Trade supporters breathe easier as U.S. trade bill clears Senate hurdle

Just two days after Democrats defied Obama to block debate on a bill to "fast-track" trade deals such as the Trans-Pacific Partnership (TPP) trade deal through Congress, the Senate voted 65 to 33 to move ahead with consideration of the measure.

Strong support for the bill on this second go-round suggests senators are unlikely to reject the bill, although heated debate is still expected in the Senate over amendments and later in the House of Representatives, where many Democrats staunchly oppose the TPP on fears trade liberalization will cost U.S. jobs.

The about-face came after Democrats won a separate vote on a bill punishing countries that manipulate their currencies to keep their exports cheap, and followed a renewed round of personal lobbying by Obama.

Thirteen of 44 Democrats joined with Republicans, who voted in lock-step to give backers of the legislation more than the 60 votes needed to proceed in the 100-member Senate.

Under fast-track, the U.S. Congress can approve or reject trade deals such as the TPP deal, but it cannot amend the contents of the pact, a centerpiece of Obama's strategy to counter China's rising economic and diplomatic clout in Asia.

Obama's aggressive defense of fast-track has put him at odds with the left wing of the Democratic Party, pitting him against Senator Elizabeth Warren, a leading liberal voice.

The president played down those differences on Thursday, saying he shared many of the left's concerns about trade but that blocking trade deals was not the way to fix problems.

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The Senate is expected to debate amendments to the fast-track bill next week and Republican Senator Rob Portman, a former U.S. Trade Representative, said he would seek to write sanctions against currency manipulators into trade deals, a move backed by U.S. automakers such as Ford Motor Co.

The White House, which has warned such sanctions would derail the TPP, has so far side-stepped a clash by convincing Democrats to isolate currency rules into a separate customs bill. That passed the Senate with the support of all Democrats and more than half the chamber's Republicans.

Portman said he would also seek to include those rules - allowing import duties against currency cheats - into fast-track itself.

Democratic Senator Charles Schumer said action on currency might be needed as a sweetener for fast-track in the House, where many Democrats say labor and environmental protections fall short and some conservative Republicans oppose any more power for Obama.

"There's a broad feeling we have to do something against China," Schumer said. Many lawmakers blame China's trade gains on an overly-weak Chinese currency.

Obama said he had spoken to Schumer and other lawmakers concerned about currency manipulation on how to find language that would not have a "blow-back" effect on U.S. monetary policy.

House Speaker John Boehner, a Republican, said any attempt to legislate currency levels would be “laughable,” signaling that Republicans, who have a majority in the House, would push strongly against currency rules.

Passage is already far from assured, with House Democratic leader Nancy Pelosi voicing concerns of her own.

The fast-track bill would effectively give Obama and his successor six years to negotiate additional trade deals that could not be amended by Congress. “I would hope there could be some addressing of the length of time,” Pelosi told reporters.

The TPP would create a free trade zone covering 40 percent of the world economy, making it the biggest trade deal since the North American Free Trade Agreement liberalized trade between the United States, Canada and Mexico.

Trading partners have said they want to see the legislation enacted before finalizing the pact - a task the administration wants to complete this year.

The Senate also passed a bill extending duty-free access to U.S. markets for African and other developing nations.

(Editing by Steve Orlofsky and Alan Crosby)