The US Trade Representative (USTR) declined an invitation to testify at the Senate Finance Committee opening hearing on the controversial “Fast Track” legislation – leaving an Ohio Republican, Sen. Rob Portman, in the position of representing the White House by reading from an Administration press release.
Several committee members said they were puzzled and disappointed that USTR Michael Froman passed on an opportunity to convince some skeptical lawmakers they need to establish Fast Track authority for President Barack Obama’s priority Trans-Pacific Partnership (TPP) agreement.
“I wish they were here,” said Portman, a member of the committee and a former US trade representative under President George W. Bush. “It’s important.”
Sen. Orrin Hatch of Utah, the ranking Republican on the committee, said renewing Fast Track for Obama is "not an issue where the president can lead from behind."
The hearing was a crucial early test for Obama’s ability to obtain Fast Track authority and complete the Trans-Pacific Partnership, priorities on his second-term wish list. But it comes in the shadow of the 20th anniversary of NAFTA – a sweeping free trade agreement that took effect Jan. 1, 1994, and which many experts cite as a factor in the widening gap between rich and poor in the United States.
The Trans-Pacific Partnership is like NAFTA on steroids. And that is one reason for the noticeable divide between the president and members of his own party in Congress – many of whom have been openly skeptical of TPP and have already announced opposition to Fast Track. This week, a group of Democratic senators sent a letter to leader Reid opposing the Camp-Baucus bill. This follows on five Finance Committee members coming out against Fast Track last week and 160 House Democrats signaling opposition at the end of last year.
The rarely-used Nixon-era procedure would allow Obama to sign the TPP before Congress votes to approve it with a guarantee that the White House could write expansive legislation to implement the pact that would not subject to committee or floor amendment and get House and Senate votes on such legislation in 90 days with only 20 hours of debate allowed.
Meanwhile, with not a single House Democrat sponsoring the Fast Track bill, the GOP House leadership has insisted that the White House present a list of 50 House Democratic votes for the bill before a vote will be scheduled. Some Republicans are urging the president to do some arm-twisting for a bill embraced by the Chamber of Commerce but rejected by labor unions and progressive groups, mindful of the damage NAFTA has done.
One of the few things economists agree on is that our current trade policy is a major contributing factor to growing U.S. income inequality. Obama is expected to dedicate much of his State of the Union address to plans for battling income inequality while he is also pushing for Congress to Fast Track the TPP, which would expand the NAFTA model to more nations.
A study published by the Peterson Institute for International Economics estimated that as much as 39 percent of the observed growth in U.S. wage inequality is attributable to trade trends. Since the January 1, 1994, implementation of NAFTA, the share of national income collected by the richest 10 percent has risen by 24 percent, while the top 1 percent’s share has shot up by 58 percent.
Communication Workers of America President Larry Cohen said the US was negotiating with countries that have no interest in fair wages for their workers. If TPP is approved, “American workers will compete against workers in Vietnam who are earning 75 cents an hour” and who are rioting for better wages, Cohen said. If Americans complain, he said, the Vietnamese government has a simple answer, he added: “They say, ‘We’re a communist country. We don’t need higher labor standards.’”
Senator Sherrod Brown raised concerns about the proposed TPP provisions that would allow foreign corporations to attack U.S. law before foreign tribunals to demand compensation from the U.S. Treasury for our laws that undermine their expected future profits. He discussed the challenge that Philip Morris brought before a trade agreement investor tribunal against the government of Australia for its policies protecting the public from the health problems of tobacco.
Witnesses supportive of Fast Track included David Cote, CEO of Honeywell, Inc., Jim Allen, president of the New York Apple Growers Association, andElena M. Stegemann, of NuStep, a small business that manufactures high-tech exercise machines.
Uninvited participants included the protestors that Committee Chairman Senator Max Baucus threatened to remove unless they put down their signs. One accused Senator Baucus -- Obama’s nominee to be ambassador to China -- of being a “Benedict Arnold” who was ceding Congress’ constitutional trade authorities through Fast Track. Other signs read, “Fast Track: Race to the Bottom,” “TPP: How Low Can Wages Go?”