Free trader Bush shoots himself in the foot

March 31, 2002|By Jay Hancock

POOR Bob Zoellick. At this rate he'll be able to write a spicy, expose memoir about bad faith and orphaned ideals at the White House, but meanwhile he must be miserable.

A sincere, committed free marketeer, Zoellick, the U.S. trade representative, works for a boss who is fueling worldwide trade damage.

Two years ago, Zoellick lit into President Bush's predecessor for "being driven significantly by political polls and calculations" in international relations. The Clinton administration, Zoellick argued in Foreign Affairs, "made pledges for free trade, but the reality of its policies did not match the rhetoric."

How's this for rhetoric?

"The case for trade is not just monetary, but moral." - George W. Bush, Nov. 19, 1999.

"Open trade fuels the engines of economic growth that create new jobs and new income. It applies the power of markets to the needs of the poor. It spurs the process of economic and legal reform. It helps dismantle protectionist bureaucracies that stifle incentive and invite corruption." - George W. Bush, April 17, 2001.

"Keeping trade and traffic moving freely is essential to America and American jobs." - George W. Bush, March 23, 2002.

How's this for policy?

Having already promised last year to shield Florida citrus growers and Southern textile mills from foreign rivals, Bush applied taxes of up to 30 percent on many categories of imported steel this month.

The tariffs are supposed to allow a breather for struggling U.S. mills by impeding the flow of cheap foreign steel. But free-trade advocates calculate that many more American jobs will be lost to overall higher steel costs than will be saved by putting U.S. mills on the iron lung for three years.

The steel levies are likely to drive up the cost of washing machines, cars, ships, coffins, lawn mowers, backhoes and metal buildings. They were imposed by a president who two weeks ago, in Missouri, said, "I couldn't imagine anybody saying, in the midst of a recession, we're going to raise taxes."

Not satisfied with raising taxes on steel products, Bush then placed import tariffs of up to 28 percent on many kinds of Canadian lumber, accusing Canada of unfairly subsidizing its timber industry. Homebuilders said the duties would raise the cost of an average new house by $1,000.

Bush is not Clinton on free trade, but he is wandering into the same maze of ambivalence, special interests, favor-swapping and means-to-an-end compromises that confused his predecessor on the same subject.

I always figured Clinton was a closet protectionist who pretended to embrace open trade. But he didn't hesitate to sell out the unions when it became clear which way the wind was blowing. Bush, on the other hand, seems to genuinely seek freer trade but is taking a circuitous, switchback trail to get there.

His steel tariffs were invoked partly to placate Eastern and Midwestern politicians whose votes are needed to restore White House power in future trade deals. Give a few yards on steel protection, the thinking goes, and gain a mile in winning the president "fast track" authority to negotiate trade deals that Congress can only vote up or down, without amending.

Regaining fast-track power, which lapsed under Clinton, is essential for Bush and Zoellick to conclude a new round of WTO negotiations in the next few years. All of Bush's protectionist dalliances, cooked up by political Rasputin Karl Rove, are aimed at boosting Republican odds in the fall elections as well as prospects for fast track.

But the moves are backfiring. The president's tactics threaten his strategy, plus the world economy.

Besides baffling voters with deeds that match words like plaid on polka dots, Bush has angered allies in the war on terrorism and provoked trade-rule retaliation.

Europe imposed its own steel-import barriers last week, claiming Bush's steel tariffs violate WTO rules. The American steel shield gave Russia an excuse to ban U.S. chicken imports, which will hurt growers on the Chesapeake's Eastern Shore. Canada retaliated against the lumber duties by sticking tariffs of up to 71 percent on American tomatoes.

In other words, the "protectionist bureaucracies that stifle incentive" are cranking up steam. This will threaten jobs on top of the ones wiped out by higher steel and lumber prices.

Europe is considering additional tariffs on a long list of U.S. products including orange juice, Harley-Davidson motorcycles, textiles, guns, furniture and sunglasses. Many of these measures, like terrorist bombs, are aimed at sensitive populations to try to produce the worst possible political damage.

In eyeing orange juice, the Europeans have not forgotten Bush's electoral debt to Florida.

Trade war isn't here yet, but it looms. Bush should start listening to his trade aide, Zoellick. Or to himself.

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