Going back to his days as governor of Arkansas, Clinton was an ardent free trader. As president, his embrace of trade co-opted a Republican policy preserve and retooled the Democrats as a centrist party. It was Clinton who pushed the North American Free Trade Agreement, despite opposition from organized labor. Clinton Treasury Secretary Robert Rubin emerged as a kind of metabureaucrat, wooing Wall Street wizards and Washington liberals alike with the gospel of the invisible hand guiding a beneficent free market. So unshakable was Clinton’s faith in the power of unfettered trade that economists dusted off a term from the 1960s to explain it: neoliberalism.
Now the neoliberal creed has been largely washed away by a populist wave that equates trade with destruction, and not the creative kind. The U.S. offer to fully normalize trade relations with Vietnam died in large part due to impatient Republican leaders, who rushed it to a vote to coincide with Bush’s Hanoi trip, with little time to rally support. It failed to gain the necessary two-thirds majority, with Democrats voting against 94 to 90, and became the first big trade measure ever to be rejected by Congress. The new anti-trade bias is likely to take a much firmer grip on the House of Representatives in January, when its new Democratic majority takes power.
During the campaign, Democrats railed against globalization as a boon to predatory capitalists and the root cause of job losses through outsourcing, stagnant wage growth and illegal immigration. They promised a moratorium on new trade deals, and already they’re delivering. “There is a backlash against neoliberalism,” says I. M. Desstler, a professor at the University of Maryland’s School of Public Policy. “We have an economy where the dividends are unevenly distributed, and the easiest way to respond to it is to blame trade agreements.”
The momentum behind this Democratic rebellion is striking. A month or so before the election, congressional aspirant Sherrod Brown of Ohio was dismissed as a fringe candidate for his fiercely antitrade views. His book “Myths of Free Trade: Why American Trade Policy Has Failed” is a populist-nationalist manifesto that debunks the Clintonian notion of free trade as good, inevitable and a well-established American tradition. Brown blasted NAFTA, the cornerstone of Clinton’s neoliberal legacy, which he blames for plundering living standards continentwide. He ended up handily defeating incumbent Republican Mike DeWine with a 56 percent share of the vote.
Brown’s victory makes him the flag bearer of the Democrats’ new populism. Of the Democrats who won Republican House seats, according to Public Citizen’s Global Trade Watch, a lobby founded by Ralph Nader, nearly a third campaigned against ratified trade deals for their alleged weak labor safeguards and environmental standards. North Carolina Democrat Heath Shuler criticized his Republican opponent for backing off his pledge to vote against the Central American Free Trade Agreement.
On the Senate side, Montana Democrat John Tester condemned trade deals for putting “our jobs and the viability of family farms and ranches across Montana in jeopardy.” Virginian James Webb called for a re-examination of trade and tax policy in the name of “fairness.” Vermont’s Bernie Saunders, a self-described Socialist who caucuses with the Democrats, attacked trade with China as “an absolute disaster … that has led to the destruction of 1.5 million American jobs.”
The Democrats’ call for “fair” rather than free trade punctuates the growing sense of disillusion. Even Rubin, still an ardent free trader, is beginning to focus on its downside. His Hamilton Project, a policy center at the Washington-based Brookings Institution, recently warned of rising insecurity due to diminished wages for most U.S. families and a widening of the average spans of unemployment. “They are concerned about the human costs of free trade,” says Howard Rosen, a trade expert commissioned by the Hamilton Project to study the rising need for unemployment insurance. “There is no longer an appetite for unlimited free trade.”
Speaking in Singapore en route to Hanoi, Bush endorsed an East Asia free-trade zone and warned against isolationism and protectionism, a clear swipe at the Democrats. The setback on Vietnam signals trouble ahead for the White House, which hopes to restart stalled world trade talks and is also negotiating bilateral deals with Mexico, Peru, Colombia, South Korea, the United Arab Emirates, the South African Trade Union and Malaysia. “These new trade deals cannot be taken for granted,” says Desstler. “Democrats are genuinely concerned about American workers competing with unfairly paid labor.”
Bush is working against the clock. His “fast-track authority” to submit trade agreements to Congress for a yes or no vote without amendment expires in June. With an increasingly trade-phobic Congress, Bush appears likely to see his negotiating authority pared back, or even stripped away. Capitol Hill watchers also expect Charles Rangel, the likely new chairman of the House Ways and Means committee, to take a tough line on trade, particularly with China. Washington could file suit in the WTO against China’s mixed record on copyright-law enforcement, says one senior Democrat House aide, as well as on its resistance to currency liberalization. “There has been a languishing of oversight and enforcement, so we’ll press the administration to take action,” says the aide, who asked to remain anonymous because he is not authorized to speak to the press. “You’ll definitely see Congress play a more assertive role in a more balanced trade policy.” Put simply, that may come to mean less trade.
