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The Endgame On Trade
by William New
With time growing tight before this fall's election, Senate and House leaders likely will try to move quickly to resolve differences over a bill that would relinquish the right of Congress to change free-trade agreements negotiated by the White House in the next three to five years.
The Senate passed its trade package, including the provisions on trade-negotiating authority, by a 66-30 margin last Thursday. The House passed its narrower trade-negotiating bill, H.R. 3005, by a margin of 215-214 last December.
The Senate measure, H.R. 3009, also would renew and expand the Trade Adjustment Assistance (TAA) program that provides benefits to U.S. workers whose jobs are lost to trade, and it would renew and expand the Andean Trade Preferences Act, which provides unilateral trade benefits such as lower tariffs to imports from Bolivia, Colombia, Ecuador and Peru.
Let The Conference Begin
Speculation has begun about who will be appointed to reconcile the trade debate. Some congressional staffers and industry observers predict that only a small number of negotiators will be named, and that they will include Senate Finance Committee Chairman Max Baucus, D-Mont., and ranking Republican Charles Grassley of Iowa, the architects of the core compromise that won Senate passage.
Some observers suggested that the participants will include Senate Majority Leader Thomas Daschle, D-S.D., and possibly Minority Leader Trent Lott, R-Miss. Other potential conferees include Sens. John Breaux, D-La., and John (Jay) Rockefeller, D-W.Va.
On the House side, Way and Means Committee Chairman Bill Thomas, R-Calif., and ranking Democrat Charles Rangel of New York will be joined by either one more or three more lawmakers. The others could include a Republican leadership representative such as Roy Blunt of Missouri, who has handled a touchy textiles issue related to the House bill, Rules Committee Chairman David Dreier of California or Majority Leader Dick Armey of Texas.
Philip Crane, R-Ill., and Sander Levin, D-Mich., the chairman and ranking Democrat of the Ways and Means Trade Subcommittee, also could participate.
High-level Bush administration officials are likely to join congressional leaders likely in a "pre-conference" to negotiate differences before the conference begins meeting, sources said.
There may be fewer House Republican votes for the compromise legislation than the original House bill, a fact that would make it necessary to attract more Democrats to win passage. House Republican leaders, however, are likely to try to curtail the TAA provisions on health care for displaced workers, which could hurt the effort to win Democratic backing.
The private sector is analyzing the trade package to determine the effect different scenarios would have on votes and likely will back any outcome that would result in trade-negotiating authority.
The Dayton-Craig Debate
The first item that may be modified or axed in House-Senate negotiations will be a Senate-adopted provision authored by Sens. Mark Dayton, D-Minn., and Larry Craig, R-Idaho.
The language would limit the president's authority to change U.S. trade laws that provide safeguards for industries suffering from unfair foreign trade practices. The provision would not prevent the administration from negotiating on the safeguards but would preserve the right of Congress to make changes to whatever is negotiated.
The Dayton-Craig provision has raised concerns among U.S. trading partners that want U.S. trade-remedy laws on the negotiating table at the World Trade Organization and elsewhere. It also has elicited a veto threat for the whole trade bill. Many business groups oppose it as well, out of concern that it would either kill the legislation or be a disincentive to other nations to negotiate with the United States.
Daschle said last week that he could accept legislation without the Dayton-Craig amendment, and Lott said the Senate's measure still has a few "barnacles" that need to be "sheared off."
One approach could be to modify the Dayton-Craig amendment, making it more acceptable to opponents while maintaining the essence of the provision. More than 100 House Democrats sent a letter to House Speaker Dennis Hastert, R-Ill., urging support for the Dayton-Craig principle, with the addition of greater congressional oversight of trade negotiations as they occur. But the letter suggests that there might be room for some differentiation, though perhaps not weakening, of the amendment.
The high-tech industry generally opposes the Dayton-Craig language, largely because it poses a threat to the entire bill. But the semiconductor industry, which has been hit hard by cheap imports, has taken a neutral stance. As a general rule, U.S. industries that benefit from cheap imports oppose the provision, while those that must compete with the imports support it.
"The high-tech industry has been wobbly" on the Dayton-Craig provision, another industry source said, who added that the amendment "may end up being a shot across the administration's bow" if it gets watered down or defeated.
"In essence, we're not a single industry," said one tech representative, who noted that a further industry rift is the concern among small companies about having to pay healthcare costs for out-of-work employees. Yet another industry source predicted that tech industry supporters of the Dayton-Craig amendment would reconsider their position now that it is part of the bill. The semiconductor industry has "some soul-searching to do," the source said.
The Tech Industry's Unity In Diversity
Micron Technology, an Idaho-based semiconductor producer, influenced Craig's decision to file the amendment. Meanwhile, Texas Instruments (TI) opposed the language despite owning stock in Micron since selling Micron its memory-chip production business. Cynthia Johnson, TI's director of government relations, chairs the High-Tech Coalition on TPA (trade-promotion authority), which opposed the provision.
Eighty percent of Texas Instruments' revenue is in semiconductors, with a large number of wafers made in the United States, according to a company official. But TI earns more than half of its revenues from semiconductor sales overseas, higher than the national average of 50 percent, according to the Semiconductor Industry Association.
The trade-remedy issue arose before the World Trade Organization ministerial in Doha, Qatar, last fall. At that time, a majority of the House and Senate backed a resolution asking U.S. Trade Representative Robert Zoellick not to put U.S. trade remedies on the negotiating table. Zoellick, however, agreed to allow them to be considered.
The tech sector has shown an ability to coalesce on the trade bill. For instance, it uniformly opposed an amendment that would have changed the investor protections in the trade bill. That amendment was "one of the great unifiers," an industry source said.
The tech industry has publicly avoided the TAA debate. But some groups, such as the Computing Technology Industry Association, sought to include in the Senate bill a provision that would retrain displaced workers for the high-tech sector. That language was not added, but some supporters are exploring whether to utilize the existing bill language to add the provision.
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