Commentary

Deal or No Deal?

Saturday marked the one-year anniversary of the much celebrated “bipartisan deal on trade.” And all Nancy Pelosi and her fellow lawmakers have to show for it is a small agreement with Peru and an acrimonious breakdown of the rules that governed good trade policy for three decades.

In December of last year, the trade agreement with Peru passed the House of Representatives by 285 to 132, but it was relatively small potatoes, and unions hadn’t campaigned much against it.

When it came time for the much more important Colombia deal — one that unions fought tooth and nail on the supposed grounds that the Colombian government was not doing enough to protect union leaders from murder — the Democrats balked.

[T]he Colombia deal is unlikely to result in any significant job losses in the United States. ”

Never mind that the Colombian government has taken extraordinary strides in this department — decreasing these murders by over 80 percent since 2002 — Democrats still oppose the deal.

There’s no question that the administration’s political strategy was clumsy: Bush sent the Colombia deal to Congress over the objections of the Democratic leadership, who warned that Congress was “not ready” for it.

But it wasn’t clear that the Democrats would ever stop stalling, and sure enough, House Speaker Nancy Pelosi changed the game to make sure they didn’t. Since 1974, trade agreements have been submitted to Congress under expedited rules, with no possibility of amendment, and Pelosi amended the house rules to remove the time limit on consideration, leaving the deal in limbo to this day.

Democratic leaders scuttled the Colombia deal so thoroughly that some now wonder if they’ve inadvertently become victims of their own success: Just when they might have been poised to take back the White House, they’ve called into question the President’s “fast-track” negotiating authority altogether.

Pelosi’s decision is already having a chilling effect on other potential trade deals, raising questions from other World Trade Organization members about the credibility of the U.S. trade representative as a negotiating partner. And the administration is holding off on sending the trade deal with Korea to the Hill, a far bigger deal for American consumers and exporters.

When the Democrats told Bush that they wanted a “new direction” in trade policy after regaining the majority in Congress, there was little doubt that they meant more emphasis on labor rights and environmental protection, and less leeway for the administration to make deals that benefit American consumers and exporters.

While congressional oversight of trade deals sounds like a good thing, in practice it allows the narrow concerns of individual constituencies to trump policies that benefit the nation as a whole. A presidential administration, on the other hand, can take a broader perspective and promote open trade and free markets.

In vain hopes of seeing trade deals passed, the Bush administration agreed to Democratic demands for labor, environmental protection, and other provisions important to their party base. Reporters at the time heralded the deal as a breakthrough in partisan relations and a new era of cooperation on trade.

Not so much.

According to his aides, President Bush is still keen to see the Colombia trade agreement through Congress. And Pelosi is apparently keen to get movement on trade-adjustment assistance — the federal program that provides extra welfare to workers who lose their jobs because of import competition — and other social programs before allowing Congress to vote on Colombia or any other trade deal.

But the Colombia deal is unlikely to result in any significant job losses in the United States. Critics of liberalization often tell us trade is not a level playing field: Look at the deficit, we buy more from them than they buy from us.

The Colombia agreement is exactly the kind of deal that would address those fears. The U.S. currently imports most goods from Colombia duty-free, and Congress approves those conditions every year. By making those preferences permanent and bilateral, the deal would allow American exports to enter Colombia duty-free. So there’s no reason to hold up the agreement on the grounds that it threatens jobs.

The fact is that 95 percent of the world’s consumers live outside the United States. U.S. exporters employ millions of Americans, and they all share an interest in selling their goods abroad. All the more so with the dollar as weak as it is.

But still the Democrats in Congress refuse to work with the White House to pass significant trade deals. How long will we have to wait for that new era of cooperation?

Sallie James is a trade-policy analyst at the Cato Institute.