By Bruce Stokes, National Journal
© National Journal Group Inc.
Friday, Aug. 2, 2002

The last time the president of the United States had special trade-negotiating authority, George W. Bush had just been elected governor of Texas, current U.S. Trade Representative Robert Zoellick worked for the home mortgage giant Fannie Mae, and the Democrats still controlled the House of Representatives.

It has been eight years since the president has had a free hand to wheel and deal for trade liberalization. And although global commerce has not noticeably suffered in the interim, lack of the negotiating authority clearly stuck in the craw of both Bill Clinton and his GOP successor. Its absence was a practical impediment, giving other nations one more excuse not to negotiate market openings with Washington, for fear that Congress would reject any new trade deals. More important, Congress's refusal to renew such authority was a clear denial of presidential prerogative, a rebuff that could not be tolerated by any White House.

So, after two aborted attempts by the Clinton administration and a hard-fought 18-month effort by the Bush team, the House's recent final passage of trade-negotiating authority, and inevitable Senate approval, mark both a substantive success and a political coup. The bill offers developing countries greater access to the U.S. market for their products. It opens the door for the United States to rapidly complete long-stalled free-trade negotiations with Chile and Singapore. It also gives a much-needed impetus to the ongoing Doha Round of multilateral trade negotiations. Moreover, the legislation sets a precedent by offering health care benefits in addition to retraining for those Americans who lose their jobs because of globalization. And finally, it hands the president a demonstrable example of his legislative leadership on economic issues-just in time to rally a business community spooked by the turmoil on Wall Street.

But both the administration and advocates of freer trade should be wary of reading too much into their victory. Debate over the negotiating authority failed to re-establish bipartisan agreement on trade, which was an implicit goal of the effort. If anything, manipulation of the process by the House GOP leadership deepened party divisions. The Senate debate on the bill brought to the surface new, volatile trade-related issues -- such as the rights of foreign investors in this country and the possible privatization of public services -- that were not resolved and that could further complicate congressional approval of future trade deals. Just how many people will actually benefit from the retraining and health care assistance offered in the bill remains to be seen. And passage of the legislation merely underscores a trend that troubles many members of Congress-surrendering trade-negotiating authority to the executive branch allows greater foreign influence on domestic regulatory affairs that have long been the purview of the legislative branch-issues such as food safety and environmental policy.

What President Bush gets with this trade bill-dubbed "fast-track" by its opponents and "trade-promotion authority" by its proponents-is a commitment from Congress to hold an up-or-down vote, without amendments, on any trade agreements negotiated by the White House over the next five years. This streamlined procedure was first crafted in 1974 as a means of expediting congressional consideration and approval of trade deals. Periodically renewed, it lapsed in 1994.

The current revival only became certain early on the morning of Saturday, July 27, when the House narrowly approved a House-Senate compromise bill by a vote of 215-212, with 27 Republicans voting against it and 25 Democrats supporting it. "Considering we didn't have the support of the House Democratic leadership, it's pretty amazing we got 25," said one House Republican staff member. Nevertheless, those 25 Democratic votes are just 12 percent of House Democrats, a far cry from the 35 percent who supported fast-track renewal in 1991.

This downward trend sobers free-trade advocates on both sides of the aisle. "I am afraid we are losing bipartisan support for trade," said Rep. Jim Kolbe, R-Ariz., the GOP's leading trade voice in the House, who voted in favor of negotiating authority. "I am worried about getting that consensus back." And, echoed Bob Matsui, D-Calif., a longtime trade supporter who this time voted against it, "the consequences of a lack of bipartisanship is that when the agreement is reached in the Doha Round, it is going to be that much more difficult to pass it."

If Democrats retake control of the House in either of the next two elections, the leftover anger of members whose concerns were largely dismissed in this bill could doom future trade deals. Liberals' demands that abuse of labor rights and non-enforcement of environmental standards in other countries be subject to trade sanctions-the issues that blocked congressional passage of fast-track in both 1997 and 1998 -- were swept aside in the House this time and never garnered much support in the Senate. A Senate provision to effectively block the administration from negotiating away U.S. anti-dumping penalties on imports -- a bedrock concern of unions and many manufacturers-was dropped in the House-Senate version of the bill in favor of a weaker provision calling for a report on the issue and a nonbinding "sense of Congress" resolution.

Even the support for additional retraining funds and health care benefits for displaced workers -- the political grease that ensured passage of this bill -- could sour if such assistance is not implemented properly. The bill continues training programs for workers who lose their jobs to imports. But it also expands coverage to farmers, to workers whose plants move to nations with free-trade agreements with the United States -- such as Canada and Mexico -- and to secondary workers who supply factories that close because of cheaper imports. For the first time, the government will pay 65 percent of displaced workers' health insurance premiums during their retraining. And the trade bill creates a pilot wage-insurance program for older displaced workers that would help supplement their earnings for the first two years after they take a lower-paying job.

But this new safety net may not cover those who lose their jobs when their plants move to China, a potentially explosive political issue. Democrats also gripe that a worker's share of health insurance costs is still too expensive and that participation in the program is still too limited. More important, the dirty little secret about worker retraining is that it has never worked very well. Democrats and Republicans who voted for this bill because they thought that the worker-assistance provisions would inoculate them against anti-globalization criticism will have to insist on rigorous congressional oversight to ensure that the program actually helps displaced workers. If not, public cynicism about trade will only grow.

The trade bill also gives short shrift to concerns raised by environmentalists, consumer advocates, and state and city officials that future trade agreements may grant foreign investors unprecedented rights to challenge local rules and regulations, probably the single most inflammatory issue that arose during the prolonged congressional debate. In recent years, for example, foreign investors took California to court over gasoline additives and challenged a Boston zoning decision, both cases brought under provisions of the North American Free Trade Agreement. Environmental and consumer activists wanted future trade agreements to block such assertions of investors' rights. The new trade bill, among other things, promises to improve procedures for settling investor-state disputes by ensuring that foreign investors in the United States are not accorded greater rights than U.S. investors and by providing appellate review of such disputes.

These are substantive improvements. And a number of the controversial investor challenges of local regulations are soon to be decided. Rejection of their claims could calm the current storm. But the issue may face rough waters ahead. Investor rights are the new rallying cry for environmental groups. In the wee hours of July 27, the House Democratic leadership aide said, "there were more enviros lobbying [in the halls of the Capitol] than labor people."

Moreover, the trade bill fails to give the U.S. Trade Representative's Office any direction on the emerging issue of privatization of public services -- the idea that foreign investors could buy municipally owned waterworks, for example. This is a major topic of discussion in the Doha Round, and it has raised the ire of U.S. state and local officials. The National League of Cities, the U.S. Conference of Mayors, the National Association of Counties, the National Conference of State Legislatures, and 35 state attorneys general have written Congress expressing concern about the potential intrusion of trade agreements on what they consider to be local control. Congress may rue the day it dismissed their concerns. "They are the opinion leaders in their communities on these issues," said Rep. Ron Kind, D-Wis., who voted against fast-track. "It is a real issue to them, so it has to be a real issue to us." After all, it is often the political machines of these state representatives and mayors that turn out the vote for members of Congress.

Finally, this year's trade fight was remarkable for the dog that didn't bark-the issue of growing executive-branch domination of foreign policy, which sooner or later may be so pervasive as to infringe on congressional powers over domestic policy. The fast-track bill, said Rep. Sander M. Levin, D-Mich., who voted against it, "maintains a minimal, meaningless, and last-minute role for Congress, at a time when trade policy is increasingly intertwined with all areas of domestic policy." Congress's failure to seize this opportunity to enhance its constitutionally mandated role to shape trade policy was an uncharacteristic demonstration of self-denial.

As for the future, this is probably the last major trade battle for some time. With Senate passage of the bill, Matsui predicted, "the trade debate will now slip off the congressional radar screen for several years, because there is nothing that will put it on the table." Early next year, Congress is likely to be asked to approve free-trade agreements with Chile and Singapore. But neither country poses an economic challenge to a significant sector of the U.S. economy or has sufficiently onerous labor or environmental practices to stir up more than perfunctory congressional opposition. The administration's proposed free-trade deals with Morocco, Central America, or perhaps Australia are still years away. And the extension of fast-track to 2007 is a tacit acknowledgment by the Bush administration that its 2004 target date for completing the Doha negotiations, and its 2005 goal for finalizing the hemisphere-wide Free Trade Area of the Americas, may slip.

But the White House will ignore trade -- allowing Zoellick and his USTR minions to beaver away behind closed doors-at some peril. Enough was left undone in this trade bill to ensure ongoing political unease over globalization. Left untended, these problems will fester.

The Bush administration has had a stellar start, launching the Doha negotiations and persuading Congress to grant the president negotiating authority. But the Clinton administration got off to a similarly impressive beginning, only to let the trade agenda get away. Because negotiating authority is merely a tool, not an end in itself, the significance of this trade bill vote can only be judged by what the administration ultimately accomplishes. "It will require an ongoing, year-round effort by the administration to keep the focus on trade," Kolbe said. "Only the president, with his bully pulpit, can do that. And, without it, we will lose momentum."

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