Bloomberg: Allies Line Up Against Obama's State of the Union Plea on Trade

January 23, 2015

Even as President Barack Obama was calling on Congress to grant him expanded powers to negotiate trade agreements, some of his staunchest allies were raising objections.

[Reposted from Bloomberg  |  Carter Dougherty  |  January 20, 2015]

“I’m the first one to admit that past trade deals haven’t always lived up to the hype,” Obama said on Tuesday in his State of the Union speech in Washington. “But 95 percent of the world’s customers live outside our borders, and we can’t close ourselves off from those opportunities.”

The difficult battle ahead to win the so-called fast-track authority he is asking for was illustrated by opponents -- including Democrats and labor leaders -- who began issuing statements before Obama had even finished speaking.

The Communications Workers of America said they support many of Obama’s initiatives but wouldn’t stand with the president “to send more U.S. jobs offshore.” AFL-CIO President Richard Trumka applauded Obama’s initiatives on taxes and wages, but added “our opposition to fast-track trade deals that are giant giveaways to big corporations must be resolute.”

Representative Rosa DeLauro, a Connecticut Democrat, announced a press conference for Wednesday in which fellow party members would demonstrate a lack of support for fast-track authority.

Photographer: Andrew Harrer/Bloomberg

U.S. President Barack Obama delivers the State of the Union address to a joint session... Read More

The authority would grant Obama the power to negotiate trade agreements that are then submitted to lawmakers for a quick up-or-down vote, a process used to pass the North American Free Trade Agreement and the pact that created the World Trade Organization.

TPP Pact

U.S. businesses stand to gain greater access to markets in the Asia-Pacific region through a deal known as the Trans-Pacific Partnership that the Obama administration said it hopes to complete this year with 12 countries representing 40 percent of the global economy. The U.S. is also working on a longer-term agreement with the 28-nation European Union that aims to clear away barriers to trade.

Obama’s call follows a months-long effort by U.S. Trade Representative Michael Froman to focus on winning trade negotiating authority. The effort, supported by top Republicans who now control both houses of Congress, will be joined in coming months by at least six cabinet secretaries, and will complement a planned lobbying blitz by business groups.

Promising ‘Omens’

Bill Reinsch, president of the National Foreign Trade Council, said before the speech that the “omens are promising” for passage of the legislation and welcomed Obama’s high-profile endorsement.

Photographer: Andrew Harrer/Bloomberg

U.S. President Barack Obama delivers the State of the Union address at the Capitol in... Read More

“The administration and the leadership are marching together on this issue,” Reinsch said. “Nobody has put any dealbreakers on the table.”

The Asia trade agreement is a sweeping deal covering not only tariffs but other policies affecting trade such as intellectual property protection and data flows. It could eventually benefit companies as diverse as International Business Machines Corp., Caterpillar Inc. (CAT), Boeing Co. (BA) and Pfizer Inc. (PFE)

Labor unions, including the AFL-CIO, and other groups have attacked the legislation on a variety of fronts. They have argued the deals reflect a corporate agenda rather than one supported by the public, that they are negotiated in too much secrecy, and that they underpin a global economy that has dragged down wages in the U.S.

NAFTA Agreement

Passing U.S. trade legislation has proved a tough political slog since President Bill Clinton pushed through the NAFTA in 1994 over the opposition of most of his party. Fast-track authority has been especially difficult to pass, having failed in the House of Representatives in 1998 and passed by one vote in 2002.

Obama raised fast-track authority in last year’s State of the Union address, but then-Senate Majority Leader Harry Reid, a Nevada Democrat, effectively killed it by refusing to bring a bill to the Senate floor. Senator Orrin Hatch, a Utah Republican, said Tuesday before the speech that he would move quickly to formulate legislation in the Senate.

With the Republican takeover of the Senate in the 2014 elections, Majority Leader Mitch McConnell, a Kentucky Republican, wants to pass the legislation, as does Speaker of the House John Boehner of Ohio. But some Republicans are likely to oppose it and Boehner and McConnell will need some Democratic votes.

Cuba Trade

Representative Steny Hoyer of Maryland, the second-ranking Democrat in the House, said prior to the speech that fast track “can pass” in the House. He also lauded prior trade deals as “good for our country and our workers.”

A month after announcing an easing of U.S. restrictions on trade with and travel to Cuba, and the resumption of diplomatic relations, Obama also urged Congress Tuesday to “begin the work” of lifting the full U.S. embargo on Cuba.

A full lifting of the trade embargo isn’t likely until at least 2017, according to an analysis by Bloomberg Intelligence. Greater tourism could help non-U.S. hotel chains already in Cuba, such as Accor SA (AC) and Melia Hotels International SA.

The embargo dates from the administration of President John F. Kennedy, five decades ago. Congress wrote it into law in 1996, so only legislative action can permit the resumption of normal trade relations.

“In Cuba, we are ending a policy that was long past its expiration date,” Obama said. “When what you’re doing doesn’t work for 50 years, it’s time to try something new.”

To contact the reporter on this story: Carter Dougherty in Washington at cdougherty6@bloomberg.net

To contact the editors responsible for this story: Jon Morgan at jmorgan97@bloomberg.net Romaine Bostick

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