Democrats Call for Fundamental Shift in U.S. Trade Policy

By Andrzej Zwaniecki
USINFO Staff Writer

Washington – Democratic lawmakers say the Bush administration needs to enforce U.S. trade laws more forcefully and negotiate more equitable trade deals to address the huge U.S. trade deficit and protect the welfare of U.S. workers.

During a February 14 hearing, Democratic members of the Ways and Means Committee, joined by some Republicans, expressed frustration over what they perceive as the administration’s inability to address the growing U.S. trade deficit and unfair competition from other countries.

Trade numbers released by the Commerce Department a day earlier showed that the U.S. trade deficit of $764 billion in 2006 hit another record for the fifth year in row.

In a letter to President Bush published February 13, Democratic leaders of the House of Representatives called for a “fundamental shift” in U.S. trade policy to address the deficit and improve U.S. workers’ job and wage prospects.

During the hearing, several Republican members of the committee joined their Democratic colleagues in demanding that the administration fight more vigorously to challenge foreign trade barriers and unfair trade practices, bring unfair trade cases to the World Trade Organization (WTO) without hesitation and pursue meaningful trade liberalization opportunities through the Doha round of global trade talks.

U.S. Trade Representative Susan Schwab testifying before the committee defended the administration’s trade record. A common misperception, Schwab said, is blaming unemployment on trade where other factors contribute to the deficit. An actual picture of the benefits the United States derives from trade is hidden behind trade deficit numbers, she added.

Schwab said 90 percent of the increase in the deficit represented higher prices of petroleum imports and that U.S. exports grew by nearly 13 percent in 2006 over the previous year.  She said that free-trade agreements (FTAs) substantially boost U.S. exports. For example, those to Israel increased 325 percent, to Mexico 223 percent, to Chile 150 percent and to Bahrain 40 percent since FTAs with those countries entered into force.

But several Democrats on the committee, including its chairman, Charles Rangel, said that U.S. trade negotiators must make sure that benefits of trade are shared broadly by incorporating in FTAs strong, enforceable provisions on labor rights based on core international standards.

Schwab said she views FTAs as the “best single vehicle” to further improvements in labor and environmental conditions around the world.

In the countries such as Bahrain, El Salvador, Honduras, Guatemala, Nicaragua and Oman where FTAs with the United States have entered into force, related labor standards are being enforced and labor conditions have improved, Schwab said.

She said U.S. negotiators have been working hard to put solid labor and environmental provisions into FTAs.

Rangel interjected that in the future, negotiators probably will have to work even harder.

Democrats have pressured the administration to include stronger worker protection provisions in the FTAs with Colombia and Peru that already have been signed and in the Panama FTA that has been finalized but not signed yet.

Schwab said the administration believes this can be done without formally renegotiating the pacts, but she acknowledged there is still a “substantial disagreement” between the administration’s position and Democrats’ stance on how to handle those issues.

She pledged to work with Congress on bridging the gap.

Experts say that language on such labor standards as the right to associate and to bargain collectively, prohibitions on child labor and forced labor, and employment nondiscrimination is likely to be included in any legislation to renew trade promotion authority (TPA).

TPA, also known as “fast track,” gives the U.S. president the power to submit trade deals to the House of Representatives and Senate for up-or-down votes without amendments. It also defines objectives that U.S. negotiators must strive for when they negotiate FTAs. President Bush recently requested the renewal of the TPA, which expires in July. (See related article.)

Schwab said that current and future presidents will need TPA to negotiate regional and bilateral agreements because few countries will negotiate with the United States without it.

A few days prior to her appearance before the committee, she said that failure to renew TPA would “signal to the world that the United States has lost faith in Doha.”

But at the hearings she reacted coolly to the idea of a one-year extension of TPA supported by the U.S. business community. She said any extension should accommodate not only a possible Doha deal but also other types of future trade agreements.

For additional information on U.S. trade policy see USA and WTO, and the eJournal USA Benefits of Trade, Costs of Protectionism.