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Back in control of Congress, Democrats divided over free trade

WASHINGTON—In the 1990s, most Democratic lawmakers favored free-trade agreements. Now in control of Congress, however, Democrats appear increasingly divided over how much they'll support further expanding trade and under what circumstances.

The first big test could come July 1, when special trade-promotion authority granted to past presidents expires. Some senior Democrats say they'll renew the authority, providing the president agrees to seek labor and environmental protections as part of trade agreements.

But a growing number of other Democrats are signaling that they'll try to deny President Bush the right to negotiate trade deals that Congress can't amend. This could freeze global trade talks designed to open the exchange of agriculture and services.

Both parties know that many Americans equate globalization with job insecurity. A recent Wall Street Journal/NBC poll showed that 48 percent think the global economy is harming the United States, and 46 percent said trade agreements harmed the United States.

That coincides with cries from an increasingly vocal wing of the Democratic Party that free trade hasn't been fair trade for the American worker. They point to the widening merchandise trade deficit—the amount that our imports exceed our exports—as one measure of how U.S. manufacturing—and workers—are losing.

"If an $840 billion trade deficit doesn't get your attention, it seems to me you are brain-dead," said Sen. Byron Dorgan, D-N.D.

Dorgan is the chairman of the Senate commerce and trade subcommittee, which oversees trade issues such as competition from foreign sweatshops and Chinese piracy of name-brand U.S. consumer goods.

Dorgan wants a new approach to trade policy. Together with freshman Sen. Sherrod Brown, D-Ohio, who was elected in November on a decidedly anti-trade platform, Dorgan announced that he'd taken the unusual step of inviting all freshmen senators to participate in his hearings on a new trade policy, even if they aren't members of the subcommittee.

"Our message ... is this is not going to be business as usual," said Dorgan, arguing that two decades of trade liberalization have cost U.S. manufacturing jobs and pushed down wages for blue-collar workers.

A softer tone on trade comes from the two Democrats who have the most direct responsibility for trade legislation: House Ways and Means Committee Chairman Charles Rangel, D-N.Y., and Senate Finance Committee Chairman Max Baucus, D-Mont. Each supported trade pacts in the `90s. Baucus opened a trade-policy hearing March 9 by stressing the need to remain engaged in global trade talks.

"Some voices, including my own, believe that we best advance these goals through a vigorous trade policy. By lowering trade barriers abroad, we develop new export opportunities. We can create jobs and further economic growth here at home," Baucus said. "We cannot sit on the sidelines while our trading partners open critical export markets without us. We cannot trail behind the forces of globalization."

Between the lines, that means Baucus supports giving Bush special trade-promotion authority if compromises on labor and the environment can be struck. If Congress doesn't extend the special authority, the senator fears, the European Union and other competitors could get a leg up over America in negotiations with India, China and other growing markets.

"That's the reason why the administration is calling for a straight extension (of negotiating authority), and that sticks in the side of some of the new members, who want to take a much more aggressive approach," said Jeffrey Schott, an expert at the Peterson Institute of International Economics, a pro-trade research center in Washington.

Since Republicans captured Congress in 1994, the U.S. Trade Representative's Office, which negotiates trade deals, had counted on support from Republican chairmen in Congress, who in turn could count on their majorities to deliver pro-trade votes. Now trade negotiators are dealing with Democratic chairmen, whose sway over their rank and file is unclear. Whether the Democratic graybeards or the more radical upstarts in the ranks carry the day will play out over the next few months.

"We'll have to see how much of an impact the caucus has on the seniority system," said Kevin Kearns, the president of the U.S. Business & Industry Council, which represents smaller U.S. manufacturers who oppose further trade liberalization. "This is uncharted territory ... it's anyone's guess how things are going to turn out."

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Some leading Democratic trade initiatives in Congress would:

_Threaten sanctions against Chinese-made imports because of alleged manipulation of China's currency. Democrats and some Republicans want China to revalue its currency against the dollar to make U.S. exports cheaper there.

_Expand trade-adjustment assistance to cover service-sector workers whose jobs are lost to foreign competition.

_Permit imports of less-expensive pharmaceutical products from Canada and elsewhere.

_Impose a "border equalization tax" on imports from countries that rebate value-added taxes to their exporters. A VAT is a tax on production. It's often levied on incoming U.S. products and rebated to exporters from the same nations, skewing the costs of trade.

_Require countries that reach trade agreements with the United States to embrace the International Labor Organization's core worker rights and basic environmental protections.

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(c) 2007, McClatchy-Tribune Information Services.

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