WorldCity Business Magazine

Changing of the guard

by Jeffrey Sparshott

Are the odds stacked against Susan Schwab as the new U.S. trade representative?

President George Bush tapped Susan Schwab to be the third U.S. trade representative of his administration. The 51-year-old will have a full agenda and challenges equal to her predecessors. Unfortunately, she also will have precious little time and face an increasingly skeptical Congress even if she manages to hold the White House’s trade agenda together.

Schwab replaces Rob Portman, the highly respected and ultra-capable former congressman from Ohio. Portman moved the White House’s Office of Management and Budget to help shore up Bush’s domestic agenda.

Schwab, too, is quite capable. She spent most of the 1980s as a trade policy specialist and legislative director for Sen. John Danforth, a Missouri Republican. There she helped shape major trade bills, including the Trade Act of 1988, Congress’**first comprehensive trade package of the post-war era. It sharpened measures the United States still uses to retaliate against trade partners. It also gave the White House the fast-track authority it used to negotiate the Uruguay Round, which established the World Trade Organization, and create the North America Free Trade Agreement, or NAFTA.

Schwab moved on to the Commerce Department during the administration of the elder President Bush, and then to electronics manufacturer Motorola, where she helped plan and implement the company’s strategy in China and other parts of Asia. Her last job before returning to the government was at the University System of Maryland (USM), where she was dean of the School of Public Policy and then president and chief executive of the USM Foundation.

It is a varied career blending politics, corporate calculation and the deep thinking of academia. She returned to the executive branch in November 2005 as deputy U.S. trade representative and that experience apparently served her quite well. She promptly helped wrap up free-trade deals with Peru and Colombia, and reached terms with Canada on one of the most intractable trade disputes in decades softwood lumber. Schwab also has picked up the ball on the World Trade Organization’s Doha Round of negotiations.

Still, there was some consternation when Bush moved Portman out of the trade office.

“This transition certainly has not come at the best time, given ongoing trade negotiations in the World Trade Organization and elsewhere,” said Sen. Max Baucus, a Montana Democrat. “But transitions give us a momentary pause to reflect. They give us an opportunity to think about where we are and the direction we are heading. Frankly, I think we have reason to be seriously concerned.”

Baucus said that the Doha talks are sputtering and noted that Trade Promotion Authority expires in mid-2007. Without TPA, which allows the White House to negotiate trade deals and submit them to Congress for a yes-or-no vote, no trade ambassador can effectively negotiate major trade deals. Both Portman and Commerce Secretary Carlos Gutierrez have said that Congress should renew TPA, but that is unlikely.

“As I’ve said recently, I do not expect Trade Promotion Authority to be renewed beyond June 30, 2007,” said Sen. Charles Grassley, an Iowa Republican and chairman of the Senate Finance Committee, which has jurisdiction over trade.

With Doha running out of time and energy, that leaves the administration with its bilateral deals. Talks with Thailand have been suspended and negotiations with five southern African countries proved premature, leaving the sub-Saharan nations to settle for lower-level ties. That leaves Schwab to oversee deals with South Korea, Malaysia and Panama on an incredibly tight time frame if they are to come in under the TPA deadline. Schwab also would have to get those deals through Congress after testing the waters with the Andean nations and Oman.

Congress may prove a tougher challenge than hard-nosed negotiators across the table.

“The most pressing problem we face in trade today has been the erosion of America’s traditional bipartisan support for open trade and the pro-trade agenda,” Schwab acknowledged at her confirmation hearing.

That support is likely to remain elusive, especially if Democrats increase their power during upcoming elections. They will be in no mood to grant Bush new trade authority. That would leave trade enforcement measures like WTO cases against China or Europe as one area where Schwab could build some bridges across the aisle. But then the Bush administration would have little to show for its last two years in office.

Despite the formidable tasks before her, not everyone is entirely pessimistic.

“I’m confident that Ambassador Schwab will effectively meet each of the many challenges she’ll face as our next trade representative. Her skills, experience, and positive energy make it evident that she’s the right person for the job,” Grassley said.