A Brazil 2002 Event

Friday, March 22, 2002

World Trade Center, New Orleans

Draft Remarks by Congressman William Jefferson

Good afternoon. First of all, I would like to welcome all of you to my home district of New Orleans. As co-Chair of the Congressional Caucus on Brazil, I am very pleased to be with you today. I would like to extend a special welcome to Mr. Pedro Parente, Chief of Staff to President Cardoso and Head of the Brazilian Energy Crisis Management Committee and Brazilian Ambassador Rubens Barbosa. I am also pleased to see my good friend and former colleague Bill Richardson. I also see many good friends from the Port of New Orleans and our local business community. Thank you so much for coming. I would also like to thank the New Orleans World Trade Center for hosting this event. They have hosted many outstanding meetings such as this one over the years. Their relentless advocacy of free trade has been very good for New Orleans, and indeed, for the entire state of Louisiana. I am proud to have them as a partner in my legislative efforts.

Brazil is critically important to the United States. US direct investment in Brazil exceeds $35 billion, which makes the US the largest foreign direct investor in Brazil. Over the past decade, US-Brazilian bilateral trade has increased by nearly 130%. Our two democracies are political and economic leaders in the Western Hemisphere. Accordingly, a strong economic relationship between the US and Brazil will set the standard.

I would like to update you on three key trade issues that are of significant importance to both the United States and Brazil: TPA, the President’s recent 201 Steel Trade Decision and the status of FTAA.

First, I would like to talk a bit about TPA:

• Trade Adjustment Assistance (aid for displaced workers) has dominated Senate debate on the TPA. Issues such as TAA funding levels (some Senate Democrats want to add provisions that are considered costly) and the scope of COBRA health insurance coverage have dominated discussions. These items are likely to prove to be the most contentious when the bill reaches the Senate floor. The latest information from the Senate suggests that the bill will be taken up on the Senate floor in late April or early May.
• However, the general consensus is that the TPA bill will pass without any difficulties when it reaches the Senate floor. It has generally received broad, bipartisan support. Senators will include TPA and TAA as elements of an overall trade package (an Omnibus Trade Package) which will consist of the Andean Bill, AGOA and the enhanced CBI. TPA is critically important for New Orleans. Why? The following facts speak for themselves:

-Louisiana sold more than 3.9 billion worth of exports to more than 100 foreign markets last year;

-The number of Louisiana companies engaged in exporting has increased over 61% during the period from 1992 to 1998;

-One in every eight manufacturing jobs in Louisiana is tied to exports;

-Louisiana exported an estimated $481 million in agricultural products in 1999.

People have often asked why I support TPA and FTAA. TPA is essentially the building block for a strong FTAA.

• Granting the US President TPA will strengthen FTAA. It will ensure that whatever the President negotiates with our prospective FTAA partners cannot be amended by Congress. This will strengthen the hand of US negotiators while simultaneously reassuring our trading partners that the agreements that we negotiate are airtight.

Now, consider the importance to Louisiana of its trading relationship with Western Hemisphere nations:

• Brazil is Louisiana’s 10th largest trading partner. The state exported nearly $450 million worth of goods and services to Brazil in 2000.
• 40% of Louisiana’s top 20 trading partners (8 countries) are FTAA members.
• If FTAA comes into effect, the vast majority of Louisiana’s top trading partners could be FTAA countries.
• It is for these reasons that I have been in full support of the completion of FTAA negotiations by January 2005. There is no need for a gradualist approach to opening markets. We should resist the efforts of protectionist elements in our countries to torpedo FTAA. Delay means lost business opportunities, lower growth and higher unemployment.

The President’s 201 Steel Trade Decision

• I strongly opposed the President’s decision to impose a thirty percent maximum tariff on steel imports. On Thursday, March 7, 2002, I formally introduced a joint resolution of disapproval (HJ Res 84) in an effort to challenge President Bush’s protectionist 201 steel trade decision. The Trade Act of 1974 authorizes the US Congress to challenge a President’s decision when it differs from that of the ITC. A successful joint resolution can compel the President to implement the ITC’s recommendation.

• The President’s proposed maximum tariff of 30% is 50% higher than that which was recommended by the ITC (a maximum tariff of 20%). Although a tariff of 0% is ideal, a 20% tariff will be less damaging to our ports, steel-consuming businesses and average consumers. During a time when our government continues to press key trading partners like Brazil to reduce trade barriers, the President’s decision is, in many ways, quite difficult to understand. Indeed, the President’s decision creates a high likelihood of a new and damaging round of trade disputes with some of our major trading partners. These confrontations could threaten other sectors of our economy beyond steel. They could prove to be highly damaging to various free trade negotiations.

• Consider the following: the most punitive steel tariffs will be applied to countries such as Japan, the People’s Republic of China, and Korea. Japan is Louisiana’s largest export market. China and Korea are the 4th and 6th largest markets respectively. Clearly, these steel tariffs will have a negative impact on shipping traffic through the Port of New Orleans.