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22 October 2004

Foreign Aid, Other Issues Remain for Congress After the Election

Mexican trucks, food sales to Cuba among the unresolved controversies

Washington -- When Congress returns to a special session after the November elections it will have a number of foreign policy issues to decide, including foreign-assistance spending.

Already past the October 1 start of fiscal year 2005, Congress has yet to pass most of the 13 annual spending bills. To keep the government running, it has passed temporary legislation to continue government spending at existing levels for a few weeks.

An effort to fold most or all of the remaining spending measures into a single compromise bill is a likely outcome when the House of Representatives and Senate return from recess November 16.

On foreign aid, the Senate and House already have passed their own versions of legislation. The House bill would spend $19.4 billion, the Senate version $19.5 billion, both below the Bush administration request but above the level approved for fiscal year 2004.

The two versions differ in some respects.

The Senate bill includes $2.4 billion for programs to combat HIV/AIDS, malaria and tuberculosis, $200 million more than the administration's request or the level approved in the House version.

The Senate would provide only $1.1 billion, less than half of Bush's request, for the Millennium Challenge Account (MCA), the new program giving additional development aid to countries that rule justly, invest in their people and promote economic freedom. The House version would allocate only $1.3 billion to MCA for fiscal year 2005.

Some congressmen questioned the ability of the new Millennium Challenge Corporation (MCC), which administers the MCA, to effectively distribute and monitor the use of the full $2.5 billion requested by the administration until the corporation has more experience.

For the Darfur region of Sudan, the Senate approved spending $300 million, the House $311 million. In the Senate version, $200 million could be made available immediately for Darfur refugees and the remainder released after signing of a peace agreement between the government of Sudan and rebel groups. Under the House bill, all funds would be available immediately.

Both the Senate and House approved the administration's requests of $2.6 billion for military and economic aid to Israel and $1.8 billion for Egypt, slightly lower than current levels.

The Senate bill would also give the administration authority to move another $360 million from the Iraq reconstruction fund to eliminate debt Iraq owes to the United States, but the House bill has no mention of this item.

The foreign aid bill also covers spending for export credits. Both the House and Senate versions have language that would prohibit the Export-Import Bank of the United States from spending to assist exports to Libya even though President Bush issued a September determination that such Ex-Im Bank spending was in the U.S. national interest.

Scattered through other spending legislation still needing final passage are a number of controversial foreign policy issues.

Both the Senate- and House-passed versions of agricultural spending bills would relax Treasury Department restrictions for U.S. persons to travel to Cuba to sell agricultural and medical products.

The House-passed version of the spending bill for the Treasury and Transportation departments would prevent spending any money to implement existing U.S. sanctions against private sales of food and medicine to Cuba. The Senate-passed version of that bill would prevent spending any money to enforce the U.S. ban on travel to Cuba.

The Bush administration has threatened to veto any bills relaxing sanctions against Cuba.

Provisions in both the House and Senate Treasury-Transportation bills would prevent the Bush administration from giving Mexican and Canadian trucks a two-year exemption from U.S. safety standards. President Bush has threatened a veto if any provision in a final bill violates U.S. commitments in the North American Free Trade Agreement (NAFTA).

The United States had delayed the implementation of a NAFTA provision allowing Mexican trucks to enter the United States by 2000. An April 2003 Bush administration decision would let the trucks cross the border during the exemption period while phasing in compliance with U.S. safety standards.

Bills implementing two free trade agreements (FTAs) signed by the Bush administration in 2004 -- a bilateral pact with Bahrain and a regional agreement with the Dominican Republic and the countries of Central America (DR-CAFTA) -- are viewed as unlikely to be considered during Congress' post-election session.

The DR-CAFTA agreement especially faces fierce opposition because of differences over labor and environmental standards and industry concerns about increased sugar imports.

Consideration of the FTA with Bahrain, while far less controversial, could nevertheless be pushed onto the 2005 congressional calendar if the post-election session in Congress is limited to one or two weeks.

Prospects for both trade deals could also be affected by the outcome of the November 2 presidential election. Senator John Kerry of Massachusetts, the Democratic presidential candidate, has vowed if elected to renegotiate the DR-CAFTA pact to improve labor and environmental standards in Central America. He has also said that he would impose a 120-day review of all pending U.S. trade agreements.

(Distributed by the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)