INTERVIEW TRANSCRIPT

C-SPAN’S “NEWSMAKERS”

Guest: Susan Schwab, U.S. Trade Representative

Reporters: Greg Hitt, Wall Street Journal & Martin Crutsinger, Associated Press

Moderator: C-SPAN

Tape Date: Friday, April 11, 2008

AIR DATE/TIME: SUNDAY, April 13, 2008 at 10 a.m. and 6 p.m. ET

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SUSAN SWAIN: Newsmakers is very pleased to welcome the U.S. Trade Representative Susan Schwab to our studios this week, in the day following the House decision on the Colombia trade deal.

Let me introduce our two reporters who’ll be asking questions today; Greg Hitt to the Wall Street Journal; staff reporter since ’96. His beat is Congress and economics. Also, joining us is the Chief Economics Writer for the Associated Press, Martin Crutsinger; Greg, why don’t you start.

GREG HITT, WALL STREET JOURNAL, STAFF REPORTER: Madam Ambassador, obviously, we’ve reached something of an impasse, this week, on trade, if that’s not understating it, on Capitol Hill and in Washington and there have been a lot of rhetoric on both sides about what it all means but I’m wondering if you see an obvious way forward out of the current impasse and you know, if there is some ground, at this point, for negotiations that would revive action on the trade agreement?

SUSAN SCHWAB, U.S. TRADE REPRESENTATIVE: I think what happened this week really was a travesty and we, as an administration, are tremendously disappointed at the implications for American workers; the implications for our farmers. The Colombia Trade Promotion Agreement was – is a piece of legislation that fixes a fundamental unfairness, which is that Colombia’s products come in here duty free and that agreement, once its enacted into law – if its enacted into law, would open up Colombia’s market for our products; our services; our agricultural commodities, so the fact that congress and the democratic leadership, in the house, stopped the process cold, is terribly disappointing.

At this stage of the game, it really is going to be up to the democratic leadership, whether they are going to favor union bosses over America’s workers because these are American jobs we’re talking about; American products; American agricultural commodities that we should and could be shipping to Colombia and other countries, with the other Free Trade Agreements, so there is no obvious way out. It really is in the hands of the Speaker of the House.

The administration, we’ve gone out of our way to reach out and say where we could do something to help facilitate the process, we would. The president talked about doing trade adjustment assistance, in his State of the Union message, in January; nothing and so, it really is up to them now whether they are going to leave this fundamental unfairness in terms of a one-way free trade program with Colombia, with trade coming this way and whether we are going to do this to one of our most important allies in Latin America.

HITT: Well, the speaker has talked, talked this week, about her desire to have action on a competing set of priorities before Colombia moves, not just the worker assistance package for those who lose their jobs, as a result of foreign competition but also, infrastructure; jobless benefits; food stamps; in effect, the economic stimulus package. Is there ground to have those kinds of discussions now, after this week, to move – before moving – so we can move forward on Colombia?

SCHWAB: Well, let’s start with the obvious, which is if you really care about jobs, in this country and you really care about workers, what you want to do is open up foreign markets to our exports. The brightest spot, in the U.S. economy, 40 percent of our economic growth last year, was attributable to the increase in U.S. exports and therefore, if you really care about American workers; you really care about American jobs; you want to open the Colombian market. You want to open the Panamanian market. You want to open the Korean market to U.S. exports, so that’s the first thing, if you really care.

Second, the administration has indicated that we’re happy to work with the leadership on trade adjustment assistance and have been all along. I mean the president believes that where there are individuals and communities that are negatively impacted by trade and there are some that we really need to care for those individuals and help them adjust and in trade adjustment assistance, which has now expired, we’re prepared to move ahead on that regardless but at the end of the day, you take a look at what has happened over the last 16 months, more than two years, in fact, since the original Colombia deal was closed, 16 months since the agreement was signed, in that time, the goal posts keep moving. First, its one thing and then it’s another thing. The democratic leadership first said, OK, we’ll move the Free Trade Agreements and there were four pending, at that time …

HITT: Right.

SCHWAB: … as you know, including, Peru, which went through last year. If enforceable labor and environmental provisions are added to these trade agreements and this is something democrats have been calling for, for 10, 15 years …

HITT: For years.

SCHWAB: … and so, the administration reached out and last May, reached an historic agreement with the democratic leadership on labor and environmental agreements, in these four Free Trade Agreements. Our trading partners agreed to accept them and then, the goal posts moved and the goal posts moved again, Monday.

HITT: Oh but now that the playing field is different and the goal posts have been set, are you willing to play on that field and negotiate on those other issues?

SCHWAB: I spent most of the 1980s working on the hill for Jack Danforth, Republican from Missouri and as you probably know, Missouri’s the “show me” state and …

HITT: You pronounced that correctly.

SCHWAB: I pronounced it correctly and the fact of the matter is, as long as, the goal posts keep moving and nobody engages, you really have to be skeptical about what the intentions are of the democratic leadership in the house.

SWAIN: Mr. Crutsinger.

MARTIN CRUTSINGER, ASSOCIATED PRESS, CHIEF ECONOMICS: Given the state of play, Ambassador, I wonder if I could take you back to the decision that in the 30 years that we’ve had fast track, no president has ever lost a trade agreement, under the fast track procedure but also, no president has ever sent up a trade deal without approval from the leadership of whatever party was in control of congress. You decided, this time, to change that. You sent this up without the go-ahead from the democrats and they used their nuclear option and have stopped the clock on you, so you don’t have that. So, how – what – did that surprise you that – what they did and what went into your thoughts on why you would take the action of sending it up before you had gotten the go-ahead, especially, in light of the fact that trade deals are always hard to get through congress, in an election year when its even harder to get through congress and we may be in a recession, where people, who are antitrade can use lost jobs as another reason to vote against trade deals.

What was the – what went into your thinking that you decided, let’s go on ahead and do this unprecedented action of sending this to congress without getting approval from the leadership?

SCHWAB: Well, as you know, fast track authority or trade promotion authority has been available to every president since 1974; 34 years and there has never been an incidence, under fast track authority, where the congress has refused to act on a trade agreement. I mean that’s what’s unprecedented here. Every single trade agreement …

CRUTSINGER: Excuse me, just a second but to go back forward, no president has ever sent one up that they did not have an agreement from the leadership, yes, we’re ready to take it; let’s start the clock running.

SCHWAB: And no …

CRUTSINGER: There’s been plenty of negotiations, on a lot …

SCHWAB: No president …

CRUTSINGER: … of deals before they were sent up but this administration decided no, we don’t – we want to vote this year, so let’s go ahead and …

SCHWAB: Marty (ph), no president has ever had his hand forced, the way this president has and where we had to send it up. No president has ever had to send it up.

Here’s – let’s go back and take – let’s look quickly, what is – what are the requirements? What are the obligations under trade promotion authority? The obligations are, for the executive branch because it’s sort of a contract between congress and the president. The president and in this case, the president’s lead, you know, trade negotiators, USTR, we are obligated to work with the congress before we launch a trade agreement; consult with them, during the trade agreement; meet the negotiating objectives that they set out for us and then, once we’ve reached the agreement, we have advisory; studies done and so on. There are a whole lot of things we have to do. This administration has done every single one of those things for all four of the trade agreements that were pending, 1.5 or 2 years ago.

What are the obligations of the congress under trade promotion authority? One, to hold hearings; this agreement was reached more than 500 days ago and not a single hearing has been held on this trade agreement. Hold hearings; hold a mock markup and accept the legislation when it comes up for an up or down vote, no amendments and so, having done absolutely everything there’s a 90-day clock, as you know, 90 days – 90 legislative days, which is a lot of time but if you look at the congressional calendar and you count backwards from September 26th when congress was expected to adjourn, you get to Tuesday, April 8th, which was the day we sent it and we had to send it if we wanted to lock in a date certain for a vote. I mean, what this congress is doing – what the congressional leadership was doing, was saying, oh well, yes, you go out, you negotiate all these agreements with our trading partners and then, we just don’t want to do anything on it.

This agreement, Colombia, is a major ally of ours. This is a country with which we have $18 billion in trade. This is a pro-democracy; pro-markets; pro-U.S. country that wants to open their markets to our exports, speaking of the U.S. economy and our economic interests, when they’re already shipping their stuff to us and all we wanted and all we’ve been asking for and you all have been covering this for 6, 18 months, is a commitment for a vote on the Colombia FTA and we were never able to obtain it, no matter what we did. No matter what we did and we did absolutely everything under the law that we were expected to do.

CRUTSINGER: Speaker Pelosi’s been fairly direct. She said this is about leverage. She’s not – she’s going passed the benefits of the agreement and saying that there are things we want to address for U.S. families in a time of economic stress.

SCHWAB: If you care about U.S. families, in a time of economic stress, you want to create jobs in this economy and the best way to do that right now, is to increase U.S. exports.

CRUTSINGER: And I think that they would probably say that you would also do – extend unemployment benefits and trade adjustment assistance for people who lose their jobs because of trade and the president talked about trade adjustment.

I haven’t heard him talk about economic – extending unemployment benefit. In fact, the administration seemed to say, we don’t need a second stimulus package. Is that still your position …

SCHWAB: Well, you …

CRUTSINGER: … second stimulus package?

SCHWAB: You’ve been covering this issue and this legislation and these agreements for more than two years and you know and you have the heard the rhetoric coming from the democratic leadership on the hill that first, it was labor and environment; that would take care of it. We did exactly what they asked for. Oh gosh, now, there’s something else. Violence and impunity show that there has been an improvement. By god, there is ample evidence to show the dramatic improvement in the level of violence in Colombia. Most American’s perception of Colombia, is 10 years, 15 years, 20 years old, so dramatic improvement in that. We did that.

Now, OK, trade adjustment assistance; we understand. We’ve pledged to work with the congress on trade adjustment assistance. The president said he wants to sign a TAA bill. The goal post keeps moving and what happens on the other side? There has never been a commitment. There has never been a commitment to have a date certain vote on the Colombia Free Trade Agreement and so, they can keep moving the goal posts and moving the goal posts and we can keep saying, yes, we made this commitment and we made that commitment, nothing is happening and I’ll tell you, as a trade negotiator, I can negotiate with myself until the cows come home but we’re not going to get anything for the American people unless the Colombia FTA goes through.

SWAIN: Let me ask the question, in a different way, which is, if you had your old hat of the years you spent as the Dean of the Public Policy School at Maryland, how would you teach this week? What would be the lesson here?

SCHWAB: Oh my. I guess I would start by quoting, Chairman Rangel, of the House Ways and Means Committee, who a couple weeks ago, when talking about the Colombia Free Trade Agreement, said, well, actually, its not the substance on the ground, it’s the politics in the air.

So, I’ve taught trade policy courses at Maryland before. I love teaching trade policy and trade policy is a fascinating field because it has implications in terms of foreign policy; domestic politics; international economic policy and domestic economics and unfortunately, the way I would teach – have to teach this case is, if you look at the substance of the Colombia Free Trade Agreement or the substance of the Panama deal or the substance of the Korea deal, every single objective report, for example, by the ITC, the International Trade Commission, independent and international trade commission, shows that it would benefit American workers and the American economy and American farmers and our entrepreneurs and obviously, our consumers and yet, there is no rational explanation, other than politics, pure partisan politics, to explain why we’re not rushing – why the congress isn’t rushing to enact this into law and so, unfortunately, the way you’d have to teach this, is there are some things that count more than the substance and the actual factual benefits to the U.S. economy of increasing U.S. exports.

It – this – what the Speaker of the House did this week was truly unprecedented. I mean it upends 34 years of U.S. trade law and U.S. trade policy and trade negotiations. Democrats and republicans have been able to operate successfully under this law until this week and the speaker pulled the plug on it.

HITT: So that’s your teacher hat, your professor hat; as a policy-maker, how do you get beyond the pure partisan politics that shroud this and can you elaborate, for a little bit – for us, a little bit about, what the political strains are on this and why it is so difficult, at this time?

SWAIN: There’s 10 minutes left, by the way.

SCHWAB: Well, I must say, I try to avoid, insofar as possible, ever getting into politics, partisan or otherwise.

HITT: But you said pure partisan politics.

SCHWAB: Well, in this particular case, there’s no way of explaining what happened without looking at the politics. Here’s where I come from. I think that politicians need to give the American people credit for understanding the difference between a good trade agreement and a lousy trade agreement. And a good trade agreement, for the United States, is one where we can clearly show that it is in our interest and in the interest of American workers and farmers; in the interest of our trading partners, of our allies and in this case, both economic and geopolitical interests.

I think, to the extent that politicians pander to the lowest common denominator and pretend that all trade agreements are alike, does the American people a disservice, so I start with that.

Second, I am of the view and you’ve watched me, in this role, for about a while, I feel very strongly that the only U.S. trade policy that’s ever going to work is a bipartisan trade policy and it may be one of the reasons I have reacted as angrily as I have over what happened this week because I believe so strongly that America’s trade policy can’t be republican trade policy or a democratic trade policy and to make it partisan, on the basis of what union bosses are demanding, of democrats, instead of looking after the interests of American workers and farmers, has really cut me to the quick and everything that I believe in.

Where do go from here? Well, I have been the one who has been out front and happily working very closely with my colleagues, in the cabinet. Hank Paulson and Carlos Gutierrez; Condi Rice; Ed Schafer in agriculture, all of us, are of a mind that trade needs to be bipartisan and that we want to work with the democratic leadership, as we did last year, when we reached out and said, yes, we will do the labor and environment deals and satisfy the concerns and quite frankly, if you care about workers in Colombia, what’s the best thing you can do for them? Get this deal enacted into law because that gives them leverage that they wouldn’t otherwise have, so you know, I’d say to you, we’ll continue to reach out but the reaching out hasn’t gotten us the trade agreements that were promised by the other side and so, there’s a pragmatic side to me, which says, look, show me. Prove to me that we’re going to get an up or down vote, on this trade agreement.

CRUTSINGER: Do you think, given the impasse that we have now that we – 10 months left in this administration, this president’s legacy on trade, which probably now have been written that you’re not going to get a Colombia deal? That you will not get the Panama deal; you will not get South Korea? Basically, he’s gotten what he’s going to get.

SCHWAB: Oh, I think you’re wrong. I think – I am still …

CRUTSINGER: We’re looking to see how this impasse is going to be broken. We just don’t …

SCHWAB: No that’s right but I think, you know, I think it is doable and here is, you know, one. This president’s legacy on trade, as you noted, it already incredibly strong. I mean when this administration came into office, there were three free trade agreements. We now have 14 on the books, in operation and I might add, just parenthetically, U.S. exports to those 14 countries, went up, last year, 40 percent faster than our exports to the rest of the world, which shows some of the benefits – economic benefits to our workers and our farmers from these deals.

There are three additional free trade agreements waiting to be implemented, so that makes 17. These last three free trade agreements are fundamental, again, to our economic aspirations and also, geopolitical aspirations. Colombia and Panama, critical allies in a region, you know, Latin America; South America, where we have interests that are so very important. You know this is our backyard and there are folks like Hugo Chávez, in Venezuela who are not our friends, who are going out of their way to undermine democracy and undermine markets in Latin America.

You have South Korea; again, you look at the Korean peninsula; you look at the importance of our position in Asia and above all, just speaking as economist, you look at U.S. competitiveness and what these free trade agreements do, is enhance our ability to compete with the rest of the world. If we don’t have these deals with Korea or Colombia or Panama, they’re going to be buying – they’ll buy Chinese computers and they’ll buy Japanese tractors and they’ll buy Australian beef. Why would they buy all those things from us but with those agreements they’ll be buying those things from us and I believe, very strongly that members of congress, as they come to realize the fundamental self-interest we have, in getting these agreements done that we’ll figure out how to muddle our way through and get the, you know, break this impasse on Colombia and move on to the other free trade agreements.

SWAIN: Five minutes.

HITT: How is – a big part of your job, obviously, to work with congress and to sell the trade agenda there and to address the concerns of lawmakers there. Another big part of your job is to work with our international trading partners, in Europe and at home and what is your assessment of how the maneuvering in Washington, this week, has been received abroad and what are you doing? What message are you communicating to the people in Europe and in Latin America and Asia, who are closely watching what’s happening here?

SCHWAB: Well, you ask a very good question and here is my approach. As you know, trade promotion authority has expired and so, with only one or two exceptions of bilateral free trade agreements that we’ve – we’re continuing to work on, we haven’t ramped up a new set. We are exploring new options.

The Doha Round, which is the multilateral trade negotiation going on in Geneva, under the auspices of the WTO, is the most important trade negotiation that we are currently involved in and the TPA expired for the Doha Round, effectively, two years ago and I think our trading partners understand that it is in all of interests to reach an ambitious outcome to the Doha Round.

If our trading partners use congress as an excuse, it’s just as easy for me to point to their legislatures or you know, their political sensitivity, so we’re going to negotiate the best deal that we can. That deal has to be one that opens markets – that opens markets around the world and that generates economic growth and alleviates poverty. This is a development round. We need to focus, primarily, on the emerging markets.

China; Brazil; India; Indonesia have to be contributing to this round by helping to open their markets to each other; to the least developing countries and to developed countries, so that really – the difficulties in the Doha Round, have more to do with countries being reluctant to do a deal, than it is anything related to U.S. politics.

CRUTSINGER: And what happened this week, doesn’t that send a message that they might as well wait for another administration? That we’re at an impasse here? Why negotiate with this administration given what happened with Colombia and just wait until next year and start it up again?

SCHWAB: I don’t think anyone would – I don’t think anyone thinks that the environment is going to get any better, in the United States or anywhere else in the world, for a successful Doha Round. We either have the political will to get it done or we don’t have the political will to get it done. There are a whole lot of reasons why 2009, 2010 wouldn’t work. There are elections in India and in the EU, the commission turns over and there are a whole lot of reasons why, totally separate and apart from our electoral cycle.

You have 152 members of the WTO, everybody’s – somebody’s got elections every single year; someone’s got political imperatives. It’s a matter of coming together, negotiating the best deal you can. If there is a strong Doha deal out there, we will close it this year. If there isn’t, it won’t close, simple as that.

SWAIN: Last question.

HITT: And next week, you should – keeping on the international side, next week the Korean president comes here, this – comes just after, you know, the vote on Colombia. I think you will be meeting with him and he’ll also be meeting with people – leaders, on the hill and the president, as well. How is – what – how is this influencing that and is there an obvious – is that in any way on a path towards a vote, do you – this year?

SCHWAB: I think each of these free trade agreements needs to be looked at separately and again, when we worked out the bipartisan deal on labor and environment, last year, I think there was a sense that each one was on its own path. In the case of Korea, it is the biggest of all of these free trade agreements and will have the most profound economic impact. The ITC is estimated increased U.S. exports of $10 billion to $12 billion, just from this agreement, so this is an agreement – I’m hoping with the Korean president coming here that American workers that are farm groups that members of congress will take a serious look at this agreement next week and realize how beneficial it would be to the U.S. economy.

SWAIN: Ambassador Schwab, we are out of time but thank you very much for being with us, this week.

SCHWAB: Thank you; happy to be here.

HITT: Thank you.

SWAIN: And we are back with Greg Hitt of the Wall Street Journal and Martin Crutsinger of Associated Press; gentlemen, most of you questions, of the U.S. Trade Representative, Susan Schwab, had to go with where does the country go from here after the administration’s loss on Colombia trade, this week. What did you learn? Where is the strategy?

HITT: Well, what I think you saw, first, was the depth of – in her response, is the depth of frustration on the part of the administration, with the white house, with the current situation, with the impasse that’s been created and I don’t know that we learned where to go from here in discussing this. You know I think she – its not at all clear that you know, she feels that there is a basis for negotiation and compromise, on the grounds that the speaker’s laid out, which is that you know that this is about more than just trade abroad. This is a political situation that’s about doing things for people; workers at home, you know, with jobless benefits; with, perhaps, food stamps, maybe even a children’s health bill, you know, infrastructure spending; in fact, a second stimulus bill and you know, its not clear to me, based on conversations with her that there’s a lot of room for discussion on those grounds.

SWAIN: The ambassador declined, although, she labeled it as pure partisan politics, she declined to define what those were, would you do that? Would you help people understand what the politics of this debate are all about?

CURTSINGER: Well, I think, even before this week, which you’ve got to say, both sides used the nuclear option, in this dispute and they now are left wondering how to pick up the pieces but even before that this administration was facing a very difficult road because we have a country that many economists believe is now in a recession. Trade is always difficult to get through congress even in good times. If the country’s in recession and you add on the fact that we’re in an election year, where all the seats in the house are up for re-election; a third of the senate and we’re going to elect a new president that puts it in the mix that really, both sides are not only trying to deal with the issue at hand but they’re also speaking to their larger constituencies out in the country and so they’re using this as a political – to score political points, as well as, to try to get trade deals through. She can talk all she wants to about how important Colombia is economically but it really isn’t. The – its less than a percent of our trade flows, are Colombia.

It is – it does have geopolitical significant to this country but economically it doesn’t and that’s what the democrats are trying to argue that we want to be seen as addressing some of the problems we’re seeing of the 80,000 workers laid off last month; three months of job losses. We want to address those problems through another economic stimulus package and also, through extending job benefits, as part of what they’re doing here in trade adjustment and Speaker Pelosi’s been very blunt on this. She said this isn’t about the economics of it. This is about leverage. We control congress. There are things that we want this president to do that up until now he said he will not do and so, if he wants his trade deal, he has to meet us and discuss our issues. She can talk about moving the goal posts but in an election year, I think that if they want things done, they’re going to have to do more on the administration side.

HITT: Although, I do think that she mentioned – I mean we asked her about politics and she mentioned that leadership was, you know, working on the agenda of organized labor and the union bosses, I think, was the phrase that she used.

CURTSINGER: Yes, she was …

HITT: And it is clear that organized labor opposes this agreement. They raised the concerns about the record of violence in Colombia against labor organizers there and so there is that concern but this also is taking place, as Marty (ph) points out, against the backup of a broader public anxiety with trade and a concern that over the last – that has built up over the last decade, as barriers in trade have fallen around the world and American workers aren’t competing well and aren’t competing often on a fair ground and to some extent, we’re seeing some of the backlash of that rise in public anxiety and in 2006, we elected a class of democrats, whom many of them we trade skeptics and …

CRUTSINGER: And believe that they won office by running against the administration’s free trade policy.

HITT: Trade agenda …

SWAIN: And then you have the component of the Republican Party who are also trade skeptics.

CRUTISINGER: Yes.

HITT: Right.

CRUTSINGER: And right now, this trade – these trade issues, in many forums, it’s not just with Colombia or the violence but also, China’s a big factor here. These are – this is a big dividing line between the two parties in the 2008 election and that’s the elephant in the room you can’t get around.

SWAIN: We’re out of time but would I read it correctly to say you’re not as optimistic as the ambassador on the prospects for the Korean agreement?

CRUTSINGER: She’s very passionate and so, if there’s a way to do it but I think what we heard was her bargaining points, right now but now, we have – we’ll go behind the scenes and see what she can get done.

SWAIN: Thanks to both of you for being here this week.

END