operations, such as self defense, peacekeeping, and humanitarian relief.

This exempts from our national targets not only multilateral operations expressly authorized by the U.N. Security Council, such as Desert Storm or Bosnia, but, importantly, also exempts multilateral operations that the U.S. initiates pursuant to the U.N. Charter without express authorization, such as Grenada.

A second misperception is that somehow the protocol will create a "super U.N. secretariat," threatening U.S. sovereignty and national decision making through alleged intrusive verification procedures and prior approval of individual emissions trades. This also is not so.

The review process in the protocol largely codifies already existing practices under the 1992 Rio Convention. The review process is not by some secretariat, it is intergovernmental. Experts are nominated by governments. The review teams meet with government officials and with others by invitation. In reviews under the prior convention, the teams have met with Congressional staff, with representatives of the private sector and environmental organizations, but only with their concurrence. Any other visits, such as site visits, would take place only—and I underscore only if approved by the host country, including in this case the United States, and only if the private sector involved agrees to it.

So the notion that somehow people are going to be swooping down on U.S. private property is utterly, completely, and totally false.

In addition, let me be unmistakably clear. We will not accept nor do we anticipate an approach that would require prior approval of individual emissions trades by any international body. Trading will be done between interested nations and their companies based on market principles.

A third concern is that somehow on the one hand we are told it will threaten U.S. sovereignty by dictating national decisions on implementation, and yet, on the other, it lacks mechanisms or teeth to verify compliance. In fact, the protocol strikes an appropriate balance between these two extremes.

We firmly opposed and succeeded in opposing mandatory harmonized policies that were desired by others and that would have imposed on us uniform ways to reach our targets. We prevailed. The protocol leaves to the parties themselves to decide how best to meet their targets based on national circumstances. If somebody else wants to do it by heavy carbon taxes or heavy central regulation, that is their business. We are going to do it by market driven mechanisms alone.

At the same time, we obviously could not tolerate a free-for-all. And so, the protocol calls for national measurements of emissions, detailed reporting, and in depth reviews on an intergovernmental basis, not by some secretariat.

Finally, there are some who suggested that the protocol is going to result in a huge government transfer of foreign aid to Russia. This is also not true. U.S. private sector firms may choose to purchase international emissions credits from Russia and from others. This will be a private decision, and, indeed, it is one of the crucial ways to achieve cost effective emissions reductions for U.S. firms.

Now where do we go from here? First, rules and procedures must be adopted to assure that emissions trading rights, joint implementation, and the Clean Development Mechanism operate efficiently and smoothly. In addition, we will work closely with our industries to be sure they are satisfied that the emissions trading system which is developed is as efficient and effective as possible to meet their needs. I have already met with industry and I have told them: you have to tell us if it satisfied your needs. We cannot tell you.

Most significant, we have to work to secure the meaningful participation of key developing countries. We will put on a full court diplomatic press to bring developing nations into a meaningful role to help solve the global climate challenge. We will accept nothing less nor would we expect the U.S. Senate to do so.

As the President has indicated, the U.S. should not assume binding obligations under the protocol until key developing countries meaningfully participate in meeting the challenge of climate change and more progress is clearly necessary. It obviously would be premature to submit something to the Senate when the Senate itself has asked for this kind of participation and we have not yet achieved it. That is the great obligation we have to assume over the coming months and, if necessary, years.

The President outlined last October a three stage approach to address climate change at home. As a first installment, he announced in his State of the Union Message a proposal for a $6.3 billion Climate Change Technology Initiative over 5 years to cut U.S. greenhouse gas emissions. These will mean tax cuts combined with R&D incentives to take cost effective, practical steps to position us to meet the challenge we face early in the next century.

We have no intention by executive fiat of going around the Senate's constitutional prerogatives-absolutely none. This is a down payment that the Senate itself can make to get us on a path so that we will be ready for any obligations we may later assume with the Senate's advice and consent.

We in the administration have great confidence in the power of U.S. ingenuity, innovation, and technology to help us meet our goals. Indeed, I think this will stimulate this ingenuity in remarkable ways.

An example is the partnership for a new generation of vehicles which will get up to three times the fuel efficiency of today's cars in a recent announcement by the chairman and CEO of General Motors about his goal for a new generation of automobile.

In closing, this administration is committed to work with you and the Congress both to realize the potential of the Climate Change Technology Initiative of the President and to craft our ongoing approach to climate change. We have the power to lead the global effort and Congress holds the key. What is done or not done today will determine the kind of world we leave to future generations and the conditions of life they will face.

But we can not, in conclusion, ignore what science is telling us. We would do so at our peril. And, again, what we are looking for is a kind of insurance policy, one that we can afford, one that is prudent, but one, Mr. Chairman and members of the committee, if we fail to act, if we fail to recognize what these scientists and

charts are telling us, will be infinitely more costly to do in the future without action now.

Thank you very much and I look forward to your questions and comments.

[The prepared statement of Ambassador Eizenstat appears in the Appendix.]

Senator HAGEL. Mr. Secretary, thank you.

Let me ask the distinguished ranking member of the Foreign Relations Committee, Senator Biden, for any opening comments. Then, after Senator Biden's comments, we will go to questions.

Senator BIDEN. Thank you, Mr. Chairman. I will withhold my opening comments until it comes time to question.

Mr. Ambassador, I think you did an incredible job. It is obvious two major things remain to be done. But when I get to the questioning, I will pursue those at that time.

Thank you for the opportunity, Mr. Chairman.

Senator HAGEL. Yes, sir.

We will take a 5 minute rotation period for questions and I will begin.

Mr. Secretary, again, thank you for coming up here. I think there is little doubt that everyone on this panel who has dealt with you over the years has a very, very high regard for you, including this junior Senator from Nebraska in the time that we have had to get acquainted over this last year and a half. I have appreciated it.

I say that up front because I think it is important that we all understand our respect for you and the kind of job that you have done for this country over the years in many positions.

I would like to take you through a series of questions and I will have more later. My colleagues I know will want to ask questions. Let me begin with this.

Can you tell us if at this point the President is prepared to sign the protocol in March? Or when would the President sign this if he intends to sign it?

Ambassador EIZENSTAT. Mr. Chairman, the protocol is open from the middle of March 1998 to the middle of March 1999. We would plan to sign the protocol within this 1 year signing period provided in the agreement. We have not yet determined the precise timing and we will sign at a time that makes the most sense in terms of the overall diplomatic situation.

The issue that is more significant is ratification. As the President has said, we are not going to submit the protocol for ratification until we get the kind of participation from key developing countries that we want to achieve and that you want us to achieve. That will be the great obligation on our shoulders in the months, and, if necessary, the years ahead.

Senator HAGEL. Are you saying, then, that you will or you will not, upon the President's signing the protocol, send it to the Senate?

Ambassador EIZENSTAT. Again, we don't know where we will be between March 1998 and March 1999, how far we will have come in terms of getting this meaningful participation that we desire and that the Senate has made unmistakably clear it requires.

If we have not obtained that-and I think it would be a stretch to imagine that in that 1 year period we will have achieved that

because it is going to take a great deal of work-then we would not be in a position to submit it. If we have, we would be. That is the key issue.

So I cannot give you a definitive answer because we don't know where we will be at the end of the signature period. But, again, I think, quite frankly, it is a real stretch to imagine that we will get the kind of meaningful participation that we desire and that the Senate requires in that 1 year timeframe.

Senator HAGEL. You heard my comments in my opening statement, Mr. Secretary, regarding the process of amending. Unless there is some misunderstanding here within the committee and within the rules, it is my understanding that we would have some difficulty going back and changing any of the dynamics of this Kyoto Protocol.

Would you take us through how this would happen and how it would work using specific examples on developing nations, such as when the Chinese have said straight out-they told me with a number of my colleagues from the U.S. Senate present-that they had no intention of signing anything and would not, as you know, even consider signing anything on a voluntary basis, as well as other members of the G-77?

Ambassador EIZENSTAT. No one knows better than I do—and, of course, you were there as well-the difficulty we had with some of the developing countries, including China and India. It was not uniform, but certainly they were in the lead.

First, it would require an amendment, as you suggest, for major changes in the treaty. However, a mechanism is created by which countries can, if they wish, voluntarily assume binding obligations, and that is one of the things that we will be pressing developing countries to do.

Let me, if I may, mention a couple of things on the developing country side because I think it is important to understand what was accomplished and what was not.

First, I see a spectrum of developing countries. There are those, for example, who are already members of Western industrial institutions-for example, the OECD. Mexico and South Korea would be examples and there are other countries, such as Argentina, that are knocking on the door.

I think that for those countries, they ought to assume, if they are members, in effect, of an industrialized organization, the kind of binding reductions over time that we have done.

Second, there are other countries that are not at that stage of development but who can afford to make binding reductions or perhaps, if not reductions, at least reducing the rate of increase by an efficiency standard. One of the things we have said to these countries is if you are concerned about your own stage of industrialization, then you ought to be concerned also about energy efficiency and sustainable development. We are working on a formula that is emissions per unit of GDP so that they would cut their rate of growth.

For still others, there may be other ways to meet those commitments. Bilaterally, subregionally, and multilaterally through the international financial institutions we will be working to achieve that result. We, for example, want to make sure if the World Bank,

the Asian Development Bank, or the Inter-American Development Bank make large loans or grants for power plants and other projects, that they are done in ways that are environmentally sound.

But it is also important to recognize that the developing countries did begin a process. It is not sufficient. But we should not think they did nothing.

For one thing, for example, they agreed to the creation of this Clean Development Mechanism. This is a way of beginning to bring them into the process. It has a double benefit. It brings them into the process, but it gives our companies credits for any clean projects that they agree to or any credits that they buy.

Second, developing countries also agree to advance the implementation of their existing commitments under the 1992 Rio Convention.

Third, I believe, Mr. Chairman and members of the committee, it will be a very, very powerful incentive when this trading rights regime begins and we have international emissions trading as we already have in the Acid Rain program in the United States.

In order to be a party to an emissions trade, a developing country is going to have to take on binding obligations. So that in and of itself will also create an incentive for developing countries to take on these binding obligations.

Senator HAGEL. Let me just ask a followup question to this and then we will go to Senator Biden.

I understand your point about incentives and the possibility of developing nations signing on for the reasons you mentioned, and I suspect there are more.

Why would we sign a treaty, though, why would we put ourselves in a position when, in fact, there is no assurance that China, India, and 132 other nations that, as you say, will be the biggest manmade greenhouse gas emitters in the next few years, China being the largest by the year 2015, will join? And, as you suggest as well, and I agree, if this is a global problem, it requires a global solution. So why would we go ahead and put ourselves in a position with the possibility that these nations would come on board and restrict ourselves to legally binding mandates, restrict our economy and all the dynamics of our society when the Chinese and other nations have made it pretty clear that they have no intention of moving forward on this?

Ambassador EIZENSTAT. That is a good and important question. Let me answer it in the following way.

First of all, we will not be assuming legally binding obligations on ourselves until and unless we have that meaningful participation. Let me underscore that. We will not be assuming legally binding obligations. Only the Senate of the United States can take that upon the United States, and we will not submit it to the Senate until we have that, until we are satisfied and you are satisfied that we have that level of achievement.

Senator HAGEL. May I also ask: that means the administration will not go forward in trying to implement any dynamic of this Kyoto Treaty through regulation, budget, fiat, executive order, until, as you suggest, it is brought before the U.S. Senate? Ambassador EIZENSTAT. Yes, sir.

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