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Senate, House leaders tell business community they won’t stand up to Trump on trade

November 6, 2017

While the business community and some on Capitol Hill are looking for ways to stop President Trump from a potential NAFTA withdrawal, Republican leaders in the House and Senate have made clear in closed-door meetings they will not face off with the president on trade out of fear they could jeopardize tax reform efforts or spur primary challenges to vulnerable lawmakers in 2018, congressional and private-sector sources told Inside U.S. Trade.

Business representatives have asked offices on Capitol Hill -- particularly those of Senate Majority Leader Mitch McConnell (R-KY) and House Speaker Paul Ryan (R-WI) -- to publicly oppose the president’s approach on trade, as well as his recurring withdrawal threats, and urged them to defend existing U.S. free trade agreements.

But sources said the leaders, in several closed-door meetings and at recent fundraising events, have responded in similar fashion: Acknowledging the business community’s anxiety over the economic and security consequences of a potential NAFTA withdrawal, they have stressed that any public challenges could have significant negative implications for their tax reform efforts and the re-election chances of their members.

Some sources recalled a recent fundraiser with McConnell at which the majority leader, asked by a business executive how he would make sure Trump won’t withdraw from the deal, said he was not in a position to help and instead suggested the executive take his case directly to the administration.

Sources said their take-away from meetings with both McConnell and Ryan was that the leadership is focused on tax reform and cannot risk any roadblocks for what many observers consider a badly needed legislative accomplishment to secure re-election for their members.

Former Commerce Department official Bill Reinsch, a distinguished fellow at the Stimson Center, last month said Republicans were “nervous about the relationship between [NAFTA] and the tax bill.”

“They’re telling the White House ‘don’t rock the boat on trade while the tax bill is going on, because we want to get the tax bill finished,” Reinsch said at an event hosted by the Cato Institute.

“I think it’s fair to say that you probably will not see any apocalyptic event in NAFTA, at least by the United States, until after the tax bill situation is clarified. But the Republicans are very nervous that one of these things is going to get in the way of the other,” he said.

Some sources said they agreed with McConnell and Ryan and their staff members that opposing Trump on trade would be unwise. They cited former White House strategist Steve Bannon, who has publicly declared “war” on the GOP establishment and has pledged to back strong primary challenges to lawmakers who do not toe the administration line.

Withdrawing from NAFTA or the U.S.-Korea Free Trade Agreement would appeal to Trump’s base, these sources said; roadblocks put up by McConnell or Ryan would be a “gift to Trump and Bannon,” as one source put it.

A spokesman for McConnell declined to comment on private conversations. A spokeswoman for Ryan did not respond to a request for comment.

But some sources and Republican lawmakers said that while the leaders publicly are quiet about Trump’s lashing out on trade, their offices, as well as many others on Capitol Hill, are preparing behind the scenes for specific scenarios and would be willing to engage if Trump made a “drastic” move.

Business representatives from virtually all industries have sounded alarm bells and ramped up their lobbying efforts since U.S. Trade Representative Robert Lighthizer and his team in the NAFTA talks have moved ahead with what the Chamber of Commerce and other trade associations refer to as “poison pill” proposals, which many fear could be designed to jeopardize the negotiations and spur a withdrawal by any of the three parties.

A senior Republican House member told Inside U.S. Trade late last month that “there are efforts behind the scenes” among House leaders and key members of the committees of jurisdiction “to try to weigh in and move the needle with the administration without having [the conversations] publicly.”

“This is not a fight we want to have publicly. It’s been held private, it’s kind of within the family,” the lawmaker said, adding that he and his Republican colleagues are “hopeful that we can have more success privately.”

A former Democratic trade official and congressional staffer faulted the GOP’s approach, saying “the Republican leadership is clearly doing its ostrich imitation on NAFTA.”

“Being challenged in a primary by the anti-NAFTA base might not be as bad in Texas or the farm belt as losing NAFTA,” the former official said. “If Trump blows it up, their appeasement of his anti-trade stance will look really bad in the farm belt and Texas, where trade with Mexico is a good deal. If they wait until he pulls the trigger it may be too late.”

But a former GOP leadership staffer sympathized with the leaders’ approach on the issue, saying that a potential clash with the administration could lead to worse outcomes than what many observers believe might ensue.

“I recognize the business community is looking for silver-bullet solutions from the Hill on trade policy, but the Republican leadership's role is to balance the policy and the politics of a really dicey issue, and to protect their members,” the former GOP staffer told Inside U.S. Trade.

“So far they have done a good job. There may come a point where they will need to step up and become more publicly willing to protect the economy and our international relationships, but for now they are probably wiser to have these discussions discretely and avoiding provoking the White House into doing something even worse than what they've already thought of,” the former staffer added.

Asked about a Plan b should Trump decide to withdraw, one GOP lawmaker said “that’s too hypothetical of a scenario at this point.”

“I have full confidence that the administration is going to be tough negotiators, and any negotiator needs to be mindful of what the moving parts are, what could happen if certain things aren’t in place,” the lawmaker said. “And I think it’s our job as the legislators to express concerns, all within the context of [Trade Promotion Authority]. But we’re not the negotiators, and for legislators that want to be negotiators, that runs the risk of undermining a negotiation and I think we need to be very careful.”

The House member also said his caucus has been “so busy with tax reform and a lot of things” that he has not yet thought about a contingency plan for NAFTA because the issues surrounding the talks “have cropped up more recently.”

The president and his trade team have received bipartisan pushback in recent weeks, particularly from lawmakers representing border and agricultural states. And prominent lawmakers on trade committees have expressed some concern over the direction of the administration’s trade policy, with some saying they are hopeful that the president’s rhetoric is a negotiating tactic aimed at securing a better deal.

The president himself has told Republican senators in private he believes the U.S. should initiate a withdrawal from NAFTA to move Canada and Mexico to negotiate more seriously, Inside U.S. Trade reported in October. “The president said there was no way to get the changes we need unless we get out, then have six months to negotiate,” said one GOP senator who strongly backs NAFTA.

But many observers have speculated the president would likely be challenged in court if he decided to withdraw from NAFTA. Another option to prevent a NAFTA exit would be to introduce legislation, which one GOP lawmaker said was “always a potential tool” -- but, he added, the preference is to “try and work it out” between congressional leadership and the White House.

“I think that’s the last resort but I think there’s a lot of support for that effort both in the House and in the Senate if things don’t turn around,” the lawmaker told Inside U.S. Trade.

Sen. Pat Roberts (R-KS) offered a similar take last week.

“That might be an option,” Roberts told reporters, “but I think right now that would be a little early to be doing that to say the least. I think we can make our case before the administration.”

Several congressional offices and trade associations have hired lawyers to interpret the appropriate legislation in the 1974 and 1988 Trade Acts as well as the NAFTA implementing bill, which Reinsch said “are both contradictory and ambiguous.”

But this uncertainty over who -- Congress or the president -- actually can effect a withdrawal from NAFTA, Reinsch said, “might in turn lead to an effort to sort that out and clarify the situation, not only with respect to NAFTA but with respect to all agreements, because there are signs that this may be the first of several.”

Others, however, cast doubt on the prospect of such legislation ever getting introduced. Republican staffers said it was highly unlikely that such a bill would be introduced in a Republican Congress in the first place, much less win presidential approval or be backed by a veto-proof majority.

“All the arguments about authority to withdraw are academic,” a trade lawyer told Inside U.S. Trade. “Republican leadership won’t take on POTUS for fear of being primaried and they’ll just lie in wait until the rollback of the NAFTA implementation act occurs. It will fill campaign coffers with lobbying funds for 2018 -- the self-licking ice cream cone of DC trade politics.” -- Jenny Leonard (jleonard@iwpnews.com)

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