Hey, it's not just Democrats who are killing free trade.

Hey, it's not just Democrats who are killing free trade.

Hey, it's not just Democrats who are killing free trade.

Moneybox
Commentary about business and finance.
Dec. 2 2006 6:37 AM

The Grand Old Protectionist Party

Hey, it's not just Democrats who are killing free trade.

Since the elections, concerned internationalists have fretted that the newly Democratic Congress will curtail the nation's free-trade policies. In Slate, Jacob Weisberg identified the new breed of protectionist Lou Dobbs Democrats. "So is America headed for a bout of protectionist class warfare?" worried the Economist. Washington Post columnist Sebastian Mallaby, reflecting the consensus, concluded that, "The two parties have opposing attitudes on the subject of trade: Republicans see it as a source of growth, Democrats as a source of inequality."

But these arguments overlook or misunderstand the new politics of trade. It's not a left-right split. Since 2000, Bush Republicans have done as much as Democrats to throw up trade barriers and tariffs. President Bush has generally spoken a good game about free trade, and his administration has concluded bilateral free-trade agreements with Morocco, Australia, Colombia, and several other countries. But just as free trade was a bipartisan project in the 1990s, the backlash to free trade has been bipartisan in this decade. Sens. Charles Schumer, D-N.Y., and Lindsey Graham, R-S.C., share little in common except their desire to slap huge protective tariffs on Chinese goods. And, all by themselves, the Republicans have done a great deal to damage the cause of free trade in the last several years.

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In March 2002, for example, President Bush proudly signed "temporary safeguards" that imposed tariffs of 8 percent to 30 percent on most steel imports for three years. This was a classic Karl Rove option play: Advance the Republican cause in formerly Democratic strongholds of Pennsylvania, Ohio, and West Virginia and screw the companies and workers in industries all over the country that consume steel. When the World Trade Organization ruled the tariffs illegal and retaliatory tariffs were set to be imposed on goods produced in Florida and other politically sensitive states, Bush ended the "safeguards" in December 2003.

In May 2002, Bush signed the Farm Security and Rural Investment Act of 2002, which Republicans passed without much help from Democrats. Just six years after President Clinton signed the 1996 Farm Bill, which slashed ag subsidies, Bush jacked up federal payments by 80 percent for all sorts of cash crops—from soybeans to corn—and offered new subsidies for crops such as peanuts and lentils. He even revived the absurd honey, wool, and mohair subsidies killed by Clinton. Bush's signing of the "monstrous farm bill" led the Economist to brand him about the worst thing the Economist can call anybody: an "anti-globaliser."  (Here's another critical take on the legislation.)

The farm bill inspired threats of retaliation from aggrieved trading partners and contributed to a perception that the United States wasn't serious about making the tough decisions required to further free trade. In fact, some analysts have blamed the failure of the Doha Round of global trade talks earlier this year precisely on the refusal of the United States to alter its expensive, anti-consumer, anti-free-trade farm policy.

Even as lame ducks, Republicans in Congress haven't been unanimous voices for free trade. In mid-November, more than 60 Republicans voted against the proposed free-trade deal with Vietnam, supplying the margin of defeat and embarrassing the president on the eve of a state visit. The Wall Street Journal noted that a vote had been delayed in part because Republican Sens. Lindsey Graham and Elizabeth Dole had "put a hold on the bill," until measures protecting U.S. textile companies were introduced.

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With the Republican base now having shrunk to the Old Confederacy (sugar, cotton, peanuts) and the Great Plains (corn, wheat, soy), look for more of the same protectionism. Senate Minority Whip Trent Lott doesn't like free trade in agricultural products any more than he likes affirmative action.

There's one final and very important Republican failure when it comes to free trade. Free trade is not simply getting cheap goods from China. It's about creating the social and political conditions favorable to the continued expansion of trade. Free trade has exposed American workers to global competition on an unprecedented scale. In recent years, wages have stagnated (despite rising corporate profits and economic growth), jobs and benefits have become more insecure,and benefits like pensions and health care are being wiped out. Is free trade the cause of all these woes? Not necessarily. Does free trade correlate with all these woes? Absolutely.

Rightly or wrongly, many Americans, even those who reap the gains of free trade daily, identify free trade and globalization with their declining financial security. And the response of President Bush and the congressional Republicans has essentially been, "tough." Companies facing ferocious overseas competition can't or won't provide health-care benefits any more? Open a Health Savings Account. Companies can't or won't provide pensions? Let's privatize Social Security and cut benefits.

This you're-on-your-own attitude has ultimately been more damaging to the cause of free trade than anything John Dingell could do. In coming months, we're sure to hear a great deal of talk tarring Sen. Harry Reid and Rep. Nancy Pelosi as the present-day incarnations of Sen. Reed Smoot and Rep. Willis Hawley, the sponsors of the disastrous Smoot-Hawley Tariff of 1930. But Smoot and Hawley were both Republicans. And so was the president whose signature turned the bad legislation into a disastrous law. The protectionist gene may no longer be dominant among Republicans, but it's still an important part of the GOP's DNA.

A version of this piece appears in the Washington Post Outlook section.