Schumer tactics on China bill reveal broader trade strategy

Senate Majority Leader Charles Schumer (D-N.Y.) is frustrating members of the powerful Senate Finance Committee by largely shutting the panel out of a bipartisan bill intended to increase U.S. economic competitiveness with China.

The move is raising eyebrows, with some lawmakers speculating that Schumer is laying the groundwork for a bigger fight later this year when he and Speaker Nancy Pelosi (D-Calif.) will attempt to pass legislation extending President Biden’s trade negotiating authority before it expires in July.

Specifically, Schumer is preventing a major GOP priority — extended trade preferences and tariff relief — from getting added to the bipartisan Endless Frontiers Act.

In doing so, he is giving Republicans a potential reason to work with Democrats on renewing Biden’s ability to fast-track trade deals through Congress by circumventing filibusters, setting up a time-limited process for congressional consideration and guaranteeing an up-or-down final vote without amendments.

Republican senators say Schumer is making these moves now on the China legislation primarily to help Pelosi secure Republican support in the House, where Democrats have only a four-seat majority and are generally more skeptical of trade deals than Senate Democrats.

There’s been little discussion among Senate Democrats so far about what to do about the July 1 deadline for extending Biden’s trade authority.

Schumer, the lead sponsor of the Endless Frontiers Act, rejected a deal hashed out by Senate Finance Committee Chairman Ron Wyden (D-Ore.) and Sen. Mike Crapo (Idaho), the ranking Republican on the panel, that would have added a litany of trade-related provisions to the China competitiveness bill, according to senators and aides in both parties.

Several Democrats on the Finance panel expressed dismay that their committee’s work product was not included in the China-focused legislation.

Sen. Ben Cardin (D-Md.) called the outcome “disappointing,” while another Democratic senator on the Finance Committee, who requested anonymity to express irritation, said, “It is very frustrating.”

But Democratic critics of the Wyden-Crapo deal said it had two provisions that could have derailed the Endless Frontiers Act. 

One of the provisions in the draft agreement would have lifted tariffs on personal protective equipment (PPE) imports from China, undercutting the broader political goal of limiting U.S. dependence on China, according to aides familiar with the draft deal.

“Certainly, the PPE thing is counterproductive to trying to get tough on China. That was in the original deal,” said a Senate aide familiar with the negotiations.

A Democratic aide confirmed that adding miscellaneous tariff provisions that Crapo wanted would have gone against the grain for trying to bolster U.S. economic competitiveness and “didn’t make sense in this package.” 

Another provision in the draft would have established a new inspector general for the U.S. trade representative (USTR), a proposal supported by Sen. Bob Menendez (D-N.J.) and Crapo.

That proposal, however, ran into opposition from the White House, which saw it as an infringement of executive privilege, according to Menendez.

“I think probably the administration pushed back. Questions of executive privileges and whatnot, which I think are fully deal-able-with and I think are overexaggerated,” said Menendez, adding that he plans to offer an amendment to create an office of inspector general in the USTR.

Crapo said he thought he had a deal with Wyden and was surprised it got scrapped at the last minute.

“Sen. Wyden and I have been working very hard on putting together a bill and we’ve got a very substantial, I think, piece of trade legislation that could go on the bill. I’m working right now to get it in,” he said.

“I don’t understand the rationale,” he added.

Wyden will now offer several Finance Committee-drafted provisions as an amendment to the competitiveness bill, which is pending on the Senate floor.

“Senate Finance Democratic staff worked with Republicans to craft legislation but ultimately couldn’t agree on how to advance it. Wyden and Schumer will shortly introduce a bill that reflects negotiations with Republicans and we’re hopeful it will attract bipartisan support,” a Wyden spokesman told The Hill.

Wyden and Schumer unveiled an amendment Wednesday evening that they say would combat trade cheating by China and other rival nations.

Wyden said the amendment “strikes at the heart of China’s anti-competitive and morally abhorrent labor, environmental and digital practices.”

The measure would bolster efforts to prohibit goods made with forced labor, such as from the Xinjiang region of China, provide modernized tools to the USTR to address anti-competitive digital trade and censorship practices such as China’s Great Firewall and require increased inspection of goods from countries identified as significant sources of counterfeit products.

But there’s less of a guarantee that the amendment will pass now that it’s been stripped of trade preferences, tariff relief and language setting up a USTR inspector general — all of which Crapo supported.

Wyden is hoping to move the 769-page bill he introduced Tuesday to extend trade preferences and tariff relief as soon as possible, and some Democratic aides think he doesn’t want to wait for the battle over extending Biden’s trade authority.

But with a slew of legislative priorities piling up on the Senate calendar, it will be tough to find floor time to move Wyden’s measure as a standalone bill. Schumer and Pelosi, however, could use it to pick up Republican votes, and cancel out Democratic defections, on any bill that extends Biden’s trade authority.

The Biden administration’s 2021 trade policy agenda published in March provided notification for negotiations on a U.S.-European Union trade agreement; a U.S.-Japan trade agreement, as well as a U.S.-Japan digital trade deal; a U.S.-Kenya trade agreement; and a U.S.-United Kingdom trade agreement.

The last time Congress approved what’s known as Trade Promotion Authority was in 2015, when Republicans controlled both chambers. The measure narrowly passed the House in a 218-208 vote, with 190 Republicans and only 28 Democrats voting for it.

This time around, Democrats are hoping to use extended trade preferences and tariff relief as a way to secure that GOP support. 

Sen. Debbie Stabenow (Mich.), the second-ranking Democrat on the Finance panel, says legislation to update and reauthorize expired trade programs, including the Generalized System of Preferences and the Miscellaneous Tariff Bill, could “maybe” be used to help pass other trade legislation later in the year.