Press Briefing by Secretary of Treasury Bob Rubin, Secretary of Commerce Bill Daley, U.S. Trade Representative Charlene Barshefsky, Assistant to the President for Economic Policy Gene Sperling; Assistant to the President for International Economic Policy Dan Tarullo

The Briefing Room

3:20 P.M. EDT

SECRETARY RUBIN: Thank you. There's a copy of Road and Track, All New Cars, for those who are interested. (Laughter.) I'm not exactly sure why, but in any event, there is.

Let me start with just a word. I think the President and the Vice President did extraordinarily well. We've had a consistent economic strategy since the beginning of the administration and we now have, and have had for quite some time, the best economic condition in the industrial world. I don't think there's any question but trade liberalization has been very important to the economic success we've had so far, and I think it's absolutely central in terms of our economic strength and economic health in going forward.

Millions of Americans owe their jobs to the trade liberalization that has taken place so far, and all Americans as consumers have benefitted from lower prices and greater choice.

As you look around the world and you meet with finance ministers and other public officials, one thing is absolutely clear, and that is globalization is continuing and countries around the world are entering into all kinds of trade liberalization agreements. The only question -- there is no question this is going to continue; the only question is will we be inside of it or will we be outside of it. And if we're outside of it, in our judgment, it will be enormously to our economic detriment.

What we must now do is work together to implement and enact fast track negotiating authority for the President so that as we go forward we can be part of the globalization of trade and the trade agreements, as I said a moment ago, are developing around the world.

And with that, I would like to introduce Secretary of Commerce Bill Daley. And I'm going to apologize, but I have to leave because I'm going up to the Hill in furtherance of this effort. Thank you.

SECRETARY DALEY: I would assume we'll all be going to the Hill very shortly for a very long time. Let me also be brief and just express a couple comments. One, obviously, the fact that our export growth over the last four years has created jobs. Some people believe that we should be fearful of competition in this new global economy. American business, American workers have proven that instead of being frightened of competition, we should welcome it because we are the victors over the last number of years in this very competitive world economy.

So we have proven through our export growth and through the competitive nature of American businesses and American workers that we welcome this global economy, and we look forward to furthering the lowering of barriers, as the President said today, because it will create additional American jobs, not lose American jobs.

So we in the Commerce Department, and speaking on behalf of the business community, who I know many of you have heard from outside, are very committed to this endeavor. The Cabinet is working very hard. Dan Glickman will go to Kansas City; I'll go to Minneapolis tomorrow; Secretary Pena will be travelling -- we will be fanning out around the nation in addition to a tremendous number of visits that will take place on the Hill, as we once again engage the American people and engage the political establishment around the world and around this country in the debate over competition and opening of barriers and lowering them for the sole purpose of creating American jobs and improving our economy.

Thank you. And I, at this point introduce Ambassador Barshefsky.

AMBASSADOR BARSHEFSKY: Thank you. I thought I would just take a minute and talk about what fast track is, and then talk a little bit about the trade agenda and what we would intend to use fast track authority for. And then I'll introduce Gene Sperling.

The original fast track began in 1934 and gave the President of the United States the ability to cut tariffs by his own proclamation. The Constitution reserves to Congress the ability to cut tariffs. In 1934, that authority was delegated to the President of the United States by Congress under what we would now call fast track authority. It was called something a little bit different then. That authority has continued virtually without exception until it expired in 1994 with the last grant of fast track authority.

So the President had the ability to proclaim reductions in U.S. tariffs if a trade agreement was negotiated. But in the late 1960s it became apparent that nations began putting up non-tariff barriers to compensate for their reductions in tariff and to try and keep foreign goods out. So, in 1974, the partnership between the Congress and the President with respect to trade agreements negotiation was broadened, and the deal struck was this: Congress would be able to consult with the President, direct the course of a particular trade negotiation, agree on trade policy objectives. And in exchange, when the President brought back a trade agreement, Congress, in implementing legislation, would vote the agreement up or down without amendment.

This gave the President the ability to negotiate from strength because foreign countries understood once they negotiated with the Executive Branch, Congress would not renegotiate individual provisions of the agreement. But, at the same time, Congress would be involved through consultation and other mechanisms in the goals set out for the agreement and in the achievement of those goals. That is the fast track authority, coupled with tariff cutting authority, that has been in existence since 1974, and to which President Clinton and Vice President Gore alluded.

That is precisely the authority sought here. We are not seeking the approval of any particular trade agreement at this juncture. We are simply seeking a reinstitution of the process by which certain of these agreements can come back to the Congress for an up or down vote. But let me emphasize a final vote on whether implementing legislation passes to implement a trade agreement resides with the Congress of the United States.

Let me talk a moment about the trade agendas. As the President said, exports have been the driver of economic growth for this country. We've seen in the last 10 years a tripling of our export performance. We are the world's single largest exporter -- about 12 million jobs depend on exports. And we know that those jobs tend to pay between 13 and 15 percent higher than non-trade related jobs. The way one shifts the locus of job creation in this country to higher-paying jobs, to better jobs, is through increasing it -- through, among other things, but increasing our export performance.

So as we look at the trade agenda ahead, we want to capitalize on our current economic strength and our current competitiveness, because, after all, we ought to be at our most aggressive internationally now and not pull back. And we want to also take a look at those sectors where we are highly competitive, but where foreign trade barriers tend to be rather high.

There are three basic uses, therefore, to which we would put fast track authority. The first has to do with the built-in agenda from the Uruguay Round. You know at the end of the Uruguay Round negotiations, which are the large, global trade talks, the United States, among other countries, pushed for a timetable at which negotiations in different areas would resume. We did that, as did Europe and other countries because we wanted more out of the Uruguay Round than we got.

This year, we begin again the negotiation on intellectual property rights -- sorry, on government procurement; next year, intellectual property rights; then agriculture; then services. Government procurement is a trillion-dollar market for us in Asia alone over the next decade; agriculture, a $600-billion market globally; services, $1.2 trillion market. We want better access into those global markets. We must have fast track authority going into this group of talks or countries will not put meaningful offers for market access on the table.

Second major use -- the President talked and the Vice President talked about the information technology agreement, under which we will reduce to zero tariffs on all of the kinds of information technology products associated with the Information Superhighway -- semiconductors, computers, telecommunications equipment, faxes, phones, integrated circuits -- a huge array of products in which we tend to be a global leader. Our tariff barriers in those areas are zero or very low. Asia's averaged 30 percent. We've agreed with another 43 countries that those tariffs should be brought to zero across the board, all countries, by roughly the year 2000.

We already have agreement among our trading partners for an ITA-2 -- that is to expand the scope of the products encompassed by this extremely ambitious initiative. Fast track authority will be used to implement that arrangement.

We're also in the process of looking at a number of other individual sectors, again where we're very competitive but global barriers tend to be high. For example, environmental equipment and services, medical equipment and technology, transportation equipment, a range of sectors as -- where fast track authority will be needed.

The third area of the trade agenda is the area of more comprehensive market access agreements with individual countries, free trade agreements. The country that has been identified by the administration thus far is Chile. Chile has already indicated that they will sign on to labor and environmental agreements, subject to fines for enforcement. They just completed a bilateral trade agreement with Canada in which Chile signed on to labor and environmental agreements. They will do the same with the United States.

As to any other individual country we may wish to negotiate with, we would obviously have to identify that country and then undertake rigorous consultations with Congress before we embarked on any additional negotiation.

Those are the uses of fast track authority. As the President said, it is vital, absolutely vital, that we continue to lead, that we continue -- continue to focus on our export performance and to ensure that this country gets its fair share of global trade.

With that, let me introduce Gene Sperling.

MR. SPERLING: I'll tell you what. Probably, since everybody is a little pressed, why don't Secretary Daley and Dan, Charlene, why don't we just take Q&A now, and I think anything -- I could say I can fit into some Q&A somewhere.

Q: Question for Secretary Daley. Just before the President and the Vice President were announcing their support for this fast track authority, representatives of the major labor unions were across the street, protesting all of this, saying it's a betrayal, and that they are going to do everything they possibly can to fight this fast track legislative authority. How do you feel about going head to head with such close political allies as the American labor movement who sees this as a betrayal?

SECRETARY DALEY: Well, obviously, the President feels very strongly about many issues and is in agreement with the labor movement on so many issues, and he is in agreement, as he stated today, with the fact that labor issues are important not only in this country and to this administration, which has proven it time and time again over the last four and a half years, but in many world forums. So it is obviously uncomfortable to not be in agreement with some of your allies and strong friends, but there will be plenty of opportunities as we move forward to be back together in unison on so many issues.

Q: Well, if you think that this case is so clear-cut, why do you think it's become such a hot button issue for labor leaders?

SECRETARY DALEY: Well, trade issues have always been hot button issues for organized labor, and that's a position that labor has had for many, many years.

Q: Is there a way to finesse this situation such that you can include some sort of protection for workers in the fast track legislation itself? Or would that muddy the waters to the point that it's unusable?

MR. SPERLING: I think the President -- first of all, obviously, open markets has been, as the President said today, one of his three pillars of his economic strategy, so that's something he believes in. He believes it increases innovation, competition, higher-wage jobs and that's been the strategy. When we do confront opening markets, we do so with the goal of lowering tariffs and non-trade barriers because, as Charlene said, that almost always advantages us as the most competitive country in the world.

But we also aim as part of our goal to increase labor standards and the environment. And one of the points that we've -- as we've gone through consultations and we've talked, is that there are several ways to promote this agenda. One issue would be what you can do within the trade agreement. The second issue is what you could do through side agreements under executive authority. A third area is things in the international labor core -- issues, things that have been worked on that Charlene has fought hard for and had unprecedented victories in over the last three years. There's also initiatives like the sweatshop initiative that we have. And then there are a variety of things, people we've spoken to who have talked about what can be done domestically in terms of improving or training or adjustment programs.

So the President is firm that anything he does will further opening markets, environment and labor. There are different ways to go about that, but the overall thrust of anything he does in opening markets will further all three of these objectives.

Q: You don't see it, then, for the specific question of whether fast track legislation would be written in such a way to include, mention, provide for the concerns of the workers in the environment? You don't see that happening in the fast track legislation itself?

MR. SPERLING: Well, we're going to put out our legislation next week. I mean, I think we're not going to -- you know, I said, we've had consultations with people. We want to have a chance among ourselves to talk about what's been said. Obviously, anything we put forward has to be capable of carrying a strong bipartisan support and we have to look at how we best promote our aims and how we best deal with political reality in getting a bipartisan majority.

Q: You were in charge of NAFTA. You became the czar of NAFTA. You joined the administration to fight for NAFTA. It was a very tough and uphill fight. How do you compare the time, then, with this fight to get fast track?

SECRETARY DALEY: Well, in some ways we are obviously in a much stronger position when you look at the economy. when you look at the success that this administration has had. In 1993, you had a very difficult budget battle in the summer, very difficult to win for the President, where he laid out his economic strategy. And then to come back in the fall with a NAFTA battle was very difficult. Obviously, right now, as the President has stated, this economy is extremely strong.

Politically, you have many of the similarities. You have the same sort of split politically in both parties, and you do have a different make-up, obviously, from a leadership perspective on the Hill. And the make up of both caucuses are a little different than they were in 1993. But there are probably more similarities. It's very difficult, as it was in 1993, but I do believe we will be successful this year, as the President was in 1993.

Q: You spend a lot of discussion with the phrase "trade related" measures in labor and environment. This was wording that I think -- first put out in 1995, when you were first trying to get fast track through, and it's come back in Mr. Archer's lingo in the past few days. Can somebody define what "trade related" measures for environment and labor mean?

MR. SPERLING: I mean, I think there are those of us here who could. Will we right now? Do you want to?

AMBASSADOR BARSHEFSKY: The only thing that I would say is that if you look at trade agreements over time you see that they are much broader in scope than they were previously, and that they encompass concepts that might not have been encompassed even 10 or 15 years ago. The Uruguay Round, for example, calls for the establishment of a committee on trade and the environment. That would have been almost unthinkable even 10 years ago. It calls for a review of the intersection between labor and worker rights issues and trade. Again, that's something that might have been unthinkable even five years ago.

So we see a progression as you look at trade agreements over time where issues with respect to the intersection of trade and labor, or trade and the environment have been broached. I think that obviously provides us some guidance.

I think the key is -- and I'd like to make a comment on Gene's answer before -- I know the temptation is very much to look at a piece of legislation and to try and parse it through as though the end goal were the legislation. The end goal for the administration is can the President keep our exports rolling out the door -- make it here, sell it there. Can he at the same time promote and expand labor principles, particularly labor rights, as they are viewed -- core labor standards. Can he help promote and ensure sustainable and responsible environmental development. Those are the goals.

There is no legislation we would put forward under which he could not pursue vigorously each of those goals. Let's keep our eye on the ball. The key, the critical element here is the ability of the United States to move forward on all three fronts simultaneously.

Q: What is the rationale for not including specific protections for labor and the environment inside the core agreement? What's the rationale for not doing it? Why do you have to put it as a side agreement?

AMBASSADOR BARSHEFSKY: We're not commenting now on what we're putting in the agreement or what we're not putting in the agreement. All I'm suggesting is the matrix looks something like this: There are three goals. Gene has laid out three or four or five means of achieving or enhancing those goals -- the means being what's in the bill, what are supplemental agreements, what do you do in international fora, and under that heading, multilateral fora, and what do we do regionally in the FTAA, in APEC, what do we do in the OECD, what do we do in the ILO, what do we in UNCTAD. Then individual initiatives that the administration and our business community and labor unions work on, like the sweatshop initiative. So there are a variety of means to pursue the aims that are so important to the President and so important to the country, and that's the critical aspect here.

Q: How can you sell open trade, free trade at a time with rising trade deficits, particularly with China and Japan? And Japan -- there are so many problems between the United States on the trade front, especially with a much-touted 1995 agreement on car trade -- how are you going to do that at this time when there seems to be so many troubles on that front?

AMBASSADOR BARSHEFSKY: We know that trade deficits are the function of many things, principally macroeconomic and not principally trade policy related, to the extent -- and we have always said this -- to the extent portions of trade deficits are attributable to trade barriers. We need to identify those barriers and to bring them down.

In the case of Japan we have concluded 30 market opening agreements. Exports under those agreements are about triple the rate of our export growth to Japan overall. With respect to autos, there are two issues. One is vehicles, one is auto parts. Our auto parts trade is actually looking fairly strong. It's on the vehicle side where a combination of factors, including a shift in exchange rates, has dampened somewhat our exports to Japan and has increased Japanese exports to the United States.

We will have a review of the auto agreement with Japan in early October, looking particularly for Japan to continue the process of deregulation in its own economy that will provide us more benefits. But the key here -- again, let's keep our eye on the ball -- the key here is our export performance, our export performance. That's what shifts the locus of job creation to higher-paying jobs. That is what provides tremendous opportunity for our workers at high wages. And our export performance has been unparalleled.

Q: If you have been able to reach those agreements without fast track, why do you need fast track to -- basically, you've been very successful without fast track up to now.

AMBASSADOR BARSHEFSKY: Agreements -- the President, as you know, has executive authority, constitutional authority to negotiate with foreign parties. And most of the agreements that we have done have been agreements that break down foreign barriers in a particular sector, not requiring the United States to take any action on its own. But in the case of three agreements in particular, and then the agreements that I've already outlined, the United States would have to take legislative action. The three agreements we did conclude where fast track was necessary were the conclusion of the Uruguay Round, the NAFTA, and the information technology agreement. And fast track was necessary because we were reducing tariffs and because we were making additional U.S. law changes.

As we look at the future agenda, the entirety of the WTO agenda will require further movement on tariffs, as well as some movement on U.S. law changes, fast track would again be necessary. Similarly on ITA-2 with respect to tariff reductions.

MR. SPERLING: I just want to add, just to make it a little more specific -- without the fast track and Uruguay Round, the pre-Uruguay tariff -- weighted tariff for Thailand was 41 percent. Now it's 26 percent. So we're talking over the last four years whether products made in the United States would be subject to that much higher of a tariff. For Korea, 16.2 percent to 7.7; Singapore 16.2 percent before Uruguay, 1.3 percent now -- to the degree that increased exports have been part of an economic strategy that has helped strengthen this economy, and this is a period where we've had a significant drop in unemployment, a historic job creation, so while there are many challenges with change and many people, even in the best of times, who struggle -- to the extent you've had a strong economic strategy and exports have been part, to the degree that that is obviously helped by having lower tariffs, those would not exist. All of the differences mentioned here would not exist but for the fast track authority there. So you can look forward, but you can also look back at the lower tariffs our exports have faced that would not exist today were it not for the President having fast track authority.

Q: Why don't we have a bill yet? What's the hold-up?

MR. SPERLING: There's nothing complicated here. After the budget, which I think was signed on August 5th, we -- and then the line item veto I think was taken care of around the middle of August -- we started doing consultations on the Hill. As we did them, as we talked to people, it was very clear to us that it would be more helpful in getting bipartisan support, more helpful in creating a tone and an atmosphere of inclusiveness if we took a few more days to consult and to hear more people out.

I can tell you firsthand there is a fundamental difference between going to a meeting in which you say, we've already made every decision and we're just here to tell you what we're going to do, and a meeting where you come and say, we've held up things a bit because we want to get your input before we make final decisions. And everything you learn working in the White House and dealing with Congress is that you err on the side of inclusiveness and consultation and I will tell you, on any bill, on any piece of legislation, at any time, if there's a choice between meeting a self-imposed or press-imposed deadline on a particular bill and doing the necessary consultation that allows you to include more people's thoughts and ideas and get more support, I'll choose the latter every time.

Q: When will there be --

MR. SPERLING: I think most of the consultations that we wanted to have and consider, we have or have scheduled, so I think we're certainly aiming for next week.

Q: Gene, how likely is it that the legislation is going to change between now and then? Is the President eager to try to make fine-tuning changes that would appeal to Democrats, to labor environment?

MR. SPERLING: Again, you'll see the legislation when we put it out next week.

Thank you.

END 3:50 P.M. EDT