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 WhiteHouse, and among K Street's cadre of corporate lobbyists on the afternoon ofTuesday, May 14. The Senate had just refused to kill the Dayton-Craig amendmentto the bill restoring the president's authority to negotiate fast-track (that is,unamendable by Congress) trade treaties. The amendment, by Minnesota DemocratMark 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 tradeaccord that weakened U.S. anti-dumping laws -- that is, statutes prohibitingother nations from selling steel, computer parts, or any commodity in the UnitedStates at artificially low prices intended to damage U.S. manufacturers.
Dayton-Craig was exactly the kind of mischief the Senate always kept out oftrade bills; it would gum up the works in trade accords and -- worse -- enragewhole legions of corporate donors. On a normal day in the Senate, this kind ofamendment 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 itwas. 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 theadministration said would force the president to veto the entire fast-trackpackage? Geography was partly responsible; senators from states where dumping hadproved devastating -- the steel belt of Ohio and Pennsylvania, the textileCarolinas -- had little choice but to desert their president. But that didn'texplain the other Republicans who sided with them, nor the 45 Democrats who, forat least one afternoon, found the imperatives of free trade to be less imperativethan other considerations.
For Senate Democrats, in fact, the vote marked just as much a departure frompast 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 Democratswere opposing NAFTA by a two-to-one margin, Senate Democrats split evenly on themeasure. In 2000, when the question of admitting China to the World TradeOrganization (WTO) came before Congress, two-thirds of House Democrats rejectedit, while Senate Democrats supported it, 37-to-7. Finally, last December, fully90 percent of House Democrats opposed the fast-track proposal. (The measurepassed by a single vote.) On May 14, however, Senate Democrats veered off courseand aligned themselves with their House colleagues, voting to weaken theadministration's fast-track authority by the very same 90 percent margin. Has theRotunda Rift suddenly closed up?
Not entirely. As we go to press, fast track has yet to come to a final vote inthe Senate but is almost sure to pass, with much more Democratic support than ithad in the House. Still, Senate Democrats spent mid-May backing all manner ofamendments designed to reassert the primacy of U.S. laws and regulations -- ineffect, national sovereignty -- over certain aspects of trade accords.Massachusetts Senator John Kerry, a free-trader who took the lead in the battlefor one such amendment and supported almost all the rest, says, "The elements aredifferent 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 finallyunderstand the threat to national sovereignty posed by the powers first conferredon multinational corporations by NAFTA. In Chapter 11 of that accord,corporations based in one of the NAFTA-member nations (Canada, Mexico, and theUnited States) are given the power to sue the governments of the other twonations 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-safetystandards. The trials are to be conducted in secret, under the auspices of theWTO or the United Nations, by a panel of three judges whose identities don't haveto be revealed. Under the terms of the current fast-track bill, NAFTA's Chapter11 is widened to include corporations from virtually every nation on the planet.
"When NAFTA was debated and passed in 1994, most of us who supportedit didn't even know Chapter 11 existed," says Congressman Robert Matsui ofCalifornia, a leading free-trade Democrat in the House who has now become aleading opponent of fast track. Chapter 11 has, in fact, become a point ofcontention only in the past three years, when U.S.-based corporations began suingCanada and Mexico, and more so when corporations based in those countries begansuing the United States. It wasn't federal statutes that these companies weretargeting. In the late 1990s, California banned a chemical concoction called MTBEfrom gasoline after studies showed trace elements in water supplies. In 1999Methanex, the Canadian-based manufacturer of MTBE, sued the U.S. government for$970 million in losses it claimed to have suffered in California. [See ChrisMooney, "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 tograsp Chapter 11's significance. "I was in Seattle in '99 [at the time of the WTOmeeting and the demonstrations]," says Tom Hayden, then a California statesenator. "There was a poorly attended meeting of state legislators fromWashington and elsewhere -- I think 14 of us were there -- to begin a discussionon this." In Seattle, Hayden also met Georgetown University law professor RobertStumberg, who'd recently completed a study identifying 95 California laws thatcould be overturned under Chapter 11.
Back in Sacramento, Hayden convened a special Senate committee to furtherstudy Chapter 11's threat to California. In time, and with the Methanex casemoving dimly through a deliberately opaque system, Hayden's apprehensions spreadthroughout the legislature and to the legislatures of other states. (One otherparticularly disquieting case was the suit filed by a Canadian-based chain offuneral homes, which sought $725 million after a Mississippi jury found it guiltyof fraudulent practices -- a verdict, the company charged, in clear violation ofNAFTA. California state senator Sheila Kuehl, a brilliant attorney who succeededHayden as chair of the special committee, wryly describes the legal theory behindthis case as "innovative.")
By the time fast track came to the House last year, not just Californiaofficials but the National League of Cities, the National Association ofAttorneys General, and the U.S. Conference of Mayors had sounded the alarmagainst incorporating Chapter 11. Massachusetts's Kerry offered an amendment tofast track, stripping the bill of its Chapter 11 language, which won the supportof 40 Democrats in the course of being defeated.
This new concern for the loss of state and national sovereignty over labor andenvironmental issues (and, possibly, over a jury's ability to render a verdict ina garden-variety business trial) parallels the rising apprehension in Europeover the growing authority of the gnomes of Brussels -- that is, the EuropeanUnion bureaucrats. Matsui, however, contends that another sovereignty issue hasproved even more potent: that of Congress over the executive. Since 1787, afterall, 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 havebeen the only congressional member to remember those pre-fast-track days beforeJimmy Carter's presidency, when Congress still set trade policy. (For thatmatter, Byrd may be the only member to have read and remembered theConstitution.)
Over the past year, partly through the work of groups such as Public Citizen'sGlobal Trade Watch, this arcane knowledge has finally radiated beyond Byrd. Thekey factor in the Democrats' awakening to their own power, though, is the changein the White House. "You have a Bush administration," says Kerry, "whose entirestance is antithetical to a Clinton administration, which negotiated decent laborand environmental agreements as part of its accord with Jordan. [Robert] Zoellick[the U.S. trade representative under President George W. Bush] has made veryclear that he's opposed to that sort of thing."
For that matter, Zoellick should get the lion's share of the credit forDayton-Craig. At last November's WTO meeting in Doha, Qatar, Zoellick told hisfellow trade representatives that he'd put U.S. anti-dumping laws up fornegotiation in the next round of global trade talks -- where, says Matsui, he'dlikely "set international standards with the Japanese, Brazilians, and Europeansto water down those laws. Then, when this comes to us as part of atake-it-or-leave-it treaty, we feel we'd need a separate vote." It was shortlyafter Doha that the trade experts at a number of unions began a series ofmeetings with members of Congress and other fair-trade activists, which led toDayton-Craig.
The still-shaky economy -- in particular, the possibility that industries likesteel and textiles may soon collapse -- was surely another factor in theDemocrats' repositioning. Public opinion, never particularly inclined to freetrade at all, was growing increasingly dubious about trade's purported upsides.As Kerry points out, there was ample evidence not just of "a backlash againstglobalization in less-developed countries, but from people here who feelthreatened and disenfranchised. That backlash is growing, and the fraying of thetrade consensus is increasingly apparent." (It is notable that the phrase"Washington consensus," long used to describe the seemingly unstoppable supportfor 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 orthodoxywhen it suited him. "The Senate was put in play by the steel deal," says SkipRoberts, congressional lobbyist for the Service Employees International Union."When Bush put tariffs on steel imports to help him and the Republicans carryOhio, 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 noguarantee than any of the Senate amendments will survive the conference committeewith the GOP-controlled House. Dayton-Craig is likely to be sent to the Museum ofShort-Lived Phenomena, and even the Trade Adjustment Assistance amendment fordisplaced workers, which the White House endorsed, will be up for grabs. OnCapitol Hill there are repeated rumblings that Republican Congressman Bill Thomasof 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 billof all its lefty add-ons. In any event, crafting a bill that can gain a majorityin both houses will be very tricky. Some New Democrats in the House who opposedfast track in December have come under enormous business pressure to support itif and when it returns from conference.
That said, the conversion of the Senate Democrats -- howeverincomplete, politically expedient, and even faltering it may be -- has been bothsurprising and remarkable. On amendment after amendment, roughly 45 of them havebroken with one or another tenet of the old orthodoxy. Some die-hard free-traders(Connecticut's Joe Lieberman most transparently) have offered tepid amendments oftheir own, intended to limit labor's wrath at them and to cover themselves whenthey oppose other Democratic amendments. Many senators will vote for the finalbill even though few of their amendments will have passed. And yet, more thanthey may have intended, they have repositioned themselves on the trade issue. Thelast Democratic believers in the Church of the Free Market look more and morelike skeptics.
