WASHINGTON — The Commerce Department and U.S. Trade Representative’s office lost millions of dollars in proposed funding for the 2008 fiscal year after Democrats were forced to make significant cuts in an omnibus spending bill to satisfy President Bush’s budget demands.

The House passed a $515.7 billion spending bill, which would fund all of the federal government’s agencies except for the Defense Department, late Monday night. The bill, a compromise package that combined several separate spending measures, also includes $31 billion for the war in Afghanistan but no money for the war in Iraq.

This story first appeared in the December 19, 2007 issue of WWD. Subscribe Today.

The Senate is discussing the spending bill and is expected to vote this week. A contentious debate over funding for Iraq is expected as senators try to increase the war funding in the bill to $70 billion. Bush said Monday he was “pleased” that the spending bill appeared to be making progress, but his support hinges on Iraq war funding.

If those efforts fail, the spending bill could stall for the year. Should the Senate succeed in including funds for Iraq, the House would have to approve the revised legislation before sending it to the President to sign.

The Commerce Department, which enforces trade remedy laws in antidumping and countervailing duty cases — including a monitoring program for apparel imports from Vietnam — was set to receive $6.85 billion in proposed 2008 funding in the spending bill, shaving almost $500 million from the proposed budget. The funding in the new bill essentially maintains 2007 funding levels for Commerce, which was $6.625 billion.

“To the extent the new bill cuts back on increases in enforcement, which are desperately needed, that’s a real concern,” said Cass Johnson, president of the National Council of Textile Organizations. “There clearly needs to be a boost in resources in the government…devoted to monitoring and filing cases against China and others who break WTO rules.”

The lead agency on that front is the USTR office, but it lost $4 million in proposed funding for fiscal year 2008. The agency, which negotiates free trade agreements and files unfair trade cases against foreign countries, was set to receive $48 million in the Democrats’ initial funding bill, but the latest round of cuts lowered the level to $44.1 million, basically matching 2007 allotments.

The textile industry would also see a major cut in funding for university consortiums that link the textile and fiber industries to leading research and educational programs, including the National Textile Center and the Textile/Clothing Technology Corp. The bill would provide $4.7 million for fiscal year 2008, marking a dramatic cut in funding of about $16 million compared with previous years.

Sens. Elizabeth Dole (R., N.C.) and Lindsey Graham (R., S.C.) were among a group that made a request for $13 million to fund those initiatives in the bill that passed the Senate.

“These programs are in a sense a casualty of the major reduction in spending for what is defined as ‘domestic programs,'” said Auggie Tantillo, executive director of the American Manufacturing Trade Action Coalition. “It is a good news-bad news scenario for the industry. The good news is [the programs] survived a very difficult budget year by being included in this package, which is a testament to the strong political support for these programs. The bad news, of course, is the funding is roughly one-third less than what they had been operating on in recent years.”

The omnibus bill kept in place funding desired by Democrats for improvements to the interstate highway system, providing $40 billion in the coming fiscal year, $631 million more than Bush requested — $1.1 billion above 2007 spending levels.

The bill would prohibit the use of funds to allow Mexican-base trucks to operate beyond the commercial zones in the U.S., which Bush has tried to implement for years. The administration has gone ahead with the program anyway, using existing funds from the Department of Transportation that could allow as many as 100 Mexican carriers to send trucks to the U.S. for a year.