U.S. Perspective on NAFTA, Fast-Track Authority and FTAA16

 

NAFTA was a primary political force in U.S. politics between 1992-1996.  It was a major topic of debate in the 1992 presidential elections and some U.S. political strategists argue that it cost President George Bush the election.  Bush was hurt by Independent candidate Ross Perot’s allegations that NAFTA provided U.S. corporations with financial incentives that encouraged them to move factories to Mexico and deprive middle-class American workers of their jobs.   A certain segment of voters abandoned Bush in favor of Perot.  As Figure 1 demonstrates, this discord and Ross Perot’s candidacy gave Bill Clinton the extra votes he needed to win the U.S. Presidency.17       An analysis of the 1993 U.S. Senate vote on NAFTA provides an important perspective on why President Clinton lost Fast-Track Authority in 1994.  As Table 1 indicates, NAFTA was passed with 61 votes in favor, and 38 votes against the treaty.  The vote amongst Democratic Senators was 27 in favor of NAFTA and 26 against.  Republican Senators assisted in passing the treaty by voting 34 to 12 in favor.         In 1994, the political power structure that had enabled the passage of NAFTA changed radically.  The Republican Party won the necessary Congressional and Senatorial seats to gain control of both the U.S. House of Representatives and the U.S. Senate. To win against entrenched Democratic incumbents, certain 1994 Republican challenger campaigns allied with anti-NAFTA supporters.   This made free trade a controversial issue within the Republican Party between 1994-1998.

  Table 1 NAFTA Vote in the U.S. Senate

Party	NO on NAFTA	YES on NAFTA	Didn’t Vote on NAFTA	Party Totals
Democrats	26	27	1	54
Republicans	12	34	-	46
Total =	38	61	1	100

 

 

Source: U.S. Senate, Legislative Activities, "U.S. Senate Roll Call Votes 103rd Congress - 1st Session," [1993], http://www.senate.gov/legislative/vote1031/vote_00395.html and  U.S. Congress, Biographical Directory of the U.S. Congress 1744-Present, http://bioguide.congress   

What Is Fast-Track Authority? 

      President Gerald Ford was the first U.S. President to use Fast-Track Authority. He was granted this power under the Trade Act of 1974 to negotiate the Tokyo Round trade talks under the General Agreement on Trade and Tariffs (GATT).  U.S. Congress renewed this authority, granting it to every U.S. President between 1974-1993.¹⁸  Legally defined, Fast-Track Authority is “an expedited procedure for Congressional consideration of trade agreements.  It requires Congress to vote on an agreement without reopening any of its provisions, while retaining the ultimate power of voting it up or down.”  Fast-Track is necessary because while the Constitution grants the President authority to negotiate international agreements, Congress retains exclusive authority to set tariffs and enact other legislation governing international trade.¹⁹  
 
      In 1994, President Clinton’s Fast-Track Authority expired.  One of the serious repercussions of this loss was that NAFTA could not be expanded to include Chile.  An informal invitation had been extended to Chile at the 1994 Miami Summit and a Chilean Senatorial delegation followed up with a visit to the United States in June 1995.²⁰  In late 1995, the U.S. House of Representative’s Committee on Ways and Means scheduled hearings on the matter.  These were postponed until early 1997 due to the 1996 U.S. Presidential and Congressional elections.²¹   U.S. Senator Phil Gramm’s NAFTA Accession Act, a bill formally accepting Chilean membership was introduced in January 1997.  The following month, Chilean President Eduardo Frei paid a visit to the United States to make Chile’s interest in NAFTA better known.²²  During the ensuing political debate in late 1997, the Chilean government hired former U.S. Senator and Republican Presidential Nominee, Bob Dole to represent them and lobby on their behalf.²³  In spite of the Chilean government’s interest, U.S. Congress could not come to a consensus on granting Fast-Track or expanding NAFTA.  President Frei came to the conclusion by early 1998 that “Chile and Latin America would have to advance [their own efforts] toward a regional free-trade area.”²⁴ 
 

1998 U.S. Congressional Fast-Track Vote ²⁵  

     The debate over whether to renew President Clinton’s Fast-Track Authority lasted from 1994-1998.  During this time, Fast-Track Authorization bills in the U.S. House and Senate were repeatedly stalled in committee.  This came to an end in September 1998 when the U.S. House of Representatives voted against H.R. 2721.   
 

Richard Gephardt Minority Leader and U.S. Congressman  Courtesy of C-Span

Opposition to Fast-Track was generated by President Clinton’s own party.  Democrat Minority Leader Richard Gephardt led the attack by linking labor and environmental issues to all bills on Fast-Track.26  He was supported in his efforts by intense lobbying efforts from non-governmental organizations such as the AFL-CIO, Greenpeace, The Sierra Club, and Public Citizen’s Global Trade Watch.  During Congressional hearings on the matter, AFL-CIO Assistant Director of International Economics Thea Lees testified that American labor groups believed that, “the U.S. was losing good jobs and gaining less than good jobs.”27  It was this sector of the economy's position that “Latin American countries’ lowered standards of living and their inadequate protections for labor and environment gave them an unfair economic advantage.”28  Lori Wallach at Public Citizen's Global Trade Watch added that FTAA and Fast-Track were not only disadvantageous to the United States, they had demonstrated that they could have a negative effect on Latin American economies.  She noted that “in the five years since NAFTA had gone ito effect, the average Mexican wage had declined by 29%,  28,000 small businesses had collapsed, and eight million Mexicans had been pushed out of the middle-class and into poverty.”29

     Fast-Track Authority was a divisive issue within the Republican Party.  Those who opposed Fast-Track were conservatives distrustful of trade expansion.  They represented middle-class and lower-middle class concerns that Americans would lose their jobs if U.S. corporations relocated manufacturing facilities overseas.  Those in favor of passing the measuresupported business interests who wanted to increase U.S. exports overseas and open new markets.  Republican leadership in the U.S. House of Representatives reflected this difference of opinion.  Majority Leader Dick Armey opposed Fast-Track while Majority Speaker Newt Gingrich declared himself in favor of the measure.³⁰      

     In the spring of 1998, pressure from U.S. business lobbyists to bring Fast-Track to a vote was relentless.  During the 1994 and 1996 election cycles, business interests had supported Republican efforts to regain control of Congress.  Republicans Congressmen who had drawn support from both business and anti-NAFTA supporters were reluctant to vote on the matter.  Big business lobbyists made their wishes known in an intensive lobbying effort that included a strategic media plan to pressure vacillating Congressmen.  As part of this effort, Charles Mack and Bernadette Budde of the influential Business-Industry PAC told the press in June 1998,  “how ironic that, after decades of G.O.P. [Republican] rhetoric pledging fealty to free enterprise, global competition, and less government interference, business cannot rely on a Republican Congress to advance these principles.”³²  Speaker Gingrich concurred and ignoring a substantial anti-free trade minority within Republican ranks, he pushed hard to bring the matter to a vote.  In his opinon, the United States was the “the only country economically strong enough to keep the world economy moving forward. The trick is for us to send a signal that we want a stronger and more vibrant world market, and that means a strong vote on Fast-Track.”³¹ 

     The Clinton Administration organized its own lobbying effort on Fast-Track. As a senior member of the House Foreign Relations Committee, Democratic Congressman Lee Hamilton featured the Clinton’s position in the September 1997 issue in his monthly newsletter.  Hamilton explained that the expansion of U.S. exports and the global economy would solve labor concerns.  Sounding like an old-fashioned dollar diplomat he noted, “without Fast-Track the rules affecting the sale of our products overseas will be written by others, not by us.  Hundreds of thousands of potential new jobs will not be created. Without Fast-Track our economy's potential will be unfulfilled, and our international leadership will be diminished.”³³         

Jeffry Davidow U.S. Ambassador to Mexico  and former Assistant Secretary of State  for Inter-American Affairs  Courtesy of the U.S. Embassy in Mexico

In July 1998, President Clinton sent Assistant Secretary of State for Inter-American Affairs Jeffrey Davidow to outline the details of his argument in front a Congressional hearing held by the U.S. House Trade Subcommittee on Fast-Track.34  Davidow provided background relating how a “network of free and partially free trade agreements has developed covering every country in the hemisphere.  This network is now expanding beyond the hemisphere to include Europe and Asia.  The rules and structures of these agreements are setting precedents which will have an increasing influence on the way trade and investment are conducted in this hemisphere, and on the internal policies and institutions of participating countries."       Davidow's biggest concern was that President Clinton's credibility was at stake.  In his opinion, “the loss of leadership in trade issues would lead to a decline in strategic and politically influence in other spheres of international relations."  He concluded forcefully that Fast-Track was "not just an issue of internal Congressional procedures, or of internal U.S. politics, it was nothing less than a questions of the United States' ability to protect its interests, its willingness to keep its commitments, and its ability to lead effectively around the world.”35

 

     In 1998 the U.S. Senate bill on Fast-Track was S. 2400, the Reciprocal Trade Agreements Act of 1998.  Sections 2004 and 2005 of this bill denied President Clinton Fast-Track Authority because they required Congress to monitor all trade negotiations.³⁶  The U.S. Senate could not come to a consensus over this bill and the Republican leadership referred it back to the Senate Finance Committee in July 1998.  No further action was been taken on the measure.  

     The decision to deny President Clinton Fast-Track Authority was made conclusively in the U.S. House of Representatives in September 1998.  H.R.  2621, the Reciprocal Trade Agreement Authorities Act of 1998 was a bill proposing to grant President Clinton Fast-Track.  As Table 2 demonstrates, this bill was rejected by a vote of 243 to 180.  The vote against its passage was 83% Democratic and 31 % Republican.  In spite of intensive lobbying by American business groups, a sizable minority of Republican Congressmen who felt they owed their election to anti-free trade supporters voted against the bill.  With the Republicans divided, there were not enough votes to pass the measure.³⁷  

  Table 2 U.S. House of Representatives Vote on Fast-Track H.R. 2621, Reciprocal Trade Agreement Authorities Act of 1998 25 September 1998  

Party	NO on Fast-Track	YES on Fast-Track	Didn’t Vote on Fast-Track	Party Total
Democrats	172 (83%)	28 (14%)	6 (3%)	206
Republicans	71 (31%)	151 (66%)	6 (3%)	228
Independent		1		1
Total	243	180	12	435

Source: U.S. House of Representatives, Congressional Record, H8765-H8776, H8805  

A handcuffed Uncle Sam with  Congressman Peter DeFazio (D-OR),  Michael McCloskey, Chairman of the Sierra Club,  and Brent Blackwelder, President of Friends of the Earth protesting the Multilateral Agreement  on Investment on the steps of the U.S. Capitol 12 February 1998  Courtesy of Public Citizen’s Global Watch

In 1998-1999, the nature of the anti free-trade force in the United States changed.  Between 1992-1998, the force had been made up of an amorphous collection of scattered non-partisan groups who organized in reaction to NAFTA.  The booming U.S. economy diffused these original groups.  Record low unemployment rates stimulated by growth in U.S. exports helped workers displaced by NAFTA in 1994 re-train and re-enter the labor force in new capacities. With these changes and the Fast-Track vote, the free trade fight shifted to organized lobbyist groups in Washington, D.C.  Political action committees (PACs) were organized in favor and against free trade with the goal of influencing political elections and moblizing public opinion.  In general, pro-free trade groups supported Republicans and anti-free trade groups supported Democrats.  Both groups have been very successful in mobilizing significant cash sources and volunteers.      One of the most successful anti-free trade organizations has been Global Trade Watch, a division of Ralph Nader’s public advocacy organization, Public Citizen.  This group isheaded by Lori Wallach, an instrumental player in the effort to oppose Fast-Track.  Following the defeat of Fast-Track, Global Trade Watch began concentrating on organizing resistance to the World Trade Organization (WTO).  It joined with other anti-free trade NGO’s including environmental and labor groups such as The Sierra Club and the AFL-CIO to oppose China’s accession to the WTO and protest “corporate globalization” under the WTO’s Multilateral Agreement on Investment (MAI).  These groups organized large protest rallies at the WTO meeting scheduled in Seattle, Washington in December 1999 .38

 

Next Section  Mexico in the Post-NAFTA Era

Notes 

¹⁶  Information on the 1994 and 1996 elections is derived from the author’s personal experiences when her husband, Paul Stepanek Boardman campaigned for U.S. Congress during these elections cycles and won two contested Republican Party primaries in California’s 29th Congressional District. 

¹⁷  Polisci.Com, The Political Reference Almanac, The Executive Branch, 1999 <www.polisci.com/exec/rper.htm> 

¹⁸  Congressional renewals to the original 1974 authorization were granted in 1979, 1984, 1988, 1991 and 1993.  Lee H. Hamilton, "Fast-Track - What Is At Stake," Foreign Affairs Newsletter (Washington, D.C.: U.S. Representative Lee Hamilton, Sept. 1997) and U.S., White House, What is the History of Fast-Track?, 1999 <http://www.whitehouse.gov/Initiatives/FastTrack/history.html> 

¹⁹  U.S., White House, What Is Fast-Track?, 1999 <http://www.whitehouse.gov/Initiatives/FastTrack/what.html> 

²⁰  U.S., Senate, Congressional Record, 22 June 1995, S8885. 

²¹  U.S., House of Representatives, “Calling For Full Hearings On NAFTA Before Planning A NAFTA Expansion,” Congressional Record, 1 August 1995, H8076. 

²²  U.S. Senate, “Introductory Remarks to S. 83, NAFTA Accession Act,” Congressional Record, 21 January 1997. S467-470; and U.S., House of Representatives, “Joint Meeting Of The House And Senate To Hear An Address By His Excellency, Eduardo Frei, President Of The Republic Of Chile,” Congressional Record, 27 Feb. 1997, H671. 

²³  U.S. House of Representatives, “Senator Bob Dole Should Explain His Involvement With Chile,” Congressional Record, 31 October 1997, H9804; and U.S., House of Representatives, “Fast-Track Debate,” Congressional Record, 23 Sept. 1997, H7610 

²⁴  This was also confirmed by Patricia Rich, a trade analyst with U.N. Economic Commission for Latin America and the Caribbean Latin American trade analyst.  In her opinion,  “Not much is happening in the FTAA.  Things have slowed down enormously and people are disillusioned … Without Fast-Track in the United States, the Latin American point of view is that let’s push on with our own regional efforts.”  Eduardo Gallardo, “Clinton Prepares for Chile Talks,” CNN, 16 April 1998. 

²⁵  Background information on Fast-Track legislation was gathered by the author while organizing a conference on this topic for the UCLA Program on Mexico and UCLA Latin American Center scheduled for October 7, 1998 at the University of California – Washington, D.C. Program headquarters.  This conference was cancelled when this issue came to a resolution with the September 25, 1998 vote in the U.S. House of Representatives and the U.S. Congress moved on to consider impeachment hearings against President Clinton in the fall of 1998. 
 
²⁶  Alison Mitchell, “Gingrich Clarifies G.O.P. Stands on Trade,” New York Times, 26 June 1998; Henry A. Kissinger, “Expand Free Trade to All Western Hemisphere,” Los Angeles Times, 27 April 1997; “In Chile, Clinton Seeks Patience On Free Trade,” CNN, 16 April 1998; and Jason Webb, “34 Nations In Americas Seek Free Trade Zone,” Washington Times, 18 June 1998. 

²⁷  “Hiring or Firing?” Latin Trade, January 1999, 42. 

²⁸  U.S. Chamber of Commerce, FTAA Background (Washington, D.C.: June 1998). 

²⁹  Lori Wallach and Scott Nova, "NAFTA Bill May Swamp Aid," Journal of Commerce, Guest Opinion Section, 29 Jan. 1999. 

³⁰  The Majority Leader is responsible for determining which bills make it to the House Floor for a vote. The Speaker heads the majority party and he is responsible for making his party’s positions known to the public. 
 
 ³¹  Alison Mitchell, “Gingrich Clarifies G.O.P. Stands on Trade,” New York Times, 26 June 1998. 

³²  Ibid. 

³³  Lee H. Hamilton, "Fast-Track - What Is At Stake," Foreign Affairs Newsletter (Washington, D.C.: U.S. Representative Lee Hamilton, Sept. 1997). 

³⁴  President Clinton nominated Jeffrey Davidow as U.S. Ambassador to Mexico on April 28, 1998.  Following his confirmation by the U.S. Senate on June 26, 1998, he assumed his official duties in Mexico in July 1998.  U.S. Embassy in Mexico, Ambassador's Corner [1999] <http://www.usembassy-mexico.gov/eAmbCorner.html> 

³⁵  Testimony of Jeffrey Davidow, Assistant Secretary for Inter-American Affairs, U.S. Department of State to the Trade Subcommittee of Ways and Means Committee, U.S. House of Representatives, Washington, D.C., 22 July 1998. 

³⁶  U.S. Senate, Senate Committee Report 105-280 - Trade And Tariff Act of 1998 (Washington, D.C.: GPO, 31 July 1998). 

³⁷  Randall Mikkelsen, “White House Pressing Ahead with Fast-Track Efforts,” CNN, 15 January 1998. 

³⁸  For more on the Public Citizen’s Global Trade Watch see <http://www.citizen.org/pctrade/tradehome.html>.  For more on this organization’s opposition to the World Trade Organization see Public Citizen, Working Group on the WTO / MAI, A Citizen’s Guide to the World Trade Organization, Everything You Need to Know to Fight For Fair Trade (Washington, D.C.: Inkworks, July 1999) <http://www.citizen.org/pctrade/gattwto/wto-book.pdf>