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The Honolulu Advertiser
Posted on: Sunday, August 20, 2006

Bush concerned over lack of support for global trade deal

By DAVID J. LYNCH
USA Today

YORK, Pa. For two decades, when presidents have wanted to demonstrate to skeptical constituents the benefits of free trade, they've come here to southern Pennsylvania.

Textile factories in North Carolina may shut their doors. Auto plants in the Midwest may totter in the face of foreign rivals. But a 232-acre Harley-Davidson factory here remains a gleaming shrine for the free-trade faithful.

The venerable motorcycle maker, battered by Japanese rivals, came within an eyelash of bankruptcy in 1985. Harley slashed payroll, overhauled its factories and engineered a remarkable turnaround. The company has been profitable for 20 years and, in a nice irony, now enjoys the largest market share in Japan.

But as President Bush flew here last week to cultivate support for free trade, he did so against darkening sentiment at home and abroad. Negotiations over a new global trade deal are moribund.

"My concern is that this kind of fear of globalization causes a reaction that will cause us to lurch toward protectionism. That's my biggest concern," the president said in a 25-minute interview with USA Today. "I am worried that maybe we're a country that is concerned about where the future heads."

In an April USA Today poll, only 30 percent of those polled said global trade "mostly helps" American workers versus 65 percent who said it "mostly hurts."

The evidence is at odds with public sentiment. A study by the Institute for International Economics says the typical American household gained $10,000 annually from postwar trade liberalization. Yet, as Americans peer beyond their borders, they see an insecure world increasingly characterized by conflict, not commerce. The desire for free movement of goods and capital is imperiled by controversies over illegal immigration, security worries about foreign investments and the outsourcing of even high-skill-level technology jobs.

Treasury Secretary Henry Paulson earlier this month called for "thinking more creatively" about helping those who lose out from globalization.

But in the interview Wednesday, the president dismissed the need for new initiatives to address worker unease. Existing trade-adjustment funds, which provide retaining aid for some workers who lose their jobs because of foreign competition, and community-college programs are adequate, he said.

(Treasury spokesman Tony Fratto said Paulson has a long-term goal of studying the issue and does not intend to propose any new policies.)

Robert Scott, an economist with the left-of-center Economic Policy Institute, said the president's trade policies benefit corporations and investors while leaving workers to fend for themselves.

"There's a rapidly growing number of workers in this country and around the world who are being threatened by the kind of globalization we're pursuing. ... It's a race to the bottom," he says.

Since the 2000 presidential campaign, Bush has voiced strong support for free trade.

His pro-trade record, however, is marred by what Daniel Griswold, an analyst at libertarian Cato Institute, calls "unfortunate lapses."

In 2002, the president imposed steep tariffs on imported steel. The measure, which was criticized even by many conservative economists, was regarded as a political gesture to win support for Republicans in swing political states such as West Virginia, Pennsylvania and Ohio, which are big steel producers.

That same year, the president signed a new farm bill that contained billions of dollars in government subsidies for crop exports.

Such payments encourage excess production of corn, cotton and other products, flooding world markets and depressing the income of farmers in poor countries.