July 30, 2001 | Lecture on Trade, Economic Freedom

A Pragmatic Trade Agenda

MR. DOOLEY: It is a pleasure to be joining you all here today. It's not just every day that a Democrat has the opportunity to address the Heritage Foundation, but I want to let you know that I wasn't embarrassed to walk right through the front door. I didn't look for a back entrance.

There are probably some of my Democratic colleagues out there, though, with videocams because they've always suspected that I was part of the other side on a lot of these issues.

As Jerry O'Driscoll said in his introduction, I'm part of a farm family in the Central Valley of California and our family has actually farmed there for four generations. My family was pretty consistent in that area in that they were overwhelmingly Republican in their partisan affiliation. So when I speak to more conservative groups I feel right at home, and I oftentimes tell the story of the first time when I was running for political office. I was having a tough time convincing one of my uncles to vote for me. He was a Republican. Finally he said, "Cal, look: I've only voted for one Democrat in my life. That's when I was on a jury and I voted to hang him." So there are some votes out there that aren't worth taking.

Jerry also talked a little bit about the work that I've been doing with the New Democrat Coalition. That was an initiative that I engaged in a few years ago because it was important for us to try to bring together Democrats who were committed to advancing policies that would allow us to maximize our economic opportunities domestically as well as internationally, understanding that when we looked forward we had to fully appreciate what is happening as this economy transitions from a more industrial-based economy to an information-based economy; how there are different forces out there that are becoming increasingly apparent; that everything now is predicated on speed--whether it's the speed of communication, the speed of commerce, the speed of innovation.

Our national borders are becoming increasingly porous to the flows of information as well as commerce, and we no longer have the luxury that perhaps we had 20 or 30 years ago of instituting domestic policies that were insulated from these international forces Thus, when we're trying to move forward with an economic policy, we have to understand that a policy of economic engagement is one that not only provides the maximum economic benefits for the businesses and the people whom they employ in the United States, but it's also a policy that's going to maximize the influence of the United States in those countries in which we are building these relationships.

We want the United States to be a stronger force in terms of advancing democracy and human rights and religious freedoms. A policy of economic engagement, which is embodied in many of our trade agreements, is certainly going to go a long way in accomplishing that.

And it's very important that we understand the impact of the decision that Congress will be making--probably this fall--on whether to grant President Bush trade promotion authority. And the importance of this is that, in order to maximize the United States' leadership, whether it be in the development of the Free Trade Area of the Americas (FTAA) or in launching a new round in the WTO, we need to ensure that he has full flexibility to exert the United States, influence in a way that can maximize our opportunities in the terms of the agreements that we're trying to negotiate.

We have a lot of trading partners. They are looking for excuses to say no to the United States, to say no to engage in another round of talks, whether they be bilateral or multilateral. Our failure to grant the President trade promotion authority will play right into those hands and those nations that unfortunately are not willing to move forward with a policy of really economic engagement.

So how did we put this initiative together? First off, I want to be very, very complimentary of the U.S. Trade Representative, Ambassador Robert Zoellick, and the team that he has put together. I think that they have been very dedicated and diligent in reaching out and really listening and trying to develop relationships with Republicans as well as many of us Democrats so that we can have that degree of confidence and trust that will allow us to put together a compromise TPA that can get the 218 votes needed for passage.

In addition, there is President Bush's legislative shop with Nick Calio, who has been at the forefront of every trade fight that we've had over more than a decade. He knows as well as anyone just how difficult it is to put these votes together.

And so I think we have the opportunity to really move forward as long as we capitalize on these relationships and this degree of confidence and trust that many of us in the pro-trade Democrat community have with the Bush Administration as well as many of our Republican colleagues in the House.

But I think we also need to step back and fully appreciate just how hard this is going to be. And we can look at the votes that we took or didn't take, for example, in 1997 when we had President Clinton, who launched a significant effort to garner fast-track authority at that time.

The business community was very engaged in that effort, agricultural as well as manufacturing and services. We engaged in that effort for months. I would say it was almost six months that we tried to put this effort together.

And then when the dust settled, when we got close, we decided we didn't quite have enough votes. And if you counted the votes that we thought we had in our pocket, we had about 165 Republicans at that time and about 43 Democrats that were committed. That would have given us about 208. We might have had just a few more than that, but the number to keep in mind is the 43 Democrats.

In 1998, when we had another effort to get fast-track authorization, one that was viewed as being a little more political in its motivation, it did go to a vote and at that time we had 151 Republicans and 29 Democrats--180 votes, far short of the 218 that we needed.

The 29 votes of Democrats is important because that might really identify somewhat of a base line but the thing you have to be concerned with, too, is that you only had 151 Republicans that were willing to vote in 1998 for giving fast-track authority to Clinton.

Now, you can try to step back and assess how many votes were motivated by more of a political consideration. They didn't want to grant President Clinton this authority. I don't know. I think in a best-case scenario you're probably talking about no more than 20, and that still is far short of the 218.

You can go back and look at the most important vote, I think, we took in this last Congress, which was to grant permanent normal trade status (PNTR) to China to facilitate their entry into the World Trade Organization. And that initiative, which had tangible benefits for every sector of our society, passed by only 19 more votes than a bare majority in Congress: 237. We only had 73 Democrats that were willing to vote for that initiative.

And so I bring this up to point out just how hard this is going to be. To further make my case, in order to move this TPA forward we are absolutely going to have to have a bipartisan coalition because the Republicans in the House do not have enough votes to pass it. My life would be a lot easier if they had the votes but, quite frankly, they don't.

And so how do we do it? An initiative was introduced a couple of weeks ago by Congressman Phil Crane, which many of us are calling a pretty clean fast-track bill. Many of us are considering that that was an effort to allow the Republicans to do basically a whip count to get a base line of how many votes they have for a clean bill. Those numbers haven't been released, and there's a message in that. If the numbers were good, we'd be hearing about them. But many of us think that the numbers probably came in maybe around 150, give or take a few. A clean bill in the House at this time probably is in single digits on the Democratic side.

And so if we acknowledge that that is the situation, then what do we have to do in order, again, to approach that 218 votes that we're going to need? Many of us were encouraged by what happened this week on the Senate side. Senator Bob Graham, a Democrat from Florida, introduced with Republican Senator Frank Murkowski of Alaska a bill that is ostensibly bipartisan (Senator Graham, though, is the only Democrat that's on it) that basically is in many ways a reconstitution of the `97 fast-track authority, but it is a step in the right direction.

And so that's the landscape I think we find right now. I think for many of us in the Democratic Party that are very sensitive to trying to find a way to put this together, our basic bottom line is that we cannot support a trade promotion authority that does not allow the President to negotiate a Jordan-like agreement. We're not saying that you've got to prescribe what the outcome could be, but we believe very, very strongly the agreement that was negotiated between the United States and Jordan was appropriate for those two countries.

We know that it's going to be much different than an agreement that's going to be negotiated with Chile and the United States in terms of some of the enforcement mechanisms as it deals with many of the issues that we are trying to achieve commitments on. It's much different than the agreement that we will see with the United States and Vietnam. But when we're trying to construct a trade promotion authority, we want to give the President the maximum amount of flexibility so that he can negotiate agreements--whether they're bilateral, multilateral, whether they're regional such as the FTAA--that can be appropriate to the forces that are in play there.

And the other thing that I think is important, in terms of when we're trying to move forward with how we construct the TPA, is that many of us are arguing that we ought to provide some parity in the negotiating objectives between agriculture, services, intellectual property rights, and also labor and the environment, that we need to acknowledge that it is in our interest to find ways that we can try to ensure that we are going to see at least the commitment to the enforcement of labor standards that a country has on its books. And if there are ways in which we can encourage an enhancement of those, all the better, but I think we can really come together and really find a way to compromise there.

Then there is the issue of how to enforce compliance with these agreements. Many of us are suggesting--and this is where the issue becomes whether we use sanctions--that our objective should be to try to develop an enforcement and compliance mechanism that has basically a toolbox of alternatives to achieve compliance.

It doesn't mean that we have to identify what each of those tools should be, but at the end of the day the President should be able to negotiate a dispute resolution process and enforcement measures that provide him with a great deal of flexibility as to how to achieve compliance--whether it's compliance with trade-related issues or compliance with environmental and labor issues that have trade impacts.

Many of us think that we can do this in a manner where we don't have to prescribe that sanctions will be one of those tools, but we think that it will be acknowledged it will be one of those tools. But we also don't want to go down a path where we preclude sanctions from being an option because many of us acknowledge that in many of the agreements that we have been involved in over the past few years we have used sanctions from time to time as something that was appropriate in order to try to achieve compliance there, and it should be a measure that should be available in future trade agreements. That doesn't necessarily mean, though, that it's going to be a tool that should be used in all instances.

And we also think that you have to acknowledge the need for the flexibility because what will work in a Free Trade Area of the Americas will not necessarily work in a WTO, and I would even make some examples in terms of how we deal with labor and the environment on the FTAA.

The 34 member countries of the FTAA have already signed on to the International Labor Organization (ILO) core labor standards. Since everyone in that body already has signed on to those standards, trying to negotiate an objective that would require those countries to try to enforce them in a responsible manner is something which probably could be appropriate.

Also, having a dispute resolution process where you would have a body within the FTAA that would come together to try to resolve disputes and then having them vested with the authority and responsibility in terms of what would be appropriate and what would not be appropriate, even with labor and the environment we might find in many instances, as we sometimes find with intellectual property rights, that a particular country does not have the capacity or the ability to enforce intellectual property rights or copyrights or patents.

And that can also be the same situation in terms of the ability to enforce some of the ILO labor standards that they've agreed to. So it might be incumbent upon the group as a whole to understand that we have to provide capacity, whether it's technical expertise or even assistance, for them to build up their ability to have their domestic enforcement of these standards.

It also might be that there would be another tool. It might be that fines or penalties might be needed and in some cases, and most often, I think, it would be a very, very rare exception when you're dealing with labor and the environment, but in other areas, trade-related areas, there might also be an occasion where sanctions will be a tool that will be needed.

Now, while we spend so much time talking about labor and the environment I don't want us to lose sight of the fact that some of the other issues out there are going to be equally challenging in trying to pull together 218 votes. And it's not just by accident, if you have the chance to read the Crane bill, how much of it is dedicated to issues related to agriculture and the negotiating objectives there.

And that I think is a clear acknowledgement of the growing disenchantment or dissatisfaction or actual questioning among many of my agricultural friends and constituents throughout the country on whether their fortunes had been benefited by trade. Many of us think that they clearly have, but there's clearly a reduction in the level of support. And how do we provide the level of parity as it deals with agriculture with other issues when you have this political challenge that we have to make sure that we can hold this group on board?

Also, what is going to be, I think, a challenge is how do we deal with some of the issues related to dumping and anti-dumping? When 61 Senators signed on to a letter dealing with steel, a strong bipartisan group of many of us questioned whether that was the appropriate trade policy. But that's a clear indication that the Administration has some limited flexibility in how they are going to deal with dumping in a new negotiation whether it be regional or whether it be multilateral. And so some of these issues are going to be very difficult to deal with, I think, as we move forward to try to get to the 218 votes.

I will close on one other issue that is important in terms of how we put together this bipartisan majority. I think we need to find a way that we can build confidence among many of our colleagues in the House and in the Senate that we have greater transparency or greater consultation rights of the various committees that have jurisdiction over the negotiating objectives that we have defined. Somehow we have to find a way that we can develop a process where Congress feels like they have a greater degree of oversight.

I don't think that this is something that is necessarily going to impede our ability to move forward with negotiations. In many ways, I think it almost strengthens it because when we get to the end of the day, when we have an agreement that is really almost finalized, members will have had the opportunity to buy into this and to understand fully the work that the Administration has been doing over a matter of years.

And I think that is going to be also a critical component in terms of how do we put this package together so we can in fact achieve the 218--hopefully, significantly more than 218 votes--that we're going to need to pass this out of the House.

So that's my perspective on where the state of play is. There are some other issues I can respond to in the question-and-answer period, but what I'd like to do now is bring my comments to a close and open this up for your comments or questions.

QUESTION: You've been pretty conciliatory to Ambassador Zoellick and also to Mr. Calio. Obviously, some of your colleagues have been a little bit more critical of the Administration so far. They think that the Crane bill sort of represents the extremist position, that President Bush has made some sort of pejorative comments about folks who are bringing up labor and environmental issues. Do you think that the Administration needs to engage a little bit more and needs to maybe send a more cooperative signal to Democrats in Congress who want to work with the Administration on trade?

MR. DOOLEY: I think that the Crane bill was a good-faith effort if it was in fact an initiative to try to determine just where their base-line votes are. Many of us have noticed a change in the rhetoric of a lot of our Republican colleagues in the last week since introduction of that bill. It has become a lot more conciliatory and a lot more interested in reaching out to some of us who are pro-trade Democrats. I think that's an acknowledgement that they are far short of the votes.

I was a little bit concerned over the comments of the President during the week that they released the Crane bill. They were pretty aggressive and pretty confrontational as it dealt with labor and the environment. But I don't look at that as something that creates a long-term problem with our ability to move forward.

But now is the time to get together and try to resolve these. Showing some deference to my Republican colleagues, they have an obligation now not necessarily to negotiate with themselves but they have an obligation to negotiate with some of the moderate Republicans because they have to get up to 175 or so votes in order to make this pass. And so while they are trying to identify the Democrats as being the real problem here, they have to be able to deliver that many votes and they have to work with a lot of their colleagues on that front.

At the same time, it's incumbent upon those of us who are committed to getting a TPA that we be able to offer something ourselves, that it's going to be incumbent upon us to give the Republicans some of the ideas that we think are going to be appropriate and responsible in order to achieve the outcome of 218 votes.

Many of us have been involved in the Sandy Levin process among Ways and Means Democrats. We're hopeful and have asked Sandy and Mr. Rangel that they bring that process to a close in the week after we get back, which will be two weeks from now, in order that we can see what the product will be that Mr. Levin and many of us have been working on.

At this point, there's no guarantee that that will be a consensus product among many of us who are Democrats, and many of us will be making an evaluation on whether that in fact is a reasonable product. If we come to the conclusion that it's not, many of us are prepared to try to develop another alternative that might find broader support among the more moderate Republicans and pro-trade Democrats.

QUESTION: Teri Ruddy, the Heritage Foundation. Congressman, during the NAFTA and GATT debates Heritage polled all the governors and found that they overwhelmingly supported trade agreements. I was wondering this time around how influential you think the governors and other state officials will be on their members to encourage them to vote for this.

MR. DOOLEY: I'm very involved with the Democratic Leadership Council and the Progressive Policy Institute, too. We did the same thing in `97 where we went out and recruited Democratic governors and local elected officials, and I don't know if it had a great impact. We ended up with about 43 Democrats and we all could have fit on a very small bus.

So I don't know exactly what's going to happen with their engagement in this TPA. But it's important because it's remarkable in many ways that the politics of trade are really only controversial in the House of Representatives. In the state bodies it's not really a controversial issue. Among the Conference of Governors there's broad support for trade there. In the U.S. Senate there's generally fairly broad support for trade there. It is really just in the House. So this is the challenge: How do we change that dynamic? And it's going to be difficult.

We've had some pretty bad indicators here just in the last week when on our transportation bill we had an initiative there to back away from a commitment by the Bush Administration to comply with the NAFTA agreement to allow long-haul trucks to move across the border. That measure passed over the objections of the President by an overwhelming majority--285 to 140, or something like that. There were 84 Republicans that voted against the President on this trade-related issue and there are about a half a dozen Democrats, including me, that supported it.

That's not an encouraging sign, and it's another demonstration of how much work we have to do to build a broader constituency in support of trade.

QUESTION: Congressman, what do you see as the next area for a trade agreement with Chile and then after that a hemispheric trade agreement, and when do you expect the U.S. to wrap up the trade agreement with Chile?

MR. DOOLEY: I'm not privy to just how the negotiations are going with Chile. We supported their initiative to send up to the Hill the U.S.-Vietnam agreement, which we think is very important. We think we have the votes to pass it, and we ought to move it. We also encouraged them to move the Jordan agreement through Congress. We think there are votes there to pass that.

We think that there needs to be work on finalizing the Chile bilateral, which we like to think could be done by the end of the year. That might be a little optimistic, but that would be a positive development.

There is also a great deal of interest and support for the renewal of the Andean Trade Pact. There's a lot of interest among many of us to move that forward in order to try to provide greater economic stabilization to that region, which is facing a lot of different challenges.

So we have the potential to have a very aggressive trade agenda. We also have the China annual renewal that will probably come before Congress because the WTO session probably will not be finalized in time. That measure, though, will pass, I'm fairly confident, similar to the margins that it passed by last year. So that is another trade vote that we will have coming before Congress also.

And that's why I think we're not going to be able to put trade promotion authority together in July. It's just not going to happen. And the critical decision when we get back is going to be whether the Republican leadership in the House moves the Crane bill through the subcommittee as is. And the concern that many of us have is if they do that, it may contribute to a polarization where members will take a position that we can't ever retrieve them from. It's a decision that will give a lot of my Democratic colleagues the opportunity to say, "here the Republicans are just playing politics with trade again," and we have no interest in being a party to that and we're going to vote against this.

So I hope--and this is where there's an obligation with Democrats, too--that we can demonstrate that we're committed to working with the Republicans in putting something together that is responsible and can pass. We're prepared to do that sooner rather than later. Delaying the subcommittee's action on the Crane bill a week or so, I think, would be in the interest of getting 218 votes in the fall.

QUESTION: Brink Lindsay, Cato Institute. Of course, there's all kinds of focus, necessarily so, on getting to 218 for TPA, but beyond that there has to be a focus on getting a TPA that isn't so loaded down with provisions that it will give, as you say, excuses to other countries not to negotiate with us and enter into new trade agreements.

A lot of the focus on that concern has been on labor and the environment, but I think perhaps the bigger risk is on the U.S. trade remedy loss side. Can you give me your assessment of efforts to declare U.S. trade laws off the table? And how big a risk do you think it is that we're going to wind up with language to that effect in TPA?

MR. DOOLEY: Well, you have articulated the concern that many of us have that there's been so much political capital being consumed on labor and the environment, that there are these other issues that are going to be equally as challenging in how we put those together. And right now in the House there is a real reluctance to see any consideration of reducing our anti-dumping provisions. The steel bill is one of the best examples of that, and this is going to be something that whether it's the FTAA or the WTO can be very problematic.

We're going to have to spend a lot more time on that and I think the President's action that they took on steel earlier was a recognition, too, that if they didn't do that--regardless of what they wanted to do--they weren't going to get the Republican votes that they needed for TPA.

QUESTION: Russell Smith, Willkie Farr & Gallagher. The list of provisions that you ticked off matches closely what's in the Graham-Murkowski bill. Why do you think there aren't any more Democratic co-sponsors on the Senate side?

MR. DOOLEY: I think that a lot of my Democratic colleagues, a lot of the members of the Senate New Democratic Coalition, have been working with Bob Graham and are sensitive and supportive of what he did, but also wanted to show some deference to Senator Baucus and the role that he plays as chairperson. I don't think that necessarily means that if Senator Baucus doesn't come up with a proposal they will not support a Graham proposal. I think that they are demonstrating an interest in working with Senator Baucus in a good-faith manner. I think Senator Graham is, too and many of us in the House are, too. So I wouldn't read too much into the lack of Democratic co-sponsors at this time.

QUESTION: Tony Carroll, Manchester Trade. I think it's fair to say that the China PNTR vote was made possible through the CBI legislation, especially Congressman Rangel, who was willing to take, I think, a very brave leadership role in not only convincing members of the Black Caucus but many other Democrats who might not have leaned toward China PNTR to go out and vote for it.

Is there a similar strategy available to try to get us ahead on trade promotion authority or not, somehow getting and playing into Congressman Rangel's strategy last time around?

MR. DOOLEY: Well, I think that that had some marginal impacts in terms of the number of votes we were able to gain on China PNTR, but I wouldn't overstate the terms of the numbers. But we're working very closely with Mr. Rangel. Mr. Rangel provided a tremendous amount of leadership on China PNTR. We're hopeful that we'll be able to fashion a bill that he can be supportive of on the TPA. There are some provisions on issues related to the Andean Trade Pact that are very important to some of my colleagues. If we could find a way to move forward with them, it might be helpful.

But the unfortunate thing is the one issue that's going to gain probably more votes for support of TPA is maybe the least pro-trade initiative, and that's the steel issue. That's where some vote trading is probably going to take place.

QUESTION: Chris Nelson with the Nelson Report. Yesterday a number of Ways and Means Democrats sent out a letter to the President that was fairly tough. I don't think your name was on it. I was wondering if you had a reason for not signing it and in particular what you thought of the argument down towards the bottom of the letter that basically said that the President pulled out of the Kyoto Accord with a fairly clear linkage between environmental standards, lack of enforcement in the Third World countries, and a threat to trade, a threat to American jobs. If they can do that on the Kyoto Accord, how come us Dems can't do that in a TPA deal? I was wondering what you thought about that particular argument.

MR. DOOLEY: Well, my name wasn't on the letter and that wasn't just by accident. I am tired of signing letters. It is time for us to put the letter-writing behind us and to sit down and try to work through these difficult issues.

And the argument that some of my colleagues are making on the competitiveness of the United States if we did sign on to the Kyoto agreements has some merit, and we have to find a way that we can structure a TPA in order that there can be consideration given that the bottom line is that countries will enforce their own domestic environmental standards.

Furthermore, on the environmental front the issue that is even more difficult and one of great concern to a lot of my Democratic colleagues is how do you protect the sovereignty of states and localities with the environmental regulations that we've put in place. Some of the recent actions that have led even in the State of California to ban MTBE (methyl tertiary butyl ether) because of some of the concerns of the environmental impact when those cases are being brought by a private company against the State of California under the dispute resolution provisions of NAFTA are not something that builds a great deal of confidence with a lot of my colleagues.

We have to find a way as we move forward in this next round of negotiations to provide some greater clarity and certainty that the prerogatives of elected bodies to enact responsible environmental regulations in order to protect the legitimate environmental interests are not going to be subject to private rights of action under these dispute resolutions.

And this is an issue. When we talk about environment this is something that we're going to have to deal with. It's very important to a whole lot of our colleagues. And, again, it's not just the Democrats. We keep focusing on the Democrats here, but there are at least 30 Republicans that we need on this TPA that are sensitive to labor and are very sensitive to environmental issues.

QUESTION: Steve Lande, Manchester Trade. It's true in Washington that to get something done you have to keep repeating and repeating certain arguments that you may question in fact. One of the arguments repeated over and over again is that we will not be able to have serious trade negotiations without fast-track.

In the FTAA context there has now been an agreement to conclude the negotiations by the year 2005, and in fact, people are looking at the Brazilian election that will take place at the end of 2002 to see how we proceed. The current debate in Geneva seems to be focusing between hard-line developing countries that have an interest in certain changes or implementation provisions of the previous Uruguay Round before they give their assent as well as an assurance that certain topics will not be on the agenda--interesting enough, topics the U.S. is not pushing, like investment and other topics like that.

In point of fact, if we don't have fast-track authority in place, do you honestly believe that we will not be able to launch the trade negotiations in Geneva or continue to make progress in the FTAA exercise?

MR. DOOLEY: I think that based on my conversations with some of the member countries of Mercosur, and Brazil in particular, that it would give the opportunity for Brazil, which is somewhat reluctant, to move forward aggressively with the FTAA, an opportunity to delay those negotiations, and so I think it would have that impact.

And the other point that I would make: At this point, I have no interest in looking beyond a TPA. I am committed to trying to ensure that we find a way to give the President trade promotion authority, and looking beyond that in some ways undermines this effort.

The Honorable Calvin M. Dooley, a Democrat, represents the 20th District of California in the U.S. House of Representatives.