US vote could leave free trade in trouble
Agence France-Presse | 31 October 2006
US vote could leave free trade in trouble
by Jitendra Joshi
WASHINGTON (AFP) — President George W. Bush’s agenda to tear down global trade barriers appears headed for trouble whoever wins US elections next week, analysts believe.
A Democratic victory in one or both houses of Congress would mean legislative deadlock, while even a narrow Republican win would clip Bush’s trade wings, according to experts.
"There’s always been a sizeable minority of Republicans opposed to free trade. A bare number of votes would alter the picture completely," said Grant Aldonas, Bush’s former undersecretary of commerce for international trade.
"We’re seeing much more angst about globalization and a world where there’s nihilistic threats to the United States," he told AFP.
"The greater threat from the point of view of both the world economy and the US economy is that we close down because of the anxiety we’re now feeling. That wouldn’t be healthy for anyone."
After the November 7 vote, the clock will be 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.
Even in the outgoing Republican-controlled Congress, lawmakers from both sides said the chances of TPA being extended were next to zero.
US Trade Representative Susan Schwab said this month that whatever the election’s outcome, there would remain a "critical mass" of support for free trade among both Democrats and Republicans.
But there has been no shortage of signs of rising protectionism. China is a perennial target of complaint, while an outcry from lawmakers prevented a Dubai company taking control of operations at six US ports in March.
Democratic candidates from Ohio to Montana have pressed home the case against "job-killing" trade pacts that, they argue, are outsourcing millions of manufacturing jobs.
Promises to renegotiate such pacts have become a rallying cry for many in the party of former president
Bill Clinton, whose passionate advocacy of open economies resulted in the North American Free Trade Agreement (NAFTA).
Joined by dissident Republicans, Democrats lobbying for "fair trade, not free trade" very nearly shot down a NAFTA-style pact covering Central American economies in late July.
In a hostile new Congress, support for other agreements such as a long-sought global deal from the World Trade Organisation might also recede.
"Any likely outcome in the election is going to make it harder for the president to pursue his trade agenda," said Daniel Griswold, of the Center for Trade Policy Studies at the free-market Cato Institute.
"It’s already run into a lot of trouble on the (Capitol) Hill. Nobody thinks Trade Promotion Authority is going to be renewed, whichever party is in control," he said.
Two major free trade agreements now in the works, with Malaysia and
South Korea, are already hitting heavy weather as the US elections approach.
And with the WTO’s "Doha round" on life support, the chances of the United States unilaterally renouncing some of its generous agricultural subsidies in the 2007 Farm Bill appear remote.
"(Democrats) could try to stem the tide of jobs moving overseas and in doing so could hurt the competitiveness of the manufacturing sector that relies the most on job outsourcing," said Merrill Lynch economist David Rosenberg.
However, few expect the United States to go back to the disastrous days of the 1930s, when misguided protectionist policies helped feed the Great Depression.
"US trade policy is not going to make a sharp turn towards protectionism. There’s too many checks and balances," Griswold said.
"You’ll see stalemate — no legislation advancing trade liberalisation, but probably no significant bills in a protectionist direction," he said.
