The Wall Street Journal

February 29, 2008

POTOMAC WATCH

By KIMBERLEY A. STRASSEL

Trade Tirade

February 29, 2008; Page A16

At an event Monday at George Washington University, a moderator asked four House Democrats if any thought it "practical" or a "good idea" to reopen and renegotiate Nafta. The crew, led by Democratic Caucus head Rahm Emanuel, stared uneasily into the middle distance before submitting "no."

"We'll see if word gets to Ohio," joked the moderator.

It didn't, and that's got some grown-ups in the party nervous. Democrats have been flirting with outright protectionism for some time now -- taking a dip with the "fair trade" movement, cozying up to labor and environmental standards, and shunning trade deals in Congress. It's been a tease, though careful not to let things go too far.

Now they're cornered with the heavy-breathing Hillary Clinton and Barack Obama, and some are worried about their reputation. The two presidential nominees, grasping for votes in economically depressed Ohio, are setting new protectionist lows, with calls for trade "time outs" and threats to overthrow Nafta. It's come at a crucial moment for the Democratic Party, which after years of trade wandering now has a shot at defining the issue from the White House.

"I think Lou Dobbs took the pulse of America and realized he could drive his ratings up by engaging in protectionist rhetoric and pandering. I think there are an increasing number of politicians who are also pandering to the less informed emotional impulses of a lot of U.S. voters," says Cal Dooley, a former Democratic congressman from California who helped lead the party to trade victories in the 1990s. "And the thing that is a little distressing to me is that our national leaders, in many respects, they know better."

Democrats do know better, and have for a long time. It was Cordell Hull, FDR's secretary of state, who picked up Hoover's pieces and rebuilt the world trade system in the 1930s. Graduates of the party's old free-trade school know America has a responsibility to lead an open, global market. They know the nation's economic prosperity depends on it. They know isolationism doesn't sell well in elections. And they know the bipartisan trade successes of the Clinton years were a boon for both sides.

That common sense hasn't matched the temptation to win points with Big Labor or to ride a populist anti-trade wave. Threats to hold trade deals hostage to labor and environmental rules; vows to review existing deals; the bashing of Mexican truck drivers; the mauling of the Chinese currency; complaints about trade enforcement -- all of these are today standard Democratic (and increasingly Republican) talking points. The Clinton-Obama threats are a logical conclusion of this, not some surprising beginning.

And yet free-trade Democrats point out that the stakes are arguably higher now than they've ever been, not just for the nation, but for their own party's long-term electoral prospects. Mr. Dooley notes that trade is inextricably tied up with national security, and so it matters more in today's complex world. He points to the Colombia trade pact, currently spinning in Congress, as an example of an agreement that is crucial to keeping a democratic neighbor strong. "If you look at that deal, it is, in most respects, more of a security issue for the United States and Colombia -- one that has some economic benefits as well," he says.

If Democrats wanted be trusted on national security, they've got to underpin their promises with a commitment to trade. "Once you are president of the United States you have to first and foremost protect the security of the United States, and one of the tools that you have to protecting that security is in building strong relationships that are going to be founded on an economic partnership," he says. An "optimist," he's hopeful that the eventual nominee will be able to "walk back" from some of the recent positions by stressing exactly that security point.

Other Democrats are likewise worried this bout of anti-trade fervor risks undercutting the party's key foreign policy plank: that it will do more on the diplomatic front. When asked about the wisdom of reopening Nafta at the university event, Rep. Artur Davis (an Alabama Democrat who happened to be the first congressman outside of Illinois to endorse Mr. Obama) replied: "I'm not a fan for reopening agreements we have negotiated because the rest of the world thinks that we don't keep our word enough as it is."

In other words, it's hard to make nicey-nice with the global community when you are stiffing it on trade. Ask Canadian Finance Minister Jim Flaherty, who clearly tuned into the Ohio Democratic debate long enough to catch Mr. Obama and Mrs. Clinton threatening to withdraw from Nafta unless his country rolled over for their new demands. "[They] should recognize that Nafta benefits the U.S. tremendously. Those who speak of it as helpful to [just the] Canadian and Mexican economies are missing the point," he responded, and not lovingly.

There is, too, the question of Democratic economic leadership. Texas Democrat Henry Cuellar recently hosted Mrs. Clinton on the streets of Laredo. He said he explained to her the city was the largest inland port in the South. Trade has transformed his district's border communities -- dropping double-digit employment and curbing rampant poverty. "My philosophy is simple: trade between the United States and other countries is good. You export, you create jobs, you build relationships," says Mr. Cuellar, who was the first Democrat to endorse the Central American Free Trade Agreement, and one of just 15 to vote for it.

Mr. Cuellar, who is a Mrs. Clinton supporter, says he remains comfortable with what she's asking for in a renegotiated Nafta. (If she'd said "six months after becoming president, I'm just going to opt out, then that would worry me," he explains.) He, too, remains hopeful that the national debate will cool once the primary is over. He warns that while it might be tempting to "demagogue" trade in the short term, Democrats will have to perform on the economy if they want a lasting run in office. Remaining strong on trade is "about both the prosperity of the nation, and the prosperity of the Democratic Party," he says.

Write to kim@wsj.com1