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July 21, 2009

Will the Real New Dems Please Stand Up?

The (New) Democratic Leadership Council has just put a 14-page brief called "Toward a New Trade Agenda," and it offers anything but.

It starts off with some relatively unobjectionable material, like tariff reform for Middle Eastern and the very poorest countries.

But then, it takes a weird turn.

It calls for climate and procurement policy to be subordinated to commercial policies.

It lauds the president's food-safety plan, not because it will resolve the problem, but because of the optics: it will "ease globalization anxieties."

And while the DLC admits that the inherited Bush trade agreements with Panama, Korea and Colombia are problematic, and focuses on too small markets, it nonetheless calls for Obama to "clear the decks" by passing them. This call appears to be based on several miscalculations:

  1. That FTAs "do seem to have helped boost exports." Actually, as we've shown, U.S. export growth to non-FTA countries outstrip that to FTA countries. And, as it happens, the DLC shows it too, in their Table 3. FTA country exports grew 47% from 2000-08, while non-FTA countries grew 77 percent.
  2. That FTAs are divisive, but that the way out is through. Ed Gresser, the author of the report, goes to pains to note how much opposition within the party there is to the FTAs. He writes: "with trade only one of many issues on its agenda, the administration has a pragmatic interest in limiting these conflicts to genuinely important topics. And so, with the FTAs modest in scale from the start and now fading under the impact of structural change in technology and logistics, it is time to remove them from the starring role." Uh, did I miss something? These fights are divisive. Check. They require lots of political capital better spent on other fights. Check. FTAs actually aren't that useful. Check. SO LET'S PICK THAT FIGHT. There you have it folks: let's build the party by destroying it. I haven't seen such sectarian thinking since my school days!
  3. FTAs help foreign policy by pleasing foreign heads of state. Actually, as Gresser notes elsewhere in the piece, we should care less about heads of state and more about the broad public diplomacy that our trade policy represents, and which FTAs undermine. (Think Mexico and Peru.)

Gresser also has a nasty habit of not taking fair traders' arguments seriously. He notes that many "unions and 'populist' politicians did not support—and often outright opposed—the agreement with Peru. They now oppose the three remaining agreements as well, despite the labor and environmental provisions. Their opposition to the Panama agreement in particular suggests the main question is not really about environmental and labor policy, but rather a more basic alarm over competition from poor countries."

Hmm. By unions and populist politicians, does he mean a majority of the House Democratic Caucus? Does he mean the 16 New Democrat Caucus members that opposed the Peru FTA?

As for Panama FTA, what about the multiple public statements by members of Congress that the problem is the NAFTA model that the pact represents, and Panama's status as a tax haven, which could be made worse by the FTA? DLC-friendly politicians like Sens. John Kerry (D-Mass.) and Ron Wyden (D-Ore.) have raised these issues. Here was Wyden from the May 21 Senate Finance hearing on the topic:

So as of today there are over 300,000 corporations with subsidiaries and obviously on the basis of what colleagues are asking about there are questions about whether this is being done to take advantage of Panama's status as a tax haven. And I think the question I'd want to ask on the basis of what colleagues have already gotten into at this point is what is the agreement, does what the FTA do to the standing of these corporations, these hundreds of thousands of corporations to challenge current and future U.S. regulation and take an area of financial services, any area...

Because I can tell you when this agreement comes up, this is going to be one of the litmus tests and perhaps one of the key questions that is going to be debated here and certainly going to be debated on the floor. And that's the question of what this agreement does with respect to Panama as a tax haven.

But I guess it's easier to pull an explanation out of thin air than to do any research. (Ditto on Peru. There wuz reezons.)

I would urge Gresser to look at the TRADE EXPANSION bill that actual elected leaders are supporting, including 15 of the caucus once associated with this think tank, the New Democrat Caucus. The Trade Act would help fix the problems with existing and prospective trade deals, and lead to trade expansion that can be broadly supported. It's the real "New Agenda" that we should be looking towards.

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