The New Free-Trade Consensus.

How the China trade vote came together.

The May 24 showdown in the U.S. House of Representatives over whether to grant China Permanent Normal Trade Relations (PNTR) had been billed as a cliffhanger that might not be decided until just before the vote, with pro and anti forces engaging in a final, furious round of arm twisting. Yet, any doubts that either side might have had about PNTR's fate were swept away twelve days before the trade bill came to the floor of the House.

That is when liberal Democratic Congressman Charles Rangel of New York met privately with local union officials from his Harlem district to tell them he had decided to support the measure despite ferocious opposition from organized labor. Four days later, on May 16, Rangel, the ranking Democrat on the Ways and Means Committee and an influential member of the Congressional Black Caucus, went public with his decision, prompting several other wavering Democrats to join him. "Rangel produced huge momentum for our side among members of the Black Caucus and other undecided Democrats," says Carolyn Brehm, legislative director for the Business Roundtable, a coalition of chief executives from the largest U.S. corporations.

In the end, the House approved the trade legislation by an unexpectedly large 237-197 vote, as two-thirds of the Republicans joined with one third of the Democrats in support of PNTR. The victory margin would have been even larger if it included a number of Democrats in tough re-election races who were prepared to support PNTR but were given a pass by the White House so they wouldn't unnecessarily antagonize local unions by casting "yes" votes that weren't vital.

That a pro-union Democrat with a weak free-trade record like Rangel could support PNTR shows how much the political dynamics over trade have changed in the United States and why passage of the measure was never really in jeopardy. (The battle lines were drawn in the House because approval by the U.S. Senate had long been considered certain.)

The conventional wisdom in Washington was that free trade would be a tough sell, particularly in an election year. But the pundits failed to take into account a number of circumstances that augured well for passage: a booming economy that has helped mute the cries of protectionists, the enormous economic benefits the United States gains from the deal, a willingness by a united business community to link PNTR to such issues as human rights, and support from a number of old-line labor Democrats.

Gloom about the bill's prospects had been fueled by the anti-globalization riots that disrupted the World Trade Organization meeting in Seattle last December. Then there were the public opinion polls showing most Americans opposed to PNTR, which would end twenty years of congressional votes granting annual renewal of normal trade with China. Those surveyed had negative opinions about China and worried that Americans might become unemployed. The poll findings only intensified the pressure on a number of pro-trade Republicans who were being urged by Christian conservative groups to oppose PNTR because of China's lack of religious freedom, and on undecided Democrats facing pressure from labor to vote "no" because of potential job losses.

In private, however, top Clinton Administration officials and corporate lobbyists were growing increasingly confident as much as two months before the House vote that they would prevail. The reason: several fence-sitting lawmakers had signaled they would back PNTR but were not ready to go public with their positions. The Business Roundtable, which spent $10 million on a pro-PNTR lobbying campaign, was encouraged by private commitments of support from Democrats David Price and Bob Etheridge of North Carolina. Their state has a big textile industry, which has been hurt by Chinese imports. But the industry, while no fan of PNTR, was not fighting the bill. Business was even more optimistic by May 1, when lawmakers returned from a week-long Easter recess, because supporters had not broken ranks while mingling with the folks back home. "That's when the anti-PNTR groups could have caused the most damage, but we didn't lose anybody" says Brehm.

The factors that produced the winning coalition for PNTR also made it possible for a bill lowering trade barriers with Africa, the Caribbean, and Central America to sail through the House a few weeks earlier. Administration officials are hopeful that these pro-trade votes will make it easier to win approval for future deals. "We are seeing positive signs of a new political consensus on trade and open markets," says White House economic policy coordinator Gene Sperling.

If this new consensus is to last, however, free traders would be wise to study carefully the conditions essential for victory:

A full-employment economy. Globalization is not as frightening to Americans when unemployment is low and fears about job losses wane. Isolationism and protectionism seem to be attitudes ingrained in the American culture; that explains why trade never scores well in opinion polls and why most Americans never see a connection between the prosperous U.S. economy and an open trading system. But at least there is no public passion against free-trade deals during these good times.

In 1992, Ross Perot mounted a serious third-party challenge for the White House by becoming the champion of workers who lost (or feared they would lose) their jobs to foreign competition. Pat Buchanan made a surprisingly strong run for the Republican presidential nomination in 1996 on the same theme. But this year, Buchanan's anti-trade message is not getting any traction. Now a candidate for president under Perot's Reform Party banner, Buchanan is getting just 2 percent of the vote in many polls. "Free trade is a good-times doctrine," says Rutgers University political scientist Ross Baker. "Despite union opposition, I don't think an assembly line worker building a Ford Explorer is worrying that his job will be exported to China any time soon. That makes it easier for a congressman to vote for the trade bill."

High economic stakes. Members of Congress were not swayed by President Clinton's pleas to pass the bill to rescue his legacy or by his hyperbolic claims that the PNTR vote would be the most important lawmakers will cast in their careers. The national security argument that PNTR is essential to maintain good relations with China is an uncertain proposition, and there is no evidence to back Clinton's claim that a closer economic relationship will bring more political freedom to China.

But when a lot of business is at stake, members of Congress can be won over. Clinton failed to win fast track authority to negotiate trade deals free of congressional interference during his second term because there was no important trade agreement that would be jeopardized at the time. That made it easier for congressional Republicans furious over Clinton's affair with White House intern Monica Lewinsky to refuse to grant the President fast track.

By contrast, the business community was united in making the case that U.S. economic gains from PNTR are enormous. Slashed Chinese tariffs and lower barriers to investment mean more U.S. exports of everything from agricultural goods to financial services and a proliferation of U.S.-Chinese ventures. "It's a damn good deal for the United States," asserts Robert Burr, CEO of FMC Corp. and chairman of the Business Roundtable. A concrete example of how the deal would mean more business and jobs in the district of a wavering lawmaker is a potent argument.

Flexibility on collateral issues. A lot of rancor over past deals stemmed from the adamant opposition of business to linkage of trade provisions to such considerations as human rights, environmental protections, labor standards and the impact on U.S. jobs. Corporate lobbyists worried that obligations concerning these other matters would dilute the economic benefits of the trade agreements. This time, business agreed to address these other issues.

In fact, PNTR may not have passed were it not for a companion piece of legislation that calls for oversight of China's performance on human rights, protections for U.S. industries and workers hurt by a surge of Chinese imports, and guarantees that China complies with WTO rules. Jerry Jasinowski, president of the National Association of Manufacturers, credits passage of PNTR in large measure to "a willingness by business to be flexible in addressing concerns such as human rights and the impact on economically distressed U.S. neighborhoods." David Vogel, a professor at the Haas School of Business at the University of California at Berkeley, adds that side agreements on these other issues will become the rule in future trade pacts. "The momentum has shifted back to trade, but concerns about globalization will continue to be a fact of life," he says.

New economy support from old Democrats. Crucial to PNTR's passage were the votes of a group of union-backed liberal Democrats who had opposed previous trade deals such as the North American Free Trade Agreement (NAFTA). They include Sander Levin, a nine-term congressman from a Michigan district north of Detroit; Rangel and John LaFalce of New York; Steny Hoyer and Benjamin Cardin of Maryland; Marty Meehan and Richard Neal of Massachusetts, and Tom Sawyer from Ohio. Levin, the driving force behind the linked provisions on human rights and import surges, says he drafted the new language because he was looking for a way to bring the extreme free-traders and extreme protectionists closer together. "There is too much polarization over trade," he explains, adding that Congress should be concerned about expanding trade and protecting U.S. jobs.

His stance is a real profile in courage: Levin, who has faced stiff Republican opposition during past runs for re-election, has infuriated the United Auto Workers, a major force in his district. Levin's gutsy support encouraged other lawmakers under pressure to vote "no" to follow his example. They included conservative Republicans Jim DeMint of South Carolina and Asa Hutchinson of Arkansas. "Once people stuck their necks out, the courage proved contagious," says a House Democratic aide.

Rangel, who holds the Harlem seat once occupied by the legendary Adam Clayton Powell, backed PNTR in part to pay back Republicans for supporting his pet legislation, the African trade bill. But Rangel was also playing to the business community; it will be a big part of his life if the Democrats capture control of the House this fall and he ascends to the chairmanship of Ways and Means, which handles all the tax legislation. "He stepped up to the plate," says Robert Hormats, vice chairman of Goldman Sachs International. "If he becomes chairman, he'll have a lot of credibility in the business community." Unlike Levin, Rangel didn't have to worry about antagonizing local unions. He holds a safe seat, having won his last election with 91 percent of the vote. "The locals took his decision on PTNR pretty well, but then what choice did they have?" says an aide. "He's been with them on so many other issues."

After China, where do the free-trade forces go next? The most promising trade deals are an expansion of NAFTA to include South America. And a trans-Atlantic deal could also be in the offing. Trade expansion has proven to be such an economic winner on balance for the United States that political momentum for new deals should continue no matter which party wins the White House and control of Congress. Of course, economic times will not always be as good as they are now. But if the stakes are high enough, business remains flexible on subsidiary issues and Democrats keep converting to free trade, the outlook for a more open trading system, at least from the U.S. political perspective, will stay bright.

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Crucial to PNTR's passage were the votes of a group of union-backed liberal Democrats who had opposed previous trade deals such as NAFTA. Among them were House Representatives Sander Levin and Charles Rangel. Levin, the driving force behind the linked provisions on human fights and import surges, says he drafted the new language because he was looking for a way to bring the extreme free-traders and extreme protectionists closer together. "There is too much polarization over trade," he explains. His stance is a real profile in courage: Levin, who has faced stiff Republican opposition during past runs for re-election, has infuriated the United Auto Workers, a major force in his district. Levin's gutsy support encouraged other lawmakers under pressure to vote "no" to follow his example.

Rangel backed PNTR in part to pay back Republicans for supporting his pet legislation, the African trade bill. But Rangel was also playing to the business community; it will be a big part of his life if the Democrats capture control of the House this fall and he ascends to the chairmanship of Ways and Means, which handles all the tax legislation. "He stepped up to the plate" says Robert Hormats, vice chairman of Goldman Sachs International. "If he becomes chairman, he'll have a lot of credibility in the business community." Unlike Levin, Rangel didn't have to worry about antagonizing local unions. He holds a safe seat, having won his last election with 91 percent of the vote. --O. Ullmann

Owen Ullmann covers economics and politics for USA Today.