China's shadow looms over Senate trade debate

 

China's Shadow Looms Over Senate Debate

The Senate Finance Committee’s vote late Wednesday to approve “fast track” trade legislation revealed two things: Some Democrats strongly support the measure, and concerns about China’s currency practices will dog the bill as it moves through Congress.

“I think this is well on its way to passing,” Senate Finance Committee Orrin Hatch told reporters after the 20-6 bipartisan vote for the bill, which would empower the White House to finish a controversial Asia-Pacific trade deal. Seven Democrats joined with 13 Republicans to send the bill to the Senate floor.

 

The panel made few changes to the trade promotion authority package agreed upon last week by Hatch, Ron Wyden, the panel’s ranking Democrat, and House Ways and Means Committee Chairman Paul Ryan (R-Wis.). One amendment offered by Sen. Ben Cardin (D-Md.) that was accepted would elevate addressing concerns about a country’s human rights to a “principal negotiating objective” of the United States in trade agreements.

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Cardin joined Wyden in backing the bill along with fellow Democrats Maria Cantwell of Washington, Bill Nelson of Florida, Tom Carper of Delaware, Michael Bennet of Colorado and Mark Warner of Virginia. However, Cardin reserved judgment on supporting the bill on the Senate floor.

The House Ways and Means Committee will vote on the trade promotion authority bill on Thursday, as lawmakers race to show progress on the legislation before Japanese Prime Minister Shinzo Abe visits Washington next week. Japan is a key partner in talks on the proposed Trans-Pacific Partnership pact, which when completed would include 12 countries representing nearly 40 percent of world economic output.

The full House and Senate are unlikely to act on the measure until May, giving supporters and opponents of bill more time to pressure undecided lawmakers to vote their way.

The bill would allow the White House to submit the Asia-Pacific pact and other agreements to Congress for a straight up-or-down vote without amendments. It has set off a fierce national debate that has aligned Obama with Republicans against many members of his own party.

Those include Sen. Elizabeth Warren, who has blasted the TPP agreement as a sop to big corporations at the expense of the working class — a charge the White House strongly disputes.

“When giant corporations get to see the details [of trade deals] and the American people don’t, we all lose,” the Massachusetts Democrat said in a blog post, referring to a set of congressionally mandated trade advisory committees that allow selected business, agriculture, labor and other interest groups to weigh in on deals as they are negotiated. “Let’s level the playing field: no vote on fast-tracking trade until the public can read the TPP deal.”

Another critic, independent Vermont Sen. Bernie Sanders, threw a kink in the works on Wednesday by invoking a rarely used rule to halt the Finance Committee from working on the bill for more than two hours while the Senate was in session. But Republican Majority Leader Mitch McConnell (R-Ky.) got past Sanders’ procedural hurdle by recessing the Senate after it finished its votes on a human trafficking bill.

Meanwhile, a prominent tea party conservative who has battled Obama on health care and other White House initiatives is solidly on board with the trade legislation. Sen. Ted Cruz (R-Texas) joined with Ryan in an op-ed in The Wall Street Journal to urge other lawmakers to back the legislation.

“In short, TPA is what U.S. negotiators need to win a fair deal for the American worker,” Cruz and Ryan wrote.

The panel debated dozens of amendments to n four trade-related bills Wednesday. It passed a measure offered by Bennet, and supported by the administration, that would strengthen a current semi-annual report on currency manipulation by giving the Treasury several new tools to deal with problem countries, including blocking them from joining trade deals with the United States.

But it defeated a bipartisan attempt by Sens. Rob Portman (R-Ohio) and Debbie Stabenow (D-Mich.) to require the administration to seek enforceable rules against currency manipulation in trade agreements — an idea that has wide support in Congress but which the White House says could kill the TPP deal.

Detroit-based automakers have pushed hard for the provision, which they say is necessary to keep Japan from circumventing any concessions it makes to open its auto market by deliberately driving down the value of the yen. A longer-term target is China, which one day could join the TPP pact. Lawmakers have complained for years that Beijing manipulates its currency for an unfair trade advantage.

Portman, who served as U.S. trade representative under George W. Bush, is up for reelection next year and is already facing criticism over his support of trade agreements from a potential Democratic opponent, former Ohio Gov. Ted Strickland.

“Unfortunately, some of our competitors tilt the playing field by manipulating their currencies so that our American-made exports are more expensive while our competitors exports in our country are cheaper,” Portman said.

But Treasury Secretary Jack Lew and other administration officials warned that including currency rules in a trade agreement could backfire on the United States.

“We have a serious concern that in any trade negotiation other countries would insist that an enforceable currency provision be designed so it could be used to challenge legitimate U.S. monetary policy, an outcome we would find unacceptable,” Lew wrote in a letter to Hatch on Tuesday. “Seeking enforceable currency provisions would likely derail the conclusion of the TPP given the deep reservations held by our trading partners.”

Five Democrats joined 10 Republicans in rejecting the amendment, but Detroit-based automakers took comfort in the 11 senators that voted their way.

“The fact that 11 members were in support was I think a strong number and demonstrates the desire to really address this in a meaningful way in the TPA,” said Matt Blunt, who heads the American Automotive Policy Council, which represents U.S. automakers and has pushed hard for enforceable currency rules in the TPP.

“I do think it provides some momentum as they head to the floor if they choose to introduce it on the floor, we’re hopeful that they will,” he said.

Portman said he would bring it up again. “I think it’s the right thing to do,” he told POLITICO Pro. “I don’t know what the outcome will be.”

But Hatch strongly opposed the measure, warning members if they approved it they “can kiss the TPP goodbye.”

Meanwhile, the committee voted 18-8 to approve another amendment, offered by Sen. Chuck Schumer (D-N.Y.), that would require the Commerce Department to determine whether countries that undervalue their currency are providing an illegal trade subsidy. That could lead to hefty duties on steel and certain other Chinese manufactured goods. The administration also opposes that idea on the grounds it would invite trade retaliation and potentially violate World Trade Organization rules.

“China is the most rapacious of our trading partners,” Schumer said. “They have perfected currency manipulation to a fine art.”

Out of courtesy to Senate Finance Committee leaders, Schumer offered the currency provision to a customs services and trade enforcement bill, rather than to the trade promotion authority package, where it could jeopardize chances for quick action.

However, the measure still could create a major headache for the White House if it becomes law. The Obama administration argues it has already had some success in pushing China to a fairer exchange rate, but threatening to impose trade sanctions over its currency practices could unravel all that work.