EXECUTIVE OFFICE OF THE PRESIDENT OFFICE OF MANAGEMENT AND BUDGET WASHINGTON, D.C. 20503

October 11, 2000
(House)

The conference report includes support for a number of important priorities for the Nation. In particular, the bill includes full funding for the President's Food Safety Initiative, significant increases in rural development programs to help rural communities and residents take part in the national economic expansion, provisions that will enable food stamp recipients to own dependable cars and have better shelter without losing their eligibility, and relief to farmers and ranchers who suffered losses from natural disasters. While the Administration continues to support a range of conservation efforts, such as the Farmland Protection, Wetlands Reserve, and Environmental Quality Incentives Programs, and is disappointed that this bill did not provide full funding for these efforts, we do appreciate the increases that were provided including funds for conservation technical assistance. However, while the Administration supports this conference report, it has concerns with several provisions in the bill.

The Administration is disappointed that the prescription drug reimportation provision in this bill will fail to achieve its goal of providing needed relief from the high costs of prescription drugs. The majority leadership chose to end bipartisan negotiations and instead produced a provision in the conference report that leaves numerous loopholes that will render this provision meaningless. Specifically, it allows drug manufacturers to deny importers access to the Food and Drug Administration (FDA)-approved labeling required for reimportation so that any and all drug companies could -- and probably would -- block reimportation of their medications. Second, a "sunset" was added that ends the importation system five years after it goes into effect. This will limit private and public sector interest in investing in this system. Third, the conference language permits the drug industry to use contracts or agreements to provide financial disincentives for foreign distributors to reimport to U.S. importers. Finally, despite the Administration's repeated requests, the conference requires FDA to pay for the costs associated with this provision from within resources needed to perform its other important public health activities. It is wrong that U.S. citizens pay the highest prices in the world for medications, leaving many with no other option than to go abroad to obtain affordable prescription drugs. But it is also wrong to provide false hope that this provision will work to address this problem. Moreover, Congress has thus far failed to pass a meaningful Medicare prescription drug benefit that will not only provide price discounts but will insure seniors and people with disabilities against the catastrophic costs of medications.

On the "Trade Sanctions Reform and Export Enhancement Act of 2000," which is included in the conference report, there are two major concerns to the Administration. First, the restrictions on the ability of the President to initiate new sanctions and maintain old ones are overly stringent. This effectively disarms the President's ability to conduct foreign policy while providing potential targets of U.S. actions with the time to take countermeasures. Second, the provisions of the bill affecting travel to Cuba would significantly set back our people-to-people exchanges that are in the interest of opening up Cuban society. They also would preclude travel by technicians and others needed to conduct normal business by the U.S. Interests Section in Havana, as well as travel for humanitarian purposes.

With respect to the provision, "Continued Dumping and Subsidy Offset Act of 2000," the Administration agrees with the findings that state that unfair trade laws have as their purpose the restoration of conditions of fair trade. However, that is the purpose of the anti-dumping and counter-vailing duties themselves, which accomplish that purpose. By raising the price of imports they shield domestic producers from import competition and allow domestic manufacturers to raise prices, increase production, and improve revenues. Consequently, distribution of the tariffs themselves to producers is not necessary to the restoration of conditions of fair trade. In addition, there are significant concerns regarding administrative feasibility and consistency with our trade policy objectives, including the potential for trading partners to adopt similar mechanisms. Such concerns were raised and examined with regard to a similar proposal considered during passage of the Uruguay Round Agreements Act. That proposal was ultimately rejected.

In addition, the Administration believes the provision removing the authority of USDA's Undersecretary for Natural Resources and the Environment has no justification, will interfere with the agency's ability to manage itself effectively, and sets a highly undesirable precedent.

The Administration is also disappointed that the bill prohibits the Secretary of Agriculture from designating any part of a USDA research lab in Ft. Reno, Oklahoma, as surplus land, thereby preventing any consideration of returning land to the Cheyenne-Arapaho tribe. The Secretary should retain his authority to effectively manage USDA property and consider its alternative uses.

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