Thursday, February 15, 2007

Will Congress extend Bush's trade authority

Will Congress extend Bush's trade authority? There's now stronger opposition among Democrats to renewing his TPA
Business Times - 15 Feb 2007
MOST political analysts have concluded that the election of the new Democratic-controlled US Congress in November 2006 has strengthened the power of the protectionist forces on Capitol Hill.
With leading Democratic lawmakers advancing a populist economic agenda, the conventional wisdom in Washington has been that US President George W Bush would not be able to win enough support in Congress for renewing his trade promotion authority (TPA), which expires on June 30.
And the loss of the TPA - first called 'fast track' - would mean Congress would be able to make changes in trade deals negotiated with other countries, a process that would make it less likely that Washington could conclude such agreements since US trade partners would be reluctant to negotiate with the American administration.
But President Bush and his aides seem to be projecting a much more bullish mood when it comes to getting the TPA approved by the new Congress. With leading business executives applauding her, US Trade Representative Susan Schwab insisted on Monday that a failure by Congress to renew the TPA would harm US global economic position and make it impossible to restart the Doha Round of negotiations to liberalise global trade.
'Failure to renew trade promotion authority would signal to the world that the United States has lost faith in Doha. We must not let that happen,' Ms Schwab said in her address at an event organised by leading American business groups which support extending the TPA and energising the Doha talks.
And Ms Schwab added in a press conference that Washington 'must be a force to reverse' signs of growing trade protectionism around the world. 'The United States needs to be in the game with trade promotion authority in hand, not on the sidelines,' she stressed.
In addition to the need to conclude the Doha Round, the Bush administration and its supporters in the business community note that renewal of the TPA is necessary to conclude bilateral free-trade agreements with Malaysia and South Korea.
While pro-free trade activists would be content to see the TPA being renewed for another year, Ms Schwab proposed on Monday that it be extended through 2009 and could therefore be transferred to Mr Bush's successor in the White House, whether he or she is a Republican or a Democrat.
'I think the broader the better, the longer the better,' Ms Schwab said during her press conference.
Her proposal could help gain more support for the extension among Democratic lawmakers, including those like Senator Hillary Clinton from New York and Senator Barack Obama from Illinois who are running for the presidency in 2008.
And the two leading Democrats who chair powerful committees that could have a major impact on the outcome of the debate, House Ways and Means Committee chairman Charles Rangel, a Democrat from New York, and Senate Finance Committee chairman Max Baucus, a Democrat from Montana, have indicated that they support in principle the extension of the White House's trade authority.
But the majority of the Democrats in the House of Representatives had voted against the approval of the TPA in 2002 that ended up passing by a 215-212 vote. Only 25 Democrats had joined 190 Republicans in backing the bill. If anything, there is probably stronger opposition against renewing the TPA among Democrats in the newly elected House.
At the same time, anti-free trade Republicans who voted in favour of the bill as part as a way of projecting their support for Mr Bush would be less inclined to do that this year when Mr Bush is so unpopular among the general electorate.
In a way, while the Democrats do not see any reason why they should help Mr Bush win a legislative victory, the Republicans are not in a mood to help a politically weak president who in any case will not be able to assist them in their respective House races in 2008. Moreover, most opinion polls indicate that the majority of American voters are either sceptical or hostile towards the need to accelerate momentum towards free trade which they blame for many of America's economic woes.
The White House may be counting on the support of many Democratic senators, including Mrs Clinton, Mr Obama and Mr Baucus who share the free trade principles that were embraced by Bill Clinton when he had occupied the White House.
But some of the new cadre of Democratic senators, including Jim Webb from Virginia and Sherrod Brown from Ohio, were elected in November by running against the free trade agenda and promising to pass legislation that would help make trade more 'fair'.
At the minimum, the Democrats are demanding that the Bush administration include in trade agreements stronger provisions that call for workers' protection.
In his annual economic report to Congress, Mr Bush has also called for removing trade barriers and energising the global trade talks and urged Congress to extend his TPA. 'This authority is essential to completing good trade agreements,' Mr Bush wrote in the introduction to the report. 'The Congress must renew it if we are to improve our competitiveness in the global economy.'
Against the backdrop of rising US trade deficits, rising competition from rapidly growing China and India, and intensified global trade tensions, President Bush may be facing a 'mission impossible' as he tries to get his TPA extended before June.
Copyright © 2005 Singapore Press Holdings Ltd. All rights reserved.

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