Photo: MANDEL NGAN/AFP via Getty Images
Last week was a busy one on Capitol Hill, with some significant developments on trade and an important event not directly related to trade but which could have long-term implications.
The latter was the action by the House, finally, to pass legislation on aid to Ukraine and Israel along with other national security matters. For trade wonks, the important thing was not the substance but the process. The bills passed with overwhelming bipartisan votes. This is the way the institution used to operate back in the Stone Age when I worked there—both sides tossed their extremes over the side and reached agreement in the middle. With some exceptions, like the Civil War period and the present, this is the way Congress historically operated. There were some members of Congress who bemoaned the result, arguing it was not what the American people had elected them to do. That is totally wrong. Poll after poll has demonstrated that bipartisan cooperation is exactly what the people want. I hope the votes signal a trend back to that approach, which will be good for the country and good for Congress’s public image, not to mention the electoral survival of moderates in both parties who represent swing districts. The pundits are saying that these votes were an aberration and we should expect a return to partisan trench warfare. They may be right, but we should all hope that they are wrong and that we have turned a corner in our politics.
Back on the trade front, most of the action was in the House Ways and Means Committee, and, unfortunately, it was not bipartisan. The committee approved a number of trade bills on party line votes, with Democrats complaining that they were not consulted and had very little time to review them. The bills addressed some old issues—renewal of the Generalized System of Preferences (GSP) program, which expired more than three years ago, and reform of the de minimis tariff rules—and one that is both embarrassingly old and new at the same time: defining the term “free trade agreement” (FTA).
The latter is a product of congressional annoyance at the administration’s negotiation of a critical minerals agreement with Japan, and potentially others, that is intended to qualify critical minerals from or processed in Japan for the tax credits in the Inflation Reduction Act (IRA). Congress is annoyed at the failure of the administration to consult on the matter or to submit the agreement for approval, but there is also a feeling that an agreement on a specific sector is not an FTA. However, since the term is undefined in law, an FTA can be pretty much whatever the administration says it is.
While the Congress may blame the administration for the ambiguity, in fact, it’s Congress’s fault for not defining the term in the first place. More embarrassing, it’s also my fault and that of my colleagues at the time in the 1970s and 1980s for not doing it then. The proposed definition would require an FTA to cover “substantially . . . all trade” (which tracks the World Trade Organization’s definition) and be approved by Congress.
The GSP bill tracks previous proposals from both parties but apparently does not go as far on labor and environment conditions as Democrats would like. The de minimis bill, like its predecessors, is aimed at China but would provide less than a total ban, removing from de minimis eligibility only those items from China that are subject to Section 301 or other trade law tariffs.
Both, in my view, are reasonable compromises on issues where action is long overdue. Unfortunately, renewal of the miscellaneous tariff bill was not taken up, apparently because of concerns that the biggest beneficiary would be China, although the real beneficiaries would be U.S. companies, which would be able to buy goods made outside of the United States at cheaper prices.
Despite the committee’s approval, the bills’ fates are uncertain. Democrats uniformly opposed them, primarily because renewal of trade adjustment assistance (TAA) was not included. The Republican argument was that TAA has historically been paired with renewal of trade promotion authority (TPA), and since there is no TPA, then there is no TAA. This is myopic and historically inaccurate. The two have been paired in recent years, but TAA dates back to the 1960s, long before TPA was envisioned, although it is true that there has always been a conceptual linkage between the idea of trade liberalization and support for workers impacted by it. It is myopic because the need for it remains as the United States continues to experience a flood of imports and because it is a necessary enabling measure for TPA, should the administration eventually request it.
The committee actions were taken before the House got its collective act together on the national security bills, so we can hope that the latter development might serve as a precedent for committees as well as the full House. If not, and the insistence on party discipline and refusal to compromise remain—the “my way or the highway” attitude—then it is not likely the trade train will leave the station, at least until after the election.
William Reinsch holds the Scholl Chair in International Business at the Center for Strategic and International Studies in Washington, D.C.
