Congress Steps Up
January 15, 2019
Last week I talked about the president's trade tactics and his thus far less than successful dealmaking. This week it is time to discuss Congress, both because the new year has brought new leadership to the House, and because at some point this year the United States-Mexico-Canada Trade Agreement (USMCA) implementing bill is likely to show up at its door, which will force them to take some kind of action. Since the last major trade vote was in 2015 (on trade promotion authority), and since the Democrats have not controlled either house of Congress since 2010, a lot of things have changed, and both parties will have to reestablish their positions on trade. That will be more difficult for both of them than you might think. Let's start with the easier one.
The Republican dilemma is reconciling their long-standing support for free trade with a president who is taking the party in the opposite direction—and whose base supports him—or deciding to stand up to him. This graph shows the significant decline in Republican voters' support for trade since Trump arrived on the political scene.
Since Trump’s base is also their base, Republicans oppose him at their peril. This has not been a smooth evolution. Some members have reacted by strongly opposing his actions on trade and seeking to return tariff authority to Congress. Some have vigorously supported him. Most have chosen to either stay silent or express concern about his trade actions and distance themselves from him without directly criticizing him.
Fortunately, consideration of USMCA implementing legislation may not pose the same dilemma for them. The president is for it (it is, after all, the greatest trade deal ever made), and the business community will be for it (most of it is upgrades of the original NAFTA). That is a combination that should allow both pro-trade Republicans and trade-skeptic Republicans (after all, who is going to be more protectionist than Trump?) to support it. The difficulty for them will be how to deal with changes in the implementing legislation the Democrats are sure to demand, and without which the bill will not pass the House.
As for other issues, they—and almost everybody else—agree that China needs to be confronted and that other negotiations—Japan, the European Union, the United Kingdom and other players to be named later—are good ideas. Their dilemma will be whether to support the president's use of tactics they think are counter-productive and which hurt their constituents. If the tactics continue and the “winning” doesn’t start, more and more members will part company with him.
The Democrats are in a somewhat different position. First, they are the opposition party and take seriously their duty to oppose. You can expect them to be against most everything the president is for. Their dilemma is squaring that with internal disagreement over the right policy. As the above graph shows, most Democrats are pro-trade. Indeed, the most pro-trade, pro-globalization parts of our population are young people and minorities, both core Democratic constituencies. However, the loudest voice in the party seems to be organized labor, which takes a much more negative view, and which is very influential with Democratic-elected officials (even though a substantial number of union workers ignored their leaders and voted for Trump). Labor opposition to pro-trade policies along with progressives' suspicion of anything that might benefit large companies (even though millions of Americans work for them) make it harder for Democrats to simply oppose the president's trade policy.
Their response so far has been to criticize the president's implementation of his policies. They either don't work or cause too much collateral damage, or both. This means they will insist on changes in the USMCA, largely focused on better labor provisions that appease labor, and if they are made, enable Democrats to support the agreement. The Democrats can say they made Trump fix it to get their support. That is a narrow path to a happy ending for the USMCA and a way for at least some Democrats to keep faith with organized labor and the rest of their base at the same time. If it works, you will see the same approach with other negotiations—demanding a price for their support, and if it is paid, enough of them will support the agreement to get it passed.
Inevitably, there will be many on the left who do not, and they will make it difficult for the Democratic leadership to maintain a united front—a parallel to the Republicans' Freedom Caucus—both obstacles to constructive operation of the government.
Getting to "yes" will be risky. It depends on the administration cooperating—not something the president does easily—and on the Democrats' price not being so high that he has an excuse to ignore them. It also means each trade issue that requires congressional action will produce two fraught negotiations—one among Democrats over what price to charge and then one with the administration over paying it.
The good news is that there is a path to success here. The bad news is that there will be a lot of drama along the way and many opportunities to go off the rails.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
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