Surprise Setback on Vietnam Bill Could Signal Major Democratic Fight Over Trade

By Jennifer Siegel

Published November 17, 2006, issue of November 17, 2006.
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Opponents of free trade scored a surprise victory in Congress this week, heralding what some activists and observers predict will be an increasingly tough fight about globalization in the years ahead.

Days before President Bush was slated to attend the Asia-Pacific Economic Cooperation meeting in Hanoi, the administration suffered an embarrassing setback when the House of Representatives failed Monday to approve permanent normal trade relations with Vietnam. The measure was designed to ease the Southeast Asian nation’s entrance into the World Trade Organization.

Before the election, we “hadn’t gotten a lot of negative pushback,” on liberalizing trade with Vietnam, said U.S. Chamber of Commerce representative Nicole Venable. The chamber is a pro-business group that favors free trade. It “should have been a no-brainer, but it didn’t pass… [and that] was a surprise to all of us.”

The legislation received majority support in the initial vote, held Monday, but fell short of the two-thirds support needed under special rules that had sped up its consideration. The number of representatives that backed the measure was 228, and 161 opposed it, with GOP members voting nearly 2-1 in favor of the bill, while Democrats were almost evenly divided.

The vote heightened speculation that the new wave of candidates elected November 7 would help block similar measures and further undo then-President Bill Clinton’s efforts to transform the Democrats into a party that is in favor of free trade.

Several potentially controversial trade issues are expected to come up in the new session of Congress, including free trade agreements with Peru and Columbia, and measures to liberalize trade with poorer countries throughout Africa, Asia and Latin America. In addition, the president’s “fast-track” trade authority — which allows him to submit negotiated agreements to Congress for approval, without amendments — is set to expire this summer. The reauthorization process is expected to be contentious, with Democrats potentially pressing for more congressional oversight of trade negotiations and mandatory inclusion of labor and safeguards for workers and the environment, or blocking reauthorization altogether.

The measure to normalize trade with Vietnam would overturn a Cold War-era law stipulating that the United States must conduct an annual review of Vietnam’s political and economic policies and grant trade preferences on a year-by-year basis. According to WTO rules, the United States would not benefit from lower Vietnamese tariffs if the measure remains on the books.

In the wake of Monday’s vote, GOP leaders at first said they would resubmit the bill under normal House rules later in the week, but later said they were postponing its consideration until December.

Liberal interest groups, meanwhile, reacted positively to the Monday vote, and said it demonstrated a new Democratic appetite for changing how America interacts with the global economy.

“This is almost a wave of fair trade sentiment,” said Thea Lee, policy director for the AFL-CIO, the country’s largest labor federation. The election “was just an overwhelming result… [with] a lot of Democrats who ran on fair trade platforms who beat entrenched Republican incumbents.” Lee said the union plans to push for new regulatory teeth in any new trade agreements or a fast-track reauthorization. At the same time, centrist Democrats expressed concern that the Vietnam vote foreshadowed divisive fights over trade policy that could play out as easily among congressional Democrats as between the Democrats and the GOP.

“Trade has become a more difficult issue for Democrats,” said Ed Gresser, a trade analyst at the Progressive Policy Institute. The institute is a research group affiliated with the Democratic Leadership Council, a centrist group that counts Senator Hillary Clinton and former Iowa governor Tom Vilsack — both presumed 2008 presidential contenders — among its leaders. Gresser compared the current environment to that of the 1980s, when trade imbalances and rising Asian giants stoked American fears about the future of America’s economy.

“There’s a sense of anxiety in the public that is playing out in the Republican Party as a kind of allergy to immigration, and in the Democratic Party as worry about trade and business competition,” Gresser said.

Past trade votes have brought out tensions within the Democratic Party over trade: In 1993, when a persistent President Clinton successfully pushed through the North American Free Trade Agreement, the treaty that lifted restrictions on trade with Mexico and Canada, he faced fierce resistance from many Democrats.

Ultimately, the measure passed the House by a vote of 324-200, with 102 Democrats joining 132 Republicans in support of the bill. But by last year, however, when President Bush pushed for a bill similar to Nafta, the Dominican Republic-Central America Free Trade Agreement, just 15 Democrats broke ranks to ensure its passage. The opposition included avowed centrists, such as Hillary Clinton and Illinois Rep. Rahm Emanuel, who, as head of the recent election efforts for House Democrats, recruited a number of successful candidates who had populist economic bents. Former North Carolina senator John Edwards, a Democratic hopeful in 2004 and 2008, once supported Nafta, but now he says that the agreement was a mistake.

Despite the shifting tide, observers say it is still an open question whether, with the reigns of leadership, the Democrats now unite behind trade reform — as liberal activists hope — or find themselves divided over the issue in the new Congress.

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