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Published: Thursday January 30, 2014 MYT 12:45:02 AM
Updated: Thursday January 30, 2014 MYT 12:46:01 AM

Analysis - Obama's nod to trade leaves tough work ahead in Congress

U.S. President Barack Obama delivers remarks on the economy at Costco Wholesale in Woodmore Towne Centre in Lanham, Maryland January 29, 2014. REUTERS/Yuri Gripas

U.S. President Barack Obama delivers remarks on the economy at Costco Wholesale in Woodmore Towne Centre in Lanham, Maryland January 29, 2014. REUTERS/Yuri Gripas

WASHINGTON (Reuters) - U.S. President Barack Obama's nod to trade in his annual State of the Union address reflects a delicate political dance and leaves the hard work still ahead in convincing a skeptical Congress to get behind free trade deals.

Business lobbyists had hoped Obama would explicitly urge lawmakers to back a bill giving the White House authority to negotiate free trade pacts and put them before Congress for an up-or-down vote, without amendments.

This so-called fast-track authority is a litmus test of support for two massive free trade deals currently under negotiation, which would create a network of nations covering roughly two-thirds of global trade.

But in recognition of a tricky political juggling act ahead, Obama stopped short of that mark. He did, however, devote four sentences to the need for trade and trade promotion authority (TPA) to "protect our workers, protect our environment, and open new markets to new goods stamped 'Made in the USA.'"

"There are all kinds of political landmines on both sides of the aisle and in both houses of Congress that have to be overcome," said National Association of Manufacturers President Jay Timmons on Wednesday.

"The speech is important to set the tone but action is what is most critical, and we are going to have to see if the words are backed up by concrete action by the administration - my sense is yes."

Forging stronger trade links with countries on the Pacific Rim is part of the U.S. administration's move to engage more with Asia, while a tie-up with the European Union seeks to level regulatory differences between the world's biggest economies.

But Obama has to walk a fine line in gauging how much he can publicly lobby for fast-track power without misstepping in Congress, which must be persuaded to cede some power in order for the administration to seal the deals.

Trade is deeply divisive in a country which, although it is the world's second-biggest exporter, has the lowest level of exports for the size of its economy of any Group of 20 developed and emerging powers, except Brazil.

Opposition to free trade deals, and by extension fast-track authority, comes partly from consumer groups, environmentalists and unions, a major power base for Obama's Democrats, many of whom worry about lost jobs and an erosion of labor and environmental standards.

More than 550 lobby groups urged lawmakers on Monday to vote against a TPA bill introduced in the House and Senate, warning the new free trade agreements went much further than their predecessors.

"After decades of devastating job loss, attacks on environmental and health laws and floods of unsafe imported food under our past trade agreements, America must chart a new course on trade policy," said the letter, signed by groups including union federation AFL-CIO, which also has a petition against TPA.

But opposition also comes from some Republicans.

Conservative Tea Party groups have launched a campaign against TPA and the Trans-Pacific Partnership (TPP), urging lawmakers to insist on their right to closely scrutinize free trade deals and avoid giving more power to the White House.

"I am all in favor of free and open trade that is fair to American producers and manufacturers, but this president, I don't believe, can negotiate for this country in good conscience," Republican Paul Broun told reporters on Tuesday.

Business groups, including the U.S. Chamber of Commerce and the Business Roundtable, are lobbying hard from the other side.

NUMBERS GAME

The numbers game to be played out in Congress is complicated by the likely departure of TPA advocate and Senate Finance Committee chair Max Baucus, nominated as U.S. ambassador to China, as well as looming mid-term elections.

Baucus is co-sponsoring the bill in the Senate with Orrin Hatch, the top Republican on the panel. Dave Camp, the Republican chairman of the House Ways and Means Committee, which also has jurisdiction over trade, is doing the honors single-handedly in the House.

The whole 435-member House is up for re-election in November, along with 36 of the 100 Senate seats. Both Democrats, who control the Senate, and Republicans, who have the numbers in the House, want to keep what they already have and make gains into the other party's territory.

Winning support for a politically unpopular bill just ahead of an election is a tough task for the Obama administration. The job is made tougher by the reticence of many Republicans to hand a Democratic president what may look like a political victory.

Obama is relying on U.S. Trade Representative Michael Froman, highly regarded for his White House connections and behind-the-scenes negotiating skills, to do the heavy lifting to push a TPA bill through. Froman is on the Hill nearly every day Congress is in session, meeting with Democrats and Republicans about the TPA and the trade agenda, a USTR spokeswoman said.

"The reality is that the White House needs to bring in Democratic votes in both chambers of Congress to pass TPA," said Eric Shimp, policy adviser at law firm Alston and Bird and a former senior trade official.

"Both industry and Congress will now wait to see if the White House legislative affairs shop swings into motion to help USTR Froman make the pitch for TPA. If he's flying solo in these coming weeks, we'll have our answer."

Froman and his staff have their work cut out for them.

In the House, the top Democrat on the Ways and Means committee, Sander Levin, is mulling an alternative TPA bill, and 151 of the 200-strong House Democratic caucus wrote to Obama in November to say they would oppose TPA given inadequate consultation on the TPP. A group of 22 House Republicans made a similar complaint.

The New Democrats, a 53-strong body which is more aligned with business and trade than union-backed colleagues from the party's left, could be a more fertile ground for TPA votes.

The group plans to introduce a bill as early as Wednesday to extend until 2020 a program making it easier for workers displaced by trade to get benefits and retraining. The bill would go hand in hand with the TPA and could help win Democrat support, but at the risk of alienating Republicans.

Republican Representative Erik Paulsen said the bipartisan Free Trade Working Group was trying to convince fellow lawmakers of the benefits of trade, especially given 90 new members had joined the House since the last batch of trade deals passed.

"It's imperative now that we go through this education process once again with these new members," he told a lunch organized by the Economic Club of Minnesota. "We really need to work hard to end the myths surrounding TPA."

As mid-year approaches, U.S. lawmakers will increasingly turn their attention to re-election efforts, meaning the window to pass the TPA is very narrow.

If not passed by May or June, the timeline could easily slip into 2015 and further drag on the TPP talks, which involve nations from Japan to New Zealand and Chile. Talks have already missed the U.S. administration's original deadline of end-2013.

"It will be very hard to close agreements because countries will be unwilling to take the difficult political decisions if they don't know that (the) agreement can be delivered on the side of the United States without amendment," said former U.S. Trade Representative Robert Zoellick, himself a veteran of a bruising congressional fight over TPA in 2001-2002.

"A lot of legislative politics is capturing the moment. The moment is now."

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