WorldCity Business Magazine

(1) Washington Report - CAFTA-DR "New Deal" on Trade?

by Marcela Sanchez

In August, Peruvian President Alan Garcia stepped out from a meeting with a U.S. congressional delegation headed by House Ways and Means Committee Chairman Charles Rangel and declared the start of a “New Deal” for international trade. Just as FDR changed the balance of capitalism favoring workers’ rights over money interests, Garcia said, the Democratic majority in the U.S. Congress was paving the way toward a new global trade policy with a more human face.

Garcia wasn’t just talking about the U.S.-Peru free trade agreement awaiting congressional ratification. He was also referring to Rangel’s overall plan to put an end to what the New York Democrat calls decades of pro-business and politically polarizing trade policy. That was demonstrated May 10 when Rangel, in what he hailed as a historic breakthrough, shepherded through amendments to various trade agreements stipulating that foreign governments such as Garcia’s must incorporate more social, labor and environmental protections in order to enter into trade deals with the United States.

The countdown toward the first real test for this new trade approach began in mid-September with the Senate Finance Committee’s hearing on the U.S.-Peru agreement. That deal is slated to become the first free trade pact to be voted on by a Democratic-controlled Congress since the passage of the North American Free Trade Agreement almost 14 years ago.

NAFTA was approved with broad bipartisan support 102 Democrats and 132 Republicans favored it in the House, the chamber where the hardest trade battles are traditionally waged. It’s been largely downhill since. The Central American Free Trade Agreement, the last trade deal for Latin America ratified by Congress, passed the House in 2005 with a mere two-vote margin and only 15 Democratic votes.

But such slim margins might become a thing of the past. Washington trade lobbyists are predicting that Rangel’s amendments could help convince between 60 and 120 Democrats to support the Peru-U.S. deal. Republicans, meanwhile, despite some objections to the amendments, are expected to support the Peruvian pact in order to ensure a victory for President Bush.

Charlene Barshefsky, U.S. trade representative from 1997 to 2001, told me that there is a desire on the part of a number of Democrats to create the conditions for greater bipartisanship. Whether this becomes a new path for the long term remains to be seen, Barshefsky added, noting that many factors can play on the political acceptability of this kind of agreement.

In other words, it all depends the New Deal that Garcia sees could turn out to be a one-deal wonder. Far more controversial trade pacts with Panama, Colombia and South Korea are still pending in Congress. Where Peru may be an easier sell with Rangels blessing, many Democrats, feeling the hot breath of organized labor, may balk at agreements such as the one with Colombia, where thousands of union members have been killed in that country’s long-running internal conflict.

Anyone doubting how sensitive Democrats really are to labor’s desire to curtail expanding trade need only look at one recent Senate action. In a 74-24 vote, senators on September 12 approved a measure meant to block a pilot program launched a few days earlier to allow Mexican trucks access to U.S. highways as agreed under NAFTA.

Why the urgency? asked the measure’s sponsor, Democratic Senator Byron Dorgan of North Dakota. That was certainly a peculiar question considering that it has been 13 years since the United States committed to open its southern border to Mexican trucks. While Dorgan expressed his concern in terms of Mexican drivers threatening U.S. highway safety, fellow Democrat Senator John Kerry, more clearly connected the amendment to labor concerns, saying in a statement that Mexican trucks “could hurt small independent truck operators” in the U.S. This, despite the fact that the U.S. trucking industry is struggling to meet demand due to a labor shortage estimated to increase to 45,000 drivers by 2009 and to 111,000 drivers by 2014.

But facts need not get in the way of keeping labor’s political contributions flowing. At the AFL-CIO’s presidential forum last month, all of the Democratic candidates agreed that NAFTA needed to either be fixed or altogether scrapped. None was caught even hinting that freer trade is good in principle, a fact that would seem to be the basis for bipartisan trade policy. When Rangel announced his May 10 “breakthrough,” he recognized the need to improve the image of trade as an economic engine that can create jobs and benefits to more than just shareholders. Of course, the image of free trade is not helped when the first inclination of his fellow Democrats is to bash it.

Marcela Sanchez is a columnist with the Washington Post. She can be reached at msanchez@worldcityweb.com.