The departure of Senator Max Baucus to be the US ambassador to China is a major blow to the US trade agenda.
First elected in 1978 and Chairman of the Senate Finance Committee since 2007, Baucus led a panel with broad jurisdiction over tax policy, health care and international trade agreements, and was instrumental in the passage of the 2010 health reform law. Baucus’ expertise on economic issues and his leadership on international trade policy will be sorely missed in Congress.
Importantly, Baucus was a key co-sponsor of recently introduced trade promotion authority (TPA) legislation that would limit Congress’ ability to make amendments to free trade agreements. His transition to China has called into question the Congress’ ability to grant the authority necessary for the US to ratify the Trans-Pacific Partnership (TPP) and will almost undoubtedly delay the Obama administration’s trade agenda more generally.
Baucus introduced a bipartisan bicameral TPA ‘fast track’ bill in early January, partnering with the top Republican on the Finance Committee as well as the Chairman of the House Ways and Means Committee, which was tasked with the bill’s oversight. The introduction of the bill, coupled with reports that the Obama administration met with over 40 members of the House Democratic Caucus by mid-January, reinforced the perception that Baucus was attempting to move quickly on the legislation and complete it ahead of President Obama’s scheduled trip to Asia in April 2014.
But Baucus’ departure rules out the possibility of having bipartisan support of the fast track bill in the near term. As the sole Democrat to co-sponsor the fast track bill, his departure means that Congress now lacks even a veneer of bipartisanship on the subject. His leadership would have been critical for the Obama administration, as it encountered strident opposition from members of its own party, with 151 House Democrats signing a letter last November stating their opposition to TPA.
This opposition gained a powerful ally when, one day after President Obama called on Congress to ‘work together on tools like bipartisan trade promotion authority’ in his State of the Union address on 28 January, Senate Majority Leader Harry Reid advised Congress against the bill. Reid directly contradicted the President by stating: ‘I’m against fast track … everyone would be well advised just to not push this right now’. His rebuke, which very publicly pitted two leaders of the Democratic Party against each other, underscores the extent to which Baucus’ departure constitutes a blow to the trade agenda.
The Obama administration, which no longer has a powerful proponent for this bill in the Senate, will be forced to see its agenda play out on Reid’s terms. Following his remarks, Obama and Reid met privately to ostensibly discuss the upcoming campaign cycle, and there were subsequent reports that a vote on TPA might be permitted in 2014, but only after the November elections. Reid, who faces the difficult task of defending a majority that looks increasingly vulnerable, clearly is reluctant to bring up a divisive vote on legislation that remains unpopular among constituents traditionally wary of these agreements.
US trade representative Michael Froman has sought to reassure partner nations that everything remains on track in spite of the clear division between Reid and Obama. But with the current bill stalled and seemingly caught in legislative limbo, partner nations will likely refrain from expending their own domestic political capital as they wait to see the outcome of this internal disagreement. Japanese Prime Minister Shinzo Abe has understandably refrained from pushing obstinate farming interests to accept the tariff changes proposed in the TPP until other, less contentious issues are addressed. And Arturo Sarukhan, former Mexican ambassador to the US, warned that ‘without [TPA] it is very hard to see partners committing to a deal’.
Incoming Finance Committee Chairman Ron Wyden will have to spend the coming weeks acclimating to the chairmanship and establishing an agenda for the remainder of the 113th Congress. He has already indicated that he plans to slow down the TPA process by conducting a review of the Committee’s work — a decision that practically ensures the current impasse will not be resolved in the near future.
Either way, the Obama administration will likely fail to rally a majority of Democrats to support its trade agenda and, as a result, Republicans who have otherwise opposed the president on most issues in the 113th Congress will be forced to provide the votes necessary for passage. This awkward embrace, similar to the position faced by the Clinton administration with the North American Free Trade Agreement, is a political necessity now that Baucus is no longer there to rally Democratic support for the administration’s trade agenda in the Senate. The Obama administration needs to move quickly if it wants to make inroads at the next TPP ministerial meeting, which is set to start in Singapore on 22 February.
John VerWey is Program Assistant at the American Enterprise Institute. This article first appeared in East Asia Forum.