Free trade war

President Barack Obama’s decision to impose punitive tariffs on Chinese tires has created a firestorm with Beijing.

The president says it might be just what’s needed to move a pro-growth trade agenda forward.


This may seem counterintuitive, as China reacted with fury and immediately threatened to retaliate against American poultry and car-parts exports. But on Capitol Hill, the decision was embraced by Democrats close to business who helped build support for free trade agreements negotiated by President George W. Bush.

Free trade has lost ground with the public and Congress over the last decade. Polls suggest mounting protectionist sentiment; a January 2008 survey by Fortune found that 78 percent believed free trade had made things worse for American workers, despite warnings in the 2006 State of the Union address by then-President Bush that the road of “isolationism and protectionism … ends in danger and decline.”

That poll was taken after a seven-year period in which Congress voted for more free trade agreements than ever before.

The votes put many members of Congress in a difficult position. The deals were with relatively small economies of correspondingly limited economic value to the United States. They were unpopular with many constituents. The Oman trade agreement, for example, barely passed the House, 221-206, in June 2006. A few months later, Republicans lost control of the House and Senate.

Members who had been in Congress since 2001 had already voted on deals with Australia, Bahrain, Chile, Morocco, Oman, Peru and Singapore and on a single pact with five countries in Central America and the Dominican Republic.

As Congress approved those eight trade deals, imports from China increased sharply and the trade deficit grew.

In 2000, at the behest of President Bill Clinton, Congress granted China permanent normal trade relations, which sparked further investment in China by American and foreign companies alike.

The legislation included a safeguard mechanism that was intended to curb imports from China temporarily to provide domestic industries time to adjust to the new competition.

This safeguard prompted many lawmakers to vote for the China bill, and they were then bitterly disappointed when Bush rejected all four safeguard petitions that reached his desk. Eventually, companies decided it wasn’t worth spending money on legal fees to bring the petitions.

This is the issue of credibility that Obama brought up in an interview with Bloomberg about the Chinese tire tariffs; if the public doesn’t believe the government will use the tools in its arsenal to help workers, support for free trade will decline.

“We’ve got to establish credibility, and enforcement of the rules, precisely because I want to further expand trade in the future,” Obama told the newswire.

Well, maybe. We’ll have to see.

President Bush had a similar playbook. Early in his administration he imposed curbs on steel imports to the U.S. That effort was ostensibly to increase support for trade, but there is little evidence that it did so.

In a conference call on Monday, U.S. Chamber of Commerce officials said the proof of the pudding will be in the eating. If Obama moves forward with the trade deals and Congress gives them a vote, perhaps today’s fight with China will have been worth it.

But William Reinsch, a Democrat who leads the National Foreign Trade Council, told reporters for The Hill this week that he doubts opponents of trade deals will change their minds because of the tires decision.