INTRODUCTION
TO
ENERGY SECTOR SERVICES MATRIX

The globalization of the world economy and rapid advancements in information
technology has raised significant questions regarding traditional theories of international
trade. In the past, intemational trade consisted of imports and exports of goods such as
agricultural products (grain, corn or other foodstuffs), natural resources (oil, coal or
minerals), and manufactured goods (clothing, automobiles or electronics).

The globalization of the world economy has increased this type of trade. Many of
these goods, such as oil, are considered to be sold in a world market, with prices
depending on global conditions that affect the mechanics of supply and demand. The
markets for many other goods (for example metals and oil by-products) are also traded in
an international market.

Perhaps the greatest globalized market is the one for financial capital. With the
recent developments in information technology, a financial trader can move millions, if
not billions, of dollars fom one market to another with just a few taps on a keypad.
These capital markets are brutally competitive and place i asing demands on those
for ways to be more efficient and to achieve higher returns for their capital providers ~
lest the providers go elsewhere. They are also looking for ways to reduce their cost of
capital by reducing the risks inherent in their business through the use of service
providers that are more capable than they at managing certain risks. The reasons for
these actions are obvious; without financial capital, businesses and economies can not
thrive.

In light of these developments in the international markets, you are asked to
consider the following energy sector services matrix. The energy sector is perhaps the
most capital-intensive sector in the world’s economy. Oil refineries, power plants and
gas pipelines are very expensive. Efficient capital formation demands that energy
industry participants operate in the most economical manner. These demands often result
in the use of specialists such as drilling companies or construction companies. They also
often require that certain risks such as fuel supply, operational performance arid
transportation and detivery of energy products be managed by companies with sufficient
expertise (and credit rating). Further, energy intensive industries are increasingly
becoming aware of the impact of uncertainties in the cost of their capital cost structure
due to the inability to effectively manage the cost of their electricity and natural gas and
are utilizing commodity and price risk management strategies.

The energy sector services matrix describes several areas that can be viewed as
distinct areas of trade within the energy industry. These areas do not involve the
movement of goods from one country to another. Rather, they deal with the movement

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Mr. Chairman, on enhanced trade with the Caribbean and with Africa, we look forward to
working with you and the other Members of the Committee. Please accept my thanks for this

opportunity to speak wath you,

00100000000078


FMAWATCH

January 17, 2002
Dear Mr. Kenneth Dam:

This week, govermment-sponsored enterprise (GSE) Fannie Mae announced
record profits for 2001, with net income rising to $5.9 billion ~ 33% higher than in
2000, While such announcements bode very well for shareholders, American taxpayers
face far greates risks in view of startling rise in debt being acquired by GSEs.

T encourage you to take a few moments to review the attached document, which
outlines the potential risks the GSEs could place upon on the U.S. financial system. For
additional information or to discuss these issues, please contact us at (202) 637-8281 or
visit our website at www.fmwatch org.

Sincerely,
PP pg darareR.

Mike House
Executive Director

00100000000403


“COVER STORY

Q&A with Enron's Sklling

_ “In every business we've been in, we're the good guys”

8 President Jeffrey K. Skilling to take the reins of Enron Corp. on Feb. 12, he acknowled es that i

is new role of CEO may require hi to be a little “less blunt." Interviews with Skilling at his Houston

& headquarters make clear doing so will be a challenge for one of the most innovative, provocative players in the

£ a3 put ascreen up

energy patch,

Thanks to Skilling and his more diplomatic counte! , current CEO and Chairman Kenneth L. Lay, Enron
has quickty transformed itself from a lumbering into North America’s largest buyer and seller of natural
gas and electricity, along with a slew of anergy-i financial derivatives. And it's quickly conquering Ei
and heading for Japan. While California’s troubles with clectricity deregulation have caught Enrea in the
spotlight, Skilling hasn’t lost faith in free markets and how the company can benefit from them. Here are edited
excerpts of his conversations with Dallas Bureaa Chief Wendy Zellner:

& When did you see that your trading model could be in a much broader than natural
trading applied way than just gas,

where
4 The real breakthrough for us was electricity. Everyone told us wo were erazy, that this just absolutely :

wouldn't apply, that gas and electricity were different... I used to remember thinking, well, so what? It's a”
commodity for crying out loud. We had the burden of proof, but we wore right. We were able to create a market ;
very $

to the market in natural gas.

We'd hear tall about what business-to-business people were going to do in these verticals (bandwidth, steel, -

palp, and paper}. It was almost naive, We've created markets, and we knew what it took. And it’s not as simple
ord saving, OS everyone, come snd buy and sell the staf. Its logistics, the back office,

the schi juling, the risk managemen' the credit — all the things that make markets operate. We've done it in ;

gas, we've done it in electricity, we're doing it in bandwidth,

But doesn’t market know count for something?
& Noe: ofthe Bas us worse Seen Most af them were from outside the

{and were forming alliances with industry players]. We'd seen in the gas and the electricity business that the |
rightness rater 7m © the death. Anyone trying to create an open, transparent mar et is (their) worst
nightmare, 3 3

Q What's different about taking on the incumbents in these new arenas va. energy, where you had some assets H

and market knowledge?
A: We'll see... ve goto create bests aad eee ar auels are pretty clear I think the challenge is
exactly the same. You've got to create -y, and you have to create a transaction infrastructure that

people ta (be certain] that if. need the product. they can transact for (it) at a price. Once you've got that,
then you see these markets . At least, that's been our experience in gas and electricity. eet

@ Why is it so difficult to for others to guin market share in your business?

A: Lf you look at this whole concept of creating markets, the fundamental advantage of a virtually integrated |
a a physically integrated system is you need less capital to provide the same reliability. How do you :
tsa i

theory. Nondelivery is a nonsystematic risk. Ifa pipeli 2 blows up or a compressor goes
down or a wire breaks, the bigger your portfalio, the greater jour abit bea eae na tae

So, if for example, I'm just starting in the gas merchant business and 1m selling gas from central Keness to
Kansas City, if the pipeline [between those places] blows up, I'm out of business. For Enron, if that pipeline
blows up, Ti back haul out of New York, or Tl bring Canadian gas n and spin ft through some cesrore ites,
If you ean diversify your infrastructure, you can reduce nonsystematic risk, which says there’s a..very strong
tangible network effect... But you're got to get big, you've got to get that initial market share, or you're toast.

,

That's why we'll continue to see ghakeouts in this business, It's impossible ta manage risk if you're a little player. {

Q: Do you see yourself a3 sart of truatbusters in other industries?

A: If you walk around the halls here, people have a mission. The missian is we're on the side of angels, We're
taking on the entrenched monopolies. In evary business we've been in, we're the good guys, That's why they
don't like us, Customers love us, but the incumbents don't like us, We're bringing the benefits of choice and

00100000000397 —


Committee = 212%, ..
On Finance

William V. Roth, Jr., Chairman

NEWS RELEASE www.senate.gov/~finance
FOR IMMEDIATE RELEASE Press Release #105-173
September 17, 1997 Contact: Ginny Flynn
202/224-4288
Christina Pearson
202/224-5218
TA’ E,

WASHINGTON - The Senate Finance Committee met today to consider the
President 5 fast track proposal, the Caribbean Basin Initiative and the
Administration's trade initiative for Sub-Saharan Africa. The following is the
opening statement of Chairman William V. Roth, Jr. (R-DE):

“Our hearing today focuses on one of the most important topics we will face
during this Congress. Today, more than ever, our economic future is linked to
trade. A growing percentage of our gross domestic product depends on
international trade and access to overseas markets.

“We will, foremost, hear of the President's proposal for renewal of his trade
negotiating authority and the related Congressional implementing procedures. We
will also hear from the Administration on two other Proposals ~ one to create parity
between the treatment of imports from the Caribbean Basin and our NAFTA
trading partners, and another on the Administration's initiative for Sub-Saharan
Africa

“Before we turn to the President's representatives, however, I would like to
offer a few comments on the purposes behind the so-called fast track process.

“Since Cordel! Hull — Secretary of State under Franklin Roosevelt and a
former member of this committee -- first outlined his vision of a trade agreements
program in the early 1930s, cooperation between the Congress and the Executive on
trade has been the foundation for our economic progress

“The Constitution lodges the power to regulate foreign commerce with the
Congress. At the same time, it is the President who the Constitution empowers to
be our representative in foreign affairs. As a consequence, we need to work together
to make progress on trade.

“In Hull's time. tariffs represented the principal barrier our exports faced

00100000000051


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INTERNATIONAL GAS CENTER

ENERGY SERVICES - JUNE 22, 1999

(The following is a brief outline)
The topic I have been given today is “WTO/APEC Update - Energy Services and

Equipment liberalization”

1. A lot has been done concerning energy services in APEC. A matrix was devised that
reflects the vertical activities of the industry. APEC ran into controversy, however, when
it came time to adopt the matrix and decided to leave the issue to the upcoming Seattle

Round of the WTO.

Il. The EU has done significant work in the past 24 months that indicates they are ready
to become involved in the WTO debate - I have read some of the material. One of the
documents contains the statement that “The welfare and the economic growth of our
economies are directly linked to a secure energy supply at reasonable prices.” It goes on
to list the EU’s energy policy objectives to be the security of energy supply,

competitiveness, and environmental protection. These are all points on which we can
agree. Just as significantly, there are points on which we do not agree and these should ¢

be part of the future discussions before, during and after the WTO.

Il. The effort by business here in the United States has not been as vigorous as maybe it
should have been, Enron - Joe Hillings, Terry Thorn; PECC ~ Steve Burns; and CSI Bob

Vastine have done exceptional work in this area but were not given much help by

00100000000157


FMAWATCH

January 17, 2002
To: Secretary Paul O'Neill
FROM: Mike House, Executive Director — FM Watch
SUBJECT: Fannie Mae’s Record Profits Pose Unprecedented Risk to American
Taxpayers
FMAWATCH

Fannie's Record Profits Pose Record Risk for U.S. Taxpayer

Government-sponsored enterprise (GSE) Fannie Mae announced on Monday, January 14, record profits for
2001, with net income rising to $5.9 billion - 33% higher than in 2000. While such announcements bode very
well for shareholders, American taxpayers face far greater risks in view of Fannie Mae's startling rise in debt,
according to a new report on GSE debt issued by FM Watch. For years, the GSEs have been permitted to
operate on thin capital cushions built for best-of-times assumptions, Recent developments illustrate the
problem has grown:

At the end of September of 2001, the value of Fannie Mae's shareholder equity was $5.6 billion lower than
where it had been at the end of June as a result of risky hedging in the derivatives market. This reduced the
company’s equity by $10.6 billion. Fannie Mae's debt/equity ratio then stood at 53:1, five times more than the
average for commercial banks. Monday's release from Fannie Mae reveals that shareholder's equity at the end
of 2001 was still $1.3 billion lower than where it was at the end of June, as a result of its risky hedging. Its
debvequity ratio was 42:1. Truth be told, if Fannie Were regulated like a commercial bank, it would face
serious risk of closure.

Since September 11, the nation has leamed that risks once deemed improbable can quickly become possible
With the nation in a recession, all financial institutions risk being adversely affected but none more than
Fannie Mae. Excesses of this type are bad in good times - but they are unconscionable and dangerous in bad
times. The savings and loan crisis taught America that under-regulated financial institutions can impose
painful costs on U.S. taxpayers im an economic downtum, More recently, the collapse of Enron has
underscored the riskiness of derivatives and the need for sufficient overzi Particul true wl

as in the case of the GSEs, market perception of an impli ial ri

a taxpayer bailout.
The Size and Growth of GSE Debt

In recent years, the dramatic growth in GSE debt has significantly increased the risk to U.S. taxpayers. Fannie
Mae and Freddie Mac have increased their debt six-fold since 1992, from $196 billion to $1.26 trillion in the
third quarter of 2001. In a decade when Treasury borrowing dropped dramatically, uncontrolled GSE debt
was moving in the opposite direction. Almost unbelievably, the GSEs now guarantee more debt and
mortgage-backed securities (MBS) than all comparable U.S. Treasury debt.

~ Continued -

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The common goal of the Administration and many in the textile and apparel industry groups has
been to expand CBI trade preferences to the textile and appare! sector, which has until now
targely been excluded from duty preferences. This bill responds to the concerns of the CBE
countries that feel that they may be disadvantaged by Mexico having NAFTA benefits for
apparel shipments to the U.S., asd also to respond to the concerns of U.S. industry that their own
investments and partnership production operations in the Caribbean have continued vicbility and
success.

The key to the success of the existing CBI program is that the trade provides benefits to both the
U.S. and to the Caribbean countries. The majority of our apparel imports from the Caribbean.
countries contains substantial U.S. content. The Intemational Trade Commission estimates that
over 80 percent of our apparel imports from the Caribbean are under these “production sharing”
arrangements. This means that our producers and our workers make the fabric and the other
inputs (linings, sewing thread, notions) that go into the CBI's apparel, our companies employ
people in cutting and distribution in the U.S., and so on. However, the bill allows us to address
situations of serious damage or threat from these imports if necessary.

The real benefit to the progeam is that we have seen apparel production come back to our
hemisphere from Asian sources, including China. Last year, imports of apparel from the CBI
grew 12 percent while imports from China were flat and imports from Hong Kong, Korea and
Taiwan declined 8 percent.

Over the 10 year life of the quota preference program for the CBI, imports of apparel from the
CBI have grown at an average annual rate of 20 percent, while imports fom China grew by 4
percent on average and imports from Hong Kong, Korea and Taiwan declined by 3 percent. The
CBI countries taken together are our largest foreign supplier of apparel products.

We fully expect the textile provisions of our proposed legislation to further expand such trade in
a manner that will benefit the United States as well as the CBI beneficiary countries.

Given the potential benefits for these countries, the changing economic and trade environment in
the region and the need for such a bill to include strong incentives for sound trade policy
measures in the Caribbean, we have designed a program that would, through a phase-in process,
give countries the incentive to continue to make progress on trade policy. We have also given a
great deal pf thought to ensuring increased market access for U.S. businesses as we grant
increased preferences to CBI countries. This bill does not create a one-way street of open-ended
trade preferences with no benefit to U.S, interests. Nor does it place unreasonable or unfair
burdens on the countries of the Caribbean. It is a balanced trade package that promotes
economic development in this region that is so important to the United States.

Initial Designation
To achieve our goals, prior to initial designation as a beneficiary, a country would have to

4

00100000000068


200%“SE=000386 roecues

ENRON, WASHINGTON
1775 EYE STREET, NW

DATE: 18/01 11:52 AM

The Honorable Lawrence H. Summers
Secretary of Treasury

U.S. Department of Treasury

1500 Pennsy'vania Avenue, NW

Room 3330

Washington, DC 20220

202-622-1100

202-622-0073 (fax)

FROM: Linda Robertson, Vice President, Federal Government Affairs
Joe Hillings
Lora Sulfiven PHONE: 202-466-9142

FAX: 202-828-3372

Nurnber of pages: 3

Please see attached press release regarding Bill Archer's decision to join
PricewaterhouseCoopers.
Regards.

Linda Robertson

00100000000224


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MAY @3 1999 23:07 FR ENRON INT PR DEPT 713 645 6594 TO S1ze282B3372 P.2e2
1/02/93 23:22 —-JOWN AMELER-ENRON + 713c4s8594 fureus wus

FROM: JOE HILLINGS
ENRON CORP,
WASHINGTON, D.C,

Enron International Statement on

US-Japan Enhanced Initiative on Deregulation and Competition Policy

Enron saluted today the government of Japan and the office of the United States trade
sepresentative for their progress in their dialogue to deregulate and open the Japanese
energy sector to constructive competition. These reforms being discussed should reduce

, electricity prices, which are among the world’s highest, and provide a fundamental boost
to Japan's economic recovery. “We regularly see demonstrations of how free and open
markets provide lower cost and more innovative services to consumers,” said Joseph W.
“Sutton, chairman and CEO of Enron Intemational. “We applaud this initiative by the *
governments of Japan and the United States. Clear, wansparent, non-discriminatory rules
and regulations in the power sector will iocrease competition to the benefit of all

»

Enron is one of the world’s Jeading integrated electricity and natural gas companies. The
company, which owns approximately $30 billion in energy related assets, produces
electricity and natural gas, develops, constructs and operates energy and water facilities
worldwide and delivers physical commodities and risk management and financial
services to customers around the world, Enron's Internet address is www.enron.com, and
the stock is traded under the ticker symbol, "ENE."

x

00100000000110


1999-SE-013340

E. Joseph Hillings
Vice President and General Manager
Federal Government Affaire
ty,
Enron Corp.
%, 1775 Eye Street, NW, Swite 800
Washington, DC 20006-4607
(202) 466-9145
Fax (202) 828-3372
skiilin@enron.com
TRANSMITTAL SHEET
TO: The Honorable Lawrence Summers
Secretary of Treasury
US Department of Treasury
FROM: Joe Hillings
DATED: December 8, 1999
RE: Ken Lay's Speech - WTO Seattle Ministerial

Enron Chairman Ken Lay recently addressed the Business Forum at the WTO
Meeting in Seattle on energy services and the new economy.

1 thought you would find the attached presentation to be of interest.

Sincerely,

Encl.

Natural gas. Electricity. Endless possibilities.TM

00100000000195


20uUT“SE“002 68 6 To 6220873 P.eier

ENRON, WASHINGTON
1775 EYE STREET, NW
Suite 800

Washington, DC 20006
202-466-9145
202-828-3372 (fax)

FAX COVER SHEET
DATE: 3/4101 4:47 PM
NAME:

TO:

Attention: Nancy (Scheculer)
The Honcrable Paul H. O’Neill
Secretary of Treasury

U.S. Department of Treasury
1500 Pennsylvania Avenue, NW

Room 3330
Washington, DC 20220
202-622-1100
202-622-0073 (fax)
FROM: Linda Robertson, Vice President, Federal Goverment Affairs
Lora Sullivan PHONE;
FAX; 202-828-3372
Number of pages: 1

Re: Request for a meeting with the Secretary on April 5 in the afternoon

Dear Nancy:

Jeff Skilling, President and CEO for Enron would like to schedule a meeting with the
Secretary to discuss West Coast eneray crisis issues. We would like to schedule a
short meeting sometime after Noon on Thursday, April 5, 2001. If this is possible,
please call me at the number listed below. .

Thank you for your assistance in this regard.

Lora Sullivan
Federal Government Affairs Representative

202-466-9142

00100000000120


e2/25/93 13:28 RAND + 912225228273 NO,2@11 as

aaert 4 sean,

“TENNECO”

The Honorable Robert E. Rubin
February 25, 1999
Page Two

We very much hope that you will be able to join us in New York and look forward
to hearing from you at your earliest convenience.
Respectfully,

ee

Ki L. Lay

enneth L. Walter V. Shipley

Chairman and CEO Chairman and CEO

Enron Corporation The Chase Manhattan Bank

Paul H, O'Neill Emest Stern

Chairman and CEO Director

Alcoa, inc. JP. an & Co., Incorporated
Je Reppin, — Macrae enpatonerny..

John E. Pepper Maurice Tempelsman

Chairman of the Board Chairman of the Board

Procter & Gamble Lazare Kaplan International, Inc,

-% .

DowteLt\. Rynoheledy dak. Vea haTion

Donald H. Rumsfeld Jonn L, Vogelstein

Chairman of the Board Vice Chairman and President

Gilead Sciences, Inc. E.M, Warburg, Pincus & Co., LLC

Henry, Seer

Director and Senior Advisor
Lucent Technologies

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~ 00100000000153


costs to consumers, “that
would cause us tron:
bie," says Skilling.
But Skilling and
other industey players
don't think that’s likely to happen, as other states such as
Pennsylvania prove thelr deregulation models can work. In-
deed, some believe that the nation's maddled effort to move
toward deregulation is the best of all worlds for Enron. “If |
the market were really open and very, very efficient, there |

ds. California 3
goes back to

isnt a kot of need for these truding intarmediavies,”
Lawrence J. Makovieh, a senior director of slecerie powe:
search for Cambridge Energy Research Az tee, Lack
for Skilling and Enron, that's one vision that’s likely to remain
a pipe dream for some time.

By Wendy Zeliner in Houston, with Christopher Palmteri
in Los Angeles, Peter Coy in New York, and Laura Cote in
Waskington, D.C.

For aa interview with Skilling, gn to the Fab. 12 issue online at
www, Dusings: i]

G-DO IN THE CORNER OFFIC

duction director at a startup Aurora
(L) r+ station. Skilling's first duties
were to paint walls at the station,
bat he quickly learned how to oper-
ate every piece of equipment in the
place, When the older production di-
rector quit in a huff om opening day,
Skilling was the only one qualified to
‘se the job. The station went on the
: each day at 4 pam. when
okilling’s mother could drop him off
after school. “I liked being successful
when £ was working, and I wos

Reprinted fro
The

smart,” says Skilling, with no trace ton, first in operstions and then in a2- j
of modesty. set and ability management Aer i
After graduating with a degree in —_—he left, the bank went bast when cil t
applied science from Scuthern and real estate crashed, raining the
Methodist University in Dallas, lives of some of Skilling’s former col-
Sicilling went to work fortwo years — leagues. He credits that in
for First City National Bank of Hous- part for his intense foous on risk con-
SITE trols at Enron. The bank “had :
taken this enormous concentrat-
risk and wasn’t able to lay it
say
graduating in the top
‘5% of his Harvard waa class in

on an Illinois highway, which:
him avoid the Vietnam draft °-.

SELF-EVALUATION "I've never-not.. |
been successful In business or.work, |
ac” na ~ Fs

FAMILY Divorced; one daughter, 16,
and two sons, 15 and 10-

“I knew this was big," he says.
| And getting bigger all the time.
J By Wendy Zeliner in Houston

acseans

wets

1” DesineiWeele, February 12. 2001. oopryrtattt ty The McGraw-Hill Companion tnc., with at rights msereed
Terr erp cm wetoraerhne, MM Cael oF CASINIRNT GE SY COENEN, POCA, BAIN GF rmmRETeRt OESOTANY

00100000000396


FP pyyay

82202 orgy

00100000000114


THIS MATRIX IS NOT A
NEGOTIATING DOCUMENT.
IT IS A DEFINITION OF CERTAIN
ENERGY SERVICES WHICH ARE
INCREASING AS TECHNOLOGY
AND OPPORTUNITIES GROW
GLOBALLY.

00100000000156


E. Joseph Hillings

Vice President and Genersi Manager
Federal Government Affairs
% even cor
2, 1775 Eye Street, NW, Suite $00

Washington, DC 20096-4607
(202) «86-9145
Faex (202) 428-3372
{jhillini@enren.com

TRANSMITTAL SHEET

TO: The Honorable Stu Eizenstat

Department of Treasury

FROM: Joe Hillings

DATED: December 8, 1999

RE: Ken Lay's Speech — WTO Seattle Ministerial

Enron Chairman Ken Lay recently addressed the Business Forum at the WTO
Meeting in Seattle on energy services and the new economy.

| thought you would find the attached presentation to be of interest.

Sincerely,

Encl.

Natural gas. Electricity. Endless possibilities."

00100000000196


2001-SE-002986

Kenneth L. Lay
Cheirmeart and
4 Chief Executive Officer
Enron Corp.
%, P.O. Box 1188
Houston, TX 77251-1188
Fr 7194535513
December 22, 2000 KemethL com
Mr. Pau! O'Neill
{(6)(6))
Dear Paul:

| am pleased that President-elect Bush has named you to
be his Secretary of the Treasury. You will do an outstanding job
in that position.

land Enron stand ready to assist you in any way that we
might be able to. In the meantime, | wish you and your family the
best of the Christmas season.

Warm regards,

fer

Endless possibilities.”

~ 00100000000578


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00100000000176


States, since we are a major exporter of these products and ovr applicable tariffs were already
quite low, Because other countries generally maintained substantially higher duties, this
agreement provides what amounts to a $5 billion tax cut for the U.S,. money that can be used for
research and market development, creating new business opportunities and jobs for Americans

In fact. the agreement has proven so successful that we already have a consensus among our
trading partners to pursue an “[TA-II" -- in which we are seeking to expand the scope of products
covered by the agreement, address non-tariff barriers in adilition to tariff barriers. and increase
access to the Information Superhighway.

We also are considering other sectors in which the United Sites is very competitive. but in
which global barriers tend to be high. In particular. we are focusing on trade in chemicals.
energy equipment and services, environmental technology and services, medical equipment and
services, and wood and paper products, Within APEC, the United States and its Pacific Rim
trading partners are working together to identify a number of areas that may be the subject of
accelerated market opening discussions, Renewal of fast track would show APEC that the
United States intends to fully take part in the negotiations end conclude key agreements.

Third. fast track is essential if we are to negotiate more comprehensive market access agreements
with individual countries, as well as on a regional basis. This Administration, consistent with its
predecessors, has identified Chile as a promising candidate for a comprehensive trade agreement
Chile appears in all respects to be prepared to enter into agreements with us that achieve our
economic objectives, as well as our goals with respect to labor and the environment, Chile also
symbolizes our commitment to proceed towards the conclusion of the Free Trade Agreemem: of
the Americas (FTAA) by 2005.

Pror to the pursuit of other specific free-trade arrangements, the Administration would clearly
define our negotiating objectives and consult closely with Congress.

The Fast Track Legislation

Fast Track is about forging an American consensus on trade and negotiating with our trading
partners from a position of strength and unity. As many members of this Committee know, the
Administration spent significant time consulting with members in both Houses and of both parties
to try to develop a proposal that would reflect the views of the American people. The consultations
were invaluable in shaping this proposal, and | thank the members of this Committee and their staffs
for their significant contribution.

Let me now tem to the specifics of the President's proposal.
The proposal first sets out “overall” and “principal” trade regotiating objectives for the President.

The “overall” objectives call on U.S. negotiators (1) to obtain more open, equitable, and reciprocal
market access: (2) to obtain the reduction or elimination of barriers and other trade-distorting

SSOIAUIS LNAWdINDS ADYANS

6

00100000000061


EMBARGOED UNTIL 19 A.M, EDT
Text as Prepared for Delivery
September 17, 1997

TREASURY SECRETARY ROBERT E. RUBIN
SENATE FINANCE COMMITTEE

Mr. Chairman, | appreciate the opportunity .o appear today with Ambassador Barshefsky
to say a few words about the importance of renewing the President’s traditional trade negotiating
authority.

Since taking office, President Clinton has pursued a coordinated economic strategy to
foster growth and raise standards of living with three key parts: deficit reduction, investing in
people, and opening international markets, His strategy is working. The U.S. economy enjoys the
best conditions in the industrialized world. Unemployment has been below 6 percent for over 2
years and below 5 percent for 5 months, the economy has generated 13 million new jobs, and
inflation has remained low. Real wages are rising, including for low-income workers.

But we must not let these current conditions, favorable though they may be, mask the
challenges we still face in improving our economy. There is still much work to do to make sure
we sustain this economic momentum into the future and that everyone enjoys the fruits of our
economy. That is why we must maintain our fiscal discipline and work to equip Americans with
the tools they need to prosper in today’s economy, through stronger education and training, and
assistance when dislocation occurs. And we must also build on our trade record of opening
markets abroad to continue to create better jobs and raise standards of living.

Having trade negotating authority is important because trade is so important to our
economy. Millions of Americans owe their jobs directly or indirectly to trade. All Americans
benefit as consumers from the greater choice and lower prices which increased trade brings.
Promoting open murkets and trade also play a key role in fostering global prosperity, which
benefits the United States by increasing international stability, and creating new markets to sell

RR-1930

00100000000054


BushiessWVeele

‘ree markets to the world. You have no ides how frustrating it was in the early days of gas. They had built all
che rules to protect their monopolies.

Q: Has your broadband business developed the way you thought it would?

A: When I look at the broadband businece, we're way ahead of where we were at this (stage) in electricity. We
did over 300 transactions lest > Which is great. The first year in electricity, I'd be surprised if we did 50...
There’s a huge, huge glut (of high-speed communications capacity). This is exactly our environment. This is
natursl gas in 1988.

Look at the telecom business. What’s the price of throughput? It’s epllapsing. It’s like gas prices did. They're
all absolutely leveraged to the hilt, and they need money. (He figures that gives Enron an opening to create
forward contracts that will allow such players to get financing, as it did in the gas business.]

Q: But in steel and and paper, those players have been around a long time and gone through
commodity than the teledan aye, Why basi talon so long for adussnes Hs has ne ayaa mare

marl

A: The old way they reduced the risk is they’d vertically int . If you were Exxon in the old days, you
int across the whole chain... If you were afraid crude-oil prices would go dawn, you'd own the refinery,
too, @ you liked it if crude prices went down... That made a lot of sense...because it wag very expensive

ta make sure you could got reliable supplies of crude cil to go into a refinery if you didn't own the crude oil,

Well, now you go an your computer and get it instantaneously... If you have somebody who comes slong and
fr bes, look, iim going to virtually vertically integrate because i 's a whole lot cheaper, you're not going to
cost-competitive. :

@ Do yon have a different strategy when it comes to assets than some of your competitors who are baying up

ants’
= Right now, it's not a bad thing to have, but two or three years from now.... Electricity is a tot:
Arig te, nt a hing have, but wo gear or he yur um no. Eestrty in otal
in my view, is a gigantic navy of power plants.

E Dek meee bem is own the ents. In your view, whe wordd wart them?

: Financial institutions, insurance companies, and pension funds. They have the lowest cost of capital. What
we should be doing as an industry is packaging them in s way whore we take away the risks that they don't
like. don’t like to te things. They don't like to take the risk on commodity prices. We ought to do
that and then sell the underlying asset with kind of an annuity return.

& Js there any kind of commodity that doesn’t ft what Enron doest

: Things that are really unique, one of a kind, knickinacks. And any traly financial commodities don't do much

for us. I don’t want to with Goldman Sachs because I'm not at what they're good at. They're not
at what I’m good at. I want to foeus on things where there to be a dedicated, unique delivery and

istics system attached to the commodity and a quasi-commodity. If it doesn't have either of thoee, I’m not

real interested.

Q: How much growth tial] is in the side of the business?

A: If you look at the wholesale side, between U.S., Europe, and Japan, probably only about 20% of the

market has converted from regulated to nonregulated. If we just hang on to our market share, we'll grow by

& factor of five over the next couple of years. Our investors should be watching carefully how we do in pulp

and paper and metals. If we're successful there, that’s ironclad proof the model translates beyand pure networ!

businesses, like gas and electricity and bandwidth, Then there's really no stopping.

Q: Do you fear you're spreading yourselves too thin, given how mach is left in the core business?
A: L really don't. I think it’s just the opposite. [Enron is cut of exploration and development and international
development of assets in 27 countries.) Two years from now, we'll be making markets in a aumber of different
commodities, but we'll be making markets — and that's it.... In a lot of ways we're concentrating, getting more
focused as time goes on.

: What did you learn from the Azurix flop? [Water company Azurix is an Enron spin-off that it recently bought
back, after the company failed to meet earnings expectations and the share price J

A: It reinforced the realization that it's very hard to earn a compensatory rate of return on @ traditional asset
investment... In today’s world, you have to bring intellectual content to the product, or you will not earn a fair
rate of return.

2: How do you see outgoing CEO Ken Lay’s role changing? (Lay remains as chairman.]

A: Ken has always been in a lot of ways the face of Enron to the outside world, and that’s grest because Ken
is a tremendous representative of the company with the government, the regulators, the customers. I hope Ken
will keep doing that. To be honest, I don’t think there's going to be a whole lot of change in the way we work
together.

Reprinted torr BusinessWeek Online Febscary 12 2001. copyright by The M:Gure Hill Compacies, Inc, with af rights reseed.
THis phd ues he er OOaTIN, witha TE MomreSged. #137 COTES. start, sormce ct wPmakment CEataHy

i

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5
I
'

00100000000398 —


AMENDED LIST
SIGNERS OF AMBASSADOR CHARLENE BARSHEFSKY LETTER 6/6/99

(1) American Wind Energy Association

(2) American Petroleum Institute

(3) ARCO

(4) Capitol Strategies

(5) The Chevron Companies

(6) Consolidated Natural Gas Company
(7) Coalition of Service Industries (CSI)
(8) Edison Electric institute

(8) EDS

(10) €) Paso Energy

(12) General Ehectric

(13) International Association of Drilling Contractors ~ lADC

(14) Interstate Natural Gas Association of Amenca -INGAA

(15) intamational Gas Center

(18) Independent Petroleum Association of America - IPAA

(17) Mid-American Energy Holdings Company

(18) National Foreign Trade Council - NFTC

(19) New York Mercantile Exchange

(20) US Pacific Economic Cooperation Counc’ ~ US-PECC

(21) Sarkeys Energy Center, University of Oklahoma
Siemens

(22)

(23) United States Energy Association - USEA

(24) US ASEAN Business Council

(25) US Chamber of Commerce

(26) United States Council for International Business (USCIB)
(27) U.S, Oil & Gas Association

(28) Westinghouse

00100000000124


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00100000000485


sconomic organizations, in particular APEC. APEC has engaged in two inportant processes

"one to establish regulatory regulatory best practice principles for independent power producers and

natural gas, and a second to the industry. One of the ironies is that the question,

“What are energy services?” is both serious and provocative. APEC has designed a “matrix”

approach to the industry that encompasses both its traditional segments and the new,
emerging businesses that are coming to dominate it.

Let me close with a brief anecdote that may explain just how dynamic, even hectic and
chaotic change has become in this industry. As I mentioned, J: is preparing to deregulare
its electicy and natural ga sectors, a project which its powerful utilities have fought coery
step of the way. Not long ago, one of our Japanese contacts sent us a question list. He
wanted to know the variations that were possible between independent power producers and
consumers in a deregulated market. Was it possible, he asked, for one power plant to supply
one or many customers, several power plants to supply one customer, and so on, without
burning down the grid? The Japanese image of a free-market power operation, you see, is
chaos. I put this question to one ofthe traders inthe California office of Enroc Capital 8
‘Trade. He was mystified. “We do all those things,” was his reply. The market, working in
tandem with regulators, has found ways to organize safe, cost-effective ply of
Slsticiy wheat te bene of conta plntlng The eu bas been cheaper

plentiful elecricy. We need to bring this message to the international trade community,
through GATS 2000, and do it soon.

Thank you very much. e

00100000000162


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FOTAdO S.eataAATA +H Mate CFE One wos wri es tm warerrom |

00100000000171


1997-SE-010343

ENRON, WASHINGTON

MEMORANDUM

To: Ken Lay
Steve Kean
Terry Thorn
Bob Baldwin

FROM:

DATE:

Secretary of the Treasury Rubin and USTR Ambassador Barshetsky cited energy

John Enerson
Karim Garcia
Cynthia Sandherr
Mark Schroeder
Peter Styles
Dennis Ulak

E. Joseph Hillings

September 19, 1997

Fast Track Testing 9/17/97 before the Senate Finance Committee

equipment and services opportunities to be of value in trade negotiations. These cites are

marked for your attention in the attached testimony.

This has been proposed in the USG's APEC list of desired results when the heads-of-state

from APEC nations meet this November in Canada.

1 thought this material would be helpful to you in making the case for fast track and
liberalized opportunities for energy equipment and services,

A large amount of the credit for moving this item into the trade negotiation arena belongs
to Don Eiss of USTR who needs to hear from those of us who see value in the strategy
for US industry.

Encl.

00100000000050°


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00100000000200


2001-SE-000537

Kenneth L. Lay
Chsirman and
Chief Executive Officer
ty,
%
Enron Corp.
P.O. Bor 1186
January 22, 2001 Houston, TX 77251-1188
(713) 853-6773
The Honorable Paul O'Neill een
Secretary
US Department of Treasury
1500 Pennsylvania Avenue, NW
Room 3330

Washington, DC 20220
Dear Paul:

In my capacity as Vice Chairman of the Business Council, | am writing to
invite you to address the moming session of our winter meeting at the Park Hyatt
Hotel in Washington, DC on February 22, 2001. If you are able to join us, which
we very much hope you are, we will work with your staff to determine the most
convenient time for you to speak. We envisage about a 20-minute speech with
10 to 15 minutes with our members.

The Council, formed in 1933, is a voluntary association of America's top
100 or so business leaders dedicated to service in the national interest. As a
gathering of current and former Chief Executive Officers from virtually every
major industry, the Council is entirely an educational and deliberative forum. The
Council does not take positions as an organization; instead, it provides a forum
for exchange between the leaders of the US business and government
communities in an effort to achieve greater understanding and consensus on the
important issues facing our country.

Our winter meeting Is held in Washington, DC in order to facilitate broad
participation by our nation’s top political leaders including the President, Cabinet
officers and Congressional majority and minority leaders. We would be delighted
to have your participation at this winter's event.

Please feel free to call me directly, or have someone on your staff contact
Philip Cassidy (Business Council) at 202-298-7650 or Linda Robertson (Enron)
at 202-466-9159.

Sincerely,
fen)

Natural gas. Electricity. Endless possibilities."

00100000000228


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00100000000475


UNITED STATES SENATE
COMMITTEE ON FINANCE

Hearing on legislation providing Fast Track Trade Authority and on
other Administration trade proposals.

Wednesday, September 17, 1997; 10:00 a.m.
Room SD-215 Dirksen Senate Office Building

WITNESS LIST

A panel consisting of.

The Honorable Robert E. Rubin, Secretary of the Treasury,
Washington, D.C.

Ambassador Charlene Barshefsky, United States Trade
Representative, Washington, D.C.

Ambassador Jeffrey M. Lang, Deputy U.S. Trade
Representative, Washington, D.C.

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00100000000173


Testimony of
the Deputy United States Trade Representative
Ambassador Jeffrey Lang
on
Enhanced Trade with the Caribbean Basin and Sub-Saharan Africa

17 September 1997

Mr. Chairman. [am pleased to be with you here today to discuss the Administration's initiatives
to enhance our trade relationships with the Caribbean Basin and Sub-Saharan Africa. itis
appropriate that my comments follow those of Ambassador Barshefsky and Secretary Rubin.
who spoke of the imponance of renewing the traditional trading authority and continuing U.S.
leadership in the international trading system. | would like co speak about some of our other
priorities where our leadership is crucial.

This year, the President announced two initiatives to enhance trade with the Caribbean Basin and
Sub-Saharan Afnca. The Africa initiative seeks to support the economic and political reforms
that are already resulting in increased economic growth in Africa. The initiative recognizes that
increased trade and investment can make a greater contribution to this growth. The Caribbean
Basin initiative seeks to ensure that the increased trade and growth resulting from earlier
initiatives continues to grow as the region moves toward a more mature trading relationship with
the United States and strives to make the changes needed to participate in the Free Trade Area of
the Americas.

These two regions hold the promise of opportunities for US firms and workers. The U.S. must
take steps to increase trade, development, and investment in these regions of the world, A
forward-looking trade policy with the Caribbean and Sub-Saharan Africa is in our national
interest: it encourages U.S, business investment and expansion in those regions; it promotes
economic growth, which enables both Caribbean and African nations to deal better with issues
such as hunger, population growth and civil strife through regional efforts; and it allows the U.S.
to continue to foster greater integration of global markets.

I will address each proposal separately.
Caribbean Basin Trade Enhancement

In response to the concems of the Caribbean Basin countries that their exports to the United
States would be placed at a competitive disadvantage vis-a-vis Mexico's exports as a
consequence of the NAFTA, there have been several bi-partisan efforts during the past four years
to pass legislation that would grant enhanced trade preferences to countries that currently benefit
from the 1984 Caribbean Basin Economic Recovery Act(CBERA). Since the 1994 entry into
force of the NAFTA, there have been significant changes in the region. The Administration's

00100000000065


-_ * © © © © © & ee ee ee ee le lel lee

IF YOU PLAN TO PARTICIPATE IN FUTURE ENERGY SERVICES

WORKING GROUP MEETINGS PLEASE FILL IN THE FORM BELOW. THIS

WILL EXPEDITE OUR CORRESPONDENCE TO YOU,

YOUR NAME:

‘TITLE:
THE PRIMARY CONTACT FOR YOUR COMPANY WILL BE: (Please include tithe)

COMPANY:

PHONE:

FAX:
E-MAIL:
DOES YOUR COMPANY WANT TO SIGN ON TO THE AMBASSADOR CHARLENE

BARSHEFSKY LETTER? a
- Yes No

Please send this completed form to:
Lora Sullivan

Earon

1775 Eye Sucet, NW

Suite 800

Washington, DC 20006

202-466-9142

202-828-3372 (fax)

Or: Send us the information via e-mail to;e-mail:  Isulliv@enron.com -

00100000000143



55 Water Street
New York, NY (0061-9003
teleconferences standardandpeore com

hp wm sauderzndyeon a STANDARD
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Teleconference: January 11, 2002, 10:00 AM Eastern Time
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00100000000185


Additional Information on Briefing Question

In the wake of media reports on the serious problems at Enron, The
President

economic team, led by Larry Lindsey, Chairman of the National Economic
ond lean Hubbard, Chairman of the Council of Economic Advisers, closely
monitored the financial and energy markets. Mr. Lindsey publicly reported
review on CNN's Novak, Hunt and Shields last Saturday, January 12th. They
monitoring because of their concern about the potential effects of the
problems on households that rely on natural gas and other energy products
the potential impact on the national economy.

Their monitoring consisted of observing the spreads in the energy markets
to see

if they widened to the point of where natural gas disruptions could occur
or the

national economy could be harmed, They also looked at currency markets,
equity

markets, bond markets and other financial indicators to determine if there
were

indications of a shortage of liquidity that might signal a more widespread
problem. In addition, the White House coordinated with the Departments of
Treasury and Energy. While the spreade did widen, other players entered
the

markets, and the spreads returned to more normal conditions. Their
monitoring

was begun in mid-October and continued for a number of weeks as Enron's
financial situation sharply deteriorated. At no time did they see any
situation

that could disrupt energy supplies for families or harm the national
economy.

Their judgment was correct; even ag Enron eventually collapsed, these
specific

problems did not materialize.

At the same time, the Department of Labor and the Securities and Exchange
Commission had identified serious problems that could affect Enron
employees and

shareholders. For this reason, the Department of Labor undertook an
investigation in the pension situation at Enron and the Securities and
Exchange

Commission began an investigation into Enron.

These actions demonstrate that as public reports showed that Enron was
suffering

from severe financial deterioration, the Administration acted to protect
people's pensions and analyze whether broader markets would be affected.
The

government did exactly what the government should do.

01000000000910


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00100000000164


1999-SE-005241

Kenneth L Lay
Chairman and
Chief Execattioe Officer

Uy knron Corp.
P.O. Box 1158
Houston, TX 77251-1188
(713) 655-6773
Fax (713) 653-S313

May 14, 1999 Hegiean.com

The Honorable Lawrence H. Summers
Secretary-Designate

U.S. Department of Treasury

45" & Pennsylvania Ave., NW
Washington DC, 20220

Dear Larry:

Congratulations on taking the reins at the Treasury. You have
certainly had a lot of on the job training with Bob and | have absolutely
no doubt that you will do an outstanding job, just as he has done.

These are fascinating times both for the U.S. economy and the
global economy. Although you are filling some very large shoes, |
cannot imagine anybody better prepared to do that than you are.

| hope our paths continue to cross and certainly stand ready to
be available if there is anything at all | or Enron could do for you or the
department.

Sincerely,

Lew

Summers 51488.d00
Natural gas. Electricity. Endless possibilities.TM

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00100000000177


INTRODUCTION
TO
ENERGY SECTOR SERVICES MATRIX

The globalization of the world economy and rapid advancements in information
technology has raised significant questions regarding traditional theories of international
trade. In the past, intemational trade consisted of imports and exports of goods such as
agricultural products (grain, com or other foodstuffs), natural resources (oil, coal or
mincrals), and manufactured goods (clothing, automobiles or electronics).

The globalization of the world economy has increased this type of trade. Many of
these goods, such as oil, are considered to be sold in a world market, with prices
depending on global conditions that affect the mechanics of supply and demand. The
markets for many other goods (for example metals and oi! by-products) are also traded in
an international market.

Perhaps the greatest globalized market is the one for financial capital. With the
recent developments in information technology, a financial trader can move millions, if
not billions, of dollars from one market to another with just a few taps on a keypad.
These capital markets are brutally competitive and place increasing demands on those
that provide and use capital. Businesses that use financial capital are constantly looking
for ways to be more efficient and to achieve higher returns for their capital providers —
lest the providers go elsewhere. They are also looking for ways to reduce their cost of
capital by reducing the risks inherent in their business through the use of service
providers that are more capable than they at managing certain risks. The reasons for
these actions are obvious; without financial capital, businesses and economies can not
thrive.

In light of these developments in the international markets, you are asked to
consider the following energy sector services matrix. The energy sector is perhaps the
most capital-intensive sector in the world’s economy. Oil refineries, power plants and
gas pipelines are very expensive. Efficient capital formation demands that energy
industry participants operate in the most economical manner, These demands often result
in the use of specialists such as drilling companies or construction companies. They also
often require that certain risks such as fuel supply, operational performance and
transportation and delivery of energy products be managed by companies with sufficient
expertise (and credit rating). Further, energy intensive industries are increasingly
becoming aware of the impact of uncertainties in the cost of their capital cost structure
due to the inability to effectively manage the cost of their electricity and natural gas and
are utilizing commodity and price risk management strategies.

The energy sector services matrix describes several areas that can be viewed as
distinct areas of trade within the energy industry, These arcas do not involve the
movement of goods from one country to another. Rather, they deal with the movement

00100000000125


JAN 18 2821 11:38 FR ENRON TD 62208873 P.@2-83

PRICEWATERHOUSE(COPERS @

PricewaterteuseCeupers LLP
L301 Avenue of the Amenicas
New York. NY 10019
Telephune 212-259-1000

Contact: Mare Eiger For Immediate Release
(212) 259-3760 January 17, 2001, 7:00 a.m.
m iger@: wLcom

Bill Archer,
Former Chairman of House Ways & Means Committee,
Joins PricewaterhouseCoopers

WASHINGTON, DC, January 17, 2001—Bill Archer, former chairman of the House Ways
& Means Committee and Texas Congressman for the past thirty years, has joined
PricewaterhouseCoopers as a senior policy advisor. Archer will provide advice to the firm's
clients on Federal policy matters and will also focus on trade and international tax issues. He
will work with the firm’s international offices and global clients on ¢ wide variety of issues
facing multinational corporations.

Archer will be based in Washington, DC in the firm's Washington National Tax
Services (WNTS) practice. Due to his extensive visibility and contacts in the Houston area,
where he has represented the Seventh Congressional District since 1971, Archer will help the
PricewaterhouseCoopers office there build stronger relationships with local companies

“Bill Archer's experience and distinguished record of accomplishments in Congress
and 23 Cheirman of the House Ways and Means Commirtee will add a new dimension to the
services we provide our clients and will also help our firm better deal with Federal policy
issues,” said Samuel A. DiPiazza, Jr., U.S. chairman and senior partner of
PricewaterhouseCoopers LLP. “This is a new position within our firm, which we created to
take advantage of Bill’s special qualifications and vast experience in the tax arena.”

Archer's distinguished government experience includes:

Member, United States Congress, 1971-2001;

Chairman, House Committee on Ways & Means, 1995-2001;

Joint Committee on Taxation, 1988-2001, Chairman (1995, 1997, 1999):
Texas House of Representatives, 1966-1970.

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00100000000219


2002-SE-000554

FMAWATCH

January 17, 2002
Dear Secretary Paul O'Neill:

This week, government-sponsored enterprise (GSE) Fannie Mae announced
record profits for 2001, with net income rising to $5.9 billion - 33% higher than in
2000. While such announcements bode very well for shareholders, American taxpayers
face far greater risks in view of startling rise in debt being acquired by GSEs.

T encourage you to take a few moments to review the attached document, which
outlines the potential risks the GSEs could place upon on the U.S. financial system. For
additional information or to discuss these issues, please contact us at (202) 637-8281 or
visit our website at www _fmwatch org.

Sincerely,

Ph hgh arene
Mike House
Executive Director

00100000000400


FMAWATCH

January 17, 2002
TO: Mr. Kenneth Dam
FROM: Mike House, Executive Director~ FM Watch
SUBJECT: Fannie Mae’s Record Profits Pose Unprecedented Risk to American
Taxpayers
FMAWATCH

Fannie's Record Profits Pose Record Risk for U.S. Taxpayer

Government-sponsored enterprise (GSE) Fannie Mae announced on Monday, January 14, record profits for
2001, with net income rising to $5.9 billion - 33% higher than in 2000. While such announcements bode very
well for shareholders, American taxpayers face far greater risks in view of Fannie Mae's startling rise im debt,
according to a new report on GSE debt issued by FM Watch, For years, the GSEs have been permitted to
Operate on thin capital cushions built for best-of-times assumptions. Recent developments illustrate the
problem has grown:

At the end of September of 2001, the value of Fannie Mae's shareholder equity was $5.6 billion lower than
where it had been at the end of June as a result of risky hedging in the derivatives market. This reduced the
company's equity by $10.6 billion. Fannie Mae's debt/equity ratio then stood at 53:1, five times more than the
average for commercial banks. Monday's release from Fannie Mae reveals that shareholder's equity at the end
of 2001 was still $1.3 billion lower than where it was at the end of June, as a result of its risky hedging. Its
debvequity ratio was 42:1. Truth be told, if Fannie were regulated like a commercial bank, it would face
senous risk of closure.

Since September 11, the nation has leamed that risks once deemed improbable can quickly become possible.
With the nation in a recession, all financial institutions risk being adversely affected but none more than
Fannie Mae. Excesses of this type are bad in good times - but they are unconscionable and dangerous in bad
times. The savings and loan cnsis taught America that under-regulated financial institutions can impose

2 taxpayer bailout.
The Size and Growth of GSE Debt

In recent years, the dramatic growth in GSE debt hat significantly increased the risk to U.S. taxpayers. Fannie
Mae and Freddie Mac have increased their debt six-fold since 1992, from $196 billion to $1.26 trillion in the
third quarter of 2001. In a decade when Treasury borrowing dropped dramatically, uncontrolled GSE debt
Was moving in the opposite direction. Almost unbelievably, the GSEs now guarantee more debt and
mortgage-backed secunties (MBS) than all comparable U.S. Treasury debt.

- Continued -

00100000000404


800 GRAHAM

FLomoe

nited States Senate

WASHINGTON, OC 20510-0903

Prepared Statement of

Senator Bob Graham

Senate Finance Committee Hearing
September 17, 1997

Mr. Chairman:

Thank you for holding this hearing today, and particularly for including CBI Parity on the
Committce’s agenda. | am very pleased that we have finally received the Administration’s Fast
Track proposal and I look forward to hearing from our distinguished panelists.

‘The issue we are debating today goes well beyond whether or not to give the President trade
negotiating authority. It is about how the American people view our country’s role in the world,
Are we fo continue in our position of leadership, or will we retreat and take a new role as a
bystander? The world is moving ahead quickly, with or without us. It is for us to decide if we
will take our rightful position of leadership, or if we will stand aside while others rush in and
take our place.

Mr. Chairman, I believe that the world will be a better place if traditional U.S. values of freedom,
fairness, and openness arc in the lead as we move into the next century. This can only happen if
we are an active participant in making the rules and setting the agenda. If we choose to stand on
the sidelines, we will leave it to others to make rules that reflect their values and their interests,
not ours.

But this is not just a theoretical debate. Enforcement of trade agreements has been a contentious
issue. If we are to move forward, the enforcement issue must be addressed. Failure to enforce
trade agreements converts international trade from the rule of law to a dominance of suspicion
and a lack of respect between trading partners, Agreements that are not enforced, or cannot be
enforced, are not worthy of the participation of the United States.

A second issue that we must address js that of unintended consequences. That js what the
Caribbean Basin Trade Enhancement Act is intended to address. Previous trade agreements,
namely NAFTA, seriously hurt the economies of our Caribbean neighbors. These are countries
with which we have uniquely close and harmonious relations. Many of these countries are being
devastated by businesses and jobs moving to Mexico. Passing CBI legislation will remedy this
unintended consequence of the NAFTA, and help U.S. companies to expand inte the Canbbcan
markets at the same time. It is in our economic and our national security interests,

Thank you Mr. Chairman

00100000000052


‘13 THERE ANYTHING THEY GANT TRADE?

Enron still makes most of its money trading energy Its earnings
from sales to utilities and other wholesale customers should grow at
2.255 to 40% cnnual pace for at least several years, it says. However;
the company is also branching out into entirely new markets:

from volatility, not high prices, he cays. In Callifor-
nia, where Enron doesn't own power plants, the
company insists it is deating in thin margins. “De-
pending how markets are swinging srcund day
to day, we're either making a little money or losing
3 little mon-
ey on that,”

ae
billion segment of the commodity

* steel business. Enron plans to lease a

“network of regional distribation’: « -

ie—bringing the whole thing to the table,”
says Skiling, “No one’s our equal in that.” And Enron has pi-
onsered contracts to manage other kinds of risk toa, Induding
weather,
Earon's deregulation roots reach back to the early "Ts,
when Lay, an economist by training, began promoting opening

creasing use of energy-sucking technology. The badly flawed

gus markets as an Under Secretary of the Interior in the
Nixon Administration. In 1986, Lay tock over Enron, the
product of a merger between two pipeline compan &
warned federal regulaters that pipelines like his were in dangnr
of sinking under rules that crippled their ability to compete
with low-priced off The Fenc finally changed the rules
in 1985, freeing utilities to ebop for gas and the pi

1996 deregulation scheme—some terme of which Enron and
from the start—only exacerbated the prob-
utllities
nd

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1999-SE-013059

Up Enron Corp.
%, 177 Eye Street, NW, Suite $00

Washington, DC 20006-4607
(202) 466-9145

Fax (202) 428-3972
{hillin@ererom. com

November 30, 1999

The Honorable Stu Eizenstat
Deputy Secretary of the Treasury
Department of Treasury

1500 Pennsylvania Avenue, NW
Room 3326

Washington, DC 20220

Dear Mr, Secretary:

Your speech before US Trade at lunch on Monday, November 29, 1999 was excellent,
and | would like to have a copy to circulate to the members of the US WTO Energy
Services Coalition.

Attached are materials which | thought would be of interest to you.

Natural gas. Electricity. Endless possibilities.TM

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00100000000190


1997-SE-010463° 00 —

E. Joseph Hiltings
Vice Prosident and Generel Manager
Federal Government Affirs

% Enron Corp.

2, 750 17h Steet. N. We. fh Foor
Washangson, DC. 10006-4507
(202) 466-9165
Fas (Q02) £26137
nllingitontr net

‘VIA FAX
202-622-0081

Mr, Lawrence H. Sur imers

Deputy Secretary of :he Treasury

Department of Treas ary

1500 Pennsylvania ¢ venue, NW

Room 3326

Washington, OC 20220

Dear Secretary Sumrners:

Mr. Terry Thom, Enron's Senior Vice President International and Environmental Officer has
asked | contact your office and request an opportunity to meet with you on October 7.
1997 in the afternocn, or Octaber 8, 1997 in the morning.

He feels it is importz nt to advise you of recent developments in the Bolivian-Brazil Pipeline
project.

Please call me at 202-466-9145 and let me know if Terry and | can meet with you.

ly,

Natural gas. Electricity. Endless possibilities.

** TOTAL PAGE.OB8) ++

00100000000087


projects. These potential funds would have aggregate capital of up to $300 million. We have
also secured agreement that the African Development Fund wiil develop a capacity for financing
infrastructure projects, in particular those that will improve linkages among markets, both within
countries and regionally. We are pleased that HR 1432 calls for such funds.

Support for regional economic integration. Under the US. Agency for (ntemational
Development's (USAID) Initiative for Southem Africa, suppor will be provided for private and
public sector cooperative activities in areas of regional concern, including investment policy
harmonization, regional business ties, financial sector development, privatization and facilitating
cooperation between private sector and regional governments. labor statistics, and occupational
health and safety.

Support for U.S.-African business relations. USAID will provide support to help catalyze
U.S.-Aftican business ties,

Export-Import Bank. The Export-Import Bank of the United States wili encourage use of its
programs through designation of a senior advisor on Africa to its board and a campaign for
outreach, surticularly with the private sector. In fact, Ex-Im Hank has already hired an Advisor
for this purpose,

Assistant U.S. Trade Representative for Africa. To ensure that trade issues with Africa
receive proper attention, Ambassador Barshefsky is creating an Assistant U.S. Trade
Representative for Africa,

In addition, the Administration will work with the IMF, World Bank Group and the African
Development Bank Group on the development and implementation of several initiatives to
support private sector investment, trade development and capacity building.

Level Two Benefits

To support those countries pursuing aggressive growth-oriented policies, the Administration
would offer, at the discretion of the President, the following additional opportunities, which we
have characterized as Level Two participation:

Additional market access through expansion of the GSP program, We are very pleased that
the “Africa Growth and Opportunity Act” would provide authority for the President, after
receiving advice from the U.S, Intemational Trade Commission, to include in the GSP program
for these countries a number of products that are presently excluded. This is the one major area
of our proposed program for which we need legislative authorization before moving forward.
While we question the appropriateness of making eligible for GSP certain products mentioned in
the bill. we wholeheartedly welcome this approach and want to work with the Committee on it,

Textiles. The Administration recognizes the importance of the textile and apparel industry to

i

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00100000000197


PO, Box 1188
Houston, TEXAS 77251-1188

00100000000486


eer2sve3

RAND

1700 Mew Seveet
PO five 2158
Same Afowace

Coliforms
90407 » 2138
310 451 6936

Fax 510451 6952

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Yaa H. Oeil

inom
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Nie em
Mord Bowen
Frank C Carkweei

13:28 RAND * 912826220073 NO.@21

domes A. Thomson
Prnideat and Chief kaataroce Offre

January 20, 1999

The Honorable Robert E. Rubin
iment of the Treasury

Dear Mr. Secretary:

| am writing to invite you to give the | address ‘at the fourth, semi-
annual meeting of the anBreponesrod Russian-American Business
Leaders Forum. This will take place on Saturday 15 and
Sunday May 16, 1999 at The Hotel in New York. A description of
the Forum and list of Its current members is attached, along with reports on
its first and second meetings and a short account of its third meetin,
meetings at which then-Prime Minister Viktor Chernomyrdin, Paul Voicker,
and First Deputy Prime Minister Yuri Maslyukov, respectively, were the
keynote speakers.

As will be immediately apparent from these attachments, the Forum is a
membership organization that bri together a highly select group of
American and Russian corporate CEO's and chairmen for reguiar, in-depth
discussions of strategic Issues on the international and national economic,
political. and security agendas of the two courte. ahd Commercil

is not only to foster productive bilateral financial and commercial
relations but to promote America’s (end Russia's) vital national interests by
accelerating Russia's transformation into a ‘normal country and reducing
the clear and present danger of e failure that could result In serious regional
and global instability.

Since the leaders of Russia's emerging private sector are play! and will
Since the 1eaders Ot sein determing the outcome of frat 's
current and emergent economic and poltical crisis, he cease fy 9
them in serious dialogue seams . In short, we believe that your
address to the Forum would come al 6 parts larly crucial time when it could
have significant influence on Russia's near- and longer-term development.

Ideally, we would like to schedule your address following a reception and
dinner for Forum members and @ few specially invited guests Tat wi pean
al 7:00 p.m. on Saturday evening May 5. If your schedule makes this
inconvenient or impossible, however, we be to hear you speak
at eitner a breakfast or luncheon meeting on Sunday 16,

J and all of the other members of the Forum very much hope that you will be
able to join us. 1 look forward to hearing from you as soon as possible and
to seeing you In May.

ly,

‘Tv
Attachments

00100000000546


((o2)]

Fox, William

From: Authauser, David

Sent: Wednesday, January 16, 2002 7:36 PM
To: Fox, William; Wolfe, George

‘Subject: Fw: FYI

fyi

coo Original Message~-~-~-~

From: TKassinger@doc.gov [mailto:TKassingerédoc.gov)
Sent: Wednesday, January 16, 2002 7:01 PM

To; David, Aufhauserédo.treas.gov

Subject: FYI

----- Forwarded by Ted Kassinger/HCHB/Osnet on 01/16/02 07:06 PM -----

Brooke

Vosburgh To: Ted Kassinger
ce:

01/16/02 06:37 Subject: PYI

PM

01000000000909


1999-SE-005235

Kenneth L Lay
Chairmen and
q (Chie! Executive Officer
‘2, Enron Corp.
(7) P.O, Box 1188
Houston, TX 77252-1188

(713) 853-6773
Fes (713) 853-8313

May 14, 1999 iaybeuron.come

The Honorable Robert E. Rubin
Department of the Treasury

5” & Pennsylvania Ave., NW
Washington DC, 20220

Dear Bob:

Although not surprised, | am sorry to see you step down as
Treasury Secretary. By any objective or subjective measurement, you
have done an outstanding job not only for your country but for the
world. Your steady hand will be missed.

At the same time, in Larry Summers you do have an excellent
replacement. | have no doubt that Larry will continue the strong and
effective economic policies that have been implemented during your
tenure.

One additional point. If you are considering joining any
corporate boards, | would like very much to talk to you. Given the way
Enron has evolved, not only do we badly need a person with your
experience and insights (gained both at Gokiman Sachs and at the
U.S. Treasury) but also | think you would find serving on our board
intellectually and otherwise interesting. | have placed a call to you in
the hope that | might mention this to you personally.

My very best in wh you do next, You certainly deserve a
somewhat less hectic schedule and would hope that you will take
advantage of that at least for some time.

| Sincerely,
fer’

Natural gas. Electritity. Endless possibilities.TM

00100000000113


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00100000000383


i [ I cc EXECUTIVE OFFICE OF THE PRESIDENT

THE UNITED STATES TRASE REPRESENTATIVE
WASMIVEGTEN, OC, 20308

dif. JO£ HILLINGS
"Ono ENRON CORP,
WASHINGTON, D.C,

~~ -

Mr. E. Joseph Hillings

Vice President & General Manager
Federal Government Affairs
Enron Corporation

1775 Eye Street, N.W., Suite 800
Washington, D.C, 20006

Dear Mr. Hillings:

Thank you for your recent letter of support from the Energy Services Coalition, which I have
read with great interest.

I agree with your proposal that the APEC Energy Services matrix serves as the starting point for
developing the United States position on liberalizing non-tariff barriers to energy services in
Services 2000. While GATS rules already apply in principle to energy services, the Matrix's
broad-based definition of your sector will help to focus negotiators on the new services provided
by your members and some of the trade restrictions they encounter as global privatization
occurs. In our negotiations, we shall be mindful of the importance to your members of retaining
a broad-based definition of the sector.

I would like to take this occasion to congratulate you and your members for the hard work thet
has gone into completing the Matrix. Members of my staff, who have recently met with you and
your colleagues, will be using it as a reference point in their preparatory work for the energy
sector in the forthcoming Services 2000 negotiations.

Sinervzly,

——

00100000000147


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FROM: JOE HILLINGS
ENRON CORP.

CNBC- STREET SIGNS WASHINGTON, B.C,

ENRON PRESIDENT AND COO JEFF SKILLING
JUNE 26, 1998

Rone On the corner of "Wall & Main,” power failures across the country, As Mother Nature turns up the heat, several
industrial companies have been forced to clase their doors because of power shortages and this may just be the
beginning. Following years of industry warnings, power suppliers are falling short of energy demands and utilities in
the Midwest and now New England are telling customers to coo! it on their summer power needs. So what js a power
company to do in the face of anticipated heat waves this summer? Joining us now from Enron headquarters is Jeff
Skilling, the president and COO at Enron, one of the country's major power suppliers. Mr. Skilling, good to see you,
thank you for being with us today.

Skilling: Glad to be here.

Ron. | was in Chicago just a day or so ago, when it was 95 degrees. The heat index was at 105 and the local utility
and municipality were both asking consumers to cut down on their air conditioning, Something that seemed like not
an unreasonable demand, given what they are facing, but one that was likely to go unheeded. What is happening right
now?

‘Skilling: I think you got it right when you were giving the lead-in a little bit earlier. We have had very hot
(emperatures in the Midwest. We have a number of big generation facilities that are down right now. And we are
coming off of 8 years of high economic growth, Al that means that supply is stretched right now.

Ron: Now explain what that means, | mean, people may have a tough time understanding the notion that you are
Tenning out of power when there are power plants all over the country. Electricity is not something that just goes
away over time. There is more of it somewhere. How come the capacity constraints are bothering the industry right
now.

Skilling: You are limited to the capacity of the generation facilities that are in place. There are some regional
opportunitics and we, and everybody else in the industry, is working very hard right now to get electrons from where
there are some left into those markets that really need them, But the grid is not real exact effective, it is hard to move
electrons around and we are all trying the best we can to keep the power flowing,

Ron: Where do you find more power?

Skilling: There are parts of the country right now where the temperatures are not real high and where there is surplus
generating capacity. The trick, or the challenge, is using our existing transmission grid to get that power fram thase
areas ino areas that need it

Ron: Now you know, were these promises by authorities, you know regulators and others, who suggested that as the
utility business became deregulated, it would be far more efficent. Mergers and acquisitions and all kinds of
Gifferent arrangements and combination would lead to a free flow around the country. We are not there yet, right?

Skilling: Not yet. We are working on it [ would make the argument in the absence of all of these market reforms and
deregulation of the wholesale power markets, we would have a lot worse problem than we have right now. The
fundamental ssue is we have a lot of demand and we have some supply constraints right now and everybody is using
these mew market mechanisms to try to get electrons into those areas but is a new market. It just takes time to build
the capability to do that

Ron: Is it, in fact, required that power companies in the United States are just going to have to, at some point, engage
in a heavy dose of capital spending and expand capacity rather radically here?

Skilling: Thas's one sofution. And I'm sure there will be more of that in the fisture. The other thing that f think would

be very helpful is, if we could open the retail markets to competition so that customers could gel a price signal, Right
now, all you can really do with the consumer is ask them to shut down or involuntarily curtail them. If on the other

00100000000096


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policies and practices tha; are directly related to trade and reduce market opportunities for U.S,
exports or distort [1S. trade: (3) to further strengthen the system of international trading disciplines
and procedures; (4) 10 foster economic growth, raise living standards, and promote full employment
in the United States and to enhance the global economy; and (3) to address those aspects of foreipn
government policies and practices regarding labor, the environment. and other matters which are
directly related to trade and decrease market opportunities for United States exports or distort United
States trade

The “principal” objectives specify that U.S. negotiators should seek (1) to reduce or eliminate wade
barrters, and foreign government policies and practices directly related to trade that decrease market
access for U.S. exports or that distort U.S. trade: (2) to reduce foreign government barriers that
discriminate against or impose unreasonable regulatory barriers on U.S. service providers; (3) 10
reduce unreasonable barriers to U.S. foreign investment; (4} to obtain adequate and effective
protection for U.S. intellectual property rights and increased access to foreign markets for US.
businesses that rely on intellectual property, (5) to make the proceedings of intemational trade bodies
more open to public view; (6) to secure fairer and more open conditions of trade for U.S. agricultural
products; and (7) to promote through multilateral institutions worker rights and sustainavle
development.

These objectives and guidance reflect the President’s three primary concerns underlying the
proposal. The President has made clear that his first consideration in proposing this legislation is
the expansion of American wade opportunities abroad and the tearing down of barriers impeding
U.S. access to foreign markets. However, the President also has made clear that we have an
obligation to promote the rights of workers and the environment. Our commitment to worker rights
and the environment reflects long-standing, fundamental values of the United States. The proposal’
objectives properly balance the need to open markets with the attention these vital issues deserve.

The proposal next provides that the President may enter into certain agreements regarding tariffs and
implement them by proclamation. For example, the proposal would re-establish the President's
traditional proclamation authority, under which he can reduce U.S. duties up to 50 percent and
climinate duties of $ percent ad valorem or less. This authority dates back to 1934. The proposal
adds a new provision thut would allow the President to harmonize or eliminate tariffs in connection
with reciprocal tariff agreements in particular sectors, as we did in the ITA, as well as to carry out
reciprocal tariff elimination agreements consistent with WTO rules,

In order for an agreement to qualify for fast-track treatmem under the bill. the President must
comply with extensive notice and consultation requirements. These provisions enable the Congress
to set priorities, provide advice, and exercise oversight at al! stages of the negotiations. They ensure
that Congressional views wall be reflected both in any final agreement and in the mannez in which
an agreement is carried out

The bill expands upon the notice and consultation requirements included in earlier trade acts. For
example, the President must provide notice to Congress before initiating negotiations. and he must

7

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Argentina, Brazil, Paraguay, and Uruguay have formed a coramon market, MERCOSUR. which has
a GDP of approximately $] trillion and ambitions to expand to all of South America). MERCOSUR
is the largest economy in Latin America and encompasses a population of 200 million. It has struck
agreements with Chile and Bolivia, and is discussing agreements with a number of Andean countries
(Colombia. Venezuela), as well as countries within the Caribbean Basin. There are recent reports
that Canada is also in discussions with MERCOSUR. And, the FU and MERCOSUR already have
plans to conclude a reciprocal trade agreement by 1999.

Furthermore, the nations of the Andean Community have started meeting with member nations of
CARICOM and the Central American Common Market to discuss negotiation of free trade
agreements.

And, Chile, with one of South America’s leading economies. has signed trade agreements with
Bolivia, Colombia. Ecuador, Mexico, Venezuela, Canada and the MERCOSUR states. Indeed. Chile
has preferential trading relationships with every major trading country in our hemisphere but one --
the United States.

In South Asia, the seven members of the South Asin Association for Regional Cooperation (SARC)
— India, Pakistan, Bangladesh, Nepal, Bhutan, Sri Lanka, and the Maldives -- have set 2001 as the
target for the creation of a free trade area. SARC now represents only about | percent of world trade,
but it encompasses roughly 20 percent of the world's population. “This will increasingly be an
important market for U.S. goods and services

Access to markets in such developing nations is especially important to America’s economic future,
particularly those in Asia and Latin America which are projected to grow at rates as much as three
times the U.S. growth rate. As noted, more than 96 percent of the world's consumers reside outside
the United States, Of the more than 30 million people who join the world's middle class annually,
an estimated three quarters are found in emerging markets and other low and middle- income
countries. Latin America alone, if current trends continue, will exceed both Japan and Western
Europe combined as an export market for U.S. goods by the year 2010. Already, Latin America is
our fastest growing export market, even though the tariff barriers within the region average three to
four times the average U.S. tariff. Similarly, the Asian Pacific Rim has been our second fastest
growing export market in recent years, but its market access barriers are also generally higher than
U.S. barners. The climination of these inequities is in America’s fundamental interest, as we have
the most competitive economy in the world.

Our lack of fast track procedures also disadvantages us in comparison with our industrialized
competitors. As mentioned, Canada recently signed a new trade agreement with Chile, giving
Canadian exporters substantial advantages over their U.S, counterparts, Perhaps even more
disturbing, the EU, already the world’s largest trading bloc, is poised for major expansion in the next
few years, The EU has secured for its exporters significant advantages in the transition economies
of Central and Eastern Europe. As noted, the EU also has begurt a process aimed at reaching a free
trade agreement with MERCOSUR and one with Mexico, 1t has also concluded a framework

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00100000000181


———————————_—

‘of intellectual capital — ideas — from one place to another. Through
business can be conducted more efficiently. This allows for low cost energy to

to consumers. Coa ciet energy allows businesses to remain competitive in the eve!
increasingly global market place. Tt also allows businesses to attract the low cost

financial capital that is needed to maintain growing and robust economics.

00100000000149


AMENDED 6/899 4:00 PM
VIA MESSENGER

Energy Services Coalition
clo Enron Corp.

1775 Eye Street, NW
‘Suite 800

Washington, DC 20006 .
May 26, 1999

‘The Honorable Charlene Barshefsky

US Trade Representative

Office of United States Trade Representative
600 17th Street, NW

Room

203
Washington, DC 20508
Dear Ambassador Barshefsky:

A growing croup of American energy companies, associations and national organizations has
been meating to discuss the importance to our nation of pursuing liberalized trade provisions for
energy services in the World Trade Organization services negotiations, GATS 2000.

Your agency with the help of Don Phillips, Don Eiss, Joe Damond, Carol Balassa, Barbara
Norton, and Bill Greene have pursued energy liberalization in the APEC process which continues
to address these opportunities to open energy markets in Asian economies. The recent
statement by the Prime Minister of Japan advocating continued discussions to promote energy
restructuring and deregulation of the energy industry in Japan was welcomed and should be
helpful in Schieving the US position as the APEC process continues. We desire thet you
@ggressively continue these efforts.

Now that the 135 members of the World Trade Organization are planning their agendas for the

negotiations. We would strongly urge you to include the attached matrix definition of energy
services which we consider to be accurate and complete. This matrix is the product of the APEC
EVSL exercise, suggesting that a consensus of support for this definition of energy services may 4
already exist arnong the 21 members of APEC. Some countries may seek to define energy
services in more constrictive ways than we would, and exclude coverage under the GATS for
some American energy services companies who are global leaders in this sector. f

‘Therefore, we ask you to pursue this issue with continued diigance and offer our support and
‘essistance as a functioning energy resource group.

Sincerely,

00100000000145


CBI region are required to implement those obligations by the year 2000.

Comparable Access. Also, the President would take into account the extent to which those CB]
nations that have entered an FTA with any other countries (other than the CARICOM and the
Central American Common Marketyare prepared to grant the United States comparable access
for commercially important products. This provision is intended to give the United States
additional leverage to insist that a beneficiary country not discriminate in favor of our NAFTA
partners even as we grant that country NAFTA-equivalent market access,

Duration

This new trade enhancement program would not be open-ended. Since it is designed as a bridge
to the FTAA, it would terminate in 2005. At that time FTAA negotiations will have been
completed and all beneficiary countries should begin to reap the benefits of the Free Trade Area
of the Americas.

Phase-In of Benefits

In order to determine the extent to which countries have met the criteria for increased benetits at
the end of three-years, the President would review the operation of the CBTEA program,
including each country's compliance with the eligibility criteria -- the criteria currently existing
in the CBI statute, as well as the new criteria. We would, of course, request public comment and
undertake extensive consultations with the Congress on the operation of the program at the time
of the review.

Maturing Relationship

In conclusion, this bill reflects the maturing relationship between the United States and the
countries in the Caribbean Basin, Trade between the region and the United States has grown
impressively since the beginning of the Caribbean Basin Economic Recovery Act in 1984. Ail
but one CBI beneficiary belong to the World Trade Organization and all those that belong have
agreed to implement all of the obligations needed for membership. All of the countries in the
region are involved in the FTAA process. For those reasons, the Administration has constructed
® proposal that asks beneficiary countries to continue on their trajectory toward more open
markets and trade policies consistent with their WTO commitments and their participation in the
FTAA.

We look forward to working with the Congress on legislation to implement this approach. Now |
would like to turn to the President's strategy for economic growth and opportunity in Africa.

INAKALVLS VOTNA¥

Africa: Growth and Opportunity
We welcome this occasion to discuss opportunities to expand U.S. trade and investment with

7

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00100000000169


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001000000003390


2001-SE-003680

Jeffrey K. Skilling
President & Chief Executive Officer

Up . ‘1400 Sorith Street
2, Houston, TX 77002
713-853-6896

P.O. Bor 1188
Heuston, TX 77251-2188
Far 713-665-8381

fefckilling enon coon

April 9, 2001

The Honorable Paul H. O°Neill
Secretary of Treasury

U.S. Department of Treasury
1500 Pennsylvania Avenue, NW

Room 3330

Washington, DC 20220

Dear Secretary O'Neill:

T appreciated the opportunity to visit and to talk to you about the West Coast energy
markets. As this debate continues to unfold, we stand Teady to be a resource to you
whether it is policy analysis, economic research or historical industry information,

T look forward to seeing you soon,

Best personal regards.

Sincerely,

Endless possibilities.TM

00100000000382


proposed CBI trade enhancement legislation offers enhanced CBI trade preferences in the
context of the important changes that have taken place in the Caribbean Basin since NAFTA
implementation

On June L7, 1997 the Administration transmitted the United States Caribbean Basin Trade
Enhancement Act (CBTEA} to the Congress and it was introduced in the Senate by Senators
Graham. Moseley-Braun. Mack. DeWine, and McCain. Tre purpose of the CBTEA proposal is
to give Caribbean Basin countries enhanced market access and serve as a bridge toward the Free
Trade Area of the Americas. This bill is part of an integrated Administration-wide strategy to
advance economic progress and promote regional cooperation throughout the Caribbean. It
signals our intention to expand trade with Caribbean countries on terms consistent with the
objectives of the Free Trade Area of the Americas (FTAA) and their own obligations in the
World Trade Organization (WTO)

‘The legislation fulfills the President's commitment. made during his recent trip to Costa Rica and
Barbados, to forward legislation to the Congress that would provide enhanced trade preferences
to countries in the region. The bill would cover all the products that are presently not eligible for
preferences under the CBI program, including textiles and apparel. The CBTEA would extend to
eligible Caribbean Basin Initiative (CBI) beneficiary countries certain trade preferences
essentially equivalent to those Mexico receives under the North American Free Trade Agreement
(NAFTA).

The Administration originally had expected the CBTEA proposal to move through the legislative
process as free standing bill, However, when CBI enhancement was included in the Ways and
Means reconciliation bill, we forwarded a proposal that the Administration supported in
preference to the text in the reconciliation bill. Wishing to maximize the possibility of passage
of CBI enhancement and to ensure funding for the measure, the Administration worked hard to
reach compromise language that would enable CBI trade enhancement to remain in the budget
reconciliation package. We were disappointed that a compromise could not be included in the
Tax bill, but we stand ready to work with you again on a compromise.

In designing this legislation, the Administration considered the evolving economic and trade
situation in the Caribbean Basin region. The increased openness of most Caribbean economies
over the past decade, improved macroeconomic stability, and the growth of foreign direct
investment have set CBI countries on a path toward improved economic growth. We aiso
considered the perception among CBI countries that the implementation of the NAFTA is
reducing their relative opportunities for expanding trade to the United States

Indicative of the changes underway in the region is the fact that al! but one of the CBI
beneficiaries belong to the World Trade Organization, and that as members they have undertaken
a commitment to adhere to the rules of that organization. [n addition to meeting their WTO.
commitments, these countries will need to make structural reforms in order to take advantage of
the benefits to be derived from a hemisphere-wide free trade 2one.

2

00100000000066


2001-SE-009940

DEPUTY SECRETARY DAM DAYBOOK FOR THURSDAY, APRIL 5, 2001

1, [OUTSIDE SCOPE]
2, {(yi6)]
3, JEFF SKILLING (ENRON)

00100000000385


E, Joseph Hallangs

iow

Donald A. Deine

Rascucive Members
Chtstien M. Baion
Can Sram

Staphen D. Beret
Sogn Emme ( mapa

Brian Peery
ee
Deiheg Comermaners

Temothy } Suchands

“ENERGY SERVICES: OPEN MARKETS BENEFIT ALL

Energy services comprise service activities related to the development,
extraction, production, distribution, marketing, consumption and
management of energy products, including coal, electricity, gas, nuclear,
oil, and renewables. As such, energy services cut across a variety of other
services, including consulting, engineering, environmental, equipment-related,
financial, information technology, and resource assessment.

A thriving energy services sector is critical to economic well-being.
Global energy demand is projected to grow by about 45 percent by 2015.
Some 2 billion people — mostly in the developing world — do not have access to
commercial energy. There is a high correlation between growth of prudent
energy usage and increased economic growth, life expectancy, and standards
of living. According to the World Bank, increased efficiencies of infrastructure
provision — including energy ~ could generate hundreds of billion of dollars in
annual savings to governments and energy users.

A growing energy services sector helps protect the environment. Energy
services today promote the efficient management and use of energy resources
and the development of renewable enefgy sources. Extending commercial
energy services to the poorest would help reduce “poverty pollution”. Open,
competitive markets in energy services can help ensure access to clean,
efficient products and processes and encourage local producers to enhance
their operations. And boosting efficiency of energy utilization lowers pollutant
emissions.

Open markets promote a vibrant global energy services sector. As with
other goods and services, competition in the energy services sector offers
purchasers access to the highest quality services on a cost-efficient basis
Energy services largely were omitted from the Uruguay Round, in part because
the sector was in its infancy during that negotiation and because jn many
countries the energy sector was still under the control of state monopolies or
monopoly franchises. One of the key goals for a new round of WTO services
negotiations must be to substantially increase global market access
opportunities for energy services providers.

For further information contact Joe Hillings, Chairman, Energy Services
Coalition c/o Enron, 1775 Eye Street, NW, Suite 800, Washington, DC 20006;
202-466-9145; 202-828-3372 (fax); email: jhillin@enron.com

00100000000144


our products. Mr. Chairman, the economic well-being of the United States is integrally linked to
the rest of the world and U.S. leadership on global trade is aecessary in promoting globai growth.

With fast track authority, we can negotiate further trade agreements to open foreign
markets to U.S. goods and services. Without it, no nation will enter into a serious negotiation
with the United States, because of concern that the treaty will be revamped during the
Congressional process, and our economic interests will suffer. Consultations with Congress,
both before and during trade negotiations, are a key provision of our proposed legislation. This
will ensure that Congressional views are fully integrated into the formulation of negotiating goals
and strategies,

Already, countries around the world are moving ahead to expand trade with each other.
There is no question this is going to continue, The only question is whether we will be part of the
process of integration, or on the outside looking in. To cite one example, look at the Mercosur
nations, who have created a preferential trade arrangement, U.S. exports to these countries in
four of our most competitive industries -- road vehicles, metal goods, cosmetics, and electrical
equipment -- fell by more than 10 percent in 1996, while our exports in these goods to the rest of
the world grow by almost 6 percent. We must make sure that U.S. companies have a level
playing field as these markets of the future open their doors to trade.

The next steps for our trade agenda are to move forward in agreements in some of our
most Competitive sectors, and reduce barriers to trade in services and agriculture, which are key
U.S. exports, as well as complete a free trade agreement with Chile, a step towards elimination of
trade barriers in Latin Amenca, Latin America and Asia are the two most dynamic economic
regions in the world and are areas of increasing importance as export markets for U.S. goods. We
must reduce trade barriers in these regions and strengthen economic ties so that we may continue
to create jobs and foster prosperity in this country. Meanwhile, as we tum, our competitors move
ahead on trade arguments in both regions.

SADIANSS LNIWNdINOA DIYLOITI

Fast track is about more than one trade agreement or set of trade agreements, however. It
is about U.S. leadership in the growing global economy and is an integral part of the strategy that
has put our economy on the right track.

Mr. Chairman, trade policy has been a bipartisan effort for the past fifty years and it
should continue to be a bipartisan effort. We must continue to work together to devise an
acceptable negotiating authority so that we can continue to open markets, expand trade, und raise
hving standards both at home and abroad.

-30-

00100000000055


1999-SE-00T97

Oans 6 Mere Teneace

Chairnas and 1275 Eig Street

Crdet Executive OMcw Grranwed, Carnectiovt 06831
Tei 202 089 1117
Fas 203 B62 1110

February 25, 1989

The Honorable Robert E. Rubin
Department of the Treasury
Office of the Secretary

1500 Pennsylvania Avenue, NW
Room 3330

Washington, 0.C, 20220

Dear Mr, Secretary:

NO. @22 wee

TENNECO

We are writing in follow-up to Jim Thomson's letter of January 20. 1999 (copy
attached) inviting you to address the forthcoming meeting of the Russian-

American Business Leaders Forum on May 15-16 in New York.

As founding members of the Forum and active participants in its three preceding
meetings, we believe that the Forum has played 8 unique role in fostering
sustained and meaningful dialogue with the most politically influential members
of Russia's emergent business elite on issues of utmost importance not only for
U.S.-Russian economic relations but for U.S.-Russian relations more generally.
Despite Russia's failure to create a functioning market economy or a political
consensus on behalf of economic reform, we Delieve that the Forum has played
a very constructive role in fostering a fuller and deeper understanding by Russian
businessmen and entrepreneurs of what must be done to stabilize and
modernize the Russian economy and why the creation of such an economy is in
their own and their country’s vital interest, a8 wall as in the interest of the United

States.

Ata time when the economic policy of the new Russian government is still in flux
(if not non-existent), when the divisions within the Russian political elite are being
exacerbated by preparations for the forthcoming election, including efforts to
stoke the fires of incressingly evident anti-Amancanism, and when the country is
in the midst of a deepening and possibly devastating economic crisis, it seems to
us that forthright conversation with Russian entrepreneurs of the sort who will ba
attending the May meeting of our Forum is urgently important. Furthermore, we
‘are convinced that your leadership of such a discussion could make a major
difference in the crucial role these businessmen decide to play in resolving the
policy and electoral uncertainties that will determine Russia's near- and mid-term
future and thereby the near- and mid-term future of U.S.-Russian relations.

00100000000544


Commission declared open access for interstate gas pipelines. Long-term, fixed price
contracts suddenly went out the window. A new industry grew up around the new gas
wholesale market. Enron was bom. Enron and its competitors have tumed the staid old gas
business into new entity with many ofthe characeriica ofthe fnciol serves Hay:
Ten years ago, in a gas compary so! was ing you used to prepare spreadsheets.
Now Enron’s risk management software and trading so! are vital to the business.
Starting in the early 1990s, the US electricity business began to follow the path set earlier by
gas

Riding both waves, Enron is now a $31 billion company, in terms of sales, It has grown into
the vast new markets opened by deregulation ~ in fact, there is linde in our business now that
even resembles the old world of utility suppliers. We are the world’s largest “independent”
supplier of gus and clectcy bacase we donot airy tok emir

ore copie” maker dans prodacer ee
finance large projects. Then, we are pri a “suppli than a or

of gas and clectricity, although we also have some of both production and

ion. We buy, sell and trade both commodities. We are like an all-service investment
Frokerage, excepr shar the currency in which we trade is energy.

blurring. At the same time, the energy business is creating an array of new products that
enable energy users and suppliers to treat electricity and gas as hedgeable, nisk-marking,
highly liquid commodities. We are now at the point where the isolation of energy services
catch-up in gas and electricity deregulation, most recently Japan. Iris fascinating to take part
in the discussions of regional forums that attempt to track policy reforms in this sector, such
as the Asia Pacific Economic Cooperation group, or APEC. The reforms are happening so
fast that virtually any publication is out of date by the time it gets to press. The Asian
financial crisis spurred a new round of energy sector reforms in South Korea, Thailand, and
Indonesia. In some product lines, in some sectors, the US may be in the lead. But counties
and regions are now vying to get abead of the curve, to take advantage of the benefits of
energy restructuring and the new energy services industry before their rivals. Energy reforms
have proven to be a magnet for investment and wealth-creation. Nations want in.

The new GATS round should include energy services as a priority mem. Energy services
have been left out in the past. To the extent thar the international trade policy community
has grappled with the issues at all, it has stumbled over the question of how to draw the line,
between “product” and “service” in this industry. We in the US industry would like to see .
the broadest possible definition of energy services. For one thing, the more commoditized
these markets become, the less it matters where the product originates. For another, GATS
1995 and the 1997 Telecommunications Agreement have set important precedents for
national treatment of service suppliers, and competition policy, that will apply to energy
services but not to energy products.

Negotiators will find many parallels between their work on financial services and
telecommunications, and energy services, but there will be much that is unique to the energy
sector, as well. In this context, we would like to recommend that policy makers and "5
negotiators make use of ground breaking work on energy services done by regional

00100000000161


1998-SE-007965

ENRON, WASHINGTON
TRANSMITTAL SHEET

To: Enron European Distribution List
FROM: Joe Hillings

DATE: July1, 1998

RE: Electricity

Please see enclosed information from CNBC “Street Signs" -- Interview with Jeff Skilling

Encl.

Joe Hillings

00100000000095


VI. What our group - which now numbers 29 - is finding out is that United States
operations differ from foreign operations in many ways. The primary reason is that much
of the energy generated in the United States comes from private sources while most
energy overseas is the property of the sovereign - that is changing. In the United States,
one company may own the energy rights while another company provides alll the services
for the item. We believe services are from ground to gas tank. As you can see, definitions

are at the heart of the question of what should be done.

Vi. This gives rise to a number of questions threc of the most prominent are:

= Would it be desirable from a trade liberalization point of view to classify energy
services as one sector, or should different parts of it be classified under relevant sectors
such as transportation and distribution?

- Is the WTO separation between “goods trade rules” and “services trade rules”

desirable? Would it be more efficient to apply a single coherent set of trade rules to
liberalization in these sectors, considering the structure of the industry and the exiting
WTO mules?

- Should there be an “energy-related services” piece or should that be part of

energy services? . 3
In July or August of this year, the Department of Commerce will conduct a round table to |

/ }
begin the coordination between business and the government concerning the upcoming '

WTO Seattle Round.

00100000000159


scared away

every buyer and seller had operate theough it
power didn’t get bought through o

chased on. a last-minute basis the following day
tity called the Independent System Operator (120).
But many observers believe this two-step setup encour-

The company’s recent

aged generators to offer less pow-
er to the exchange and instead
to wait until the last minute to
sell power to the 150, which out of desperstion would have
bad pay higher prices. In three lawsuits, consumer groups,

jal water districts, and the City of San Francisco
aege that Enron and other electridty marketers engaged in
unlawful market manipulation. Several investigations so far
have failed te prove collusion by Enron or others. But one
study sald that the soaring prices coukin’s be explained by
such factors a3 high demand and rising fuel and environ-
mental costs. “We concluded that power was being withbeld
inexplicably, at the exact time at which prices were most
vulnerable to manipulation,” says Edward Kahn of the
Analysis Group/Economies, s co-author of one study backed

by the parent of utility Southern California Edison. Adds co-
suthor Psul L. Joskow, a professor of economics at Massa

chusetts Institute of Technology: “It was bad regulation, had

market design, bad Inck, and greed.”

“OT ROLUMG OVER. Enron dismisses the eturly as flawed and
ated to favor the utility that pald for it. Meanwhile, the
aorney general’ office, state Public Ut

and FERO

rel

is being

the exchange would be pur- |

SUCCESS is sure
to make its competition more aggressive

| he doesn't linger over troubled assets. To t

vigorously ps
jency and lower yx into a slew af

snodities. “Look at pulp snd paper. Lock at all

those salesmen who play golf al

For a commodity, crying cut

You don’t need to play golf to sel

commodity,” blarts Skilling in his typ-
ically blunt style. In these new
arenas, Enron won't face the kind
of regulatory obstacles it must
eliminate in energy. But it's no
wonder that many players will re-
sist what they see a5 an arrogant
and menacing middleman. The Cal-
Wornia experience gives them new
ammunition, Enron and other
traders “sure as hell haven't done
a very good job of protecting
American public from the rising
price of natural gas ar electricity. I
don’t see that they bring any real
value to the stool marketplace,”
says Daniel R. DiMicco, czo of
Nucor Corp., one of the nation’s

steelmakers.

In one of his first big beta out-
side of the energy patch, Skilling
is attacking the telecommunica-
tions industry. In the past year,
Enron has spent nearly $500 mil-
lion to create its own high-speed
fiber network. But the geal is not
to be a traditional telecom player.
Instead, Enron wants to create a

vast spot market for high-speed communications capacity,
and ultimately a futures market. Consider its deal with
Blockbuster Ine. The two signed a 20-year pact for Enron to
deliver movies-on-~demand to Blockbuster castamers, a serv-
iee that’s now in four test markets, Instead of having to
build its own network and coordinate a multitude of agree-
ments with local high-speed communications providers,
Blockbuster tarned the whole thing over to Baron. [t pays
Enron per movie, getting only the capacity it needs, when it
needs it, For now, those movies are moving mostly on En-
ron's 13,500-mile fiber network. But as a robust market for
trading bandwidth develops, Enron could pluck the eapacity
it needs from other communications companies, It may even
sell its fiber network when ft no longer needs the physical
capacity to ensure delivery to Its castomers. “The minute I
don’t need it, it’s gone,” says Skilling

Indeed, Enron's new czo has alresdy demonstrated that
ip fund its vast
$2 billio

on expects to shed more t
her properties around the world #
ction plant in India and a

comp
teok a 25 million aftertax

o caver problems at 9

00100000000394


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00100000000152


instituted economic reform programs. They have adopted the most critical reforms — liberalizing
exchange rates and prices, privatizing state-owned enterprises, instituting tighter disciplines over
government expenditures, ending costly subsidies, and reducing barriers to trade and investment.
Many countries have also undertaken political reforms.

Reform efforts have helped boost economic growth in Africa from [.4 percent in the 1991-94
period to 4 percent in 1995 and 4.6 percent in 1996. The United States seeks to encourage these
reforms and the growth that stems from them. The benefits for the United States are clear. In an
increasingly competitive global economy, the United States cannot afford to neglect a largely
untapped market of some 600-million-plus people, and the world cannot afford to see a vast
region marginalized, The lowering of tariffs and other trade barriers will help African nations to
grow. They will also help Amencans by opening these markets to our goods and services.
Increased growth will also contribute to social and political stability on the continent and to an
enhanced capacity to address the problems with which we are all too familiar,

Trade and Investment

We must continue to address obstacles to wade and investment. In the last 40 years. Africa’s
share of global trade has fallen from 3.1 percent to 1.2 percent. A recent World Bank study has
concluded that the most significant part of Africe’s marginalization in world trade can be
attributed to African trade barriers that are far more restrictive than those in high-growth
developing countries and incorporate @ substantial anti-export bias. For example, import tariffs
in sub-Saharan Africa average 26.8 percent, whereas they only average 8.7 in the fastest-growing
exporters in the developing world. African countries also impose some form of nontariff barrier
Testrictions on over one-third of all of their imports, a ratio that is almost nine times higher than
the corresponding average for fast-growing exporters. Such trade protectionism erodes the
competitive position of Africa’s exports and, according to this study, costs the region an average
of $11 billion per year in annual trade losses -- about the same as total aid to Africa from all
sources in 1991

The core premise of our plan is that those nations willing and able to pursue the most aggressive
growth-oriented economic policies -- principally by opening their economies to the world
marketplace -- are the ones most likely to be the engines of growth on the continent. The plan
provides incentives for all African countries to join this advance group of African reformers

Many African countries have been able to make substantial achievements in restarting economic
growth by taking bold steps to open, liberalize, and privatize their economies. The most
dramatic progress has come when countries have focused on three areas: trade and investment
liberalization, investing in human resources, and improving policy management. Our program
secks to emphasize support for countries that are making strony efforts in these areas,

In the area of trade and investment. we attach particular importance to the extent to which
countries have made substantial progress toward reducing tariff levels, binding their tariffs in the

9

~~ 90100000000073


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0100000000117


1997-SE-01

HORAT IO A L G E R

Fretry-First ANNUAL AWARDS

wana ACTTOIFTES CHAIRMAN

wikem F, Paetey

Vhamar a CM

Fran oto Love, lor December 16, 1997

oer amass

‘Danae Kel The Honorable & Mrs. Robert E. Rubin

Paar fhentrnete 15th & Pennsylvania Ave., NW

eect mts Washington, DC 20220

Cesena ED

aon Dear Mr, & Mrs. Rubin,

‘oeeres Me Kaier . _— ; —
enna Tt is my pleasure to invite you to attend the Fifty-first Annual Horatio Alger Awards Activities
Prins & CH honoring Kenneth L. Lay as a recipient of the 1998 Horatio Alger Award. | know you will

want to join us in honoring Ken on this very special evening.

Reweeth Lay

premeer rey

eae On Friday evening, April 24, Ken will receive the Horatio Alger Award at the 1998 Awards
sind ere Ceremony in Washington, D.C., which will be recorded for a nationally broadcast special on
MWA Corpaenion PBS television. He will join the nearly 500 members of the Horatio Alger Association of
evdetet REC. Price Distinguished Americans who have been chosen over the past 50 years. The Members of the
ale Association, all recipients of the Horatio Alger Award, symbolize that any American can rise

from humble beginnings and triumph over adversity.

Chee Merce Enea In addition to the Award recipients, we will recognize the Horatio Alger National Scholarship
Coenen recipients—exceptional young people who have faced and overcome extreme hardships.
mt tore Proceeds from this event support the Association's scholarship and educational programs,
ewe d C20 which will reach over 80,000 students across the nation this year,

Cooper te

teteny Wetere Enclosed is information on the Association and the Awards Activities. You can make your
tateer @ COD reservation by completing and retuming the enclosed reply form. Should you have any
questions, please feel free to contact our Awards Activities Committee at (202) 582-6200.

I look forward to seeing you in Washington on April 23-25, 1998.

With best wishes,
William F. Farley
Awards Activities Chairman
Horatio Alger Awards Activities Committec
2020 Pennsylvania Avenue, NW. Suite 175, Washington, D.C. 20006 Tel: (202) 582-6200 Fax: (202) 582-6008

00100000000473


” Revised 10/22/09 5:00 PM
(3TM Amended filing 6/8/99 @ 5:00 PM) ust

SIGNERS OF AMBASSADOR CHARLENE BARSHEFSKY LETTER 6/8/99

42 Members
ABB
Allied Signal
American Wind Energy Association
Institute

McDermott

Mid-American Energy Holdings Company

National Association of Energy Services Companies (NAESCO)
National Foreign Trade Council - NFTC

National Electrical Manufacturers Association (NEMA)

New York Mercantila Exchange

Rockwell Automation

Sarkeys Energy Center, University of Oklahoma

Siemens.

United States Energy Association - USEA

US ASEAN Business Council

US Chamber of Commerce

United States Counc’ for international Business (USCI8)
U.S. 08 & Gas Association

US Pacific Economic Cooperation Council - US-PECC
Westinghouse

members are in

00100000000146


developing countries, While we cannot support the textile proposals in $.778, we are ready to
work with Congress to develop a program that will be consistent with our overall commitments
under the WTO, while at the same time taking into account the interests of U.S. industry and
Africa.

Debt reduction, To help ensure that the growth-oriented countries now burdened by excessive
debt are in a position to invest in human resources, the Administration would support an
approach that leads to the extinction of concessional bilateral debt for the heavily indebted poor
countries (HIPC), and we would urge the World Bank and IMF bourds to provide deep relief
under the HIPC debt initiative,

Creation of an U.S.-Africa Economic Forum. The Adminstration will establish a Cabines-
and Minister-level forum to meet once per year in order to raise the level and caliber of the
dialogue between the United States and Africa's strongest reformers,

Bilateral technical assistance to promote reforms. USAID will finance short-term technical
assistance to African governments to liberalize trade and promote exports, comply with WTO
obligations and assume additional ones, and maxe financial and fiscal reforms. The U.S.
Department of Agriculture will provide technical assistance to promote agri-business linkages.

Support for agricultural market liberalization. As part of the new multi-year Africa Food
Security Initiative, USAID will help address such critical agricultural policy issues as market
liberalization, agricultural export development, and agribusiness investment in processing and
transport of agricultural commodities.

Trade Promotion. The Trade Development Agency (TDA) will increase the number of reverse
missions to growth-oriented countries

Programming commodity assistance. To help countries experiencing budget shortfalls in the
course of their growth-through reform programs, and to encourage more effective spending on
human resource development and agricultural policy reform, the Administration will take steps
to focus PL-480 Title I assistance more on growth-oriented countries in Africa and will explore
the possibilities to increase funding for Title II] assistance from within PL-480.

Support for economic policy reform. In FY-98 USAID will provide support for growth-
oriented programs with both technical assistance and program support funds,

Financing and debt relief; The Administration has looked carefully at the need for well-
targeted, appropriate financial assistance and debt relief. The need for financing --both budget
and balance-of-payments support -- debt relief would be acute for countries pursuing aggressive
trade liberalization and trying to maintain, or even increase, useful investments in health,
education and infrastructure development, We want to ensure that liberalizing countries have
enough breathing space to carry though with a comprehensive program of trade liberalization and
12

00100000000076 ©


THE BARONY WAY
Enron makes money by trading commodities and
other contracts. Here's how it works:

aE ORES TBE FS
avon has @ contract to provide an aluminum smelter
with electricity at a fixed price for three pears. Enron
bays aluminum from the smeltec.
Prices move down for aluminum and up for electricity.
Enron pays the smelter to shut down temporarily,
buying cheaper aluminum in the market to meet the
smelter’s commitments,
z Enron then sels the electrlety elsewhere ata higher
market price. :

E ‘A small clothing cataloger asks Encon to create
Gerivative to protect against hot weather that might
hurt sales of winter clothes,

Bi] 7 see ate naa wr i rod, :

must pay the retailer a certain amount; for every degree
below, the retailer pays Enron.”

Bey Sore as tis rk tga eal wth
maker who benefits from hot weather

fourth quarter, Enron's core wholesale trading and services
business reported income af $777 million before Literest and
taxes, nearly tmiple that of a year earlier Enron's total net in-
come excluding nonrecurring items shot up S2¢% for all of lac:
year, to $1.27 billion, on sales of $100.8 billion, up 1305,
Physical volumes of gas and electricity delivered jumped
50%, beosted in part by EnronOnline, the company’s year-ald
Web-based trading operation.

ill be using the crisis to push for more favorable
federal rules for moving electricity from state to state,
which could boost its flexibility and trading options. Cer:
tainly, Curt L. Hébert, the new chairman of the Federal En-
ergy Regulatory Commission (reac), is a free-market ad-
vorite flendly to Enron's views. “1 don't think Califurnia is
oa be that stops America from wanting

4 lesgon that allows America to

"he sy
ay will have to spend precious time

at

wire ee AAaAM PO

_ Bata Gives Gap, Frver Mates Pek, Marl Lech & Ce, Bizanter Paral taets

i
i
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00100000000179


Lebryk, David

From: Robertson, Linda
Sent: Friday, November 03, 2000 4:31 PM
To: Carter, Ted; Arkin, Steve; Baker, Ros; Conly, Sonia; Cumby, Robert, Davie, Bruce;

DeLaVina, Lynda; Flanagan, Rosemary; Gerardi, Geraldine; Holtzblatt, Janet; lwry, Mark;
Knopf, Kevin; McCubbin, Janet; Mikrut, Joseph; Talisman, Jon, Vandivier, David; Walker,
Deborah; Atkinson, Caroline; Baukol, Andrew; Budington, Michele; Cetina, Jill; Chaves, Mary;
Eichenberger, Joe; Fall, James; Geithner, Timothy; Gelpem, Anna; John, James; Lee, Nancy;
Lowery, Clay; Ludden, Ken; Schuerch, William; Stedman, Louellen; Truman, Ted; Walsh,
Helen; Alagiri, Priya; Andrews, Lisa; Arnold, Thomas; Bordoff, Jason; Cameron, Art; Carter,
Jana; Cohen, Alan; Comstock, Neal; Decker, Larry; Desler, Anne; Egolf, Brian; Eizenstat,
Stuart; Fant, William; Flanders, Stephanie; Gathers, Shirley; Grayson, Cherry; Harvey,
Reavie; Herold, Valerie; Johnson, Linda; Jones, Janet; Joseph, Verlene; Keene, Carolyn;
Keller, Alan; Kim, Carol; Klasky, Helaine; Lavine, Marne; Longbrake, John; Luce, Ed; Matera,
Cheryl; McAuliffe, Laura; Mejia, Annabella; Moore, Holly; Muldoon, Lara; Nisanci, Didem;
Powell, Linda; Robertson, Linda; Sandberg, Sheryl; Smith, Michelle A.; Starks, Ora; Stern,
Todd; Summers, Larry; Toohey, Frank; Valentic, Marsha; Barber, Francine; Barbour, Gaylen;
Bieger, Peter; Carro, Richard; Cohen, David; Edsall, Alexandra; Greene, Michelle; Joy,
David; Kellogg, Cliff; McGivern, Tom; McHale, Stephen; Mcinerney, Roberta; Sachs, Lee;
Wolin, Neal; ex.mail JONESM; ex.mail. VJORSTAD; Adashek, Jonathan; Affleck-Smith, Joan;
Baer, Gregory: Barr, Michael; Bell, Rochelle; Beresik, Michael; Bresee, Elisabeth; DeMarco,
Edward; Foote, Norman; Gensler, Gary; Johnson, James; Lebryk, David; Ross, Lisa
Subject: Thanks

Today is my last day at Treasury. As I was walking back from my lunch this
afternoon, I must say it was with enormous sadness that I reentered the
Treasury building this last time as a member of Team Treasury. This
Department and the very special friends I have gained over the last eight
years will always be a highlight of my professional experiences. It has been
a@ great honor to work with you. We have shared some of the most important
achievements of the Clinton Administration, and our Department will forever be
locked upon as one of the primary reasons we had so many successes during this
period, economically and in social justice. I truly will miss showing up here
next Monday morning. But most of all I will miss our professional and
personal relationships, although I know they are not over, but that they will
simply now be from a bit further distance.

E will be starting work next Monday at Enron. When I have my new telephone
number, E-mail, and mailing info, I will have Janet forward it to you. In the
meantime, my home telephone number is [(b)(6)] . Again, thank you very
much for being a part of my professional life.

01100000000013


of intellectual capital — ideas ~ from one place to another. Through this flow of ideas,
business can be conducted more efficiently. This allows for low cost energy to delivered
to consumers. Low cost energy allows businesses to remain competitive in the ever
increasingly global market place. It also allows businesses to attract the low cost
financial capital that is needed to maintain growing and robust economies.

00100000000126


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00100000000174


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00100000000151


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00100000000175


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00100000000213


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00100000000216


1999-SE-004434

ENRON, WASHINGTON

TRANSMITTAL SHEET

1775 Eye Street, NW

Suite 800

Washington, DC 20006

202-466-9145

202-827-3372 (fax)

Jnilin@enron.com

TO: The Honorable Robert E, Rubin

FROM Joe Hillings

DATE: 5/3/99

RE Enron International Statement on:
US-Japan Enhanced Initiative on Deregulation
And Competition Policy

| thought the attached statement from Enron Intemational on US-Japan Enhanced Initiative on
Deregulation and Competition Policy would be of interest,

Best regards.
Encl

00100000000109


PAGE 2

This debt has been issued chiefly to fund a lucrative investment portfolio, which was undertaken solely to
grow profits for GSE shareholders. Here's how it works: the GSEs borrow funds cheaply because of their
implicit government guarantee, and then invest them. The above-market retums are highly profitable - but do
nothing to increase American homeownership. In 2000, both GSEs reported that this arbitrage investing
accounted for approximately 60 percent of their net income. That's like a local government issuing a revenue
bond to build a schoolhouse, and then using part of the money to play the stock market. If the GSEs bet right,
their shareholders profit. If they're wrong, the U.S. taxpayer loses.

Excessive Leveraging

Compounding this debt growth, the GSEs are also leveraged far beyond what would be permitted for other
fmancial institutions. At year-end 2000, the GSEs' debt-to-equity leverage for on-balance sheet liabilities w:
30:1 versus 11:1 for commercial banks, If the GSEs were to meet the standards imposed on commercial
banks, they would have had to hold $82 billion in capital - or double the amount at that time. In their current
condition, the Federal Reserve would deem them "significantly under-capitalized" ~ and they would face
serious risk of closure, These institutions simply are woefully undercapitalized - a situation that becomes
more perilous during a recession.

Risky Derivatives Hedging

The GSEs attempt to mitigate the risk associated with their debt through extensive reliance on derivatives.
From 1995 to 2000, the GSEs' derivatives exposure increased over 400%. At the end of 2000, the GSEs had
$749 billion in such exposure. This is 2 massive amount of derivatives exposure,

In the third quarter of 2001, Fannie Mae reported a startling write-down of $10.6 billion in shareholder equity,
reducing its equity by 29 percent from where it stood just three months earlier. Fannie took a big position in
the derivatives market and bet wrong. As a result, their debt/equity ratio shot up to 53:1. This approaches a
doubling of the GSEs’ year-end 2000 leverage ratio of 30:1.

With such low capital, the GSEs simply do not have room to gamble in the complex derivatives markets.
Allowed to operate on extremely thin capital margins, the GSEs must be right almost all of the time to hedge
their huge portfolios. However, if Fannie Mae's interest rate forecasts are wrong - and many forecasts by
reputable companies prove to be wrong in turbulent times - continued losses could spell serious trouble.

Check the facts: Please visit http:/(wisw fmwatch org for additional formation on the GSEs" practices and
activities, and their potential implications upon the U.S. financial system and exposure to American taxpayers

00100000000405 —


regional agreements, as well as negotiating new multilatcral agreements that level the wade play ing
field. But no such agreements are likely as long as our trading partners believe that any agreement
the President negotiates will also have ta be separately negotiated with the Congress,

Fast track, however, is about more than economics. It is about American leadership. As the
President said last week, fast track “is about whether other countries will continue to jook to the
United States to lead to u future of peace and freedom and prosperity, about whether the world will
be growing together instead of coming apart, about whether our economic ties will lead to cultural
ties and ties of partnership, or whether we will be viewed as somehow withdrawn {rom the world,
not interested in leading it, and therefore, not nearly as influential us we might otherwise be for the
causes in which we so deeply believe.”

Sidelining ourselves at this critical juncture will have repercussions that will be far more than
economic. Economic prosperity contributes to economic security. which in tum suppons democracy
and stability. We are at the pinnacle of our influence and we should use that influence to shape
international economic rules and transmit our fundamental values,

The Uses of Fast Track

‘The absence of fast track does not only mean that we cannot match our competitors when they
enter into prefercntial trade arrangements. [t also prevents us from achieving our own goals.
‘There are three major areas of pressing concern which require fast track now.

First, fast track would allow us to complete the built-in agenda of the World Trade Organization:
that is, conclusion of the major trade negotiations that were deferred at the end of the Uruguay
Round and participation in negotiations mandated by the Uruguay Round agreements in areas
ranging from rules of origin to services. This year, we resume negotiations to expand and
improve the government procurement agreement. Next year, we begin again the negotiations on
intellectual property rights, followed by agriculture negotianons in 1999, and then services
negotiations, We seek enhanced access to global markets in these areas, and the stakes are very
high. The world’s government procurement market will be a trillion-dollar market over the next
decade and bringing more countries into the agreement will be critical. Agriculture and services
tepresent another almost $2 trillion market, with agriculture representing $600 billion globally:
and services $1.2 trillion. We must have fast track authority to enter these various talks or
countries will not put meaningful offers on the table.

Second, fast track would enable us to pursue market-opening initiatives in sectors where the
United States cither leads the world or is a powerful competitor. and where there is extraordinary
potential for growth. A good example of what can be achieved in this area is the recently
concluded Information Technology Agreement (ITA). the United States and 43 other nations
agreed to the reduction and eventual elimination of tariffs on information technology and
electronic products, including semiconductors, computers, telecommunications equipment, faxes.
phones. and integrated circuits, This is an extraordinarily favorable agreement for the United

5

00100000000060


April 05, 200
Thursday. 3

[OUTSIDE SCOPE] —_ =
10:1Sam-10:45am [OUTSIDE SCOPE] . want e |
11:45am-12:00pm (bY8)]
{(06)] eae - ee
(ie) _ z
[OUTSIDE SCOPE} ae ny Si
Secretary O'Neill w/Jeff Skiing, Pres/CEO, Enron re: Energy Crisis, Steel
[OUTSIDE SCOPE] ae

Dam, Ken a

04/04/2001
6:53 PP

00100000000387


Cover s

Corp., its failed ws that's Ukely to

d up. Under Skilling, En
doning its once-ambitious plan
pipelines, and

will
build assets where
they clearly support

the trading opera-
‘sons, including places like Spain and Japan. Rival energy
marketer and producer Dynegy Ine. of Houston questions
just how campetitive Enron can be without a significant
physical presence in its new commodities “to give you that
incremental intelligence,” adys cho Chuck Watson. Without

tock is up
® years. “One thing about Enron
is they're incredibly well managed, very smart, and entre-
preneurial,” says portfolio manager Rob L
shareholder ant Capital Management Inc. “Th
they deserve the benefit of the doubt.”

As Enron gets bigger, maintaining its prem
culture and stiff risl-management controls will rely re

@ bigger challenge. And mare competition from strong rivals,
like Dynegy, means “a lot of the margins are going to go
away,” says one utility analyst. “Early entrants get generous
thargins that attract other competitars.” One of the biggest

ENRON'S BiG WHEEL HAS A HEAVY TREAD

sas business has slways prided

itself on its “can-do” attitude. But

when it comes to prodding gov-
emment policymakers to action, no-
body comes close to Enron Corp. ceo
Kenneth L. Lay. “In recant years,
that has become Ken-do,” says Chase
Untermeyes, director of government
affairs at Compaq Computer Corp.
and chairman of the Texas State
Board of Education.

So what has Ken done? In Hous
ton, Lay Jed the fight for a new base-
ball stadium, which opened last April
under the Enron name and with $100
million of its funding. As chairman of
the Governor's Business Council un-

der former Governor Gearge W. Bush,

Lay pushed fer and won state educa-
tion reform, litigation curbe, and tax

‘Lay was PRESIDENT B SH’S leading

cuts. In Washington, Lay's army of
lobbyists has songht everything frum
electricity deregulation te tax breaks.
Now, with Bush in the White
House, Lay stands to became one of
the moet influential corporate players
in the country. With the public furor
over California's power crisis, he'll
work to stave aie cries for rereguis-
tion of electricity, Says Craig McDon-
sid, executive director of Texans for
Public Justice, a Eberal consimer ad-
voracy group: “Enron is at the top af
the top group of corporations that has
the ear of George W. Bush.”
” Indeed, the tice hetween
the Texans run deep. They share a
background in the energ
and a free-market worl:
was 2 big back

younger Bush's leading patron in
Austin, donating more than $550,000
to the governor, according to the
Center for Public Integrity, a Wash-
ington watchdog group. When Bush
set his sights on the White House,
Lay was one of 212 “pioneers" who
raised more than $100,000, and En-
ron wss the cempaign’s top supplier
of corporate jete. Enron donated
$250,000 for the Republican national
convention. In addition, Lay sent the
maximum $5,000 to the Florida re-
count legal fund, and gave $100,000
uw committes,

KEN LAY AT THE OPEX-
ING OF ENRCN FIELD
WITH PRESIDENTS BUSH,
FORMER AND CURRENT

High on Enron's list of
priorities is federal au-
thority to approve inter-
State electricity transmis-
aion lines. Lay says he
wus Willing to serve ina
key Bush Cabinet post
but dids’t lobby for a job,
and no offer carne: “I've
got a job, and I can sup-
port President Bush in a
lot of other ways, just
like I did his father.”
Beyond the White
House, Enron has a vast

ronmental quality. While Enron tilts
toward Republicans, it gives generous-
ly to both parties, In the 2000 election,
fun-

to Demeerats, says the nonpartisan

Center for Responsive Politics,

‘Thase who have been subjected to
Enran'’s kibbying efforts say the eotn-
pany is persistent bat not overbearing
in pushing ts agenda, “They are force.

00100000000395


PAGE 2

This debt has been issued chiefly to fund a lucrative investment portfolio, which was undertaken solely to
grow profits for GSE shareholders, Here's how it works: the GSEs borrow funds cheaply because of their
implicit government guarantee, and then invest them. The above-market retums are highly profitable - but do
nothing to increase American homeownership. In 2000, both GSEs reported that this arbitrage investing
accounted for approximately 60 percent of their net income. That's like 2 local government issuing 3 revenue
bond to build a schoolhouse, and then using part of the money to play the stock market. If the GSEs bet right,
their shareholders profit. If they're wrong, the U.S, taxpayer loses.

Excessive Leveraging

Compounding this debt growth, the GSEs are also leveraged far beyond what would be permitted for other
financial institutions. At year-end 2000, the GSEs’ debt-to-equity leverage for on-balance sheet liabilities was
30:1 versus 11:1 for commercial banks. If the GSEs were to meet the standards imposed on commercial
banks, they would have had to hold $82 billion in capital - or double the amount at that time. In their current
condition, the Federal Reserve would deem them “significantly under-capitalized" - and they would face
serious risk of closure These institutions simply are woefully undercapitalized - 2 situation that becomes
more perilous during a recession

Risky Derivatives Hedging

The GSEs attempt to mitigate the risk associated with their debt through extensive reliance on derivatives.
From 1995 to 2000, the GSEs’ derivatives exposure increased over 400%. At the end of 2000, the GSEs had
$749 billion in such exposure. This is a massive amount of derivatives exposure.

In the third quarter of 2001, Fannie Mae reported a startling write-down of $10.6 billion in shareholder equity,
reducing its equity by 29 percent from where it stood just three months earlier, Fannie took a big position in
the derivatives market and bet wrong. As a result, their debv/equity ratio shot up to 53:1, This approaches a
doubling of the GSEs" year-end 2000 leverage ratio of 30:1.

With such low capital, the GSEs simply do not have room to gamble in the complex derivatives markets.
Allowed to operate on extremely thin capital margins, the GSEs must be right almost all of the time to hedge
their huge portfolios. However, if Fannie Mae's interest rate forecasts are wrong - and many forecasts by
reputable companies prove to be wrong in turbulent times - continued losses could spell serious trouble.

Check the facts: Please visit http:‘/www fmwatch org for additional information on the GSEs" Practices and
activities, and their potential implications upon the U.S. financial system and exposure to American taxpayers,

00100000000402


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~ 00100000000128


agreement with Chile which is expected to lead to a free trade agreement by 1999 based on recent
reports.

China has targeted Mexico, Argentina, Brazil, Chile and Venezuela as “strategic priorities” in Latin
America, China wants to enhance commercial ties and ensure that key Latin countries are receptive
to its broader global ayvenda as a rising power, both in the WTO and other fora. The Chinese
leadership has undertaken an unprecedented number of trips to Latin America in the last two years,
and Latin America is China's second fastest growing export market,

Japan has undertaken high level efforts throughout Asia and Latin America to enhance commercial
tues through investment and financial initiatives. The Prime Minister of Japan recently visited Latin
America seeking closer commercial ties and a greater Japanese commercial presence in all respects,

The consequences of agreements being reached without us are not just theoretical; they are quite
real. Many U.S. firms are suffering from the competitive disadvantage caused by preferential
agreements that do not include us. Our companies are losing export opportunities, Our past efforts
to level the playing field will prove futile over the long-term if we begin to cede this ground to our
competitors. Examples abound:

. U.S. fabric producer, Quaker Fabric, recently lost a $1.8 million a year sale in Chile to a
Mexican competitor because of an 11% tariff preference favoring Mexican producers

. U.S. apple producers are at risk in their Latin American markets due to Chile's preferential
tariff free, or near tariff-free, access to MERCOSUR, Venezuela, Colombia, and other South
American markets as a result of the FTAs it has been negotiated (six since 1991). U.S.
producers have to absorb the non-preferential tariff cost to enter these growing markets.

. U.S. com producers are facing competition in Chile from Argentinean producers who enjoy
a 3.3% tariff preference, which will grow to 11% over time.

’ Chilean fresh fruit pays a 2 percent duty when entering Venezuela (due to the Chile-
Venezuela FTA), whereas U.S, producers pay a 15 percent tanff. The U.S, Embassy
estimates that U.S. market share would grow from its current 39 percent to 67 percent if US,
producers had equivalent access to the Venezuelan market.

MERCOSUR comprises the largest market in Latin America (200 million people and a GDP of
approximately $1 trillion). In the context of negotiating this customs union, Argentina. Paraguay
and Uruguay raised their tariff on imported computer products to accommodate Brazil's interests.
The net result was that the common extemal tariff is significantly higher (from zero to 14 percent
ad valorem in the case of Argentina, the second largest economy in South Amenca)} than the onginal
tariff on these items in Argentina and others.

The United States can only redress these growing trade setbacks by concluding similar bilateral and

4

00100000000059


1999-SE-007748

%

Kenneth L. Lay
Chairman amd
Chief Executive Officer

Enron Corp.

FO. Box 1188

Housteet, TX 77251-1188

(713) $53-6773

Fes (713) 883-5313
July 16, 1999 BayQewron.com

The Honorable Charlene Barshetsky

US Trade Representative

Office of United States Trade Representative
600 17th Street, NW

Room 209
Washington, DC 20508
Dear Charlene:

We are actively involved with 28 other companies and asseciations in promoting energy
services as 2 significant trade service deserving to be included in the GATTS 2000 negotiations.
| am attaching the list of members.

‘The Energy Services Coalition was recently established on May 26, 1999. At that time
we forwarded our letter to you announcing its organization, recognizing the key role that the office
of the USTR has played and continues to play in promoting energy services liberalization in
APEC, and the desire of the growing group in the United States for the United States government
to include energy services on the WTO negotiations agenda.

Ihave agreed to deliver @ speech at the WTO Ministerial Business Forum in Seattle on
December 2, 1999, and will address the broad horizon that energy services covers. Energy
services also includes energy equipment as a significant part of our energy services market

‘The United States energy industry because of our continuing liberalization of market
opportunities has helped create new enterprises which stimulate investment, improve overall
competitiveness and bring to ail consumers beneficial choices. This can be done globally with
many WTO members using their entrepreneurial skils to developed and developing economies.
Energy services offers unlimited opportunities for you and benefit to all WTO members.

To assist you in preparing for the Seattle Ministerial, anc beyond that in negotiations of
the GATS Round itself, we look forward as an industry grouping to providing you with definitions
of the scope and breadth of energy services, its impact on the US economy, and barriers faced
by US energy and energy service companies in foreign markets.

Sincerely,

fer

Encl. (Matrix)

ce: The Honorable William Daley
The Honorable Bill Richardson
The Honorable Robert Rubin

Natural gas. Electricity. Endless possibilities.

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Africa and the Administration's program for seizing these opportunities. | want to commend the
Congress for its leadership in focusing on the need to develop a new trade approach to Africa
The Clinton Administration enthusiastically endorses the basic approach of the African Growth
and Opportunity Act (S. 778), We look forward to continu:ng our work with the Congress to
develop. refine, and enact legislation that will help build a new trade relationship between the
United States and African countries,

We believe that this is an opportune time for us jointly to address the issue of our economic and
trade relations with Afnca. Over the last year and a half. both the Administration and the U.S
International Trade Commission have submitted two reports on this question. Our most recent
report sought to lay a foundation for our future work in this area. The Administration has also
worked to develop new policies in this area, after consultation with African officials, The
President is very interested in this subject and has directed us to determine what steps we can
take to establish more substantial trade relations with Africa,

We recognize the achievements of many countries in Sub-Saharan Africa in pursuing economic
and political reforms and wish to offer special support to those countries committed to pursuing
acceleratea reforms. Today, ] want to discuss the Clinton Administration's new economic
approach to Africa. We have worked intensely withir the Administration to develop a program
that we hope will help African countries lock in and accelerate the increase in growth that they
are starting to achieve. 1 would like to acknowledge the contributions of a number of agencies,
including the Treasury, State, Commerce, Labor and Agriculture Departments, USAID, OPIC.
Export-Import Bank and the Trade and Development Agency. We have worked on this project
as a tearm under the coordination of the National Security Council and the National Economic
Council to produce this comprehensive program. | will focus on the trade and investment policy
aspects of the program because that is my area of expertise and trade and investment is. [
understand, the subject of this hearing.

Economic Reform in Sub-Saharan Africa

The Administration's program is entitled “Partnership for Promoting Economic Growth and
Opportunity in Africa.” This partnership begins with the simple but powerful idea that American
interests are best served if we view African countries as partners in trade and investment.

We begin with the idea that building strong trade partnerships with Africa's rapidly growing and
reforming economies is in our interest. It is also the key to generating growth and opportunity in
the rest of the continent. The 48 countries in Sub-Saharan Africa are quite diverse. Some
countries in the region are already showing that the continent can be a region of dynamic
economic growth, and that there is no reason why they cannot achieve Asian levels of growth if
they make the nght policy choices, Only if we build on Africa's progress can we change the
minds of those in the private and public sectors who doubt the continent's potential.

Our plan highlights Africa's success stories. In the last few years. more than 30 countries have

00100000000072


The CBTEA will atlow countries in the Caribbean Basin to enjoy enhanced trade preferences
while encouraging them to mect their WTO commitments and helping them to prepare for
participation in the Free Trade Area of the Americas. These new trade preferences would cover
all of the products not included in the existing CBI legisiation (i.¢., textiles’ apparel. petroleum,
footwear, certain categories of flat goods and gloves, leather apparel, canned tuna and a category
of watches). Trade preferences for CBI beneficiaries would be phased in. with 50 percent of the
benefits available immediately upon implementation of the levislation.

Textile/Appare! Provisions

Of course, the heart of any CBI trade enhancement bill is textiles and apparel. The bill would --
when fully implemented over the phase-in period ~ provide beneficiary nations the same duty
treatment and quota-free treatment as Mexico receives for all products meeting the NAFTA niles
of origin (essentially a “yam-forward” requirement). Basically, textiles that on a yarn-forward
basis were made from C'B] inputs would be eligible for the same tariff treatment as Mexican
products. In addition, products assembled from U.S. cut and formed fabrics made from U.S
yam, as yell as handicrafts, also could enter duty-free.

The bill also contains specific provisions for apparel products made in the Caribbean Basin from
non-U.S./non-CBI fabric. Under our bill, interested US. citizens could petition the President to
provide such products preferential tariff treatment where the fabrics or yarn from which the
articles were made are not commercially available from U.S. producers. The tariff preference
level (TPL), if granted under the petition process, would be limited in quantity to 10 percent of a
country's previous year's shipment of “Section 807" apparel assembled in the Caribbean using
U.S. parts made from extra-regional (non-U.S./non-CBI) fabric. This petition process differs
from NAFTA, in which we negotiated TPLs up-front with Mexico. We suggest this different
approach in the Trade Enhancement Act because this is not the result of a negotiated agreement,
but is a preference.

The bill would also contain safeguard provisions on both originating and non-originating
products. Imports of non-originating products could be limited under the same conditions, both
criteria and remedies, as in the NAFTA; also as under the NAFTA, imports of originating
products could be subject to a tariff snap-back safeguard. The draft bill also expands the quota
safeguard provision so that all textile and apparel products receiving benefits under the bill can
be subject to quota safeguards, While NAFTA applies quota safeguards only to non-originating
products, safeguards in this bill are more comprehensive, again because the bill is not a
negotiated agreement.

If the President finds that goods from third countries are being transshipped through CBI
countries and are receiving duty preferences that they should not, the USTR may reduce the
amount of any quota -- including eliminating @ country’s access to the U.S. market for this
product -- with the CBI countries involved in transshipmen:.

=)

00100000000067 —


Testimony of
U.S. Trade Representative Charlene Barshefsky
Renewal of Fast Track Authority
Senate Finance Committee
September 17, 1997

Mr. Chairman and Members of the Committee, | want to thank you for the opportunity to appear
before you today to address an issue that js vital to the future of American farmers, businesses, and
workers, as well as our position as a leader in the global economy: that is, approvat of the
Administration's proposal to renew fast track and the President's tariff proclamation authority under
the “Export Expansion and Reciprocal Trade Agreements Act of 1997." Mr. Chairman, if enacted,
the President's proposal would renew more than 60 years of cooperation between the Congress and
the Executive Branch in the negotiation and implementation of market-opening trade agreements for
the benefit of American workers and companies

What is at stake in your consideration of this proposal is nothing less than whether the United States
will continue to be at the forefront of nations seeking the reduction of trade barriers and the
expansion of more open, equitable and reciprocal trading practices throughout the world. As the
President said last week, the question before you is whether we are going to lead the way or follow.
This is not the time to shrink from the future, but to seize the opportunities it holds.

The President is right. ‘Today, this country is at the pinnacle of its influence. Our economy is the
strongest in the world. In the last four and one half years, the United States has once again become
the world's number one exporter, the world’s largest manufacturer of automobiles, the world's
premier agricultural exporter, and the world's leading producer of semiconductors. Fram the farms
of the Midwest to the high-tech firms of California and Massachusetts, businesses are growing,
unemployment is declining and inflation is under control. America leads the world in a very
competitive global marketplace. Our economy is the envy of our trading partners.

Today, intemational trade is an increasingly vital component of our economic strength at home and
leadership abroad. Exports are more important in our economy than ever, Since 1993, more than
a third of our economic growth has come directly from exports, and the number of export-related
jobs has increased by 1.7 million. A total of some 11.5 million U.S. jobs depend on exports, and
these jobs pay an average of 15% more than non-trade-related jobs. Since 1985, U.S. exports have
roughly tripled from about $300 billion to an expected $900 billion this year.

But, we cannot rest on our past accomplishments. We must find new markets for our goods and
services in order to help our economy to maintain strong growth. To frame our economic challenge
clearly: the United States represents four percent of the world’s population, yet our share of global
income is 20%. How are we going to maintain our enviable position? We must sell to the more than
96% of the consumers that live outside our borders, which requires that we further open foreign
markets to our goods and services. We need fast track if our economy is to stay on the fast track,

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petroleum energy services until recently. Within the past 6 months, a few of us have
attempted to determine just what the interest level is in having petroleum energy services
included as part of a separate “energy services” sector in WTO. Don Eiss worked hard to
generate comments. These,efforts have resulted in an increase in the interest level and

this interest is beginning to have an impact.

IV. A letter signed by nearly thirty companies, dated 26 May 1999 was sent to Charlene
Barshefsky, the United States Trade Representative, urging consideration of economic
activities that are considered energy services in the upcoming WTO Round. On June 11,
1999, Inside U. S. Trade magazine ran an article commenting on recent efforts to have
energy services included in the WTO. The article ran the complete Energy Services
Coalition letter to Barshefsky. Most recently, we met with Josephine Ludolph, Director
of the Office of Service Industries at the Department of Commerce. She explained the
complications with vertical principles (The matrix from APEC) and horizontal principles
which are inserted across all negotiated sectors.

V. The biggest problem continues to be definitions. For example, oil and oil derivatives
as well as solid fuels are treated as goods within some WTO current writings while ‘
clectricity and gas are not, As you know, under the current WTO system, created in , .
1995, there are two agreements GATT and GATS, Within the existing WTO framework,
production of energy goods comes within the scope of the goods agreements or GATT,
while transmission, distribution and related services come within the scope of the GATS.

00100000000158


tax reforms. Accordingly, we proposed the debt relief init-ative cited above and we also intend
to seek enhanced financial support through the International Financial Institutions. Their specific
contributions would include, for example:

. Enhanced financing under the Enhanced Structural Adjustment Financing (ESAF) and the
International Development Agency (IDA) policy-based loans to support countries where
bold structural reforms, such as trade sector liberalization, result in greater financing
requirements; -

. Financing for improvements to infrastructure related to trade and business development.
such as improvements to ports, railways, roads, anc storage facilities.

Level Three Benefits

Finally, the Administration's program will hopefully lay the groundwork for a third level of
economic involvement; the creation of free trade areas, We share the view expressed in S. 778
that negotiations on removal of trade barriers and on eventual free trade agreements can be a
catalyst for increased trade, We think that it is important that we send a signal to our private
sector that we are serious when we say that Africa has the potential to become a more significant
USS. trading partner. Therefore, we believe we should affirm that we are open to pursuing free
trade agreement negotiations with our trading partners in Africa, who are ready to take on those
obligations, just as we have affirmed with our partners in South and Central America and in Asia.
The proposal in the “Growth and Opportunity Act” that we report on plans for such agreements
with African countries would provide such an opportunity.

We invite al] Sub-Saharan countries to pursue a course toward freer trade and open markets by
participating in this comprehensive program. This graduated approach takes into account their
diversity, commitment, and potential.

Further Integrating Africa into the Global Trading System

To magnify the economic impact of our proposal, the Administration obtained agreement from
our partners at the summit of industrialized nations in Denver in June to take bilateral and
multilateral actions that work toward the same ends as those described above. Collaboration
among Summit partners on matters affecting Africa has already yielded major results, with the
unveiling last year of a program of multilateral debt reduction for Heavily Indebted Poor
Countries --the HIPC Initiative --which will benefit a number of poor African countries that are
pursuing strong reform policies bur are burdened with particularly heavy debt loads.

As [ noted earlier, Mr. Chairman, we believe the legislation before your Committee and the
program | have just described are quite complementary, We hope that we can work together to
develop legislation and a program that allows our (rade relations with Africa to enhance broad
economic reform and accelerated growth on the continent

13

00100000000077


lation experiment. Soaring power prices have pushed the
state’s utilities to the brink ef bankruptey and fared Third
World-style blackouts across the world's sixth-largest econo-
my. Enron and other electricity marketers and generators are
being investigated by the state attorney general and sued by
consumers amid accusations of profiteering and market ma
nipulstion. “Every trading company in the country has been
feasting on California, and Enron is the shrewdest of them all.

They are like sharks in a feeding frenzy," says Michael |

Shames, executive director of the Utility Consumers’ Ac-
tion Network in San Diego. Enron, an early critie of Califor-
tia's deregulation plan, hotly denies thase
FRICTIONLESS? The glaring spotlight on Californis’s batched
attempt at deregulation cests Enron in the uncomfortable role

with utilities, Enron |

of defending its radical batines: model. Though often grouped
produces little power
itself and owns rela-

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of hard assets, Instead {t has pioneered the financialization of
energy, making the company more akin to Goldmsin Sachs
than Consolidated Edisen, Its impressive profits stream is
squeezed ont of a torrent of often low-margin trades, in
and sells a dazzlin, ns variety of contracts. The
for Enron, which is new

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When the power gants are basted up,
wes it can thrive by delivering just the
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00100000000391


consult with Congress prior to concluding an agreement. Members of Congress and their staf¥ are
to be named as cleared advisers with respect to on-going negotiations, These Congressional advisers
will be apprised of all critical phases of the negotiations, and they will have direct input into our
strategy and offers. When negotiations near completion. the President must notify Congress of his
intention to enter into an agreement and, once the agreement is signed. the President must describe
to Congress how he intends to implement the agreement. Finally. the President and the Congress are
to receive advice on any proposed agreement from the Intemational Trade Commission.

To strengthen these provisions, we have added further consultation requirements. The bill mandates
that, prior to entering into negotiations, the President must describe his specific negotiating
objectives. The President is required to consult with Congress both before and after negotiations
begin. In addition, the President is required to inform Congress of any other agreements he intends
to conclude with the country or countries in question in addition to the trade apreement itself. The
President must also state whether the fast track agreement will require additional implementing
legislation that can be enacted only outside the fast track process.

Moreover, Congress must be satisfied that the President has met his consultation obligations. Under
the proposa., if Congress finds that the President his not done so, an expedited procedure is available
for Congress 10 withdraw fast track procedures.

The proposal also builds on existing provisions to ensure that the public is informed of trade
negotiations and that a mechanism is available for ensuring that the public can make its views known
to U.S. negotiators. In addition, the proposal calls for the President and Congress to receive advice
from officially-designated advisory committees covering the full range of sectors and policy
matters, including manufactured goods, agricultural products. services, intergovernmental matters,
investment, intellectual property, labor, and environmental matters. These provisions demonstrate
the Administration's hope that Americans will not only understand our trade agenda, but take an
active part in formulating it.

Under well-established practice, the President collaborates with the Congress in drafting fast track
implementing legislation. Such legislation is subject to informal public hearings and “mark-ups"
by all Congressional committees of jurisdiction before its introduction. Under the President's
proposal, provisions may be included in such legislation on)y if they are necessary or appropriate
to implement an agreement and are related to trade. This language was designed to provide the
President and Congress with sufficient flexibility to modity domestic Jaw to achieve our trade
objectives while ensuring that implementing bills will retain their focus on trade issues.

The President's proposal seeks this authority until his term is completed, with the possibility for an
extension until 2005, subject to disapproval by Congress. This provides Congress and the next
President the opportunity to ensure that the consensus that we hope can be achieved with this fast
wack proposal endures during the first term of the next Pres dent.

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hand, they were able to sce some of the prices in the marketplace, there are a number of consumers that are right now
seeing the very high prices of power in the Midwest, would voluntarily and on good economic justification, reduce
consumption or shut down. Right now, we just don’t have that ability because the markets are not open to price
signals, not open to actual competition,

Ron: All right. Let's talk about how the consumer gets hit by all this, Obviously, reduced availability of power means

you have to cut back on air conditioning and other things as the summer remains hot. What about prices though. Are
people going to kind of open their eyes a lithe wider when they see their bill in this eavironment?

Skilling: Anytime you have this shortfall of supply that you're starting te bring on very expensive facilities to meet
the demand, so | would expect that, yes, prices will be a little bit higher as we move through the summer.

Ron: Can you quantify that in eny way, shape, or form?
‘Skilling: It’s hard to say right now. It will depend a tot on how this plays out over the next couple of months.

Ron: I know are you not in the business of weather forecasting but there has been so much discussion of El Nino and
the coming La Nina, that people are trying to figure out whether this indeed will be a very hot, very humid, very
difficult summer around the country. What is the intelligence that you folks are getting on that?

Skilling: We've locked at the weather patterns and I'm not weather forvcaster so I'm going a little out on a limb
here. But the pattern so far this year, with the extremely warm winter, suggests that we are in an El Nino cycle. And
what is typical is, after 2 warm winter like we had last year, you tend to have @ very hat summer, particularly July and

August,

Ron: Any advice for consumers on how to conserve power and use it most effectively while they are waiting for
clectrons from somewhere else?

‘Skilling: That's up to everybody to decide for themselves, but fundamentally, what we would like to see or what 1
think the industry would like to sec is, more open competition and more price signals getting through to consumers
so that they can make that choice rationally. They can look at what the price is and decide if they want to use
electricity of not.

Ron: Under the best of all circumstances, how long will this process take’?

‘Skilling: The deregulation process?

Ron: Yeah.

‘Skilling: The wholesale markets are pretty mach open. And that is a federal jurisdiction, so the federal government
has pretty much opened the wholesale markets. When you move to the retail side, that is actual consumption by
consumers, thet is regulated by the states. And each individual state is on its own timetable. California is open right
now. A number of states in the Northeast are in the process of opening up. But we are probably looking at another 3
to 4 yours to make that process complete.

Ron: Mr. Skilling, a pleasure. Thank you for joining us today.

00100000000097


a272593 13:28 RAND + 912826228073 NO.@22

TENNECO

1275 King Street
Greenwich, Connecticut 06831
Tel 203 863 1111
Fax 203 863 1110

FACSIMILE COVER SHEET

OATE: February 25, 1999
TO: The Honorable Robert E. Rubin

Department of the Treasury
Ctfice of the Secrotary
1500 Pennsylvania Avenue, NW
Room 3330
Washington, D.C. 20220

TEL: 202.622.0054

FAX: 202,622,0073

FROM: Dana G. Mead
Chairmen and Chief Executive Officer

SUBJECT: Attached Letter

TOTAL NUMBER OF PAGES INCLUDING COVER SHEET: 4

00100000000547


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Jeffrey K. Skilling
President and CEO, Enron Corp.

Jefirey K. Skilling is president and chief executive officer of Enron and sits on its board
of directors. Jeff joined Enron in 1990 to further develop the company’s aonregulated
merchant business within Enron North America (ENA), formerly Enron Capital & Trade
Resources. Under Jeff's leadership, Enron pioneered the use of risk management
products and long-term contracting structures in the natural gas industry and has since
applied similar concepts to the electricity industry. Today, Enron is the largest
independent buyer and seller of natural gas and electricity in North America and is
extending its capabilities to Internet broadband services.

Prior to joining Enron, Jeff was 2 senior partner at McKinsey & Company, where he
oversaw the firm’s worldwide energy and North American chemical consulting practices.
Jeff also served as a corporate planning officer with First City National Bank of Houston
and as an associate with MJH Nightingale and Company, Ltd., an investment banking
firm in London, England. Jeff received a bachelor’s degree from Southern Methodist
University, and an MBA degree from Harvard Business School.

In addition to his responsibilities at Enron, Jeff sits on the boards of directors for the
Greater Houston Community Foundation, the Houston Technology Center, and the
Houston Branch ~ Federal Reserve Bank of Dallas. He is also a member of the Advisory
Board for the North American Electric Reliability Council. In 1997, Jeff was recognized
by the New York Mercantile Exchange (NYMEX) as the first recipient of its Director's
Award for Global Vision in Energy.

Enron is one of the worid’s leading electricity, natural gas and communications
‘companies. The company, with revenues of $101 billion in 2000, markets electricity and
natural gas, delivers physical commodities and financial and risk management services to
customers around the world, and has developed an intelligent network platform to
facilitate online business. Fortwre magazine has named Enron “America’s Most
Innovative Company” for six consecutive years. Enron’s Internet address is
yorw.enron.com. The stock is traded under the ticker symbol “ENE.”

03/21/01

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Conclusion

Mr. Chairman, if enacted, the President's proposal would renew more than 60 years of cooperation
between the Congress and the Executive Branch in the negctiation and implementation of market-
opening wade agreements for the benefit of American workers and companies. We have had a
bipartisan consensus on the importance of expanding trade for the American economy ar:d creating
a trading system as a part of America’s leadership for peac: and freedom, it is now clearly more
important than ever that we build a new consensus on the framework for the global economy of the
2ist century. | am committed to working with the Congress to make sure that this legislation
receives the full, bipartisan support it deserves and the American people expect.

As the President Clinton said last week: “Walking away from this opportunity will not create a
single job. No one suggests we should throw up greater barriers in our own marketplace. Walking
away from this opportunity will only leave inequalities in place -- inequalities that do not work to
the advantage of either American businesses or American workers.” The world is on a very fast
track to the 2fst century. America must lead in shaping our future.

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00100000000154


Time for a Global Agreement on Energy Services

By Terence H. Thorn, Session Chair, Executive Vice President,
International Government Relations & Environmental Affairs
Enron Corporation

Houston, Texas

At GATS 2000 and Sectoral Liberalization: Energy
Session VII, Panel 6, Wednesday, June 2, 1999, 11:00 am to 12:25 pm

Services 2000: New Directions in Services Trade Liberalization
June 1-2, 1999
"The University Club, Washington, DC

Hello, My name is Terry Thorn, and I represent Enron, the largest independent supplier of
electricity and natural gas in the world,

‘The two key words are “independent” and “supplier.” Both businesses were traditionally the
domain of utilities, often owned by national governments. They operated vast fiefdoms and

served as sinkholes for government finance. Prices were fixed. Many governments
believed in subsidizing the prices of both gas and electricity commodities.

Some governments, like Japan, subsidized prices for manufacturers. India subsidized prices
for farmers. Few utilities made money. Technological change was something that happened
in other industries. From a consumer's point of view, gas and electricity were bills that had
to be paid. There was no concept of managing the cost of gas and electricity i For
Tike defending your borders and declaring nati holidays, In short, these industries were a
dead weight in the global economy, technologically inert, fscaly intrusive, and economically
static,

About fifteen years ago, electricity and gas took the first steps towards the revolutionary
trade negotiators begga thes fe anemprs to consrac ies foe Wa cadens In the US,
restructuring of the Jal and telecommunications industries was well underway. .
London's financial “big bang” was on the horizon. In Latin America, the debt crisis was
shaping a new embrace of the private sector. The commodity price slump of the mid-1980s
forced Asians to introduce radical new policies favoring the inflow of foreign capital. Policy
makers understood these developments, and put finance and telecommunications first as
they hammered out the first great accord on services, the 1995 General Agreement on Trade
in Services.

But they left energy our. In 1905, when negotiators were working towards the frst services
partial exception of oil and gas exploration and production. Enron was two interstate
pipeline companies worried about the future. That year, the Federal Energy Regulatory

00100000000160


demonstrate a commitment to undertake its WTO obligations on or ahead of schedule and to
actively participate in FTAA negotiations. We would expect all countries in the region to meet
these initial criteria arid be eligible for a 50 percent tariff reduction (between the MFN tariff and
Mexico's prevailing rate under the NAFTA), Countries could receive up to 100 percent of the
tariff reduction -— i.c., parity witli Mexico's tariff rate under the NAFTA -- depending upon a
three-year review of the country’s compliance with the eligibility criteria.

These criteria were carefully constructed to ensure they were consistent with U.S. trade policy,
that they encourage fair treatment of U.S, exports and investment, and that they would expand
economic development to encourage citizens in beneficiary countries to direct their energies
toward opportunities available in a growing formal economy. We are certain that increased
economic growth among CBI countries will provide growing markets for U.S, products and
enhance the ability of our neighbors to ensure justice and security within their own borders

To that end the CBTEA would require that, before granting additional benefits. the President
consider the extent to which countries have met the following conditions.

International Trade Rules. The extent to which 2 country follows accepted rules of
international trade will be considered in determining 2 country's eligibility for increased benefits.
We would like to encourage all beneficiary countries to meet their WTO commitments on or
ahead of schedule. We think it important to establish a “floorTM of compliance with WTO rules,
which will enable us to move toward the Free Trade Area of the Americas from within a WTO
consistent framework.

Intellectual Property Rights, With respect to intellectual property rights, a CBI nation’s
compliance with the WTO Agreement on Trade-Related Aspects of Intellectual Property Rights
and with the provisions of Chapter 17 (Intellectual Property) of the NAFTA would be eligibility
criteria for the full benefits. The bill also includes provisions regarding the parallel importation
of “gray market” goods and border enforcement against infringing impons. These provisions
would benefit creative and inventive activity in the region as well as U.S. holders of intellectual
property nights.

Investment. With regard to investment, the bill includes an eligibility criterion based on a CBI
nation’s compliance with the substantive provisions of NAFTA Chapter 11 (Investment). These
conditions would ensure non-discriminatory treatment of U.S. investments and international
standards of treatment, including third party arbitration for investor-state disputes. Such policies,
of course, would increase the attractiveness of CBI countries to the foreign direct investment that
is essential to increasing productivity and promoting the economic diversification of these
countnes.

Market Access. The bill offers the opportunity for expanded market access for U.S. goods
because beneficiary countries would be expected te provide equitable and reasonable market
access in product areas for which the CBI countries are receiving new benefits.

5

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WTO and assuming meaningful binding obligations in arezs of trade such as services, and in
eliminating nontaritf burriers to trade, We also think it is very important that any country in Sub-
Saharan Africa that is not already a member of the WTO should be actively pursuing
membership in the WTO and be prepared to take on meaningful obligations. We are pleased that
several African countries made Commitments in the recently concluded WTO telecom services
negotiations. We hope that these countries will also make commitments in the WTO financial
services negotiations which are now underway in Geneva.

We also believe economic growth may. be enhanced by other factors in the trade and investment
area such as the provision of national treatment for foreign investment, a readiness to begin
negotiations with the United States on a Bilateral Investment Treaty, privatization of sectors of
the economy that are most likely to attract foreign investment. compliance with programs with
and obligations to the International Monetary Fund (IMF) end other intemational financial
institutions and the introduction of current account convertibility.

The Administration's Initiative

Mr. Chairman, | would like to discuss briefly the specific elements of the Administration's
program for Partnership for Economic Growth and Opportunity in Africa, Through this
Partnership the United States would seek to work in particular with those countries making
strong efforts at growth-oriented policies in areas such as those I have just discussed

We recognize that not all African countries are ready o7 able to take the steps necessary to spur
high levels of economic growth. Therefore, we propose to work with the relevant international
institutions to make available the foliowing opportunities to Sub-Saharan African countries,
according to their desired level of participation. Under the overall partnership countries can
participate at one of three different levels.

Level One Benefits

SUNLONYLSVYANL ‘91dO “NOILYZILVAIYd ‘KOOTTEL

To support efforts to achieve sustainable economic growth throughout Sub-Saharan Africa, at the
first level of participation the Administration will make broadly available the following
opportunities and assistance, Level One will include notably:

Enhanced market access. African nations will continue to receive preferential market access
under the existing Generalized System of Preference (GSP} program, which now provides less-
developed countries duty-free access for products in some 4,000 tariff lines and will provide
least-developed countries enhanced access on products in up 10 an additional 1800 tariff lines,

fnvestment support. The Overseas Private Investment Corporation (OPIC) is working with the
private sector sponsors of a proposed $150 million fund for equity investment in a variety of
economic sectors. Two-thirds of the fund would consist of OPIC guaranteed debt, OPIC is also
working to develop one or more separate funds that would focus on economic infrastructure

10

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00100000000111


MRR 14 2001 16:39 FR ENRON TO 6220073 POLO

ENRONI WASHINGTON
1775 EYE STREET, NW
Suite 900

Washington, DC 20006
202-466-9145

202-628-3372 (fax)

EAX COVER SHEET
DATE: 3~14101 4:47 PM

NAIGE: fax number:
TO:

Attention: Nancy (Scheduler)
The Honorable Paul H. O’Neill
Secretary of Treasury

U.S. Department of Treasury

1500 Pennsylvania Avenue, NW
Room 3330

Washington, DC 20220
202-622-1100

202-622-0073 (fax)

PROM: Linda Robertson, Vice President, Federal Government Affairs

Lora Sullivan PHONE: 202.466.9142
FAX: 202-828-3372

Number of pages: 1

Re: Request for a meeting with the Secretary on April 5 in the afternoon
Dear Nancy:

Jeff Skilling, President and CEO for Enron would like to schedule a meeting
with the Secretary to discuss West Coast enemy crisIs Issues. We would like to
schedule a short meeting sometime after Noon on Thursday, April 5, 2001, If
this is possible, please call me at the number listed below,

Thank you for your assistance in this regard.

Lora Sullivan
Federal Government Affairs Representative

00300000000022


2001-SE-003680

Jeffrey K. Skill
President & Chief Executive Officer
Enron Corp.
Up fe 1400 Somith Street
3, Houston, TX 77002
713-853-6094

P.O. Box 1198
Howstort, TX 77251-1188
Fax 723-646-838]

eff skidding @enrom com

Apnil 9, 2001

The Honorable Paul H. O'Neill
Secretary of Treasury
U.S. Department of Treasury

1500 Pennsylvania Avenue, NW

Room 3330

Washington, DC 20220

Dear Secretary O’ Neill:

] appreciated the Opportunity to visit and to talk to you about the West Coast energy
markets. As this debate continues to unfold, we stand ready to be a resource to you
whether it is policy analysis, economic research or historical industry information.

I look forward to seeing you soon.

Best personal regards.

Sincerely,

Endless possibilities.”

00100000000233


Worker Rights. Provision of internationally recognized worker rights is a CBTEA eligibility
criterion, That is, a country’s new -- as well as current -- benefits would depend upon the
provision of intemnationally-recognized worker rights, including the right of association, the right
10 organize and bargain collectively, a prohibition on the use of any form of coerced or
compulsory labor, a minimum age for the employment of children, and acceptable conditions of
work with respect to minimum wages, hours of work, and occupational health and safety. We do
not think it is appropriate to reward countries that are indifferent to the working conditions of
their labor force. This provision is drawn from the GSP program,

Environment, To ensure that beneficiaries of the CBTEA pursue their new trade opporwnities in
an environmentally responsible way, each interested country will be reviewed on the extent to
which it has adopted laws and regulations to protect the environment (including natural resource
protection laws), as well as the extent to which it is effectively enforcing those laws and
regulations. This provision is modeled on language in the NAFTA.

Narcotics Cooperation, We want 0 use every available 100! to try to stamp out the scourge of
narcotics production and trafficking. Therefore, the Presicent will assess whether the beneficia. y
country has met the narcotics cooperation certification criteria set forth in section 490 of the
Foreign Assistance Act of 1961 for eligibility for United States assistance.

Corrupt Business Practices. Corrupt business practices can be a more impenetrable barrier to
trade than any tariff. This legislation will encourage CBI nations to ratify the newly-concluded
Inter-American Convention Against Corruption. The President will take into account whether,
having ratified this agreement, countries are taking necessary measures to implement the
agreement.

Exchange of Tax Information. This bill will encourage countries in the region to join Barbados,
Bermuda, Costa Rica, Dominica, the Dominican Republic, Grenada, Guyana, Honduras,
Jamaica, Saint Lucia, and Trinidad and Tobago in entering an agreement with the United States
for the exchange of tax information,

Government Procurement. Eligibility criteria for full benefits include a CBI country's support
for the multilateral and regional objectives of the United States with respect to government
procurement, including the negotiation of government procurement provisions of an FTAA and
the work program in the WTO as agreed at the Singapore Ministerial Conference: and the extent
to which the country applies transparent and competitive procedures in government procurement
equivalent to those in the WTO Agreement on Goverment Procurement

Customs Valuation, The bil! includes an eligibility criterion based on the provisions of the
WTO Agreement on Implementation of Anicle VII of the GATT 94, which addresses rules for
customs valuation. U.S. exports are put at a disadvantage in the market when arbitrary customs
valuations result in higher tariffs, making our exports less competitive in the market. Adherence
to the WTO Agreement is of great importance to our exporters, and all WTO members in the

6

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00100000000150


JPN 16 2003 11:38 FR ENRON TO 6228a73 P.O3-83

Page 2

Among the numerous awards he has received:

National Federation of Independent Business, 2000 Lifetime Achievement Award;
Smal] Business Council of America, Congressional Aware;

National Federation of Independent Business, Guardian of Smalj Business Award:
Nationa! Associated Business, Watchdog of the Treasury Award:

Citizens Against Government Waste, Taxpayers’ Hero Award:

US. Chamber of Commerce, Spirit of Enterprise Award:

Tax Foundation, Distinguished Public Service Award,

Small Business Council of America, Congressional Award,

National Venture Capital Association, William A. Steiger Award.

oe eer en eae

Archer is a graduate of the University of Texas at Austin, where he received BBA and
LLB Degrees with Honors. This year, the University created the Bill Archer Center, a new
campus and fellowship program in Washington, DC,

PricewaterhouseCoopers (www,pweelopal.com) is the world’s largest professiona)
services organisation. Drawing on the knowledge and skills of 150,000 people in 150
countries, we help our clients solve complex business problems and measurably enhance their
ability co build value, manage risk and improve performance,

Washington National Tax Services of PricewaterhouseCoopers provides professional
tax advice and counsel to most companies in the Fortune 100, a large sumber of Fortune 500
companies, and financial services companies. The practice has epproximately $00 parners
and staff.

PricewaterhouseCoopers refers to the US firm of PricewaterhouseCoopers LLP and
other members of the worldwide PricewaterhouseCoopers organisation.

eee

Note to Editors: The came PricewarethouseCoopers is one word. with upper case P, uppercase C, and all ccher
leters in lower case.

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00100000000208


The Importance of Fast Track

Fast track is critical to increase access to foreign markets and shift trade conditions in our favor. Fast
track sends a strong signal to our trading partners. 11 tells ther that when the President negotiates
a trade agreement, he has the confidence of the Congress behind him. It also indicates that the
United States is serious about reaching agreements that will reduce market barriers and trade
distortions

This proposal reactivates a partnership between the President and the Congress that dates back over
six decades. Recognizing that the high protective U.S. tariff walls it established in 1930 had only
served to deepen the Depression, Congress four years Ister enacted the first reciprocal trade
agreements act, [n that act, Congress gave the President authority to negotiate mutual tariff
reductions with our trading partners. Congress renewed that authority repeatedly over the years, and
successive Presidents used the authority to dramatically reduce tariff barriers around the world.

“Fast track” was first put in place under the Ford Administration in 1974. Under fast track the
Congress and the President work together, ensuring that the United States can effectively negotiate
away foreign tariff barriers as well as non-taniff barners — such as quotas, protectionist product
standards, and subsidies -- which foreign governments have increasingly substituted for tariffs to
exclude U.S, products. It worked well for 20 years, a periad over which every President had fast
track authority with bipartisan support. Fast track lapsed slong with most of the President's tariff
reduction authority three years ago.

With this legislation, we are seeking to reactivate the process by which certain trade agreements can
come back to the Congress for an up or down vote without amendment, We are not seeking
Congress’ approval of a particular trade agreement, Congress retains the last word.

Dangers of Inaction

There are serious and immediate consequences if we do not renew fast track. Increasingly over the
past few years, major trade agreements have been negotiated without our participation. Our
competitors are determined, sophisticated, strategic and focused. In every region of the world, but
particularly Latin America and Asia, the two fastest growing regions of the world, governments are
pursuing strategic trade policies and, in some cases, preferentia) trade arrangements. They are
forming relationships around us, rather than with us, and they are creating new exclusive trade
alliances to the detriment of U.S. interests. | can assure you that our trading partners are not waiting
for us to pass a bill

A significant number of bilateral and regional trade agreements are already operating here in the
Western Hemisphere. The United States is party to only one In fact, most U.S. trading partners in
the hemisphere have been actively forging closer ties with neighboring countries. In Latin America
and Asia alone. over 20 such agreements have been negotiated since 1992 -- all without us.

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THE DEPUTY SECRETARY OF THE TREASURY
WASHINGTON, D.C. 20220

May 25, 1999

Mr. Kenneth L. Lay

Chairman and Chief Executive Officer
Enron

P.O. Box 1188

Houston, Texas 77251

Dear Ken:

‘Thanks very much for your kind letter of congratulations. Tam grateful for
your best wishes and deeply honored by the President’s choice. As I said in
the Rose Garden, Secretary Rubin's act is a tough one to follow and there are
certainly plenty of challenges ahead. 1 am looking forward to the opportunity
and to continuing on the course that has been set.

1 hope our paths will cross again soon.

Sincerely,

h- Da heey ry LYE FN

Yew dared ota ad Sep
Ime-by inpfarbictee Wt,

00100000000118


HORAT I O FF 4 / aN L G E R

wm *

—_

Firry-First Foy le NU AE AWARDS
ae

J am pleased to participate in the 1998 Awards Ceremony by pledging a tax-deductible contribution of:

0 $100,000—PLATINUM Sponsorship of ten students to attend the National Scholars Conference and Awards
Activities; one table of ten with preferred seati at the Awards Ceremony & Dinner; ten seats at the Inaugural
Ceremony at the U.S. Supreme Court, Inaugural Dinner at the Library of Congress, Awardee Forum at Ford's Theatre,

Chairman's Reception, and Breakfast Saluting the National Scholars; and prominent recognition in the Awards program
and other printed material.

a $50,000—GOLD Sponsorship of five students to attend the National Scholars Conference and Awards Activities;
one table of ten with preferred seating at the Awards Ceremony & Dinner; ten seats at the Inaugural Ceremony at the
U.S, Supreme Court, Inaugural Dinner at the Library of Congress, Awardee Forum at Ford's Theatre, Chairman's
Reception, and Breakfnst Saluting the National Scholars; and prominent recognition in the Awards program and other
printed material.

ao $25,000—SILVER One table of ten at the Awards Ceremony & Dinner, ten seats at the Awardee Forum at Ford's
Theatre and Chairman's Reception; two seats at the Inaugural Ceremony a the U.S. Supreme Court, Inaugural Dinner at
the Library of Congress, and Breakfast Saluting the Nathonal Scholars; and prominent recognition in the Awards
program and other printed material.

Oo $15,000—One table of ten at the Awards Ceremony & Dinner; ten seats at the Awardee Forum at Ford's Theatre and
Chairman's Reception; and prominent recognition in the Awards program and other printed material,
$5,000—One seat at the Awards Ceremony & Dinner, Inaugural Ceremony at the U.S, Supreme ‘Court, Inaugural
Dinner at the Library of Congress, Awardee Forum at Ford’s Theatre, Chairman's Reception, and Breakfast Saluting the
National Scholars; and prominent recognition in the Awards program and other printed material.
Number of Seats:

oO $2,500—One seat at the Awards Ceremony & Dinner, Awardee Forum at Ford's Theatre, and Chairman's Reception,
and prominent recognition in the Awards program and other printed material.
Number of Seats:

Oo Jam unable to attend the Awards Ceremony, but wish to pledge a tax-deductible contribution
of $ to support the Association's educational programs,

DA tax dedectible contribution made payable to the Horatie Alger Association is enclosed. Tax identification #13-1669975.
O Please send an invoice te my attention.
Signature, Date.

The Honorable & Mrs. Robert E. Rubin
i Sth & Pennsylvania Ave, NW
Washington, DC 20220
Phone: Pax:

ia} Jam unable to participate at this time, KLL

Please mail or fax this reply form to
Horatio Alger Awards Activities Committee
2020 Pennsylvania Avenue, NW, Suite 175, Washington, D.C, 20006 Tel: (202) 582-6200 Fax: (202) $82-6008

00100000000474


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00100000000189


Carol Browner
William A. Nitze

The Honorable Max Baucus

The Honorable Jeff Bingaman

The Honorable Phil Gramm

The Honorable Chuck Hagel

The Honorable Kay Bailey Hutchison
The Honorable Gordon Smith

The Honorable Frank Murkowski

The Honorable Bi! Archer
The Honorable Joe Barton
The Honorable Tom Biley
The Honorable John Dingell
The Honorable Kolbe

The Energy Services Coalition Members

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