WASHINGTON — The Congressional trade agenda is being stymied by election-year pressures, a fierce partisan atmosphere and dwindling days in the legislative session, which could leave a lot of loose ends for the fashion industry.
With just seven weeks until the midterm elections, with the entire House and one-third of the Senate at stake, Republican leaders in Congress are playing their trade cards close to the vest.
Senate Majority Leader Bill Frist (R., Tenn.) made no mention of trade legislation in laying out his priorities when the Senate reconvened Sept. 5 after a monthlong recess, and House Majority Leader John Boehner (R., Ohio) chose his words carefully in response to reporters’ questions on trade.
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Trade policy — set by the White House, but shaped by Congress in approving and amending legislation — is high profile for the industry, and pending bills and expiring trade-preferences programs are propelling the debate between retailers and importers, and domestic textile and apparel producers.
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The House and Senate have less than two weeks before they are scheduled to adjourn to campaign for the elections. The House is expected to return on Nov. 13.
The only consensus among trade veterans is that it’s unlikely any major trade bills will move before the elections on Nov. 7. Some attribute the skeletal trade agenda to election-year pressures — GOP leaders want to avoid forcing their members to make a difficult trade vote before they face their constituents at the polls — while others attribute it to a truncated legislative agenda and several unfinished spending bills.
“As I see it, the election period strategy is just to keep trade on the far, far back burner,” said Gary Hufbauer, a senior fellow at the Institute for International Economics. “Republicans are obviously for it, but they don’t see it as useful in an election year. They don’t think it will get additional votes, but it will stir up opposition.”
The outcome of the Congressional elections will shape the trade agenda for the next two years, as will the expiration on June 30 of President Bush’s trade promotion authority, which requires Congress to vote for or against trade deals without amendment. That authority is not expected to be renewed.
If Democrats regain the majority or narrow the margin by picking up seats in either the House or Senate — many political pundits have said Democrats are more likely to take control of the House — the priorities will change and the bulk of trade legislation could stall, with a few exceptions.
Some experts contend that many Democrats are pro-trade and a change in power in the House will shift priorities but not stifle free trade deals, while others maintain Democratic control could have a chilling effect on the trade protocol and continue the gridlock.
“If Democrats take over one chamber of Congress, you will have a lot more measured discussion on trade issues,” said Tim Kane, director of the Center for International Trade & Economics at the Heritage Foundation, a conservative think tank in Washington. “[Former president] Bill Clinton made it OK for Democrats to be pro-trade, but a lot of those voices have been quiet because they are not in power.”
One of the biggest wild cards this fall is a bill that would grant permanent normal trade relations status to Vietnam. It is a bill that has broad bipartisan support in both the House and Senate and appears to have the most traction, but it faces opposition from textile-state senators and the domestic textile industry.
Vietnam already has reached a bilateral trade pact with the U.S. as a precursor for its joining the World Trade Organization, and Congress must pass a bill giving Vietnam PNTR in order for the U.S. to enjoy the benefits of Vietnam’s membership in the WTO, such as looser restrictions on distribution and services in Vietnam.
Retailer and importer groups, poised to take advantage of the elimination of quotas on Vietnamese apparel and textile exports to the U.S., which comes with Vietnam’s WTO membership, are lobbying members of Congress aggressively this month to vote for the bill before the President travels to Hanoi for the Asian Pacific Economic Cooperation summit in November.
Domestic textile associations are lobbying against the bill and Vietnam’s entry into the WTO because that would effectively eliminate quotas on apparel and textile imports from Vietnam, potentially leading to import surges and further job losses in the U.S, they argue.
Sens. Elizabeth Dole (R., N.C.) and Lindsey Graham (R., S.C.) have placed holds on the legislation in the Senate because of concerns about the impact of potential import surges on domestic textile firms. Officials in the U.S. Trade Representative’s office are discussing ways to resolve the issues with the senators. Dole has said she is seeking an extension of existing quotas on apparel and textiles, among other remedies.
“We hoped to get this done in September, but that doesn’t appear to be in the cards,” said Erik Autor, vice president and international trade counsel at the National Retail Federation. “This is an amendable trade bill and even if the House and Senate vote, the question is whether there will be a conference this year and then votes on the conference report.”
Autor said neither party would have a mandate after the elections.
“It will still be a very, very small majority, whichever party is in control,” he said.
Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition, said he expected trade agreements to be “pushed off because there is nothing demanding any level of action.”
AMTAC has been lobbying the Bush administration for a China-like quota safeguard or an extension of existing quotas on Vietnamese apparel and textile imports, and maintains the safeguard mechanism the U.S. negotiated with Vietnam in its WTO accession package is inadequate.
“It is easy to push off trade agreements and do them early next year or in a lame duck session, but Vietnam is an odd one” because of Bush’s trip, Tantillo said.
If the Democrats take control of the House, they would be very “uncooperative,” he said, although Vietnam might be an exception because there is broad bipartisan support.
Boehner, who controls the legislative agenda in the House, said earlier this month that the bill would be on the House calendar before the President goes to Vietnam, but he declined to say whether the House would try to move the bill before Election Day.
Another top trade issue for the industry is a pending free trade agreement with Peru and the expiration of a trade preference program known as the Andean Trade Promotion & Drug Eradication Act, with Peru, Colombia, Bolivia and Ecuador.
Importers and retailers are concerned about losing existing duty free benefits under the trade-preference program because it expires at the end of the year and the FTAs, which would make the program permanent, have run into election-year snags.
The White House has not yet sent the Peru trade deal to Congress, so key committees in the Senate and House cannot vote on the bill. In addition, many Democrats are strongly opposed to the trade pact because of what they claim are weak labor provisions.
The American Apparel & Footwear Association brought in several executives last week to lobby members on Capitol Hill about the importance of protecting duty free benefits in the Andean region between the expiration of the trade-preference program at the end of the year and the Congressional passage and implementation of FTAs with Peru and Colombia.
“The priority for us is to keep the Andean region stable,” said Stephen Lamar, senior vice president of the American Apparel & Footwear Association. “We would like to see both the Peru and Colombia deals completed and done, but at the same time we would like to make sure there is no gap in coverage between the expiration of the Andean program and the entry into force of the Peru and Colombian free trade agreements.”
Julia Hughes, vice president of international trade at the U.S. Association of Importers of Textiles & Apparel, said, “That is a very difficult issue [in Congress], but it is a very high priority for our companies. Companies are starting to shift orders because the preference program expires on Dec. 31 and a free trade agreement won’t be implemented at that time.”
Hughes said USA-ITA would press members of Congress this fall to get a temporary extension of the trade-preference benefits for Peru and Columbia, which is where the bulk of existing apparel production is.
“House members feel Peru is a ‘Why does it have to be done issue?'” said Tantillo. “Republicans in the House feel fairly confident if they make a big enough stink on trade, it will not happen prior to the election, whether it’s Peru or Vietnam.”
Rep. Bill Thomas, (R., Calif.) chairman of the House Ways & Means Committee, indicated to reporters two weeks ago that he might try to assemble an omnibus trade package of items that are “expiring” this year.
Thomas, who is retiring at the end of this term, said he would consider such trade items as the Generalized System of Preferences program and expiring provisions in the African Growth & Opportunity Act, which allow importers to use fabrics and yarns from anywhere in the world in apparel production in eligible sub-Saharan African countries.