We will work with Canada and Mexico to amend the North American Free Trade Agreement so that it works better for all three North American countries. – Draft Democratic Party Platform, 2008

Only nine legislative days remain before Congress adjourns for the fall campaign season on September 26. As the Democratic leadership in both chambers has already indicated reluctance to hold a lame duck session following the November election, this leaves a small window for trade-related legislation.

As noted above, major FTA votes are highly unlikely to occur, and will be subject to a new political environment next year. During July, the House and Senate parliamentarians offered differing assessments of the ability of the Colombia FTA to enjoy fast-track privileges if a vote were to be delayed until next year. These parliamentary debates, however, are simply political noise — the facts of the short legislative calendar, the absence of leadership support in the Senate for a vote and the lack of movement on a trade adjustment assistance package renders the debate moot. Instead of votes on FTAs, the Democratic leadership is proceeding with initiatives likely to prove problematic for U.S. trade partners abroad.

Iran Sanctions Act Left Out in Cold

Eleventh hour efforts on the part of proponents of new sanctions on Iran failed September 17th in their latest effort to secure passage of the Iran Sanctions Act. Banking Chair Chris Dodd (D-CT) had labored to amend his version of sanctions legislation to the annual Defense Authorization Act. The White House had threatened to veto the legislation if the Iran bill was included. The sanctions amendment were removed at the last instant from the final manager’s amendment to the defense bill, and despite the efforts of Senators Dodd and Warner (R-VA), the defense package was passed without sanctions language. The authorization bill will now proceed to a conference with the House to resolve differences in the two versions, but lacking Iran sanctions language in either bill, it is highly doubtful that Iran sanctions will move as part of the defense spending package.

Senator Byrd and Anti-Dumping

The United States was forced to repeal the controversial Continued Dumping and Subsidy Offset Act in 2007 following adverse rulings in the WTO. The so-called Byrd Amendment had allowed the Department of Commerce to distribute monies from punitive antidumping tariffs to U.S. plaintiffs in dumping cases against foreign imports.

Senator Robert Byrd (D-WV) is again seeking to re-establish the international legitimacy of that practice through the annual congressional appropriations process. For the second year running, Byrd is using his chairmanship of the Senate Appropriations Committee to include language in the Commerce, Justice and Science appropriations bill (S.3182) to mandate that U.S. negotiators conclude a WTO agreement to recognize the right of members to distribute monies collected from antidumping and countervailing duties. While Byrd has not gone so far to re-establish the CDSOA itself, expect these initiatives to expand from the appropriations process to more general U.S. trade policy in the 111th Congress.

The Democratic Platform

The Democratic Party, meanwhile, has issued a draft trade agenda in the party’s platform, which was made public in advance of the nominating convention the last week of August.

The draft platform reveals that the voice of the traditionally pro-trade moderates of the Democratic Leadership Council has been significantly muted in this election cycle. The platform instead is notable for the resurgent influence of populist constituencies within the party.

As a result, the draft trade platform would recast policy to support greater government regulatory power on trade. This will translate into a focus on enforcement of U.S. trade laws, particularly in the areas of “currency manipulation, lax consumer standards, illegal subsidies, and violations of workers’ rights and environmental standards.” Most notably, the platform pledges the party to seek to work with Mexico and Canada to amend the NAFTA.

If carried out into governmental policy under an Obama Administration, this platform would create a trade landscape that would look similar to the middle years of the Clinton presidency. During the period between the passage of the NAFTA and the launch of the Singapore FTA, Clinton trade policy featured aggressive monitoring and enforcement of trade agreements by the USTR, a significant appetite for trade litigation at the WTO, and reduced restraint on the use of unilateral trade remedies available under U.S. law. These trends will recur should the 2008 Democratic platform guide trade policy in the next White House.

Although the platform also pledges to work with other countries toward completion of the Doha Round, it is almost inconceivable that the USTR could — given the competing objectives within the party — receive in a timely fashion a negotiating mandate with the necessary flexibility to reach a workable compromise with key WTO members. Doha will, for the foreseeable future, remain more hope than reality.