October, 2001: The Yankee Trader

By Greg Rushford
Published in The Rushford Report

“We will direct every resource at our command—every means of diplomacy, every tool of intelligence, every instrument of law enforcement, every financial influence, and every necessary weapon of war — to the destruction and to the defeat of the global terror network.”
—-President George W. Bush to Congress, September 20, 2001.

“We will do whatever is needed to protect our nation. Nothing is more urgent.”
—-Sen. Majority Leader Thomas Daschle, September 20, 2001.

Yeah, right.

Throughout America’s history, crises have brought out the best in everyone.

Well, not everyone. Sen. Jay Rockefeller (D-West Virginia) took advantage of the September 11 terrorist bombings to argue that here was the proof that limits on “unfairly” traded foreign steel need to be slapped on foreigners in the name of national security. This, despite the fact that 40 percent of the structural steel in the World Trade Center towers — steel that was strong enough on September 11 to hold up long enough to save thousands of lives while people escaped — was the product of Japan’s Nippon Steel.

As this article went to press late last month, it was unclear whether there were enough votes in the House and Senate to give the president fast-track trade negotiating authority with America’s trading partners and allies — an essential tool if the United States is going to use “every financial influence” available to defeat global terror.

In the days following the September 11 tragedy, Congress rushed to give the president virtual carte blanche authority to wage global warfare against terrorism and nations that harbor terrorists, with an immediate $40 billion check as a down payment. But it wasn’t clear that Congress trusted the president enough to give him authority to negotiate trade deals that are not only in America’s own economic interest, but are a very important part of the coalition that has to be put together to win the war.

The only reason for optimism late last month was that it appeared that Bush would go to the mat to get fast track from Congress — perhaps early in October. The reason that the president would do this is that there really is a direct link between fast track, coalition building, and restoring America’s (diminished) leadership in international economics. It is simply explained.

Consider the situation of Indonesian president Megawati, who came to Washington last month to discuss her country’s anti-terrorism stance with President Bush. Indonesia is home of more Muslims than any other country, including Saudi Arabia. Indonesia is in serious financial straits, and really wants more market access to the United States, particularly for clothes. Egypt is, of course, another key Muslim country whose support is needed in the coalition against Islamic radicalism. Egypt would like to be able to sell the United States more rebar steel. Consider further Japan, whose prime minister has just come out with a strong declaration that his country will stand by the United States (in dramatic contrast to the 1991 Gulf War, where Japan dragged its feet on military assistance and had to be embarrassed into contributing some $13 billion). And how about Pakistan and Turkey, two more from a long list of countries that also would like to sell the United States more products, including clothing and textiles?

What is the higher priority for America, advancing the interests of its domestic steel and textile lobbies, or putting together the coalition to defeat terrorism? Is the United States supposed to tell countries like Indonesia, Egypt, Pakistan, Turkey and Japan that while their sacrifices in the effort to fight terrorism are appreciated, we are not prepared to take any steps that would upset the U.S. protectionist steel and textile lobbies?

While the question sounds ridiculous, it isn’t. On Capitol Hill, the steel lobby responded to September 11 by linking its protectionist demands to the fight against terrorism. It’s an absurd argument, even an unpatriotic one, but one that carries weight in Congress.

In the 1991 Gulf War the United States gave Turkey increased textile quotas as partial payment for that nation‘s cooperation against Iraq. This outraged Sen. Jesse Helms (R-NC) and other advocates of textile protectionism, who said that the U.S. textile lobby should not be sacrificed at the alter of foreign policy. There is something wrong when America puts foreign policy priorities ahead of the priorities of the North Carolina mills, Helms fumed.

Is Bush now expected to tell the Egyptians to stuff it, if they expect to sell America their rebar steel? Is he supposed to kick Japan in the shins for wanting to sell America steel that the health of the American economy requires? Is the president of the United States expected to go to Doha, Qatar for the upcoming WTO Ministerial in November (assuming that anyone really believes that that meeting will actually be held in Qatar now) with his hands tied? Are diplomats from around the world to be reminded that the United States Congress is unwilling to trust the president enough to launch a new round of global trade negotiations — talks aimed at promoting increased prosperity throughout the planet?

It’s really that simple. America’s leadership in free trade really is a vital element of the national security equation.

United States Trade Representative Robert Zoellick gets this. “Earlier enemies learned that America is the arsenal of democracy; today’s enemies will learn that America is the economic engine for freedom, opportunity and development,” Zoellick wrote in an Op-Ed column that was published by the Washington Post on September 20. Give the president fast track, the USTR urged Congress.

But on Capitol Hill, the Democratic leadership still didn’t quite get it.

Senate Majority Leader Thomas Daschle (D-SD) supports giving the president fast track, said a spokesman. “But the consensus is that fast track is not really considered part of the economic stimulus package in response to this emergency,” the aide added.

In other words, Daschle hasn’t changed from his pre-September 11 position. He says that he supports fast track, but even the September 11 tragedy didn’t change his sense of urgency. Still, when he looks in the mirror, Daschle sees presidential material.

Last month Sen. Max Baucus, the Montana Democrat who chairs the Finance Committee and who has been blocking fast track all year, responded to the September 11 tragedy by saying that the president’s men should not have too much leeway to negotiate trade deals with America’s trading partners. Better to have a congressional review mechanism — like a group of senators and congressmen — to monitor trade negotiations, Baucus told Zoellick in a September 21 letter. Having such congressional oversight, Baucus told Zoellick in a letter, would “go a long way toward resolving” the concerns sparked by the labor and environmental lobbies that the president should not be trusted with fast track.

Good grief. What Baucus meant was have U.S. trade negotiators report to the congressional steel caucus and others with a protectionist, anti-WTO agenda. In 1994, Baucus voted against ratifying the Uruguay Round that created the World Trade Organization.

Another key Finance Committee member, West Virginia’s Sen. Rockefeller, testified before the International Trade Commission on September 17, just six days after the terrorist attacks on America. The ITC is being asked to slap on restrictive tariffs and quotas on foreign steel to help domestic steelmakers. In his statement, Rockefeller opened with what can only be called a crass exploitation of the loss of American lives.

“This is the most important steel matter this Commission has ever addressed. Last Tuesday, our steel crisis, already a national security threat, became a national emergency. Without steel we cannot guarantee our national security. Without steel, we cannot rebuild from our national tragedy.”

Never mind all that Japanese structural steel that built the World Trade Centers and helped save thousand American lives last month. Never mind that no modern skyscraper in America today could be built without wide flange beams from Europe. Never mind that people from more than 50 countries died in those twin towers, nor that the health of the American economy requires foreign steel. Never mind that you can’t rebuild any modern skyscrapers in America without wide flange beams from Europe and other foreign steel.

At least Rockefeller is consistent. In May 2001 he called into question the patriotism of distinguished Stanford University economist Anne Krueger, who had been nominated by President Bush to become a member of the Council of Economic Advisers. Krueger is one of America’s most distinguished economists. But Rockefeller fumed that she had “testified as a paid consultant for the Japanese steel industry” in a U.S. antidumping case. Rockefeller also thought that it was unpatriotic for Krueger to have criticized the U.S. steel lobby in an introduction to Paying the Price for Big Steel, which was written by Washington trade lawyers Kenneth Pierce and William Barringer, who represent Japanese steel clients. In her forward, Krueger wrote: “It is high time that the misleading and self-serving claims of industries like Big Steel using the lobbying process instead of competing in an open market were brought to light.”

First fact is, Krueger (who is now Deputy Director of the International Monetary Fund, as Bush pulled her nomination to the CEA) was right. Second fact is, if you want to study purveyors of “misleading and self-serving claims” on steel, Jay Rockefeller is the man to see. This guy’s got a long, easily documented, rap sheet in that regard.

Let’s look more closely at Rockefeller’s own national security record.

On February 17, 1999 Rockefeller announced that he had been appointed the top Democrat on the Commerce Committee’s aviation subcommittee that oversees the Federal Aviation Administration. “My new role on the Aviation Subcommittee means that I am in an even better position to help address the air service problems plaguing small communities,” Rockefeller said in a press release. He met with West Virginia transportation officials in Bridgeport “to discuss the importance of having reliable and affordable air service in north central West Virginia.”

On August 17, 2001 Rockefeller issued a press release to announce “that the Tri-State Airport Authority is being awarded a $177,012 grant to make improvements deemed necessary to make the airport more safe and efficient.”

On September 7, 2001 Rockefeller again issued a press release explaining his aviation priorities to West Virginians. “Senator Rockefeller has promoted the development of the aviation industry in West Virginia as part of an overall plan for economic development,” the release noted. The senator praised a Scholarship Challenge Flight plan, the goal of which “is to raise $60,000 to create 10 endowed aviation education and training scholarships through the Greater Morgantown Community Trust,” the release explained.

“It has been estimated that the aviation industry may require up to 50,000 new students each year to fill the need for additional employees,” Rockefeller continued. “For example, in the next year, over 7,000 pilots are expected to be hired by the airlines, and by 2006 the U.S. will need an additional 18,000 maintenance technicians.”

On September 11, 2001, America saw the work product of Islamic terrorists, some of whom apparently also had taken an interest in attending flight schools in the United States.

On September 24, 2001 Chairman Jay Rockefeller of the Senate Aviation Subcommittee joined other members of the Commerce Committee in calling for legislation to put stronger cockpit doors and locks as part of a package to protect the security of U.S. passenger aircraft.

“There is no question that there were failures in the way aviation security was handled,” Rockefeller said. “By overhauling the way we address aviation security, we will begin to take the steps necessary to restore Americans’ confidence in the safest form of travel.”

The chairman’s press release displayed no sense of shame that before the tragic events of September 11 he had used his important position on the aviation panel mainly as an opportunity for constituent service, instead of serving the national interest in protecting America’s skies from terrorism.

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