Bush loses trade negotiation lever with collapse of WTO talks
Sunday, 1 July 2007
Mark Drajem
The collapse of World Trade Organisation talks over a new global agreement leaves President George W. Bush without a lever to prod Congress to renew his trade promotion authority before it expires at the end of this month, lawmakers and business lobbyists say.
The authority ``hasn't come up, and the only reason we would be entertaining it would be having the WTO proceed,'' said Representative Charles Rangel, who, as chairman of the House Ways and Means Committee, is a leader on trade issues.
The prospect of life without trade promotion authority, known as ``fast-track,'' has made administration officials and U.S. businesses concerned that the European Union, China and other competitors will rush ahead with new deals among themselves, leaving the U.S. behind. The authority allows the president to negotiate trade agreements that Congress must accept or reject without amendment.
``If there is no trade promotion authority, does the Congress really want the United States to be sitting on the sidelines over the next several years while our trading partners negotiate sweetheart deals with each other that lock us out?'' U.S. Trade Representative Susan Schwab said in an interview today.
When Bush came to office the U.S. had free-trade agreements with three countries, Canada, Mexico and Israel. It now has those deals with 13 more nations, and companies such as Peoria, Illinois-based Caterpillar Inc. say those have helped boost their exports and profits.
``Without trade promotion authority, the problem is that we eventually go on the defensive,'' said Bill Lane, director of government relations for Caterpillar. ``One of the biggest risks we see as a company is if the U.S. turns inward and loses its confidence.''
The WTO talks in Potsdam, Germany, among trade and agriculture ministers from the U.S., the European Union, India and Brazil broke down yesterday as the U.S. and EU said the developing nations weren't committing to cut their industrial tariffs enough, and India and Brazil said the U.S. and EU wouldn't reduced their farm subsidies sufficiently. The talks had been one incentive for Congress to consider renewing fast- track authority.
The lapse of fast-track is likely to end a five-year U.S. push for individual free-trade deals with countries from Chile to South Korea. While Bush probably doesn't have time left in his term to complete new agreements, his successor is likely to have to begin anew on trade.
``In 2009 they will be starting over building a relationship'' between Congress and the White House, said Richard Levy, a former Bush administration economist and fellow at the American Enterprise Institute in Washington.
The last time fast-track authority lapsed, during the Clinton administration, it took more than seven years to renew it. Supporters worry about the diplomatic ramifications for a country that helped set up the post-World War II trading system and has been its biggest champion.
``It signals to the rest of the world that the U.S. is not serious'' about lowering commercial barriers, said Representative Wally Herger of California, the top Republican on the House trade subcommittee.
The theory behind fast track, which began in 1974, is that lack of congressional interference will encourage other countries to negotiate knowing that the administration can stand behind its agreement.
It hasn't always worked that way, and some say the rules have outlived their usefulness.
``It would be a very good thing to have fast track expire,'' said Thomas Palley, founder of the Washington-based Economics for Democratic & Open Societies Project and critic of current U.S. trade pacts. ``Fast track sets up a policy process that is uneven and favorable to corporate interests by limiting congressional oversight.''
Still, Congress does get involved in negotiations. Last month, Schwab acceded to changes to completed trade agreements with Peru, Colombia, Panama and South Korea that Democrats in Congress demanded before the administration formally submitted them for approval.
The U.S. and Peru reached their deal at the end of 2005, signed it in April 2006, and the Peruvian Congress ratified it a year ago. With the changes worked out before a vote in Congress, Peru is being forced to accept tougher environmental and labor rights rules, and its legislators will have to vote again to ratify those changes.
``Fast track is a fragile political compact,'' said Hal Shapiro, a trade lobbyist and author of a book on the topic. ``It looks more powerful and sounds more powerful than it is.''
Many lawmakers, including Democratic Representative Marcy Kaptur of Ohio, say Congress must forget free-trade agreements and establish a policy aimed at cutting the record trade deficit and protecting U.S. manufacturing jobs.
``We have to rethink how we do these trade agreements to get rid of incentives to ship jobs overseas,'' said Scott Paul, executive director of the Alliance for American Manufacturing in Washington, which represents steelworkers and steel companies.
Bloomberg
The collapse of World Trade Organisation talks over a new global agreement leaves President George W. Bush without a lever to prod Congress to renew his trade promotion authority before it expires at the end of this month, lawmakers and business lobbyists say.
The authority ``hasn't come up, and the only reason we would be entertaining it would be having the WTO proceed,'' said Representative Charles Rangel, who, as chairman of the House Ways and Means Committee, is a leader on trade issues.
The prospect of life without trade promotion authority, known as ``fast-track,'' has made administration officials and U.S. businesses concerned that the European Union, China and other competitors will rush ahead with new deals among themselves, leaving the U.S. behind. The authority allows the president to negotiate trade agreements that Congress must accept or reject without amendment.
``If there is no trade promotion authority, does the Congress really want the United States to be sitting on the sidelines over the next several years while our trading partners negotiate sweetheart deals with each other that lock us out?'' U.S. Trade Representative Susan Schwab said in an interview today.
When Bush came to office the U.S. had free-trade agreements with three countries, Canada, Mexico and Israel. It now has those deals with 13 more nations, and companies such as Peoria, Illinois-based Caterpillar Inc. say those have helped boost their exports and profits.
``Without trade promotion authority, the problem is that we eventually go on the defensive,'' said Bill Lane, director of government relations for Caterpillar. ``One of the biggest risks we see as a company is if the U.S. turns inward and loses its confidence.''
The WTO talks in Potsdam, Germany, among trade and agriculture ministers from the U.S., the European Union, India and Brazil broke down yesterday as the U.S. and EU said the developing nations weren't committing to cut their industrial tariffs enough, and India and Brazil said the U.S. and EU wouldn't reduced their farm subsidies sufficiently. The talks had been one incentive for Congress to consider renewing fast- track authority.
The lapse of fast-track is likely to end a five-year U.S. push for individual free-trade deals with countries from Chile to South Korea. While Bush probably doesn't have time left in his term to complete new agreements, his successor is likely to have to begin anew on trade.
``In 2009 they will be starting over building a relationship'' between Congress and the White House, said Richard Levy, a former Bush administration economist and fellow at the American Enterprise Institute in Washington.
The last time fast-track authority lapsed, during the Clinton administration, it took more than seven years to renew it. Supporters worry about the diplomatic ramifications for a country that helped set up the post-World War II trading system and has been its biggest champion.
``It signals to the rest of the world that the U.S. is not serious'' about lowering commercial barriers, said Representative Wally Herger of California, the top Republican on the House trade subcommittee.
The theory behind fast track, which began in 1974, is that lack of congressional interference will encourage other countries to negotiate knowing that the administration can stand behind its agreement.
It hasn't always worked that way, and some say the rules have outlived their usefulness.
``It would be a very good thing to have fast track expire,'' said Thomas Palley, founder of the Washington-based Economics for Democratic & Open Societies Project and critic of current U.S. trade pacts. ``Fast track sets up a policy process that is uneven and favorable to corporate interests by limiting congressional oversight.''
Still, Congress does get involved in negotiations. Last month, Schwab acceded to changes to completed trade agreements with Peru, Colombia, Panama and South Korea that Democrats in Congress demanded before the administration formally submitted them for approval.
The U.S. and Peru reached their deal at the end of 2005, signed it in April 2006, and the Peruvian Congress ratified it a year ago. With the changes worked out before a vote in Congress, Peru is being forced to accept tougher environmental and labor rights rules, and its legislators will have to vote again to ratify those changes.
``Fast track is a fragile political compact,'' said Hal Shapiro, a trade lobbyist and author of a book on the topic. ``It looks more powerful and sounds more powerful than it is.''
Many lawmakers, including Democratic Representative Marcy Kaptur of Ohio, say Congress must forget free-trade agreements and establish a policy aimed at cutting the record trade deficit and protecting U.S. manufacturing jobs.
``We have to rethink how we do these trade agreements to get rid of incentives to ship jobs overseas,'' said Scott Paul, executive director of the Alliance for American Manufacturing in Washington, which represents steelworkers and steel companies.
Bloomberg