Globalization in Retreat – Strange Bedfellows: Democrats and Trump Blow up 20-Year Unity on Trade




By Bob Davis and Siobhan Hughes

NOV. 28, 2017 11:44 A.M. ET

In fight to overturn Nafta, White House makes common cause with Ohio Sen. Sherrod Brown, a longtime free-trade skeptic

WASHINGTON—A lone senator jumped to the Trump administration’s defense last month when the U.S. Chamber of Commerce attacked its proposal to rewrite the North American Free Trade Agreement.

He is a Democrat.

“Any trade proposal that makes multinational corporations nervous,” says Ohio Sen. Sherrod Brown, “is a good sign that it’s moving in the right direction for workers.”

The politics of trade are shifting in Washington. In the 1990s, a Democrat in the White House, Bill Clinton, worked with free-market Republicans in Congress to open the world trading system to Mexico and China. Now a White House Republican, Donald Trump, hopes to work with trade skeptics among the Democrats to reverse that trade liberalization. It is too soon to say whether Mr. Trump will succeed. But if he does, it will be in alliance with people like Mr. Brown, a leading voice among Democrats in the Senate against free trade agreements written in the past three decades.

Already Mr. Trump has halted the steady liberalization of trade that began with President Franklin Roosevelt and continued in Democratic and Republican administrations. In his first working day in office, he pulled the U.S. out of a 12-nation Pacific trade pact, even though the other nations continue working to complete a deal. In a recent speech in Vietnam he warned Asian powers that the U.S. wouldn’t “be taken advantage of anymore” in trade deals. If anything, Democrats criticize Mr. Trump for not clamping the brakes even harder on globalization.

Mr. Brown opposes Mr. Trump on almost everything other than trade and is under pressure from his party’s liberal wing not to cooperate with the White House on any issue. But behind the scenes, the senator has formed a strong bond with Mr. Trump’s top trade negotiator, Robert Lighthizer, the author of the Nafta proposal that the Chamber of Commerce attacked earlier this month.

Mr. Brown and Mr. Lighthizer have much in common. Both are natives of Ohio steel towns that suffered from a flood of foreign import competition in the past half-century. Both are policy wonks steeped in the detail of U.S. trade law who believe the era of liberalization hurt U.S. workers. Both want Mr. Trump’s trade agenda to advance. And both are battling forces in their own parties.

Mr. Brown, 65, and Mr. Lighthizer, 70, also both like to recite a lyric from a Bob Dylan song, “I’ll look for you in old Honolul-a, San Francisco, Ashtabula”—the latter being the hometown of Mr. Lighthizer and Sen. Brown’s wife.

Mr. Lighthizer saw the port of Ashtabula decline through steel imports, and U.S. Steel shelve plans to expand in the area. As a trade official in the Reagan administration he helped block steel imports from Japan. Later he became a powerful steel industry lawyer who made enough money to buy a red Porsche Targa, which he raced for years in West Virginia.

When Mr. Brown was a young legislator from Mansfield, Ohio, he liked to hang out at the United Steelworkers union hall and talk to workers. Later, he testified in trade cases brought by Mr. Lighthizer’s firm to shut off steel imports that harmed Ohio mills. He wrote a book, “Myths of Free Trade.”

“Common background, common interests, common understanding,” says Mr. Lighthizer, who speaks in a craggy voice similar to Sen. Brown’s, but about an octave higher. Sen. Brown “has an Ohio perspective which I think I have too,” says Mr. Lighthizer. “That’s what president Trump has too—an Ohio, Wisconsin, Pennsylvania, Indiana-kind of perspective”—he says, ticking off the Rust Belt states Mr. Trump carried to win the presidency.

Now President Trump is in the middle of tense negotiations with Canada and Mexico to rewrite Nafta, a move that could require support from Congress, which free-trade Republicans control.

Mr. Trump has reached out to Democrats for compromise on issues like immigration, taxes and the national debt ceiling. There are few riper subjects for Mr. Trump to win Democratic support than trade. Sen. Brown has led anti-free trade Democrats since Nafta in 1993, when he rallied freshman House Democrats to oppose the deal.

Says White House spokeswoman Natalie Strom: “President Trump is putting American workers first when it comes to trade policy. He welcomes the support of members of Congress that want to do the same.”

Sen. Brown says it is his job to make sure Mr. Trump follows through on his trade promises and to help him get rewritten pacts through Congress. Some doubt Mr. Trump can count on his support, but he disagrees.

“Of course I’ll work with him,” says the Ohio lawmaker who has made trade his defining issue. “No matter how discredited he is, no matter how much his own party turns on him, if I think I can advance good trade policy, I will.”

A week after Mr. Trump’s electoral victory in November, Mr. Brown sent a letter urging the president-elect “to overhaul trade policy,” renegotiate Nafta and “reset” economic relations with China.

“GREAT LETTER,” Mr. Trump replied on Jan 3, using capital letters. “I WILL NEVER LET OUR WORKERS DOWN”—underlining the word “never.”

Mr. Brown says he spoke with the president by phone in February to discuss a Buy America program, which reserves government contracting jobs to U.S. firms. Mr. Trump spent the bulk of the 10-minute call recounting his election win, Mr. Brown says. He chalks up the conversation to what he calls the president’s “insecurity” or “narcissism.”

Despite the personal friction, Mr. Brown continues working with Mr. Trump on trade. In May he helped work out a deal that unfroze Mr. Lighthizer’s nomination to become U.S. Trade Representative after months of delay. Mr. Brown’s staff said that, when the senator tried to phone Mr. Lighthizer with news of the confirmation, Mr. Lighthizer was already calling him. Mr. Brown later sent to Mr. Lighthizer the handwritten tally of his nomination vote.

The two men speak regularly by mobile phone. “I just call him intermittently to say, ‘What’s going on?’ ” Mr. Brown says. That included a call on Labor Day at around 4 p.m., when Mr. Brown was watching a Cleveland Indians baseball game and Mr. Lighthizer was working in Mexico City on Nafta negotiations. “Keep fighting for workers,” Sen. Brown says he urged.

Says the trade rep of his cellphone buddy: “I talk to him on a regular basis,” and seeks his input on trade policy. “It’s close.”

Mr. Lighthizer talks about creating a “new trade coalition” in Congress to pass deals that include provisions which appeal to Democrats. In the House, Democrats like Rosa DeLauro of Connecticut and Marcy Kaptur of Ohio have also defended the administration in fights with big business over remaking Nafta, and have prodded the administration to carry out pledges to block imports and battle China on trade. Although free-trade Republicans and their business allies may not like some measures, such as eliminating international arbitration panels that give business a chance to appeal government actions, Mr. Lighthizer figures they will back other measures and vote to keep international trade flowing.

Trade deals “should be done in a way that creates a new majority,” he says.

President Trump already can count on support for this tough trade stance from Republican voters. According to Wall Street Journal-NBC polls, just 31% of GOP respondents in December 1999 said free trade deals hurt the U.S. By February 2017, when the question was posed slightly differently, a majority of GOP voters polled said free trade hurt the country. In the same 2017 poll, just 16% of Democrats looked at free trade negatively.

Trade analysts attribute the change in attitudes among Democrats and Republicans to their support for or opposition to Mr. Trump.

Institutions in Washington that have spent decades advancing open markets are wary of an alliance between Mr. Trump and Democrats who oppose free trade. “If we move in that direction, that would undermine confidence in America’s economic leadership in the world and undermine the president’s efforts to create jobs and promote exports,” says Myron Brilliant, the U.S. Chamber of Commerce’s executive vice president.

Politically, the biggest obstacle to a realignment on trade is the Republican congressional leadership. Sen. Majority Leader Mitch McConnell and House Speaker Paul Ryan are both staunch free traders. The White House itself has free trade factions, such as at the National Economic Council.

Any new trade deal needs congressional approval, including a rewritten Nafta—although a 2015 law gives the president leverage, allowing him to submit trade pacts for a straight up-or-down vote, without amendments. Even withdrawing from Nafta, which would require tariffs to be increased and other barriers reinstalled, may require a congressional vote, say some legal scholars.

“There’s almost no margin of error” when it comes to passing trade legislation, Mr. Lighthizer said in June Senate testimony. He has made other overtures to Democrats, including retaining the Obama USTR’s general counsel, Timothy Reif, as a senior adviser.

Sen. Brown has made himself the party’s Senate expert on trade and other Democrats turn to for advice on such issues. His staff has the ability to maneuver through the thicket of policy and process questions involved in trade law.

“Sherrod Brown and I talk about trade issues all the time,” Sen. Tammy Baldwin (D., Wis.), a member of the Senate Democrats’ policy-setting arm, said in July when asked who she saw as a party leader on trade.

But some Republican trade veterans warn that Sen. Brown and his allies can’t be counted on to back any deal that Mr. Trump supports, especially as next year’s congressional elections draw closer. Mr. Brown is up for re-election.

“Democrats have to win back blue-collar voters in Northern and Midwestern industrial states,” says Warren Maruyama, USTR general counsel under George W. Bush. “One way to do that is to show that whatever Trump comes up with isn’t good enough.”

For Mr. Brown, working with the president initially seemed like a winner politically because his blue-collar supporters like the way the president talked on trade. At an April meeting in Toledo at a union hall, Bruce Baumhower, president of United Auto Workers Local 12, egged him on to support the president. “I was teasing him at one point [that] Trump finally got you to understand trade a little bit better,” he told the crowd.

By the summer some local liberal activists urged him to fight the president no matter what. “Sen. Brown should draw a very hard line and absolutely refuse to support this man,” said Suzy Scullin, co-chair of Indivisible CLE, the Cleveland wing of the national activist group formed with the mission of resisting Mr. Trump on all issues.

Mr. Brown says he isn’t worried; he figures the left will rally to his side. “They’re going to think I have sold them out?” he asks. “Hardly. I have a reputation with the progressive base that goes deeper than that.”

Since he came to Congress as a House member in 1993, Mr. Brown has led fights against nearly every major trade bill, including pacts with Mexico, Central America, Colombia, China and South Korea. He has lost almost all the legislative battles, but has helped make free trade toxic for congressional Democrats by portraying it as unfair to U.S. workers who must compete with developing nations and their low wages.

In the 1993 vote, 102 House Democrats backed Nafta. Twenty-two years later, just 28 voted to give a Democratic president, Barack Obama, more power to negotiate the Trans-Pacific Partnership.

Nafta became so unpopular in Congress that a Republican U.S. trade representative insisted that the acronym for a trade deal with Korea in 2007 shouldn’t rhyme with Nafta, says a former senior negotiator. Negotiators settled on Korus—Korea-U.S. Free Trade Agreement.

In some ways, Mr. Brown is more moderate in his position on Nafta than President Trump, who regularly threatens to scrap the agreement altogether. Mr. Brown argues that a hasty withdrawal could disrupt trade flows in North America and hurt Ohio auto makers and farmers dependent on exports to Mexico.

In the Nafta negotiations, Mr. Lighthizer is pushing several proposals to Mr. Brown’s liking. One would let the U.S. withdraw from international arbitration panels. Another, on “rules of origin,” would require that autos eligible for Nafta zero-tariff treatment be made with a certain percentage of U.S.-made components. Other demands could include Buy America provisions and prohibitions on currency manipulation, also priorities of Mr. Brown.

Businesses are resisting the arbitration panel and U.S.-content proposals, especially at the U.S. Chamber, whose president blasted the proposals in an October speech in Mexico. Rufus Yerxa, head of the big business National Foreign Trade Coalition, says it won’t be easy for Mr. Lighthizer to cut a deal that will pass muster with Mexico and Canada and please Mr. Trump.

“He has almost a Houdini act to accomplish,” he says.