Election Seen Slowing Trade Deals

Congress is expected to consider a full slate of trade measures next year amid the heat of a presidential campaign.

WASHINGTON — Congress is expected to consider a full slate of trade measures next year amid the heat of a presidential campaign.

This story first appeared in the December 4, 2007 issue of WWD.  Subscribe Today.

Key legislation on the table includes: A bill that would pressure China to raise the value of its currency or face punitive tariffs, an overhaul of the Consumer Product Safety Commission to tighten lead standards and stiffen penalties for contaminated imported products, pending trade deals with Colombia, South Korea and Panama, and action on the Doha round of global trade talks if a deal is first struck between World Trade Organization members.

Apparel importers and retailers are also bracing for a move by the textile industry and organized labor to push the White House and Congress to extend quotas that expire at the end of 2008 on Chinese apparel and textile imports.

House Speaker Nancy Pelosi’s (D., Calif.) floor speech leading up to the Peru Free Trade Agreement vote provided a glimpse of how Democratic leaders in the House may approach the trade debate next year.

“We certainly have to be concerned about the impact of trade,” Pelosi said. “It’s self-evident and it is a challenge for us. But we cannot turn our backs on it, and I absolutely refuse to have the Democratic Party be viewed…as an antitrade party.”

The Peru pact showed a willingness by Pelosi and House Democratic leadership to push a trade agreement through without the support of a majority of their own party. They also faced dissatisfaction in the labor movement, which did not actively oppose the deal in the hopes of getting more cooperation on blocking bigger trade deals with Colombia and South Korea.

Gary Hufbauer, a senior fellow with the Petersen Institute of International Economics, said the passage of the Peru deal gave Democrats more “credibility” on trade and may be the only trade initiative they pass until 2009, with the exception of extensions for a few preference programs that expire early next year.

Among House Democrats, opposition to pending trade agreements is being led by a group of 20 members who comprise the House Trade Working Group, which has insisted that all deals be put on hold until issues such as China’s currency valuation are addressed. Democratic leaders have indicated they plan to put off tackling most major trade measures until 2008.

A total of 116 Democrats voted against the Peru free trade accord that passed in last month. A domestic trade assistance bill helping workers who lose their jobs because of foreign competition was approved by the House in October. The Senate, which has not voted on the aid bill, is expected to approve the Peru deal before the end of the year.

One of the biggest issues for the industry is whether Congress will act on punitive legislation aimed at Chinese imports, although any bill likely would draw a veto threat from President Bush.

“The Democratic leadership may not agree to do anything other than a China bill,” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “I think it will be a massive embarrassment for them to go through the entirety of this Congress without doing some sort of China bill — that would be inexplicable to their constituency.”

Tantillo said domestic groups are concerned that House Ways and Means chairman Charles Rangel (D., N.Y.) might try to move his own agenda that could include measures to expand duty free benefits for Haiti, African nations and other less developed countries.

Stephanie Lester, vice president of international trade at the Retail Industry Leaders Association, with membership that includes Wal-Mart Stores Inc. and Target Corp., said she anticipates the Democratic leadership will take up China legislation that is opposed by retailers next year.

“Legislation targeting our bilateral relationship with China in a harmful way is a top concern and it is a concern shared across the business community,” said Lester.

Stephen Lamar, executive vice president of the American Apparel & Footwear Association, said, “The biggest question for the industry next year is what will happen at the end of 2008. Will there be something that replaces the [Chinese apparel and textile] quotas?”

Lamar expects Congress to act on a “China omnibus trade or enforcement package….You’ve got a lot of members of Congress who would like to do something on China” and currency and trade remedy reform are top priorities.

Mark Levinson, chief economist at UNITE HERE, said the apparel and textile union will work with a coalition of textile groups to try to extend the bilateral deal the U.S. reached with China that imposed quotas on 34 apparel and textile import categories through 2008.

“Our reading of the China WTO accession agreement is that it allows [an extension],” Levinson said.