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Mood Shift Against Free Trade Puts Republicans on Defensive

Wall Street Journal

Mood Shift Against Free Trade Puts Republicans on Defensive

By Greg Hitt and Brad Haynes

31 October 2008

WASHINGTON — The U.S. has led the way in efforts to lower barriers to global trade since World War II, despite opposition from unions and voters hurt by foreign competition. This election could put trade-liberalization on ice for a while.

A slumping economy, years of stagnating wages for many workers and unease about the rise of China as an economic power are fueling popular skepticism toward free trade and buoying Democratic candidates who are seizing on anxieties about globalization.

One Republican free trader feeling the heat is Oregon Sen. Gordon Smith, who likes to remind voters that one in five jobs in the state depends on overseas trade. He has supported the North American Free Trade Agreement and voted for the Central American Free Trade Agreement. "Oregon is probably the most trade-dependent state in America," Sen. Smith said. "Portland is called Portland because it’s a port."

Now Sen. Smith is scrambling to hang on to his seat, as his Democratic opponent, Jeff Merkley, hammers on the trade issue.

"They call it free trade," a recent Merkley ad says, "Problem is — there’s nothing free about it." Mr. Merkley wants legislation that would inject strict workplace safety, labor and environmental standards into future trade agreements, while requiring a review of all existing trade deals. Polls show Mr. Merkley running closely with Sen. Smith.

From Oregon to Georgia to upstate New York, skepticism about the benefits of free trade is rippling through campaigns for several House and Senate seats, many of them races where Democrats are running strong. Lawmakers elected on promises to slow down on trade could find it hard to walk back from those pledges once in office — particularly if labor unions and other Democratic constituencies critical of the Bush and Clinton Administrations’ open trade policies keep a focus on the issue.

President Bush’s efforts to win passage of trade deals with South Korea, Panama and Colombia stalled after trade concerns helped to put Democrats in charge of the House and Senate in 2006.

Most Democrats don’t call for blatant protectionist measures such as steep tariffs, or a return to import quotas such as those that governed automotive trade in the 1980s. Instead, Democrats, starting with Presidential candidate Sen. Barack Obama, talk about the need for trade to be fair, and insist that trading partners be required to meet higher standards for environmental controls and workers’ rights to unionize.

Republican candidate Sen. John McCain is a free trader and has surrounded himself with like-minded advisers such as Stanford University economist John Taylor. Mr. Taylor headed international economic policy in President Bush’s first-term Treasury Department and is a candidate to be Treasury Secretary should Mr. McCain win the White House.

Other McCain economic advisers, such as former Congressional Budget Office director Douglas Holtz-Eakin, former eBay Chief Executive Meg Whitman and former Hewlett-Packard Chief Executive Carly Fiorina, are longstanding proponents of open markets.

Sen. Obama has hedged his bets on trade. On the stump, Sen. Obama talks about leveling the playing field on trade, hitting South Korea often for tight import quotas on U.S. automobiles. He opposes the free-trade agreement with Colombia that is awaiting ratification, saying the Latin American country is still hostile to organized labor leaders. This week, he pledged to pressure China to loosen control of its currency. During the primary, he suggested he would support strengthening labor and environmental requirements in Nafta.

But Sen. Obama’s chief economic adviser, Jason Furman, is a former aide to Bill Clinton’s free trade Treasury Secretary, Robert Rubin. Mr. Rubin, as well as Clinton Treasury Secretary Lawrence Summers, have become much more involved in the Obama campaign since Sen. Clinton was vanquished. And the campaign has played down the primary talk of reopening Nafta.

Some Democratic congressional leaders and key committee chairmen, such as Senate Finance Chairman Max Baucus, the Montana Democrat, remain supporters of free trade.

But free-trade critics like Ohio Sen. Sherrod Brown are sure to be emboldened if they have a big new bloc of trade skeptic votes to work with.

"Americans are anxious about job losses," says the Ohio Democrat, who was elected to the Senate in 2006 after running a populist-tinged campaign. "Most Americans, not just in my state, understand intuitively that it has been government policy that has enabled, and pushed, many companies to go overseas."

The threat of jobs moving offshore is an issue in a close race in central North Carolina. Democratic House candidate Larry Kissell, a mill worker for 27 years who became a teacher after his plant closed, blames Rep. Robin Hayes, a Republican, for tens of thousands of lost jobs in the local textile industry.

In 2005, after Rep. Hayes declared himself "flat-out, completely, horizontally opposed to Cafta," he reversed his vote on the House floor, delivering the deciding margin for the trade agreement. "That is the ultimate betrayal," said Mr. Kissell. "To know you are voting against the interests of people in your district."

Mr. Hayes, a textile-mill owner, says he won crucial last-minute concessions on Cafta to prevent the dumping of Chinese textiles in American markets.
- Jonathan Weisman contributed to this article.