97-817 ENR
Updated December 3, 1997
CRS Report for Congress
Received through the CRS Web
Agriculture and Fast Track Trade Legislation
Geoffrey S. Becker and Charles E. Hanrahan
Specialist and Senior Specialist in Agricultural Policy
Environment and Natural Resources Policy Division
Summary
Senate and House committees in October reported legislation for new fast track
authority enabling the Administration to negotiate trade agreements with foreign
countries and to submit them to Congress for consideration under expedited procedures.
Fast track could be used to negotiate new agreements with trading partners in Latin
America and possibly Asia and to improve the agricultural provisions of the Word Trade
Organization (WTO) Uruguay Round (UR) agreements. Fast track procedures have
been used to negotiate and enact a number of agreements, including the U.S.-Canada
Free Trade Agreement (FTA), the North American Free Trade Agreement (NAFTA),
and the Uruguay Round. Many agricultural and food industry interests are among the
export-dependent enterprises that support new fast track authority, arguing that foreign
trading partners will not seriously negotiate with an Administration that lacks it.
However, some agricultural groups argue that fast track provides them with inadequate
opportunities for dealing with their issues, and that it ultimately will lead to new
agreements that benefit foreign more than U.S. producers, at least in some commodity
sectors. Neither bill was taken to the floor in 1997 because of insufficient votes for
passage in the House. However, the President is expected to seek approval in 1998.
What Is Fast Track Authority?
Fast track authority refers to legislation that explicitly enables the President to
negotiate trade agreements with foreign countries and then to submit legislation to
implement them to Congress for approval under special, expedited procedures. Fast track
was first adopted in the Trade Act of 1974, and, before authority expired in early 1994,
was used to negotiate and implement several bilateral and multilateral agreements,
including agreements in the Tokyo Round of multilateral trade negotiations, the U.S.-
Canada FTA, NAFTA, and the UR accords, which included establishment of the WTO.
Under past fast track procedures, the President could negotiate a trade agreement
with one or more foreign countries and then submit to Congress the text of the agreement
along with draft implementing legislation (to make any “necessary or appropriate”
changes in U.S. laws). Senate and House leaders introduced this implementing legislation
Congressional Research Service ˜ The Library of Congress

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on the day it was submitted. Congress then generally had a maximum of 60 legislative
days to approve or disapprove the complete package, with no amendments permitted.
Fast track is intended to strengthen the President’s negotiating authority and credibility
by reassuring foreign trading partners that agreements will be considered promptly by
Congress and not subjected to changes that would force a return to the bargaining table.
Fast track procedures included requirements for advance notification of Congress and
advance consultations with relevant House and Senate committees, before an agreement
could be concluded. Lawmakers, in effect, used these consultative requirements as
informal mark-ups to address, in advance, the various policy issues that otherwise might
be debated during the votes on the implementing legislation. (For more information see
CRS Issue Brief 97016, Trade Agreements: Renewing the Negotiating and Fast-Track
Implementing Authority
.)
Importance of Trade for Agriculture
Because U.S. agricultural production is increasing more rapidly than domestic
consumption, export markets are critical to farmers’ prosperity. According to the U.S.
Department of Agriculture (USDA), agricultural exports account for 30% of U.S. farm
cash receipts, a share that is expected to increase. Crops planted on one out of every three
acres are exported. Higher-value U.S. farm products like meats, poultry, fruits, and
vegetables are experiencing the most rapid export growth, particularly in many developing
countries where economic growth and rising incomes have been greatest.
Most agricultural interests agree that U.S. efforts to open international markets must
continue in order to sustain export growth—including the negotiation of new or enhanced
trade agreements that reduce tariff and nontariff import barriers and curtail the use of
trade-distorting domestic and export subsidies. Most also concede that free trade cannot
be a one-way street: the United States also is expected to open its own borders to the
products of other countries. While increased food and other agricultural imports can bring
more variety and lower prices to U.S. consumers, they also can compete directly with
U.S.-produced goods—possibly even jeopardizing the economic survival of producers in
some commodity sectors.
Previous Fast Track Trade Legislation and Agriculture
Fast track procedures have been used to implement three free trade agreements and
two multilateral trade agreements. Three of them have significant agricultural provisions:
The U.S.-Canada FTA provides for the phased elimination of tariffs on all goods
traded—including agricultural products—between the two countries within 10 years (by
January 1, 1998), in three staging categories depending on the “import sensitivity” of
products. The FTA did not, however, address quantitative barriers to trade in dairy,
poultry, and eggs, on the basis that those products would be dealt with in then-ongoing
multilateral negotiations in the Uruguay Round. Legislation to implement the FTA, the
U.S.-Canada Free Trade Agreements Implementation Act (P.L. 100-449, U.S.C. 2112
note.), was signed into law on September 28, 1988. An important change in U.S. law,
with implications for agriculture, establishes new binational trade dispute settlement
procedures in lieu of judicial review.

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NAFTA provides for the phased elimination of all tariffs on trade between the United
States, Canada, and Mexico. The Agreement incorporates the tariff reductions agreed to
in the U.S.-Canada FTA and all of its agricultural provisions. As for U.S.-Mexico
bilateral trade, most tariffs will be eliminated by 2004, while tariffs for import-sensitive
items, including a number of agricultural products, will not be completely eliminated until
2009. For the first time in any trade agreement, NAFTA contains rules on applying animal
and plant health and safety measures (termed sanitary and
phytosanitary—SPS—measures) to imports, and it spells out procedures for recognizing
the “equivalency” of each country’s food safety standards for poultry and meat products.
The North American Free Trade Agreement Implementation Act (P.L. 103-182, approved
December 8, 1993, 19 U.S.C. 3301 note) includes the changes in U.S. law that affect U.S.-
Mexican agricultural trade.
The Uruguay Round/WTO Agreements are the most comprehensive agreements
in the history of multilateral trade negotiations. They cut tariffs by a third and reduce or
eliminate many nontariff measures such as quotas or restrictive licensing systems. The
series of agreements establish new multilateral rules for trade in services, trade-related
investment measures, trade-related intellectual property rights, and government
procurement, and dispute settlement, among others. The WTO is established as the
international organization that administers trade rules under both the General Agreement
on Tariffs and Trade (GATT) and the new rules and disciplines developed in the Uruguay
Round. The UR/WTO Agreement on Agriculture strengthens multilateral rules and
disciplines for agricultural trade and requires WTO members to reduce import protection,
export subsidies, and trade-distorting domestic support.
The Uruguay Round Agreements Act (P.L. 103-465, approved December 8, 1994,
19 U.S.C. 3511) has a number of important agricultural provisions. It authorizes the
President to convert U.S. quantitative restrictions to tariff quotas for dairy products, sugar,
sugar-containing products, peanuts, cotton, and beef; exempts all WTO members from
section 22 import quotas; and repeals the Meat Import Act of 1979. The Act provides for
the reduction in export subsidies provided by the Export Enhancement Program and Dairy
Export Incentive Program as required by the Agreement on Agriculture. The legislation
extends the concept of equivalency of meat and poultry inspection standards, developed
in NAFTA for Canada and Mexico, to all WTO member countries.
Effects of Trade Agreements on U.S. Agriculture
The support of farmers and agribusinesses for fast track legislation depends in large
part on their perceptions of how they have been affected by previous agreements.
Comparing trade flows before and after NAFTA’s entry into force, most analyses report
that NAFTA has had a positive overall effect on U.S. agricultural trade. Of course, factors
other than trade liberalization—including population and economic growth, national
agricultural policies, exchange rates, and weather—also influence trade flows.
Total agricultural trade between the United States and its NAFTA partners increased
from $17.5 billion in 1993, the year just prior to NAFTA’s entry into force, to $22.6
billion in 1996. In 1994, NAFTA’s first year, U.S. agricultural exports and the net balance
both increased substantially. U.S. agricultural exports to Mexico declined to $3.7 billion
in 1995, the year of Mexico’s peso devaluation, from around $4.2 billion in 1994, giving
Mexico a small agricultural trade surplus with the United States. U.S. agricultural exports

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to Mexico recovered significantly in 1996, reaching almost $5 billion, while Mexico’s
exports to the United States declined by $1 billion. U.S. agricultural exports to Canada
also increased in 1994 and 1995, but at a significantly slower pace than U.S. agricultural
exports to Mexico. In 1996, the U.S. trade balance with Canada turned from a surplus to
a negative one: Canada’s agricultural exports to the United States increased to $7.3 billion,
while U.S. exports declined to $6.4 billion.
U.S. commodity exports to Mexico that have increased most since NAFTA are corn,
soybeans, wheat, cotton, barley, and beef and veal. Mexico’s largest commodity export
increases are for tomatoes, peppers, onions, cucumbers, grapes, and melons. U.S.
commodity exports to Canada that have grown are soybean meal, poultry meat, orange
juice, corn, oranges, tangerines, and cotton. Canada’s agricultural export gains are in
cattle, pork, beef and veal, rapeseed oil, hogs, and potatoes.
Some farmers contend that they have been disadvantaged by NAFTA or that their
concerns are not being addressed by the agreement. For example, many U.S. cattle
producers have raised concerns about large imports of Canadian slaughter cattle and feeder
cattle in 1996. U.S. producers maintain that, while Canadian cattle access to the U.S.
market is relatively easy, market access for U.S. cattle into Canada is impeded by
Canadian health requirements and seasonal restrictions on cattle movements.
U.S. producers of winter vegetables, especially tomatoes, are concerned about
increasing imports of fresh produce from Mexico. They have argued that safeguard
procedures in NAFTA provided inadequate protection against a surge in Mexican tomato
imports following Mexico’s peso devaluation, and petitioned the U.S. Commerce
Department to undertake an antidumping action against Mexico. The antidumping petition
was withdrawn when Mexico and the United States reached an agreement that establishes
a minimum selling price for Mexican tomatoes in the United States.
Increasing imports of durum and spring wheat from Canada plus continuing
restrictions on access of U.S. wheat to Canada have been sources of controversy about
NAFTA. Some U.S. producers contend that the Canadian Wheat Board (CWB), which
has a monopoly on export sales, is unfairly trading wheat into the U.S. market and want
imports to be restricted. Lack of transparency on the part of the CWB makes it difficult
to determine if dumping or countervailable subsidizing is taking place. The lack of
transparency of CWB operations may be addressed in WTO agricultural trade negotiations
scheduled to begin in 1999.
Also, U.S. dairy, egg, and poultry producers continue to assert that Canada’s high
tariffs and restrictive import quotas severely limit their access to Canadian markets. Under
the WTO agreement, Canada converted its import quotas to very high tariffs and restrictive
quotas. The United States challenged these as inconsistent with Canada’s NAFTA
obligations, but a NAFTA panel rejected the U.S. complaint. U.S. producers will press
for improved market access in forthcoming WTO negotiations on agriculture.
Assessments of the impact of the UR/WTO Agreement on Agriculture have focused
on implementation of commitments and dispute settlement. The Office of the U.S. Trade
Representative (USTR) reports that most countries, including all major trading partners
of the United States, are in compliance with their market access and export subsidy
reduction commitments. A handful of countries, however, have not met their
commitments to open markets to some U.S. agricultural products.

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More attention has been paid by farmers and agribusinesses to WTO dispute
settlement--and its perceived weaknesses. The United States has either won outright the
agricultural cases it has brought to the WTO or reached favorable settlements before the
cases were adjudicated by WTO panels. But concerns have arisen about the pace of
implementation of panel decisions in the U.S.’s favor. Important examples are Korea’s
delays in revising inspection procedures for fresh produce imports and the European
Union’s evident reluctance to implement a WTO ruling against its ban on imports of meat
produced with hormones. As a result, some in agriculture have questioned the credibility
of multilateral dispute settlement in particular and the value of trade agreements in
general. However, most agricultural interests contend that the economic benefits of free
trade agreements outweigh these problems, and they express support for the UR
Agreement on Agriculture and the new WTO dispute settlement procedures as important
steps toward improving prospects for U.S. agricultural trade.
New Fast Track Authority
The President, who submitted his draft fast track bill to Congress on September 16,
1997, wants the authority so that the United States can participate fully in a number of
negotiations to create new, or to expand existing, agreements among various countries.
The Senate Finance Committee on October 1 approved, by voice vote, its own bill (S.
1269). The House Ways and Means Committee on October 8 voted, 24-12, to adopt its
version (H.R. 2621). Neither bill was taken to the floor in 1997 due to insufficient votes
for passage in the House. However, the President is expected to seek approval in 1998.
Fast track supporters have pointed out that other nations already have negotiated, or
are negotiating, agreements, most notably in Latin America. Unless the United States
participates, U.S. agricultural and other exporters will face higher tariff and other trade
barriers vis-a-vis countries that have signed such arrangements, fast track supporters
maintain. Opponents, on the other hand, contend that any potential economic and political
advantages of these free trade agreements are outweighed by the prospect of U.S. capital
and jobs being exported to countries where wages, labor standards, and environmental
requirements are weaker—including those in the agricultural sector.
Agricultural Provisions
The President's proposal included various "principal trade negotiating objectives" that
U.S. officials would be required to observe, including one specifically on agriculture:
reducing or eliminating trade barriers that harm U.S. agricultural export opportunities; and
strengthening international rules dealing with unfair practices that distort world markets.
However, Senate and House committees greatly expanded these agricultural (among many
other) provisions in order to broaden support for the bills.
For example, H.R. 2621 states, among other things, that: agricultural tariff reductions
should be achieved by a "date certain," with priority given to cutting the highest tariffs;
reasonable adjustment periods should be provided for "import-sensitive products, in close
consultation with the Congress" (in advance); and the targeting of unjustified SPS
restrictions should include those "not based on scientific principles in contravention of the
UR Agreements." The House bill would include additional provisions for: advance
consultations with Congress on agricultural tariff reductions and on other provisions
affecting seasonal and perishable agricultural products; creation of a Chief Agricultural

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Negotiator under the USTR; new "Section 301" procedures requiring USTR to identify
countries that deny agricultural exporters "fair and equitable market access" and to initiate
unfair trade practice investigations against some; and more stringent country-of-origin
labeling requirements for perishable agricultural products, among other things.
Potential Uses of the New Authority
Under all of the proposed bills, fast track authority would be available until October
1, 2001, and could be extended (unless disapproved by either the House or Senate) until
October 1, 2005. Among the negotiations where fast track authority might be used:
Chile. The Administration designated Chile as the next country for negotiating a
bilateral FTA. Chile already has agreements with other individual countries including
Canada and Mexico, and with the Common Market of the South (MERCOSUR, composed
of Argentina, Brazil, Paraguay, and Uruguay). Thus, U.S. products face much higher
tariffs, for example, relative to these countries. Negotiations with Chile to join NAFTA
started in 1995 but were suspended, largely because Chile wants the United States to
renew fast track before discussing what it views as “sensitive” issues. Though Chile is not
a major U.S. trading partner—it accounts for about 0.5% of overall U.S. agricultural
trade—freer trade is considered a key step toward broader economic integration in the
Western Hemisphere (see below). Also, it is argued that an agreement could help to
narrow the U.S. agricultural trade deficit with Chile—in 1996 such imports from Chile
were valued at $622 million, versus $131 million in U.S. exports there.
Free Trade Area of the Americas. President Clinton was among 34 leaders who
agreed, at a December 1994 summit, to complete negotiations for a Free Trade Area of the
Americas (FTAA) by 2005. Negotiations on this agreement, also proposed in concept by
President Bush in 1990, are to start formally in early 1998, although details on their pace
and scope have not yet been determined. In 1996, U.S. agricultural exports to Latin
America and the Caribbean totaled $10.5 billion, accounting for 17% of total agricultural
exports. Imports from the region were about $11 billion. (For more information on both
the Chile and FTAA negotiations, see CRS Issue Brief 95017, Trade and the Americas.)
WTO Agriculture Negotiations. WTO members have agreed to open negotiations
in 1999 aimed at further liberalizing world agricultural trade. Although many agricultural
issues were addressed by the UR agreement, impediments remain. Many contend that
certain member countries have not implemented their UR commitments on agriculture and
other issues; are not abiding by the newly-established process for resolving disputes
expeditiously; or are continuing to unfairly subsidize their agricultural producers through
state trading enterprises, domestic support programs, and export subsidies. (See CRS
Report 97-965 ENR, Agriculture in the Next Round of Multilateral Trade Negotiations.)
Agreements in Asia and the Pacific Rim. More than 60% of all U.S. agricultural
exports (value) go to Pacific Rim nations belonging to the Asia-Pacific Economic
Cooperation (APEC) forum—the countries of eastern Asia, along with Australia, New
Zealand, Papua New Guinea, Canada, Mexico, and Chile. Because many of the economies
of this region have experienced rapid growth, consumer demand for U.S. food and farm
products was expected to increase significantly here. APEC is seeking to establish free
trade and investment arrangements by 2010 for its industrialized economies and by 2020
for developing ones. A general commitment to a comprehensive agreement means that
agriculture will be a key element.