Master Deal Maker Faces Test at Home

If you want to get Charlene Barshefsky angry, call her tough.

“Ahh,” says Barshefsky, the chief U.S. trade negotiator, sitting in her office a block away from the White House. “I think if I was a man no one would use the word tough. . . . When you’re female, when people wish to be complimentary, they tend to use the word tough.”

Tough may not be her preferred word, but such adjectives as tenacious, determined and disciplined all wrap themselves around Barshefsky as naturally as the expensive silk scarfs that are her trademark.

Most Cabinet officials are lucky to inspire the occasional amusing anecdote; Barshefsky inspires war stories:

The time she laughed out loud when the Japanese finance minister told a U.S. negotiating team it had to take or leave the offer he had placed on the table. Or the time she gave a speech to the U.S. Chamber of Commerce in Beijing in which she blasted her hosts for not supporting her hard-line negotiating strategy with the Chinese.

In a job that has attracted some exemplary deal makers--Robert Strauss, Carla Hills and Mickey Kantor, to name three--Barshefsky may be the most skilled negotiator of all.

In 4 1/2 years at the Office of the U.S. Trade Representative, first as a deputy and since April 1996 in the top job, she has butted heads in Tokyo, Beijing and Seoul; spearheaded global treaties eliminating trade barriers on information technology and telecommunications products, and played a central role in laying the foundation for proposed free-trade zones in South America and Asia.

“Basically she’s smart as hell, indefatigable, and the right person philosophically because she is not encumbered by a lot of the ideological fixations--is this free trade, is this protectionism,” says Bill Archey, president of the American Electronics Assn. “She is practical about the issue: We should be getting into certain markets and we’re not.”

But today Barshefsky’s most important trade negotiation is at home, with Congress. Despite a sustained economic recovery that has underscored the revival of American competitiveness, President Clinton finds his trade agenda entangled in anxiety about America’s ability to hold its own in the international economy.

Since 1994, the administration has been unable to persuade Congress to provide him with “fast-track” authority--the special procedure that allows trade treaties to receive an up or down congressional vote without amendment. Without such authority, moving major trade agreements through Congress is virtually impossible without amendments that would force renegotiation of the agreements. Fearing that the legislative calendar already was overloaded, Clinton recently decided to put off the push for fast track until this fall.

For the 46-year-old Barshefsky, this impasse presents a new challenge. Her skill in international trade negotiations is unquestioned. But her experience with domestic politics is much more slight. And at a time when the top trade priority is rebuilding the domestic political consensus for a policy of open markets, that is the arena she must now master.

“Where Charlene has been able to go off and negotiate on her own, she’s been brilliant,” says one administration official who works closely with her. “It’s when all these other people get into the mix that it gets more complicated.”

Unease About a Global Economy

The politics of trade has become a complex game of three-dimensional chess. To move forward on a significant agenda requires the perfect alignment of the White House, Congress and the foreign negotiating partners.

From fall 1993 through fall 1994, Clinton aligned the stars to produce some of his most glittering foreign policy achievements. He completed both the North American Free Trade Agreement with Canada and Mexico and the world trade treaty known as the GATT (General Agreement on Trade and Tariffs). Over a remarkable four-week period in late 1994, he won commitments from South American nations to build a hemispheric free trade zone by 2005, and from Asian nations to construct a trans-Pacific free trade zone by 2020.

These ambitious agreements were as much political as economic: They amounted to Clinton’s effort to impose order, not to mention an American stamp, on the most dynamic regions of the post-Cold War world. But three years later, both the domestic and international forces behind those achievements have begun to drift out of phase.

Abroad, the Asian and Latin American trade initiatives seem to be losing momentum. The administration’s inability to win fast-track authority has led to an embarrassing delay in reaching a free-trade agreement with Chile. Trade ministers from throughout the Americas recently voted to recommend formal negotiations toward a hemispheric free trade zone next year. But, as the United States has hesitated, Brazil has become bolder in questioning the vision of an American-led trade union.

Likewise, in Asia, despite some signs of progress, it is becoming increasingly clear that “you’ve got a bunch of countries that don’t want to liberalize to the degree or at the pace we want them to liberalize,” says Bruce Stokes, a senior fellow at the Council on Foreign Relations.

At home, the resistance to providing Clinton fast-track authority symbolizes the continuing unease about the impact of economic globalization on the United States. “From the standpoint of what I would call the gut political instinct in the United States, there is a real questioning of what this is all about,” says Jeffrey E. Garten, dean of the Yale School of Management and a senior Commerce Department official during Clinton’s first term. It is something of a paradox: Since the approval of NAFTA in 1993 the political prospects for free trade have grown gloomier even as the economic outlook for the nation has grown brighter.

A Compulsion for Excellence

These riddles are now the province of a woman who approaches problems with the patience and precision of a safecracker. In a capital given to the construction of grand theories, Barshefsky has made her mark through the mastery of the particular. Though she is witty and capable of finding the humor in tense situations, she chooses her words carefully, as if assessing precious stones or inspecting ammunition.

Barshefsky was born in Chicago in middle-class circumstances. Her father, who emigrated in his teens from Ukraine, went on to become a chemical engineer; her mother, who arrived from Poland, was a schoolteacher.

Barshefsky always seemed powered by the compulsion for excellence common in first-generation Americans. Her father traveled extensively abroad, and Barshefsky had a precocious interest in the world; as a grade-schooler in Chicago she read, and underlined, the New York Times. Law, much less trade law, was never in her sights; she planned to pursue a PhD in political theory until it became clear by her junior year at the University of Wisconsin that the job market for advanced political theorists was itself somewhat theoretical. Several of her friends (including her future husband, Ed Cohen, now a lawyer at the Interior Department) were on their way to law school, and Barshefsky followed them, eventually graduating from Catholic University in Washington.

Even after Barshefsky joined the Washington law firm of Steptoe & Johnson, trade wasn’t on her mind. At a luncheon soon after she arrived, she found herself sitting next to the firm’s chairman, who asked her whether she would like to work on a “dumping” case.

Barshefsky answered that she wouldn’t feel comfortable going into court against environmental interests.

She soon learned that “dumping” involved foreign manufacturers’ unloading their products in American markets below cost. She spent the next 18 years mastering the blinding detail of international trade law, as she assembled a prominent and lucrative practice.

By her own account, Barshefsky divided her time “half and half” between domestic and foreign corporate clients, representing them in trade disputes not only in the U.S. but also in countries such as Mexico and England.

Although not active in politics, Barshefsky was well known in the legal profession, and when Clinton named Mickey Kantor as his trade representative in 1993, her name quickly came across Kantor’s desk as a potential deputy. Kantor brought her in for a meeting and was sold before the coffee cooled: “I don’t think it took three minutes before I wanted to hire her,” he says.

Kantor gave her responsibility for negotiating with Latin America and Asia. It was Asia that dominated her first two years. As a candidate, Clinton had promised a tougher line in trade talks with Japan. Barshefsky was charged with implementing it.

Her approach was marked by an absence of sentimentality: “Her perspective was different” from that of her predecessors, says attorney Ira Shapiro, who worked with her at the trade office. “Lots of people have come into that job thinking there had been some misunderstanding between us and Japan. Her view was that Japan was still a closed market and that opening it would be a difficult challenge.” After her first trip to Tokyo, the Japanese nicknamed her “Stonewall.”

A Record of Patience, Tenacity and Discipline

Barshefsky negotiated high-profile agreements with Japan and led the administration’s drive to force China to combat the unauthorized copying of compact discs, movies, software and other products. The relentless travel halfway across the world imposed enormous strain on her family; in a New Yorker profile last year, she openly agonized over the impact of her frequent absence on her two young daughters and husband.

In April 1996, she replaced Kantor, who succeeded Commerce Secretary Ronald H. Brown after his death in a plane crash. The promotion gave her more control over her travel--if not her hours in the office--because wooing Congress demands so much of the trade representative’s time.

Barshefsky wasted no time. Ten days after taking office, she rejected as inadequate a draft agreement meant to end national monopolies and open phone services to international competition; 10 months later, she finalized a much more comprehensive agreement among 60 countries. She conceived and executed an imaginative strategy to build consensus behind a global agreement to eliminate almost all tariffs on the export of information technology products such as computers and software.

In all this her hallmarks were patience, tenacity and discipline. Asked her rules for successful negotiation, Barshefsky is precise and specific. “Rule No. 1, and there is not a substitute for it, is preparation,” she says. “I don’t ever want to be in a room and not know at least as much as everyone else in that room, and if that’s all I know, I’m not entirely comfortable.”

Part of that preparation, she continues, “would be Barshefsky’s next precept: You have to know what you want. I know it sounds obvious . . . but you have to be able to articulate in your own mind with precision what you want.”

She has one final rule: “to watch. You have to watch the people across the table from you: . . . how they react to what you’re saying, what’s on their face, how their shoulders look. The reaction of the body comes well before the reaction of the mouth.”

Slowed by Divisive Trade Issues

It is ironic that a woman who has had such success reading poker-faced Japanese negotiators should find Capitol Hill something of a blank page. But even after meeting with 170 legislators this year, Barshefsky remains somewhat perplexed at Congress’ reluctance to provide Clinton the fast-track authority critical to negotiating future trade deals.

“If I could answer the question, then we would be in a position to move faster,” she sighs. “There is something of a mystery.”

In fact, the reasons for the resistance are not totally mysterious. One is NAFTA. To many economists, the free trade treaty with Mexico and Canada has been something of a non-event, neither the boon that its supporters claimed nor the disaster that its critics feared.

But when the Mexican peso collapsed in 1994, making Mexican goods cheaper in competition with U.S. goods, the U.S. trade balance with its southern neighbor moved from a slight surplus to a $16-billion deficit.

At the same time, American concerns over illegal immigration, drug smuggling and pervasive government corruption in Mexico have all increased. While not directly attributable to the agreement, all this has left many legislators leery of expanding the NAFTA model into South America or Asia.

Adding to the problem is the fragmentation of the political coalition for free trade.

Today trade divides both parties. On each side of the aisle, a substantial internationalist core upholds the traditional agenda of opening markets. But now, liberal Democrats who fear that new trade agreements will endanger American wages have been joined by populist Republicans who fear they will undermine the nation’s sovereignty.

At the core of the resistance, though, is an unresolved--and perhaps unresolvable--political division over the impact of globalization on the American economy. Each side focuses on the side of the trade ledger that supports its position.

The administration and its supporters point to the surge in American exports by 35% over the last four years. Exports account for fully one-fourth of the nation’s total economic growth over that period, government economists calculate.

Companies large and small now depend on foreign markets. In 1995, U.S. manufacturers sold abroad more than 40% of their telephone equipment, television parts, integrated circuits, data processing machines, boilers and turbines, aircraft engines and construction and mining equipment. Many high-tech companies at the cutting edge of the economy depend on exports for more than half of their sales, Archey says.

This creates a demand for economic policies that will open markets abroad and create new consumers for American products. “If you are going to keep fueling this domestic economy, you’ve got to keep your exports expanding,” Stokes says.

And yet as fast as exports have grown, imports have grown even faster, drawn to an American economy far more robust that those of its rivals. Relative to the total size of the economy, America’s trade deficit is smaller than in the mid-1980s, although in absolute terms it remains very large--and growing.

What does that deficit mean? Today most economists insist the answer is: not much. With unemployment so low, it is difficult to argue that imports are eliminating significant numbers of jobs. The consensus among economists holds that imports contribute much less to the wage pressures on low-skilled American workers than technological changes that have increased the value of advanced skills.

But that story hasn’t convinced everyone. Many liberal economists--especially those associated with organized labor--resolutely pin much more of the blame for wage stagnation on imports and the relocation of domestic production abroad in search of cheaper labor.

More subtly, even some trade boosters, including Harvard economist Dani Rodrik, argue that increasing globalization shifts the balance of power in labor negotiations toward employers--who always have in their pocket the threat of taking jobs abroad if employees here demand too much.

Debating Rules of Globalization

As she tries to push through these webs of anxiety, Barshefsky’s response is characteristically concrete. In her meetings with members of Congress, she argues that the broad phenomenon of globalization is not the issue before them. Trade policy “properly constructed,” she says, can provide more equitable access to foreign markets; but, no matter how it is designed, it “will have little effect” on decisions by American corporations whether to locate production at home or abroad.

In one sense, Barshefsky protests too much: One aspect of the domestic trade debate is clearly about the rules of globalization. Organized labor and its congressional supporters want the United States to use trade negotiations to pressure foreign nations into establishing basic legal protections for the environment and labor rights. Such measures, they argue, would make it less attractive for American employers to relocate abroad in search of looser regulations and lesser wages.

Barshefsky takes a less evangelical position. Even labor officials agree she has aggressively pushed for labor and environmental standards in trade negotiations where those issues have been relevant. But those who know her well agree that those experiences have left her less sanguine than Kantor about America’s ability to force these standards on other nations.

“I think the United States always has some leverage on any issue one can think of, because we are the United States,” she says carefully. “The question is whether the leverage is sufficient in a situation in which the foreigner already has what they want in [access to] our market, and where the matter at issue is one viewed by a foreign government as inherently implicating its sovereignty.”

With Republicans resistant to allowing negotiations on labor and human rights issues, Clinton may now settle for a fast-track bill that simply does not prohibit him from pursuing them, senior administration officials say.

Even that may be more than Republicans will accept. Yet if Clinton moved further toward Republican positions on labor and the environment, he would likely provoke a rebellion from labor and liberal Democrats. Many observers believe it is precisely that prospect that explains why Clinton has allowed the fast-track authority to languish since 1994 without much of a fuss.

Further complicating the equation are Vice President Al Gore’s political calculations. While Gore has staunchly defended free trade in public, in private he’s appeared uncertain about provoking another clash with organized labor that House Minority Leader Richard A. Gephardt (D-Mo.) might be able to use against him in the Democratic primaries in 2000.

Some See Retreat From Grandiose Trade Deals

These hints of White House hesitancy have cast a shadow over Barshefsky. Her personal reputation on Capitol Hill is solid. Her toughness with Japan and China gives her credibility with trade hawks; her background as a trade professional gives her credibility with Republicans who saw Kantor as a Democratic operative. The one doubt is whether she can deliver a sustained commitment from Clinton.

While most legislators accepted the decision to delay the push for fast track until fall as a rational tactical maneuver, it reopened the intertwined questions of Clinton’s commitment and Barshefsky’s influence on his thinking. Initially, she was hoping to pursue fast track in the spring; but when the White House hesitated, she eventually did not oppose the decision to delay.

After Clinton’s long delay in seriously pursuing fast track, those fears are understandable. But they are probably overdrawn. Barshefsky isn’t as close to Clinton as Kantor, an old friend who chaired his 1992 campaign. But no one in the White House questions Clinton’s respect for her; she won his confidence six months into his first term with her sharp, informed answers when she briefed him at the Hotel Okura just before Clinton went to a dinner with Japanese Prime Minister Kiichi Miyazawa. However much she dislikes the label, it probably doesn’t bother Barshefsky that Clinton has privately described her as “tough enough to bring tears to the eyes of a dead man.”

And for all his hesitancy, it would be surprising if Clinton did not fully commit to the drive for fast track this fall. Many analysts had once expected him to take a dive on NAFTA, but in the end he drove it through Congress with a tenacious and energetic public campaign. Likewise, it would be surprising if Congress did not ultimately grant Clinton fast-track authority: While protectionist sentiments are powerful, they rarely prevail.

The real question may be not whether Clinton wins fast-track authority but how broad it will be--and what he does with it. With so much resistance, many analysts believe the president may be tempted to retreat from the ambitious visions of free trade through South America and Asia that he laid out in 1994, and focus on more narrow and traditional negotiations revolving around individual economic sectors.

“Although Clinton may believe in it, the political realities dictate it will be very difficult for him to accomplish the goals in the second term that he set out in the first,” says one former senior administration trade official. “The administration has probably gotten as much as it is going to get out of grandiose trade initiatives. Now it will get to more traditional things that they have to do on a case-by-case, grind-it-out basis.”

Barshefsky isn’t ready to accept that fate. As the fast-track debate approaches in the fall, she is eager to make the case that an ambitious trade agenda would allow the United States to maximize its opportunities in the regions (South America and Asia) and products (such as information technology) where it has natural advantages. Her words rush closer together, as if she’s delivering a summation to a jury.

“You have to look at the world and say, ‘What will this world look like 30 or 50 years down the road?’ It’s not so hard to posit. And then you have to step back and say: ‘How should we begin to position ourselves given the probable way the world will look in the year 2025?’ And then build. And build.”