U.S. GOVERNMENT PRINTING OFFICE

68–287 CC WASHINGTON : 2000

INTERNATIONAL TRADE AND THE ENVIRONMENT

HEARING

BEFORE THE

SUBCOMMITTEE ON

INTERNATIONAL ECONOMIC POLICY AND TRADE

OF THE

COMMITTEE ON

INTERNATIONAL RELATIONS

HOUSE OF REPRESENTATIVES

ONE HUNDRED SIXTH CONGRESS

SECOND SESSION

JUNE 21, 2000

Serial No. 106–170

Printed for the use of the Committee on International Relations

(

Available via the World Wide Web: http://www.house.gov/international—relations

(II)

COMMITTEE ON INTERNATIONAL RELATIONS

BENJAMIN A. GILMAN, New York, Chairman

WILLIAM F. GOODLING, Pennsylvania

JAMES A. LEACH, Iowa

HENRY J. HYDE, Illinois

DOUG BEREUTER, Nebraska

CHRISTOPHER H. SMITH, New Jersey

DAN BURTON, Indiana

ELTON GALLEGLY, California

ILEANA ROS-LEHTINEN, Florida

CASS BALLENGER, North Carolina

DANA ROHRABACHER, California

DONALD A. MANZULLO, Illinois

EDWARD R. ROYCE, California

PETER T. KING, New York

STEVEN J. CHABOT, Ohio

MARSHALL ‘‘MARK’’ SANFORD, South

Carolina

MATT SALMON, Arizona

AMO HOUGHTON, New York

TOM CAMPBELL, California

JOHN M. McHUGH, New York

KEVIN BRADY, Texas

RICHARD BURR, North Carolina

PAUL E. GILLMOR, Ohio

GEORGE RADAVANOVICH, Califorina

JOHN COOKSEY, Louisiana

THOMAS G. TANCREDO, Colorado

SAM GEJDENSON, Connecticut

TOM LANTOS, California

HOWARD L. BERMAN, California

GARY L. ACKERMAN, New York

ENI F.H. FALEOMAVAEGA, American

Samoa

MATTHEW G. MARTINEZ, California

DONALD M. PAYNE, New Jersey

ROBERT MENENDEZ, New Jersey

SHERROD BROWN, Ohio

CYNTHIA A. MCKINNEY, Georgia

ALCEE L. HASTINGS, Florida

PAT DANNER, Missouri

EARL F. HILLIARD, Alabama

BRAD SHERMAN, California

ROBERT WEXLER, Florida

STEVEN R. ROTHMAN, New Jersey

JIM DAVIS, Florida

EARL POMEROY, North Dakota

WILLIAM D. DELAHUNT, Massachusetts

GREGORY W. MEEKS, New York

BARBARA LEE, California

JOSEPH CROWLEY, New York

JOSEPH M. HOEFFEL, Pennsylvania

RICHARD J. GARON, Chief of Staff

KATHLEEN BERTELSEN MOAZED, Democratic Chief of Staff

JOHN P. MACKEY, Republican Investigative Counsel

SUBCOMMITTEE ON INTERNATIONAL ECONOMIC POLICY AND TRADE

ILEANA ROS-LEHTINEN, Florida, Chairman

DONALD A. MANZULLO, Illinois

STEVEN J. CHABOT, Ohio

KEVIN BRADY, Texas

GEORGE RADANOVICH, California

JOHN COOKSEY, Louisiana

DOUG BEREUTER, Nebraska

DANA ROHRABACHER, California

TOM CAMPBELL, California

RICHARD BURR, North Carolina

ROBERT MENENDEZ, New Jersey

PAT DANNER, Missouri

EARL F. HILLIARD, Alabama

BRAD SHERMAN, California

STEVEN R. ROTHMAN, New Jersey

WILLIAM D. DELAHUNT, Massachusetts

JOSEPH CROWLEY, New York

JOSEPH M. HOEFFEL, Pennsylvania

MAURICIO TAMARGO, Subcommittee Staff Director

JODI CHRISTIANSEN, Democratic Professional Staff Member

YLEEM POBLETE, Professional Staff Member

VICTOR MALDONADO, Staff Associate

(III)

C O N T E N T S

WITNESSES

Page

Mildred Callear, Vice President and Treasurer, Overseas Private Investment

Corporation ........................................................................................................... 8

Barbara Bradford, Deputy Director, U.S. Trade and Development Agency ....... 10

Dan Renberg, Member of the Board, Export-Import Bank of the United

States .................................................................................................................... 13

Paul Joffe, Associate Director for Advocacy, National Wildlife Administration ........................................................................................................................ 23

Myron Ebell, Director, Global Warming and International Environmental Policy, Competitive Enterprise Institute ................................................................. 25

APPENDIX

Prepared statements:

Mildred Callear ........................................................................................................ 32

Barbara Bradford ..................................................................................................... 39

Dan Renberg ............................................................................................................ 49

Paul Joffe .................................................................................................................. 57

Myron Ebell .............................................................................................................. 61

(1)

INTERNATIONAL TRADE AND THE

ENVIRONMENT

WEDNESDAY, JUNE 21, 2000

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON INTERNATIONAL ECONOMIC

POLICY AND TRADE,

COMMITTEE ON INTERNATIONAL RELATIONS,

Washington, DC.

The Subcommittee met, pursuant to notice, at 2:05 p.m. In Room

2255, Rayburn House Office Building, Hon. Ileana Ros-Lehtinen

[Chairwoman of the Subcommittee] presiding.

Ms. ROS-LEHTINEN. The Subcommittee will come to order. Thank

you so much for being here today.

It has been said that we do not inherit the Earth from our parents but rather bequeath it to our children. Today we are just beginning to understand the real and long-term effects which our existence has upon the natural world around us and how we can as

Americans can affect environmental change for the better.

One area in which it has become quite clear that we can export

our concern over the environment to other nations is in international trade and development. By supporting initiatives which

not only account for environmental concerns but indeed promote

conservation, the United States can provide leadership in a world

where concerns over the environment are becoming ever more

prominent.

In an age when international commerce and the cause of conservation are often described as locked in the proverbial battle between an immovable object and an unstoppable force, it is incumbent upon us to pause and realize that trade and the environment

are not issues which are mutually exclusive. The twin goals of

trade and the protection of the environment can provide each other

with opportunities to pursue sustainable development as well as

conservation.

Following the World Trade Organization Seattle ministerial in

1999, the world took notice of the issue of environmental conservation and its relation to the international trade community. As protesters from an eclectic collection of causes pour into the streets of

Seattle we were all forced to revisit the way in which multi-national trade organizations had dealt with the issue of protection of

the environment. Among the most serious charges leveled at the

WTO was the perceived lack of priority given to national and international environmental laws. For example, while most member nations have committed themselves to certain core environmental

2

standards, protesters felt that the WTO was not taking steps to implement regulations to reward countries adhering to and exceeding

such standards.

In response to these attacks, WTO members stated that as an organization it is entirely dependent upon the desires and actions of

its member states and that many were unenthusiastic about instituting reforms which they felt would overly burden developing nations.

So for those Americans who believe that environmental conservation is an important and needed reform within the WTO, we must

look far closer to home in order to ensure that care for the environment is afforded the same respect as other international trade

issues. This goal can be accomplished by addressing the procedures

and regulations employed by the U.S. Government agencies which

fund and support American trade and investment abroad such as

the Overseas Private Investment Corporation, OPIC, the United

States Trade and Development Agency, USTDA, and the ExportImport Bank of the United States.

By promoting projects and endeavors which account for environmental conservation as well as assisting in creating sustainable development within the local communities and economies, the United

States can provide the leadership which the WTO has failed to exhibit and perhaps provide other nations with an example of just

how trade and environmental concerns can work together.

One possible example of this fusion of trade concerns and environmental awareness which has been proposed by analysts is to

take advantage of the vast experience which the United States has

developed in the field of environmental conservation. For many

years, the United States has been in the forefront of nations studying the environmental impact of industry and developing more environmentally friendly modes of production.

These innovations can be put to use, for example, when a state

finally develops the necessary resources to maintain a stable economic infrastructure and decides to allocate some of its surplus resources toward protecting the environment. With the proper guidance and support from U.S. agencies, American firms with the necessary experience and technology may find a fertile business opportunity.

Another example lies in less developed nations, where the drive

to actively conserve the environment may not be as prevalent as

it is within our country. American firms with the foresight to understand the inherent value of the environment can create new opportunities, such as eco-tourism, to not only conserve the local environment but to strengthen the local economy.

Finally, there is the vast divide between the environmentally

friendly technologies developed here at home and those available in

many other nations of the world. These technology firms, which

create products such as industrial scrubbers and other bio-friendly

commodities, represent yet another opportunity for Americans to

increase our share of the growing international market while at the

same time benefiting the protection of the environment.

With the passion and assistance of the men and women assembled before us today we can come up with just a few examples of

how it is that international trade and the protection of the environVerDate 11-MAY-2000 16:47 Jan 05, 2001 Jkt 000000 PO 00000 Frm 00006 Fmt 6633 Sfmt 6633 68287.TXT HINTREL1 PsN: HINTREL1
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ment can work, and together we may be able to help provide our

children and our grandchildren with a world full of blue seas and

green forests as well as to provide them with the prosperity and

good fortune to appreciate the beauty of nature.

I am proud to yield now to the Ranking Member of the Subcommittee, Mr. Menendez.

Mr. MENENDEZ. Thank you. I appreciate the opportunity you

have provided us for talking about this globally important question

of the relationship between trade and the environment. Clearly, the

subject is topical, as we have seen over the past 6 months in the

news, and it is, more importantly, of long-range importance as decisions made now on this issue will have an impact for years, even,

I believe, centuries to come.

The protests at the WTO meetings last December in Seattle, and

in Washington at the World Bank IMF meetings, serve to remind

us that there are still plenty of skeptics and some with good cause.

There are legitimate concerns on both sides of the question, considering for a moment trade and the environment separately. Most

people in the United States agree, though that, the development of

trade and protection of the environment are both desirable. More

significantly, I would say there is growing consensus in this country that they should no longer be considered mutually exclusive. I

believe most of our witnesses today will make that point rather

ably.

Certainly the vote that we expect today, which I think will be

somewhat lopsided, in calling for the United States to leave the

WTO, the vote against that is an indication of wide support for continued U.S. participation and leadership in global trade mechanisms and discussions. But that vote, when it takes place, does not,

of course, mean citizens in the United States and elsewhere are

complacent with the WTO. The Seattle protest should not be disregarded, for they reflect a real disenchantment for the way the

WTO operates.

Principally, these problems include the world trade body’s failure

to pay sufficient attention to environmental concerns, as well as its

continued penchant for operating in a secretive manner.

These concerns, along with important labor considerations, are

part of the reasons certainly that talks on future multilateral trade

agreements remain stalled. In fact, since 1994 when NAFTA was

agreed to, and the Uruguay round of GATT negotiations culminated in the establishment of the WTO, not much more has happened. So I believe that the United States, through continued leadership on these issues, can help lead us back on track to sustainable, responsible growth through environmentally friendly trade.

In the past few years, the United States, with help from NGO’s

such as the National Wildlife Federation from which we will hear

today, has done admirably in asserting the necessity of pursuing

the twin goals of liberalized trade and environmental protection

and to argue that these not need be in conflict.

Prior to the start of the Seattle WTO ministerial meeting, the

U.S. Government, with backing from NGO’s, made clear to its negotiators a set of guidelines intended to, ‘‘ensure the trade rules

continue to be supportive of environmental protections at home and

abroad.’’

4

In a public White House declaration, President Clinton outlined

a series of principles. They included: increased accounting of environmental implications, greater transparency in the WTO and

trading system, strengthened cooperation between the WTO and

international organizations with respect to environmental matters,

assurance that trade rules do not undermine U.S. ability to maintain and enforce fully U.S. environmental laws, support for

ecolabeling, and full participation of environmental, health and

safety officials in trade negotiations.

These policy guidelines for the multilateral WTO are extensions

of what the United States has called for and implemented in its

own government institutions charged with trade development. In

1985, Congress added environmental provisions to OPIC’s statute.

In 1992, Congress revised the charter of the Export-Import Bank,

requiring environmental review procedures; and we look forward to

hearing from these U.S. trade agencies, including the Trade and

Development Agency, about how they have redoubled their focus on

environmental questions in recent years.

Finally, one of the most interesting proposals prior to Seattle was

to identify and pursue win-win opportunities in which reducing or

eliminating subsidies and opening markets can yield direct environmental benefits, such as recent moves to reduce subsidies to

fishing industries and thereby reduce overfishing. This kind of initiative is where the future of sustainable, environmentally responsible and publicly supported trade lies.

One outcome of the protests at Seattle is that a variety of issues

once considered anathema to trade discussions, including environmental impacts of trade, have become more visible and harder to

ignore in subsequent trade negotiations. Environmental concerns

will from now on be a constant ware on any trade negotiation table.

In this reality, there are challenges and opportunities for the

United States. The challenges include the need for industrialized

countries, with the United States in the lead, to convince developing nations that environmental protection is in their interest,

too. So, too, the United States and other WTO members are challenged to persuade the world trade body to be more transparent in

its actions and inclined toward protecting the environment.

At the same time, the mounting international pressure for sustainable, environmentally responsible growth in developing countries provides significant opportunities for U.S. firms. U.S. exports

in environmental technology have nearly doubled since 1996. U.S.

companies must overcome extremely difficult competition from foreign companies subsidized by their governments, but there should

be plenty of room in what is estimated to grow to a more than $500

billion industry in the next few years. Opportunities exist, too, in

the growing areas of biodiversity and ecotourism.

So I look forward to hearing from the panelists today about some

of these issues. I look forward to hearing about those projects that

support a healthier global environment by helping to build the capacity of developing countries to meet environmental needs and

about opportunities for U.S. firms and organizations to play a larger role in the export of environmental technology and expertise.

I am reminded that we travel on a small spaceship called Mother

Earth and that we are dependent upon its natural but limited reVerDate 11-MAY-2000 16:47 Jan 05, 2001 Jkt 000000 PO 00000 Frm 00008 Fmt 6633 Sfmt 6633 68287.TXT HINTREL1 PsN: HINTREL1
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sources. And that as we seek to raise the tides for all people in

terms of the economic opportunity that trade can provide, we need

to remember that the sustainability of all of those possibilities exists with the type of environmental decisions that make us good

stewards of the land for this generation and generations to come.

That is our challenge. It is also a tremendous opportunity. And

I personally want to thank those who have raised and continue to

raise the issue of the environment. I don’t always agree on how

they raise the issue, but I do believe that the raising of the issues

has made it possible for this to be part of the agenda and the debate in the days ahead of the trade issues that we will face.

Ms. ROS-LEHTINEN. Thank you so much, Mr. Menendez.

Mr. Cooksey, thank you for joining us.

Mr. Rohrabacher for some opening statements.

Mr. ROHRABACHER. Every time I hear about this issue being discussed there just seems to be something that is left—the equation

just totally left out. I am listening today, and it just seems it is

being left out. There is a void there.

I sort of looked at the map. I was trying to think what that void

is. It is very clear what that void is now, so that nobody is talking

about where democracy and freedom come into play in this issue.

It is just like not part of the question. I mean, it is all about the

environmentally good things that need—the policies that need to be

followed and, you know, what sort of trade policies we will have.

But there is a relationship here, a very strong relationship between

how we trade and what policies we have as—based on what type

of government is on the other end of the trading relationship.

And people—let me assert this—people in developing countries

have just as much right to democratic government and making

their own decisions and controlling their own destinies including

their environmental policies as we do. And anybody who comes

from a rich, developed country like the United States and thinks

it is going to impose on a democracy environmental laws is talking

about tyranny. Even though it is the best of motives, cost benevolent motives saving the environment, the best of motives. But this

is totally—then we are talking about a dictatorship. When you are

talking about how you relate and what laws should be restricting

trade with dictatorships, that is totally different.

The WTO—and this is one of my biggest problems with the WTO

and a lot of the other trade—you know, globalist trade policies that

we have been hearing about on Capitol Hill—is that these policies

almost always insist that our trade policies and our policies in the

government should be exactly the same toward a dictatorship as it

is toward a democratic government. That makes no sense to me.

I happen to believe that if you have a democratic government

they can set their own environmental restrictions, as I said earlier.

They have a right, and businesses—and we try to control the trade

policy—businesses have a responsibility when they go to those

countries to obey the laws of those countries because the laws are,

by definition, the laws that have been put in place by the people

there through the ballot box.

But now, with dictatorships, that is a whole different issue, isn’t

it? And we have had a lot of dictatorships. We had a lot of trade

with nations when they had a lot less than a free government. Now

6

they are struggling to have a democratic government. I will bet you

that the open environment policies that we noticed in the old Indonesian government are going to be changed.

In Burma, we had the rape of a rain forest in order to what? In

order to put money in the pockets of a militarist elite and to also

to help give them the weapons they needed to repress their own

people. So we had dramatic degradation in non-free countries. This

has to be an important part of the debate.

Because part of the struggle to staff the resources around the

world and have good environmental laws is, No. 1, giving the people of those countries the right to control their heritage, their rain

forests, their land, their skies, their oceans. And I think it is wrong

to think that we are going to have a WTO, you know, just—the argument is, well, the WTO has to do—have more regulations that

are going to protect the environment in the Third World.

I don’t agree with that at all. I think the WTO should—you

know, people in their own countries—we should be struggling for

democracy and let the people in their own countries start protecting their rights of their people when it comes to their natural

resources.

Again, I say we should be trading, trade-wise, with Costa Rica

different than Burma. And if we do and if we promote democracy

I think in the end it will promote environmentally good decisions

at the same time. Because with honest and democratic governments you don’t have the wholesale corrupt destruction of these

natural resources.

We need a code of conduct for American business in dealing with

dictatorships. The code of conduct in dealing with democratic societies should be the laws of those societies as those people see fit.

If Burma wanted to destroy its rain forest, if the people of Burma

wanted to do that in order to have an education system to sell their

trees, they have a right to do so. If the people of Burma did that—

not the little dictatorship, but if the people of—if they wanted to

do it because they wanted to use that money for education, what

might be a tradeoff, that would be their right to make that tradeoff. What isn’t good is having dictators down in Indonesia or

Burma or anywhere else raping the environment in order to make

a quick profit and put it in Swiss bank accounts.

So I think that when we are talking about trade policy, we

should distinguish, as the WTO does, not between free and unfree

countries. And if we ourselves in the United States try to establish

our own standards maybe, as I say, rather than putting all of our

authority and power in the hands of the WTO, set up our own

standards like a code of conduct for American companies in dealing

with dictatorships. That would have my support.

And, with that, I am very interested in hearing what the witnesses have to say. I do know one thing. The Export-Import Bank

and American financially supported international financial institutions have subsidized a lot of really bad environmental decisions

and economic activity going on in dictatorships. I mean, we have

actually financed with our tax dollars the destruction of the environment in countries that were not free, where their own people

couldn’t vote out the clique that was in power.

7

That should stop immediately. We should have a restriction on

all subsidies that come from the U.S. taxpayers on economic activity that would be deemed not acceptable by American law because

of environmental reasons in the United States. But, again, when

we are dealing with a democracy let’s have those people have control of their own lives and let’s not just ignore their rights as well.

So thank you very much, Madam Chairman.

Ms. ROS-LEHTINEN. Mr. Cooksey.

Mr. COOKSEY. Thank you, Madam Chairman.

I would certainly agree with the comments of my colleagues, but

I will defer my time to hearing from the witnesses. We have some

impressive witnesses. I have glanced over your statements. I am

anxious to hear what you say. Thank you.

Ms. ROS-LEHTINEN. Thank you.

I would like to now introduce the three administration witnesses

who will share their views on the current state of relations between

international trade and environmental communities this afternoon.

So let me begin with—and I am terrible with names. I have got a

name that everyone slaughters, so I hope I get more or less these

right:

Mildred Callear, Vice President and Treasurer of the Department

of Financial Management and Statutory Review for the Overseas

Private Investment Corporation, OPIC. OPIC’s former Senior

Counsel for Administrative Affairs, Ms. Callear is the currently the

corporation’s chief financial officer and responsible for administering OPIC’s financial and political risk insurance portfolios.

Thank you so much for joining us.

She will be followed by Ms. Barbara Bradford, the Deputy Director of the United States Trade and Development Agency. A graduate of Georgetown University, Ms. Bradford joined TDA in 1986

after a series of successful ventures in the private sector, including

having founded a prosperous export trading firm. While at TDA

she has focused on managing the agency’s small business outreach

programs and its trust funds with the World Bank and other financial institutions.

We are also fortunate to have Mr. Dan Renberg, member of the

board of the Export-Import Bank of the United States, the

Eximbank. Sworn in as a board member in November 1999, Mr.

Renberg is the former president of Renberg Strategies consulting

firm and a published author of a book on the House of Representatives entitled, A House of Ill Repute. I understand Mr. Rohrabacher

has an entitled chapter in that book?

Mr. RENBERG. The Congressman wasn’t one of the contributors,

but some of his colleagues were—Congressman Gingrich, Congressman Walker. We could always do a reprint, I guess.

Ms. ROS-LEHTINEN. Ms. Callear, Let us begin with you.

Ms. CALLEAR. Madam Chairwoman——

Ms. ROS-LEHTINEN. We will be glad to put your entire statements

in the record. If could you briefly summarize them, we would appreciate it.

8

STATEMENT OF MILDRED O. CALLEAR, VICE PRESIDENT AND

TREASURER, DEPARTMENT OF FINANCIAL MANAGEMENT

AND STATUTORY REVIEW, OVERSEAS PRIVATE INVESTMENT

CORPORATION (OPIC)

Ms. CALLEAR. On behalf of OPIC President and CEO George

Mun ̃ oz, I appreciate this opportunity to testify on the relationship

between trade and the environment. And we also appreciate your

leadership and the bipartisan approach that you and the other

Members of the Committee are taking to this important issue, because we really do think that it is good for the environment, good

for the developing countries and very good for American companies.

Mr. ROS-LEHTINEN. Tell George we all say hello.

Ms. CALLEAR. I certainly will.

More than 15 years ago, this Congress had the foresight to give

OPIC an environmental mandate. We were charged with conducting environmental assessments for all of the prospective

projects that come before us and to avoid doing any project that

would have the potential for serious harm to the environment.

Thanks to that vision, OPIC is one of the first international agencies to have an environmental mandate, and today we have a rich

history of successful environmental assessment and monitoring

that I think showcases the responsible approach that American

companies have taken.

Now I would acknowledge that, at times, this has posed a dilemma for OPIC because, as Americans, we recognize and value

the benefits of clean air and water and soil, and it is only fair for

us to take those values with us when we invest overseas. But, unfortunately, not all of our OECD counterparts have had the same

approach. This has led to a very real concern that American companies may be at a competitive disadvantage if they are held to a

higher standard.

But today I think there is more and more consensus among environmental groups, U.S. business and us in the government that

common environmental standards for overseas investment really do

make sense. We should not allow foreign companies to compete for

business by cutting corners on environmental health and safety.

And I know that many Members of Congress have worked diligently with your parliamentary counterparts overseas to try to

bring this point home, the importance of having a common standard when companies are bidding on the same projects in developing

countries.

Since 1999 we do see that some of our counterparts have begun

to make some changes. I think that some of that is due to the same

pressures and discussions that we are seeing in our own country

as the environment is higher on the agenda and there is more need

for our OECD counterparts to look at these issues. But there is

much more that needs to be done. There is much that has to occur

before there is a real, substantive standard that is applied and, I

think, some of the transparency and accountability issues are so

important to having an open discussion about the projects and

their effects.

So we think that U.S. leadership is helping to level the playing

field, but there is much more work ahead.

9

Now, although having strong policies in the environmental sector

is important, our real commitment I think is shown by the types

of projects that we do, as you mentioned earlier. There are many

opportunities for American companies to really take a leadership

role. For example, just last week OPIC approved a project that will

greatly benefit the health of the people in Bulgaria. We approved

$200 million of political risk insurance to rehabilitate a thermal

power project in Bulgaria. It is Entergy Power Group out of Louisiana—New Orleans—that will be modernizing this plant.

As a direct result of their investments, some very important U.S.

technology is going to be put into place. Atmospheric emissions will

be reduced because there will be modern new gas desulfurization

technology, low NOX burners and other state-of-the-art equipment.

So this will have significant health benefits for the people of Bulgaria, and it will also improve the supply of electric power. The rehabilitation of this plant will allow the Bulgarians to phaseout

their reliance upon a Soviet-era nuclear facility that is clearly unsafe and technologically obsolete.

A couple of other noteworthy environmental initiatives. You may

be aware that OPIC has a series of investment funds, and three

of those funds are focused on environmental investments. There is

nearly $500 million of equity capital that is available for investment. One of those funds has fully invested its capital and two others are making investments in clean water, clean energy and waste

water treatment.

Because of President Mun ̃ oz’ dedication to small business, we are

also focusing on how we can work more closely with the small business sector to do good things for the environment. We recently announced, during World Environment Week, a $1 million project to

support small environmental projects in the Philippines. We are

working with the nonprofit NGO, Counterpart International, and

they have set up a for-profit subsidiary that will take equity stakes

in small energy-efficient projects, ecotourism, water supply

projects, etc., in the Philippines that will help to improve the quality of life there.

And, finally, one project that we approved last year I think demonstrates how we can meet the environmental challenges that are

inevitable when we are financing and ensuring projects overseas.

The Cuiaba integrated power project involved the construction of

an underground natural gas pipeline from southeastern Bolivia to

fuel a power plant in Cuiaba, Brazil. This project has provided us

an unprecedented opportunity for participation and dialogue as the

project was assessed and developed. It will benefit the environment

because it will provide clean natural gas as an alternative to diesel

and because currently many of the local citizens are harvesting

timber for fuel wood and that is resulting in a lot of deforestation.

So we are very pleased to have the opportunity to work on a

project of this type, but it does present many challenges. It required us to ask the sponsors to thoroughly assess all of the impacts in advance and, in fact, to reroute part of the pipeline to

avoid an environmentally sensitive area, which they were satisfied

to do.

To ensure that the project meets the environmental commitments that we are putting into the agreements, we have really an

10

unprecedented monitoring program, and we are trying to do it by

using advanced technology to measure and manage the project impacts. We are using satellite imagery, satellite telecommunications

and the ability to send digital images, including video images, directly from the field as the monitoring is occurring back to our offices. Much of this we are putting on our state-of-the-art website,

and we have had the results posted in both English and in Spanish

so that the local citizens in Bolivia can understand the impact of

the projects that are taking place in their country.

So through this process we have I think made great strides in

engaging the local citizens and the NGO community, and we are

having a proactive dialogue. We really have set out to make this

project a model; and we think that, because of the cooperation of

the sponsors, including the Enron Corporation, we are well on our

way to doing that.

As further evidence of their commitment, they put forward $20

million of additional funding to support a regional forest conservation program which is really separate and apart from the project

itself but I think shows their good will and their desire to have a

long-term relationship with the citizens of that country.

So our experience in implementing projects shows that under

President Mun ̃ oz’ leadership we have really been able to strike the

right balance between protecting the environment on the one hand

and making sure that we are helping American companies compete

in a marketplace that is becoming increasingly competitive for all

of us.

As Congressman Menendez and you have described, I think the

opportunities are excellent for American companies and there is a

real chance for us to take our technology and our skills and our infrastructure that we have developed here and really be a model for

the world at large and to truly sell our services and our products

in a way that is very good for our country as well. Thank you very

much.

[The prepared statement of Ms. Callear appears in the appendix.]

Ms. ROS-LEHTINEN. Thank you so much.

Ms. Bradford.

STATEMENT OF BARBARA BRADFORD, DEPUTY DIRECTOR,

U.S. TRADE AND DEVELOPMENT AGENCY

Ms. BRADFORD. Thank you, Chairperson Ros-Lehtinen, Congressman Menendez, and Members of the Subcommittee, for this opportunity to testify today on the U.S. Trade and Development Agency

and the environment.

I would like to briefly summarize my remarks.

As our name suggests, TDA targets projects that promote trade

while assisting low- and middle-income countries with their development and infrastructure priorities. With the international political pressure mounting in recent years for countries to become

more environmentally responsible, environmental projects have become an important mainstay of TDA’s programs. Despite the

growth in this market, however, U.S. companies face extremely

tough foreign government subsidized competition. As a result, the

assistance TDA and our sister export promotion agencies can proVerDate 11-MAY-2000 16:47 Jan 05, 2001 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6633 68287.TXT HINTREL1 PsN: HINTREL1
11

vide our companies can be critically important to their success

overseas.

My testimony today will focus on how TDA has responded to

worldwide environmental trends presenting export opportunities

for U.S. companies, as well as a couple of examples of the environmental projects in which we have invested.

Let me begin by discussing some of the trends we have observed

in trade and the environment around the world. From hazardous

waste to air pollution, the world community now recognizes that

environmental mismanagement in one country can have negative

global or regional consequences. Although the initial investment in

pollution mitigation and prevention technologies can be costly, failure to make this investment can result in environmental problems

with much higher costs. Recognizing this, many countries have significantly strengthened their environmental policies.

One of the trends we have witnessed that we believe has great

promise for U.S. firms is the increase in the number of privatization and private sector projects. When market-based decisions prevail over political ones, U.S. companies frequently benefit. We have

witnessed this in Asia where, given the somewhat limited resources

of the public sector, governments are encouraging the private sector to undertake many environmental investments. Also, in Europe,

there is intense political pressure for the new EU accession countries to adopt the strong environmental regimes of their Western

European counterparts. This has led to a multitude of private sector environmental projects.

Our strategy, however, has been to focus on private sector

projects because private sector decisions tend to be less distorted

by political pressures than public sector projects. On a level playing

field, when the choice comes down to who has the better product

and expertise, U.S. firms do very well against their tough competition, whether it is in Asia, Europe or any other region.

TDA has recently hosted several conferences geared toward the

environmental sector. Conferences are particularly helpful for

small business, and many environmental firms fall in this category,

because their limited business development budgets make it difficult for them to identify potential overseas opportunities. Our conferences help with this problem because we have essentially done

the legwork for them.

Take as an example our U.S. Environmental and Process Technologies Conference which we held in Hungary last fall, where, for

the price of an airline ticket and a nominal fee 56 U.S. companies

were able to meet one on one with local project sponsors regarding

more than 30 major environmental projects. Since that conference,

we have already funded half a dozen feasibility studies for projects

that were profiled at that event.

TDA conferences and the resulting feasibility studies are examples of TDA capitalizing on win-win situations. Not only are we

able to assist regions in addressing their thorny environmental

problems, we also help U.S. companies establish a foothold against

their competition in this lucrative market.

Let me turn for a moment to a newly identified category that

falls within the environmental sector, emergency management and

preparedness. Obviously, not all environmental calamities are manVerDate 11-MAY-2000 16:47 Jan 05, 2001 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6633 68287.TXT HINTREL1 PsN: HINTREL1
12

made, so we must make efforts to deal with natural disasters as

they occur. Institutions such as the World Bank, tired of watching

decades of loans and advances in development literally wash away

in floods or crumble in earthquakes, are seeking solutions. In the

last 2 decades, the World Bank has lent over $14 billion for disaster preparedness, mitigation and response, with this trend expected to increase rapidly.

With key sources of funding such as the World Bank already

identified, the potential for significant U.S. exports in this area is

pretty impressive; and U.S. firms are well-positioned to take advantage of these opportunities. The United States industry is a

world leader in emergency management, information technology

systems, weather forecasting systems, telecommunications and a

wide variety of emergency response equipment. To capitalize on

this new sector, TDA has hosted several events designed to showcase U.S. equipment and expertise, including earthquake reconstruction symposia in Turkey and our first major event, the Asia

Regional Emergency Management Conference.

This fall, TDA will sponsor a similar event targeted toward Latin

America.

TDA spends close to 20 percent of its budget each year on environmental projects ranging from water and waste water to air

quality to industrial efficiency and clean energy. Last year alone,

we invested $10 million on over 50 feasibility studies and other related activities that had a strong environmental benefit. This year,

in India alone, we will probably invest in over a dozen environmental feasibility studies. In addition, it is important to note that

all of our feasibility studies in every sector examine the environmental implications of projects in which we invest to ensure that

where the environment is concerned we do no harm.

Madam Chairwoman, I would like to briefly discuss a couple of

examples of TDA’s environmental projects.

The first is a great little success story of a small business in California with new, high-tech proprietary technology and its efforts to

introduce this technology into the marketplace. In Venezuela, the

government is trying to address environmental problems caused by

the oil industry, particularly in the area of thousands of oil pits.

In response to this effort, TDA funded a feasibility study for an oil

pit remediation project in 1993. As a result of the feasibility study,

a U.S. environmental company teamed up in a joint venture with

a Venezuelan firm and won the contract to clean up one of the oil

pits using their centrifuging and stabilization technologies. This

has generated approximately $5 million in exports so far, and since

it is viewed as a pilot project we expect the exports to go much

higher in the years to come. In a couple of weeks, 12 Venezuelan

delegates are coming to visit the United States to look for again

U.S. technology for this clean-up of the oil pits.

At the other end of the spectrum is one of TDA’s biggest success

stories. Almost $200 million in exports have been associated with

the feasibility study we funded for a Mexico City air pollution

project in the early 1990’s. It is no secret that Mexico City has

faced a serious air pollution problem with untold health and economic costs. In the early 90’s the Mexican government made a

major commitment to begin addressing their pollution problems.

13

We provided a grant for the major feasibility study coordinating

Mexico City’s pollution mitigation effort. This project has been a

huge success for U.S. exporters while tackling one of the world’s

most infamous environmental problems.

In conclusion, again I would like to say that TDA’s environmental projects are win-win situations. Not only do they present

U.S. firms with lucrative export opportunities, but they help developing countries address their pressing environmental problems.

While U.S. firms are very competitive in the environmental sector,

we must not lose sight of the fact that our companies are facing

competition that is heavily subsidized by foreign governments. To

counter this competition, TDA strategically responds to the trends

driving environmental decisions in the various regions of the world.

In this way we believe that we are making a significant contribution in helping U.S. firms win some of these opportunities, while

helping countries take important steps on the road to environmental progress.

Thank you very much for your time and attention.

[The prepared statement of Ms. Bradford appears in the appendix.]

Ms. ROS-LEHTINEN. Thank you so much, Ms. Bradford.

Mr. Renberg.

STATEMENT OF DAN RENBERG, MEMBER OF THE BOARD,

EXPORT-IMPORT BANK OF THE UNITED STATES

Mr. RENBERG. I assume that you will put the longer version in

the record—— Ms. ROS-LEHTINEN. Absolutely.

Mr. RENBERG [continuing]. For history and historians. I worked

on it last evening. I tried to abbreviate it. It was down to 4 minutes

and 40 seconds in my kitchen. Different air, different temperature—I am not sure how it will come out.

I appreciate you having this hearing. I think it is great for the

people who visit Washington occasionally in the summertime to descend on your offices and ask for the passes—it is great for them

to see an oversight hearing not just targeted on legislation.

The comments you made in your opening statements I certainly

take to heart—I am sure my colleagues here at the table do as

well—and it is great to have a chance to think about these issues,

as opposed to just thinking about a piece of legislation that is moving.

As a member of the board, I have just been there 7 months, since

I was sworn in, I have what we call the environmental portfolio

where I divvy up some responsibilities, jointly and separately liable

for all the activities of the bank, but I asked for and have received

this chance to work on environmental matters.

To give you an idea of the scope of our involvement, just 15, 20

years ago an Eximbank board member giving testimony wouldn’t

be able to say the following: We did $17 billion in transactions last

year, total export value, 2,200 or so transactions, 86 percent of

which were small businesses. So right off the bat this is not the

Eximbank of old. I just want to draw that to the attention especially to people who aren’t as familiar with Eximbank as they

might be OPIC and TDA.

14

Over the past 51⁄2 years we financed transactions including an estimated $2.7 billion in environmental export value. This includes

the small business sales of air and water purification systems as

well as multi-million-dollar fossil-fuel-burning, natural-gas-burning

power plants. That really ranges—but a total of $2.7 billion over

the past 51⁄2 years.

A couple of the key points I wanted to leave you with today because I think you have had a chance to read the written testimony.

We have an environmental exports program. We have had it since

1994, and we provide enhanced levels of support for environmentally beneficial exports, goods and services, which is another

thing to point out. We are able to maximize repayment terms

under the OECD guidelines. We can capitalize interest during construction, and we can finance a percentage of local costs. So we

have tried to use market approaches, if you will, to get people to

think more about buying United States environmental technologies.

I think that the Chair would be particularly pleased to learn

about our experience with Kimre Incorporated. I am not sure if the

Chair is familiar with that company. It is in Miami, Florida, in

your district. Funny how that works, that my testimony would reflect that.

But a small business manufacturer of environmental control filters that is using one of our short-term policies to export around

the world, they offer 60 days open account credit to their customers. What this means is they—first of all, they can do more exports. But, technically, what we can do is they don’t need to insist

on letters of credit from the foreign buyer. This makes it less expensive for the buyer, and they can hopefully buy more. Second, domestic banks for Kimre and other banks will allow them to get

credit. As an assured foreign receivable they can get credit and borrow against that. So they can grow their business as a result of an

export sale that really we believe wouldn’t happen but for our involvement.

Congressman Rohrabacher, your comments on democracies and

dictatorships made me pleased that I had included in my prepared

text a mention of the southeast Europe reconstruction credit initiative that I am working on at the bank.

In early May, I visited both Prague and Budapest. We identified

Hungary in particular as a very useful gateway for American goods

and services, and once again particularly with the environment.

One thing that the Czech Republic and Hungary have in common,

they want to enter the EU, the European Union. They have to

bring themselves into compliance across the board environmentally.

It is a wonderful market opportunity for the United States. So

what we decided was to—not only did we have the Czech Republic

and Hungary as potential markets, but all of southeast Europe is

a potential market. We joined in what is a unique marketing relationship with our sister agency, the Hungarian Export-Import

Bank, where we will jointly identify projects in Third World countries, in southeast Europe, Croatia, Romania, Bulgaria, where, for

instance, a Hungarian company could bid on a waste water treatment plant, deciding to incorporate U.S. technologies, U.S. goods,

15

U.S. services. The Hungarian Eximbank would finance the Hungarian portion of the contract if they win, and we would finance the

American portion.

So it is a chance for us to—almost a Trojan horse, if you will,

but I don’t mean in a war-like situation. But we can come in using

the good offices of Hungarian Eximbank, the Czech Export-Import

Bank, where we are hoping to do a comparable agreement with

them. This is an effort to recognize that these fledgling democracies

certainly need our help to stay—for their economies but also for the

environment, and I am hoping that we can help them grow so they

won’t go back to the ways of old.

With respect to our environmental guidelines and procedures, we

place a real importance—our charter places a real importance on

balancing our mission both to promote exports with the need to

protect the environment; and we do this through our environmental

procedures and guidelines. I am sure you are all familiar with

them. If a project doesn’t fall within our guidelines, our first response is not to say, hey, we are not going to do this. Our first response so to try to work with the exporters and the project sponsors to see how we can ameliorate the project. What could we do

with them so that they can avail themselves of the U.S. exports?

Of course, one potential outcome is that we still consider the

transaction, declining. But certainly since I have been there that

hasn’t happened. Really, in recent memory what we have been able

to do is to lift up the boat, so to speak.

One example, in Venezuela, they don’t have—they did not at the

time—I can’t tell you when this was—they did not have guidelines

on NOX emissions nitrogen oxides. As a result, a foreign buyer, a

power plant, wasn’t forced to content with that issue. They could

retrofit their power plant.

What we did is we came in, as I understand, and said, look, we

have an environmental exports enhancement program. If you decide to put in special low NOX burners, even though you don’t have

to under host country law, we can finance that. It meant that, ultimately, when Venezuela does get around to adopting NOX regulations, they would already be in a position to comply. So it was I

think a real win-win not only for the people of Venezuela but for

the American exporter. That wouldn’t have happened if our engineering division didn’t take the time to work with the project sponsor on it.

My last point I would make is that the OECD is actually meeting—the exports credit group of the OECD is meeting this week in

Paris. It is a very timely hearing with respect to what other ECAs,

export credit agencies, are doing with respect to their own environmental procedures. Most of them don’t have guidelines such as

ours. We are seen—I think the NGO community would say we are

seen as being in the forefront on this fight.

What I can report is we are making incremental progress at getting the G–7, ECAs and the other OECD ECAs to move forward.

Right now, we have information exchange, but that is the first

step. We are not in a position to dictate what these other country

sovereign nations will do. What we are trying to do is lead by example and show that you can help your exporters get the job done

16

and get more sales without necessarily having to hurt the environment.

With that, I would be more than happy to answer your questions.

[The prepared statement of Mr. Renberg appears in the appendix.]

Ms. ROS-LEHTINEN. Thank you, Mr. Renberg.

Following up on what you had said in your statement about the

policy you have about declining certain projects, that says—your

environmental policy description states, Eximbank will decline to

finance an export transaction if the board of directors determine

that it is appropriate in light of the project’s serious adverse environmental effects. And you had given us some examples, but what

is considered serious enough to prompt the denial and what adverse environmental effects are deemed acceptable by your policy?

Mr. RENBERG. I will tell you, Madam Chair, I would be more

than happy to supply the Subcommittee for the record with a copy

of our environmental procedures and guidelines. We are really out

there with respect to our ability. We can quantify NOX, SO2. We

can really—I could give you that, but I don’t have it off the top of

my head.

Ms. ROS-LEHTINEN. So you have sound science to back up.

Mr. RENBERG. We have sound science, quantifiable guidelines

with respect to specific emissions, for instance. We also have a

more of a broad—we take into account sociocultural effects.

For instance, if a population is going to have to be shifted—you

know, they are going to have to be forcibly moved by an environment, we take that that account. What efforts are there going to

be to mitigate through compensation and other means? I think we

are leading the league, so to speak, on having quantifiable emissions guidelines.

I would be more than happy to provide them for the record.

Ms. ROS-LEHTINEN. How do your board and your agency complement the work of the other agencies that are involved in helping

U.S. businesses abroad? Especially U.S. environmental exporters.

Mr. RENBERG. Sure. Well, one thing I didn’t mention on your

first question, Madam Chair, would be that since I have been there

we have not declined anything for environmental reasons. In fact,

just last week we approved a transaction that I would say had

some environmental issues. So there is not much in recent memory

where we said no to something. So the board of directors doesn’t

often have to do it. We try to work with the project sponsors, as

I said.

With respect to how we work with the other groups, we like to

say we are the agency with the checkbook for American businesses

that want to export. We have—thanks to Congress’s appropriation,

we have the ability to underwrite insurance and to direct loans but

preferably loan guarantees. As you know, we don’t compete with

the private sector. We price things accordingly. I would say that

sometimes there are projects where we work with OPIC jointly financing some power plants, clean natural gas in Turkey I think

earlier this year.

With respect to TDA, one of my colleagues, Craig O’Connor, attended that Hungary environmental conference and came back

17

with loads of leads. So, from my perspective, we work harmoniously

with them.

Ms. ROS-LEHTINEN. Thank you. Would you care to add anything

about the agency’s coordinated efforts?

Ms. CALLEAR. Sure. I think the way that we look at it at OPIC

is that the first stop is TDA, because they are involved in the feasibility study end of things when a company is just beginning to

think about a prospect; and the next stop is Eximbank, because you

are going to generally export before you are ready to invest and the

first step is to have a product and try to test it out in the marketplace by continuing to be here in the United States and to export

abroad.

Finally, if you are successful enough, your investment may be

such that you need to expand your presence and you need a presence in the market that you are going to serve, and we are involved

in helping finance that long-term investment overseas.

As was stated, because Eximbank’s focus is on exports and our

focus is on investments, sometimes we can be side by side in the

same project. We are financing it from the investment standpoint,

and Eximbank is financing it because perhaps there are some GE

turbines that are going into that power plant, and hopefully TDA

did the feasibility study to start with.

Ms. ROS-LEHTINEN. Great.

Ms. Bradford.

Ms. BRADFORD. We are trying to open up the opportunities in the

largest projects in developing countries for U.S. firms. At that very

early stage in the project development, the feasibility, prefeasibility

study stage, nobody knows where the financing for the project itself

is going to come from. If U.S. investors and U.S. manufacturers get

involved in building the project, likely, OPIC and Eximbank financing will be there. But many of the projects are financed by the

World Bank, the host governments themselves and private financing, and we want to make sure that those projects go forward with

financing and that it isn’t tied to some other nationalities and so

that the U.S. exporters have a chance to sell into them.

Ms. ROS-LEHTINEN. Thank you.

Mr. Menendez.

Mr. MENENDEZ. I want to make a comment to my colleague from

California. I share some of his concerns on the question of the democracy aspects of our trade and the engagement with nondemocratic countries. I know that the Chairlady’s focus today was the

environment, and so I think many of us are focused that way.

I would love to see a session on—a hearing on trade and democracy issues as well. We look forward to that opportunity.

Let me just—one of our panelists later will say that any linkages

with our trade issues and environment are possibly doomed, that

the World Trade Organization creates some serious issues for us.

You have all spoken about what you have done positively in this

regard. Have we put you at a competitive disadvantage—since you

are all there to promote U.S. interests abroad in terms of export

promotion and assisting U.S. companies being able to export their

products and services abroad, and ultimately that creates opportunities here at home, have we put you at a competitive disadvantage

18

by the congressional mandates that we have provided in legislation

to have you consider environmental issues in the process?

Ms. CALLEAR. I would say that was the fear of some American

companies initially, but the reality is that today the environment

is so much a part of the business that is done here in the United

States that, when it is taken overseas, it is really not as great a

leap as one might think. The concern, however, is that their competitors may not have the same rules that have to be followed if

they are going to the equivalent of their Eximbank or OPIC for financing; and that is the danger and why it is important for us to

continue to work on this concept of trying to level the playing field

for the standards. This is what we have tried to do with our political risk insurance counterparts and others who are in the development financing business, as opposed to just the export side.

It is not what Congress has done, I think it is what our counterparts have not done in living up to the responsibility that we all

acknowledge we have to be sure that what we are doing in these

developing countries is something that we can be proud of and that

it is going to be beneficial and developmental, as opposed to harmful.

Mr. MENENDEZ. Doesn’t that speak to creating the greater linkages that we would like to see in order to level that playing field

and ensure that American interests abroad are competitive in the

context of others meeting some of the same standards? As long as

that doesn’t happen, we will consistently have a set of problems in

this regard?

Ms. CALLEAR. I think that is an issue that is there and has to

be addressed. I think the problem that will develop is that, ultimately, if the playing field is not level, American companies are

creative and they will find other ways to continue to do business,

but it might be at the expense of U.S. exports. And that is the real

fear—that we all learn how to work around the system if we have

to, although it is not our preference. Certainly any company here

in the United States would prefer to be using U.S. suppliers, but

they do want that level playing field.

Mr. RENBERG. I don’t think that Congress has disadvantaged

American businesses with our current mandate as I have seen it

in the 7 months I have been at Eximbank. I have seen environmental benefits occurring, mitigation of adverse impacts as we saw

in a number of board transactions. We are up for reauthorization

next year. After I have more time, I would be glad to chat with you

on that issue.

The real issue is, can we get other members of the G–7 to stay

with the program? The Cologne summit, they have spoken a good

game about common—moving forward to their common environmental guidelines. Getting them to act has been tougher and slower going.

I can’t wait to see what happens in Paris this week with respect

to the OECD negotiations. There is a Congressman Menendez in

France or Germany, and I would hope——

Mr. MENENDEZ. Probably in Spain.

Mr. RENBERG. Quite possibly—I would hope that your counterpart over there would care. To the extent that you can raise the

issue with your counterparts, it would be so helpful.

19

Mr. MENENDEZ. With reference to your discussion about that

pipeline development in Brazil and Bolivia and the public participation, how does that actually come about? How does that take

place?

Ms. CALLEAR. Well, it takes place person by person, step by step.

It is a very labor-intensive process. Enron Corporation estimated

earlier in this implementation phase that they had upwards of 200

meetings individually with indigenous groups, members of communities, various NGO’s, government officials on the ground in the

various communities that are affected along the pipeline. The work

is at the grassroots level.

At the more macro level, what we do is make sure that we post

on our Internet site when we are about to do a particular project,

make the environmental impact assessment available to anyone in

the public who requests it, and provide an opportunity for comments. In fact, before every board meeting we have a public hearing so anyone who wants to come and talk to us about the project

and give us their ideas or suggestions can do so. It becomes a very

iterative process, and I think a dialogue has gone on in this particular case because it is a large pipeline, and a lot of people are

affected.

Mr. MENENDEZ. But for the requirement for that consultation, we

would have less of an empowerment and less of a democratization

for those individuals, would we not?

Ms. CALLEAR. You have hit the nail on the head. As Congressman Rohrabacher was talking before, having that kind of public debate and accountability is the first step to democratization. It empowers people, and they have a tool to make the changes needed

in the country. Environmental standards are good, but having accountability and transparency is really key.

Mr. MENENDEZ. Thank you.

Ms. ROS-LEHTINEN. Thank you.

Mr. Cooksey.

Mr. COOKSEY. Thank you, Madam Chair.

Ms. Callear, tell me if an American company went to Venezuela

and started a business, took some of their technology there and

they did not go through OPIC, what would be the ramifications of

it on environmental issues, bad loan, on the political risk insurance?

Ms. CALLEAR. Clearly we believe we are adding value to the

transaction, because chances are that, at this point in time, the

standards that might apply in Venezuela—and I think we just

heard an example from Eximbank about a similar case—might not

be at the level that we require. We tend to follow the World Bank

guidelines and supplement them when necessary.

This project has better environmental impacts because we have

been engaged and working with the company to apply those standards. Certainly from a political risk standpoint, without OPIC that

company has less protection if there are changes in the government’s viewpoint on the particular project, if there is some difficulty on down the road, some contract that has to get renegotiated, some concerns that are raised.

20

Mr. COOKSEY. So if they did not go through you, they would not

have any opportunity to take advantage of the political risk insurance?

Ms. CALLEAR. Certainly they would not have the U.S. Government behind them.

Mr. COOKSEY. Our largest source of oil for gasoline is Venezuela

and Mexico, not the United States. It is not the Middle East. The

largest retailer of gasoline products in this country is CITGO, and

CITGO’s major stockholder is the Venezuela government. Chavez is

the man that led an overthrow of the government a few years ago,

and then he was elected through a democratic process. That directly relates to what you are talking to.

I couldn’t help but notice that Brazil in your testimony is replacing diesel fuel with natural gas, and that is the right and proper

decision, and that has not been done in this country. In the energy

crisis in this country, the Department of Energy or some of these

politicians—and you know how I rail against politicians—they have

dictated that we would do certain things in this country.

For example, in my State, they mandated a coal-burning power

plant and energy plant, and we have these trainloads of coal coming in, while the plant is located on one of the largest reserves of

natural gas in the United States. When all of you Northeasterners

get cold in the winter and are complaining about your high heating

oil, you should be buying natural gas because it is better burning

fuel, it is environmentally the best. But that decision was made by

a bunch of politicians 20 years ago. Of course, none of us would

make bad decisions like that.

The other thing that I am glad to see is that our technology is

being exported over there with energy. They are a good company

in Bulgaria. And, again, I would emphasize something that Mr.

Rohrabacher emphasized, that Bulgaria was running their government on a flawed political policy and that flawed political policy,

which had no democracy, led them to make a lot of bad decisions

from an environmental standpoint and from an energy standpoint,

and they are paying the price right now. I think some of the worst

environmental abuses occurred in these countries.

Ms. Bradford, I was glad to hear you say that you are aware

when market-based decisions prevail over political decision the outcomes are better. I think that is true. You said that private sector

decisions are usually better, and I think that is certainly the case—

not that politicians don’t always have this clairvoyant ability that

we think that we have. Anyway, it is reassuring.

Mr. Renberg, sometimes I have some question about the ExportImport Bank and the approach that is used on some of those loans

in countries, but you were reassuring, and I am sure that you are

making economic statements and not political statements—and

good banking decisions, too.

Thank you very much. Your testimony was good. There seems to

be a game plan. I think that will be good for us and good for the

rest of the world and the environment.

Ms. ROS-LEHTINEN. Thank you, Mr. Cooksey.

Mr. Rohrabacher.

21

Mr. ROHRABACHER. There is one thing worse than a politician

and that is them who holds power without having been elected

through a political process.

Dan, did you say that there have been no requests for loans

turned down for environmental reasons by the Export-Import

Bank?

Mr. RENBERG. Not since I have been there. Historically there

have, but not since I have been there.

Mr. ROHRABACHER. Historically there have. You mean the Three

Gorges Dam project in China?

Mr. RENBERG. Yes.

Mr. ROHRABACHER. Do you know of any other contracts with your

organizations that have been turned down for environmental reasons?

Ms. CALLEAR. On a regular basis, people come to us with large

dam projects, and we are not able to do those because of the environmental impacts.

Mr. ROHRABACHER. Yes, those dam projects.

Ms. CALLEAR. If someone proposes a power plant that can’t meet

our emissions standards, unless they are willing to apply the appropriate technology, we are not able to do them.

Mr. ROHRABACHER. Do you have some examples of people who

have been turned down for environmental reasons?

Ms. BRADFORD. We turn down a lot of projects for a lot of reasons, and if there is an environmental problem that is so big, it

wouldn’t even come up from the staff as a recommendation.

Mr. ROHRABACHER. Early on we mentioned that we should not be

financing with any tax subsidy any project that environmentally

would not be permitted in the United States. Do you have that

standard? Or is that something that has not been codified by your

operations?

Ms. BRADFORD. Would we finance a feasibility study for a project

that would not meet the environmental standards of the United

States, is that the question?

Mr. ROHRABACHER. Correct. In other words, if a project is not

possible in the United States because of our environmental quality,

our laws, etc., and regulations, are any of your organizations involved or can you legally be involved in providing funds and support and subsidies for that very same project overseas?

Ms. BRADFORD. I don’t know on an exact par, sir, how that would

work. At the TDA level, when we are talking about the

prefeasibility and the feasibility study stage of a project on the

drawing boards, every step when deciding whether we provide financing for the feasibility study, we are trying to frame up the environmental issues. You are starting to frame up those issues and

not apply the standards. So I——

Mr. ROHRABACHER. That is still a no.

What about you two guys?

Ms. CALLEAR. Our standards basically are the World Bank standards, and so what I would call them are international standards.

Many of them have been based over the years by reviewing the

best standards that exist in the world, which usually are the U.S.

standards. But in terms of the actual substantive levels in every

category, because U.S. laws were written for the U.S. environment

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and the conditions that prevail here, which may or may not be the

same in the developing countries, but they are the highest standards.

Mr. ROHRABACHER. In my opening statement I made it clear that

people in democratic countries can set their own standards, but

that is different. We are talking about setting standards for the use

of our tax dollars. American people have a right to set a standard

for the use of their tax dollars in subsidizing projects, at least that

they are consistent with our values or consistent with our standards of environment or other types of standards. But that might be

a good piece of legislation to consider perhaps.

Mr. RENBERG. If I could respond along those lines, Congressman,

our guidelines I believe were done first in 1992—obviously, 1988 or

1992. They were recently updated in 1998. As part of that process,

there was significant public participation, exporters, NGO’s, dissemination very wide, and we—the good part, they sunset. We did

not get a permanent guideline in place. They sunset at some point

in the next year; and as a member of the board with this portfolio,

I intend to work closely——

Mr. ROHRABACHER. Let me be more specific then. Are we financing in any way—have we financed in the last 10 years the construction of nuclear power plants overseas? No nuclear power

plants? Nothing from your institutions on that?

Mr. RENBERG. Since I have been there, we did the safety upgrade

in Lithuania.

Mr. ROHRABACHER. I have this feeling that some money that

went into North Korea came from us or some of these Japanese clients.

Again, I personally am not necessarily against nuclear power,

but I do know that you can’t build nuclear power plants in the

United States. And if that is the case because of our standards we

should not be subsidizing that to other countries.

I have another question here about—what relationship do you

guys have with the World Bank in terms of—you are totally separate? You do join in joint projects? Your organization does feasibility sometimes with the World Bank, doesn’t it?

Ms. BRADFORD. Yes. But the World Bank is a multilateral development institution, and the United States is a member. TDA does

have grant funding at the bank in a trust fund that is available

to be used in the exact same way that the TDA core budget is to

be used.

Mr. ROHRABACHER. Are there companies—to your knowledge, do

you know of companies that actually leave the United States and

set up factories in places like China in order to escape environmental regulations here?

Ms. CALLEAR. If there were companies doing that we would not

be able to assist them, because we have a provision that states that

we cannot support a runaway project. We are not active in China

now anyway.

Mr. ROHRABACHER. My question is whether or not there are companies that close up shop here and set up in China, and that is not

the discussion of today. If there are companies like that, they do

get support from the World Bank, do they not, maybe if they go to

China or Vietnam?

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Ms. BRADFORD. Those that TDA funding goes into, bank projects,

we look at that runaway shop issue at each stage of the vetting;

and we would not put any TDA funding into a project that had that

element.

Mr. ROHRABACHER. Your testimony today has been basically talking, and I would say justifiably, tooting your own horn about the

proactive way that you have been to the environment; and that is

very good. They say here in Washington if you don’t toot your own

horn somebody is going to come along and turn it into a spittoon.

I am very concerned about maybe some of the things that are not

proactive but instead policies that are permitting things that go

ahead and happen, you want to happen, but are just going through

the system, people using your systems to do projects overseas that

they couldn’t do here. Of course, philosophically, I oppose the idea

that we should be subsidizing people doing business overseas—but

it makes it worse when they do things that we don’t permit in our

own country.

Thank you.

Ms. ROS-LEHTINEN. Thank you very much for your testimony

today. We thank you for your participation.

To complement the expertise of our first panel, I would like to

introduce two gentlemen who have been in the field and understand the problems and prospects of relations between the environmental movement and the international trade community.

First, I would like to introduce Mr. Paul Joffe, the Associate Director for Advocacy at the National Wildlife Federation’s Office of

Federal and International Affairs. A former Acting General Counsel of the Department of Commerce and Deputy Assistant Secretary of Commerce for Import Administration, Mr. Joffe is a

former recipient of the Navy Achievement Medal for his years of

service at the U.S. Navy JAG Corps. We thank you for being here

today.

He will be followed by Mr. Myron Ebell, the Director of Global

Warming and International Environmental Policy with the Competitive Enterprise Institute. In addition, Mr. Ebell currently

chairs the Cooler Heads Coalition, a subgroup of the National Consumers Coalition that focuses on the issues of climate change. A

former policy director at Frontiers of Freedom, Mr. Ebell is an accomplished essayist whose writings have appeared in a number of

nationally respected publications.

I thank you gentlemen for your testimony. We look forward to

hearing your insights, and your full statement will be entered into

the record, so if you would feel free to summarize your remarks.

Thank you.

Ms. ROS-LEHTINEN. Mr. Joffe, let us begin with you.

STATEMENT OF PAUL JOFFE, ASSOCIATE DIRECTOR FOR

ADVOCACY, NATIONAL WILDLIFE FEDERATION

Mr. JOFFE. Thank you very much, Madam Chair. And I want to

commend the Chair and the Ranking Minority Member for their

very constructive statements and in fact support for environmental

legislation such as the conservation funding legislation, and I

would like to salute the Ranking Member for being from my home

State of New Jersey.

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Ms. ROS-LEHTINEN. There is another Mr. Menendez in Spain, you

know.

Mr. JOFFE. Without a healthy global environment, any one nation’s prosperity is in jeopardy.

The evidence of the need to ensure that trade and environment

policy are mutually supportive continues to increase. At the same

time, public confidence in trade rules and in multilateral institutions has been shaken. We believe this is because of a growing

sense that these institutions don’t reflect the public interest regarding the environment, but we are optimistic that that can be remedied because we believe that there are ways to do that, some of

which have already been explored today.

I would like to suggest three components of U.S. trade policy we

believe can advance both trade and the environment simultaneously so that they are mutually reinforcing. I am just going to

touch on and summarize some items in the prepared statement for

the record.

The first of the three is improved openness and accountability

both in our own trade institutions and in those multilateral trade

institutions. For example, prior to any action initiated by the

United States against a foreign environmental measure, we believe

that other agencies of the U.S. Government and the Congress and

the public should be consulted. That is not something that has

been fully done in the past, and we think that would be an improvement, and that is an example of a process improvement that

we mention in the statement.

The second category of recommendations we have deal with ensuring that trade liberalization and environmental protection go

hand in hand, and we reference a number of improvements here

such as the need for recognizing legitimate national and international environmental standards. Contrary to what some have

suggested, this is not some novel innovation. The charter of the

GATT going back to 1948 contains a provision which allows for

that type of consideration, and there has been some debate over

whether it is being applied properly, but there is a long-standing

principle, not a terribly novel innovation. In fact, it is something

that happens within the United States. There is a leading Supreme

Court case in which the environmental rules of the State of Maine

were sustained against claims that they somehow violated free

trade within the United States. So that balancing goes on under

free trade regimes classically.

The third area in which we make recommendations is for improving global consensus. A major lesson of the Seattle ministerial was,

as a consensus-driven institution, the WTO needs to find common

ground that unites the interests of the industrial world with those

of the developing world. We recognize that liberalized trade abroad

can be vital to securing the means for less developed nations to implement policies for sustainable development and environmental

protection. But these results are not a given. They do not occur

automatically.

And glancing at the statement of Mr. Ebell, who is going to follow me, we would not agree with the idea that one somehow has

to go first; and perhaps we can discuss that in the question period.

We believe that they go together. They are mutually reinforcing.

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And indeed the sustainability aspect is an important aspect of development, that you really are not going to have successful development unless it is sustainable. So we have proposed in recent

months to both the administration and Congress that there be a

systematic approach to reaching out to developing countries and to

working with them to improve the capacity of those countries to

help themselves; and we have proposed that that include evaluation of their needs, significant incentives and financial assistance

to those countries, milestones and reporting and evaluation of results.

In conclusion, international trade is suffering a crisis of eroding

public confidence. It is in the interest of everyone who wants trade

to succeed to establish public confidence in the institutions and

policies governing trade.

We are optimistic that this is possible because we believe that

the agenda we have set forth is a straightforward, common-sense

agenda that can provide the basis for consensus, not one that is

terribly difficult if all concerned will work together. Thank you.

[The prepared statement of Mr. Joffe appears in the appendix.]

Ms. ROS-LEHTINEN. Thank you, Mr. Joffe.

Mr. Ebell.

STATEMENT OF MYRON EBELL, DIRECTOR, GLOBAL WARMING

AND INTERNATIONAL ENVIRONMENTAL POLICY, COMPETITIVE ENTERPRISE INSTITUTE

Mr. EBELL. Thank you, Madam Chair; and thank you for inviting

me to testify today. My name is Myron Ebell. I will just try to highlight a couple of aspects of my written testimony.

It seems to me that there is always a temptation to try to make

trade into some—to try to moralize it, moralize it for whatever goal

particular a group has. Now, some religious communities over the

centuries have tried to do this within their own community, and

that is their right. But to memorialize trade and make it compulsory for all of us is problematic, and that is what is at stake with

the World Trade Organization and the attempt to link the environmental and labor issues into them. Because, of course, each one of

those interests, the environmental interests and the labor interests,

are an attempt to moralize trade on the basis of some interest of

that group.

I think this was best put some time ago by Professor Deepak

Wol, one of the world’s largest development authorities. He teaches

at UCLA but is a native of India. He was debating Ralph Nader

on television, and he turned to him and said, so, Ralph, when you

go to the butcher do you inquire as to the background of the butcher who is providing your meat? And Ralph Nader was apparently

nonplused. And Deepak explained, what you are offering for the

international trading system should be applied in your own life.

That is, do you inquire as to whether this is a good family that is

providing this meat and look at the farm that it has come from and

if you agree with them politically and religiously and everything.

But that is not the purpose of trade, of course. The purpose of

trade is to provide consumers with the cheapest and best goods

possible. And there are many, many protectionist interests in the

world that would like to do down consumers, make goods less afVerDate 11-MAY-2000 16:47 Jan 05, 2001 Jkt 000000 PO 00000 Frm 00029 Fmt 6633 Sfmt 6633 68287.TXT HINTREL1 PsN: HINTREL1
26

fordable and of less quality by protecting their own special interests; and that is the battle that the WTO has all the time. And so,

therefore, I would like to suggest that importing two groups of protectionists into the WTO is a recipe for disaster, labor protectionist

and environmental protectionist, because each one of these groups,

their recipe for everything is to restrict trade in some way. That

is in the way that they like.

Now, they have some charges against the WTO, that it is undemocratic, unaccountable and secretive and that it overturns national environmental standards; and I would like to address those.

The WTO is a club of sovereign nations that have joined up.

Each one of these sovereign nations has a role to play and can negotiate there. Other groups that are not nations, such as the environmental groups, or, in the case of my organization, free market

groups, we have every right to make ourselves heard within our

own deliberative processes in our countries. And we do that.

Now, I should say that the environmental groups usually win,

and the free market groups usually lose, but that is the way that

the game is played. But what is it to import these groups and to

give them a seat at the table, at the WTO? Well, it is to change

the club into something very different, something that is not accountable to anyone. Because environmental groups, labor unions,

even free market public policy institutes are not accountable. They

work in secret. They are not democratically elected; and, therefore,

they should mind their own business and stay out of the WTO.

Now, they can make their views known, but they don’t have a

place. They are not members of the club, and they should not become members of the club.

Now, of course, some deliberations are secretive. All international negotiations have periods that must be secret because the

nations that are doing deals are giving up some of the interests of

some of the people in their own country in order to further what

they feel is a larger national interest; and, of course, they have to

be able to do that without having the world scrutinizing them. And

I think opening up the deliberative processes of international negotiations is the way to spread strife and probably warfare, certainly

civil warfare in the world. The idea that WTO overturns national

and environmental standards, this is utterly false. The WTO in

every one of its dispute resolutions has upheld national and forbidden extraterritoriality, and that is that we can export our standards and force some other country to abide by them as a condition

of trading with us.

So it seems to me that all of the complaints about the WTO,

which is certainly not a perfect organization, are largely baseless.

I would conclude with a couple of remarks with the practical

problems of the environmental linkage, and I would like to quote

from an editorial that appeared in the International Herald Tribune right before the WTO met. It is by Barry Akobundu, who is

a colleague of mine at CEI who is an agricultural economist by

trade and a Nigerian by birth. This is what she said from her perspective as someone from a poor and developing nation:

27

Increases in wealth will first provide families with basic necessities and only later

with the disposal income to demand improvements in the environmental quality.

Consideration of environmental issues in WTO trade talks threatens to restrain

trade and progress in the 48 sub-Saharan countries. Detractors of free trade point

to environmental degradation as a consequence of trade and want this to be a priority issue in trade negotiations. They would condition trade with countries of the

region on environmental policies. Such linkage would make an acceptable set of environmental policies precede increased access to the markets of developed countries.

But in a region in which the basic necessities of life are luxuries, that is at best

unrealistic and at worst inhumane.

I think that fairly summarizes the situation between our environmental standards and those that are possible in the rest of the

world.

Finally, I would bring up something that has only very marginally come up so far today and that is the claim that, without the

ability to export our environmental standards and force them upon

other countries, we will have a race to the bottom. That is to say,

industries will move to those areas of the world that have the lowest environmental standards.

Well, first, there is absolutely no evidence of this, no factual evidence; and I have searched quite a lot.

Second, the environmental groups that push for environmental

legislation in this country continually talk about how it won’t be

costly. That is, it will not impact industry in the way that industry

claims that it is going to raise our cost of production. They continually say no, no, no, it will actually improve your performance by

spending this money on pollution controls.

So I think I would conclude by saying that the threat to the

world trading system is real. It is very serious. It is called linkage,

and thank God for the developing nations of the world which almost unanimously and steadfastly oppose linkage because they understand what is at stake.

[The prepared statement of Mr. Ebell appears in the appendix.]

Ms. ROS-LEHTINEN. Thank you, Mr. Ebell and Mr. Joffe, for both

of your testimonies. As you heard, the bells have rung, and we

have a series of four votes, so that will keep us on the floor for a

substantial period of time.

I would like to recognize Mr. Menendez to ask a concluding question, and I have a few questions, but I will give them to you in

writing and perhaps you can respond.

Mr. MENENDEZ. Thank you. I also have more questions than I

could ask, so I will submit them for you to answer as well.

Let me get this straight. The purpose of trade—I was trying to

write your words down as you said them—is to obtain the cheapest

and best goods possible. Is that a fair characterization of what you

said?

Mr. EBELL. Yes.

Mr. MENENDEZ. So it is also fair to say that that purpose would

be achieved regardless of how we seek to accomplish that goal?

Mr. EBELL. Could you repeat that?

Mr. MENENDEZ. The purpose of trade is the cheapest and best

goods possible. It is the cheapest and best good possible however

we can achieve that?

Mr. EBELL. As long as we pay for them, yes.

Mr. MENENDEZ. That would be the only qualifier?

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Mr. EBELL. There may be some slight other qualifications, but

yes, in a market economy, when you pay for a product, you get it.

Mr. MENENDEZ. So if the price of paying for that is our only

qualifier, and listening to your comments about moralizing trade,

I guess then it is OK to trade with those countries that imprison

their people and use their prisoners for slave labor. I guess that it

is OK to trade with those countries that Chernobylize their citizens; and I guess it is OK to trade with those countries that, in

fact, would use children to create products. Because those ultimately would be the cheapest possible products that we would obtain and, of course, we would pay for them, but that would be OK?

Mr. EBELL. Yes, it seems to me that we do all of those things

now that you have just listed. We do trade with countries that do

all of those things.

Our belief is, first of all, that it benefits consumers in this country.

Second, that it is up to those countries to decide what sort of political system they want to have and what sort of laws governing

production they want to have.

Third, it is the belief I believe of virtually every trade economist

in the world that trade with repressive regimes has the effect of

both helping the poorest people in those countries and also has the

effect of liberalizing those regimes over time. This is not a hardand-fast rule, but I think the people who have looked most seriously believe trade does good.

Mr. MENENDEZ. I have looked at it seriously, and I beg to differ

with you. I don’t believe that Americans generally want the cheapest price at any cost, including the sacrifice of a child or the imprisonment of people in order to achieve a benefit here in the United

States. If they truly knew that was the case, I would venture to

say on that score, or having a cleaner environment that they would

mutually enjoy, that they would pay somewhat more not to get the

cheapest product to their table or to wear a clothing article in that

regard.

The suggestion that trade alone is going to lift all tides for the

people here in this hemisphere of which nearly 50 percent live

below the poverty level—trade has broadened the gulf between

those who already have within those societies and those that do

not. If you do not match it with development assistance in addition

to trade, you do not lead to where you need to be.

I am really concerned about the view that neither environmental

issues nor some of the issues in terms of labor—that our view is

that, at any cost, as long as we pay for it and the cheapest price,

if that is the standard of the United States of America, that is in

my mind an appalling standard and one that does not sustain itself

over time for our country for a policy and ultimately for the sustainability. I am not among those marching on the streets of Seattle who drowned you out, but I do believe that you cannot say

that the only equation is the cheapest price. The cheapest price

does not promote democracy, it does not promote sustainability

and——

Mr. EBELL. You have made several points.

Ms. ROS-LEHTINEN. Mr. Ebell, I am afraid—if you can just take

1 minute each. We have 5 minutes to vote.

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Mr. EBELL. First, I just suggest that trade embargoes don’t have

much impact. Are we hurting Saddam Hussein or the poorest people in Iraq? We are hurting the poorest people in Iraq.

Second, I have no problem not to buy products that are produced

in countries which produce them in ways that I don’t agree with.

I make many of those choices in my personal life. But I don’t want

my country telling me what I can and cannot buy. I want that

choice.

One more point. There are many other international forums for

pursuing human rights, labor and environmental issues. We have

hundreds of treaties governing national environmental issues.

Don’t mix up trade with environment.

Mr. MENENDEZ. Thank you. Thank God you are not in a country

where you are sitting in jail.

Ms. ROS-LEHTINEN. Mr. Joffe.

Mr. JOFFE. It is not the law of the GATT or the charter of the

WTO that anything goes. There are provisions in the charter that

provide for exceptions, forced labor and for immoral aspects of

trade. The debate is somewhere else. The debate is how those are

being interpreted. And the only other point in the shortness of time

that I would say is that it is impossible to avoid some discussion

of this in the WTO because the existing environmental rules are

sometimes challenged under the WTO charter, and it is at that

point that a deliberative process has to take place as to whether

the exceptions apply. So you can’t extricate them, but if the countries of the world can move in another forum and provide a rule

that applies to particular cases, we are all for that.

Ms. ROS-LEHTINEN. Thank you, Mr. Joffe; and thank you, Mr.

Ebell.

The Subcommittee is now adjourned.

[Whereupon, at 3:50 p.m., the Subcommittee was adjourned.]

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A P P E N D I X

JUNE 21, 2000

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