Flash Gordon, Meet Susan Schwab

♠ Posted by Emmanuel in , at 9/27/2007 12:01:00 AM
With apologies to Brian May and Queen:

Schwab! Ah-ah...savior of the Doha Round!
She's for ev'ry one of us
Stands for ev'ry one of us
She'll save with a mighty hand
Ev'ry man ev'ry woman ev'ry child
With a mighty FTA!

This current outburst of silliness on my part is driven by the journalistic hyperbole in the title of this Fortune piece about US Trade Representative Susan Schwab, "Can This Woman Save Free Trade?" Its equally grand subtitle is "Susan Schwab's Crusade to Keep Globalization Alive." Unlike most of the Bush junta, I've already indicated that I hold a generally favorable (gulp!) view of Susan Schwab. Nonetheless, it's of course an exaggeration to pin the hopes of the completion of Doha on the shoulders of the USTR. Still, this Fortune article provides an informative glimpse into her efforts to win over Democrats who Bush previously railroaded with previous trade deals before they gained majorities in both houses of Congress. Not that they're getting along exceedingly well with her, but there's no harm in trying:
Susan Schwab is sitting inside a VIP lounge at Dulles airport near Washington, waiting for a call from The Chairman. Jet fumes hang on the tarmac outside, but what Schwab smells is a deal.

That's why she's grounded for the moment on her way to Tampa, where she's scheduled to give a speech to 1,000 people the next morning. In this twilight March moment, waiting for word from The Chairman, there was no better encapsulation of the power shift that had taken place in Washington: President Bush's trade ambassador, yellow legal pad on lap, faux quill pen in hand, surrounded by a handful of aides, hoping for Charlie Rangel to call.

That is the kind of humbling moment that makes up Sue Schwab's lonely crusade to fight the rising tide of protectionism [sniff]. It was her fate to take this job just months before the Democrats gained control of Congress, bringing with them an end to the unfettered, free-trade era of Bush's first six years [never mind those steel tariffs].

During that time Bush and the GOP leadership in Congress rammed through global agreements to open trade in the U.S. and abroad - ignoring a shifting political zeitgeist in which Democrats were jumping off the free-trade bandwagon to complain that American workers were being harmed.

Now Schwab finds herself in the delicate position of pleading for support from the same Democrats who had been bulldozed by her White House boss for six years.

"Hello! Mr. Chairman!" Schwab coos after an aide announces the caller and delivers her cellphone. Even at age 52, draped in a St. John knit and an Hermès scarf, Schwab has a pixie quality; she's the classroom good girl whose razor intellect lies just below the surface.

By contrast, Rangel, at 76, is a natural showman who describes himself as having a "gift for living by my wits and hiding my inadequacies behind bravado." The call goes well. "We'll send those papers over - you got it," Schwab promises before hanging up to dial Treasury Secretary Hank Paulson with a status report: Progress made. No deal yet.

By May, Schwab will close this deal, and the press will label it "historic." In return for Democratic support, the administration will - for the first time ever - agree to global standards for protecting workers and the environment [which are phooey]. Paulson and House Speaker Nancy Pelosi will stand side by side at a late-night Capitol Hill press conference to celebrate their bipartisan good will. Schwab and her staff will pop bottles of champagne.

At last, after months of roller-coaster negotiations...Schwab will be able to take credit for saving America from protectionism.

Or will she? The Schwab story is not over - and this fall comes her biggest test yet. Powerful Democrats, under pressure from organized labor, have suggested they had crossed their fingers behind their backs last summer when signing off on the deal she and Rangel negotiated.

Now the stage is set for a titanic fight on Capitol Hill. The main targets of dispute are agreements with four countries - South Korea, Peru, Panama, and Colombia - that promise to open new markets for agriculture, machinery, financial services, and other industries.

More important, the outcome will signal to the world the direction America plans to take in writing the rules for a globalizing economy that promises riches for U.S. companies but uncertainty for U.S. workers.

Schwab understands the stakes. But can one woman, working for a lame-duck administration, make a difference...?

Everyone has his [sic!] own way of dealing with pain, but for Sue Schwab it has meant 250,000 miles of global shuttling to rescue trade talks, reassure anxious trading partners, and woo wary Democrats as she finds her footing in life again.

I first saw Sue Schwab in action inside Beijing's cavernous Great Hall of the People, where she had just emerged from delivering a lecture to China's vice premier, arguing that China's brand of government intervention in markets historically has led to "less stability, not more; less development, not more."

Schwab's history lesson might seem at face value like the musings of a scholar whose real-world experience ends at the Campus Drive stop sign. After all, the woman has academia written all over her: Williams College, master's from Stanford, Ph.D. from George Washington University...

As trade ambassador, Schwab understands that at any given moment, she is speaking to multiple audiences. In the case of her Beijing remarks, she was keenly aware that the Democrats - who had swept into power a month earlier and viewed China as the chief villain in America's mushrooming trade deficit - were watching closely. It was no time to get squishy toward her hosts.

Schwab has been looking over her shoulder at the Democrats ever since they declared victory last November. "I thought trade was in desperate straits," says Louisiana's Jim McCrery, ranking Republican on the House Ways and Means Committee and a key player in trade talks. "The Democrats had pretty much marched in lockstep with labor, opposing anything of great significance."

But it wasn't just politicians. A handful of prominent free-trade economists had flipped and were now suggesting that what's good for multinational corporations isn't necessarily good for American workers.

That meant a whole flotilla of free-trade initiatives was suddenly in jeopardy this year: newly minted agreements with Peru, Panama, and Colombia that would open business for such companies as Wal-Mart, Caterpillar, and Procter & Gamble. American financial services companies, among others, stood ready to tap into South Korea's middle class.

Despite the sea change, Schwab understood that top Democrats didn't want to be branded the "party of protectionism." Rangel, in particular, was open to finding a way forward. With 36 years in the House behind him, the Harlem Democrat had finally achieved his lifelong dream of running the House Ways and Means Committee and was eager to leave his imprint.

So Schwab marched up to Capitol Hill after the election and offered one word for virtually all of Rangel's conditions: yes. Yes to international labor standards, yes to environmental standards, and, later, yes even to softening drug company patents to let more generic drugs flow abroad.

"We're prepared to concede - just give it to them," she told me a couple of months later in March, after her airport tête-à-tête with Rangel was complete and our plane to Tampa was lifting off the runway. "It's a huge victory for Charlie Rangel and the Democrats, if they choose to take it. The question is, Does Nancy Pelosi want the Democrats to be the party that killed trade...?"

For months Schwab had been a fixture in Rangel's office, negotiating the bipartisan deal. The night before the flight to Tampa, she and Congressman McCrery spent two hours with the chairman and top staffers, quietly working out the details...

She said yes to an offer to become deputy U.S. trade representative in 2005, then was promoted in 2006 to trade ambassador, on the eve of the breakdown of the latest round of World Trade Organization talks in Geneva.

Determined to salvage the talks, Schwab traveled 87,000 miles in three months to try to piece the negotiations back together. "I'm enough of an economist that I really felt I was creating wealth, helping people, creating U.S. exports - all the things I believe in," she says. Whether negotiating over trade in autos or dark-meat chicken parts, Schwab played well in the nuances of trade disputes. "These specific line items mean someone does or does not make a sale," she says...

She has been on airplanes ever since. Longtime friend and former Senator Bill Brock, a Tennessee Republican who was President Reagan's trade ambassador, calls her restless diplomacy a "real tour de force."

Her performance seemed to pay off on the night of May 10, when Paulson and Pelosi convened the joint press conference to announce the bipartisan breakthrough. Then it all came apart again.

Union leaders, never fully onboard, publicly denounced it as a "sellout." They turned up the heat on Democrats, especially over the Colombia deal, citing continued violence against labor organizers in that country, and the Korea accord, pointing to U.S. trade imbalances with that country.

On June 29, as Congress was breaking for the Independence Day recess, Pelosi issued a press release saying the House wouldn't consider the Peru and Panama deals unless those countries first changed their labor laws.

Inside her office next door to the White House, a stunned and angry Schwab began crafting a three-page letter to Pelosi, objecting to the "unprecedented new preconditions on our trading partners" Peru and Panama. The letter ended with a passionate defense of free trade.

"American workers, farmers, consumers, and businesses cannot afford for Congress to hang up a CLOSED FOR BUSINESS sign," she wrote. The letter, Schwab told me a month later, was cathartic. It also forced her to examine the Democrats' press release, which appeared carefully nuanced to keep labor satisfied while moving free trade forward.

"They appear to be moving the goal posts," she says. "But they are saying the right things [privately]. Let's see if they deliver."

It is early August, and we are talking over coffee at the Hay-Adams Hotel, across the street from the White House. A relentlessly upbeat Schwab insists on blending realism with optimism on the WTO talks, too, which have had their own set of twists and turns.

This fall could be "the end of the road," she says of the six-year WTO session to lower trade barriers. "If it doesn't work this time around, we're probably done for now."

And then there's the most controversial trade issue of all - "fast-track" authority for the President, which gives foreign nations the reassurance that their trade deals with the President won't be picked apart by Congress and special interests. (Under fast-track, which expired in June, Congress can only vote up or down, not amend.) Labor leaders and their Democratic allies are reluctant to renew fast-track authority for Bush, though Rangel appears willing to reconsider if there's a WTO deal.

I ask her which is more difficult - negotiating with foreign nations or Democrats. She laughs, because it's something she has thought a lot about. "Whether it's the Indians trying to protect their agriculture or the Brazilians trying to protect their manufacturers or the Democrats trying to protect organized labor," Schwab says, "everyone has their political imperative."

What's generally agreed is that if anyone has the persistence and patience to bring the parties together, it's Sue Schwab. "She hasn't gotten discouraged," observes McCrery. "She's always bounced back from a disappointment to plow ahead." Maybe that's because for Sue Schwab, this crusade isn't just business, it's personal.