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Senate GOP Holds Commerce Department Hostage Over Trade Deals

I touched on this in last night’s Roundup, but it’s really something. Republicans in the Senate are using the means at their disposal offered to them by the failure to enact Senate rules reform to hold a Cabinet position hostage in exchange for some ideologically favored trade agenda.

Congressional Republicans Monday threatened to block votes on key administration nominations until President Barack Obama submits trade deals with Colombia and Panama to Congress for passage.

The move is the latest in a GOP-led effort to force the White House to ratify the two Latin American agreements on a similar timeline as a trade opening deal with South Korea that the White House is eager to see passed.

In a letter signed by 44 Senate Republicans, including Republican leader Mitch McConnell of Kentucky and GOP whip Jon Kyl of Arizona, the legislators pledged to “use all the tools at our disposal to force action, including withholding support for any nominee for Commerce Secretary and any trade-related nominees.”

A few things on this. First of all, “gentlemen’s agreement,” we hardly knew ye. Mitch McConnell signed on to this deal, so it’s not the work of some rogue Senators forcing cloture, but the considered opinion of the leadership and pretty much all of the rank and file. Second of all, fortunately Republicans are only holding hostage the meaningless position of Commerce Secretary. The Administration should take the opportunity to dissolve the Department and move its parts into other federal bureaus, and blame Republicans for forcing his hand to boot.

Third, let’s look at this trade agenda that McConnell, Kyl and the Republicans seek. They want trade deals with Panama and Colombia to happen on the same timeline as the South Korean trade deal. Colombia’s murderous stance toward trade unionists makes such a deal distasteful, and frankly, the South Korea deal doesn’t offer much of interest to American workers either. But in the grand scheme, these are pretty small markets and small trade actions, more symbolic than anything. The one area of global trade where the US could really make some big change is by sanctioning China for manipulating their currency and benefiting their home industries. Millions of American manufacturing jobs have been lost as a direct result of currency manipulation. Just last year, Democrats and Republicans came together and passed a bill that would label China a currency manipulator and sanction them if they failed to remedy the situation. It got 335 votes in the House, including roughly half of all House Republicans. But this new House leadership doesn’t want to vote on the bill. Why?

But attempts to address the problem have hit a Great Wall here at home. Senior House Republicans are putting the brakes on the Currency Reform for Fair Trade Act of 2011, a bill that would make China’s currency practices punishable under US law. They oppose it, says an inside source familiar with the negotiations, because “US multinationals with operations in China really don’t like it.” These mega-companies fear that China will retaliate by crimping access to its markets—not to mention that their manufacturing operations in China will make less money selling goods back to American consumers without the subsidy.

“I think it is fair to say that Wall Street firms seeking financial business in China, and multinationals like Caterpillar with big manufacturing activities in China, have lobbied both Republican and Democratic administrations against action,” Morici says. “Goldman Sachs’ and Caterpillar’s interests are more aligned with China than with the US economy.”

And the Republican interests are similarly aligned. So while the GOP Senators hold the Commerce Department hostage over trade deals, they stand silent in the face of the only trade policy that would actually have a positive impact on US jobs.

Meanwhile, expect the Obama Administration to send a written letter asking “How high?” at this command to jump. US trade representative Ron Kirk said in committee last week that he expected deals on the Colombia and Panama agreements this year.

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David Dayen

David Dayen