COMMENTARY by Lorraine Woellert

CONGRESS MAY LONG REGRET KILLING FAST TRACK

It has been conventional wisdom in Washington for almost a year: Legislation giving the President the authority to negotiate "fast track" trade deals that Congress can approve or deny but can't amend stood zero chance of passage in this election year.

How right the CW was. With just five weeks to go before Election Day, the House killed fast track on Sept. 25 on a decisive 243-180 vote. It marked only the second time in the last 20 years that Congress has nixed a trade-liberalization bill. Never has it been done with such conviction. And Congress may long regret its action.

Fast-track trade negotiating authority is key if the U.S. wants an effective voice in talks aimed at expanding the jurisdiction of the World Trade Organization or in creating a hemispheric free-trade zone from Alaska to Argentina. But don't blame globe-o-phobia for the bill's defeat. This loss was as much about partisan politics as anything else.

After months of horse-trading and arm-wringing failed to win enough votes for the bill last November, the GOP leadership decided to take another shot. Their motives were suspect from the start. Fast track was just what the spin doctor ordered -- a politically explosive bill at a politically sensitive time. Going for passage would win brownie points with big business, forcing free-trade Democrats to cast a tough vote, and making the beleaguered President look more ineffectual.

Democrats weren't buying. "This debate is not about fast track. This debate is an attempt to embarrass my party," fumed California Representative Robert T. Matsui when the legislation hit the floor. In the end, Matsui joined other free-traders such as Representatives Steny H. Hoyer (D-Md.) and Vic Fazio (D-Calif.) in voting against the measure. Newer Democrats in close races this fall were counseled by more senior party members to vote whichever way gave them the most cover on Election Day. In the end, a shaky coalition of 40-plus Democrats that had been set to approve a nearly identical fast track bill a year ago dwindled to only 29.

Of course, Republicans blame Democrats for the bill's loss. Representative Jim Kolbe (R-Ariz.) insists the GOP really believed it could get fast track through, thanks to increased support from agricultural interests and what seemed like a new awareness of the need to liberalize trade barriers in light of the Asian currency crisis. "We told the Administration we were thinking of it, and they said they didn't think it was a bright idea," Kolbe admits. But "we didn't bank on the fact that the President would...not just walk away from it, but almost oppose it."

The Administration and its free-trade Democrats repeatedly asked Republicans not to bring up the legislation so close to the election. Clinton was even out of town on the day of the vote, attending a Silicon Valley fund-raiser. But once the decision was made in July to move ahead, Kolbe says, "there was the view that having pulled it once last fall, that if we pulled it again you'd lose all credibility."

Now, everyone's credibility has taken a hit. The business community pushed relentlessly for a vote knowing that the bill would fail. Industry lobbyists said they wanted to get members on record -- even if meant sending a dismal signal to the rest of the world that the U.S. was turning inward. Not the best idea, considering what's going on in Malaysia, Indonesia, and Russia. "If you pull it, it basically is spun by the media as a defeat anyway," says one corporate lobbyist. "There is a benefit to accountability in the political process."

Fortunately, domestic markets didn't even blink on the news of fast-tracks defeat, with the Dow closing up 26.78 on the day of the vote. But the real impact will be felt over the long term. Trade bills simply don't pass without bipartisan support. Now trade liberalization has become a harshly partisan issue, with the goodwill of free-trade Democrats squandered in the process.

Even if the GOP gains seats in the next election, it won't be able to go it alone on trade. Seventy-one Republicans -- many of them isolationists -- voted against fast track. And new members historically can't be counted on to support trade-liberalization efforts. Add the growing cries of labor, environmentalists, and America Firsters, and fast track's prospects are dimmer than ever. The vote has "recklessly endangered" progress on trade liberalization and frozen votes on both sides, says Representative Earl Blumenauer, D-Ore.

The 105th Congress set a precedent when the House buried the Caribbean Basin Initiative last year on a 234-182 vote, making it the first Congress in memory to kill a trade-liberalization bill. Now, it has sealed its place in history as the first Congress ever to kill a second. Free-traders can only wince -- and hope that the new era of retrenchment on trade will only last a few years instead of a few decades.

Woellert covers national affairs from Business Week's Washington's bureau