Trade Wars Become the Thrilla on the Hill
Strange allies line up for a high-stakes fight
When U.S. Trade Representative Charlene Barshefsky testified before the Senate Finance Committee last week, she found herself hit from both sides--by the same senator. China's "reckless threat to use force," warned Chairman William Roth, means that the Clinton administration's effort to secure Senate support for China's admission to the World Trade Organization "is not a foregone conclusion." On the other hand, the administration's "ambivalence on trade," Roth warned, is impeding "progress on trade."
So which is it? Too much Adam Smith orthodoxy or not enough? Senator Roth is not alone in suffering such internal division. Not since the War of the Spanish Succession have alliances shifted so confusingly as in this year's Capitol Hill trade wars. Election politics adds to the turmoil. But, says one administration official, "the issues involved are so supersensitive you don't need an election year to make things difficult."
The ostensible battle lines are familiar: Favoring more trade deals are export-hungry businesses--large and, increasingly, small--the Clinton administration, and all four major presidential candidates. Opposing are labor, environmental, and human-rights groups that fear the deals erode standards at home and abroad.
But things rapidly get more complicated. Take the impending fight over last Thursday's ruling by the WTO that the U.S. government can't give certain tax benefits to U.S. companies that export. "This one could be big," says former Clinton official Laura D'Andrea Tyson, who notes that the "same businesses that are the most aggressive WTO supporters are also the biggest beneficiaries" of the tax break, worth an estimated $4 billion a year to companies such as General Motors and Boeing. That could complicate renewal of U.S. membership in the WTO--a vote likely to be high on Congress's spring agenda. Ways and Means Committee Chairman Bill Archer dismisses failure to renew as "unthinkable." Still, says U.S. Chamber of Commerce President Tom Donohue, "there will be a lot of banging of pots and pans" before the dispute is resolved with the European Union, which is smarting over its losses in earlier fights over beef hormones and bananas.
Africa first. Next on the agenda is a bill to reduce U.S. barriers to imports from sub-Saharan Africa and the Caribbean Basin. Free-trade advocates had hoped the bill could set a climate of compromise, with normally trade-wary liberals such as Rep. Charles Rangel finding common ground with GOP free traders. But many Democrats, including some Congressional Black Caucus members, see the bill as threatening U.S. textile workers. Rep. Jesse Jackson Jr., an aide says, is simply "totally opposed." Jackson, sponsor of a broad African aid package, says the House measure would mostly benefit corporate elites and make Africa a mere stop-off for goods transshipped by China to avoid U.S. quotas. Meanwhile, over in the Senate, GOP conservatives such as Trent Lott and Jesse Helms, both from big textile states, join unions in opposing the measure.
The AFL-CIO, however, is sidestepping that fight, saving its big guns for the toughest fight of all: granting permanent U.S. trade benefits to China. President Clinton last week renewed his unconditional support for China's admittance to the WTO. But China's renewed truculence toward Taiwan (Page 34) makes the sales job tougher still. So did recent remarks to the AFL-CIO by Vice President Al Gore that were widely interpreted (incorrectly, say both Gore and the unions) as implying that if a vote were delayed until he became president, he would push for tougher conditions. Laborites find common cause on this issue with conservatives who condemn China's human-rights record. Barshefsky, however, points out that a negative vote by Congress would not keep China from joining the WTO.
The AFL-CIO points to a poll showing that 65 percent of the general public--and 75 percent of Republicans--oppose granting China permanent trade rights as a sign that both parties may want to avoid a vote this year. Still, many a member looks to the business community for financial support in the fall elections. "This is a very important vote, and people on the Hill better not walk away from this," warns Donohue, who argues that the China deal is important not just to business but to U.S. security. "We're going to pull out all the stops--and we're going to win that one." In the end, money may well talk the loudest. But in the meantime a lot of other voices will be raised, and sometimes they may seem to be arguing with themselves.
This story appears in the March 6, 2000 print edition of U.S. News & World Report.