TOPICS:
Issues on International Business in Taiwan
December 1997/January 1998

Thinking the Unthinkable:
What the Failure to Pass Fast Track Legislation Means to America

by Steven C. Clemons

In Vice President Al Gore's own words, just days before the House was scheduled to vote on fast track trade negotiating authority, failure to pass fast track was "just unthinkable." Every senior official of the Clinton administration -- from the obvious economic team members such as Secretary of Commerce Daley, Agriculture Secretary Dan Glickman and US Trade Representative Charlene Barshefsky to other non-economic types such as Secretary of State Madeleine Albright and UN Ambassador Bill Richardson -- lobbied Congress hard and hyped the message that America could not possibly retreat on this issue.

It was nearly inconceivable to both proponents and opponents of fast track that the President would not eke out a victory in the end. Fast track opponent and Perot Vice Presidential running mate Pat Choate cynically but realistically commented at a Capitol Hill gathering that President Clinton was "building those bridges to tArticles%20html/Topics%20--%20Thinking%20the%20Unthinkable.html he 21st Century -- one in every house member's district who would support fast track." But about 1 a.m. in the early morning hours of Monday, November 10, after the House had been in all night and during a weekend of constant negotiation and lobbying of the last undeclared members of the House, President Clinton and House Speaker Newt Gingrich pulled the legislation before a 2 a.m. scheduled vote, revealing that their joint effort had failed to secure a majority of votes in the Republican-controlled chamber.

Not only did this historic non-vote and failure to pass fast track christen the clear beginning of President Clinton's status as a lame duck president, but it has put an exclamatory pause in America's claim to economic leadership on the precipice of the 21st century. Many pundits will argue that the failure to pass this legislation which makes it easier for the Chief Executive to negotiate trade agreements which seek to lower trade barriers will not significantly impact the American economy. Perhaps this is true in the short term economic sense, but not when it comes to the long term.

Unfolding regional and sectoral trade rules can by their design help or hinder American economic interests. Without fast track, it will be more difficult to make sure that the U.S. helps write these rules. This is a wake-up call. What has been missing in America's trade agenda is a sense of seriousness, a discipline driven by strategy, and the commitment to ensure that the resources exist to make sure that trade agreements are clearly and visibly delivering better economic results to the broad American public.

If one had to argue what had a more profound impact on the quality of life and workers' wages in America, fast track legislation on one hand or, on the other, the currency crisis that has rocked Southeast Asia -- clearly what is looking increasing like a Southeast Asian-led global devaluation of nearly all currencies against the U.S. dollar matters more. But what proponents of increasingly open, less fettered markets need to understand from the fast track debacle is that they have been asleep at the switch and that quick action is called for.

America offers the world the most open market and liberal economy in the world -- and has submitted a major portion of its economy to global trading rules that make it very difficult to withhold that market from other countries. But the rest of the world does not have such open, liberal economies -- and the failure to secure fast track negotiating authority makes it more difficult for President Clinton to strike deals that increase access for American products and services. But perhaps what is most critical, fast track's failure matters because it is the first explicit national manifestation of the American public's increasing ambivalence about global leadership in the post Cold War-period.

As a recent former senior staff member to a Democratic senator, I watched in disbelief as the mismanagement of this legislative initiative unfolded. While a book could be written about the subject, a few major issues that could have made a difference in this debate.

First, the White House made a mistake of harping on the 239 trade agreements that had been achieved during Clinton's tenure. This only begged questions, made worse by abounding skepticism about NAFTA's impact on U.S. workers' wages and jobs. What were the results of these agreements? Were they being enforced? Were these agreements part of some national economic strategy that was helping to break into new markets and which was leading to more high wage jobs in America? Or was this manic globalism combined with the administration's love of photo opportunities on deals in which the details still had not been firmed up?

In April 1997, former Vice President and retiring US Ambassador to Japan Walter Mondale told his former Senate colleagues: "I presided at the signing of about 19 major trade agreements with Japan, 3 of which are being implemented and enforced." What few in the White House seemed to see is that if a Democrat voted for fast track, communicating a positive rationale for that vote would be tough. The White House, for the most part, relied too much on the logic that every President since Ford had had this authority, so why stop now?

What was missing from this initiative was the message of 'strength through trade.' The public needed to hear from the President and our national business leaders that trade agreements do matter, that they help open markets to American goods and services -- and because these agreements matter, America was going to do a better job monitoring compliance with these agreements and enforcing them. This would have been a more positive message for Democrats to have taken back to their constituents as a justifiable and credible reason to support fast track.

The President would not have lost this battle if early on he had communicated to the public more effectively that American economic growth was now dependent on opening markets abroad, that nearly 30% of the nation's GNP was tied to trade and that this figure had doubled in recent years. The President could have coupled his statements about the need for renewed fast track authority to his commitment to bolster the government's capacity to manage our trade responsibilities.

Quite unbelievably, there are only six attorneys who work in the litigation unit of the US Trade Representative office. Before the WTO was established, there were six attorneys in this section; and despite the US's involvement in 53 WTO trade disputes, there are still six attorneys there today. In September 1997, these six attorney logged together more all-nighters than days in the month, meaning approximately five all-night sessions on average per person per month.

Also inconsistent with the President's message on fast track negotiations, the office of International Economic Policy in the Department of Commerce's International Trade Administrations has been steadily cut back year by year to anemic levels. This office performs the support role for USTR negotiations and prepares the market access material which is so critical to successful trade negotiations. Everyone knows that government resources are shrinking and being cut back, but the amounts spent on this division to make sure that America can competently deal with big emerging market opportunities are very minor and can be increased in modest ways that do not affect the overall reduction of the government budget deficit.

Furthermore, the government never delivered on its commitment made to Congress two years ago that it would significantly expand the number of personnel in the U.S. and Foreign Commercial Service deployed around the nation in domestic export assistance offices. These trade assistance officers provide a critically important link with small and medium sized exporters who often need a leg up in getting up to the table of global trade. In a state like New Mexico, the individual who has played this role -- despite having to split her time between New Mexico and Kentucky because of shortage of personnel -- has played a major role in developing a constituency supportive of a global trade agenda.

Perhaps the biggest frustration in this process is that people like Charlene Barshefsky, Bill Daley, and the President's Fast Track Advisor Jay Berman agree with all of the points above. What is a mystery is why these capable and well-meaning people had such a difficult time themselves getting the President to make statements that would support a 'strength through trade' message. Americans are demanding that the results of trade negotiations be less ambiguous; that enforcement be more consistent. The President could have offered some minor concessions in these areas -- and perhaps fewer roads and bridges -- to secure the fast track supporters that he needed for passage.

Trade is not going to disappear from the American political scene. The upcoming APEC Leaders Summit in Vancouver will most likely be marked by President Clinton coming out of the chute more vigorous than ever, promising to be back next year with a new Fast Track request of Congress. Congressional leaders from both parties have stated that the President will have no problem in securing fast track negotiating authority for specific sectoral agreements, such as in a second information technology agreement, in medical equipment, in energy systems and supplies, in environmental technology and services, and so on. Most likely, the President will commit himself to a sectoral agenda in Vancouver -- for which he can secure limited fast track authority -- any time over the next year.

In other trade related headlines that will keep the President in the trade game, the Eastman Kodak-Fuji Film case will have an interim decision come down from the dispute resolution panel in the December-January time period. The global negotiations on financial services inclusion in the WTO will be decided by December 12. And on an old and unfortunately predictable note, Ambassador Barshefsky has begun to publicly admonish Japan for very poor performance in most of the sectoral agreements reached during the first Clinton term, including agreements on insurance, flat glass, computers, autos and auto parts, and government procurement. The kicker will be the erupting trade deficit which may increase from current levels of approximately $160 billion a year to a projected $300 billion next year, given the currency devaluations against the U.S. dollar occurring throughout Asia and the rest of the world.

In this global environment in which no economy is sitting still, American leadership needs to reconnect with the American public on how best to pursue national economic interests. The public is demanding that the case be made that trade matters, that trade raises living standards, and that America is willing to commit to an economic strategy that makes good sense for the nation. Perhaps the silver lining in this fast track loss is that America has a good opportunity to think about its post-Cold War priorities -- and if this means that manic globalism will be replaced by more thoughtful, hard-headed globalists, this unthinkable failure may turn out to be a very healthy exercise.