WASHINGTON — Sometimes what isn’t saidamey in politics carries the most weight and that seems to be the case regarding international trade and the President’s Tuesday night State of the Union address before a joint session of Congress.
This story first appeared in the January 22, 2004 issue of WWD. Subscribe Today.
Despite the Bush administration’s extraordinary focus during the last three years to engage countries in free-trade talks and otherwise push to liberalize global commerce, the President, in his 54-minute speech, devoted a mere 27 words to the subject.
“My administration is promoting free and fair trade to open up new markets for America’s entrepreneurs and manufacturers and farmers, and to create jobs for America’s workers,” Bush said in comments sandwiched between imploring lawmakers to pass his energy bill and a measure to set up personal retirement accounts as a Social Security alternative.
Bush’s dispatch of trade in his address — and the absence of a call to Congress to approve the recently penned Central American Free Trade Agreement — left free traders and CAFTA backers in the fashion industry glum about the pact’s chances of congressional passage this year, while blaming the presidential short shrift to his desire to be reelected in November.
“It was an election-year speech,” said Peter McGrath, president of J.C. Penney Purchasing Corp., and chairman of the U.S. Association of Importers of Textiles & Apparel and the National Retail Federation’s trade committee. “The conspicuous absence of free trade was a real indication the White House is stepping back. Trade is a lightening-rod issue in an election year.”
Retailers and other importers were already expecting CAFTA to have a difficult time in Congress, given that the entire House and one-third of the Senate are also facing reelection and lawmakers have to weather the same trade-versus-U.S.-manufacturing rift on the stump.
“It was very disappointing, but not surprising, the President’s lack of any specific reference to free trade, particularly with Central America,” said Kevin Burke, president and chief executive officer of the American Apparel & Footwear Association, also sensing White House election-year caution.
Importers are keen on seeing CAFTA passed in advance of the Jan. 1, 2005, scheduled elimination of global quotas on apparel and textile trade for World Trade Organization members. With CAFTA, importers envision the Central American region increasing its importance as an apparel supplier now comprising nearly 20 percent of all garments imported into the U.S.
“We’re running against the clock,” Burke said of the need for CAFTA’s passage, noting that other industries, such as electronics, are equally eager for the pact’s approval.
“My hope is the lack of a statement in the President’s State of the Union doesn’t signal a lack of desire on the part of the administration to urge the Congress to support CAFTA’s passage.”
The White House didn’t return requests for comments regarding its trade agenda, as well as its plans for CAFTA. Administration trade officials are continuing talks with the Dominican Republic and Costa Rica to join the four countries now comprising CAFTA — Honduras, Guatemala, El Salvador and Nicaragua — with an eye to having a six-country pact presented to Congress for a vote.
However, since campaigning and the presidential conventions are cutting into the congressional calendar, Capitol Hill watchers said major legislation like CAFTA would have to be considered by late June. Another scenario has a CAFTA vote being delayed until after the Nov. 2 election and during a lame-duck session of Congress, a strategy that presumes Bush’s reelection and a comfortable reelection of the GOP majorities in the House and Senate.
But if a Democrat claims the White House, there could be a push to renegotiate the pact, since the party’s presidential candidates, including Iowa Caucus winner Massachusetts Sen. John Kerry, want to review trade agreements to ensure they’re balanced.
“The closer to the election, the more difficult it will be politically,” said Erik Autor, vice president and international trade counsel with the National Retail Federation. “There are a lot of people questioning whether [CAFTA] can be done this year or not. It will have to be done with a lot of political lifting [from the White House].” Otherwise, Autor said, don’t expect CAFTA to move farther in Congress this year beyond the congressional hearing stage.
Bush’s State of the Union speech was largely focused on foreign policy and justifying the U.S. war in Iraq, while making it evident that his central campaign focus will be the war on terrorism. However, in turning to domestic issues and the uneven employment and economic recovery from the 2001 recession, Bush acknowledged “there are troubled times” in some parts of the U.S. He proposed no new economic initiatives, but touched on longstanding calls for things like healthcare reform, reduction of government spending and making his almost $3 trillion in tax cuts permanent.
The Bush administration has sought to bring tougher enforcement of trade laws, while helping U.S. manufacturers improve efficiencies and expand exports to head off criticism about U.S. manufacturing losses. At the same time, the Democratic presidential candidates have made the impact of trade on domestic manufacturing a key issue.
Although the manufacturing sector has seen some rebounding since the 2001 recession — industrial production for the last four months of 2003 has gradually improved — Democrats note there are still 2.8 million fewer manufacturing jobs in the U.S. than there were three and a half years ago. In addition, the economy as a whole continues to produce far fewer jobs than needed.
The Democratic front-runner, Kerry told NBC news after Bush’s speech, “This President is not in touch with Americans trying to make ends meet.”
Jim Chesnutt, president of National Spinning Co. in Washington, N.C., and chairman of the American Textile Manufacturers Institute, said he was largely disappointed with the State of the Union address, although he supports the President on foreign policy.
“There were no solutions for the economy,” Chesnutt said. “He was saying things about jobs improving, but you have to look at the last jobs report and only 1,000 new jobs were created and everyone was expecting 150,000.”
Chesnutt is among a cadre of textile industry officials in the South whose traditional GOP allegiances are being tested by trade policy and job losses — those who oppose CAFTA and otherwise see the flagging textile sector under siege by low-cost imports.
On Wednesday, the board of another mill group, the National Textile Association, voted to oppose CAFTA when it goes before Congress.
“Our group is very unhappy with the administration,” said NTA president Karl Spilhaus. “It’s a good thing if it never comes up,” he said of CAFTA and the potential of an election-year delay in its consideration by lawmakers.