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To Trade or Not to Trade

January 12, 2016
In the 114th Congress, roughly sixty percent of the bills that have reached the floor of the Senate came through the Finance Committee.  The legislation spanned a variety of issues within the committee’s jurisdiction, ranging from tax extenders to the Highway Trust Fund reauthorization; yet, the most interesting political fight to be had this summer was over granting President Obama fast track authority in trade negotiations.  As the international trade intern for the majority staff of Senate Finance, I got to see first hand how the bill evolved and eventually passed both houses and was signed by the president.  I learned a great deal from the process and developed three main conclusions.

By Griffin Rubin

In short, here is the background of the situation.  The United States is one of 12 current signatory countries to the Trans-Pacific Partnership (TPP), a free trade agreement that has yet to be ratified. If the agreement goes through, it would include countries such as Canada, Mexico, and Japan and have 40% of the world’s economy party to the agreement.  The President of the United States has generally had fast track authority, also known as trade promotion authority (TPA), which allows the president to present Congress with a trade agreement that can have no amendments attached to it and no opportunity to filibuster the deal.  Trade promotion authority most recently expired in 2007.  Thus, my boss, Senator Orrin Hatch, along with Senator Ron Wyden, led the charge on the TPA bill as Chairman and Ranking Member of the Senate Finance Committee, respectively.  Rep. Paul Ryan headed up the same effort in the House as Chairman of the Ways and Means Committee.  Ultimately, the bill was signed into law after a series of political maneuvers and deals that  included the passage of Trade Adjustment Assistance (TAA). It reauthorized government assistance to those workers adversely affected by globalization and international trade.

My first major conclusion is how much influence Democratic special interests have over elected officials in Washington, specifically the AFL-CIO.  This labor rights organization vehemently opposed TPA and opposes TPP to protect “the hopes and aspirations of the working people of America.”  Groups like the AFL-CIO, other Democratic interest groups, and Democrats in general denounce the influence of money and special interests in politics, especially when it comes from the financial sector and is given to Republicans.  Democrats concerns about this influence of money from the financial sector are valid because the actions of GOP members of Congress reflect the influence. However, democrats exhibited this summer the very behavior that they criticize in republicans. For example, the AFL-CIO exerted a similar kind of influence over congressional Democrats in classic rough and tumble union fashion. The union boss, Richard Trumka, began by freezing all campaign contributions to PACs until the vote on TPA.  Then the AFL-CIO coordinated massive phone drives and other forms of political pressure on perceived swing votes in Congress.  Finally, any swing votes that decided to vote for TPA were essentially threatened with the guarantee of a primary challenger in the 2016 elections.

My hope is that at this point you understand from my comments that this is too wordy. It makes your writing cumbersome and difficult to understand. Consider revising to keep your ideas concise and clear. You have great ideas and your observations are interesting. Don’t let what you have to say get hidden among extra, unnecessary verbiage.

While this aggressively political strong-arming was mainly done in the House, I was still able to observe it up close and personal.  To watch one of the most powerful support groups of the Democratic Party treat many congressional Democrats like pawns really led me to the conclusion that although money has quite significant influence in politics today, the Democratic Party’s stance that it is only Republicans who are bought and paid for by special interest groups is blatantly false.

Additionally, it became apparent that one of the most significant policy shortcomings of the vast majority of congressional Democrats is trade.  It is one of the most divisive issues within the Democratic Party, and the reasoning behind the pervasive opposition to TPA in this instance is short sided and unrealistic.  Excluding political pressure from heavy-handed political interest groups such as the AFL-CIO, two main reasons caused the Democratic caucus to oppose the move toward expanded free trade. 

The first is the notion that free trade relocates American jobs, specifically manufacturing jobs, to other countries such as Mexico.  In the short term, this is a distinct possibility, as demonstrated by NAFTA.  However, over time, additional jobs will be added in the export field, which will pay 15 to 20% more on average than jobs focused on domestic production, according to the Council on Foreign Relations.  These new jobs will help make up for any possible initial job loss.  Additionally, to advocate against free trade in favor of late 19th century “fat cat” protectionist tariffs is an alarming development in the ideology of Democrats.  Citing a growth in U.S. manufacturing jobs of 800,000 in the four years after NAFTA was ratified, the CEO and chief economist of the National Association of Manufacturers write, “The reality is that protectionist policies do not work, and free trade does not kill jobs.  It grows jobs and expands opportunities for manufacturers in the United States.”  Using the argument of losing U.S. jobs due to free trade in light of the evidence is shaky at best, deceptive at worst.

The second is that Democrats weren’t getting assurances about certain aspects of the trade negotiations.  Discussions of trade secrets are crucial in trade negotiation to get the best deal for the most partners, but the Democrats were not appeased with the amount of information being received on their end as to the dealings.  They attempted to attach amendments in regard to labor standards, climate change, investor-state dispute settlement, and other issues woven into the fabric of the Democratic Party.  The lack of guarantees from the TPA bill generated a great deal of negative opinion and “nay” votes from congressional Democrats.  However, had these issues been added to the TPA as requisite for a deal to be agreed to, the whole TPP would have collapsed.  Congressional requirements of certain levels of labor standards, for example, would have been quite detrimental to the negotiating ability of the U.S. negotiators, and it could have caused certain key signatory countries, such as Vietnam, to back out of the trade negotiations.  While it is noble for congressional Democrats to stick to their principles, attempting to assert those ideals in the form they were presented would have sunk any chance of the TPP being finalized.  The need for surgical and strategic precision is absolute in trade negotiations, and the congressional Democrats were willing to use a blunt instrument solely out of principle.

Finally, stemming from the previous conclusion, I found that congressional Democrats trust President Obama much less than one would expect.  Granted, President Obama has not done much outreach to congressional Democrats during his tenure in the Oval Office.  Still, when the President of your own party makes a trip to Capitol Hill, it’s serious.  And to rebuke him on the floor of the House by shooting down the initial TPA/TAA package is even more serious.

As stated earlier, congressional Democrats were seeking assurances about certain items in the trade negotiations such as labor standards and climate change.  The TPA outlines the trade objectives Congress would want to see in a trade deal, but who then takes those objectives and actually negotiates?  That would be our Commander in Chief and his United States Trade Representative (USTR), Michael Froman.  President Obama and USTR Froman go way back, all the way to Harvard Law when Froman was part of the same staff of the Harvard Law Review as Obama.  He’s a lifelong Democrat like Obama, and the Office of the USTR is stock full of Obama appointees and Froman hires that have solid Democratic credentials.  Even on USTR’s website, the trade objectives for the TPP negotiations are listed, including items such as labor and environmental standards.  These objectives are very much in line with current Democratic ideals.

So what does this say about congressional Democrats’ relationship with President Obama and his administration?  It seems only logical that they do not trust Michael Froman and Barack Obama to adequately represent the Democratic Party’s ideals even though they are running the negotiations

The degree of force and coercion used by Democratic special interests, the divisive thinking and seemingly muddled reasoning behind Democratic thoughts on trade, and the lack of trust in the incumbent president of their own party are the three main takeaways for me after working for the majority staff of the Senate Finance Committee this summer.  While the negotiations are reaching the final (and most difficult) points, the deal still has a bit to go as it must pass Congress once the negotiations are complete.  Needless to say, seeing how the trade dealings turn out will display the United States’ desire to be more active in trade negotiations worldwide and give people a peek into how the Transatlantic Trade and Investment Partnership (U.S.-E.U. free trade agreement) will be formed and negotiated.

 

Sources:

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  • <h3>HUD State of the Cities Data Systems</h3><p><strong><img width="200" height="200" alt="" src="/live/image/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg" class="lw_image lw_image482 lw_align_left" srcset="/live/image/scale/2x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 2x, /live/image/scale/3x/gid/4/width/200/height/200/482_hud_logo.rev.1407788472.jpg 3x" data-max-w="612" data-max-h="613"/>The SOCDS provides data for individual Metropolitan Areas, Central Cities, and Suburbs.</strong> It is a portal for non-national data made available through a number of outside institutions (e.g. Census, BLS, FBI and others).</p><p> Quick link: <a href="http://www.huduser.org/portal/datasets/socds.html" target="_blank">http://www.huduser.org/portal/datasets/socds.html</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>
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  • <h3>National Bureau of Economic Research (Public Use Data Archive)</h3><p><img width="180" height="43" alt="" src="/live/image/gid/4/width/180/height/43/478_nber.rev.1407530465.jpg" class="lw_image lw_image478 lw_align_right" data-max-w="329" data-max-h="79"/>Founded in 1920, the <strong>National Bureau of Economic Research</strong> is a private, nonprofit, nonpartisan research organization dedicated to promoting a greater understanding of how the economy works. The NBER is committed to undertaking and disseminating unbiased economic research among public policymakers, business professionals, and the academic community.</p><p> Quick Link to <strong>Public Use Data Archive</strong>: <a href="http://www.nber.org/data/" target="_blank">http://www.nber.org/data/</a></p><p>See all <a href="/data-resources/">data and resources</a> »</p>