Sunday, November 1, 2009

Reason for Post-ObamaCare Optimism re: the Future of US Trade Policy? (Hint: Probably Not)

Reuters reports that a couple Democrat congressmen are optimistic that US trade policy will shift back into gear once the White House has secured passage of its top domestic policy priority, healthcare "reform":
The White House and Congress could take up delayed free trade deals with Panama and Colombia once work on healthcare reform is done, two Democratic lawmakers who support the pacts, said on Thursday.

"Right now, the healthcare debate is taking all of the oxygen out of the air," U.S. Representative John Tanner said at a talk on trade relations in the Western Hemisphere.

Obama has made an overhaul of the $2.5 trillion healthcare industry, which constitutes one-sixth of the economy, his top domestic priority.

Tanner said there were compelling national security arguments that make approval of the trade deals possible, despite the opposition of many Democrats.

Venezuela's move to restrict trade with Colombia over Bogota's decision to sign a defense security pact with the United States is one, he said.

Colombia, a close U.S. ally in South America, has received about $6 billion in U.S. aid since 2000.

Democrats control the White House and Congress and have been reluctant to push forward on trade deals that deeply divide their party.

President Barack Obama opposed the pact with Colombia and another with South Korea during last year's campaign.

He has also said he wants to work with Congress and the two countries to get them approved.

Representative Henry Cuellar said he believed a desire to keep peace among Democrats during the healthcare debate was the reason Obama had not sent a trade deal with Panama to Congress for a vote, although U.S. Trade Representative Ron Kirk indicated back in April or May that could happen soon.

"I still have faith the Obama administration will do the right thing," said Cuellar, a Texas Democrat. "I think they're trying to figure something out without upsetting their base."

Kirk's office has said it has made progress resolving labor and tax concerns related to the Panama pact.

Cuellar predicted Colombia would be approved if Obama sent it to Congress for a vote, even though it might not get the support of most Democrats....
As Dan Ikenson and I noted last spring, Reps. Cuellar and Tanner (god bless 'em) are the last of a dying breed in Congress - Democrat free traders.  And their statements echo what I and others have been saying for months now - that the White House has routinely sacrificed free trade in order to achieve President Obama's top domestic priorities.  But while the good Congressmen's hearts are certainly in the right place, I feel that I have to be the bad guy here and pour a lot of cold water on their cheery post-ObamaCare hopes for an American free trade renaissance.

I see three main reasons for serious and continued pessimism:
  • First, when the health care debate is over and ObamaCare has passed or failed, the President's other top domestic priority - Cap and Trade - is waiting in the wings.  And as Rep. Cuellar even admitted (PDF - see pp. 36-37) earlier this year, the White House shelved the pending FTAs to secure passage of both ObamaCare and domestic climate change legislation.  With Congress addressing the latter throughout the winter (especially in the run-up to Copenhagen's global climate change talks) and probably not voting on final legislation until early 2010, it seems highly unlikely that the White House will move the FTAs before then - at the earliest.
  • Second, and more broadly, once Cap and Trade is done, it's not like the President's domestic agenda is complete, and the White House has established a nine-month track record of sacrificing trade whenever the politics call for it - and not just for ObamaCare and Cap and Trade.  Recall that America's free trade agenda also has taken a backseat to the Stimulus* Bill (with its Buy American provisions) and the 2009 Omnibus Appropriations Bill (with all sorts of nastiness, including the Mexican Trucking ban).  So when Cap and Trade stops riding shotgun, what's to prevent another domestic priority - like the Value-Added Tax (VAT) or education or financial services reform - from hopping in the front seat?  The answer: not much.
  • Third, let's not forget that 2010 is an election year, and current projections are that the Democrats are going to get absolutely pummeled.  Trade traditionally takes a backseat in election years anyway, but with incumbent Democrats (especially in the House) likely desperate to hold onto their seats in 2010, there is a very, very small window to push free trade policies through Congress in 2010 - maybe the first three or four months (if that).  After April, and maybe even before that, vulnerable Dems will be extremely reluctant to vote for anything that might run afoul of their anti-trade union supporters, or that might just not poll very well with the general public (and trade traditionally doesn't).  So it's rather unlikely that Pelosi and Reid are going to be gung-ho about jumping on any White House FTA bandwagon in 2010.  Perhaps more importantly, given the administration's incessant lobbying in New Jersey and Virginia this year, will Obama really be willing to zealously push for party-splitting FTAs next year when a lot more is at stake than two governorships and a couple congressional seats?  Color me skeptical. 
Given these factors, I'd say there's almost no chance that the White House will submit the implementing legislation for the Colombia, Panama and/or South Korea FTAs, and then vigorously lobby for congressional passage (which will require House and Senate hearings, by the way) anytime soon.  It's not totally impossible, I guess.  If Cap and Trade gets completely pushed to 2010, and if the White House makes a deal with the unions and finds a way to sneak the bills to Congress after ObamaCare and before the end of the year, and if the House and Senate leadership can streamline consideration of the legislation and keep their troublemaking protectionist colleagues at bay, then maybe, just maybe, one or more of the FTAs can be ratified before election year politics salt the earth.

But that's a whole lotta "ifs," and I'll gladly wager a shiny nickel that they don't materialize, and thus that the pending FTAs stay right where they are - which is (unfortunately) collecting dust in a White House closet.

No comments: