Awesome: Obama Talks KORUS with House Group Dedicated to Its (and Other FTAs') Demise

OK, imagine you're the President of the United States.  You're finally back from a really embarrassing meeting with the President of Korea who tells you in no uncertain terms that the (relatively insignificant) changes you've demanded re: the US-Korea FTA are a complete non-starter.  So what's the first public thing you do on KORUS when you get back stateside?  Oh, of course, you meet with the one House group utterly opposed to the KORUS - and all other US FTAs out there - and you express a willingness to make further (and far more fundamental) changes to the agreement.  Great idea! 

Yeah, just grrreat:

President Barack Obama told congressional critics of a free trade deal with South Korea he would consider asking Seoul for changes to labor, investment and financial provisions of the pact to help win approval of the deal in Congress, a lawmaker said on Thursday.

"He wanted us to give him a list of what our other concerns were," Representative Michael Michaud, a Maine Democrat, told Reuters after he and eight other lawmakers met with Obama.

Obama said he "is willing to go over that list and see which ones they agree with, and the ones that they do (agree with) they'll try (to pursue) when they continue the negotiations with the Koreans," the Maine Democrat said.

But Michaud, who is chairman of the House of Representatives Trade Working Group, said also Obama made clear finalizing the trade deal was a priority and "he definitely does not want to start from scratch" to get that done....

See, kids, there's the silver lining: President Obama doesn't want to totally scrap the existing agreement!  You know, the one that was completed 41 months ago, is worth tens of billions of dollars to the struggling US economy, and is about to get lapped by Korean FTAs with American rivals in Australia, New Zealand, Canada and the EU.  Sweet!

In all seriousness, what the @&*$ is going on here?  You may recall that Michaud's House Trade Working Group ironically works to thwart trade at every turn, and that its members, along with the professional protectionists over at Public Citizen and the AFL-CIO, are the champions of the also-ironically-named Trade Reform, Accountability, Development and Employment (TRADE) Act (H.R. 3012), which, among other nasty things, demands the complete renegotiation of all existing and pending US free trade agreements according to a veritable wishlist of trade-inhibiting and agreement-killing criteria.  Thus, pretty much anything that this group has asked President Obama to include in any future KORUS discussions is going to require far more fundamental changes to the FTA than a few "tweaks" on automobiles and beef market access.

Only one problem: the Koreans have repeatedly said that, while they're open to a side letter or two in order to advance the FTA, the agreement itself can't be touched:

South Korea conceded on Thursday some changes may be needed to the pact but said any revisions would be limited.

"It is not full-fledged negotiations. What is inevitable is we need negotiations on a very limited scale to give and take what each side needs," South Korea's deputy minister for trade, Choi Seok-young, said in Seoul.

The United States wants a slower phase-out of tariffs on South Korean cars and U.S. industry fuel economy and emissions standards to be automatically recognized in South Korea.

Choi said any change to the tariff phase-out schedule will have to involve changes to the text itself and is therefore unacceptable as a matter of principle. But he left open the possibility for discussions.

And Choi's not being an obstinate jerk here; he has plenty of good reasons to refuse any textual changes to the FTA.  First, there's the principle of the matter: the agreement has been completed and signed for well over three years, and, as the Washington Post's depressed editorial board put it, a deal's a deal.  Second, there's the politics: according to the Korean National Assembly's research team, any changes to the agreement's text would require completely restarting the FTA's (not-yet-completed) ratification process.  And considering the fact that the last time the KORUS FTA began that down that ratification road, the national opposition party held a "violent, 12-day seige of South Korea's parliament," it's pretty easy to see why Choi and his colleagues don't want to relive that fun.

So where does that leave us with President Obama's big meeting yesterday with the House (Anti)Trade Working Group (instead of, you know, the powerful House and Senate committee chairmen who are griping about beef and autos)?  Well, I see only two options: (1) Obama's playing rope-a-dope here (i.e., he plans to use this meeting as proof that he took their concerns into account before ditching them, or shoving them into an innocuous side-letter, and submitting the agreement to Congress as-is); or (2) he's going to cave to the group's demands and add them to his laundry-list of renegotiation points, thus further cementing KORUS' untimely demise (and the President's reputation as a politically-motivated trade policy wimp).

I don't know about you, but after last week, I'm leaning towards door #2.

Behold, the Amazing Disappearing House Opposition to KORUS!

On Monday, Congressman Mike Michaud (D-ME) and 20 of his House colleagues joined with 35 members of South Korea's opposition party to pen a letter demanding broad revisions to the Korea-US Free Trade Agreement:

A group of United States congressmen yesterday sent a letter drafted with their legislative counterparts in Korea to Presidents Barack Obama and Lee Myung-bak urging the renegotiation of the U.S.-Korea bilateral free trade agreement, according to a U.S. trade online magazine....

Jang Hyung-chul, chief secretary for Democratic Party Representative Chung Dong-young, told the Korea JoongAng Daily that the letter was drafted in coordination with Representative Mike Michaud and 20 other U.S. congressmen and 35 Korean lawmakers including Chung. Earlier yesterday, World Trade Online reported on its Web site that the letter signed by the 56 lawmakers was sent.

The letter calls for restrictions on certain service industries and a revision of provisions on a dispute settlement mechanism involving foreign companies. Beef and auto provisions, the main stumbling block to the ratification of the pact on the U.S. side, were not mentioned.

The full text of the letter is available here.  The US signatories are Michaud and fellow Reps. Hare (D-IL), Jackson Jr. (D-IL), H. Johnson (D-GA), Kaptur (D-OH), Kildee (D-MI), Kilroy (D-OH), Kucinich (D-OH), Lipinski (D-IL), Mollohan (D-WV), Oberstar (D-MN), Pingree (D-ME), T. Ryan (D-OH), Sanchez (D-CA), Schakowsky (D-IL), Slaughter (D-NY), Stupak (D-MI), Sutton (D-OH), Tierney (D-MA), Tonko (D-NY) and Waters (D-TX).  The letter rattles off the usual protectionist canards about "economic justice," protecting the environment, and FTAs and investment, and then adds a new, and kinda bizarre, one about services (probably requested by the Koreans).

Yet the thing that struck me wasn't the letter's trite protectionism.  It was the absolutely tiny number of folks who joined Michaud in signing this silly thing.  As you may recall, back in July of this year Michaud corralled a rather substantial 109 of his colleagues into signing a very similar letter demanding that the White House revise the KORUS agreement as part of the "new" FTA talks that Presidents Obama and Lee promised would be completed by the November 2010 G20 summit in Seoul.  Now, only a few weeks before the November mid-term elections and with those pre-G20 negotiations not even started, Michaud could find only 20 other signatories.  What gives?  Did significant congressional opposition (almost 90 House members!) to the US-Korea FTA just up and disappear even though nothing - politically or substantively - has changed since Michaud's last anti-KORUS letter?

In short, yes, it apparently did.

Considering that the list of signatories on the October letter consists of only (i) the farthest of the House's far-left wing; (ii) a guy who's retiring (Stupak); and (iii) several big protectionists who are facing really tough re-election battles (e.g., Hare, Schakowsky, Kildee and Michaud himself(!)), the rapid deterioration of congressional "opposition" to the KORUS makes it pretty clear that it had very little to do with the agreement's substance and very much to do with politics.  At this point in the election cycle, most campaigning House members just don't have time to sign on to another KORUS letter - only one is needed support their election talking point, thanks, and almost no voters get frothy over Korea these days.  So the only ones left signing this "new" congressional letter are the far-left whackos, the guy not campaigning, and the really, really desperate folks who have absolutely nothing to run on except protectionism.

And those are exactly the signatures that Rep. Michaud got.  All 20 of them.

Good luck, as they say, with all that, Congressman.

Rethinking the Conventional Wisdom that a True Free Trade Platform is Political Poison

I've often lamented the misguided political position of many free trade advocates in the House and Senate who are afraid to counter protectionist politics with a robust defense of trade liberalization, and instead use self-defeating mercantilism to deflect anti-trade criticism.  My reasoning is pretty simple: by focusing only on exports and trade surpluses, free traders are immediately exposed to false protectionist arguments that, for example, "if exports and trade surpluses are good, then current US free trade policies must be bad because we're running a trade deficit."  Of course, this response is poppycock (as I've noted seemingly millions of times), but a little thing like the truth has never stopped most politicians, especially during campaign season.

Typically, however, pro-trade politicians and their omniscient strategists respond to my idealistic (albeit totally fact-based) pleas with stories of bad poll numbers and "short-term political realities."  Their (short-sighted) argument is that because free trade is a dead loser of a political issue and because they don't have the time to teach folks the "truth" about trade and protectionism, they'll politely decline my advice thankyouverymuch and, assuming they can't avoid the issue altogether, merely deflect protectionist criticism with trite chatter about exports and international obligations, regardless of the inevitable protectionist auto-response.

But is this "conventional wisdom" correct?  Is true free trade advocacy really a one-way ticket to Loserville?

Recent events sure seem to indicate otherwise.  As I noted last week, Democrats across the country are running full-steam on an anti-NAFTA, anti-China, anti-trade campaign platform.  And as Cato's Dan Griswold points out today, protectionism so far appears to be a big fat dud of a plan:

The early returns are in on the Democratic tactic of making trade an issue in the 2010 campaign, and the results are not encouraging for those who want to blame trade agreements for the state of the economy.

In a column this morning for the Wall Street Journal (“Ohio’s Test of Protectionist Rage”), Gerald Seib reports from Ohio that two Republican candidates have been unscathed so far by Democratic attacks on their past support for major trade agreements.

In races for U.S. Senate and governor, Democrats have unleashed hard-hitting ads accusing their GOP opponents of supporting trade deals “that shipped tens of thousands of Ohio jobs overseas.” So far the attacks have failed to draw blood. According to Seib:

Right now, both Republican contenders in those races—Rob Portman for the Senate and John Kasich for governor—are coming under fire for their past support of free trade. The fact that both enjoy big poll leads right now suggests the attacks have had limited effect so far.

A key question in the campaign stretch run, both for Ohio and for policy making in Washington after the election, is whether that remains the case.

The Ohio races are ones that I've already noted here, and these polls are certainly a good sign that not only is protectionism not winning lots of votes these days (even in the Rust Belt), but also a free trade agenda might not be the political poison that it (allegedly) once was.  Nice.

Yet perhaps an even better sign of this phenomenon is a little-known race in Maine's 2nd district between incumbent Democrat Rep. Mike Michaud and his Republican challenger Jason Levesque.  Congressman Michaud, you see, is one of the House's biggest protectionists.  He's chair of the "House Trade Working Group," which ironically works to prevent trade, co-sponsor of the equally ironic TRADE Act, and routinely campaigns on rabid protectionism.  Michaud's congressional seat was thought to be very safe, but a little thing happened on the way to the mid-terms: he's getting a strong challenge from the relatively unknown Levesque, who now trails Michaud by only a few percentage points and is starting to pop-up on everyone's radar as a race to watch in 2010.

Now, given Michaud's hardcore protectionism and past electoral success, as well as the fact that Maine has long been represented by protectionist (and Republican) Senators Olympia Snowe and Susan Collins, one would expect Levesque to also express serious skepticism about free trade, or at best adopt the standard GOP "milquetoast mercantilism" in order to survive the inevitable protectionist onslaught and maybe eke out a win in a very favorable year for Republicans.

Guess again.

Now, it's not like Levesque is hanging his hat on free trade, and no one, not even your humble correspondent, can blame him for that. (As Griswold said today "free trade... is probably not a big vote-getter on Election Day, but neither is it a vote-loser.")  But Levesque also isn't dodging the issue or embracing mercantilism either, as these recent pro-trade statements make absolutely clear:

“We cannot be a protectionist society — this is a changing world, we live in a modern global economy, where communications, travel and goods are, quite frankly, regardless of border,” says Jason Levesque, Michaud’s Republican challenger in this year’s election and a big supporter of free trade.

The challenges faced by Maine’s paper industry, Levesque says, are more a result of the state’s non-business-friendly climate than foreign competition. “I’d argue that they need to look at the paper industry domestically and realize that there are paper machines and paper plants that are starting up in other parts of the United States, namely Virginia. So we’re not necessarily losing jobs to foreign entities, we’re losing jobs to other states because we are not a business-friendly district any more.”

Maine companies, he says, need to become more competitive and not rely on what he calls “trade walls” to insulate them from foreign competition. He does not, he says, support efforts to make foreign companies abide by certain labor and environmental standards.

“Do we just take our ball and go home and stop playing if they don’t abide by our rules and our social conscience?” Levesque says. “I just think it’s another excuse to be not competitive in a modern global economy and to build that wall and become more of a protectionist society, which will not work in this day and age.”

Awesome.  Of course, everything Levesque said is correct, and the facts about trade liberalization and competitiveness certainly support him (and contradict Michaud's anti-trade claims).  Indeed, I don't think I could've said it much better myself.

But as good as Levesque's response is, there's a much bigger point to be made here.  If Levesque - who currently trails Rep. Michaud by a an easily surmountable 7 percent - can pull off a win against a rabidly protectionist incumbent in a highly trade-skeptical area of the country, it would, in my humble opinion, go as far as the Ohio races - and considering his unapologetic free trade rhetoric, perhaps even further - to proving that the "conventional wisdom" on free trade and politics is dead wrong.  So stay tuned, folks.  And cross your fingers that Levesque's trade honesty and integrity pay off in November, and that the Democrats' broader protectionist plans go down in flames.

(Of course, a little contribution to Jason's cause couldn't hurt.)