Bush Faces Obstacles to Placing Pact on Fast Track

Can he pull it off?

Now that the rhetoric and tear gas have cleared from the weekend Summit of the Americas, the enormity of President Bush’s pledge to make a hemispheric free trade zone happen in 2005 can be seen with sobering clarity.

Negotiating a seamless 34-country Free Trade Area of the Americas pact--as he promised to do in a Sunday news conference attended by all the region’s freely elected leaders--will take all the political suasion that Bush can muster.

Bush must walk a delicate path in dealing with foreign countries reluctant to join the FTAA unless such protected U.S. markets as steel, orange juice and sugar are opened, while placating vested domestic interests.

He also will have to mute the objections of free trade opponents, tens of thousands of whom were in the streets of Quebec City over the weekend.

Bush must do all this on a tight schedule. To complete an Americas trade pact by January 2005, he first must gain expanded negotiating authority this year from a Congress that will be reluctant to make trade issues a priority once the 2002 election cycle begins.

The president’s campaign for a regional trade pact got off to an auspicious start. Foreign and U.S. observers applauded him for his forceful advocacy of FTAA and for dispelling doubts about his commitment. Such a pact would encompass 800 million people and produce $11.5 trillion a year in goods and services. The hemispheric zone essentially would be an expansion of the three-nation North American Free Trade Agreement that now includes the U.S., Mexico and Canada.

Jose Alfredo Graca Lima, Brazil’s foreign relations undersecretary who is leading his country’s FTAA talks and who has criticized the United States’ trade stance as protective, said Bush’s statements during the summit were positive for two reasons.

“He fully engaged the United States in the negotiations and he injected some predictability by imposing a deadline” of January 2005 to complete an agreement. “But to manage this process will be a daunting challenge.”

The difficulties ahead were apparent hours after Bush made his pledge. Opposing sides immediately staked out turf in the looming battle over commodity price supports, quotas and anti-dumping rules. All are protections enjoyed by U.S. agriculture and steel industries that Latin American countries say must be eliminated if there is ever to be a true “free trade” accord.

“For Argentina, the critical issue is agriculture and the nontariff barriers for our products, from peanuts to wheat. They should disappear in the FTAA,” said Daniel Marx, Argentina’s finance minister. Meanwhile, Chilean trade negotiator Mario Matus claimed that U.S. industries now routinely invoke anti-dumping laws to impose trade sanctions on imports they can’t compete against. In recent years, Chile’s mushroom, flower, salmon and grape industries have been hit with sanctions.

The other side of the issue was laid out by House Agriculture Committee Chairman Larry Combest (R-Texas), who attended as an observer and who in an interview warned that FTAA must generate a net benefit for U.S. agriculture, which “can make or break a trade agreement.”

Although NAFTA has proven beneficial for U.S. agriculture overall, Combest said he was concerned there might be some losers in a broader, regional agreement, particularly U.S. sugar, peanut, citrus and fruit growers.

Also bracing for a fight are U.S. steel producers who, many Latin Americans claim, use the anti-dumping laws to keep out cheap foreign steel.

Rep. Phil English (R-Pa.), a member of the House Ways and Means Committee whose northwestern Pennsylvania district is in the heart of steel country, said any effort by the Bush administration to do away with anti-dumping laws will fail.

“I will state categorically that FTAA will not fly in the United States if it entails watering down anti-dumping laws,” said English, who also attended the summit as an observer.

Bush also must deal with the environmental and labor concerns that propelled demonstrators into the streets here over the weekend. Protesters maintain that rules for enforcing labor and environmental standards must be incorporated directly into any Americas trade pact, not as less meaningful “side agreements” as in NAFTA.

However, Bush’s first priority is to get “fast-track” negotiating authority from Congress that would give Bush the ability to hammer out the details of a trade agreement and then present it to Congress in an all or nothing vote.

Latin American nations including Brazil have said flatly they will not negotiate a FTAA unless Bush wins fast-track authority because it would mean the FTAA would have to be negotiated twice: once with the Bush administration and again with members of Congress.

The president’s chances of winning fast-track authority are anything but certain, even though his Republican Party holds a slim (223-212) majority over Democrats in the House and half of the Senate. Domestic opposition to free trade stirred up by labor, environmentalists and threatened industries has caused some Republicans to waiver.

One of Bush’s staunchest free trade allies in the House, Rep. David Dreier (R-San Dimas), predicts Bush will win fast-track authority in a House vote as early as August.

Negotiations on the guts of a free-trade pact will be conducted by nine working groups composed of the North and South American nations’ representatives that will meet in Panama at least three times this year.The groups will leave the disputed issues for more intense negotiations, which are to start in May 2002. Negotiations assume an even higher level of intensity in October 2002 when the U.S. and Brazil take over as negotiating co-chairmen.