Not so quiet on trade

Given the looming elections, trade lobbyists could be forgiven for expecting a quiet 2008. Instead, a president determined to bolster a legacy of opening markets and a handful of House Democrats equally determined to take on the U.S. trade deficit with China are likely to make trade lobbyists earn their money this year.

Business lobbyists expect President Bush to present Congress with legislation implementing a controversial trade deal with Colombia, a key ally in Latin America led by President Alvaro Uribe, who frequently visits Bush. Meanwhile, Democrats on the House Ways and Means Committee are preparing a China trade bill that could penalize China for manipulating its currency to lower the price of its exports.

Both moves would set off huge political fights between congressional Democrats and the White House as well as their allies in labor and business, which generally supports the Colombia deal but fears a China bill.

The Colombia deal holds risks for both sides. If Bush presents the legislation, House Speaker Nancy Pelosi (D-Calif.) would have three choices. She could look for a compromise, try to defeat it, or try to bottle it up with procedural moves, a potentially controversial option since under fast-track rules the bill is supposed to be guaranteed a vote.

Unions and other trade opponents are salivating at the possibility of defeating the deal, which would damage Bush’s legacy. But Democrats would earn international scorn and plenty of negative press if they bury a trade deal with a U.S. ally and opponent of Venezuela’s socialist leader, Hugo Chavez. If approved, Democrats would be in trouble with unions, a key constituency vital in Democratic get-out-the-vote efforts.

China may present more of a win-win political opportunity for congressional Democrats. Even if Bush vetoes a bill imposing punitive restrictions on Chinese trade, Democrats could use the political fight to contrast the president with their own candidate and values.

Whatever the economic truth, polls show rising skepticism among Americans about the benefits of free trade and greater fears of China. In a December poll by the German Marshall Fund, 57 percent said free trade costs more jobs than it creates, up from 51 percent in 2005.

Some freshman Democrats believe a backlash against trade contributed to their election in 2006. They’re determined to go back on the campaign trail in 2008 with something to brag about, and either a defeat of the Colombia FTA or passage of a tough China trade bill would do that.

President Bush has repeatedly urged Americans to resist turning inward, warning in his 2004 inaugural address that efforts to escape competition by walling off the U.S. economy from imports should be resisted. The U.S. cannot hope to keep a high standard of living by sealing off its borders, Bush insisted in a speech that also called for immigration reform.

Bush is sure to make the same arguments today. The question is how much they will resonate with the public and congressional Democrats increasingly thinking about ways to replace him and raise their majority.