accuse the institution of failure, rather than a failure of some large new countries to realize that it is give and take, not take and take.

The NAM will certainly be looking at ideas on how to move ahead. One excellent idea that perhaps can gather traction is that of an environmental sectoral that would reduce or eliminate tariffs on products meant to help clean the environment. There are other possibilities as well. Since non-tariff barriers were non-controversial, maybe some of those could move ahead – so long as we get away from the idea nothing can happen outside a huge round.

I want to end my last blog from Geneva by saying how proud I am of Amb. Susan Schwab, Presidential Assistant Dan Price, Commerce Under Secretary Padilla, Ambassadors John Veroneau and Peter Allegeier, and the entire U.S. interagency negotiating team. They worked ceaselessly, with little sleep, looking for ways to make this thing work. If anyone could have made it happen, it was them. But even they couldn’t make it work when others just said no.

Thanks for reading these blog posts, and I look forward to coming back to Washington and to home.
NAM’s Man in Geneva
Frank Vargo

For the previous reports from Frank Vargo, NAM’s vice president for international economic affairs, please click here.

The headline was so grim, we had to read the whole article. The Handelsblatt is a German daily newspaper that often partners with the Wall Street Journal. Today’s column from Helmut Hauschild, European correspondent, is headlined,  Das Debakel von Genf, “The Debacle of Geneva.”

Excerpt:

In the long term, however, the Geneva debacle represents a divide of far-reaching consequence. It begins with the reality that the rules of trade will become less transparent. The new norm will be now trade agreements between individual countries, rather than the previously accepted global standard. 

The World Trade Organization will lose its ability to influence and referee disputes. The negative impact on the export economy will manifest itself only gradually, but it will be high. The climate for trade will be markedly more rough than before.

The failure of the WTO talks is at the same time an expression of new complexities. Long gone is the time of a bipolar world economy, in which the United States and Europe set the tone and world trade agreements were then developed accordingly. China and India have taken the stage, powerfully. They represent their own interests, hard as stone, and will support free trade only as far as it benefits them. The former industrial powers will come to rue the day, bitterly. Geneva was just a taste of what’s to come.

 

And that assumes that countries are willing to negotiate bilateral trade agreements. That’s no so clear here in the United States these days.

Full translation follows in the extended section… 

(continue reading…)

Statement from Ambassador Susan C. Schwab, U.S. Trade Representative

“While we made good progress during the past week, it is clear that despite our best efforts we will not be able to reach a breakthrough at this time.

“There should be no question, we made important progress. Even today, 5 of the 7 countries in the leadership group were prepared to accept the Friday proposal by Director General Lamy. We gained insights into what members are prepared to offer on services at the signaling conference this weekend, greater clarity on what a modalities package might look like, and saw a constructive attitude in attempting to solve many other issues that have been preventing progress in the negotiations.

“To ensure that the advances we made this week are not lost, the United States will continue to stand by our current offers, but we maintain that they are still contingent on others coming forward with ambitious offers that will create new market access. So far, that ambition is not evident.

“Regrettably, our negotiations deadlocked on the scope of a safeguard mechanism to remedy surges in imported agricultural products.

“Any safeguard mechanism must distinguish between the legitimate need to address exceptional situations involving sudden and extreme import surges and a mechanism that can be abused.

“In the face of a global food price crisis, we simply could not agree to a result that would raise more barriers to world food trade.

“Certain members sought increased flexibilities that would have allowed them to apply tariffs that, in some cases, would exceed their current WTO bindings. This would have moved the global trading system backwards – exactly contrary to the purposes of a negotiation intended to expand trade and economic growth.

“Throughout these negotiations, the United States has been strongly committed and willing to make the tough choices necessary to achieve an ambitious breakthrough. Since the launch of the Round, we have worked tirelessly, traveling hundreds of thousands of miles, spending countless hours negotiating in good faith, all to sustain the Round and bring together a development outcome that would open new markets and create new trade flows.

“The United States remains committed to demonstrating the leadership necessary to achieve an ambitious result. I look forward to conferring with my counterparts in the coming weeks as we work to achieve that outcome.”

-# # #

Or anything else that offends the globally attuned sensitivities of California’s attorney general. Get in Jerry Brown’s way, you will be sued!

State Attorney General Jerry Brown today warned Siskiyou County officials that they’ll face legal challenges if Nestle doesn’t address global warming in its plans to build a bottling plant in McCloud.

Citing environmental and global warming concerns in a letter to the Siskiyou County planning department, Brown said that Nestle Waters North America needs to revise its contract with the county to bottle water, even though the firm recently announced it would downsize its original plans.

“It takes massive quantities of oil to produce plastic water bottles and to ship them in diesel trucks across the United States,” Brown said in a statement. “Nestle will face swift legal challenge if it does not fully evaluate the environmental impact of diverting millions of gallons of spring water from the McCloud River into billions of plastic water bottles.”

So you can see where business might be leery of expanded authority for attorneys general in legislation, like, oh, the new CPSC bill.

Updated and bumped to the top.

From a statement from NAM President and CEO John Engler:

I regret to say that, despite incredible efforts on the part of U.S. Trade Representative Susan Schwab, Assistant to the President Dan Price and the entire U.S. negotiating team, WTO members declined to agree on terms that could have provided greater opportunities for trade of manufactured goods.

Time and again at the Geneva meetings, China and India reiterated how they could not lower their barriers, but insisted we must lower ours. Revealing the sort of negotiation he had in mind, Indian Trade Minister Nath, for example, remarked that cars will no longer be made in Detroit and Düsseldorf but in Asia, a process he seeks to foster by maintaining India’s impenetrable barriers against U.S. cars while having virtually open access to our car markets.

The “Special Safeguard Mechanism” demanded by China and India for their agricultural sectors was the final straw. That mechanism would have violated one of the most basic tenets of the world trading system: nations do not violate their tariff bindings by raising tariffs above the legally-bound levels. Once an exception is made, no matter how small, the entire world trading system could begin to unravel. The Doha Round was supposed to move world trade forward, not backwards.

 It is regrettable that China and India in the end refused to stick with the rules and wishes of the majority of countries. However, we must face the reality of what they did. It is important to note, however, that other developing countries, especially Brazil, made it plain during the Geneva talks that they were prepared to enter into give and take negotiations, and that is a positive development.

For Frank Vargo’s reports from Geneva, please go here.

See also USTR statement, news coverage.