Budget cuts hamper trade policy, top trade official tells Congress

WASHINGTON – The administration’s top trade official outlined President Barack Obama’s ambitious trade agenda to Congress Tuesday while cautioning that budget cuts are hampering efforts to negotiate new trade deals and enforce existing ones.

The administration is currently conducting or preparing to launch three major trade negotiations, acting U.S. Trade Representative Demetrios Marantis said at Senate Finance Committee hearing on trade policy. But budget cuts “may significantly hamper these and other efforts to open global markets and support American jobs.”

He said his agency has seen its funding cut by $2.6 million as a result of the automatic budget cuts that went into effect at the beginning of the month and stands to lose another $1 million under legislation to fund the government for the rest of the fiscal year. “USTR has cut everything from travel to hiring to parking spots to security to save money,” he said.

Marantis has been acting chief of the agency since Trade Representative Ron Kirk stepped down earlier this month. Obama has yet to nominate a successor.

Senators quizzed him about the administration’s goal of completing the 11-nation Trans-Pacific Partnership this year and opening free trade talks with the European Union. He also discussed plans to begin talks on an International Services Agreement that would remove barriers to U.S. service industry exports.

Several voiced concern about Japan’s interest in joining the Trans-Pacific trade talks, saying they feared the administration would make concessions to Japan on its highly protected auto and agriculture industries that could undermine the goals of the free trade negotiations.

Giving in to Japan in such areas “threatens to dilute the benefits of the entire agreement” because other countries would also seek exceptions to protect their own industries, said Sen. Orrin Hatch of Utah, top Republican on the committee.

Sen. Debby Stabenow, D-Mich., a strong supporter of her state’s auto industry, said Japan has been protecting its auto industry since the 1930s, so “why in the world would we believe at this point that this would be any different.”

Marantis said it had been made clear to the Japanese that everything would be on the table if they joined the talks.

Committee Chairman Max Baucus, D-Montana, a champion of beef and agriculture exports, said 21 per cent of U.S. goods and services exports now go to the EU, and that figure could grow by another 17 per cent if tariffs were eliminated. But he said that first serious challenges must be overcome, including the elimination of “non-science based regulations,” such as restrictions on genetically modified crops, that have kept out U.S. farm goods.

Hatch said a successful trade policy depended on Obama nominating a trade representative with strong leadership skills and the administration working with Congress to revive Trade Promotion Authority — also known as fast track — under which Congress gives the president the authority to negotiate trade deals that Congress can accept and reject but cannot amend.

The last TPA law expired in 2007, making it more difficult to conclude trade talks because negotiating partners are reluctant to sign off on agreements that Congress can amend.

With many Democrats suspicious of the benefits of trade deals that could disrupt American industries, the Obama administration has not actively sought a reopening of negotiations with Congress to establish the non-binding trade objectives that would act as the basis of new TPA legislation.

“There’s some concern,” Baucus said, that “maybe the administration is a little lax, a little slow,” in requesting a revival of TPA.

“We have heard the strong calls” from Congress to move forward with TPA, Marantis said. “We are ready to begin our work with you.”