Bush’s trade agenda in doubt after Democratic win
Agence France-Presse
Bush’s trade agenda in doubt after Democratic win
09 November 2006
WASHINGTON — The Democrats’ triumphant return to power in the House of Representatives could spell trouble for US President George W. Bush’s campaign to dismantle global trade barriers.
But after Tuesday’s election, which has left the Senate on a knife-edge, analysts said legislative gridlock and a focus on the 2008 presidential race would limit the influence of Democratic isolationists.
"The election means that the president’s trade agenda has come to a screeching halt," Daniel Griswold, director of trade policy studies at the free-market Cato Institute, told AFP.
But he added: "Divided government will mean no bold trade liberalisation, but no bold protectionism either. We’re looking at two years of stalemate in US trade policy."
Moody’s Investors Service economist John Lonski said wrenching job losses brought about by globalisation had reverberated in the mid-term US election.
"My sense is that a lot of seats the Republicans have lost, in places like Indiana, Pennsylvania and Ohio, were in a large part the consequence of a persistent exit of manufacturing activity to cheaper sites in China," he said.
For European Union Trade Commissioner Peter Mandelson, there is a "brief window of opportunity" to revive the World Trade Organisation’s ailing "Doha round" after the US elections, his spokesman Peter Power said in Brussels.
But the clock is now ticking before Bush loses his "Trade Promotion Authority" at midnight on June 30. Under TPA, the administration can fast-track trade pacts through Congress without amendment.
US Trade Representative Susan Schwab said last month that whatever the election’s outcome, there would remain a "critical mass" of support for free trade among both Democrats and Republicans.
"Ambassador Schwab and this administration have worked well with members on both sides of the aisle," said Sean Spicer, a spokesman for Schwab, after the elections.
"For a number of years, almost every trade vote has been pretty much bipartisan," he insisted.
Charles Rangel, a top Democrat who is in line to chair the powerful House Ways and Means Committee, pledged to reach out to Bush’s White House and other Republicans.
"We’ll find ways to involve more members on issues like trade policy so we can show the American people that expanded trade doesn’t always have to mean the loss of good-paying jobs here at home," he said.
But at the very least, the Democrats can be expected to push for greater protections on the environment and labour rights in any US trade deals, analysts noted.
In Ohio, Democratic challenger Sherrod Brown trounced incumbent Senator Mike DeWine after campaigning fiercely against "job-killing" trade pacts that he argued had cost the state millions of manufacturing jobs.
However, the Democrats are also the party of former president Bill Clinton, whose passionate advocacy of open economies resulted in the North American Free Trade Agreement.
And as with Iraq, there will be different voices on trade competing for ascendancy as the Democrats prepare to drive the legislative agenda for the next two years.
Gary Hufbauer, a senior fellow at Washington’s Institute for International Economics, said leading figures such as New York Senator Hillary Clinton would want to temper any anti-globalisation rhetoric as they position for 2008.
Two major free trade agreements (FTAs) now in the works, with Malaysia and South Korea, had already been hitting heavy weather as the US elections approached.
Other agreements were held up in the outgoing Congress, such as a bill to grant normal trading relations status to WTO-bound Vietnam, and FTAs with Peru and Colombia.
Pressure to impose import tariffs on Chinese goods could now intensify, unless Beijing dramatically revalues its currency, Hufbauer said.
"If you make an enemy of China on economic issues, you can forget any cooperation on North Korea or Iran or pretty much anything," he said.
"The Democratic leadership recognises that but on the other hand their base does resent China’s trade policies, so they’ll have to come up with some kind of a sop against China economically." - AFP/ir
