Congress And Bush Clash On Trade

s the Bush administration continues to extol the virtues of its free trade policies, it
has become increasingly clear that Congress is concerned about the direction and results of those
policies and, as a result, the administration’s trade agenda faces some rough sledding. The House
leadership flexed its muscles when it voted to rewrite the rules for considering the US/Colombia
Free Trade Agreement (FTA) and set the agreement aside in order to address what House Speaker Nancy
Pelosi, D-Calif., said will “put the economic concerns of the American people first.” She made it
clear that the president cannot expect to have free reign in the area of international trade in
these times of economic uncertainty.

In addition, the senior Democratic members of the House Ways and Means Committee sent
President Bush a pointed letter saying the United States cannot tolerate a continuation of what
they call a “historically high and unsustainable trade deficit.” They said the administration needs
to place less emphasis on promoting FTAs and pay more attention to enforcing existing agreements
and be more attuned to the impact the administration’s trade policies are having on US jobs. On the
Senate side, Finance Committee Chairman Max Baucus, D-Mont., has said action on ratification of
pending FTAs will be held up until something is done about legislation expanding trade adjustment
assistance for workers who lose their jobs to import competition.

Administration’s Trade Record

The comments were triggered after the administration sent Congress its National Trade
Estimate for 2008, which painted an optimistic picture of what the administration has accomplished
in the past seven years and what lies ahead in the remaining year of George W. Bush’s term in
office. US Trade Representative Susan C. Schwab said the report “lays out the successes and ongoing
challenges to free and open trade for American goods and services.”

In the area of accomplishments, the report cites FTAs reached this past year with Peru,
Colombia, South Korea and Panama. It also says the administration was successful in cases launched
against China before the World Trade Organization (WTO) that were designed to protect intellectual
property rights. Also on the plus side, the report says the United States has succeeded in getting
China to remove some prohibited subsidies. As another important achievement, the report cited a
multinational anti-counterfeiting agreement with key trading partners to set a higher international
standard for attacking counterfeiting and trademark violations. Looking at continuing efforts, the
report cited the importance of the US role in promoting the Doha Round of trade liberalization
negotiations, which remains “a top US trade priority.” The administration believes a multilateral
agreement in the WTO offers the potential to generate economic growth in the United States and
around the world and to help lift millions of people out of poverty.

What The Democrats Want

However, the Democratic leadership does not seem particularly impressed by the
administration’s litany of accomplishments and what it sees down the road. Pointing out that the US
trade deficit increased by 80 percent between 2001 and 2007, the congressmen said the
administration has “mismanaged America’s trade policy,” and they urged the administration to take
some “long overdue steps to remedy the situation.” They called for immediate consultations with the
major trading nations such as Canada, China, the European Union, Japan, Mexico and Korea, with a
goal of reducing various trade barriers standing in the way of US exports of manufactured goods,
services and farm products. While praising the successful WTO cases involving China, they cited
additional actions that need to be taken.

The letter concluded by saying, “Without vigorous enforcement, trade agreements do not
benefit US companies, workers, farmers or consumers, and Americans deserve a trade policy that
holds trading partners to the bargain negotiated and produces real benefits for the United States.”

The Democratic leadership in both the House and the Senate for all intents and purposes has
blocked consideration of the US-Colombia FTA and any others for this year, and possibly longer,
because they feel President Bush had not properly consulted the congressional leadership and has
been unable to address issues raised by organized labor. They are saying the administration’s
thrust toward free trade is not going over very well with them and they have some higher
priorities. Further action on any FTAs could very likely be held off until the new administration
takes over. The Democratic presidential candidates want some “time put” on trade agreements in
order to ensure that they are benefiting working Americans, and the economy in general. The
presumptive Republican candidate, Sen. John McCain strongly supports free trade.


Trade Adjustment Assistance

As the debate over international trade issues heats up, and the Democratic leadership of
Congress asserts a more active role, the outlook for enactment of legislation expanding the Trade
Adjustment Assistance Program (TAA) is improving. TAA legislation has been promoted for some time
by textile-state members of Congress in view of the industry’s import-related job losses, but the
administration has been cool to it, and as a result, the legislation has not gone anywhere. The
effort got a shot in the arm when House Speaker Pelosi and Senate Finance Committee Chairman Baucus
said they will hold action on FTAs hostage until legislation expanding TAA is enacted. The measures
pending in Congress would expand TAA eligibility to workers whose jobs move to a nation that does
not have a preferential trade agreement with the United States. It also would speed up the
timetable for approval of applications for assistance and substantially increase funding for the

Consumer Agency

More Involved In Textile Issues

As Congress is intent on expanding the authority and funding for the Consumer Product Safety
Commission (CPSC), the agency is likely to become more involved in some textile regulations.
Following the flap last year over lead-tainted toys and other unsafe consumer products, Congress
has been throwing money at the agency and providing it with new tools to protect consumer safety.
After years of budget cuts, Congress last year added $17 million to the agency’s $63 million annual
budget, and more is on the way this year. This means CPSC will be able to significantly increase
the number of its technicians, statisticians, legal experts and field representatives. A proposed
new public-searchable database for consumer complaints is strongly opposed by many manufacturing
industries and CPSC Chairman Nancy Nord, who believes the database requests could overwhelm the
agency. At the present time such data are available only through Freedom of Information Act

All of this can be both good and bad news for textile manufacturers. On the plus side,
expanded regulations and more resources for policing compliance would apply to imports as well as
domestic products, and US manufacturers have frequently complained that they are at a competitive
disadvantage when imports do not meet US standards. CPSC already has announced new rules covering
the flammability of apparel, something the textile industry supports, because it will enhance
consumer safety, and the new techniques for testing are safer for textile-mill technicians.

CPSC also has published a proposed furniture-fabric flammability standard that is not going
over very well with textile and furniture manufacturers and fire marshals. The CPSC proposal, as
currently written, could have an impact on the cost, comfort and style of upholstered furniture.
And, in another area of concern to textile manufacturers, Congress is likely to fund a study of the
possible dangers of formaldehyde in textile and apparel products.

May/June 2008