Second, the battle lines are being drawn with respect to implementing legislation for the free trade agreements (FTA) with Peru and Colombia. Members may recall that negotiations on both FTAs were completed in 2005 and 2006, and that the agreements have been signed by the Presidents of the respective countries. However, the Administration has not sent the implementing legislation for either agreement to Capitol Hill for Congressional consideration, pending resolution of demands by the newly empowered Democrats that the agreements be revised to toughen labor and environmental provisions (along with some other incidental matters). Timing becomes ever more important here: pursuant to the legislation passed in December 2006 (a bill heavily supported by this Association), the Andean Trade Preferences Act (ATPA) was extended for all four beneficiary countries until July 1 of this year. After that date, an additional six-months extension may be granted on a country-by-country basis if the U.S. Congress has approved implementing legislation for an FTA with that country. In practical terms, this would only cover Peru and Colombia – not Bolivia and Ecuador – since those are the only two ATPA beneficiaries with which free trade agreements are pending. However, with less than four months to go before that deadline, there is a significant policy disagreement emerging as to whether an additional extension for ATPA should be granted even if implementing legislation is not approved in time. Charles Rangel, Chairman of the House Ways and Means Committee, is arguing strongly for this tact, as is the Administration (as demonstrated by recent remarks made by Secretary of Treasury Paulson). However, there is pronounced opposition to this idea on the Republican side of the aisle, particularly in the House, as it is felt that one extension of this “unilateral” preference program was enough, and the reciprocal free trade agreements must now take its place. This sets up a repeat of the battle we were engaged in last year, and on behalf of the Association we are making our position known to relevant officials in the Administration and on Capitol Hill, and we will continue to work in conjunction with like-minded groups both to get the Peru and Colombia FTAs approved by Congress and implemented as soon as possible, and to maintain the ATPA until that time.

Lastly, several Congressional factions continue to put pressure on China to modify its exchange rate policies and to improve intellectual property rights protections. In the wake of the release of full-year 2006 trade data which showed a trade deficit with China of $233 billion – fully 30 percent of our total trade deficit, and the largest bilateral trade deficit in the history of the world – a plethora of bills have been introduced or discussed on a range of issues regarding economic relations with that country. These include:

• a bill to impose a 27.5 percent duty on all imports from China;
• a bill that would explicitly subject China to "countervailing duty" (CVD) investigations;
• a bill that would make it much simpler to label China as a "currency manipulator" which could then subject imports from that country to penalty tariffs;
• a bill that would consider currency manipulation a countervailable subsidy
• a bill that would subject China's "most favored nation" trading status to annual renewals (as it was prior to 2001 under the Cold War-era "Jackson-Vanik" amendment).

While some of these proposals represent purely a "political stand," others stand a realistic chance of passage, especially with the Democrats in control and with the Bush Administration under increasingly intense pressure to take some concrete and substantive action. The pressure of the Administration is increased by the fact that this Administration desperately wants Congress to renew its so-called "trade promotion authority" (TPA, otherwise known as “fast-track authority) which is due to expire as of July 1, 2007. We are working in conjunction with others to achieve an extension of TPA.

And we will continue to keep the Association involved, and up-to-date on these several trade issues of great importance.