Postelection Trade Blues Part II

Last week I discussed possible lame duck congressional outcomes. Nothing in the election results so far cause me to change anything I said then. I still expect members on both sides of the aisle to make a run at tying up loose trade ends, and I still think the chances of their success remain low.

Although not all results are in, last week’s hypothesis appears valid—the Republicans will take over one house of Congress. The somewhat unexpected development is the small size of their margin. That will only encourage what was going to happen anyway—internal conflict. People with short memories are well aware of the battles between left and center Democrats that have been a feature of the past two years. Those with longer memories remember similar battles between far right and centrist Republicans during the John Boehner and Paul Ryan eras. Majority status invites fratricide, and a narrow majority encourages it.

For policy wonks, the likely leadership struggle will be a distraction from actually developing a 2023 legislative agenda, and it will continue until at least January 3. (Remember that the speaker must be elected by a majority of the whole House, which means even a small number of dissidents can derail the train.) After that, the same divisions are likely to recur in struggles over new legislative initiatives.

Uncertainty about the outcome, however, has not stopped individuals from laying out their agendas. In the case of trade, that is partly because there is a contest for the House Ways and Means Committee chairmanship, and the candidates are under pressure to make a substantive case to their colleagues as to why they should be chosen. First up is Vern Buchanan (R-FL), who has already made clear his support for renewing trade promotion authority (TPA) and for pursuing free trade agreements with Kenya, Taiwan, and the United Kingdom. One of his competitors, Adrian Smith (R-NE), currently ranking member of the Subcommittee on Trade, has also been clear in his support for a more active policy of negotiating new FTAs and critical of the Biden administration’s failure to do so. The third candidate, Jason Smith (R-MO), has been less vocal on the subject but presumably has similar views, as has the lead Senate Republican on the Finance Committee, Mike Crapo (R-ID).

While Congress cannot easily make the president negotiate something, and it cannot do it itself, it can, indeed it must, give him the authority to negotiate if anything is going to happen. That suggests we should look for a congressional effort to draft new TPA legislation. From my point of view, that would be welcome since I began such an effort in 2020 with a hardy group of private sector advisers only to see it fade off into the sunset due to lack of interest, at the time in both parties. I would be happy to resuscitate it, but, realistically, producing what would be a major trade bill without administration leadership will be very difficult, and there is currently no sign that leadership will be forthcoming.

Nor is it entirely clear that Republicans will be unified, either on producing new TPA legislation or on its contents. The leadership is clearly pro-trade in the traditional sense, but Donald Trump can hardly be called a traditional free trader, and his acolytes in the Congress may not support more FTAs, or at least will have strong views on what they ought to look like. The Senate, which likes to think of itself, erroneously, as above such petty bickering, may demonstrate more bipartisan support for new trade agreements, but the leadership will still be Democratic, and the necessity of finding 60 votes to move forward will be a significant obstacle to a trade bill. So, I would look for a lot of activity—hearings, committee markups, maybe even House floor action on a trade bill—but the odds remain getting anything across the finish line. If the administration decides to play an active, constructive role in that process, which Ambassador Katherine Tai is certainly capable of doing, the results might be different, and the results of the United States-Mexico-Canada Agreement (USMCA) debate certainly demonstrate that bipartisanship is possible even in a difficult political climate. Channeling that success, she recently indicated a TPA would need to be bipartisan to obtain administration support, but that hardly implies leadership.

One area where there will be bipartisan movement is on China. Republicans have a political interest in claiming Biden is soft on China, and Democrats have a political interest in refuting that, and public opinion currently is very negative on China. That will lead to what no doubt will be a whole bunch of bad ideas with some good ones sprinkled in. Congressman Buchanan has mentioned looking at China’s continued efforts to steal U.S. intellectual property. That is a noble objective, but there are already laws on the subject and enforcement strategies underway. It will be interesting to see what he and others come up with that is new.

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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