Seeker Blog

The Economist has a few blogs now. E.g., Free Exchange where this analysis of the Bush record on free trade was posted. I found the explanation of Bush backing the steel tariffs very interesting - a political trade to gain the essential Fast Track trade negotiation authority. With Fast Track the special interests can easily block any trade deal - which they have done. In this trade it appears Bush gave up nothing - the steel tariffs were doomed before their launch.

…But I have heard convincing arguments—indeed, I have actually been convinced—that the steel tariffs were a necessary sop to the Rust Belt in order to get Mr Bush Fast track trade negotiation authority. Fast track, which forces the Congress to vote either “yes” or “no” on a treaty with no amendments, is an absolute prerequisite for doing any trade deals with America. In a parliamentary system, the PM has the power over the legislature to ram his proposals through. In America’s representative system, on the other hand, any member can revolt at any time, and the committees (which have proliferated like bacteria over the last forty years) will happily kill any trade bill with endless amendments to please favoured constitutencies, unless forcibly prevented from doing so. Given the critical Doha negotiations coming up, steel tariffs were, Mr Bush’s supporters argue, fairly obviously less important than fast track.

Moreover, Mr Bush took absolutely no care to impose them in any way that had the slightest chance of withstanding a WTO challenge; a really anti-trade president would have crafted some environmental fiddle, or leveled charges of “dumping”, and tied the thing up for years. As it stands, America briefly had steel tariffs, and now permanently has CAFTA and various bilateral deals. Doha collapsed, of course; the president cannot singlehandedly wangle a trade deal when the Europeans are resolutely intransigent and the developing countries oddly willing to derail a deal (and of course Mr Bush and his negotiators had America’s own powerful farm lobby hanging around their necks). But there is a reasonable argument that on trade, Mr Bush did the best he could with what he had.

Now that the Democrats are in power, however, it seems likely that Mr Bush will have to do more than make strategic gestures towards protectionism. Protectionist sentiment is on the rise in the country, and Democratic party, because of its ties to Big Labour, has long been more solidly protectionist than the Republicans. That protectionist sentiment seems to be freezing solider by the minute. The pro-trade wing of the party, exemplified by Bob Rubin, is apparently losing its fight to couple free trade with assistance to those who lose out. The new senators and congressmen are more protectionist than the Republicans they replaced, and, at least some argue, even more protectionist than the group of Democrats they are joining. This piece in the Wall Street Journal (subscription required) presages a painful future for ardent liberalisers:

RTWT.