The Trade Agenda Of The 110th Congress

BY DR. PAUL FREEDENBERG
Vice President-Government Relations AMT - The Association For Manufacturing Technology

When it convenes in January, the 110th Congress will look a lot different from the 109th. The most obvious difference is that the Democrats will be in control of both Houses of Congress. Nevertheless, if one takes a closer look, the margins of control for Democrats, particularly in the Senate, will be closer than they were in the 109th Congress for Republicans.

The Republicans proved unable to buck both the short-term trend of voter unhappiness with a combination of Iraq and corruption and the long-term traditional losses that occur in the sixth year of any president's tenure. The Democrats won control, but it was by the slimmest of margins.

This has implications for all sorts of legislative initiatives, but particularly in the highly controversial trade arena it will be extremely difficult to generate the majorities necessary to pass controversial trade legislation.

Certain to be on the agenda for the 110th Congress is the president's authority to negotiate trade agreements and bring them back to the Senate for an "up" or "down" vote. That is, to bring back a signed agreement and ask the Congress to vote on that agreement without the right to add further amendments. Such authority is critical to any president's credibility if he or she wants to negotiate trade deals, particularly in a multi-lateral forum.

The name for such presidential negotiating authority is Trade Promotional Authority, which not only authorizes the non-amendable negotiation but also ensures that it will be "fast-tracked" to a certain vote. Such authority is due to expire on July 1, 2007, and that is where the next trouble spot is likely to occur for the president's trade agenda. Without Trade Promotional Authority, other nations will not come to the negotiating table, but the Democrats are likely to demand a high price for any Trade Promotional Authority reauthorization.

Working with thin margins, it will be difficult for the Administration to avoid concessions on two key issues that have been on the Democrats' agenda for the past decade: the demand to include "labor" and "environmental" provisions as a part of any new trade agreement. The price for Trade Promotional Authority would likely be, in one form or another, the promise not to reach future trade agreements with countries that have low labor and environmental standards, or the equally onerous condition that any new trade deal includes provisions that enhance the labor and environmental conditions of the parties to the agreement. Such amendments have been proposed and rejected in earlier trade legislation, but could be irresistible the next time around. That would be an almost impossible standard for any future U.S. Trade Representative to meet when negotiating a trade deal, whether it was within the context of the Doha Round of the World Trade Organization, or within the context of a regional agreement with our Latin American neighbors.

These preconditions for the negotiation of any new trade agreement reflect the American labor movement's strong opposition to globalization. Obviously, high-paying jobs have been lost in recent years, and just as obviously, the labor movement is at its weakest point in the past half century. Particularly in the past decade, labor unions have lost membership, and workers have had to offer give-backs to employers to retain the jobs that remain, in an era when labor and, indeed, manufacturing can be sourced abroad. The unions realize that they cannot turn back the tide, but they believe that demanding labor and environmental provisions in future trade agreements will at least build barriers against their members being drowned in the tidal wave of new trade liberalization.

Will the president resist such demands and try to keep his negotiating authority robust? Or will the president try to strike a deal with the Democratic leadership that allows his trade representative to continue to expand trade liberalization? My guess is that the president will reject any deals that undermine his negotiating authority. He is more likely to prefer to place the onus on the Democrats for stopping the momentum toward an ever-expanding trade arena and lay the attendant economic costs at their feet.

But beyond that, with the bilateral trade deficit with China likely to hit $250 billion this year, the president is more likely to be playing defense than offense in the trade arena.