HISTORIC trade legislation that could change the direction of America's economy into the 21st century comes to the floor of Congress this week. Lawmakers will decide whether to grant President Bush "fast track" authority to negotiate deals that would sharply expand commerce with Mexico and other major trading partners.
The White House claims that these new trade deals will create thousands of highly skilled jobs in the United States and bolster American industry. The pacts would also set the stage for greater prosperity in Latin America, Europe, and Asia, the administration says.
Critics, including leaders of US labor unions, say that lowering barriers to trade and investment entails significant risks, particularly for working Americans. They predict that without stringent safeguards, new trade agreements, especially with Mexico, could throw thousands of Americans out of work and reduce this nation's standard of living.
All sides agree the stakes are huge. "We're kind of at a crossroads," says Wesley Smith, a free-trade advocate and policy analyst at the Heritage Foundation.
Mr. Smith says that if the trade issue is handled well by the White House and Congress, barriers to expanded trade could drop swiftly around the globe.
However, Smith also points to dangers. If the current round of trade talks fails, the result could be the creation of "Fortress Europe,Fortress America," and "Fortress Asia" with new barriers to the exchange of goods, services, and investments.
The immediate issue that will come before the House, and perhaps the Senate, this week will be whether to grant the president a two-year extension of his "fast track" negotiating authority. Fast track gives the president authorization to sign trade agreements which Congress agrees, in advance, to either reject or approve without any amendments.
The White House says that other nations are unwilling to reach agreements which, without fast track, could be revised word-by-word by the committees of Congress. As Smith explains:
"Without fast-track authority, the president would lack sufficient negotiating power to convince other countries to lower trade barriers. Without fast-track authority, the president probably would be unable to finish the GATT Uruguay Round, negotiate a free-trade agreement with Mexico, or promote more trade and investment in Latin America."
Fast track has generated one of the most intense lobbying efforts in recent memory on Capitol Hill. The Mexican government is reportedly spending millions of dollars on high-powered lobbyists to push fast track. On the other side, the AFL-CIO has made defeat of a Mexican trade agreement its top priority.
Opposition to fast track comes on two fronts.
Some members of Congress, such as Sen. Ernest Hollings (D) of South Carolina, argue that fast track gives the president too much power. Under the Constitution, Senator Hollings points out, Congress has the duty "to regulate commerce with foreign nations." Yet fast track leaves Congress with only a "yea" or "nay" vote, with little influence over the details of a trade agreement.
Smith at Heritage points out, however, that Congress can keep the president on a short leash throughout the negotiations.
"The House and Senate can rescind fast-track authority by a majority vote under what is known as 'reverse fast track, he notes.
Other serious objections come from the AFL-CIO, and from scholars such as Robert D. Manning of American University.
Dr. Manning says the fast-track debate so far has missed a major point - that the real issue is investment, not trade. A US-Mexico deal would clear the way for billions of US investment dollars to pour into Mexico. Jobs will follow those dollars south, he warns.
The Bush administration concedes that a few unskilled, low-wage Americans may eventually lose their jobs as factories move over the border.
But Manning says that "semi-skilled and skilled workers in the Midwest and Northeast will bear the brunt" of a new pact.
The long-range implications are worrisome, Manning says, because corporations appear to be disinvesting in the US. He explains:
"The reason a lot of American plants and equipment are uncompetitive is the conscious decision not to invest [here]. The best example is the Big Three automakers. They have purposely declined to upgrade facilities in union areas."
Instead, he says, US firms are pouring money into Mexican factories, like the new billion-dollar Ford auto-parts and assembly plant in Hermosillo.
Manning says the Hermosillo plant has state-of-the-art, flexible capabilities which allow the company to replace skilled craftsmen with semi-skilled workers.
The president's push for free trade ignores the fact that such investment "could have occurred in the US." Instead, such investment is going where wages are low and enforcement of environmental laws is lax. If this trend continues across a broad range of industries such as electronics, auto, furniture manufacturing, and agriculture, as many critics of the Mexican treaty predict, it will become a serious long-term threat to US prosperity, he says.
The AFL-CIO has joined this battle with all the force it can muster, warning about the devastating impact Mexican free trade could have on middle-class jobs.
Congress now must pick sides in this debate. The president's position is expected to win, but both sides say it will be close.