The main themes of President Barack Obama’s international-trade strategy for the November 6 presidential election are now fully established. It’s all about the 21st Century, where the buzzwords are American jobs, U.S. exports, and more American jobs. He doesn’t want America known for “buying stuff from other nations,” Obama told representatives from a dozen-plus corporate luminaries including Ford Motor Co. and Intel Corp. who assembled in the East Room of the White House on Jan. 11. “I want us to be known for making and selling products all over the world stamped with three proud words: ‘Made in America.’”
If economists would immediately retort that the president’s language was the stuff of 17th and 18th century mercantilism, practicing politicians could shoot back that hey, campaigns are not academic seminars. In that vein, the nation’s Politician in Chief furthered his plea for economic nationalism in his Jan. 24 State of the Union address, where he asked Congress to help him give tax breaks aiming at bringing back lost manufacturing jobs to US shores. More broadly, Obama will be vigorously asserting that on his watch, he has succeeded in restoring America’s traditional claims to international economic leadership. Toward that end, he will ignore his lack of focus on what should have been top priority — the truly big-money stakes involved with the World Trade Organization’s Doha Round of multilateral trade liberalization talks, which the White House has helped kill. Instead, Obama will keep touting how he managed to obtain congressional passage of three small-by-comparison trade pacts last year— with South Korea, Colombia, and Panama — that had been negotiated by predecessor George W. Bush, but had become trapped in Washington’s gridlock. Obama has also positioned himself as an an advocate of government efficiency: a reformer who is fighting for lean-and-efficient bureaucracies, pitted against an entrenched Congress and corporate lobbyists. And looking to a second term in office, Obama will advertise his focus on forging deeper ties with dynamic, forward-looking Asian-Pacific economies in a region which he asserts Bush had neglected (and which conveniently encircles China, a trading partner that the president misses no opportunity to say doesn’t “play by the rules”).
The forward-looking Asia-Pacific part of the Obama campaign strategy was clearly on display before a high-powered audience of Washington insiders who packed a conference room on K Street the morning of Jan. 4 at an event organized by the respected bipartisan Center for Strategic and International Studies. Keynote speaker Michael Froman, the deputy national security adviser for international and economic affairs, smoothly spoke of US leadership in the so-called Trans-Pacific Partnership negotiations. The TPP negotiations are designed to liberalize trade with promising Asia-Pacific countries including Singapore, New Zealand, Australia, Malaysia and Vietnam, Froman said. After the Obama administration came into office in 2009, the White House had studied the gridlock and “determined that we needed a new, 21st century approach to trade,” Froman said. “When we launched TPP,” the White House top international economic aide added, “we developed entirely new texts that reflected US interests and the competitive realities of the region…we pushed our limits and forced ourselves to try to think a bit outside the box about traditional issues.” US Trade Representative Ron Kirk and his team of trade negotiators, Froman related, “have now led 10 rounds” of TPP negotiations, boasting how in 2010 “we welcomed” emerging tiger-cub economies Malaysia and Vietnam into the trade pact.
But a close examination of what has really happened on the Obama watch strongly suggests that the White House claims to economic leadership in the TPP negotiations should not necessarily be taken at face value. For openers, the United States isn’t even a member of the trade pact. Moreover, the issues that are at the core of the White House negotiating strategy are straight out of an 18th century fascination with the mercantile world of high tariffs. It’s the same old story: sugar, steel, cotton, clothes, shoes, and a few other coddled farm lobbies. Moreover, even a cursory look at Obama’s proposals to “streamline” what he says are inefficient federal trade agencies reveals an absence of policy prescriptions truly aimed at bringing official US trade policies into line with 21st century economic realities.
Here’s the story, beginning with the White House assertions of enlightened 21st century “leadership” in the Asia-Pacific negotiations.
A Promising Pacific Partnership
A simple chronology illustrates the doubts about Obama’s claims to American leadership in the TPP. The United States isn’t a member of the Trans-Pacific Partnership, which came into being in 2006 thanks to the leadership of four progressive Asia-Pacific economies: Singapore, New Zealand, Chile, and Brunei. In 2008, President George W. Bush’s top trade adviser, Susan Schwab, announced that the United States was ready to join the club. But in Jan. 2009, the incoming Obama administration put the US application to join TPP in a deep freeze. After nearly a year of agonizing, Obama finally put his toe into the TPP’s waters in mid-December, 2009 — some 13 months after Australia, Peru and Vietnam had already announced their intentions of joining the trade pact (White House aide Froman was correct to point out that Malaysia did join the negotiations in 2010. The credit for this goes in substantial part to skillful quiet diplomacy pressed by American diplomats in Kuala Lumpur who report to Secretary of State Hillary Clinton, and also to the Malaysians’ own recognition that their country needs to do more to attract more foreign investment.)
These days, it’s mainly original TPP members Singapore and New Zealand — plus Australia — that are the driving intellectual forces that are pushing for an expanded TPP. Rather than really contribute much on substance, the Obama White House is asking other negotiating partners to express willingness to liberalize their own markets, while remaining determined not to grant additional access to US markets until some undetermined time after the November presidential elections.
Late last year, Japan, Canada and Mexico also expressed their interest in participating. Their involvement would truly make the TPP a very big deal that would create strong pressures for harmonized- and liberalized trade rules that would promote trade expansion in the most dynamic region in the world. But the prospect of such an expanded TPP membership has, so far at least, received a lukewarm reception in the Obama White House. (Last year I reported how U.S. officials had been working behind the scenes to exclude Canada — reflecting the protected American dairy lobby’s concerns over Canada’s own existing protectionist scheme for the Canadian dairy lobby. See: Troubles along the US-Canadian Border, www.rushfordreport.com, April 4, 2011.)
True 21st century issues
It’s not that there aren’t any very important cutting-edge trade issues involved in the negotiations to expand the Trans-Pacific Partnership. There are.
The Obama administration is pressing for countries like Vietnam and Malaysia to bring transparency to their powerful, coddled — and often corrupt — state-owned enterprises, and to take measurable steps to bring those SOE’s into market-oriented compliance. The real target of such reforms is China, the hope being that a successful trade deal across the Asia-Pacific region would serve as a powerful inducement for Beijing to reform China’s own powerful entrenched state-owned enterprises. The White House is also interested in helping create better conditions for some of America’s most innovative enterprises — think Google, Microsoft, and IBM — which have legitimate worries about government restrictions on the free flows of data across international borders.
More broadly, businesses throughout the region are looking for a TPP that would harmonize and simplify rules of origin and otherwise facilitate a seamless movement of goods and services to meet the needs of fast-moving, complex modern supply chains — think of the long list of such globally competitive American enterprises as Apple, Intel, General Electric, 3M, Cargill, Procter & Gamble, Caterpillar, Wal-Mart, Nike, Federal Express and UPS. To be sure, when officials like Froman talk of their hopes that the TPP will foster new “high standards” that really are necessary to break down trade barriers that slow down trade flows of goods and services, they clearly are on solid ground.
An 18th century focus
Problem is, when it comes down to the fine print of the TPP negotiations, the Obama White House is clearly more focused on the traditional issues that had already acquired a rather dated look when I started watching them some four decades ago: sugar, steel, clothes, cotton, and shoes. Consequently, the backward-looking U.S. positions threaten to weaken substantially the hoped-for benefits of harmonized trade rules that would facilitate the real “21st century” trade issues.
On sugar, when the U.S. and Australia signed a preferential trade agreement in 2004, President George W. Bush humiliated then-Prime Minister John Howard by refusing to permit one grain of Australian sugar into the United States beyond the existing strict US tariff-and-quota regime. Now, the Obama White House is gearing up to have the president take Australia’s current prime minister, Julia Gillard, to the mat when push comes to shove in the final hour of TPP negotiations, according to three knowledgeable insiders who spoke only on the usual condition of confidentiality.
True, the high tariffs and quotas that prop up a globally uncompetitive domestic sugar industry in important electoral states like Florida are drags on the American economy, and should have been phased out years ago. But especially in this presidential election year, Obama is simply not going to risk the temporary pain associated with such economic reforms — Florida has 29 electoral college votes. The White House is also looking to 10 more electoral college votes from Wisconsin, another important swing state where the dairy lobby is opposed to a TPP that would open US markets to the globally competitive dairy industry from New Zealand. At least, when it comes to an unwillingness to grant foreigners more access to protected American sugar- and dairy markets, Obama is doing essentially what all recent American presidents have done. And while the Republican 2012 presidential race remains uncertain, it is unlikely that the president will be challenged on such perennial American protectionist rackets.
On steel, the Obama White House is basically on auto-pilot, prepared to balk — again, this is not just the current incumbent, but traditional bipartisan American protectionist politics at work — at any suggestions from Japanese TPP negotiators or anyone else to liberalize the draconian US anti-dumping regime, which is widely regarded as unfairly administered. Ask the South Koreans, who got nowhere with American trade negotiators regarding reform of the US trade laws in the US-Korea trade deal.
On cotton and clothes, Obama’s key position has two parts: all TPP members who want to avoid high US tariffs on clothing that hover in the 18 – 36 percent range must agree to buy American cotton (or yarn or fabrics) from US textile producers. Does it make economic sense to force US trading partners to buy American-made fabric and ship it across the Pacific? Of course not.
Complex rules of origin and US Customs regulations and inspections aimed at preventing Asian exporters who would be tempted by market realities to buy their fabric from China are deliberately designed to restrain trade, not expand it. At least there was some semblance of economic realities when the U.S. forced Mexico and other Latin American neighborly trading partners to adopt yarn-forward rules. Still, those rules have been so complex, and so costly to comply with, that often the most efficient American apparel importers simply refuse to bother, preferring to pay the high tariffs instead, as Wal-Mart’s Sarah Thorn recently reminded an audience convened by the Global Business Dialogue. Thorn, one of Washington’s most experienced trade observers, pointed out that for the TPP negotiating partners, high US tariffs for shoes and clothing amount to some 70% of the import duties that they have to overcome. (Vietnam is the second-largest exporter of apparel and footwear to the U.S., after China.)
Deal-killing US negotiators
But deal-killer or not, “yarn forward” with all of its trade-distorting complexities is the core position of the National Council of Textile Organizations. The NCTO is famous for pressing for complex rules of origin for every button on every shirt, every piece of fabric in a jacket, every zipper in a pair of pants, and so on. Even a simple brassier may have different rules for more than a dozen components, ranging from elastics to spandex, metal hooks and eyes, cotton, or polyester, to name just a few of the more obvious.
Obama’s key negotiator on the textile and clothing issues before the TPP is Gail Strickler, a former executive of a Fall River, Massachusetts textile firm and a former board member of the NCTO. Strickler has caused some mutterings in Washington trade circles for her tenacious negotiating style, pressing the NCTO’s positions to the point of walking out of meetings when Asian diplomats dare to challenge them too aggressively, according to well-informed insiders. But don’t blame just one American official’s negotiating style, as Strickler is clearly advancing positions that the White House supports. Assistant US Trade Representative Demetrios Marantis, a well-liked former aide to Sen. Max Baucus (D-MT), has also been inflexible on yarn-forward rules, albeit in softer tones.
When Michael Froman and other White House officials who are focused sharply on domestic politics talk of the importance of respecting “sensitivities” in the TPP negotiations, this is the big one. To the extent that the Americans refuse to open their markets to Vietnamese and Malaysian exporters of apparel and footwear, you can forget meaningful reforms of Vietnamese and Malaysian state-owned enterprises. By adopting the backwards-looking NCTO positions as their own, the White House is risking wiping out billions and billions of dollars of export opportunities to the big-ticket, globally competitive US providers of goods and services. But so far, the White House has chosen to put 18th century economics ahead of the 21st.
Tax Breaks and American jobs
There were cheers last week when the president called in his State of the Union address for tax breaks designed to keep jobs in America. But sometimes in the real world of business, such government favors have a habit of helping one company put its competitors at a disadvantage. Consider the experience with tax breaks that have already been given to one US manufacturer.
New Balance, the Maine-headquartered athletic shoe manufacturer, imports most of its shoes from China, with lesser quantities from Vietnam and Indonesia. Such footwear is subject to tariffs that are in the 10-20% range, with peaks for some lines several times higher. But still, the company advertises itself as the last manufacturer of shoes in America left standing. New Balance imports some uppers from China duty free, and soles at only a 2.7% tariff. A few hundred workers in New England then glue the shoes together, which are then sold as either Made in USA, or Made in USA from imported components. The New Balance website says that about 25% of its US sales fall into these patriotic categories. (New Balance’s patriotism also extends to the Mother Country, where some 200 workers in the United Kingdom proudly make footwear that is proudly advertised as Made in UK.)
All together, New Balance — thanks to the tariff breaks — has a US workforce of about 1,200 people. Nike alone, with a US-based workforce of more than 22,000, supports 20 times the jobs. Moreover, many of Nike’s US-based workers are in high-value, well-paid jobs in research and development, marketing, design, advertising, and so on.
Meanwhile, in the TPP negotiations, New Balance is lobbying to preserve its Chinese manufacturing base, hoping the Obama administration will help it put the likes of Nike — which has a significant presence in Vietnam — at a competitive disadvantage. New Balance is advocating putting athletic shoes in a so-called “sensitive” basket that would keep the high U.S. tariffs on footwear in the 10-plus percent range. This would deny Nike and other manufacturers in Vietnam from expanding their operations in that country if U.S. tariffs are reduced and rules of origin were to be simplified. Thus, New Balance could continue importing the majority of its footwear and components from China, and also continue to represent itself to the public as the last Made in America athletic shoe manufacturer. Given that Obama is running as the Buy American candidate, no wonder that the White House has given the impression its sympathies rest with the New Balance position — at least until the November presidential vote has been counted.
What about the president’s proposals to streamline federal trade agencies?
Obama unveiled the second part of where trade fits into his reelection strategy on January 13, when he spoke to an audience of small business executives in the East Room. “We live in a 21st century economy, but we’ve still got a government organized for the 20th century” when it comes to implementing US international trade policies, the president declared. Obama said that he would be asking congressional permission to allow him to “streamline” six scattered federal agencies that have some trade jurisdiction — the Office of the U.S. Trade Representative, the Export-Import Bank, the Overseas Private Investment Corp., the Commerce Department, the Small Business Administration, and the U.S. Trade and Development Agency — into what the president says would be one super-efficient modern trade department.
President Obama presented his proposal in attractive-sounding terms of eliminating “redundant and inefficient” government and a bureaucratic “system that is not working for our small businesses,” as a White House fact sheet put it. “Small businesses often face a maze of agencies when looking for even the most basic answers to the most basic questions,” the release declared. “There is a whole host of websites, toll-free numbers and customer service centers that at times offer them differing advice.”
There is at least a kernel of truth to the president’s assertions. After all, it doesn’t take a graduate degree in business, much less serious government experience, to appreciate that the most innovative enterprises are constantly re-inventing and re-organizing themselves. But again, a closer look suggests that the Obama proposal is business-school lite. When one looks at the details of what Obama is suggesting, the inescapable inference is that either that this president remains relatively inexperienced, or that he is so focused on his 2012 campaign that little else matters when it comes to trade.
First, Shoot the Diplomats
For openers, the president’s suggestions to lump in the Office of the US Trade Representative by lumping it in with standard (stodgy) trade-promotion agencies like the Small Business Administration and the Commerce Department have been given an icy reception. The USTR, operating out of the executive office of the president, has long enjoyed a deserved reputation as a small, elite corps that is skilled in conducting international economic diplomacy. Indeed, some of the biggest names in US international trade circles are USTR veterans: experienced trade diplomats like Alan Wolff, Doral Cooper, Peter Allgeier, Joe Damond, and Dorothy Dwoskin come immediately to mind.
Calman Cohen, the long-serving president of the Emergency Committee for American Trade and one of Washington’s most respected voices on trade policy, got to the bottom line in a January 13 statement. Streamlining government may have its attractions, but “such a result cannot have at its heart, however, the elimination of the Office of the Untied States Trade Representative,” Cohen declared. “The amalgamation of USTR and other key US government entities may severely damage the ability and function of USTR and other entities as they seek to improve the competitiveness of US companies and their workers in the international economy.” The proposed bureaucratic reorganization, Cohen added, “represents a process, rather than a policy.”
Policies for the 21st Century?
If the president were more experienced, and more truly focused on 21st century bureaucracy-modernizing opportunities, he would find plenty of old-fashioned policies over at the Export-Import Bank of the United States. Ex-Im — like the Overseas Private Investment Corp, which Obama also would lump in with standard trade-advocacy bureaucracies — is staffed with a respected cadre of experts in financing, a cut above the standard federal employee. Obama’s top man at Ex-Im, Fred Hochberg, has been credited with working diligently to help the president achieve his declared goal of doubling US exports by 2014. In the last five years, Ex-Im has financed $65.5 billion worth of exports, with more than $32 billion of them coming just last year under Hochberg’s aggressive leadership.
Problem is, American exporters who want to benefit from Ex-Im’s financing must face foreign competitors whose governments have made Ex-Im look relatively insignificant by comparison. As Karan Bhatia, vice president and senior counsel for international law and policy at General Electric, bluntly-but-accurately put it in congressional testimony last March, despite its talent, “Ex-Im unfortunately remains among the world’s least competitive export credit agencies.” To drum home the point, the GE Washington operative added: “For example, Canada — a country less than a tenth the size of the United States — has more than triple the amount of export financing as the U.S.; Japan more than five times; and China an estimated eleven times.”
[The Chinese Ex-Im bank, hardly a model of transparency, says that it has financed $63.5 billion just in 2010, the most recent year for which it has published estimates. But the true number for total Chinese government-backed export financing from several entities just last year is thought to be about $300 billion, according to some experienced China watchers.]
GE’s Bhatia, a former senior US trade official under George W. Bush, and other critics have pointed to a variety of clearly outdated policies that were crafted in an earlier era. Ex-Im’s shipping regulations require that “for certain Ex-Im Bank support a provision be made that the supported products are carried exclusively on U.S. vessels,” the bank’s website reports. That policy dates to the pre-World War I era when the United States was looking to support a merchant marine fleet. And there are Buy America regulations, where Ex-Im isn’t allowed to finance deals where there is less than 50% domestic content. By contrast, the Japanese Ex-Im bank only requires 30% Japanese content, and Canada doesn’t require any, if a Canadian exporter will be helped.
If an American exporter wants Ex-Im financing for a “core product” made by an American multinational in Mexico — but with 77% US content — forget it. Ex-Im isn’t even allowed to support Information Technology services, one of the most entrepreneurial and globally competitive segments of American industry. The bank is also coming up against a lending-exposure cap of $100 billion, with some $90 billion already pledged. The Obama administration is asking Congress (with no real sense of urgency from the White House) to raise that to $140 billion — refusing suggestions from General Electric and other leading US exporters that it be doubled to at least $200 billion.
If the president wanted to look for one government program that has actually more than doubled exports in five years — the declared Obama overall goal for all US exports — he has only to look to his own Commerce Department, which administers duty-free foreign trade zones. There are 500-plus such zones around the United States, where some 2,400 businesses employ about 320,000 workers. These zones are wonderful examples of the benefits of a zero-tariff world.
Essentially, companies who operate in these zones import their components duty-free, which they turn into completed products that are then “exported” outside the zones. If the final manufactures are sold overseas, the U.S.-based company pays the duty applied by the foreign country. If they are “exported” outside the special Customs area into the United States proper, they pay the duty on the finished products that the U.S. applies. For example, Merck, the giant pharmaceutical manufacturer, imports chemicals that are taxed in, say, the 6-percent range, to make medicines in a zone in Elkton, Va. When Merck “exports” the finished pills into the United States, those pills are usually subject to no U.S. tariff at all. Merck’s Elkton manufacturing operations illustrate what a zero-tariff world looks like, as the company is one of the largest employers in Virginia’s remote Shenandoah Valley. Imports thus, as economist Anne Krueger once put it, really are “wonderful things.”
From 2004 to 2008 exports from U.S. foreign-trade zone more than doubled, from $19 billion to $40 billion. In 2010, the last year for which figures are available, the number was about $34 billion, somewhat down, but still 23 percent higher than during the deep 2009 recession.
But foreign-trade zones are not loved in the Obama White House, which has refused to include them in the president’s export-promotion strategy. Inside a business-school classroom, such logic would obviously raise eyebrows — but not in Washington, where imports are politically incorrect. “I will go anywhere in the world to open new markets for American products,” the president declared in last week’s State of the Union address. But he won’t travel a few blocks from 1600 Pennsylvania Ave. to the Commerce Department on Constitution Ave. to praise the job-creating foreign-trade zones. Nor is it likely that Obama will be going anytime during this year’s campaign to a foreign-trade zone in, say, Smyrna, TN, where Nissan operates. And it’s difficult to imagine Obama going to a thriving BMW plant near Spartanburg, SC.
Assisted by its access to duty-free automobile parts, BMW makes its sporty Bmers in South Carolina, which are exported to over 130 global markets. And BMW has recently announced plans to add 300 jobs to its Spartanburg plant this year, and some 700 more in the next three years. But the White House has been cool to such export success stories.
Actually, foreign automobile makers like BMW, Nissan and Toyota are at a competitive disadvantage when they “export” their autos from duty-free zones into the U.S. proper, where they are subject to U.S. tariffs of 2.5 percent. By contrast, General Motors has set up operations in Mexico, where its automobiles are then exported to the United States duty free, thanks to the North American Trade Agreement. The Obama White House has refused to endorse legislation that would level the playing field by giving exporters from foreign-trade zones the same duty-free treatment as their Mexican and Canadian competitors enjoy thanks to Nafta.
The explanation lies in the politics: Auto workers in the American south are not members of the United Auto Workers union, and thus are not considered “American” enough — especially by the Buy American occupant of the Oval Office.
Discouraging foreign investors
It gets worse. Aides to Commerce Secretary John Bryson, a former chairman and CEO of Edison International who presumably knows better, are thinking of making it even more difficult for American exporters’ operations in foreign-trade zones to thrive. Longstanding U.S. regulations have specifically permitted American exporters who manufacture goods inside the zones to pay no duties even on imported raw materials or components that would otherwise be subject to U.S. anti-dumping tariffs. The legal logic is simple: as long as those goods don’t enter the American marketplace, the anti-dumping tariffs shouldn’t apply. But aides to Bryson, who have been lobbied by domestic anti-dumping advocates, are thought to be close to changing the rules.
For American exporters, the result of such a reversal would hit their bottom lines. “For U.S. companies to thrive in global markets, they must have access to raw materials at competitive global prices,” noted Dan Griswold at a Jan. 25 Commerce hearing on the issue. Griswold is president of the National Association of Foreign-Trade Zones, whose members are concerned that reversing the rule would cost them business. “If U.S. companies are forced to pay duties for inputs that their foreign competitors can acquire duty-free in global markets, America-based producers will be at a disadvantage,” Griswold said. “Production, employment, and market share will be more likely to flow abroad than remain at home.” He added: “For U.S. companies to thrive in global markets, they must have access to raw materials at competitive global prices.”
The “Pants on Fire” Candidate?
But meanwhile, the focus in the White House remains on how the president can have access to voters in the 2012 presidential race. During election seasons, to be sure, all White Houses are vulnerable to suggestions that there is a gap between campaign rhetoric and tangible accomplishments. And while the Republican presidential candidate has not yet been determined, it is highly unlikely that anyone who heads the Republican ticket will be running an academic seminar, either. (Already, Mitt Romney has adopted even a shriller tone vis a vis China than even Obama, pledging to declare Beijing a currency manipulator on his first day in the Oval Office.) But still, Obama — who has a record to defend — is vulnerable to charges that he is the “pants-on-fire” candidate.
The president claims he saved some 1,000 American jobs by slapping on tariffs on Chinese tires. Even if true, even if those jobs were not really attributed to normal economic recovery from a recession, which is debatable, those Chinese tire tariffs have had other unpleasant consequences. The Chinese have retaliated by slapping their own tariffs on more than $700 million of American poultry exports, and also have targeted U.S. automobile exports for economic retributions. And then there is the Keystone Pipeline with all those energy-related jobs running from Canada to the Gulf of Mexico — Obama isn’t really against it, he just wants to put the elections (and those jobs on hold) until after the November vote.
Concerning the president’s claims to have restored American international economic leadership by breaking Washington’s gridlock late last year to pass preferential trade deals with South Korea, Colombia, and Panama, well, that’s not exactly what happened.
In the two years before Obama won the 2008 presidential election, the three preferential trade deals had been blocked by congressional Democrats led by then-Speaker of the House Nancy Pelosi (Calif.), supported enthusiastically by then-Sen. Barack Obama. Once Obama was in the Oval Office, he continued the stall. But fast-forward to early 2011, when the political landscape started to change.
Then, Obama sought congressional passage of Trade Adjustment Assistance, a federal program aimed at training Americans who lose their jobs due to import competition, helping them to move on. But the influential conservative Heritage Foundation and congressional figures like Utah Republican Sen. Orrin Hatch put up a howl — arguing that despite the good intentions, TAA spending had too-often been wasteful.
Basically, what could be called the Heritage-Hatch Group employed the classic Washington maneuver of taking a hostage. And throughout most of last year, they seemed prepared to kill the TAA hostage. But when Obama finally agreed to put the US-Korea trade deal before Congress, the conservatives decided to trade. But the White House wanted only to put Korea forth, leaving the other two deals with Colombia and Panama hanging.
That inspired enlightened business leaders like Caterpillar’s CEO, Doug Oberhelman, and others like John Murphy and Tom Donahue at the powerful U.S. Chamber of Commerce, to bring heavy pressure on the White House to do all three deals. Speaker of the House John Boehner was particularly forceful, bringing along other Republicans whose voice on trade issues matter, like Reps. Dave Camp (MI) and Kevin Brady (TX) of the Ways and Means Committee. While Pelosi and the Democratic Party’s protectionist wing remained opposed, important Democrats like Maryland Rep. Stenny Hoyer and William Daley, then White House chief of staff, gave the final push before the president agreed not to leave Colombia and Panama twisting.
With such a record of recalcitrance on international trade in his first term, perhaps the only unanswered question is whether, in a second term, the Obama White House really would take the necessary steps to restore America’s international economic leadership that the president has so tarnished.