US Trade Policy Over the Coming Period
C. Fred Bergsten: Let me offer a very warm welcome to Chairman Rangel.
We're deeply grateful you're with us. We're delighted that Representative Sandy Levin (D-MI) has joined you. Sandy, who is chairman of the Trade Subcommittee, has been deeply involved in all these efforts for many years.
Chairman Rangel's been a member of the Congress, a Democratic member of the Congress, since 1971, representing what is now the 15th district of New York based in Harlem. He became chairman of the Ways and Means Committee in January of 2007 and immediately began speaking and exerting leadership, along with Sandy and his colleagues, in an effort to restore bipartisan trade policy in the country and find a way to move forward.
I can do no better in introducing the chairman than to cite from his own book. His book is called And I Haven't Had a Bad Day Since: From the Streets of Harlem to the Halls of Congress, and it was written just after the 2006 election as he was in the process of becoming chairman. I quote one short paragraph about trade. The chairman says, "I, for one, want American business to have a fair advantage over foreign business so they're not going to have a great problem with me on matters of trade. I'm ready to give something up, but they've got to give up something for the larger good in return. That's what my support for the Caribbean Basin Initiative, Chinese free trade, and the African trade initiative has been all about. These things help these countries, but they also benefit American business."
Chairman Rangel: I thought it would be dramatic if Sandy Levin and I walked in with Congressman Jim McCrery (R-LA), and we almost pulled it off on the floor, and we're going to be doing a lot of that because we learned or felt early on that this recent 2006 election was certainly not an endorsement for anybody. The American people knew what they didn't want, and we had yet to give them an opportunity to show what we would be able to do.
In my very partisan way, I made it clear to Jim McCrery that I didn't think he had much of a coattail to run on in '08, but also made it clear that I don't think we as Democrats had such a track record either. We're going to have to prove that, besides the war, we could work together. Singularly we spoke with [US Treasury Secretary] Hank Paulson, and it became clear that he didn't come to Washington for a food fight, but rather that he wanted to get something done. We made it clear that if bipartisanship was what we needed to do, then we weren't afraid of the executive branch. We felt that in certain areas we had a constitutional responsibility. Just because I've been bullied for 10 years doesn't mean that I intended to accept that while being in the majority.
I'd like to make it clear that Congress has constitutional responsibilities, and even though they have the most charming ambassadors at the United States Trade Representative (USTR), sometimes they believe that the Republicans would actually share with us what they are going to do. We are saying that we can work together with Republicans, because let's make it clear, nobody in their right mind thinks there's a Democratic or Republican way to deal with the problems facing our great nation today. We can't do it. There's no Democratic way for Social Security or Medicare, and there is certainly no Democratic way as it relates to trade.
It would seem to me an embarrassment for the minority dealing with foreign ministers of trade, presidents, and prime ministers to say, "I'm a member of the club, but I don't have anything to say about the negotiations other than they are just not good for the United States of America." It's awkward, and it's embarrassing. So where are we in terms of the differences between Democrats and Republicans as it relates to trade? We believe the private sector has done a lousy job in educating this great country about how important trade is and that wherever we find someone who's lost a job, lost a community, and has no one to blame, then you can bet that they think they're taking a good political shot, and we've got some new members to prove it, by saying it's all trade that caused it to happen.
When I said in the book that we're going to have to talk, it means that while many of us know that this country can't live alone (i.e., that we have to be competitive, that if we don't move forward, we're moving backwards), it also means that there has to be some overt way to show that the multinationals enterprises are patriotic too and that they are concerned about health care. And why shouldn't they be? We hope that one day health care could be subsidized, and if General Motors and automobile people say that they're putting more in steel, meaning they're putting more in health care than they are in steel, somebody should say, "You don't go to your local school board to establish a national problem." The same thing should be true of education and health care. We should be working together to have a stronger, competitive workforce so that we don't have to take something like that to the World Trade Organization (WTO).
We believe that if we see a country that is suffering with any type of death, threatening disease, or ailment, we should try to work out something with our pharmaceutical companies, ensuring that no one in this country dies because of a policy. We've come close to working out these problems with the pharmaceutical companies.
For 10 years Congressman Bill Thomas (R-CA) has never asked me for a vote on any trade bill, because I think he was trying to do the same thing Gingrich and DeLay were trying to do: establish a national policy that would be a Republican policy. I don't say this in criticism. Sometimes people believe in their philosophy so strongly that they just don't believe that there's any room in the Constitution for more than that type of thinking. If you really believe that organized labor is so bad, how could you possibly suggest that international labor standards be anywhere?
But what if these labor standards included things that we as Americans take for granted (i.e., we will not drive a labor force or do business with a labor force that uses children; we find it repugnant to think that we'll be dealing with a country that's involved in slave labor; we would not want investors to have more rights in suing us than we would have if we would have if we were suing them)? The things I've just listed are not Democratic principles; these are American principles. Sometimes business groups would rather bark at the moon and put out press releases than to find out what is going on, while Congressman McCrery and I are trying to work out language that would be acceptable to the US House of Representatives.
Sometimes when you lobby too fast without knowing the facts, you're really not helping anyone, especially the interest that you do have. One of the major things that my committee is concerned with is being sensitive and truthful and using the experts who deal with these subject matters each and every day. Congressman Levin would say we are not going to allow new trade agreements to take away agreements that were already negotiated by Presidents Carter and Clinton and agreements that are in the declarations of the International Labor Organization (ILO).
We're not talking about the conventions; we never did talk about the conventions. The ILO only came up as an issue after all of the parties reviewed the papers, and I was able to take it to my caucus, and they agreed to that. We had some members of the minority party that thought that slave labor could mean Hugo Chavez could put some money into Peru and sue Senator Grassley (R-IA) for having kids working on the farm. A lot of imagination was involved in some of these things. If you don't like labor here, I can fully appreciate why you don't like it anywhere. The question isn't what you like; the question is what do you want your country to look like? What do you want America to look like? Congressman Levin can tell you that sometimes we had tears in our eyes to see the peasants, farmers, priests, and ministers that came from the Central American countries begging us to approve those agreements. They showed us how poor they were and showed us their hope and their aspirations that they had to one day, perhaps, come close to America. They said, "But please don't endorse any agreements that we're not in; we have a hard time in our country, and we want to be able to organize." I'm not talking about the AFL-CIO, but principles and standards, some of which we don't find in Colombia today as we take a look at that free trade agreement (FTA).
We've accomplished most of the things we intended, and then we come right back to where we started: international labor. We have not been discouraged in terms of talking with Republicans, Republican leadership, or Congressman McCrery. The language is very sensitive; we have people looking at the language to try to find a problem with it. We are very hopeful that by the end of this week that we can overcome the last obstacles (i.e., find some way that America can be certain that it's not vulnerable to any attack by any foreign country and certainly to make it abundantly clear that no country is going to substitute its language or its laws for the United States Congress). Anyone who would believe that doesn't have much confidence in the US House of Representatives or the US Senate, which we are working with on this.
On the Ways and Means Committee, Democrats and Republicans have never had a better rapport. We are convinced that we will have disagreements, but we also think that it's healthy for the committee, healthy for Congress, and certainly healthy for the United States. Whatever disagreements we have, we mutually respect the rights of different political parties that have different views without being disagreeable. Someone came to one of our hearings on one of our three bipartisan bills, and he said, "What a different atmosphere we have here," adding that when we used to come into this committee room, "it was like walking into a divorce court: No matter what someone said, the other party would oppose it." And in a smart retort, Congressman McCrery says, "Well, we're not exactly out of the divorce court, but we are in serious reconciliation."
I did want to add that a group of chairmen and CEOs from about a dozen multinationals met last month to find a way to contribute in terms of math, science, and education. We discussed a private-public way to make certain that during our lifetime we won't have to depend on foreign intellect to run our businesses. What are we going to do about 50 percent of our kids dropping out of high school? Why do we just have on the business agenda issues of taxes, when we should also have on that same agenda how we can make this great country strong, especially because it relates to our ability to produce and to be competitive? When people drop out of school, where can they go? There's no door left to open. The military may be the only option that they have, and even then, they may have to deal with unwanted babies, violence, and jail. Businesspeople should be asking themselves how we can keep our nation strong and productive, and I will be asking you as you ask me, let's see the full agenda that you're carrying so we can work together.
C. Fred Bergsten: Mr. Chairman, when you were talking about the new trade legislation and the effort to forge a new trade policy, you did not mention any direct or explicit links to domestic assistance for dislocated workers. Education had been one of your emphases over the years, and that was exactly the right linkage to trade. Without a better education system, our citizens can't take advantage of globalization, and in turn, they feel victimized by it. What about worker adjustment programs, trade adjustment assistance, unemployment insurance, and programs that do link directly to provide safety nets for workers who are dislocated by trade or maybe anything else? Is that part of the package?
Chairman Rangel: You bet your life it is.
C. Fred Bergsten: What you'd like to see in that regard?
Chairman Rangel: In a recent conversation with Ambassador Schwab and Congressman McCrery, I was saying that if you listen to Lou Dobbs, every problem we have in the United States that's economic is attributed to trade and bad trade agreements. "No, no, no, no," the Ambassador said, "I want you to know that many of these towns that have lost their industry, and it's globalization and has nothing to do with any trade agreements." McCrery said, "I don't think you get it, Ambassador; Congressman Rangel is talking about the power of the perception that this loss is related to trade." I would like to say that there are Democrats that got elected just running against trade, they don't want to know a damn thing about the ILO; they'll just say that if you have to explain it, you've got a political problem.
We have adventurous Americans and entrepreneurs going into these developing countries, and they're not asking for degrees. Instead they ask, "What have you got to work with, because we want to work with you." I asked the trade ambassador, "When you are negotiating this great agreement, is all of America sitting at the table?" You can have the greatest agreement in the world and know you're wiping out a city—maybe it's Buffalo, maybe it's Cincinnati, maybe it's Cleveland. Are you thinking that you're America's ambassador too? Are you thinking, what can we do? Maybe someone else has to be sitting at that table to get that community to know that it cannot survive. Maybe we can bring some of the technology we have and find out, what can you do in that community? Yes, we have to help the people that we can, but if you can't help them, why can't you help the kids? Where are these well-paying jobs?
My grandfather was an elevator operator in the District Attorney's (DA) office in the criminal court building in New York. When the elevators became automated, this was a big shot, and it broke my grandfather's heart and every black guy that operated there. But when he saw his son come back as an assistant DA, it eased the pain. We can do some of these things by working with that community, seeing what we can do, using tax incentives, using our technology, and even though it's totally unrelated to trade, it's not totally unrelated to the United States of America.
When I look at the health care situation and education situation, who should be better partners than you? Let's get together and see what we can do together, and you can call it trade adjustment, and I can call it the American way. We want to take advantage of the knowledge that you have, and we don't want to make it a tax and spend situation. We want to be able to get a common agenda to move our country forward. It doesn't make any difference, and they're working now with Congressman George Miller (R-CA) because a lot of the companies have done a great job in their foundations. How can we do it so that it's a partnership without people looking at it as a socialistic program?
Mac Destler: If, as you say, and I believe you are correct, that it's a wild scenario that has people using the provisions of FTAs with Peru or Panama to change American labor standards, why can't you just agree to what Republicans say they want, which is some sort of safe harbor or some sort of provision. Give me the reasons why you can't agree to that.
Chairman Rangel: We don't want to admit that we have worse laws than anybody. If you, as an expert, share our view that the conventions are not an issue, and we're not vulnerable to a suit, why don't you accept what Democrats believe: we have a right to set this policy? In other words, we don't feel as strongly against the word "labor" as other people do. If we put the language in indicating that this doesn't apply—and I'm not saying we're going to do it—to the conventions, why do I have to deal with the National Association of Manufacturers publicly? That's not the way other people do business. There are different people that oppose this for different reasons (i.e., the left who doesn't want to explain anything, and the right who just say, why can't you do this without putting labor in it?) This thing could have been done easily if we didn't have this history of confrontation dealing with partisanship, and if we weren't coming off an election so swiftly. But we've been working on this for a long, long time.
We were working, but no one was working with us, though. Now we're down to fine-tuning it politically. To answer your question, a lot of wordsmiths, lawyers, and negotiators could have worked this out a long time ago if it wasn't the sensitivity of the language that has to be made acceptable to all parts of our party, and McCrery is a good soldier.
Gary Horlick: Looks like you're close to making this positive for both countries in an FTA. For example, as you did with Cambodia on textiles, there was a benefit to Cambodia. The European Union just announced a billion dollars for Central America to start FTA negotiations. I'm not saying money is the answer, but something that makes it not only something the United States wants but something that the other countries want as well.
Chairman Rangel: Well I don't negotiate, so Ambassador Hills?
Ambassador Hills: I would defer to our current ambassador.
Chairman Rangel: I didn't recognize him right away, but you're doing a fantastic job. So is the ambassador [ Karan K. Bhatia], and so is Hank Paulson. We could not have done this without the sincerity of the executive branch. And I don't know about Congressman Levin, but I haven't had to deal with the president on this, but I'll be on a plane with him tomorrow, so anything I said is subject to executive veto.
Representative Levin: The Cambodia model was one where incentives were used, and it's interesting how effective it was, essentially to say that workers being part of the globalization process was important in a country which had a command-communistic country economy and also had a so-called labor movement that was tied completely to the ruling party. That was a relevant experience and approach for Cambodia, and interestingly, eventually, the labor movement participated and sent somebody there to work with them.
Incentives can be part of it, but only depending on the circumstances, not the whole thing. There are some differences of opinion about this for Democrats. Mr. Rangel asked our chairman how long have we been working on this? It's been 10 years on our side trying to promote this idea that in order for globalization to work, you have to spread its benefits. Nigeria, by the way, is probably a good example of how that isn't happening with all of its oil wealth, because too many people there aren't gaining the benefits of globalization in that sense. That's what we have been about: trying to make sure that as these trade agreements are put together, that there is an involvement in terms of the basic rights in the declaration of workers. This has been our basic position and remains as part of this notion of shaping globalization. It isn't a response to any special interest; it's a response to the basic interest of the United States in making globalization work better.
In answer to the earlier question, why not a safe harbor? The answer is we signed onto the declaration in 1998. We signed on to it. We promised that we were going to take steps to bring it about. When we come to an FTA, we don't want to sign off of a declaration that we've signed to. The basic five standards, as Mr. Rangel, our chairman, has said, are not trying to change American labor law through an FTA. Only another government could bring a complaint, not the AFL-CIO or any other group. It would have to affect trade. Most importantly of all, we want to move this process ahead to expand those who participate and who benefit, and a safe harbor sends the wrong message as to what we're about. It's like saying, it's okay for you, but don't talk to us. That isn't the principle in any other part of a trade agreement. There's a mutuality involved, and we want that as a basic principle.
So let it be clear that's where we're coming from, and our chairman has been working, working, working to try to make this happen, and if I might close with this: We would like an approved FTA. We would like an FTA with Colombia, though, there are different issues there in terms of the violence there. We would like one with Panama. We have some disagreements about Korea, but the Democratic Party is determined to carry forth with this effort that so many of us have participated in.
Anybody who calls Chairman Rangel, as it's sometimes been said, an isolationist is nuts. Anybody who says that all we're interested in is essentially a narrow interest—no, it's not that at all. Mr. Rangel has worked to expand Caribbean Basin Initiative and was one of the parents of the African Growth and Opportunity Act. We believe in expanded trade. We believe as you expand it, you have to share with those who benefit from it. Workers in various countries haven't benefited enough, and we stand for that principle: include workers in this country benefiting from FTAs with everybody else.
C. Fred Bergsten: I'm going to ask you if you have any observations on a Korea FTA. Just to speculate a little bit, when the prime minister of Japan is here later this week, there are some rumors that he might propose a US-Japan FTA so Japan won't be cut out in its two big markets.
Chairman Rangel: We haven't received the final agreement, and we had big concerns about three things: automobiles, automobiles, and automobiles. We don't know how open the problem's going to be to us as a result of the tariffs being removed. There could be some issues that don't concern tariffs, so how does this happen? When do we get the papers and we can sit down and talk, but we just haven't had a whole lot of people coming to us asking for support.
I would like as many agreements that give us a fair advantage over anybody. I'm not thinking about going to China looking for jobs. I want those jobs here in the United States of America. So if there's a good agreement, I'm for it. We just can't have a lobbyist for the companies, no matter how good the agreement is. If the Ambassador needs other people sitting at that table, so be it. But at the end of the day, we should have constituents coming to members saying, "Listen, we've got to make our bow under that in our community. We want you to support that."
But we don't have people marching in front of our congressional offices saying, I got my job through the North American Free Trade Agreement (NAFTA). They're really not there. We're going to have to think of some way to educate people, and maybe the benefits are not as direct as they would want. When we are talking about something that's good for the United States, it doesn't have to be in the treaty, but it could be in the economy so that people could be associated with a new technology, new business, or something where the United States can say, "I'm from the United States government and I'm here to help," and no one's laughing.
Bill Cline: We have not subscribed to the core labor principles or ILO. We don't have the same flexibility for the conditions for establishing unions, and that's more a state-determined thing. So point one, we haven't fully signed on to this; point two, we're asking our partners to fully sign on; it would seem to follow point three that the result would be an asymmetrical structure of responsibilities. Now, point four, some people seem to imply that this is why this is a sort of Trojan horse to reform American labor. Now all this may be a straw man, and I think it'd be helpful, if it is a straw man, to show that it's wrong.
Chairman Rangel: Well, it's our understanding, and it has not been challenged, that we have already signed on to the declarations, so we're not asking for anything new; we just want it spelled out so everyone sees it. In addition to that, the conventions, which open themselves, perhaps, to a challenge about the difference in our laws and the difference in our negotiating partners, are not a part of what we're asking to be congressional trade policy. There are people still negotiating the language, but what you've stated is the major problem that we've had in the last few months and that is people walking away feeling sincerely assured that what you mention cannot and will not happen. You can say it's not going to happen as you've suggested, or say, get a legal interpretation of the declarations, and if you're satisfied with the declarations, don't ask me to beat up on labor; just get a lawyer. If Bill Coleman says that this is not a partisan issue but just based on the facts and his knowledge of international law, accept it. I don't think a lot of people have accepted the fact that Democrats have won. Republicans should be, as they're doing now, working with us Democrats to establish not a Democratic policy, but something that they believe is in the interest of all Americans. And unfortunately, the confusion is over very sensitive language.
C. Fred Bergsten: You mentioned earlier the National Association of Manufacturers (NAM), and we have somebody representing them here. Let me ask Frank Vargo if he would like to respond.
Frank Vargo: What I heard you say this evening was you don't want other countries or dispute settlement panels to change US legislation. That's what former Michigan Governor John Engler is saying, and it's a serious point for us. Things are moving very quickly. We're not party to the negotiations; we haven't seen the language; we just wanted to make sure that our point of view was put on the table, and we thank you for paying attention to it. As Governor Engler said, we look forward to working with you to come up with something that is going to benefit all of us: American workers, American factories, Democrats, and Republicans.
Chairman Rangel: I called the governor right after I got a copy of his letter to make it clear that I intended to be pretty rough on the way he indicated the language we were working on. I told him that I was doing it to try to educate people that really didn't know the difference. He should receive the letter in that style, because our telephone call couldn't get in the Washington Post, but the letter did. It showed the differences that people had in perceiving what we were talking about. I think it served a purpose for NAM and for me, but that's not the way McCrery and I have been working together.
Kimberly Elliott: Let me ask both the chairman and Frank Vargo about this whole debate over whether or not having the core labor standards in a trade agreement could affect US laws. I actually went and looked at implementing legislation from one of the FTAs, and at the front of the agreement is a provision saying that nothing in this agreement, unless it explicitly says so, changes US federal law or US state law, or creates a private right of action. Are you suggesting that the Democrats would not include that provision in future trade agreements or, to Frank, if you did include it, why is that not good enough to solve this problem?
Chairman Rangel: We're negotiating with the White House, the US Trade Representatives, Republicans, and Democrats, and we're not doing it publicly. That's the reason why Governor Engler and I had a problem. I'm new at this, and when people say they're going to work at this until we get it right, it doesn't help for people to tell us what to do. They could suggest and give us advice, but they can't condemn us for doing something that we didn't do.
Mr. Vargo: You said last week that you were ready to contemplate an extension of trade promotion authority, at least for the Doha Round, if there was enough progress in store for the Doha Round to make it worthwhile. Assuming you can get through the problems we've been discussing on labor standards, what would it take by way of a prospect for the Doha Round to make you feel that it was worthwhile to give more authority?
Chairman Rangel: I don't know what's being discussed. I will depend on our USTRs a lot. We're meeting tomorrow with the head of the WTO, and we expect everyone to be optimistic. There are serious problems that have been going on for years, and what we really want to do is get away from giving the president fast track. We're trying to find out what power of attorney are we giving the president. No matter who the president is, if it's still a congressional responsibility, then like anything else a lawyer would do, we say, "We give you the authority, now how are you going to use it?" This is what we could do if there were 535 of us negotiating, and I think it's a good way to do it, but you just can't say yes or no. Now, the WTO people are trying to have us to believe that if it fails, it's because the president didn't have fast track. Maybe we have to go back to the table and talk with people to see how we do nothing negative to do everything positive to push the talks, but we can't just give the fast track without any restrictions.
Mr. Vargo: But let me ask if you were able to resolve the issues we've been discussing, the labor standards and such, would you then be willing to extend fast track in a general sense and not limit it just to the Doha Round?
Chairman Rangel: Yes, I would have to get back to the committee, but once we establish principles, he's our president, and that's our USTR, and we don't check out their party affiliation. That's why I like Bill Coleman so much.
I mean, you just want to say, "Hey, we're here, we trust you, and that's something that we have to build on. We trust you to do the best thing, and sometimes those things don't fit into the ideology of the party of the president." If you have a fair person negotiate on behalf of your country, and this is especially after we've gone through what we're going through now, which is building on trust and talking to each other two and three times a day, then what difference would it make in giving the president fast track authority if you knew he was representing all of America? When people say, "You waited this long to become chairman, I know how happy you are," I say, "It's just like somebody not hitting you in the head with a hammer." It had nothing to do with the chairmanship; it had a lot to do with seeing the precious Congress that you've known so well, with Ross Dekowski and Tip O'Neill, where you work everyday and are sure to protect your party's principles, but not with hatred and hostility and partisanship. We're doing okay so far in our committee. It doesn't appear as though we have a lot of that between the US House and the President, but we do have it in the USTR, and we're taking advantage of that. Thank you.
The Institute hosted a special dinner meeting for Chairman Charles Rangel of the House Ways and Means Committee on April 23, 2007. The Chairman presented his thoughts on US trade policy over the coming period.
Chairman Rangel has been a Democratic member of the House of Representatives since 1971, representing what is now the 15th District of New York. He was awarded a Purple Heart and Bronze Star Medal with Valor during the Korean War. After graduating from law school and working as a prosecutor and in private practice, he became a member of the New York State Assembly from 1966 to 1970. In 1970, he defeated long-time Congressman Adam Clayton Powell in the Democratic primary and won election to the US House. He cofounded the Congressional Black Caucus, of which he has served as chairman, and became chairman of the Ways and Means Committee in January 2007. He is currently the fourth longest serving Democratic member of that body. In this position, Chairman Rangel exercises critical leadership for US trade policy as well as tax policy and numerous other key economic issues.
Policy Brief 07-5: American Trade Politics in 2007: Building Bipartisan Compromise
I. M. Destler, Peterson Institute