The Heated Politics of Free Trade Bring No Smoke, Plenty of Fire

The heated politics of free trade.

NEW YORK, NY - OCTOBER 31: Cigarettes are displayed in a deli on October 31, 2013 in New York City. New York City's City Council recently passed a bill that raises the legal age to buy cigarettes from 18 to 21, which Mayor Michael Bloomberg says he will sign into law. New York is the first major city to pass such legation. 
National Journal
Feb. 5, 2014, 4:45 p.m.

Phar­macy gi­ant CVS will stop selling ci­gar­ettes and oth­er to­bacco products. Pres­id­ent Obama, a re­formed smoker, was so pleased he told the world.

But staunch Obama al­lies like Beau Biden of Delaware — yes, that Biden — as well as Lisa Madigan of Illinois and Eric Schnei­der­m­an of New York are ticked off. Not at CVS, but Obama. The is­sue is not to­bacco sales, per se, but free trade.

And so be­gins our jour­ney in­to the com­plex world of trade-fueled glob­al­iz­a­tion, Obama’s strained al­li­ance with Sen­ate Ma­jor­ity Lead­er Harry Re­id, the tattered re­mains of Obama’s “Asia Pivot,” and le­git­im­ate ques­tions about trans­par­ency and sov­er­eignty sur­round­ing “fast-track” trade au­thor­ity and the Trans-Pa­cific Part­ner­ship.

You can’t ex­plain all of this with a flam­boy­ant move by CVS to stop ci­gar­ette sales. But you can get closer than you might think.

First of all, the U.S. ci­gar­ette mar­ket grows smal­ler by the day, and to­bacco com­pan­ies see fu­ture profits and mar­ket share over­seas. In that con­text, the CVS move is not as earth-shat­ter­ing as the head­lines or Obama’s praise sug­gests. But the way trade deals in­flu­ence to­bacco sales in this coun­try is a big deal, and that’s why Obama has Biden, Madigan, and Schnei­der­m­an on his case.

The trio joined 39 oth­er states’ at­tor­neys gen­er­al in a let­ter to U.S. Trade Rep­res­ent­at­ive Mi­chael Fro­man protest­ing emer­ging pro­vi­sions in the Trans-Pa­cific trade pact that they fear would ex­empt U.S. to­bacco com­pan­ies from com­ply­ing with state to­bacco laws and reg­u­la­tions.

From the let­ter: “Ex­per­i­ence has shown that state and loc­al laws and reg­u­la­tions may be chal­lenged by to­bacco com­pan­ies that ag­gress­ively as­sert claims un­der bi­lat­er­al and mul­ti­lat­er­al trade and in­vest­ment agree­ments, either dir­ectly un­der in­vestor-state pro­vi­sions or in­dir­ectly by in­stig­at­ing and sup­port­ing ac­tions by coun­tries that are parties to such agree­ments.”

There is his­tory here. A Ca­na­dian ci­gar­ette maker chal­lenged to­bacco laws in 45 states un­der pro­vi­sions of the North Amer­ic­an Free Trade Agree­ment. The state laws pre­vailed, but only after ex­tens­ive and costly lit­ig­a­tion (which drained state cof­fers). In­done­sia suc­cess­fully ap­pealed to the World Trade Or­gan­iz­a­tion to lift the U.S. ban on clove ci­gar­ettes.

The let­ter is as bi­par­tis­an as things come these days, signed by 24 Demo­crats and 18 Re­pub­lic­ans. Biden is the vice pres­id­ent’s son, Madigan sat in the same row as Obama in the Illinois Le­gis­lature, and Schnei­der­m­an was Obama’s State of the Uni­on guest in 2012. This is not an Obama­care re­dux, but an as­ser­tion of state power against a fed­er­al gov­ern­ment that might sac­ri­fice it on the al­tar of free trade. You might think this to­bacco is­sue is the biggest trade dis­agree­ment between Obama and party loy­al­ists. Butt no. Equally im­port­ant are mount­ing com­plaints about the se­cret­ive nature of talks on TPP, a po­ten­tial free-trade zone unit­ing the U.S. with Canada, Mex­ico, Aus­tralia, Brunei, Chile, Ja­pan, Malay­sia, New Zea­l­and, Peru, Singa­pore, and Vi­et­nam.

This week, Richard Trumka, head of the AFL-CIO, com­plained to Fro­man that the labor move­ment was be­ing shut out of ne­go­ti­ations and over­whelmed by in­dustry groups with more ac­cess and in­flu­ence on the trade deal’s fine print. This is not a new com­plaint. Pro­gress­ives and con­ser­vat­ives have ex­pressed deep re­ser­va­tions about the ne­go­ti­ation’s lack of trans­par­ency and its wide-ran­ging im­plic­a­tions for in­tel­lec­tu­al prop­erty, copy­right, and pri­vacy rights. These griev­ances were giv­en fresh fuel by WikiLeaks’ dis­clos­ures of chapter-by-chapter texts of the emer­ging trade pact (no text has been of­fi­cially re­leased). Sub­sequent ana­lys­is sug­ges­ted the U.S. was try­ing to pull oth­er na­tions in its dir­ec­tion and seek­ing con­ces­sions that would re­quire whole­sale re­writes of ex­ist­ing laws — all in ex­change for ac­cess to the luc­rat­ive U.S. mar­ket.

Skep­ti­cism about the be­ne­fits of free trade have been sim­mer­ing for years, more so on the pro­gress­ive Left than the tea-party Right, but both wings of their re­spect­ive parties are agit­ated and op­posed to TPP and the fast-track au­thor­ity that would force Con­gress to con­sider the deal, upon its com­ple­tion, without amend­ment and with ex­ped­ited floor pro­ced­ures. Part of this is also a back­lash against NAF­TA’s un­der­whelm­ing per­form­ance.

The Con­gres­sion­al Re­search Ser­vice con­cluded last year that NAF­TA did far less than its en­thu­si­ast­ic back­ers prom­ised when Con­gress ap­proved the deal in 1993. That’s what op­pon­ents fear with TPP. Twelve U.S. sen­at­ors wrote Re­id an­noun­cing they would not sup­port any new fast-track le­gis­la­tion without sig­ni­fic­ant changes im­prov­ing trans­par­ency, over­sight, and com­pens­at­ing le­gis­la­tion for work­ers vic­tim­ized by glob­al com­pet­i­tion.

All of this weighed heav­ily on Re­id, a long­time op­pon­ent of free-trade deals. Re­id had a choice — keep his long-stand­ing op­pos­i­tion to him­self, or of­fer vague es­tim­ates about when a vote on fast-track le­gis­la­tion would oc­cur. That cer­tainly would have been Obama’s pref­er­ence after he jumped feet-first in­to the fast-track de­bate in his State of the Uni­on ad­dress. Re­id told Obama and the free-traders to take a hike.

But Re­id knows the polit­ics of trade have be­come more com­plex, with is­sues of job losses com­pet­ing with pro­gress­ive ant­ag­on­ism to­ward glob­al cor­por­at­ism and bub­bling anxi­et­ies about se­cret­ive ne­go­ti­ations that echo those about the Amer­ic­an sur­veil­lance state. Ig­nor­ing any of these would cause grass­roots polit­ic­al prob­lems for Re­id among uni­on mem­bers, young voters, and pro­gress­ive pop­u­lists. That’s a tox­ic mix Re­id can’t abide. And won’t. Fast-track’s biggest Demo­crat­ic boost­er in the Sen­ate, Max Baucus, is head­ing to China as U.S. am­bas­sad­or — a farewell that will bring not one tear to Re­id’s eye but will in­tensi­fy his strangle­hold on the fast-track sched­ule.

The simplist­ic take is, Re­id is merely wait­ing for the midterm elec­tions be­fore schedul­ing a fast-track vote to lay the ground­work for TPP and, pos­sibly, a less ad­vanced trade deal with Europe called the Transat­lantic Trade and In­vest­ment Part­ner­ship. Think again.

The ne­go­ti­ations for the Asia-based TPP re­com­mence in Singa­pore on Feb. 17. The best lever the U.S. has in reach­ing a deal is fast-track au­thor­ity — be­cause it gives oth­er na­tions a sense of con­fid­ence that the deal will hold. That’s now im­possible.

Any­one who thinks free-trade polit­ics for Obama will im­prove after the midterms should think again. If Re­pub­lic­ans make gains in the House and Sen­ate, yes, there will be more pro-busi­ness sym­pathy. But Demo­crats, after lick­ing their wounds, will sound a more pro­gress­ive and pop­u­list trum­pet.

Obama’s trade agenda, there­fore, is go­ing up in smoke. With or without CVS.

The au­thor is Na­tion­al Journ­al Cor­res­pond­ent-at-Large and Chief White House Cor­res­pond­ent for CBS News. He is also a dis­tin­guished fel­low at the George Wash­ing­ton Uni­versity School of Me­dia and Pub­lic Af­fairs.

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