Primed for Fast-Track and Raring to Go
During his two terms, Bill Clinton couldn't persuade Congress to give him fast-track trade authority. But in just his first year, George W. Bush has already confounded skeptics who scoffed at the idea that he would have the muscle to advance his ambitious trade-expansion agenda. On Dec. 6, Bush squeezed out a 215-214 win in the House for a measure that restores the President's ability to negotiate trade pacts without congressional tinkering. As a result, 2002 could mark a string of free-trade dealmaking.
The narrow House victory, expected to be ratified by the Senate, was Bush's third trade policy accomplishment this year. It comes on the heels of a successful November launch of a new round of global trade talks. That coup followed the April decision in Quebec City to revive work on a new hemispheric free-trade zone. And now, armed with the ability to cut deals that Congress can't amend, Bush's trade negotiators will have their hands full. "[This] is going to allow us to really step on the gas in all the trade negotiations," says Franklin J. Vargo, a vice-president at the National Association of Manufacturers. "Up to now, the other countries have just been dabbling at negotiating."
The surprising House victory for fast-track was also a red-letter day for multinationals such as Boeing Corp. (BA ) and Caterpillar Inc. (CAT ), which already account for 60% of U.S. exports. The losers: the AFL-CIO, environmentalists, and some consumer groups that had stymied Clinton-era attempts to pass fast-track and kick off new trade negotiations. "This was all about Big Business declaring [its] dominance," says AFL-CIO economist Thea Lee. "It's clear they think they own trade policy now."
So which industries will benefit from the Administration's new powers? First in line will be America's grain farmers, cattle ranchers, and food processors. They're twice as dependent on export sales as the rest of the economy but face far higher trade barriers than other exporters. Next come service industries such as insurance, securities, and construction. Many U.S. services seek 100% ownership of foreign affiliates. Hollywood and Silicon Valley also see a chance to increase copyright and trademark protections. Manufacturers--especially makers of telecommunications and computer gear--also stand to gain as barriers to government procurement abroad fall.
Change may come quickly. A free-trade deal with Chile to remove the 11% tariff faced by U.S. exporters may be the first rubber-stamped by Congress under the new fast-track rules. And on May 15, horse-trading will begin in earnest for the proposed 34-nation Free Trade Area of the Americas, a zone that would encompass every country in the Western Hemisphere, with the exception of Cuba.
SKEPTICS. To be sure, opponents of the Bush trade policies haven't given up. They'll try to derail the fast-track bill again when the House and Senate versions are reconciled next year. If the President fails to deliver on several pledges made in the final minutes of debate to buy the votes of a handful of House Republicans, they may bolt. Among the promises: changing U.S. law so that apparel admitted duty-free from Africa and the Caribbean has to be made from cloth first manufactured and dyed in the U.S.
There will be political fallout as well. If unemployment continues to climb, as most economists expect even during the initial stages of a recovery, Bush will be extolling free trade to an increasingly skeptical public. Undoubtedly, Democrats will lash House Republicans for sending jobs overseas. Among the biggest potential losers: The U.S. textile and apparel industry, which has shed 678,000 jobs since 1994. Also likely to lose as negotiations shift into high gear are industries such as steel that have made ample use of U.S. antidumping protections. The Administration has already put those on the negotiating table.
Still, as the 2002 elections grow nearer, corporate political action committees aren't likely to sit on their wallets when it comes to rewarding their GOP allies. Business will hardly be the only winner if and when fast-track finally arrives.
By Paul Magnusson in Washington