Who wants to trade?

Politicians won't discuss trade on merit

AP/AFP

DISCUSS a trade deal, and you might think that the main issues would be whether it is good for the American economy. But few debates on public policy ever reach this level of purposefulness. And in America, talking trade in an election year is no exception. Recent manoeuvres show how politicians are reluctant to talk about trade on its own merits.

George Bush’s administration signed a trade agreement with Colombia in 2006. But last week, under the auspices of Nancy Pelosi, the party’s leader in the House of Representatives, an arcane rule was invoked to prevent the bill from moving closer to ratification. Susan Schwab, America’s Trade Representative, called the move “pure, partisan politics” in an interview on Sunday April 13th.

Ms Pelosi says her party is not anti-trade. Instead, she says that Colombia must crack down on the murders of labour leaders (over 700 since 2001). But she is also using the threat of holding up the deal to get Mr Bush to make progress elsewhere. Ms Pelosi says specifically that she may release the trade deal for a vote in the House if Mr Bush bends her way on economic stimulus, including an energy tax credit and infrastructure spending.

Republicans play politics with trade, too. Although Colombia is a minor trading partner the deal would have the virtue of showing that America has not given up on pushing for global liberalisation. Nevertheless Mr Bush has repeatedly made the case for the Colombia trade deal not on its economic rationale, but because it would help a Latin American ally in the war on drugs, and incidentally one whose next-door neighbour is that anti-American irritant, Hugo Chavez, Venezuela’s president. John McCain, in chiding the Democrats for holding up the deal, repeated Mr Bush’s reasons for supporting the deal, not to mention hinting at his own distaste for Mr Chavez.

Several factors are making trade a hard sell in America these days. One is a constant: the benefits of trade are spread fairly evenly around the economy; the costs, however, tend to show up more obviously on a few sectors, whose less competitive workers and producers will be disadvantaged by the deal. This gives politicians less clout when defending trade deals amid the cries of the afflicted. At the time of a credit-crunch, a mortgage crisis and general talk of recession, which has heightened economic anxieties, making the case for trade is harder still.

Mr McCain seems genuinely in favour of trade liberalisation, and the centre of gravity of the Republican Party is largely with him (though some parts of his party will always be leery about trade as they are other forms of globalisation). But the Democratic Party is moving in the other direction at speed. Bill Clinton pushed through America’s biggest trade deal, NAFTA (with Canada and Mexico), that was introduced at the start of 1994. But Hillary Clinton has soured on trade on the campaign trail. While hailing NAFTA in a book published in 2003, as a senator she voted against CAFTA, a deal with Central America. She now claims that she opposed NAFTA all along, but that she kept mum out of loyalty to her husband’s administration. She has proposed a “time out” before signing any new trade deals.

Barack Obama, Mrs Clinton’s Democratic rival, has a similarly mixed record. He too voted against CAFTA and has called NAFTA a bad deal. He says he would use the threat of pulling out of NAFTA to strengthen America’s hand in renegotiating it as president. His economic advisor got in a flap by allegedly telling Canadian diplomats in a private conversation that Mr Obama’s anti-trade talk was more political positioning than policy substance.

But both Democrats’ tough talk on trade is likely to continue. Democrats are enduring a six-week pause between their last primaries, on March 4th, and the next contest in Pennsylvania on April 22nd. This big rust-belt state has lost over 200,000 manufacturing jobs since 2001. So it’s just the kind of place where demonising trade with foreigners (particularly China) is likely to prove politically useful.

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