New Trade Policy Leaders in Washington

Excerpt from North American Free Trade & Investment Report
published by WorldTrade Executive, Inc.

By Steven J. Mulder (Greenberg Traurig)

Steven J. Mulder (mulders@gtlaw.com) is Assistant Director of Global Trade & Governmental Affairs with Greenberg Traurig in Washington.

In December, then President-elect Obama announced his pick for the next United States Trade Representative (“USTR”), former Dallas Mayor Ron Kirk. The new President made brief, but important, comments on trade policy when he introduced Kirk striking a balanced tone between the importance of trade to the U.S. economy and the need for a new approach on trade -- just as he promised on the campaign trial. It will largely fall to Kirk and the new senior leadership at the Office of U.S. Trade Representative to develop and implement the President’s goals.

However, it is likely to be several months before the President himself can focus on trade. President Obama and the Congress are intensely focused on enacting a massive economic “stimulus” package that should be completed in the next few weeks. Following that, it is expected the President will turn to major reform of America’s financial markets with many of his other stated priorities -- health care reform, environmental protection, energy policy -- jockeying for position to be “next in line.” Thus, it is not expected that the new administration will seriously tackle trade issues until the second half of 2009.

That said, a lot of work is going to take place with USTR-designate Kirk and the new senior leadership at the USTR in the months ahead to try to fashion a new policies that advance the President’s vision on trade. The broad parameter’s of his vision were laid out during the President’s announcement last month. The President called for enhanced trade as part of the effort to turn around the economy: “We must engage in strong, robust trade and open doors for American products.” At the same time, the President made clear that greater consideration for labor and environmental protection, as well as shielding American workers from the effects of trade, will be a major part of his trade agenda: “…there is nothing inconsistent about standing up for free trade and standing up for American workers.” President Obama indicated that once Kirk becomes USTR, he will ensure that, “any agreement I sign as President protects the rights of all workers, promotes the interests of all Americans, strengthens business and preserves the planet we all share.”

It will be interesting to see how Kirk balances this support for NAFTA with the adamant opposition to free trade agreements by organized labor, which played a strong role in electing President Obama and are expecting a major “roll back” of the Bush Administration trade policies. Following the President’s announcement, labor and their congressional allies reacted with responses that ranged from “wait and see” to outright skepticism. For example, a leading critic of current trade policy, Congressman Mike Michaud (D-Maine), issued a statement saying: “I am deeply concerned about the choice of Ron Kirk because his past trade policy positions do not reflect the views of most Americans.”

A representative of the AFL-CIO indicated that the union would “reserve judgment” on Kirk. Many other labor supporters of the President issued cautious statements and almost all vowed to “closely scrutinize” the President’s choice. That process will start with the upcoming confirmation hearing, though Kirk should easily win Senate confirmation.

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US Trade Act Proposed

Excerpt from North American Free Trade & Investment Report
published by WorldTrade Executive, Inc.

By Kenneth G. Weigel, Thomas E. Crocker and Eric Shimp
(Alston & Bird LLP)

The Trade Reform, Accountability, Development and Employment Act (TRADE Act) would seek to fundamentally change core tenets of U.S. trade agreements, mandate the renegotiation of several existing agreements, strengthen the role of Congress in trade policy, restrict fast track votes, and dilute the power of the federal government over the states in the area of trade and investment.
Fostered by core Democratic constituencies including ten major unions and NGOs, including Public Citizen and Friends of the Earth, the TRADE Act was launched on June 4. Democratic Representative Mike Michaud (ME) and Senator Sherrod Brown (OH) offered joint legislation aimed at a wholesale reform of the way the nation conducts trade policy. This bill will shape the debate over trade policy in Congress, on the campaign trail, and during the first year of the new presidential administration in 2009.

Key Provisions
The sprawling scope of the TRADE Act would compel key changes in U.S. trade policy, including:
• New objectives: Lays out new negotiating objectives, focusing specifically on trade and environment matters, and reducing the scope of provisions on investment and services disciplines.
• Trade agreement review: Mandates that GAO perform regular reviews of all existing trade agreements, examining data on job creation, wage levels, exports and imports, outsourcing and labor and environment issues. Criteria are clearly slanted to portray agreements as detrimental to the economy.
• Renegotiation: Compels the government to renegotiate all existing U.S. trade agreements, including NAFTA, to a) comply with new objectives and b) address faults found in review process.
• State opt outs: Would grant states the ability to reject all nontariff-related provisions of negotiated agreements (e.g., services, investment, government procurement, IPR). This particular provision is likely to cause significant problems for foreign trading partners who look to market access within the 50 states as a major benefit of FTAs with the United States.
• Services: Would move the U.S. to a positive list approach, thereby reducing potential market access gains for U.S. services providers in foreign markets.

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