Commentary: The Real Trade Wars Will Be at Home
By Paul Magnusson
President George W. Bush may have raised eyebrows when he drank straight from a water bottle at a diplomatic dinner at the Summit of the Americas in Quebec. But when it came to the core of the meeting, creating a free-trade zone among the 34 democracies from the Canadian Arctic to the tip of Argentina, an enthusiastic Bush passed his first world leadership test. Speaking to his fellow heads of state, Bush pledged to make winning congressional backing to jumpstart the stalled negotiations, leading the effort to fashion the world's largest free trade zone, and finally bringing home a completed deal to Washington by 2005 "among my top priorities."
It's an ambitious goal with big potential payoffs for Bush and the hemisphere's economy. The White House reasons that economic integration of the Americas could boost growth throughout the region, support struggling democracies and, most important, provide the nation's downtrodden farm and manufacturing sectors with a vast new export market. Establishing the Free Trade Area of the Americas (FTAA) would also eclipse President Clinton's achievement of knitting the U.S., Mexico, and Canada together in the North American Free Trade Agreement of 1994.
NIT-PICKING. But Bush faces even bigger political hurdles wresting a trade deal out of Congress than did Clinton. Add to that resistance from some Latin leaders and reluctance by protected U.S. industries to face import competition. Even the first step won't be easy: getting authority from Congress to negotiate the FTAA on a legislative "fast track," which would force Congress to approve or deny whatever deal Bush brings to them--without amendments. Fast track, which lapsed in 1994, is also crucial to Latin leaders. None wants to sign a trade pact with Bush only to have to renegotiate it with a nitpicking Congress.
But the White House as yet has no plan for getting fast track, other than to change the yet-to-be-drafted bill's name to "trade promotion authority." Democrats insist that the legislation must commit the President to negotiate protections for the environment and workers' rights directly into the FTAA. Although most business groups are in favor, as long as trade sanctions aren't used as enforcement tools, the Administration has been hesitant.
That's because there is outright resistance on the GOP right. House Majority Leader Richard K. Armey (R-Tex.), insists that "trade is too important to be compromised by the ideology" of labor leaders and environmentalists. But if Armey gets his way, Dems will balk. Says Representative Sander M. Levin (D-Mich.), the top Democrat on the House trade subcommittee: "They can't just send up something and shove it through." That's a reference to the strong-arm tactics the GOP leadership used in getting Bush's tax bill through the House on a straight party-line vote. Since some anti-trade Republicans can be expected to vote against fast track, Bush may need votes from 20 or more Democrats in the closely divided House.
Even if Bush gets the congressional go-ahead, he's still not home free. Powerful U.S. industries will fight to keep high tariffs, quotas, and subsidies. Brazil, for example, wants access to the U.S. markets for its citrus, sugar, and vegetables; it also wants the U.S. to cut its crop subsidies. That doesn't wash with GOP Senator Charles Grassley, the Iowa farmer who chairs the Finance Committee. Standing by a barricade while dabbing tear gas from his eyes with a handkerchief in Quebec, Grassley said: "That's not going to happen within the FTAA; we are not going to unilaterally disarm."
Bush could overcome such reluctance in Congress by selling voters on the benefits of globalization. Ultimately, the true test of his skills as a world leader may yet depend on his ability to persuade the American public.
Magnusson covers international trade from Washington.