so i think what we need to do is not only ask the fed to carry out its responsibilities but to encourage it to do what i think what it would otherwise do, to change capital standards that make them own risk for systemically important institutions, carry out more macro-prudential supervision than it's done before. although, let me say the treasury proposal separates that out and gives that responsibility mainly to treasury -- well, mainly to the risk council that's staffed by treasury and chaired by the secretary. >>hank you, i'm not sure i understand all of that but i'll try to absorb it but i appreciate your answer. dr. berner, you indicated that coordination with other regulators will be essential to all of this. can you be more explicit about that. what other regulators -- i

assume the fdic andthers and exactly what that coordination would be. is that something the federal reserve would do or there should be some sort of council that would meet on a regular basis. how would that coordination occur in your mind, at least. >> well, i mentioned there are probably two aspects of that coordination. one is within our own boundaries in the united states and for u.s. financial institutions. but i also think that that we need to coordinate globally since our markets and institutions are global as well. as far as the u.s. is concerned, you know, we have a multiplicity of regulators and even in the sweeping proposal from the treasury or in other regulatory proposals i haven't heard any move to -- you know, to consolidate them all into one and as i indicated, it's not clear to me that doing so would produce a better outcome. so the coordination would have to take place among the various regulators tt we have.

however, we reshaped them so that information doesn't slip through the cracks so that we don't miss the activities of institutions who are regulated by one group or one regulator but who are engaged in activities that are properly the responsibility of, if you will, collectively all the relators. that extends across borders because markets are global and we need to court -- coordinate across borders with their counterparts across the seas and taking into account what institutions are doing either to as dr. meltzer indicated avoid regulation by doing things in one place rather than in another o that they're aware of what's going on and so that they can appropriately safeguard the markets and institutions. >> i think what you've just discussed is vitally important and i hope everybody gives a lot of thought exactly how that would be done because ultimately that's sometng that's going to have to happen no matter which way we go.

dr. galbraith -- >> the gentleman's time has expired. oh, i'm sorry. >> the gentleman's time has expired. >> i yield back. i may write to you about that question. >> the gentleman from new jersey, mr. lance, is recognized for five minutes . >> thank you, mr. chairman. let me agreeing with my colleagues that i believe this is an extremely distinguished pal and it's my privilege to participate this afternoon. dr. galbraith, you indicate one way out of the difficulty eliminate the board of directors of the regional federal reserve banks or alternatively t remove the banks fmoc, realistically is that likely to occur? >> as a witness, it's not my responsibility to be the most realistic person.

>> we do rely on your expertise, however. >> i do think one has to look at this question of the perception of a privileged position for those who are -- to whom the president of the regional districts are responsible. >> absolutely. >> and, you know, an alternative, of course, is not to put the examining power in the regional federal reserve banks. to leave it in the hands of a tough cop who's entirely autonomous >> yes. i think on our side of the aisle we have great difficulty with reposing these powers in the federal reserve board at all. to dr. taylor and dr. meltzer, regarding the establishing of tier 1 financial holding companies, i think many of us have a concern that if that were to occur, there would be some assumption that they would have the backing of the federal government. we already may be in that place

in some areas and certainly we were in the place regarding fannie mae and freddie mac. your comments, both of you as distinguished persons regarding this area of your expertise. would you elaborate on that for me a little bit. >> yes, the rope why i would characterize this proposal as giving significant, not incremental powers to the federal reserve largely lies in this ability to distinguish certain institutions as a threat to the financial system as fined by the treasury. and so once an institution -- we don't know, quite frankly, how many there will be. it's not clear. it will be a good question to ask the treasury or the fed. but it could be quite large. >> in your opinion, could you give us an estimate as to how many you think it might be? >> i have no idea. >> you have no idea. >> that's one of the problems.

operationally, there is no desk of systemic risk lear. it could be quite large. it might not be -- this federal reserve, these people who make the decision -- it could be their successors. >> yes, sir. >> and so i think the danger just as you say once these institutions are in this group, then they do become too big to fail and too big to resolve because it will look like a black mark. and so they could become fannie mae's and freddie mac's of the future. >> yes. dr. meltzer. >> i like your emphasis on realism. >> i'm new here so i'm sure i'll get over it. >> try hard not to. the realism to me says what would the systemic risk regulator do with a tier 1 holding companies? in my opinion it would be fannie mae and freddie mac ripped large. >> that would be my concern. >> these are going to be banks or institutions that are going

to have branches all over the country. every member will feel an obligation to say, we can't let that hapn in our district and in our districts. and so too big to fail will really become an even greater problem now. how can you limit the risks that bankers, some bankers are going to take? make them bear the risk. >> thank you very much, i yield back the balance of my time. >> the gentleman from alabama mr. bachus, is up for five minute >> thank you, mr. chairman. mr. meyer, you described the proposed changes as incremental to the federal reserve. >> right. >> reading the treasury proposal on what they say about it -- they say this report proposes a number of changes to the formal

powers and duties to the federal reserve including the addition of several new financial stability financial responsibilities. these proposals would put into effect the biggest changes to a federal reserve authority in years our decades. >> so i think you have to read the rest of the report and see whether you agree with that. i read the rest of the report and i don't see that there is this vast new -- now this administration possibly wants to look at this as a more sweeping set of proposals than perhaps it is. >> okay. but as the vice cirman said, this is not the case. >> okay. so actually you don't agree with their description of their own plan. >> absolutely not. >> okay. let me ask the panelists, can you function as a systemic isk

regulator of significantly -- significant institutions without a robust examination and supervision authority or can you -- can you do that? >> impossible. >> impossible? >> can't do it. >> i agree. >> yeah, i completely agree here. that clearly part of this issue of being a systemic risk regulator is that you have to go in and know what's going on in the institutions that you are regulating and so i think it's essential that this be part of the role and clearly there's already an element of believe, a very strong element in what the federal reserve does now to the bank holding companies. >> but do you think the federal reserve had a robust supervision and examination of those institutions that failed including aig? >> well, certainlyhe federal reserve did not have this responsibility for aig. >> well, they were a holding company, were they not?

>> not a bank-holding company. >> how about citi? >> there are people monitoring citigroup -- they have people monitoring citigroup and all from the new york fed every day, you know, did they find anything at citigroup? nothing that they were willing to do anything about. >> uh-huh. and i guess wachovia was a bank-holding company? >> yes. >> does the fed -- do they have fed have the robust supervision or is that something the occ or -- or the fdic does on a day-to-day basis? >> the occ and the fdic have never been responsible for consolidated supervision. it they have no history of doing that. the fdic does not have of a

supervory staff thahas any expertise in the complex banking institutions that we're talking about. the occ is already involved and was the bank supervisor of many of the institutions that have gotten into trouble. and in most of the large institutions, occ is the bank supervisor and the fed is the holding company supervisor. and they both to have work together. >> yeah. and they didn't do that in the last -- >> well, i think -- let's say neither distinguished themselves. >> okay. all right. do we need to determine the causes of the present financial crisis before we start legislating a x? and have we done that? >> it would be very helpful in my view to conduct a full and independent investigation into the cause of the financial crisis similar to the committee investigations of the early 1930s. >> how about dr. mishkin?

>> well, i think that clearly we do have to think more about these issues and that particularly the rush to do regulatory reform is something that i have been concerned about. i do actually think, however, that the need for a resolution authority is absolutely critical and so -- >> and i don't disagree -- >> and i think that one of my concerns has been that if we go down the route of worrying about the big picture and then don't do anything then we're actually in a situation which not only means institutions can get in trouble we can't do anything about it, but also we're in very weak position to get them to fix things because we have no ammunition. >> let me say the republican proposal is for an enhanced resolution, a bankruptcy-like proceeding. like for nonbank financial companies. i don't know -- have y'all looked at the republican proposal? >> not in detail. >> the gentleman's time has

expired and i would encourage him to send each of these witnesses the republican proposal. unfortunately, there is another meeting scheduled as i've previously announced in this room at 5:00. if we had been more expedition on the floor perhaps we could have had more time to do what we do in committee. and i'm not trying to be mean about it. i just --. >> i don't think you're being mean. >> i can't give more time than the room allows me to give. the gentleman's time has expired. dr. galbraith, let me just ask one question. do you distinguish between the two responsibilities on the bottom of page 2 and top of page 3 of your testimony -- one was to identify the tier 1 financial holding companies considered to be so large and interconnected

and then the second was the institution of regime of examination the regulation. if the first part of that -- the first one of those i take it you concluded was not constitionally suspect to be done by the fed? >> it could be done in the federal reserve board and it would be an incremental responsibility of the kind that the vice chairman described. >> and i take it that you're recommending that the second part of that be undertaken by the fdic? >> by an agency for whom it is the highest priority and for whom it is the major mission, yes. >> even for institutions that are not federally insured? >> sure, yes. >> okay. i note that members may have additional questions for this panel, which they may wish to submit in writing. without objection, the hearing record will remainpen for 30

days for members to submit written questions to these witnesses and to place their responses in the record. i thank the witnesses for their unending patience throughout the afternoon and regret that we have to rush out of the room; otherwise, we would be happy to go another round. but i'm sure that members will follow up with vigorous written questions and i encourageou to answer them as expeditiously as you can so that we can continue the process moving along. i thank youor coming and the hearing is adjourned. [inaudible conversations]

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welcome you to what is our second annual what the hell is august and we're going to hold a conference anyway. [laughter] >> it was about -- somebody reminded me of this morning. it was just a year ago -- two weeks after the collapse, the fifth or sixth collapse of the doha round talks we decide well, we really should take a look at what happened and maybe not wait until september and we're thinking what the hell is -- are we just going to have a couple of us sitting around the table because will anybody be here? well, my faith in the trade mafia was sustained by the fact we had 150 people sign up, which is just about what we had this rning. so we had a very successful morning a year ago and i'm sure we will this year. we have an excellent panel. and i will introduce them in a minute. to make a of preliminary remarks and e a stepping back a little bit and seeing trade policy in a larger context.

before i do that, i have to remind myself and we should remind our speakers this morning and you that with the obama administration coming in in the midst of a huge financial crisis, the deepest recession since the 1930s, problems in afghanistan, problems in iran, hillary clinton going off -- up the wall yesterday in africa -- or a couple days ago, it seems like these people have been in office for some time but we have to remind ourselves this is a six-months' assessment a to be fair to the administration, ron kirk still doesn't have his full staff. i think the senate is holding one of his key appointments and so while there are, i think, preliminary judgments can be made, we ought to know -- we should be careful. that said, of course, this is washington and this is a think tank and we have speakers who write on these things. we will make some preliminary judgments.

i'dust like to make three points in three areas rating to the limitation, potential limitations, t barriers, the challenges and also the opportunities that president obama has in moving forward in the trade area. the first relates i'd say to the political situation he faces and the political situation he faces within his own party. as i said in a couple of earlier remarks that others -- at other venues it goes back to the pogo cliche we have met the enemy and he is us. and mr. obama, i think, first set of challenges go right to the congress and specifically in the house of representatives where i think there is a substantial minority -- and i'll leave to the democrats who have come to office and indeed been elected on platforms that are substantiallyntiglobal or

skeptical of global trends and events. we have to be very careful. i don't think this is necessarily protectionist. it's not that they are protectionists in the sense that they are going to out and push for smoot-hawley tariffs but he does face at least in the helps a group of congressmen who really think that we ought to have of a wholly new trade policy and think that the president actually was on their side when he at least -- part of his campaigning and certainly in the primaries that he also espoused this cause. i would just point out to you that the relatively new democratic working groups in the house. the so-called trade-working group which has 60 odd members. the populist caucus. a you been in ofhese members, by the way, were elected in 2006 to 2008. 60, 65% of the new democrats who came in after the 2006 election had run explicit on antiglobal

platforms and when they talked with pelosi they could say, you know, we didn't hide what we stood for. the other thing -- the other point politically i think is important, they often were in districts that were -- that had been previously republican districts, who were marginal districts that pelosi and the leadership wants to hold onto to. so they have some power. i don't want -- i don't want to push this too far, just signing up for a caucus or just putting in a bill as the house trade working group did in june, which is a -- the so-called trade bill, trad are the normal acronyms that the congress is fond of which really calls for big changes in u.s. trade policy -- just signing that bill is not -- is that people will work for it but it is important that the trading group got over 100 and now i think it's 125 democratic representatives to sign onto that bill.

that leaves me to a second point to note. and thato go back to 2006, the democratic era in trade did not begin in 2008 with the election of a mr. obama. it may be to other areas but it began in 2006. and the house leadership as well as the senate leadership -- for the two years before obama came into office we're used to making judgments on policy and particularly on trade on their own without guidance or having to pay attention to the white house in fact, they were at odds always with the bush white house. and so you have a situation where the congress has already begun to take the lead and into detail now, as you know, theouse forced the bush administration to compromise on the trade -- new trade promotion authority rules for free trade agreements, phil

levy, my colleague and i were called over because we opposed that compromise and we were told by the lieutenants of being ideologues and rigid we thought it turned out the administration was not going to get anything out of it. they didn't but at any rate you had a major change in tra policy, at least in terms of the tpa even before obama got in office. and i would say that behind that, and this is what's going to be interesting to see play out, is that an increasing restiveness in congress, that i think are bipartisan to a degree the congress has given over the last 50 years to the executives. this transcends.óñ partisan differences.mdñ it was hidden under bush because it was the congress versus bush. now in some cases it may very well be that congress having a different view -- excuse me, a view of things than the executive.ú

the key will be when the obama administration, if it ever does, and i think it will, goes,a ba to congress for renewal of trade promotion authority. what will congress ask? how will it want to increase its own part of the process and what will be the reaction of the bush administration people?záe i remember again phil and i met as the loyal opposition to a number of the transition people of the obama administration in late 2008 and early 2009..# and one of the points we made to them was,xghey, it's your government now. it's going to be your president that congress may come after in terms of congressional authority. and that's going to be the challenge to you. it's not -- you no longer have bush to kick around as it were any longer. and that leads mto a final int. in terms of the congress versus the president. and that is president obama's own leadership style and what that portends or may not portend for trade. there's a very interesting article this morning i just

noticed before coming up here in the "wall street journal." the point of which in terms of his own personal staff, particularly, the economists on his staff, obama is a detail guy. he wants to get in. he wants to know all kinds of things about the impcations of economic policy. that he and his administration will propose and what are the arguments against it? that struck me as an amazing contrast with the way he has handled major issues since he's come in office in dealing with congress where his style of leadership has been not to get involved in details. to hang back. to let congress sweat the details. now, just as a footnote, my colleague norm ormestein wrote a piece criticizing this style. it was better for the president

to hang back. i then wrote a piece that said i won't challenge you though i won't agree with you but i won't challenge on the stimulus package or healthcare but in trade, if the president hangs back, it's going to be a disaster. because particularly in the house, i think there's a lot of mischief that will come forward and we've seen this -- i'm not going to go into details so some of my colleagues may talk about with buy america and the argument that cut off the small program relating to mexican trucks and coming down the road of equal -- of more importance, i think, and we don't know how this will play out, there's a direct challenge to presidential authority in the climate change bill where the proposed tariffs down the road really greatly constrict the president's ability to intervene in the national interest so that you have, i think, as a background these three point at least in my view to look at. the one the political situation

he faces. second, the institutional and third, his own style of leadership and what that means for trade. let me turn, excuse me, to our panelists. and i will go -- i will go down in the order that they're going to speak. we'll be led off with an overview by bruce stokes, who is the international economic columnist for the "national journal)w he's also a senior fellow at the council of foreign relations and i think currently also a transatlantic fellow for the rman marshall fund. my colleaguec'd phil levy who's american scholar before he came to aei in 2006 was a member of the policy planning staff for the secretary of state and before that he had been a senior economt from the council of economic advirs and bore that he had taught economics at yale. third is ed gresser who's a

fellow at the democratic leadership council. he's also been -- i don't know whether this is a joint appointment earlier with the democratic leadership policy or the progressive policy institute. before that, theq;& last administration he was part of the trade representative and before that he had been a trah- advisor or staff person for senator max bachus. finally, we have don murphy who was vice president for international affairs at the u.s. chamber of commerce. he's been at the chamber for a while before he was vice president for international affairs he had been -- he had headed their division for latin america and before that, he had been a staff member at the republican -- of the independent republican institute. so why don't we get is that right we'll go with all four of our speakers and then we'll go for questions and comments. .. >> thanks, clyde. it's a really pleasure to be here. and i, too, am impressed with the turnout or the crowd. you should all be proud of yourselves for turning out on an august morning for a discussion

about something as arcane as trade, something we all love and near and dear to our heart and obviously is near and dear to your heart. so it's great to see you all here. i see my task this morning is to lay out, %f@@@@@rra""$@ fact, among the body politic, it may be just the opposite. but certainly if it's not the opposite, at least there's some openings there for this administrati to do some

things. so i will i think confound some of your presuppositions about public attitudes. unfortunately, i will confirm some other of your presuppositions about public attitudes about trade. so it's a mixed message, at the >> so it isof mixed message at and then also i would like to talk just briefly about what i'd think are some of -- should be some of the framing concepts of new drug policy if and when we ever get one. let's start with the public attitudes first. first this is the story we have all come to know and love about public attitudes toward trade. using data from last year basically the public thinks the trade leads to job losses. this is coming from the research center service.

nothing surprising there except that it is disturbing there has been such an increase in two years in terms of concern about jobs. the public believes that trade lowers wages. i would point out to you that their experience over the last generation is that their wages have increased and that an economic. you dump several hundred million more people into the global labor pool it should have a depressing effect. so as much as we might amend this concern and quibble about the details, the public may actually have a sensibility about some of the impacts of trade on their livelihoods that those of us who are more immune from this don't fully appreciate. this is probably the most disturbing statistic from 2008, and that is that the public basically -- a plurality of the

public, not a majority, reject the economic. the public may be wrong about this, but the plurality believes it doesn't. this is something that shapes and frames the political debate going forward. so this is indication, though, that something is happening out there in public opinion abroad trade issues. notice 2009 data. it is a survey by cnn, and it shows the dramatic increase in the public's view that trade creates an opportunity for the economy. and noticet had been going down from 2007-2008 and jumped back up in 2009. right athe time of the april

primaries -- of surrey, year after the april primaries when trade was taking a pretty bad rap something happened here an think we can attribute to a number of bonds. this is probably mostly the obama bounce. people trust obama. if obama pursues trade then maybe we can trust it again. i am surmising this. we don't know that again. to see that kind of increase in change, what else was happening in the economy at the time? the economy was getting worse. we had a new president that people believe an overwhelmingly. but it may also reflect the fact that in bad times, as we knew in the recession and bear in the 1990's, in bad times people actually became desperate. there weren't looking for anything that could help the economy. it may well be that as a result that will be thinking the

benefits of acquisition and trade in the process. we can draw from conclusions, but it's a good sign for this administration and the country. this is from a new york times poll. again in april of 2009 traded for the u.s. economy. this is not what one would have expected given the trajectory of the overall economy. it confounds the narrative. we need to integrate this data. we have to understand that our simplistic assumptions about public attitudes is just that, simplistic. more primal out there and we would like to accept. this is of latitude survey done this summer. even more recent data. again, you can see that there has been a dramatic increase in the number of americans who say the trade is dead or somewhat with the country.

you see at similar bounce in data when they ask the second question. is it for you and your family to back down, to ways to interpret e data. the u.s. in 2008 has the lowest percentage of its population, barely half. in 2009 we are still. it had jumped up to 65. still significantly below the european populations. but things have rebounded in of very significant way. and with the that is because people are desperate and the ping for for anything to towarde economy or whether they have faith in obama and did not have faith in bush, probably

irrelevant. there is an opportunity here to do things that did not exist in bush's last year. a second of the trity. this, agai comes. they ask the question, are free trade agreements pit for the united states? and br in mind, this is slightly different. this is an act of the u.s. government. this is a policy that congress has to vote on. and, in fact, there have been a sharp increase in the percentage of people who believe, a plurality agree that free trade agreements are good for the country. last year a plurality but the paper back to the country. not overwhelming. not 70 or 80%. there seems to have been a turnaround in public opinion and opportunity has been created.

one final myth of want to try to explode in this presentation, and that is this one. it's not moving. fine. the slide that is not up there that i'd be happy to send all of you is thelide, again, rom the data ofthis summer. democrats now believe trade is good for the country more than republicans or independents. now, this doesn't speak to the point about the democratic composition of congress. again, this perception that democrats are somehow a isolationists and have their head in this and is not borne out by the data. i can tell you from oth data that is yet to be released the democrats are less likely to

support them are republicans. so it does seem to me th there is an opportunity here for the administration to make progress. final point, and that is what should be, it seems to me, the lessons we learned from the great recession as we go forward to shape a policy in the new obama administration. after the great depression w use those lessons to shape american trade policy for half a century, for two generations. it does seem to me there are lessons we might want to draw from the great depression to shape policy going forward. we have to have a trade policy that supports the sustainable current account deficit. 5-6% gdp is unsustainable. as herb stein used to say things

that are unsustainable are not sustained. trade policy is not in the main way to support that. domestic policy. that should be one of the framing concepts. the goal should be to have a sustainable current account deficit. it doesn't have to be zero, but it should not go back to a 5-6%. if it does the according trouble again. to do that i would suggest that we need to think more about reciprocity and balance and benefit. these are both elements which have not been applied to past trade agreementsecause we thought they were -- did not serve our interests. we may want to rethink that. and second we need a trade policy that convinces boat industry and e people that this trade policy will benefit

them. to that extent it seems to me we need a trade policy based on standards, technological standards that ensure the competitiveness of the american industry. the chinese are pursuing these. we need to be in that game. i would argue we need to be in that came with the europeans. and we need as standard policy that convinces consumers that imports are get them. and a think this raises the issue of health and safety issues. primarily we need to convince mothers out there who are feeding their children vitamins and imported food that it won't make an sec. economists argue that over time labor rights will have. you just give a country a couple of generations. interments' a stanrd tour improve if you just give a country a couple to the rations. doesn't help that mother who is worried about what she is beating her baby today. we need a trade policy that

ensures that mother that as globalization proceeds and more anmore what she puts in her baby's body is imported, that it is safe and meets the highe possible standards. none of those pillars of a new trade policy are going to be easy, and they are all brought with potential abuse. that is the lesson we need to learn from the great recession and from the public unease about trade in the data. thank you. >> a great start. some food for questions and back and forth and disagreement later. >> all right. thank you. good morning. in my remarks have touched on some of the themes that were put forward in our recent internatiol economic outlook. it is available on the event web site. the fourth in some going to touch on our first that useful ambiguity of president obama stance on trade as a center and then a presidential candidate.

second the way trade policy in this administration has been shaped, not by any grand strategy, but reaction to pounds by others. third, and this was mentioned of a bit of ready, the constraints the administration faces at home and abroad in dealing with trade policy. i will close a bit with some upcoming event that may tell us more about the administration's plans on trade. okay. first trying to discern where the president's true sympathies lie on trade. look, for the last several decades you could figure out roughly where president was going to stand on trade from the potions they held during their careers and campaigns leading up to their election. the occasional surprise in the way they approached a particular issue, but from both parties that are broadly committed and they govern that way, president obama was something different. one of his great polical achievements actually was to persuade both protectionist interests and commited

multilateralism that is true sent these were with them. he would write eloquently of the benefits of tde and describe himself as a free trader. then he would stand before the assembled masses and argue that nasa had cost jobs. you would argue for a friendlier more multilateral approach. then he would approach free trade agreements such as the one with colombia unless the colombians would do just what we told them. from a political standpoint that ambiguity was and remains exceedingly useful. strong risks within the democratic party. some within the republican party, as well. but it can be a touchy topic. or president of moment to take a clear stance he would run a serious risk of offending a group that he needs more his other ambitious endeavors. of course theresident could attempt to heal the rift, but that would take substantial effort on his part and he prefers .. his injuries to other matters. presidents are often compelled to make decisions.

and even inaction can sometimes have serious implications. with that let me turn to my second point. with your i will paraphrase the bard. some craft trade policy. some craft when they get there and some have policy thrust upon them. the would have been quite happy to go through all of 2009. instead the first weeks of taking office they had to deal with congress is pushed of a stimulus bonds. the notorious. i want said too much. i know that at least one of my colleagues is going to address this. but let me just offer one corrective to a common interpretation of that episode. the common telling, congress began filming at the mouth. president obama then calmly and coolly rained congress back in by supporting an amendment

requiring as to honor our international obligations. the problem with this version is that five days before the president made his position clear his vice-president had spoken on the issue on cnbc. i don't think there is anything anticompetitive or anti trade and we are stimulating the u.s. economy the purpose is to create u.s. jobs. i don't view that as a harbinger of protectionism. i think it is legitimate. vice-president biden commented any mention. that in matter. president obama is modest effort to rein and applied not only to congress, but also his own administration. i bring this up as an illustration of how its money on trade policy has persisted as the administration has stacked up. there are distinguished free traders and those to take a more skeptical view. american episode was followed by others, notably the killing of the program to permit banks to

contracts to operate across the border and restrictions on imports of chinese chicken which they have challenged at the wto. in each case congress took the lead. in some of the cases the president expressed his discomfort, but signed them into law nonetheless. this pattern seemed to repeat itself on a more threatening scale when the house passed its cap and trade bill. the administration was deeply inlved. presumably the administration has some clout in said. the legislation emerged from the house with a strong protectn. the president quickly denounced those but apparently had not. now, there have been positive signs of the administration. this bike explicit campaign promises the administration chose not to label china. and in may a series of speeches

in which he advocated moving forward. shortly after the speeches the white house clarified it was ready to do nonesuch than trying criticism from both senators bacchus. the third category, to be fair to the presidency is fairly him down on trade. here i would just not by the way as a card-carrying economist that the reluctance to go for trade and in our mental masters has nothing to do with whether one requires food safety. the country has every right to enforce its products' safety standard. very different than going down to lima and writing labor laws. a small country may be willing to have u.s. congressman tg that. the administration faces some difficulties because when they deal with larger countries like

brazil that would probably be problematic. and one of the democratic criticisms was that it was too focused on smaller economies. so the trade policies seem to be those that baby least welcome abroad. the administration clearly hopes that a stronger social second and will pave the way for new trade action. it's actually not clear why that is true. if you buy the opening promised that trade agreements cost jobs why should they can be seen more favorably once health care is not linked to employment? there is continuing conflict over whether congress should be the driving force of trade congress of the upper hand because they are granted the authority by the constitution.

in practical terms even if president obama were inclined to pursue new trade agreements he doesn't at the moment have trade negotiating authority nor but restoring that authority be a simple act of resuscitating what was allowed to laps earlier. in the rush to kill or to forestall at least the colombian free trade agreement the house demonstrated the old approach that trade promotion authority was fundamentallynadequate. so that would be a difficult challenge even should the administration decide to move forward. let me move my final set of points. what does all this mean going for? what can we predict about the administration's trade policy? book, it is clear there is little near-term likelihood. the investors and has said as much. instead we can focus on three potential battlefields. enforcement, administer protection.

first enforcement. this are the ministration announced that enforcement would be a central element. the bush administration had failed to enforce u.s. rights under existing agreements now. it's not yet clear whether this enforcement policy is going to rely mostly on moral or new dispute cases. either approach will face difficulties. if this new dispute case there are several hurdles. first is often a gap between what the existing agreements say and what do with this said. we saw this in part that the u.s. lost against china. second when needs a complainant. that was of long standing problem. and finally new dispute cases, particularly if this represents a policy of.

difficulties on the enforcement front. the big case to watch is section 421 on chinese tires. in this case filed not by divestitures, but ben labor interests. try to assert a couple of rules, to that have worked reasonably well our data nor the chinese. they are paying. and to annoy and labor interests. hear those rules kind of come into conflict. but labor interests and the chinese have highlighted the abcanine decision. one as an oppounity to right past wrongs. the other as a test of why the administration is really protectionist. we will know by mid september which constituency is going to win out. finally the president has joined repeatedly the g20.

will the president take the lead? that would be a reversal from his campaign stance. d how would he deal with the diminished enthusiasm? that would take a substantial investment of political capitol. so far the administration has not agreed deal. that neglect has actually been noted abroad. one story about how last month brazil suggested his company would focus more on regional agreements says the u.s. had clearly turned away. perhaps one might argue that the time is not right this year, but maybe next year will be better. i have not heard an awful lot of people argue that election year is the at the time for passing broad trade agreements. look, i don't want to and on such a down note. let me offer my own feeble tempt at optimism. at the president was entirely

sincere. symmetry is likely to demonstrate the importance that the rest of the world places on trade relations. so my hope is that this may prompt the president to step up his great. with that. >> thank you, filled. there is another event that may or may not be to some degree. that is the president is hosting the g20 pittsburgh. a big deal around the world. the administration has promised at various times that the they had a tradeolicy review that was supposed to get through in spring, now finished. we never heard anything about it. they said the president is going to make his speech some time at the end of this hour early september. they have pointed to the time before the pittsburgh meeting. so we will see. that is certainly something that will b noted. our next speaker, before i turned said, as phil mentioned, we don't give out the paper

these days. if you get to the web site, the event web site each of us has papers on trade policy. what i mentioned before i introduce, he's just on -- i think the last month, a paper for the democratic council. recommendations to the administration on trade policy. i'm sure to be talking about that now. .. panel, thank you all for coming out this morning. i think i'll start where phil left off, with, as he said, a couple of reasons to think things aren't so bleak, as dr. levy was portraying them, and also one reason to think things are much more bleak. the reason things are much more bleak is that we're living really through a once-in-a-century event in the world's trade. since, you know, this morning, u.s. census released its monthly trade data. his shows the u.s. census released its monthly

trade data. this shows the first six months of trade in the united states. theysjo showed that last year f six months of 2008, we importe a billion point three dollars and for six months of last year we exported $0.92 trillion worth of goods and services. this is a decline in trade that has not happened since 1937. did not happen during the second world war. did not happen in the economic crisis of the 1970s. did not happen in the early 1990s. so u.s. trade has contracted in a way that none of us now living can remember. so the real world of trade for people who buy and sell things is pretty bad. the world of policy over these six months i would say is not nearly so bad as phil is saying.

yes, there's a modest buy american provision which i didn't particularly applaud. yes, there's, you know, a problem with mexican trucking. there's no big steel safeguard or doubling of farm subsidies as there was in the beginning of the bush ainistration. typically, administrations in their first year try to arrange a domestic coalition and bring their people on board, exile some unfriendly people from it. this has been the pattern in every administration. the last three republican administrations have done big steel safeguards. i think the bush administration is unique in raising farm subsidies. there's things that the obama administration and congress have done so far are, you know -- it cause unhappiness abroad and unhappiness among the economic crists for eternality. they don't seem to me to be setting big precedence for the future. what does seem to me to be the

important thing thing that president obama has done is during the debate over buy american, america needs to do its very best to stay compliant with the obligations we've taken on. during a period of collapsing trade and unemployment in america rising by a half million people every month, that's a big thing. that is aeal wall against a closure of the world economy that has been built up and i think will serve the country and the world pretty well for the next four years. then let me move on to the policy agenda. i think when you look at the administration, you see a gup of people who have a real sense of mission whoeel they were elected to do some things that are big and important. they need oversee recovery from the financial crisis. they need to improve the american standing in the world in general and reshape our standing with the muslim world in particular. they feel we need to give the

american public some additional sense of security and stability in a time of economic crisis and some, you know, long-term changes in the economy that are troubling in some ways. when global economy policies fit into those policies i think the administration has been pretty bold and willi to face down opponents within the public and its own party. i would point to a very substantial revision of the trade adjustment assistance program and probably revision of food safety programs as bruce is mentioning. i wouldoint to the effort in the face of some pressure to keep world markets open. so if you think of trade policy as globalization policy at large, i would say the record is pretty good. if you think of trade policy as trade policy sort of narrowly and purely, you know, in our line of work, you know, it's an

open question work in progress. i would say the big problem trade advocates face and that the problem the administration is trying to work through is that the agenda it has before it doesn't really fit the national priorities very well. is not all that ambitious and is not one you can go to the public and say this will make your life better or it will serve the great national security needs very well. let me run through. i think free trade agreements inherited with the previous administration with panama and canada and i think they ought to pass but i would also say that the centrality of ftas to u.s. trade policy really since the middle of this decade has not been all that productive for us. the ftas passed since 2001 and there have been 14 relationships and i believe 8 agreements, maybe 7 agreements, something like that -- they have covered

about 8% of u.s. exports and about 5% of u.s. imports. on the exports side you can see some pretty good growth but it's a very marginal contribution to our overall trade portfolio. import side, our partners have actually lost market share. those 14 countries had 4.3% of u.s. imports and now they have 3.7% so as a tool for helping the partners they haven't been all that effective and as a tool for helping the u.s. economy inn general, it's been marginal. and as long as the big economies with which we carry on most of our trade, which is to say european union, china, japan, maybe in the future brazil, india and so on -- as long as they are not on the ft a-list and the fta program is marginal, then you have the doha round centraltrality o agriculture to it is very important to poor

countries and i think ranchers and farmers have the right to say their industry is more limited and restricted by foreign barriers. agriculture is 8 to 10 american exports. it's not going to grow even if there was an successful doha round. if the administration goes to the public and says we want to make a big push for doha at least as it is and for these three ftas, the public will say the president is a smart guy, i can trust him, it's got not much to do with me. and given that trade is a disadvicive and difficulty in the party, if the administration will push trade and spend political capital on it it needs to have a somewhat different agenda that will do more for america as anconomy and do more for our national security goals as a nation. and let me give, i think, three points from my paper that i would like to see.90 one is we need to look a bit

harder at ourselves and our policies because they're not always that pretty. if you look at the american tariff system, we collect about 25, $26 billion in tariffs every year. about $13 billion of that comes from clothes plus home linens and textiles plus, shoes plu luggage. industries that employ very few people here but are overwhelming importance to the exports of some very poor countries in asia and to some -- such as cambodia and bangladesh and laos and so fortand to some very security-sensitive countries such as pakistan in particular. pakistan has $3.5 billion of exports to the u.s. mainly of clothes and textiles. we impose a $365 million penalty on those tariffs every year and meanwhile is trying to get give pakistan a billion and a half a year to promote growth and job security and employment there. as we penalize the one industry

that is promoting jobs and growth today. this is not a sensible or reasonable approach. we need to look at ourselves. we need to look at those policies that are damaging to our foreign policy goals and our national security needs. second, i think as an economic matter, trade policy needs to be reoriented away from ftas and towards the large industries that are employers here and countries that are big trading partners. in particular to information in media to environment and energy technologies that the administration is really looking into to promote growth and to agencies like health services and medical technologies. these are areas that americans look to as big employers and to secure america's leadership in the future and i think they need replace the ftas that are at the center of american trade policies and economic matter.

this should be done if possible through the doha round. if not, then through secretary agreements modeled on the technology agreement of the 1990s. finally, trade policy needs to do more to look to the future. we will have in the next decade many new industries that we don't have now that emerge from internet. that emergency from nanotechnology, that emerge from biotechnology, there are very new and difficult issues -- we've already seen a lot of debate particularly with europe over biotechnology and privacy. we should be looking particularly with europe and japan and canada and australia, probably with korea with the developed countries to define a set of standards and product approvals and so forth that will allow these industries to grow and contribute as much to us and to the rest of the world as they should. and if whave that sort of, you know, set of issues to deal with in trade, things that will really help us deal with our

great security problems and national threats, things that will really contribute to the country's hopes for growth and employment, then i think the administration can really go to the public and to congress and say, it's important that we do something difcult because the rewards will be very great. and i think the burden is on trade advates as well as in the administration to develop the ideas and t policies that will allow the administration to do that. i think trade policy really will be worthwhile. let me close there. >> thank you. it's a pleasure to be here this morning with this distinguished panel to think a bit about the obama administration's trade policy so far. as you've heard, the president will outline his vision for a new framework for trade in a speech at some point in the weeks or months ahead. but while we've been waiting for this speech, trade policy has not been dormant.

and it's wakefulness hasn't necessarily been a good thing. there has been concern about creeping protectionism and the cost of inaction on the pending trade agreements and negotiations. so i will try to briefly assess these issues from the perspective of the business community and i'll offer some thoughts on a hopeful trade agendahat perhaps the oba administration can believe in. first, what protectionist measures have been undertaken by the obama administration and the 111th congress? what has captured the attention in an alarming way for the business community? have they been serious? as ed points out this has been a terrible recession and pressures for protectionism have risen. a couple of months ago the world bank reported that 17 of the g20 countries that have pledged repeatedly not to engage in protectionism had nonetheless done so but to cut to the chase, it would be an exaggeration to

say that the world has been descending into a maelstrom of protectionism. yes, we should be vigilant as to the costs of economic isolation that can be high but this isn't 1930. we are in general seeing the w.t.o. rules and the other trade agreements serving as an effective break on protectionist impulses and so far those rules are being respected with a couple of dangerous exceptions. and i'd like to zero in on one of those. the buy american mandates and the recovery act. because as you dig into it you start to see how serious it truly has been for many people in the business community. due in part to objections from the business community and from major trading partners such as the european union and canada, the recovery act was indeed amended so that the buy american mandates were limited. the recovery act had to conform to u.s. commitments under the w.t.o. procurement agreement and other agreements.

so that resolved a large part of the difficulty at the federal level. however, $280 billion in the recovery act spending is being channeled to states and municipalities, many of which are not constrained by those international agreements. outside of road-building, states and municipalities have never been forced to comply with buy america rules in the past. nonetheless the office of management and budget has issued interim guidance requiring states and municipalities to comply fully with the recovery acts of buy america mandates. this is unprecedented at a time of economic crisis and in the context of a stimulus package that's intended to spend money quickly and create jobs quickly, this is a self-defeating idea. and it's retarding economic recovery. the buy requirement for u.s. steel and transportation infrastructure has not been a huge shock to the system. similar rules have been around for 30 years.

but it's elsewhere we see the problem. there is a $130 billion north american market for water and wastewater treatment, equipment, infrastructure and there we have a real mess on our hands. canadian firms are now being excluded from u.s. municipal contracts and retaliation by canadian municipalities could result in billions of dollars of losses for companies. the buy american rules are being interpreted in a way that bars some u.s.-based manufacturers from bidding on projects. that's because many u.s. manufacturers rely on global production chains that intergrate components from all around the world. and american manufacturers are finding it difficult to comply with buy american rules because it is often impossible to avoid sourcing at least a portion of their content fr other countries. the recovery act included $7 billion in funding from municipal water and wastewater

projects. the house transportation and infrastructure committee reports that each billion dollars in infrastructure investment creates about 35,000 jobs and an additional $6 billion in economic activity. so do the math. that means that more than 200,000qb)=m that this portio of the recovery act funds could save or create, if they weren't tied up in red tape relating to buy american rules. it's also more than $40 billion in economic growth that's being left on the table. now, most of the recovery act spending relating to housing and school construction isn't online yet. but you can be sure that when it comes along, we'll be hearing more about the cost in those sectors as well. now, i wanted to take a moment and focus on buy american because it shows that whether we like it or not trade policy happens or as phil says, it's thrust upon us. in this case, it's happening in a damaging way with job losses

and a growing threat of retaliation. on monday, president obama was in mexico and he commented on buy american. he said, we have not seen -- quote, we have not seen some sweeping steps towards protectionism. this has in no way endangered the billions of dollars of trade taking place between canada and the united states. in general, that's through but in this instance of buy american, it is a very serious problem on the chamber's website we have profiles of some small and medium-sized companies, aquarius technologies of wisconsin, companies in illinois that are definitely facing a crisis of lost sales and potentially large layoffs due to buy american rules. i'm highlighting this in part because it's not too late. the omb has received comments from the business community on its interim guidance and it has the authority to fix this. omb is due to issue its revised guidance shortly and that could lift the unprecedented burden of buy american rules on state and

municipal governments. so fingers crossed. i'll turn now briefly to what the new administration has not done in trade policy. namely, it's failure to move forward with the pending ftas. i'll spare you an extended survey of their benefits, the benefits of these excellent agreements with columbia, panama and south korea, the chamber believes they'll boost sales, create good jobs and bolster important allies. from a business perspective, the foremost goal of trade policy should be to tear down foreign barriers to u.s. expos. as these three agreements proposed to do. those barriers are alive and well and they pose a major competitive challenge to u.s. industry and agriculture. in july, the world economic forum issued its annual global enabling trade report which ranks countries around the globe, according to their competitiveness in the trade arena. one of the reports several rankings gauges how high the

tariffs are that a country's exports face. leading the pack as the country whose exporters faced the lowest tariffs is chile. now i'm reaching for my visual aid. while the report found that the united states did well on a number of areas, we ranked a pathetic 114 out of 121 in terms of tariffs faced by our exports overseas. in other words, american exporters face higher tariffs abroad than nearly all of our competitors. it may be a truism that 95% of the world's consumers live outside of the united states but what are we doing to lower the barriers that prevent american companies to selling to them. as congressman kevin brady pointed out the last time congress voted to lower foreign barriers to u.s. exports was in 2007 when congress approved a free trade agreement with peru.

since then, though, the house has voted six times to lower u.s. tariffs on imports. why is it that so many in congress are pleased to offer foreign workers free access to our markets with 300 or 400 house members voting in favor but they oppose helping american workers by lowering tariffs on a reciprocal basis? i've been wondering what to call this philosophy. mercantilist policies, we all remember, encourage exports and discourage imports but the reigning philosophy in congress seems to be roughly the opposite. to encourage imports and let exports happen as they may. so i went to google and i tried to find the opposite of mercantilism and i found the best label for this exotic philosophy may be laissez-faire capitalism. don't misunderstand me. the chamber is not calling for

the united states to raise barriers to imports. many of ed gresser's ideas about lowering the high tariffs that the u.s. imposes on some developing companies are proposals that our members would strongly support. but this is not sustainable. and that which is not sustainable won't be sustained. i had that in my notes here. [laughter] >> this contradictory -- [inaudible] >> this contradictory position is a particular threat to the democratic party. a more consistent and logical position would be to embrace reciprocal trade agreements just as democrats have already embraced one-way free trade coming in. it would also be more consistent, though, to oppose trade liberalization consistently. so this is a threat as well as an opportunity. most democrats are already proimport. a great communicator like obama would like to find their way to

be proimport as well. briefly, i would like to differ a little bit with ed's restrained assessment on the performance of ftas. i would like to point to a gao report that came out on monday, excellent timing, with talks about the ftas. the commercial benefits of these agreements have exceeded expectations. growth in two-way trade since implementation ranged from 42% to 259%. gao found that post-fta average annual growth rates for u.s. exports were all higher than pre-fta annual growth rates and several sectors of the u.s. econy, little sectors like manufacturing and agriculture, made substantial gains in market share versus suppliers from other countries. i can tell you that firsthand that the business community has found them extremely helpful. to close, i'd like to offer just three brief recommendations for a trade agenda that i think the obama administration can embrace.

earlier this year the chamber issued a report entitled international engagement. it will be on the website. this is a much more extended version but i'll stick to my three points. first, go on the offensive. the administration will be stuck playing defense against protectionist measures like buy american until it devises a forward-leaning trade agenda of its own. as prize fighter jack dempsey used to say a best defense is a good offense. if the administration had already done that, would the absured trade act put forward by congressman mike michaud and sherrod brown would have attracted more than 100 supporters in the house? of course not. the internationalists who run the administration, folks like larry summers, ron kirk, hillary clton, timothy geithner, gary locke, they understand this. the silence in the white house has left a vacuum and congress like nature abhors a vacuum. a week ago the chamber joined with five other leading business groups in calling for the president to make the case for a

leading -- a forward-leaning trade agenda including in his promised speech. we wrote, quote, the united states cannot standstill in the international economics sphere. we need to revitalize our export and international trade leadership. by moving forward on multilateral, regional and bilateral marketing opening opportunities. second, clear the decks. pass the ftas. if you want to build a growth-oriented international economic policy focusing on asia as the administration has said that it wants to do, korea and the fta with korea is the place to start. if you want to have any kind of engagement with the moderate governments of south amica, economic, political or otherwise, then columbia and the fta with columbia is the place to start. and if you can't pass the agreement with panama, you've completely caved in to the idea, the ludicrous idea that american workers can't compete with

anyone. finally, embrace multilateralism. ed is just a number of trade experts including former u.s. trs who has suggested the big new trade deals of the future should be pleural lateral sector agreements under the w.t.o. examples include the information technology agreement from the '90s and also the proposed environmental goods and services agreement which will do away with the surprisingly high tariffs and nontariff barriers facing green goods and services. but you can't get there without doha. abandoning doha would deal a serious blow to the still-young w.t.o. and it would embitter major trading partners around the globe. the only way out is through. embracing multilateralism seems a natural path for democrats and it isn't clear why this hadn't already happened. a couple months ago jim bachus spoke in this room at an event on trade and climate change. he's a former congressman, a former ustr official and former

chairman of the w.t.o. appellate body, a unique combination. i wrote down afterwards a quote of his and i think i had it mostly right here. it puzzles me that my party, the democrats, can consistently and in a principled way embrace multilateralism and where it has been most successful. the obama administration has a sterling way to change that. the economic circumstances are making trade more important not less and the chamber look forward to working with the administration, congress, and many of you here today to advance the trade agenda that avoids protectionism, that continues to welcome imports and proudly advances the exports interests of the american workers and companies. thank you. >> thank you very much, john. there are lots of individual points and questions that i have, i'm sure, others have from your individual presentations. but i want t turn to the

audience. i dohave one general question and that's one worst case scenario and that's not where i started from this and i know the answer to this will lead you to conjectures about the overall political situation in the united states, but it seems to me that there's a plausible case to be made that over the next couple of years that you could go right to 2007 -- 2011 that we won't advance. ed have made the point and others have made it that the administration -- part of the administration's argument has been that they need to get a much better base internally and that means domestic reform. initially, they had said in the late bush years if we can just get a big trade adjustment assistance program, we have the biggest program that we can imagine and still the admistration moved on we need healthcare reform and boosting

up the social base in the united states and they seem to have decided in may and june -- we haven't talked about this, that everything else will stop until then. they haven't made that announcement but basically they pulled everything back. and i don't see when that starts again. the ftas are a real problem in terms of the faction that is we've talked about. a much bigger problem than doha. doha itself presents the administration with a situation where the major interest groups in the united states have basically told them, bipartisan here, what's on the table is not acceptable. so what i'm thinking of -- when did go forward. if you go to 2010 it's too late because of the elections and the administration is making heavy water on things like healthcare. this may change. the economy make us better but i can see us going into 2011 without much happening and then you face 2012. what is the likelihood do you think if something like that

happens? this is before i turn to the audience. >> if i were a betting man i think i would place my bet on your projection. i think that the -- as much as i support the need for a stronger social safety net in the united states and certainly the public support for globalization in trade in europe may in part reflect the fact that the competition created by globalization is not as endangering to individuals in europe as it is to the united states and the livelihood and their families and so forth. the administration's argument that first we have to get that in place is reall a delaying tactic because people aren't going to overnight believe that it will work. let's take the -- let's assume that, in fact, the premise is right and you need a stronger social safety net to build support for globalization in the united states. it'll take years for people -- for that to sink in, for people to understand that if they lose their job because of trade,

they're not going to lose their healthcare. if they lose their job they will, in fact, get retrained when they used not to get retrained. that, in fact, unemployment might not be as onus in the future as it is now. bear in mind, the obama administration has done nothing to improve the underlying basis of unemployment insurance in the united states. so i would agree with you. i think that this is a delaying tactic. it may be true but it's a delaying tactic and even if all this stuff would get passed, which is highly dubious, it would still take time for public opinion to change on these issues. and so much of this is out of their control. i mean, progress in doha also depends upon our trading partners, the indians, the chinese, and the others being willing to move, too. and we have no evidence of that as of yet. >> anyone else? >> i know that ed has written about this in an article several years ago that i've often

quoted. he talks about the differences within the democratic party and those who say, no, we have to stop until we can get -- we have to stop trade until we can get a better social safety net. i don't know what your current thinking isn this. >> well, in answer to your direct question, there will have to be some -- or there isn't have to be. ere's very likely to be some trade policy fairly soon in that several of our trade preference programs are going to go, you know, to lapse or blink out of existence at the end of this year. congress will have to decide whether to continue them, particularly, the gsp program and the indian trade preference act. my guess they will probably do continue them so there will be some trade legislation. probably, there's a window for the ftas early in next year. if it goes much later than that, it will be difficult. doha -- i don't think the w.t.o. members have been talking about finishing the agreement and

having it done and voted o next year. they're talking, as i understand it, about completing an agreement sometime in 2010 which would mean a vote in 2011. so i don't think there will be no trade policy activity, but either it will be fairly small and limited to preference or i will be preference plus fta plus some other thing. i think a really big, you know, trade legislative event is probably not likely until 2011. >> so just one follow-up. the kinds of things you mentioned -- you recommend in here about the central agreements or moving toward new, you know -- new sectors, advanced technology sectors, that's one -- realistically one would have to think of in terms of a second obama administration or another president or something like that? is that fair or not? >> well, when i was writing the paper -- what i was thinking about was a four-year term. what can reasonably be

accomplished within -- within four years? we could do the support for the muslim world and very poor countries this year. the sector agreement could be done as part of doha or separate. the technology agreement was about six or eight months' work. it had a lot of background fore it so it would take longer to do something that was in other industries and it would take longer to do something that was really serious. it involved services in nontariff barriers as well as taffs but i think this is a reasonable four-year program. i wasn't thinking about a decade or an eight-year program. >> okay. >> well, you asked a question, you know, does the obama administration have a plan to broaden its base? how important is growing that base? i would argue that the base is probably of support for trade

isn't that bad. you know, the peru trade agreement passed by a 2-1 vote. it's one of the most bipartisan votes that we saw in the last congress. you know, trade adjustment assistance is kind of a different beast. but it was the one item in the stimulus package that was negotiated by partisan or bipartisan or bicameral basis. how big can that base grow? you know, you can -- you can do all kinds of things to try and entice a dialog with the house trade working group but are you ever going to win them over? you know, this administration, if they're going to make it contingent on moving forward on trade, that they need to have support from -- of that magnitude, you know, up to 400 house members, that's a very high bar and it becomes very difficult to accomplish.