its views on the progress made in negotiations and on whether the extension requested by the President should be approved or disapproved.

-Neither House of the Congress adopts a resolution disapproving the extension before June 1, 1991.

On March 1, 1991, President Bush submitted a report to the Congress requesting extension of the "fast track" procedures for considering implementing legislation with respect to trade agreements entered into after May 31, 1991, and before June 1, 1993. While a generic extension for multilateral and bilateral trade agreements was requested as required by the statute, the report supports continued availability of the fast track as essential for (1) the completion of the Uruguay Round of GATT multilateral trade negotiations, (2) negotiations expected to begin in late spring 1991 of a North American Free Trade Agreement with Mexico and Canada, and (3) pursuit of free trade agreements with Latin American countries under the Enterprise for the Americas Initiative announced by the President on June 27, 1990.9

BILATERAL TRADE AGREEMENT AUTHORITY

Section 1102(c) of the Omnibus Trade and Competitiveness Act of 1988 authorizes the President to enter into bilateral tariff and nontariff agreements with foreign countries, subject to the same Congressional consultation requirements and special "fast track" procedures for approval of implementing legislation as apply to multilateral agreements. The authority to enter into bilateral trade agreements expires on June 1, 1991, but also is subject to the same automatic extension procedures until June 1, 1993 as apply to the multilateral authority.

The agreement may provide for the elimination or reduction of any U.S. duty or for the elimination or reduction of nontariff barriers or other trade distorting measures. No trade benefit under the agreement can be extended to a third country. The authority is similar to that which was used for the bilateral free trade agreements between the United States and Israel and the United States and Canada.

Three requirements must be met prior to the negotiation of a bilateral agreement:

1. The foreign country must request the negotiation of a bilateral trade agreement;

2. The agreement must make progress in meeting applicable U.S. trade negotiating objectives; and

3. The President must provide written notice of the negotiations to the House Committee on Ways and Means and the Senate Committee on Finance and consult with these committees regarding the negotiation of an agreement. The negotiations may proceed unless either Committee disapproves the negotiations within 60 legislative days prior to the 90 calendar day advance notice required of entry into an agreement.

9 "The Extension of Fast Track Procedures", Message from the President of the United States, House Document 102-51, March 4, 1991.

In conjunction with the proposed North American Free Trade Agreement, President Bush sent two notices to the House Committee on Ways and Means and the Senate Committee on Finance-the first dated September 25, 1990 notifying the Committees of trade negotiations with Mexico, following a letter from Mexican President Salinas of August 21 formally proposing initiation of negotiations for a free trade agreement between the United States and Mexico; and the second dated February 5, 1991 notifying the two Committees of trade negotiations with Canada to seek a three-way free trade area. On February 5, Presidents Bush and Salinas and Canadian Prime Minister Mulroney issued a joint communique announcing their intention that their trade ministers proceed as soon as possible, in accordance with domestic procedures, with trilateral negotiations aimed at a comprehensive North American Free Trade Agreement.

LIMITATIONS ON IMPLEMENTATION

Reciprocal competitive opportunities

Section 1105(b) of the 1988 Act 10 requires the President to determine before June 1, 1993 (the final expiration date of trade agreement authority) whether any major industrial country has failed to make trade agreement concessions which provide competitive opportunities for the United States substantially equivalent to such concessions provided by the United States. If the determination is affirmative with respect to any country, the President must recommend to the Congress legislation to terminate or deny trade agreement concessions in order to restore equivalence.

Conditional agriculture reforms

In the 1990 farm bill (the Food, Agriculture, Conservation, and Trade Act of 1990), various reforms were enacted to the U.S. domestic price support and production programs and export promotion programs in order to reduce government expenditures and increase international competitiveness. Congressional concern, however, that our trading partners might take these cuts in U.S. program expenditures for granted and become less cooperative in the GATT Uruguay Round negotiations to achieve multilateral reform in agricultural trade rules, led to the subsequent enactment of a conditional "snapback" provision.

Section 1302 of the Omnibus Budget Reconciliation Act of 1990 requires the Secretary of Agriculture to reconsider certain acreage limitation requirements, export promotion expenditures, and wheat and feed grain price supports, and to make appropriate adjustments in the event of a failed agricultural trade negotiation or rejected agricultural trade agreement under the Uruguay Round. Specifically, the Secretary is required to make all three types of adjustments if by June 30, 1992 the United States has not entered into an agricultural trade agreement. This requirement is not effective, however, if the failure to enter into an agreement is due in whole or in part to the fact that fast-track authority did not apply to the implementing bill for such agreement.

10 Public Law 100-418, 19 U.S.C. 2904.

On the other hand, if an agricultural trade agreement is concluded, but it has not entered into force by June 30, 1993 (for example, due to the rejection of the implementing legislation by the Congress), then the Secretary is required to make adjustments, but has more discretion in determining what adjustments are most appropriate. Whatever adjustments are made must be appropriate "to protect the interests of American agricultural producers and ensure the international competitiveness of United States agriculture."

SPECIFIC TRADE AGREEMENT AUTHORITIES

Sections 123, 125, and 128 of the Trade Act of 1974, as amended by the Trade and Tariff Act of 1984 and the Omnibus Trade and Competitiveness Act of 1988, contain authorities to enter into and/ or to proclaim changes in U.S. duties under trade agreements in certain specific limited circumstances.

Compensation agreements

Section 123 of the Trade Act authorizes the President to enter into trade agreements granting new concessions and to proclaim modifications or continuation of existing duties or duty-free treatment as he determines required or appropriate as compensation to foreign countries for restrictions imposed as import relief under section 203 of the Trade Act or for any judicial or administrative tariff reclassification. No duty reduction can exceed 30 percent of its existing level. The purpose of such concessions is to meet international obligations under the GATT to maintain the general level of reciprocal and mutually advantageous concessions with countries whose trade is adversely affected by import relief measures or certain tariff reclassifications, and provide an alternative to the right of such countries under the GATT to take retaliatory action. Termination and withdrawal authority

Section 125 of the Trade Act contains the traditional requirement that every trade agreement entered into is subject to termination or withdrawal within 3 years after its effective date, or upon 6 months advance notice thereafter. The President may terminate any proclamation at any time.

Section 125(c) provides the President explicit domestic legal authority to proclaim increased duties or other import restrictions as he deems necessary or appropriate to implement U.S. international trade agreement rights or obligations to withdraw, suspend, or modify any trade agreement concessions.

Section 125(d) authorizes the President to withdraw, suspend, or modify substantially equivalent trade agreement obligations and proclaim increased duties or other import restrictions in response to withdrawal suspension, or modification by foreign countries of trade obligations benefitting the United States without granting adequate compensation (i.e., "self-compensation" authority). This authority was used in November 1982 by President Reagan to suspend most-favored-nation status for Poland indefinitely, based upon Poland's nonfulfillment of trade obligations undertaken in its ac

cession to the GATT, and in view of increased repression of the Polish people by the martial law government.

No duty increase imposed under section 125(d) can exceed the higher of 50 percent or 20 percent ad valorem above the rate existing on January 1, 1975. Public hearings are required prior to taking any action, or promptly thereafter if expeditious action is necessary.

Section 125(e) requires duties or other import restrictions to remain in effect at negotiated levels for 1 year after U.S. termination of, or withdrawal from, a trade agreement, unless the President proclaims restoration of the previous level. The President must submit his recommendations to the Congress within 60 days as to the appropriate rates of duty on all affected articles. This provision prevents automatic, sudden "springbacks" to higher preagreement duties that could create serious economic impact.

High technology products

Section 128 of the Trade Act, as added by section 308 of the Trade and Tariff Act of 1984, authorizes the President to enter into bilateral or multilateral agreements necessary or appropriate to achieve trade negotiating objectives on high technology products and to proclaim the modification, elimination, or continuation of existing duty or duty-free treatment on specific semiconductor items during the 5-year period after date of enactment (i.e., until October 30, 1989) in order to implement such trade agreements. Accession of major state trading regimes to the GATT

Section 1106 of the Omnibus Trade and Competitiveness Act of 1988 11 requires the President to determine, before any major foreign country accedes to the GATT, whether state trading enterprises (1) account for a significant share of that country's exports or of its goods subject to import competition, and (2) whether those enterprises unduly burden or restrict or adversely affect U.S. trade or the U.S. economy or are likely to have such results. If both determinations are affirmative, the GATT cannot apply between the United States and that country until either (1) the country enters into an agreement with the United States for its state trading enterprises to operate in accordance with commercial considerations, or (2) Congress approves "fast track" legislation submitted by the President extending application of the GATT to the country.

TRADE NEGOTIATION PROCEDURAL REQUIREMENTS

Sections 131-135 of the Trade Act of 1974,12 as amended by the Omnibus Trade and Competitiveness Act of 1988, require that certain procedures be followed in connection with any proposed trade agreement under section 123 of the 1974 Act or section 1102 of the 1988 Act authorities. These prenegotiation procedures require advice from the International Trade Commission on the probable economic effect of duty modifications on U.S. industries (section 131), advice from Executive branch agencies and other sources (sec

11 Public Law 100-418, 19 U.S.C. 2905. 12 Public Law 93-618, 19 U.S.C. 2151.

tion 132), public hearings (section 133), and advice from private sector advisory committees (section 135). In addition, Executive liaison with the Congress is required through Congressional designated official advisers to negotiations (section 161), transmittal of trade agreements (section 162), and annual reports on the trade agreements program and related matters (section 163). (See also discussion of Congress in chapter 7, infra).

Section 127 of the Trade Act of 1974 13 requires the reservation from any negotiations involving reduction or elimination of duties or other import restrictions of any article while it is subject to an import relief action under section 203 of that Act or to a national security action under section 232 of the Trade Expansion Act of 1962, or if the President determines that the national security would be impaired.

Congressional Fast Track Implementing Procedures

In contrast to traditional tariff proclamation authority, nontariff barrier agreements entered into under section 1102(b) and bilateral trade agreements entered into under section 1102(c) authority under the 1988 Act cannot enter into force for the United States and become binding as a matter of domestic law unless and until the President complies with specific requirements for consultation with the Congress and implementing legislation approving the agreement and any changes in U.S. law is enacted into law. Sections 1102(d) and 1103 of the 1988 Act 14 and sections 151-154 of the 1974 Act 15 prescribe the following procedures for Congressional approval:

1. Before entering into any trade agreement, the President must consult with the House Committee on Ways and Means, the Senate Committee on Finance, and with each other committee in the House and Senate with jurisdiction over legislation involving subject matter affected by the agreement. The consultation includes (a) the nature of the agreement; (b) how and to what extent the agreement will achieve applicable purposes, policies, and objectives; and (3) all matters relating to agreement implementation.

2. The President must give the Congress at least 90 calendar days advance notice of his intention to enter into a trade agreement, and promptly publish the intention in the Federal Register. The purpose of this notice period is to provide the Congressional committees of jurisdiction an opportunity to review the proposed agreement before it is signed, to determine the changes in U.S. laws that will be necessary or appropriate to implement the obligations under the agreement, and to meet with Administration officials to develop the the text of an acceptable implementing bill.

3. After entering into the agreement, the President must submit a copy of the final legal text to the Congress, together with a draft implementing bill, a statement of any administrative action proposed to implement the agreement, and support

13 Public Law 93-618, 19 U.S.C. 2137. 14 Public Law 100-418, 19 U.S.C. 2903 15 Public Law 93-618, 19 U.S.C. 2191.