Congressmen and women learned the trade-politics lessons of the mid-term elections, and the impact is being felt now - months before the advent of Democratic control in 2007: Vietnam Trade Bill Goes Down to Defeat (Martin Crutsinger, AP via the Washington Post, Nov 14):
Republican supporters of legislation to normalize trade relations with Vietnam say they will try again Wednesday to win House passage of the measure after a surprising initial rebuff.
The extent of the opposition could be a signal that President Bush's agenda of trade liberalization is headed for tough times in a Congress that will be controlled next year by Democrats.
The measure failed Monday night to win the necessary two-thirds majority it needed to pass under a procedure House Republicans adopted in an effort to rush it through with limited debate.
It received 228 votes in support _ 32 short of what was needed. There were 161 votes against it.
David Rogers reports in Tuesday's Wall Street Journal that the defeat in the House was due in part to a tactical error by the Republican leadership (House Defeats Vietnam Deal in Bush Setback, Nov 14).
...Republicans overreached last night when they called up the bill under rules that limit debate but then impose a higher hurdle, requiring a two-thirds majority for passage.
Business supporters were surprised that as many as 66 Republicans opposed the deal, and th efinal 228-161 vote fell about 32 votes short of the needed margin.
And in Wednesday's Journal, Rogers reports (Bush Won't Bring Vietnam Deal to Asia Summit, Nov 15):
In a postelection slap at the White House, Republicans put off action on a Vietnam trade bill until December, denying President Bush an accomplishment he had hoped to cite at an Asia-Pacific Rim summit this week...
... Smarting from losses in last week's midterms, Republicans are less eager to march to the beat of the president's drum. There is rank-and-file resentment that Mr. Bush didn't announce the resignation of Defense Secretary Donald Rumsfeld until after Election Day, and party leaders are more preoccupied with saving their jobs than moving the president's agenda...
...The 228-161 vote fell about 32 votes short of the required margin, and the administration was surprised it lost 66 Republicans, about twice the number it had expected, given past experience on similar trade bills.
To allay concerns of domestic textiles producers, who have lost tens of thousands of jobs under pressure from low-cost labor abroad, a provision was added that would empower the administration to impose annual limits on textile and apparel shipments from Vietnam. Nonetheless, Republicans from textile states like the Carolinas rejected the measure. The Texas delegation, where Rep. Sam Hall, a former Vietnam prisoner of war, is a major influence, was prominent in its opposition, as was House Armed Services Committee Chairman Duncan Hunter (R., Calif.)
Given the level of discontent, Majority Leader John Boehner (R., Ohio) feared trying again too soon and risking a fatal stumble over another procedural obstacle. Already facing conservative challengers in caucus elections Friday, neither he nor Republican Whip Roy Blunt of Missouri had much appetite for twisting arms on a subject like Vietnam.
Republicans, as well as Democrats are more protectionist than before the mid-terms. Moreover, the preceding story suggests that it is not just that economic populism and protectionism played well in the mid-terms. There clearly has been a loss of respect for a President who was a liability in the election, and who is a lame duck. This will also work to reduce his ability to push a trade reform agenda.
Here is Steven Weisman from the New York Times on Wednesday (G.O.P. House Leaders Withdraw Vietnam Trade Bill , Nov 15):
...Though the bill could come back to the House before the end of the year, some legislative aides said that its future was in doubt, along with that of several other bills lowering trade barriers with poor countries in Asia, Africa and Latin America. The administration remained hopeful, at least on the surface....
The unsettled atmosphere was another sign of the fraying of the pledges of bipartisan cooperation after last week’s midterm elections, as well as a reflection of lingering sensitivities over Vietnam. Most of all, it seemed to be a sign that whatever consensus had existed for free trade bills was also starting to crumble.
A spokesman for Representative John A. Boehner, the Ohio Republican who is House majority leader in the waning weeks of this Congress, said there was a “possibility” that the bill could come back later in the lame-duck session. He said the bill was withdrawn because Democrats were turning against it...
House leaders immediately expressed confidence that it would pass as early as Tuesday under regular rules enabling it to be approved by a simple majority. But the “yes” votes appeared to be melting away under a sustained campaign by organized labor and other opponents who argue that the bills cost American jobs.
Kevin Madden, the spokesman for Mr. Boehner, said that the majority leader learned that an effort would be made by House Democrats to send the Vietnam measure back to the committee level, and that the maneuver might succeed. He said Democrats were being pressed by labor groups and anti-trade groups that backed them in the election.
But Democrats said the bill seemed to be a victim of disarray in Republican ranks, and antipathy toward the departing chairman of the House Ways and Means Committee, Representative Bill Thomas of California, an ardent advocate of free trade...
Democrats said they had asked the Republican leadership to delay the vote Monday night until Tuesday to allow dozens of lawmakers to return. But they said they were rebuffed by Mr. Boehner’s and Mr. Thomas’s offices, which expressed confidence that the necessary two-thirds votes were available...
The Vietnam bill, however, had the support of crucial Democrats, including the future House speaker, Nancy Pelosi of California, and Representative Charles B. Rangel, the expected next chairman of the House Ways and Means Committee, as well as the Republican leadership.
Election Alters Trade Climate. Democrats Eye Environmental, Labor Clauses. (Peter S. Goodman, Washington Post, Nov 11):
As Democrats prepare to take control of Congress, incoming leaders are planning to insert labor and environmental protections into pending trade treaties and to demand that the Bush administration adopt similar measures in future pacts it negotiates, congressional aides and government officials said yesterday.
The Democrats plan to insert restrictive provisions into two pending trade deals with Peru and Colombia, measures that would limit duty-free access to the U.S. market for goods made in those countries if factories are found to use child labor or deny workers the right to organize unions.
Democrats Set to Press U.S. Automakers' Case ( Sholnn Freeman, Washington Post, Nov 14): "Allies of the American auto industry, brought to power in last week's elections, are set to challenge the Bush administration to level the playing field for U.S. manufacturers..."
Revised through November 15
How Bad Trade Deals are Destroying the Middle Class
This is from “Skeptical Economist”.
So far, our global economic failures show up mainly as discontented workers in areas hard hit by import competition. However, the real problems (and the worker problems are quite real) are considerably worse
The United States as a nation is far from self-sufficient or anything close. Back in Kennedy era, imports and exports were in the range of 4 to 5% of GDP. The US economy was closes to autarkic. These days comparable numbers are imports are 16.22% of GDP and exports are 10.46% of GDP. Per se, there is nothing wrong with trade growing as a percent of GDP. However, the brutal reality is that our nation can no longer pay its bills. Imports of goods are almost double exports of goods. We enjoy a small (and shrinking) surplus on services and are now in deficit for payments (profits received from overseas US investments versus profit earned by foreign investment in the US).
If you could only pay half of your bills, would you think you were doing well? Would that be OK? Might some question of economic failure arise? Wouldn’t virtually every American see it that way? Yet, when it comes to our country, it is somehow OK. Of course, it is not.
If you could only pay half of your bills, your debts would be soaring. Guess what? So are the debts of the United States. Of course, the national debt is growing and more than 50% owned by foreigners. However, the debts of ordinary Americans are rising as well and a growing percentage are owned by foreigners as well.
The trade debate is usually depicted in terms of “cramped, narrow minded, locally oriented protectionists” versus “visionary, open minded, free trading globalists”. This caricature is largely correct. However, that doesn’t mean the protectionists are wrong. With America going broke, they are at least on the right side of the issue..
Thomas Friedman demonstrated again the cluelessness of our elites on trade today. His piece “China: Scapegoat or Sputnik” repeated the usual mantra about education solving our problems. His actual words were “health care, portability of pensions, entitlements, and lifelong learning”. Nice ideas, but will they really help middle aged workers without jobs? No, of course not, but the deeper problem is they won’t fix our trade problems either. We will simply go broke faster. What words were missing? How about “overvalued currency”, “RMB versus the dollar”, “China’s lack of currency flexibility”, etc. All notably missing.
Posted by: John Konop | November 19, 2006 at 03:42 PM