Wednesday, October 25, 2006

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The trade implications of the midterm elections

I received the following in an e-mail today:

Given your vast knowledge of international and domestic politics, I am shocked that you have not blogged on the possible repercussions on future free trade agreements as a result of this election. In this election, in the battleground states (Rhode Island, even Ohio, Montana, Missouri, and Virginia) the Republican incumbent in each state has a very good/ excellent record on free trade, while the Democratic challenger is advocating protectionist policies. Senator DeWine in Ohio is likely to lose in part because of his past support of trade agreements. Unfortunately in these states and in general, free trade has almost no constituency while the anti-trade movement has a large number of volunteers....

At this rate, there are going to be few politicians of any party promoting free trade. Why would Republicans or politicians of any stripe want to support these agreements if they are getting little credit and much condemnation for doing so?

The e-mailer has a point. Over at NRO, Jonathan Martin has a column about the trade implications of the midterms:
Democrats only need six seats to gain a majority in the Senate, but the election of five new Democrats and one independent in particular would have even greater ramifications. Should seats currently held by free-traders in Ohio, Vermont, Pennsylvania, Virginia, Rhode Island, and Missouri go to “fair traders” — and should the sour environment for Republicans prevent them from gaining any seats from Democrats — the bipartisan commitment to free trade in the Senate would almost certainly end, torpedoing the prospects for any significant legislation in President Bush’s final two years and perhaps longer while fundamentally altering the character of the upper chamber.
After the midterms it's likely that both chambers of Congress will likely be more protectionist. This should matter to those crucial swing-libertarian voters.

Here's the thing, though -- it's not clear to me that it matters. Doha is at a standstill, and the FTAA has been in a coma for years. The only promising bilateral trade agreement is with South Korea, but I suspect that it's a dead letter as well -- because there's no chance in hell that the U.S. will accept goods from Kaesŏng. The president's Trade Promotion Authority is expiring in June of next year, and I don't think the president is willing to invest whatever political capital he's got left to have it renewed. Regardless of what happens in the Senate, I can't see Nancy Pelosi agreeing to anything that gives the executive branch more authority in Bush's final two years.

In other words, I'd rather not see the Senate go protectionist -- but a trade-friendly Senate will have only a marginal effect on U.S. trade policy over the next two years.

posted by Dan on 10.25.06 at 10:50 PM


Speaking for Ohio, we are tired of setting records for job losses and home foreclosures.

We have been raped by NAFTA (remember Ross Perot?), raped by the Chinese and we are getting tired of hearing how great things will be in the "long run."

Senator DeWine paid no attention to the economy until about 3 months ago, and his only solutions for Ohio are tax cuts for the wealthy and more trade with China.

The Bush administration position? "Let them eat cake." (as delievered by Snow and Mankiw)

We don't want to stop progress (and can't) but we are tired of Wall Street and K Street drowning in money will we pay the price.

posted by: save_the_rustbelt on 10.25.06 at 10:50 PM [permalink]

The benefits of our trade policy.........

Top degrees here earn $22,000 less

Thursday, October 26, 2006
Joe Guillen
(Cleveland) Plain Dealer Reporter

It pays to attend college, but not as much in Northeast Ohio than in other parts of the country.

Northeast Ohioans holding an advanced college degree earn about $22,000 less per year than the national average, according to recently released Census data.

The data also shows people with bachelor's degrees and high school diplomas in the region earn thousands less on average than their national counterparts.

Bachelor's degree-holders in Northeast Ohio make an average of $43,737, compared with the national average of $51,554.

High school graduates earn $26,428 on average here, compared with $28,645 nationally. People in the area with advanced degrees average a salary of $56,367, while the national average is $78,093.

The averages were released today from a Census Bureau survey of 100,000 households nationwide done in February, March and April 2005. They cover adults ages 18 and older. The figures specific to Northeast Ohio represent people 25 years and older and are estimates as of July 1, 2005.

People of all education levels earn less here because Ohio's economy generally grows slower than other parts of the country, said LeRoy Brooks, professor of finance at John Carroll University.......

posted by: save_the_rustbelt on 10.25.06 at 10:50 PM [permalink]

Expect free trade to suffer along with all other major national issues for the next 2 years. Election '08 positioning has already begun, and no other matter will get serious attention.

Partisanship cannot get any more sour, and in 2 months retribution will drive the congressional agenda.

I don't mean to sound so negative, but it's very hard to see bitter, vengeful DFL'ers rising above the GOP stench.

posted by: wishIwuz2 on 10.25.06 at 10:50 PM [permalink]

Drezner's argument seems a little disingenuous, because you can say that almost any change in the composition of Congress won't have a huge effect on anything. For example, adding six Democrats to the Senate will not, in fact, have a dramatic impact on federal funding of stem cell research (one of Prof. Drezner's favorite boondoggles, I know). It will probably have minimal impact on our Iraq policy. Etc., etc. So this is an argument for not caring who wins the election, not an argument for voting Democratic.

posted by: sean on 10.25.06 at 10:50 PM [permalink]

The free-trade coalition is a shifting coalition of sorts. Many Democrats can be persuaded to vote for certain agreements with enough trade adjustment, promises to slow the pace of change in certain industries, etc. Likewise in the House, allthough in the House the fight is tougher.

But yes, Bush has made no effort to revive Doha or other trade agreements, so the question is largely moot.

posted by: Nicholas Beaudrot on 10.25.06 at 10:50 PM [permalink]

I get it that Dan and others want psychological reassurance that it's okay to vote their emotions and punish the Republicans. The Congressional majority pisses me off, too. But this analysis ignores the issue--not whether Doha will go forward (we should live so long), but whether active protectionism will increase. It's wildly optimistic to cast trade policy only in terms of whether things will get better and how fast. We have to think about things getting a lot worse, and over a longer time frame.

As for poor Ohio, I don't see how every part of the country can be on or above the average of any indicator. We don't live in the United States of Lake Woebegone.

posted by: srp on 10.25.06 at 10:50 PM [permalink]

One thing a pro-free trade Senate CAN do is keep idiotic "Buy American" stuff from the House from being attached to must pass bills such as appropriations and defense authorization.

posted by: adr on 10.25.06 at 10:50 PM [permalink]

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