Objet : [Cerchio di G8] ATTAC NEWSLETTER 78 - QUEBEC - GENOA

SAND IN THE WHEELS (n°78)
ATTAC Weekly newsletter - Wednesday 25/04/01
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Quarterly Reports
International Trade & WTO - 1
Finance & Economy (to come)
Debt & Development (to come)
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Content

1- Peaceful, violent protests mark 2nd day of FTAA summit
2- Draft FTAA Negotiating
3- WTO Tidbits
4- Genoa Social Forum
5- Using Monetary Fines in Trade Disputes

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1- Peaceful, violent protests mark 2nd day of FTAA summit
____________________________________________________________

By Jennifer C. Berkshire and Ton Mashberg

QUEBEC CITY -- While peaceful protesters and government potentates
from across the Americas met in separate forums here yesterday to hash
out the economic future of the hemisphere, a hard core of activists
clashed with police for the second straight day amid tear gas and TV
cameras.

Dozens were injured, none seriously, according to police, who said
about 150 arrests were made during the two days of conflict.

The weekend gathering, called the Summit of the Americas, drew
officials from 34 nations, including President George W. Bush. It also
drew an estimated 30,000 protesters - 2,000 from New England - who
marched and held rallies for two days to protest aspects of free trade
that they deem harmful to workers and the environment.

"It's been amazing - peaceful but militant," said Russ Davis of
Arlington, Mass., state director of Jobs With Justice and organizer of
the New England contingent. "We are here to dramatize the dangers that
working people in the U.S. and other nations face if this deal goes
through without accounting for workplace conditions, the environment
and real living wages."

At issue in the capital of French-speaking Canada is the so- called
Free Trade Area of the Americas, a ballyhooed yet beleaguered effort
to create a single economic entity stretching from Alaska and the
Arctic Circle to the southern end of Argentina.

Yesterday's protests - part carnival, part labor march, featuring
cheerleaders with pompoms yelling antitrade slogans and a float
bearing a guillotine draped with the American flag - contrasted with
Friday's tumultuous, tear-gas-drenched standoff between protesters and
Canadian police.

Police yesterday did unleash rubber bullets, water cannons and tear
gas against rock-throwing activists, and used snarling dogs to fend
off demonstrators trying to pull down fencing at the perimeter of the
official meeting halls.

But peaceful ralliers refused to join in the theatrics. Many spoke
dismissively of the self-described "Black Bloc" anarchists as "agents
provocateurs" - and thus irrelevent to their true aim: seeking a trade
accord that accommodates views and needs of non-governmental and
non-business groups.

"There are only a few of them," said Jacques Theoret, a spokesman for
the Quebec Federation of Labor. "It is annoying that they are getting
all of the attention."

Canadian Police said yesterday that 30,000 protesters crowded near the
summit site, and 2,000 engaged briefly in acts of intimidation.
Including Friday's violence statistics, 34 police and 45 demonstrators
have been injured, and 150 arrests made, police said.

The rioters seemed intent on toppling a fence, tying a long rope to
one section of it an attempt to tear it down. They also deployed wire
cutters and tore at the barrier with their bare hands, but a secondary
fence stood in the way.

But no one joined in. At one point yesterday, a group of the black-
clad rioters began to throw wooden barricades through the windows of a
bank, shattering the glass. Other protesters quickly surrounded them
and booed.

"Go and confront the police!" admonished Sel Burrows, a 57-year- old
retiree from Thompson, Canada. "Don't destroy property. It gives us
all a bad image."

"They're just crazies," he added loudly to reporters. "They don't
represent the rest of us."

Cathy Ferreira, a 38-year-old graduate student at the University of
Massachusetts at Lowell and a single mother of four, said she hoped
New Englanders would be able to see past the police clashes and try to
understand what the protests were about. She says a trade agreement
could threaten the public education system.

"There's a push to make public services private," she said. "That's a
big part of this trade deal."

Raytheon employee Barry Richards, who traveled to Quebec with 25
co-workers Friday night, said that like many, he wanted to know what
was in the agreement, which has been negotiated in secret by trade
ministers from the member nations. "If it's such a good deal," he
asked, "then why won't they show us what's in it?"

Canadian officials said this month a draft of the FTAA pact would be
made public, but no date has been set for its unveiling.

Joining union members from Massachusetts here were students from all
over New England, too.

Phoebe Ryles and Princess MacLean, both seniors at Brookline High
School, almost decided against the trip after watching news coverage
of Friday's clashes.

"I was a little afraid," said Ryles. "But if you don't fight things
that you don't believe in, whose going to do it for you?"

Davis of Jobs With Justice said opponents of the trade agreement are
long past defending "protectionism" - a form of international commerce
in which nations establish artificial barriers to trade such as
tariffs or quotas.

"We're not against `globilization,'" he said, using a term for
abandonment of trade barriers. "We are just against it when it
benefits a few. We want workers in all these nations to realize that
they have to organize politically to stand up for their rights."

With the streets of this 17th century capital roiled in conflict, the
34 presidents and prime ministers meeting on trade also discussed
education, drug trafficking and human rights from their posh hotel
conference center.

But with the words "Trade equals tyranny!" scribbled in red on the
wall of one downtown business, some leaders felt compelled to address
demonstrators' varied and virulent grievances.

"True - globalization has brought prosperity to some, but we cannot
deny it has destroyed the lives of others," said St. Lucia Premier
Kenny Anthony. "Until the hemisphere as a whole enjoys the fruits of
trade liberalization, we cannot proclaim its glory."

Said Mexican President Vicente Fox: "Trade has helped people in Latin
America, but it has failed to root out poverty. There's much to
celebrate, but much to lament."

Overall, the street fighting so far this weekend is but a dim echo of
the violence that disrupted world trade talks in Seattle in 1999. Many
of the black-clad anarchists roaming through the city appeared simply
to be along for the ride, taking advantage of the bigger demonstration
to cause havoc.

But to Russ Davis of Jobs With Justice, the Quebec rallies are the
start of a more coordinated effort by labor groups to confront aspects
of trade policy from an orderly and influential posture.

"With enough public pressure," he said, "what is already a fragile
endeavor for Latin nations who feel they are being muscled into it by
the U.S. will draw strength from this popular resistance and put the
kiss of death to this thing."

Boston Herald; Boston, Mass.; Apr 22, 2001.Copyright Boston Herald
Library Apr 22, 2001.
JENNIFER BERKSHIRE, US Correspondent for ATTAC and TOM MASHBERG

Photos of the demonstrations on ATTAC Website

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2- Draft FTAA Negotiating
____________________________________________________________

In keeping with the mandate of the Ministers Responsible for Trade
given at their meeting held in Toronto in November 1999 to prepare a
draft text of the chapter on investment; the guidelines outlined at
the San José Ministerial in March 1998; and the work programme agreed
to at the meeting of the TNC held in Buenos Aires in June of 1998 to
"develop a framework incorporating comprehensive rights and
obligations on investment, taking into consideration the substantive
areas already identified by the FTAA Working Group on Investment," and
to "develop a methodology to consider potential reservations and
exceptions to the obligations;" the Negotiating Group on Investment
(NGIN) prepared a draft chapter on investment for the FTAA Agreement.

Following is a report of the Group's activities, during the second
phase of the negotiations, prepared pursuant to the guidelines of the
TNC as outlined in Document FTAA.TNC/11/Cor.1.:

PART I: DESCRIPTION AND ASSESSMENT

a) Description of the Negotiating Group Activities

Since the Toronto Ministerial Meeting, the NGIN has met on five
occasions (February 15, 2000, May 22-24, 2000, August 14-15, 2000,
October 9-10, 2000, and November 27-29, 2000) with a wide
participation of FTAA countries, whether directly or through
sub-regional delegations.

In keeping with the mandate of Ministers, the NGIN advanced its work
on the development of "a framework incorporating comprehensive rights
and obligations on investment, taking into consideration the
substantive areas already identified by the FTAA Working Group on
Investment" (FTAA.TNC/01). The Group discussed the twelve (12)
substantive issues identified by the Working Group on Investment as
issues that might, in principle, be included in the FTAA Chapter on
Investment.

The NGIN agreed on the following work methodology: i) Preparation of
the draft chapter based on initial submissions on the twelve (12)
substantive issues by delegations and discussions at the NGIN
meetings. Submission by delegations prior to each meeting of their
initial proposals to the Chair by a specific date.

ii) Preparation by the Chair of a consolidated text of these initial
proposals, which was circulated to delegations prior to each meeting.

iii) Discussion by delegations of a consolidated text in plenary and
bilateral sessions, review of initial proposals, and reduction in the
number of brackets in the document by merging positions, where
possible.

iv) Agreement by the Group, acting on the advice of the Trade
Negotiations Committee, to consider the issue of the treatment of the
differences in levels of development and size of economies in a
cross-cutting manner.

The work of the NGIN also included a presentation by the
representative of the U.N. Economic Commission on Latin America and
the Caribbean (ECLAC) on "Foreign Investment in Latin America and the
Caribbean" and a presentation by the delegation of Mexico on the
"Methodology for the Registration and Preparation of Statistical
Information on Foreign Direct Investment in Mexico." The Group also
agreed that the studies prepared by the Tripartite Committee, entitled
"Investment Agreements in the Western Hemisphere: A Compendium" and
"Foreign Investment Regimes in the Americas: A Comparative Study"
would be updated regularly.

b) Assessment on the Progress Accomplished

The NGIN made significant progress on the first element of its work
programme to "develop a framework incorporating comprehensive rights
and obligations on investment, taking into consideration the
substantive areas already identified by the FTAA Working Group on
Investment" (FTAA.TNC/01). The draft chapter contained in Part II of
this Report shows initial proposals presented by some delegations.

In addition to the twelve substantive issues that were originally
agreed in the context of the mandate of the Ministers to the NGIN, in
the course of the negotiations various delegations submitted nine new
issues 1 for consideration by the Group. No consensus was reached on
whether these issues fall within the scope of the negotiation. The
matter was considered subsequently at the TNC's fifth and sixth
meetings and given that no consensus was reached on the inclusion of
proposals, the NGIN reiterated its request that the issues be again
addressed at the seventh meeting of the TNC to be held in Lima, Peru
in January 2001.

As negotiations progress the need for greater interaction among
Negotiating Groups will intensify. The NGIN would wish to suggest
therefore that there is a need for consideration of the following by
Ministers:

i) The linkage between the Negotiating Group on Investment and many of
the other Negotiating Groups which calls for an enhanced coordination
between these Groups to facilitate the consideration of issues that
may fall under their purview.

ii) The treatment of issues that are horizontal in nature but fall
within the mandate of various Groups.

c) Report on Modalities and Procedures for the Negotiations The second
element of the NGIN work programme is to "develop a methodology to
consider potential reservations and exceptions to the obligations"
(FTAA.TNC/01). The issues of reservations and exceptions were
discussed by the NGIN and initial proposals are included in the draft
text. The precise modalities and procedures for negotiations will be
determined by the Group as soon as possible within the next
negotiating phase. In this regard, the Group considers that enhanced
coordination with the Negotiating Group on Services should be taken
into consideration.

For the purposes of guiding future stages of the negotiation, the TNC
may wish to provide direction with respect to a methodology for
enhancing the work of the Group, and in so doing it may also give due
consideration to timeframes and adequate frequency of meetings. The
Group understands that the guidance of the TNC regarding the
advisability of establishing a timeframe with respect to the
development of the methodology for considering potential reservations
and exceptions would be useful.

Full document: http://attac.org/fra/libe/doc/ftaa.htm
______________________________

3- WTO Tidbits
____________________________________________________________

By omc.Marseille@attac.org

1)  Room for NGOs at the Ministerial Conference at Doha (Qatar)

According to the WTO, a Centre for NGOs will be available at Doha for
representatives of civil society.  It will include facilities for
meetings and press conferences.  The Fair Hall, where the NGO Centre
will be installed, is a two-minute walk from Convention Center where
the Ministerial Conference will be held.  4.400 rooms will be
available to house participants (delegates, observers, press and
NGOs).  The WTO thinks the number will be sufficient, but it maybe
necessary to limit the number of participants (!)

The WTO has also announced the creation of an 'inter-division
operational group' to manage  WTO/NGO relations. The WTO looks on this
group as a new way of tackling the challenge of interactions between
the WTO and civil society.  The committee will have the job of
presenting ideas and devising means and strategies to enable
interaction with NGOs by means of workshops and symposiums, and
improve relations by using the WTO website and its "chats". It will
include about a dozen representatives of the main WTO divisions and
will report to the Director-General; it will act as coordinator for
activities of concern to NGOs.  (This is what is called "squaring the
field" !)  Requests from NGOs to attend the Conference will be
considered from the beginning of May.

2)  Developing countries are against the "social label" now being put
on a legal footing in Belgium

Egypt, Hong Kong, Brazil, India, Argentina, Malaya (representing the
ASEAN) and Pakistan are among those which condemn the law being drawn
up with the intention of creating a label for goods and services
produced in a socially responsible way. According to Malaya, this is a
subject to be treated at the ILO, not the WTO. The EU, speaking for
Belgium, explained that obtaining the label would be voluntary and
that no one would incur sanctions; only Belgian goods would be
affected.

Another debate going on before the TOTs (Technical Obstacles to Trade)
Committee is about the eco-label on products made of wood (in the
context of the law on "reponsible forestry maintenance") which is
shortly to be presented to the upper chamber of the Dutch parliament.
Malaya (supported by Brazil and Canada) argued before the Committee
that this measure would be discriminatory and represent an obstacle to
trade.

3)  Disagreement at the Codex on the subject of traceability

If the general opinion is that significant progress  has been made in
establishing international norms for products derived from
biotechnology, no consensus has yet been obtained on traceability,
mainly because of disagreements between the EU and the US. The failure
to include this measure has been mainly due to the opposition of the
US, Canada, Australia, New Zealand, South Africa, India and Indonesia.
Some countries consider that traceability is too costly and is anyway
unnecessary.  A complete report can be found at :
www.who.int/fsf/Gmfood/

4) In Asia, NGOs oppose the launch of a new round

The NGO alliance headed by Third World Network considers that the
efforts of the EU in favour of a new round, to include competition,
investments, and public markets, are unjustified and liable to cause
economic, social and environmental harm.  The alliance further affirms
that the Director General of the WTO, Mike Moore, has overstepped his
brief in attempting to stimulate enthusiasm for the new round, given
that all countries do not give it their support.

5) The guide adopted for negotiations on services

This recorded agreement is a strong signal that member states are
ready and willing to advance towards negotiations even in the absence
of a new Round. The Director of the Services Division (who previously
complained that the anti-GATS campaign, premeditated in his view,
considerably distorted the intentions of those who were urging the
project forward) qualified the agreement as "good news", adding that
"everyone can see it as opening a new phase of negotiations".

The guide adopted mainly refers to existing clauses of the GATS.  The
developing countries have succeeded, for their part, in obtaining "an
appropriate flexibility" in negotiations on the Most Favoured Nation
exemptions.

During the meeting at the end of March to draw up the annual progress
report, discussions concentrated on the nature and timing of work to
be done during the Special Session. Seventy propositions were
presented by more that 40 countries. This considerable number was seen
as a sign that the negotiators wanted to make progress.  But some
delegations privately expressed their consternation at the
predominance of propositions from developed countries and their doubt
as to whether developing countries would manage to get progress on
propositions corresponding to their interests.

Work group "International Treaties", omc.marseille@attac.org


______________________________

4- Genoa Social Forum
____________________________________________________________

To Associations NGOs International Networks Unions Political
organisations

We are writing you on behalf of many Genoese and Italian organisations
working together to build a co-ordinate framework for the protest
against the G8 Summit, which will be held in Genoa on 20 - 22 July
2001.

We have signed the enclosed document, and in the past few months we
have been negotiating with the local and national authorities in order
to find areas and sites for the activities and events to be held on
those days.

We are willing to make an international call for a strong mobilitation
and a large participation.

We know that many organization all over Europe and the world are
already planning to come to Genoa to demonstrate, on the basis of the
final Porto Alegre  social movements declaration.

In order to organize and co-ordinate international efforts in the best
way, we are organizing an international meeting to be held in Genoa on
4 and 5 May.

The official language of the meeting will be English.

Details on the already planned activities will follow ASAP together
with all information about the meeting (schedule, time, venue, etc.).

Please circulate this letter among all those who may be concerned.

To join us, to make suggestions, or to get information, please e-mail
to genoasocialforum@libero.it

Further information are also available at www.genoa-g8.org (under
construction).
If you are interested, we invite your organization to subscribe our
document "A different world is possible".

GENOA SOCIAL FORUM
Genoa, 20-22 July 2001

A different world is possible

Introduction

The world in which the Genoa G8 Summit is to be held is one full of
striking injustices. 20% of the world population - in countries with
advanced capitalism - wastes 83% of the resources of our planet; 11
million children die every year of malnutrition and 1.3 billion
children live on less than one dollar per day.

This situation does not improve: on the contrary, it is getting worse
and worse.

Thanks to its international relevance, this summit is a challenge to
all those organisations that for a long time have undertaken to
assert - with different methods and priorities- principles of social
justice and solidarity, as well as fair and sustainable development.

The challenge must be met! We must contribute all together to make the
different projects known, which deal with such matters as
international co-operation, environmental protection, citizens' and
workers' rights, promotion of ethical and solidaristic economic
models, and development of multiethnic communities, support peace and
fight against injustice.

These experiences must help society to grow, spurring it to develop,
by July 2001, initiatives aimed at increasing the public awareness of
this unacceptable situation and at denouncing it. It is necessary to
develop a new way of thinking in order to respond to the dominant
cultural models that - through growing social disruption - hinder even
the dream of a better society. Yet, a different world is possible!

This is the meaning of the challenge for the citizens to accept. The
international organisations, upon which the attention of a growing
global movement is focussing, should be forced to take into account
the demands of an ever more attentive population, determined to ask
for real democracy and new social and economical justice.

Work Agreement

For aforesaid reasons, the signatory organisations commit themselves
to a work agreement whose objectives are as follows:

1. raising the citizens' awareness of the different themes each
association focuses on, respecting their individual methods and
procedures;

2. asking the local and national authorities to grant everybody wide
spaces for activities, projects and demonstrations to be organised
before and during the Summit; above all, demanding that the right to
demonstrate not be subjected to arbitrary restrictions;

3. acting in a co-ordinate way in order to favour a smooth flowing of
information and to foster all the initiatives in the program;

4. respecting all open and transparent forms of expression, protest
and direct and non-violent action.

Through this document the signatory organisations invite all
interested organisations and networks as well as those who are already
working against the G8 Summit, to meet soon in order to better
co-ordinate their energies and purposes, to start a dialogue with the
scientific and political circles, to pursue the above mentioned goals
as effectively as possible.

Local Signatories:  ACLI  - Altrimondi  - ARCI Nuova Associazione  -
Arciragazzi  - ASSEFA  - Associazione Agire Politicamente  -
Associazione Città Aperta  - Associazione Medici per l'Ambiente -
SDE  - Associazione per il Rinnovamento della Sinistra  - Bambini
Vittime  - Banca Etica - Circoscrizione Locale di Genova e Imperia -
CEDRITT  - Centro Cooperazione Sviluppo  - Centro Sociale Talpa e
Orologio  - Centro Sociale Terra di Nessuno  - Centro Sociale
apata  - Circolo ARCI Mascherona 16  - COGEDE  - Consorzio Sociale
Agorà  - COSPE  - Federazione Chiese Evangeliche Liguria  -
Federazione Giovani Socialisti  - Federazione Regionale Solidarietà e
Lavoro  - ICS - Consorzio Italiano di Solidarietà  - Il Ce.sto  -
ISCOS CISL Liguria  - La Rete per il Partito Democratico Liguria  -
Lavoratori della Libreria Feltrinelli  - Legacoop Liguria - Comparto
Cooperative Sociali  - Legambiente Regionale Liguria  - LOC - Lega
Obiettori di Coscienza  - Mani Tese  - Marea  - Movimento Federalista
Europeo  - Partito Rifondazione Comunista  - Planet  - Progetto
Continenti  - Rete ControG8  - Rete Lilliput  - Sinistra Giovanile  -
Sondagenova  - UISP  - Ya Basta!  -

First National Signatories:  Altrimondi  - ARCI Nuova Associazione  -
Arciragazzi  - Associazione Botteghe del Mondo  - Associazione
Coordinamento Pace   - Associazione Italiana Amici di Raoul
ollereau  - Associazione per la Pace  - Associazione Tatavasco   -
ATLHA - Associazione Tempo Libero Handicappati  - AYUSYA  - Beati i
costruttori di pace  - Bilanci di Giustizia  - Campagna Chiama
L'Africa  - Campagna Dire mai al MAI - Stop Millennium Round  -
Campagna per la Riforma della Banca Mondiale  - Campagna Sdebitarsi  -
Carta - Cantieri Sociali  - Centro Nuovo Modello di Sviluppo  - Centro
Sociale Leoncavallo  - CGD - Coordinamento Genitori Democratici -
Coalizione Italiana Contro la Pena di Morte  - COCORICO - COnsumatori
COnsapevoli RIciclanti COmpatibili  - Comitato per la Globalizzazione
dei Diritti (TO) - Consorzio CTM Altomercato  - Cooperativa Roba
dell'Altro Mondo  - COSPE  - Democrazia Popolare  - Federazione Chiese
Evangeliche  - Federazione dei Verdi  - Federazione Giovani
ocialisti  - Giovani Comuniste e Comunisti  - ICEI - Istituto
Cooperazione Internazionale  - ICS - Consorzio Italiano di
olidarietà  - IRED Nord  - Lega Missionaria Studenti  - Legambiente  -
LILA  - Lunaria - Mani Tese  - Nigrizia  - Partito Rifondazione
Comunista  - Pax Christi  - Rete ControG8  - Rete delle Marce
uropee  - Rete Lilliput  - Rete Lilliput (SV) - Rete Radie Resch  -
S.in.COBAS  - Tavola della Pace  - Sinistra Giovanile  - UISP  -
Unione degli Studenti  - WWF  - Ya Basta!

First International Signatories: Casa da Mulher Oito de Março (BR) -
Forum Nord Sud (BE) - Marches européennes contre le chomage, la
précarité et les exclusions (FR) - MNC - Mouvement National des
Consommateurs (CM) - National Coordination in Greece - Campaign Genoa
2001 (GR)
______________________________

5- Using Monetary Fines in Trade Disputes
____________________________________________________________

By USTR (Internal Concept Paper)

USING MONETARY ASSESSMENTS TO ENFORCE PANEL DECISIONS UNDER BILATERAL
FREE-TRADE AGREEMENTS

This paper explores how
1) monetary assessments could be used in place of trade sanctions to
secure compliance with dispute settlement panel decisions under U.S.
bilateral free- trade agreements (FTAs);
2) an agreement with U.S. FTA trading partners to use monetary
assessments could be memorialized; and 3) federal law would need to be
arranged to put such a system into effect.

1. How Monetary Assessments Would Work

a. Summary of FTA Dispute Settlement Procedures
The United States is currently a party to one bilateral free-trade
agreement (with Israel) and has signed another (with Jordan).
Procedures for resolving disputes under the two agreements are very
similar.

Under those procedures, when a dispute arises between the two
governments regarding the agreement they must first try to settle
their differences through consultations. If consultations are
unavailing, either side may refer the dispute to an ad hoc
three-person dispute settlement panel. A panel may hear disputes over
whether a party has 1) breached its FTA obligations; or 2) taken
action that "severely distorts the balance of trade benefits" provided
under the agreement or "substantially undermines the fundamental
objectives" of the agreement.

Once the panel has heard the matter, it issues a non-binding report to
the two governments setting out its factual findings and legal
determinations. The report may also include recommendations for
resolving the dispute.

After the panel has issued its report, the two governments may seek to
resolve the dispute through further consultations. As a practical
matter, consultations are likely to be held only in cases where the
panel has sided with the complaining party. To settle the dispute, the
parties may agree that the defending country will change its laws or
regulations, provide trade "compensation" to the complaining
government, or take any other action that the complaining government
finds sufficient. Alternatively, the dispute may be left unresolved,
with no further action by either side.

If the parties cannot reach agreement on settlement and the "affected
party" wishes to pursue the matter further, it may take "any
appropriate measure" (Israel) or "any appropriate and commensurate
measure" (Jordan). While these phrases are not defined, they allow for
a range of possible remedies, including the withdrawal of
proportionate trade concessions (i.e., limited trade retaliation).

b. Including a Monetary Assessments System in a Bilateral FTA
Free-trade agreements, such as the U.S.-Israel and U.S.-Jordan FTAs,
normally contemplate that the complaining government may enforce a
panel decision in its favor by taking action against the other party
if settlement discussions are unproductive. Under a system of monetary
assessments, by contrast, the defending party would be expected to
take action -- namely, pay an assessment -- in such circumstances.

Thus, an assessments-based system would represent a departure from the
"self- help" approach to enforcement built into current agreements. In
addition, to guard against the possibility that the defending party
may fail to pay an assessment levied against it, there may be a need
to back up monetary assessments with some other enforcement procedure.

To graft an assessments-based enforcement system onto existing U.S.
FTAs, the parties would need to agree that:
1) the complaining party may seek, and the defending party must pay,
an assessment if the two governments cannot resolve their differences
following a panel ruling in favor of the complaining government; and
2) trade sanctions are not included among the field of measures the
complaining country may take to enforce a panel decision.

c. How the System Might Operate

There is a variety of ways to structure an assessments-based
enforcement system. Perhaps the most straightforward system would
operate along the following lines.

First, the dispute settlement rules would allow the complaining
government to seek a monetary assessment when:
1) the panel has issued a report that is adverse to the defending
party;
2) a fixed period has elapsed after the report has been issued; and
3) the parties have not been able to settle their differences. The
complaining government would not be required to seek an assessment and
might choose at least initially to threaten an assessment rather than
seek one.

If the complaining government decided to seek an assessment, the two
governments would have an agreed period (say, 30 days) to consult on
the amount. The assessment level could be pegged to the amount of
trade (or royalties, sales, etc., in the case of disputes involving
intellectual property or services) that the defending government's
action (or inaction) affected. For the sake of simplicity, it might be
appropriate to set the amount of the assessment at a percentage (say,
50%) of the actual dollar amount of trade or commerce affected. (For
larger FTAs it might also make sense to place a ceiling on
assessments.)

Thus, for example, if Jordan were to violate its FTA obligations by
failing to eliminate or reduce a tariff on computers, and that failure
has effectively reduced U.S. computer exports to Jordan by $12 million
per year, the assessment would be set at half that amount. To induce
compliance, the assessment could be due in periodic (e.g., quarterly)
installments and might be automatically renewed each year until Jordan
eliminates or reduces its computer tariff or the dispute is settled in
another way. To make this system work, the parties would need to have
the ability to go back to the dispute settlement panel to decide
disagreements over the applicable assessment.

Once the parties agree on the amount of the assessment, or the panel
sets the amount, the defending government would be required to pay the
assessment (or the first installment) within a set period, say 90
days. This short delay would provide a final opportunity for
settlement negotiations.

If appropriate, a back-up system could be [words illegible] to address
the possibility that the defending government might fail to pay an
assessment. One possibility would be to preclude the defending party
from initiating panel proceedings under the FTA until the assessment
is paid or the dispute is settled. A back-up system may not be
necessary for FTAs where the likelihood of a government will default
on its obligation to pay an assessment is slight.

d. Setting Assessments in Labor and Environment Disputes
The U.S.-Jordan FTA includes provisions regarding labor and
environmental law enforcement. In particular, the agreement prohibits
the two governments from failing to effectively enforce their labor
and environmental laws, through a sustained or recurring course of
action, in a manner affecting bilateral trade.

It is noteworthy that this obligation arises only where the alleged
enforcement failure has a bilateral trade effect. This means that in
disputes regarding the adequacy of an FTA government's labor and
environment law enforcement efforts, it would be possible to key
monetary assessments to the amount of bilateral trade that the alleged
enforcement failure has affected. In principle then, a system in which
assessments are pegged to a percentage of the trade effect that a
breach of the agreement has engendered could work for both pure trade
disputes under the Jordan FTA and disputes arising under the FTA's
environmental and labor obligations.

It is worth observing that the NAFTA and Canada-Chile supplemental
labor and environment agreements use a different approach for setting
assessments. They give dispute settlement panels the authority to
determine assessment levels based on general guidelines related to the
defending party's conduct.

Under the NAFTA supplemental agreements, assessments may not exceed an
amount equal to .007 percent of total trade in goods between the
parties concerned for the most recent year. This means that the
current ceiling for assessments in disputes between the United States
and Canada is about $29 million; $17 million for disputes between the
United States and Mexico. The Canada-Chile supplemental labor and
environment agreements limit assessments to $10 million.

2. Memorializing an Agreement to Use Assessments

In future bilateral FTAs that the United States negotiates, an
assessment-based enforcement procedure could be made an integral part
of the agreements' dispute settlement mechanisms. There would be
several ways to build a system of assessments into existing U.S.
bilateral FTAs. The two most obvious alternatives would be:
1) directly to amend the texts of the agreements; or
2) conclude separate understandings on how the enforcement provisions
of the FTAs will operate. Under the latter approach, the parties would
make clear that "appropriate [and commensurate] action" by the
"affected party" would exclude trade sanctions and include
assessments.

While amending the FTA itself would be the most direct way to proceed
from a legal perspective, it could lead to demands from our trading
partners to reopen other aspects of the agreements. For that reason,
among others, the most advisable procedure for establishing an
assessment-based enforcement system would be to conclude a separate
understanding.

3. How Federal Law Would Need to be Changed and Applied

Legislation would be required to pay an assessment assessed against
the United States under a bilateral FTA. Congress could provide
funding by: 1) authorizing one or more federal agencies to pay any
assessments and appropriating the money to do so; or 2) making the
"judgment fund" (28 U.S.C 2414) available to pay assessments.

The judgment fund authorizes the Treasury Department to pay "final
judgments rendered by a foreign tribunal against the United States".
Before payment is made, the Attorney General must certify that the
payment is in the U.S. interest.

In order to invoke the judgment fund to pay an assessment assessed
under a bilateral FTA, the assessment would need to be a "final
judgment" of the dispute settlement panel. To achieve that result, the
FTA's dispute settlement provisions would need to be changed (either
directly or through a supplemental understanding) to specify that:
1) the panel's rulings are to be considered final and binding; and
2) any assessment assessed against the defending party flows directly
from those rulings. It also may be necessary to provide that dispute
settlement panels are selected from standing rosters rather than on a
purely ad hoc basis.

To make monies available from the fund, Congress could enact specific
legislation making clear that the judgment fund is available.
Legislation of this sort would fall within the jurisdiction of the
Judiciary Committees.

Alternatively, it is possible that judgment fund may be available to
pay assessment assessed against the United States if Congress
specifically approves the assessment-based enforcement system included
in the FTA or in a supplemental understanding establishing such a
system. Such an approval would evince Congressional intent to implement 
the monetary assessments procedure, including the payment of 
an assessment that a panel assesses as part of a final judgment
against the United States.