Trade Bill Faces Political Puzzle

WASHINGTON -- Lawmakers return to Capitol Hill today to face a vexing issue: how to reach a compromise during an election year on a trade bill and still secure enough votes for its passage, particularly in the House.<P>What the formula for success...

WASHINGTON — Lawmakers return to Capitol Hill today to face a vexing issue: how to reach a compromise during an election year on a trade bill and still secure enough votes for its passage, particularly in the House.

This story first appeared in the June 4, 2002 issue of WWD.  Subscribe Today.

What the formula for success could be is a hot topic among business lobbyists, including those representing textile, apparel and retail companies.

“I don’t think anyone can predict how this thing is going to play out,” said Erik Autor, vice president and international trade counsel for the National Retail Federation.

Part of the trade measure talk involves dropping duties on apparel made in the Andean nations of Colombia, Peru, Ecuador and Bolivia. House and Senate negotiators will try to reach agreement on whether the compromise should require apparel receiving duty breaks to be made of U.S. textiles or both U.S. and Andean textiles, including fabric and yarn.

Talks will also include whether trade legislation covering Caribbean Basin and sub-Saharan African nations two years ago should be changed to expand the amount of apparel using non-U.S. textiles allowed duty-free treatment. A House-passed Andean bill calls for these enhancements, while the Senate bill does not.

Various sectors are pressing for different outcomes to the compromise. Apparel and textile importers, including retailers, want the Andean bill to contain the U.S.-or-regional fabric option and are eager for the Caribbean and African trade bill enhancements.

“We’re looking for a flexible enough rule of origin for apparel,” said Steve Lamar, vice president of the American Apparel & Footwear Association.

Domestic yarn spinners and cotton growers, breaking from the broader domestic textile lobby, are siding with retailers and importers on the Andean textile-origin issue because they see a chance to boost U.S. cotton-containing yarn sales.

“We’ve seen how this operates in the Caribbean Basin and it’s been beneficial to U.S. exports and companies down in the region,” said Mike Hubbard, executive vice president of the American Yarn Spinners Association.

Fearing that increased import competition would deal a crippling blow to the already weakened domestic textile industry, U.S. fabric producers and the apparel-textile union UNITE, want the entire trade bill to be shelved, which isn’t expected to occur during the House-Senate negotiations. However, these groups plan to lobby against passage in each chamber and are marshaling its members to campaign against lawmakers who vote for the bill.

Jock Nash, the Washington lobbyist for textile giant Milliken & Co., said House-Senate negotiators are attempting “to cobble together a politically satisfactory compromise on an issue where there is no grassroots support.”

The proposed Andean duty breaks are part of a trade package that includes expanding benefits for workers who lose their jobs from import competition to include health and wage insurance. The bill also would renew duty-free breaks for an array of nontextile products from dozens of developing countries. These products range from baskets to candlesticks and are widely stocked by U.S. stores.

However, the centerpiece of the package being assembled from the House and Senate legislation is a provision renewing the President’s trade promotion authority. The Bush administration contends the authority is needed in order to complete a series of trade-expanding initiatives, including creating a Free Trade Area of the Americas. Under the authority, Congress couldn’t amend trade agreements, only vote them up or down.

The bill being crafted is expected to face a series of political calculations, largely among House Republicans concerned over how the bill will rest among voters in manufacturing and farming communities where jobs have been lost to import competition. Factoring voter response is crucial for the GOP because it’s clinging to a five-seat majority in the House.

“There are so many elements to this trade bill that counting votes will be very difficult,” said the NRF’s Autor. “There will be a rough calculus.”

On the reelection endangered list are a handful of House Republicans from southern textile-producing states under fire for voting last December to renew TPA. The bill only passed by a one-vote margin, so negotiators crafting the final trade package face the hurdle of garnering support from ample Republicans, as well as Democrats, to ensure passage.

In order to score the TPA victory, House GOP leaders and the Bush administration made various pledges to Republican textile-state lawmakers in exchange for their votes.

One of those promises — requiring U.S. fabric to be dyed, printed and finished in the U.S. if it’s contained in Caribbean Basin apparel receiving duty breaks — is also expected to be part of the trade bill negotiations. The promise also calls for extending the same requirement to U.S. textiles used in Andean apparel.

While the House is considered the toughest hurdle for a compromise trade package, lawmakers negotiating the bill still have to worry about getting a final product through the Democrat-controlled Senate. There, lawmakers voted for a trade bill containing expanded laid-off worker benefits, a provision seen as key to garnering Democratic votes in the Senate and House in order to secure passage of a compromise.

The Senate also included in its bill a controversial provision that would require congressional approval of changes to U.S. trade laws contained in trade pacts. The administration has balked at a final trade bill containing this caveat.

Who will be negotiating the trade bill compromise is the source of still more controversy. Typically, a large panel of House and Senate lawmakers from both parties, known as a conference, are selected to iron out differences in legislation.

But given the political complexity of striking a compromise that can pass both chambers and the desire to have a trade bill vote well in advance of the November elections, there is speculation the conference process could be circumvented.

A cadre of House and Senate leaders could negotiate the compromise, a strategy used two years ago in reaching a deal on the apparel-duty-dropping Caribbean and African trade bills.”