Will the Democrats Shift to Protectionism on Trade?

Every Saturday, the Wall Street Journal runs their "Hot Topic" feature, providing an in-depth look at one of the top policy issues on the agenda. This feature is then paired with a lead editorial on the Journal's Op-Ed page, which fleshes out the editors' views on the debate. Yesterday's hot topic was available online and asked "Will the New Congress Shift Gears on Free Trade?" Here's the introduction, noting that President Bush set off for Vietnam empty handed, as Congress voted to reject U.S.-Vietnamese trade normalization:

Mr. Bush is one of 21 leaders gathering in Hanoi to discuss forming an Asia Pacific free-trade agreement. His hope had been to show up with a completed trade deal as a sign of the U.S. commitment to an open global trading system. Instead, he faces a Congress increasingly skeptical of such trade agreements.

In the midterm election, at least five Senate seats and 16 House seats switched from members of Congress who are generally supportive of free-trade agreements to those who express more skepticism.

The new trade skepticism could affect a variety of congressional actions important to global businesses.

Over on the Op-Ed page, the Journal's editorial writers criticize the protectionist streak that has taken over the Democratic Party. They note that the Democrats historically, from FDR to Bill Clinton, have been staunch advocates of free trade:

This is a proud pro-growth tradition, helping to keep America competitive as the world's greatest destination for capital and goods. The question now is whether Democrats newly elected to Congress will squander that legacy and turn to the populist, protectionist left. The early portents aren't encouraging.

We wrote earlier this week about the growing Democratic opposition to freer trade even with sub-Saharan Africa and Peru. The Peru pact is already signed, while the African deal would merely extend for one year a textile provision that would save as many as 150,000 African jobs from going to China. For politicians who like to moralize about the fate of the poor, this ought to be embarrassing. Likewise, many Democrats are now hoping to scuttle the Vietnam deal that failed this week due to Republican procedural ineptitude but could still come back in December.

What explains this opposition? Union politics, pure and simple. Once a free-trade supporter, the AFL-CIO began to turn protectionist in the 1960s and is now a relentless opponent of open global markets. Union leaders invested heavily in this past election, and they are boasting about the exit polls showing that nearly one in four voters last week came from a union household. Those voters went Democratic by more than 60%, and now union leaders expect legislative repayment....

We don't think there's much political profit in a protectionist turn. Whatever applause Democrats received from the AFL-CIO, they would lose as much support from business. They'd also advertise themselves as a party of a narrow special interest rather than the larger national good. This is why no truly protectionist candidate has won his party's Presidential nomination, Democrat or Republican, since Hoover. Voters have an instinctive sense that the only way to prosper is by competing in the global economy, not shrinking from it.

A few in the media and politics are trying to spin last week's results as a backlash against "globalization," and are talking up the "middle-class squeeze." The latter is a topic for another day, but trade barriers aren't going to solve the problem in any case. The steel workers won their first trade protection nearly 40 years ago, only to watch the industry shrink anyway under the laws of comparative advantage. The main accomplishment of Mr. Bush's steel tariffs this decade was to hurt American companies that use steel, such as autos and other heavy manufacturing, driving even more "middle-class" manufacturing jobs offshore. The same Detroit automakers that Democrats say they want to help are pleading for repeal of anti-dumping duties on foreign steel.

If Democrats want to help American workers, there are many things they could do: Make health insurance and pensions more portable, promote competition for failing public schools, reduce the cost of litigation that drives companies overseas. Trade protection, however, will be an economic and political loser.

I oppose trade protectionism. But for more on this, check out Daniel Drezner's post, in which he cites Daily Kos's support for class warrior Jim Webb, the new Senator-elect from Montana.