Senatorial Heresy

Few things in contemporary American politics have been
more certain than the Senate's support for free trade. While the critics and
criticisms of global laissez-faire have been growing in number and the House's
support for free trade has become increasingly iffy, the Senate has rolled
merrily along, Republicans and Democrats alike ratifying whatever trade bill was
up for a vote.

Imagine, then, the stunned bewilderment on Capitol Hill, at the White
House, and among K Street's cadre of corporate lobbyists on the afternoon of
Tuesday, May 14. The Senate had just refused to kill the Dayton-Craig amendment
to the bill restoring the president's authority to negotiate fast-track (that is,
unamendable by Congress) trade treaties. The amendment, by Minnesota Democrat
Mark Dayton and Idaho Republican Larry Craig, struck at fast track's very heart.
It gave the Senate the right to review, and reject, any language in a trade
accord that weakened U.S. anti-dumping laws -- that is, statutes prohibiting
other nations from selling steel, computer parts, or any commodity in the United
States at artificially low prices intended to damage U.S. manufacturers.

Dayton-Craig was exactly the kind of mischief the Senate always kept out of
trade bills; it would gum up the works in trade accords and -- worse -- enrage
whole legions of corporate donors. On a normal day in the Senate, this kind of
amendment would be tabled and never heard from again. But on this May afternoon,
the motion to table was put to a vote, and suddenly, the Senate forgot who it
was. The motion went clamorously down, losing by a 61-to-38 vote.

What had happened? How had 16 Republicans come to back a provision that the
administration said would force the president to veto the entire fast-track
package? Geography was partly responsible; senators from states where dumping had
proved devastating -- the steel belt of Ohio and Pennsylvania, the textile
Carolinas -- had little choice but to desert their president. But that didn't
explain the other Republicans who sided with them, nor the 45 Democrats who, for
at least one afternoon, found the imperatives of free trade to be less imperative
than other considerations.

For Senate Democrats, in fact, the vote marked just as much a departure from
past practice as it did for Republicans. There's long been something of a
"Rotunda Rift" in the Democrats' position on trade. In 1994, as House Democrats
were opposing NAFTA by a two-to-one margin, Senate Democrats split evenly on the
measure. In 2000, when the question of admitting China to the World Trade
Organization (WTO) came before Congress, two-thirds of House Democrats rejected
it, while Senate Democrats supported it, 37-to-7. Finally, last December, fully
90 percent of House Democrats opposed the fast-track proposal. (The measure
passed by a single vote.) On May 14, however, Senate Democrats veered off course
and aligned themselves with their House colleagues, voting to weaken the
administration's fast-track authority by the very same 90 percent margin. Has the
Rotunda Rift suddenly closed up?

Not entirely. As we go to press, fast track has yet to come to a final vote in
the Senate but is almost sure to pass, with much more Democratic support than it
had in the House. Still, Senate Democrats spent mid-May backing all manner of
amendments designed to reassert the primacy of U.S. laws and regulations -- in
effect, national sovereignty -- over certain aspects of trade accords.
Massachusetts Senator John Kerry, a free-trader who took the lead in the battle
for one such amendment and supported almost all the rest, says, "The elements are
different this time. There are elements that have raised people's consciousness."

And new elements -- in politics as in chemistry -- merit some scrutiny.

One key change is that many Democratic lawmakers finally
understand the threat to national sovereignty posed by the powers first conferred
on multinational corporations by NAFTA. In Chapter 11 of that accord,
corporations based in one of the NAFTA-member nations (Canada, Mexico, and the
United States) are given the power to sue the governments of the other two
nations for losses, real or imagined, incurred due to state or local laws that,
for example, ban the use of a particular chemical or set workplace-safety
standards. The trials are to be conducted in secret, under the auspices of the
WTO or the United Nations, by a panel of three judges whose identities don't have
to be revealed. Under the terms of the current fast-track bill, NAFTA's Chapter
11 is widened to include corporations from virtually every nation on the planet.

"When NAFTA was debated and passed in 1994, most of us who supported
it didn't even know Chapter 11 existed," says Congressman Robert Matsui of
California, a leading free-trade Democrat in the House who has now become a
leading opponent of fast track. Chapter 11 has, in fact, become a point of
contention only in the past three years, when U.S.-based corporations began suing
Canada and Mexico, and more so when corporations based in those countries began
suing the United States. It wasn't federal statutes that these companies were
targeting. In the late 1990s, California banned a chemical concoction called MTBE
from gasoline after studies showed trace elements in water supplies. In 1999
Methanex, the Canadian-based manufacturer of MTBE, sued the U.S. government for
$970 million in losses it claimed to have suffered in California. [See Chris
Mooney, "Localizing Globalization," TAP, July 2, 2001.] Should the
three-judge panel find for Methanex, the United States would either have to pay
the company or lean on California to come up with the bucks.

Not surprisingly, then, state legislators were the first elected officials to
grasp Chapter 11's significance. "I was in Seattle in '99 [at the time of the WTO
meeting and the demonstrations]," says Tom Hayden, then a California state
senator. "There was a poorly attended meeting of state legislators from
Washington and elsewhere -- I think 14 of us were there -- to begin a discussion
on this." In Seattle, Hayden also met Georgetown University law professor Robert
Stumberg, who'd recently completed a study identifying 95 California laws that
could be overturned under Chapter 11.

Back in Sacramento, Hayden convened a special Senate committee to further
study Chapter 11's threat to California. In time, and with the Methanex case
moving dimly through a deliberately opaque system, Hayden's apprehensions spread
throughout the legislature and to the legislatures of other states. (One other
particularly disquieting case was the suit filed by a Canadian-based chain of
funeral homes, which sought $725 million after a Mississippi jury found it guilty
of fraudulent practices -- a verdict, the company charged, in clear violation of
NAFTA. California state senator Sheila Kuehl, a brilliant attorney who succeeded
Hayden as chair of the special committee, wryly describes the legal theory behind
this case as "innovative.")

By the time fast track came to the House last year, not just California
officials but the National League of Cities, the National Association of
Attorneys General, and the U.S. Conference of Mayors had sounded the alarm
against incorporating Chapter 11. Massachusetts's Kerry offered an amendment to
fast track, stripping the bill of its Chapter 11 language, which won the support
of 40 Democrats in the course of being defeated.

This new concern for the loss of state and national sovereignty over labor and
environmental issues (and, possibly, over a jury's ability to render a verdict in
a garden-variety business trial) parallels the rising apprehension in Europe
over the growing authority of the gnomes of Brussels -- that is, the European
Union bureaucrats. Matsui, however, contends that another sovereignty issue has
proved even more potent: that of Congress over the executive. Since 1787, after
all, the Constitution's language on trade has been short, clear, and unamended:
"Congress shall have the power ... to regulate commerce with foreign nations."
Until recently, old Robert Byrd, the Senate's longest-serving Democrat, may have
been the only congressional member to remember those pre-fast-track days before
Jimmy Carter's presidency, when Congress still set trade policy. (For that
matter, Byrd may be the only member to have read and remembered the
Constitution.)

Over the past year, partly through the work of groups such as Public Citizen's
Global Trade Watch, this arcane knowledge has finally radiated beyond Byrd. The
key factor in the Democrats' awakening to their own power, though, is the change
in the White House. "You have a Bush administration," says Kerry, "whose entire
stance is antithetical to a Clinton administration, which negotiated decent labor
and environmental agreements as part of its accord with Jordan. [Robert] Zoellick
[the U.S. trade representative under President George W. Bush] has made very
clear that he's opposed to that sort of thing."

For that matter, Zoellick should get the lion's share of the credit for
Dayton-Craig. At last November's WTO meeting in Doha, Qatar, Zoellick told his
fellow trade representatives that he'd put U.S. anti-dumping laws up for
negotiation in the next round of global trade talks -- where, says Matsui, he'd
likely "set international standards with the Japanese, Brazilians, and Europeans
to water down those laws. Then, when this comes to us as part of a
take-it-or-leave-it treaty, we feel we'd need a separate vote." It was shortly
after Doha that the trade experts at a number of unions began a series of
meetings with members of Congress and other fair-trade activists, which led to
Dayton-Craig.

The still-shaky economy -- in particular, the possibility that industries like
steel and textiles may soon collapse -- was surely another factor in the
Democrats' repositioning. Public opinion, never particularly inclined to free
trade at all, was growing increasingly dubious about trade's purported upsides.
As Kerry points out, there was ample evidence not just of "a backlash against
globalization in less-developed countries, but from people here who feel
threatened and disenfranchised. That backlash is growing, and the fraying of the
trade consensus is increasingly apparent." (It is notable that the phrase
"Washington consensus," long used to describe the seemingly unstoppable support
for global laissez-faire, is no longer heard.)

What finally pushed the Senate Democrats away from free-trade orthodoxy,
however, was something more prosaic: Bush's willingness to abandon that orthodoxy
when it suited him. "The Senate was put in play by the steel deal," says Skip
Roberts, congressional lobbyist for the Service Employees International Union.
"When Bush put tariffs on steel imports to help him and the Republicans carry
Ohio, West Virginia, and Pennsylvania, the free-trade Democrats had to wonder,
'Are we the last believers in the Church of the Free Market? And at what cost?'"

If and when the Senate passes the fast-track bill, there's no
guarantee than any of the Senate amendments will survive the conference committee
with the GOP-controlled House. Dayton-Craig is likely to be sent to the Museum of
Short-Lived Phenomena, and even the Trade Adjustment Assistance amendment for
displaced workers, which the White House endorsed, will be up for grabs. On
Capitol Hill there are repeated rumblings that Republican Congressman Bill Thomas
of California, the doctrinaire free-trader who will head the House delegation,
has told the Senate's free-trade zealots not to worry: He'll strip the final bill
of all its lefty add-ons. In any event, crafting a bill that can gain a majority
in both houses will be very tricky. Some New Democrats in the House who opposed
fast track in December have come under enormous business pressure to support it
if and when it returns from conference.

That said, the conversion of the Senate Democrats -- however
incomplete, politically expedient, and even faltering it may be -- has been both
surprising and remarkable. On amendment after amendment, roughly 45 of them have
broken with one or another tenet of the old orthodoxy. Some die-hard free-traders
(Connecticut's Joe Lieberman most transparently) have offered tepid amendments of
their own, intended to limit labor's wrath at them and to cover themselves when
they oppose other Democratic amendments. Many senators will vote for the final
bill even though few of their amendments will have passed. And yet, more than
they may have intended, they have repositioned themselves on the trade issue. The
last Democratic believers in the Church of the Free Market look more and more
like skeptics.

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