INTERVIEW

Interview of Congressman Duncan Hunter

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Republican presidential hopeful Rep. Duncan Hunter (R-Calif.)

ongressman Duncan Hunter of California is one of the few Republican members of Congress with the distinction of having voted against both the NAFTA and CAFTA trade agreements. His congressional district in the San Diego area shares a border with Mexico. He is currently campaigning for the GOP presidential nomination. We caught up with him on Patriot’s Day at Washington’s Capitol Hill Club in between weekend trips to South Carolina to campaign for the upcoming presidential election. The early primary state, which has seen its textile industry devastated by trade-dealgreased off-shoring, will host the first televised GOP presidential candidate debate on May 15. Congressman Hunter was interviewed by Jim Capo, national spokesman for the John Birch Society on trade policy. THE NEW AMERICAN: Congressman Hunter, a key issue that sets you apart in the GOP presidential race is your position on U.S. trade policy. Why have you opposed trade agreements like NAFTA and CAFTA? Rep. Duncan Hunter: I see these agreements as business deals. NAFTA was a bad business deal. We gave up something of value, the American market, and got essentially nothing in return. We were promised that NAFTA would develop a Mexican middle class that would buy Kenmore washers and Cadillacs. The promise was also made that NAFTA would stem the tide of illegal immigration. Instead, NAFTA destroyed many small businesses and farms in Mexico that were incubators of a potential middle class in Mexico, and we have seen illegal immigration surge. Similar unrealistic promises were made for CAFTA. Let me say here one more thing about how these trade deals are bad business deals. The 1946 General Agreement on Tariffs and Trade [GATT] was upgraded to the World Trade Organization a year after NAFTA. When the GATT was created, the United States allowed a loophole for something called the VAT — the Value Added Tax. Almost all of our trading partners use a VAT to put U.S.-based manufacturers at a significant disadvantage in all these so-called free-trade deals we are signing. Right now it has been calculated that the VAT system creates up to a $327 billion annual disadvantage for the United States just
THE NEW AMERICAN • MAY 14, 2007

Talking with
Duncan

Hunter

Congressman Duncan Hunter, one of the few Republican members of Congress to vote against both the NAFTA and CAFTA trade agreements, answers questions about U.S. trade policy and more.
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in manufacturing goods, not including services. This is almost half our ballooning yearly trade deficit. TNA: Since you bring it up, can you give us the nickel version of how the VAT works? Rep. Hunter: In simplest terms the VAT is a tariff-and-subsidy scheme masquerading as a GATT/WTO compliant tax. Here is an example of how it works. China has a VAT of about 17 percent. Under the VAT system, a manufacturer produces a table that costs $100. If that manufacturer ships that table out of the country to the United States, that manufacturer is rebated $17 of taxes that were collected along the manufacturing supply chain in China under the VAT system. The manufacturer can then deliver that table to the United States for $83. When a U.S. manufacturer wants to ship a similar table into China he gets a bill for $17 at the Chinese border, so the cost of his good now becomes $117. This means that before the opening kickoff in this international competition we call world trade, the other side has 34 points on the scoreboard before the game even begins! That is a built-in disadvantage we have signed up to. TNA: On Capitol Hill there seems to be a movement to address the situation. Are you aware of a bill called the Border Tax Equity Act that is soon to be introduced? This bill calls for countervailing taxes to be assessed to VAT countries in an effort to level the playing field for U.S. manufacturers. Rep. Hunter: I am very much aware of that bill, and I will proudly be adding my name to it as one of the initiating cosponsors. We are not going to continue to play the global trade game at a built-in disadvantage. I know there will be many U.S. companies that will resist this effort because they have already moved their production outside our country to take advantage of this designed-in disadvantage for U.S. producers, but we have to begin the process of rebuilding our country’s manufacturing base. No country can remain strong and successful without one. Two years ago when we went looking for high-grade armor steel plate to protect our soldiers against IED’s in Iraq, we found that there was only one supplier left in the United States for this critical item. We have to do better.
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TNA: You mentioned China in your VAT example. Is that country a particular concern? Rep. Hunter: As the recent former Chairman of the House Armed Services Committee, I am very much concerned about China. The Chinese are arming with American — Congressman Duncan Hunter, trade dollars. They are expanding their miliduring debate on NAFTA in 1993 tary capabilities. They have bought missiles from Russia that will U.S. dollar. Despite a slight revaluation in allow them to destroy aircraft carriers. 2005, the yuan remains undervalued by as They are building next-generation fighter much as 40 percent. The Chinese governjets. The tragedy is that at some point in ment is cheating. The legislation that Conthe future, American military personnel gressman Ryan and I have offered defines may end up facing off against equipment currency manipulation as an illegal trade that was purchased through our trade defi- subsidy. This practice, when coupled with cit with China. other tariffs and trade penalties, creates an uneven playing field and a one-way street TNA: Was this what led you to introduce for trade. This one-way street heads right the Hunter-Ryan/Fair Currency Act (H.R. to China. 1498)? Rep. Hunter: In a large part, yes. The TNA: What are the prospects for this bill? Chinese yuan has been pegged to the Rep. Hunter: It will be difficult. The multi-

“NAFTA is not a glorious, honorable program. It is not innovative, creative, or courageous. It is a retreat. It is a retreat of American industry away from all the problems that we have caused in over regulation [and] heavy taxes.”

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Republican presidential hopeful Duncan Hunter (R-Calif.) espouses smart trade policy with China to level the playing field between our two countries, instead of continuing the present policies that give China an advantage even before the trade games commence.
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INTERVIEW

“Let us vote NO on NAFTA so that the average wage earner in this country, when he sits at the dinner table with his family after a day’s work at his job, can say of the House of Representatives, the United States Congress, ‘It works for us.’”

— Congressman Duncan Hunter, during debate on NAFTA in 1993
and a NAFTA Superhighway is being discussed outside the oversight of Congress? Rep. Hunter: Yes, I have recently become aware of this effort, and in no way do I support it.

nationals in our country are saying, “Wait a minute. We are Chinese corporate citizens. We like the situation as it is.” Honestly, we will need more businessmen to put America first. I was encouraged by the recent split in the National Association of Manufacturers (NAM) over the currency-manipulation issue. There are still many patriots in the United States business community, and they are speaking out. We need more to step forward. American business advisers are advising American manufacturers to pack up and leave our shores for tax and tariff purposes. A major part of my presidential campaign is to restore our nation’s manufacturing base. As president of the United States, I’ll junk bad trade deals and bring competitors back to negotiate new ones. TNA: Our trade deals have all been negotiated under the Trade Promotion Authority (TPA) or “fast track” that Congress has given to the president. The current TPA runs out on June 30 of this year. What is your position on TPA renewal? Rep. Hunter: I’m not supportive of TPA. In fact, I won’t support TPA. We don’t have people that are competent working on these deals. In the private sector, if we had negotiators who promised us so much and delivered so little, we would not be doing business with them any longer. NAFTA under President Clinton’s negotiation team was bad. President Bush’s team has not changed much. They are not interested in doing a good job for us. Leaving it to the administration’s trade team is not working. I understand that it is not efficient to negotiate a deal by committee (as in the Congress), but we need another path. TNA: Are you aware that NAFTA is being expanded under the Security and Prosperity Partnership, and that the creation of something like a North American Union
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TNA: Are you supporting Virgil Goode’s bill, House Concurrent Resolution 40, which calls on the president to stop work on the North American Union and NAFTA Superhighway? Rep. Hunter: Yes. I support the Goode bill. My name is being added as a cosponsor. Along with Marcy Kaptur [DOhio], I have also introduced a bill called the NAFTA Safe Trucking Act. This bill requires that Mexican motor carriers attempting to operate in the United States meet all the same safety requirements U.S. companies and drivers are required to meet. It also requires that they can address all our security concerns regarding truck shipments coming into the United States from Mexico. Additionally, under the bill no Mexican carrier will be allowed to operate freely in the United States until the Secretary of Transportation has submitted to Congress a Three pillars: As Duncan Hunter (R-Calif.) campaigns for plan to enforce English the presidency, he pushed three main issues: smart trade language proficiency as practices to restore American manufacturing, “strategic already required. national defense,” and strong border security.

TNA: Regarding security on our border with Mexico, what is your assessment of the situation for U.S. Border Patrol agents Ramos and Compean, who were arrested and jailed for shooting and wounding a Mexican drug smuggler whom they thought was armed? Rep. Hunter: I read the relevant transcripts of their trial, and I came to the conclusion that their convictions and sentences were an extreme injustice. We have sent the wrong message to those protecting our borders. When the president didn’t pardon them, I introduced a bill for a congressional pardon, H.R. 563. The bill currently has 94 cosponsors. These men have been unjustly imprisoned.... Upon being elected president, if Ramos and Compean are still tragically in jail, I will pardon them. ■

THE NEW AMERICAN • MAY 14, 2007

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TRADE PROMOTION AUTHORITY

Why Bush Wants TPA Extended
President Bush wants Trade Promotion Authority for the sake of “free trade,” but there is a growing grass-roots resistance to the harmful consequences of his trade agenda.
by Jim Capo

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ithout action by Congress, the Trade Promotion Authority (TPA) powers of the president will expire at midnight on July 1. This authority, formerly known as Fast Track, was first extended by Congress to President Nixon with the Trade Act of 1974. It has been used to place the United States in such trade pacts as the North American Free Trade Agreement (NAFTA), the World Trade Organization (WTO), and the Central American Free Trade Agreement (CAFTA). Although the TPA powers have been employed by both Republican and Democrat presidents to get trade pacts through Congress, the TPA-spawned pacts collectively advance a similar agenda. That agenda is euphemistically called “free trade” by its promoters, despite the fact that it is not genuine free trade. Genuine free trade entails the free flow of goods without any outside government involvement. But when the fine print of trade agreements is fully explored, it becomes clear that the TPA trade-agreement process is not about eliminating government involvement but about who will make the rules. Put simply, the agreements restrict the ability of the United States to set its own trade policies by transferring decision making to regional and global arrangements as part of a broader agenda called “globalization.” Consider the binding nature of NAFTA’s Chapter 11 tribunal rulings, which many congressmen did not even notice when they voted for NAFTA in 1993. In April 2004, with these tribunals established and issuing rulings, the New York Times quoted California Supreme Court Chief Justice Ronald George as warning: “There are grave implications here. It’s rather shocking that the highest courts of the state and federal governments could have their judgments circumvented by these tribunals.” President George W. Bush supports
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President Bush signs the Central American Free Trade Agreement in 2005. The agreement has earned criticism because it both opens up foreign markets to some subsidized U.S. agricultural products, putting out of business small farm interests in largely agrarian Third World countries; and it promotes the outsourcing of U.S. manufacturing jobs overseas.

the “free trade” agenda. He also wants to continue using Trade Promotion Authority to advance that agenda and has called on Congress to extend his TPA authority. But there has been growing grass-roots resistance to the TPA-spawned agreements based on both their economic consequences and their neutering of U.S. sovereignty.

The “Free Trade” Agenda U.S. adoption of the NAFTA agreement in 1993 under “fast track” rules provided a foundation for the so-called free-trade agreements that followed — as former

Secretary of State Henry Kissinger predicted when the NAFTA agreement was still being debated: “[NAFTA] will represent the most creative step toward a new world order taken by any group of countries since the end of the Cold War, and the first step toward an even larger vision of a free-trade zone for the entire Western Hemisphere.... [NAFTA] is not a conventional trade agreement, but the architecture of a new international system.” President Bush supports NAFTA and wants to build upon it. “NAFTA has worked,” he claimed last March 14 in Mexico. “You don’t want to weaken NAFTA;
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TRADE PROMOTION AUTHORITY
you want to make sure it stays strong in order that prosperity continues to expand and people benefit on both sides of the border.” Of course, that rosy assessment of a NAFTA economic boom contrasts sharply with the mounting evidence of economic devastation wrought by NAFTA and other so-called free-trade agreements. Last year, for instance, an Economic Policy Institute briefing paper about NAFTA found that “growing trade deficits with Mexico and Canada have pushed more than 1 million workers out of higher-wage jobs and into lower-wage positions in non-trade related industries.” The paper also found that “the displacement of 1 million jobs from traded to non-traded goods industries reduced wage payments to U.S. workers by $7.6 billion in 2004 alone.” President Bush disagrees that NAFTA has been bad for the economy as a whole, and in 2005 he strongly lobbied lawmakers to get a similar trade agreement, CAFTA, through Congress, extending the NAFTA concept to Central America. But the president does at least acknowledge that some American workers have lost their jobs despite the economic boom he credits to NAFTA. He wants to help those “displaced workers,” but not by backing away from his trade agenda. In his January 31 “State of the Economy Report,” delivered at New York City’s Federal Hall, he explained: “Government has a responsibility to help displaced workers find new jobs, or even a new career. So my administration has reformed job training programs and expanded Trade Adjustment Assistance to help more displaced workers learn the new skills they need to succeed. I’m going to work with Congress to reauthorize and to improve the Trade Adjustment Assistance this year, so we can help Americans take advantage of this growing, dynamic economy.” In the same speech, President Bush proudly pointed to his success at implementing his trade agenda: “When I took office, America had free trade agreements with three countries. We have free trade agreements in force now with 13 countries — and we have more on the way.” Also on the way is a strengthening of the WTO. As the president put it in his speech: “At this moment, the most promising opportunity to expand free and fair trade is by concluding the Doha Round at
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the World Trade Organization.” However, President Bush pointed out: “The only way America can complete Doha and make headway on other trade agreements is to extend Trade Promotion Authority.... The authority is set to expire on July 1st — and I ask Congress to renew it.”

What’s Wrong With TPA Under fast-track legislation, the Congress surrenders some of its constitutionally authorized power to the executive branch, diminishing the role of Congress (and of the people acting through their congressmen) in setting trade policies, and expanding the influence of the executive branch (and the special interests that have strongly influenced the presidency during both Republican and Democratic administrations). Trade Promotion Authority allows a president not only to negotiate a particular trade agreement but also to implement legislation needed to bring existing U.S. law into conformity with the agreement. This violates not only the constitutional mandate that “All legislative powers herein granted” (Article I, Section 1) be exercised by Congress alone, but also that Congress — not the president — “regulate commerce with foreign nations” (Article I, Section 8). Moreover, “fast track” hamstrings Congress by requiring that it: 1) limit debate to a maximum of 20 hours; 2) vote within 60 legislative days after both the agreement and its implementing legislation have been presented by the president; and 3) vote yea or nay on the exact text submitted by the president without altering or amending. Great pressure is applied then to members of Congress to pass the agreement, by the White House and corporate lobbyists, with extravagant claims about the benefits to be reaped by increased trade and, conversely, the dire consequences that will befall the
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United States’ economy, competitiveness, and international stature if they fail to expeditiously approve it. The fast-track authority also enables the president, with the cooperation of Congress, to circumvent the Constitution’s treaty-making power. Advocates of fast-track authority want free-trade agreements to be negotiated by the president as though he were exercising his valid executive power “to make treaties.” However, our Constitution requires that treaties be approved by a two-thirds majority of the Senate, not by a simple majority of House and Senate members who have been bound and gagged by TPA rules. Because of the nature of the “fast track” process, it is not surprising that it has produced a series of trade pacts that have been (despite administration claims

THE NEW AMERICAN • MAY 14, 2007

Details, details: Prominent New York Times columnist Thomas L. Friedman (right) claims he loves all “free trade” deals because he knows free trade is good. Like so many other freetrade advocates, however, he ignores the fact that our trade agreements are conditional trade agreements — where governments essentially choose which industries will be winners and losers.

to the contrary) damaging to our economy and national independence. But a growing number of Americans is coming to realize the danger, and the president will not have an easy time getting TPA extended, if he’s able to get it extended at all. Among those opposing TPA is the proAmerican industry organization American Trade Action Coalition (AMTAC), whose executive director, Auggie Tantillo, observed in a January 31 press release, “TPA is the blank check Congress gives to the Executive Branch to offshore entire U.S. industries.” Recognizing that Congress as well as the president is part of the problem, Tantillo added: “TPA is Congress’ way of passing the buck to avoid accountability. By stifling meaningful debate and all amendments, TPA perverts the legislative process by effectively

preventing negatively affected industries and interests from airing their concerns in Congress. Such an outcome only serves to promote the special interests who write the biggest campaign checks at the expense of the will of the majority of the American people.” On the whole, Bush’s fellow Republicans in Congress have gone along with him. On the other hand, with a Republican president in the White House, the Democrats have been very resistant to the president’s trade policies. When the House passed CAFTA in 2005, for instance, only 15 Democrats voted “yea.” (By contrast, 102 House Democrats voted for NAFTA in 1993 when Bill Clinton was president.) But Democratic congressional opposition to the president’s trade policies could erode if the pacts submitted to Congress

Dynamite under the track: U.S. Trade Representative Susan Schwab, shown at a meeting of key membernations of the World Trade Organization in April, said that without presidential fast-track trade authority, the continued creation of new trade blocs and deals would be stymied.
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are expanded to include labor standards set by the UN’s International Labor Organization as well as environmental standards. On March 27, Rep. Charles Rangel (D-N.Y.), chairman of the House Ways and Means Committee, and Rep. Sander Levin (D-Mich.), that panel’s trade subcommittee chairman, unveiled a proposal to modify pending trade pacts along those lines. Their proposal has the support of the Democratic leadership. “Labor groups also praised the document,” according to Congressional Quarterly, “but expressed skepticism that the administration would accept the Democrats’ position.” By linking the extension of trade pacts to labor issues, organized labor is actually hoping to have it both ways. Many laborunion officials would like to empower a supra-national labor tribunal (or panel) to strike down state “right to work” laws in states that ban collective bargaining of unions. However, they do not want other international tribunals decreeing that state laws which favor sourcing work to union shops are a restriction of “free trade.” Once again, it’s a question of who makes the rules. Expanding the trade pacts beyond trade to include labor and environmental standards would actually make these pacts worse, not better, from the point of view of any American who, regardless of his position about free trade or protectionism, wants the United States to be able to set its own policies and write its own laws without being further hamstrung by international regulations or tribunals. However, the expansion of the so-called freetrade pacts beyond trade fits nicely with the goal of the political elites to transfer more economic and political power to regional and global arrangements, including a proposed North American Union modeled after the EU. To move his trade agenda forward, President Bush needs TPA extended. Whether or not a majority of congressmen vote for that extension, and also vote for pending and future “free trade” agreements with or without labor and environmental standards, will ultimately be shaped not only by pressure from the White House and the special interests, but also by the opposing pressure from informed constituents who’ve had a belly full of destructive trade agreements. ■
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