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And The Hot Button Issue For '96 Is...Free Trade?


Washington Outlook

AND THE HOT-BUTTON ISSUE FOR '96 IS...FREE TRADE?

That dull boom you hear in the distance is the opening salvo of the '96 Presidential campaign. Bill Clinton is blasting away on the "Three Es," hitting Republicans for gutting education, the environment, and elders' Medicare benefits. The GOP is firing back at Clinton for being soft on criminals, welfare chiselers, and illegal immigrants. Yet despite the partisan bombast, both sides are ducking an explosive issue that's starting to stir voters: surging economic nationalism.

For now, the charge that free-trade policies are costing the U.S. jobs is coming from the periphery: America Firster Patrick J. Buchanan, civil rights leader Jesse Jackson, and independent Ross Perot. But with the North American Free Trade Agreement and a new global trade pact yet to produce the promised economic payoff, protectionism may go mainstream. "It could be the hot-button issue for '96," says Democratic pollster Rob Schroth. "It touches on all the things that concern people: their wallets, immigration, foreign aid."

The protectionist backlash has already prompted Clinton to put the brakes on trade expansion. Fearful of riling economic nationalists in both parties, the President won't fight for renewed authority from Congress to negotiate trade deals on a "fast track." Without that power, he has no chance of extending NAFTA to the rest of Latin America.

BUCHANAN FODDER. The GOP front-runner, Senate Majority Leader Bob Dole (R-Kan.), is also trimming his sails. Dole took a pummeling at Perot's mid-August issues confab when hecklers cried: "What about NAFTA?" Since that public thrashing, the veteran free-trader has clammed up on the subject.

Indeed, NAFTA has become the rallying symbol of the nationalists, who blame it for turning a $1.3 billion U.S. trade surplus with Mexico into a $12 billion deficit while boosting illegal immigration. In fact, the accord has cushioned the impact of Mexico's financial crisis on American exports by preventing Mexico from hiking tariffs on U.S. goods. But facts aren't the issue here. Instead, NAFTA-bashers have made emotional inroads in convincing the public that the pact was a deal with El Diablo. A new national survey by EPIC-MRA, a nonpartisan Lansing (Mich.) polling firm, found only 41% support for a free-trade deal with Europe, despite traditionally warm U.S.-European ties. Activist Ralph Nader hopes to fuel opposition with a study, released on Labor Day, that ridicules unfulfilled corporate pledges to boost U. S. jobs under NAFTA.

The protectionists' alarms tap into deep fears among U.S. workers that free-trade policies are exporting American jobs to low-wage nations. Buchanan, currently second in New Hampshire polls, says his populist campaign is "touching a nerve with people who want leaders to start looking out for American workers first." His solution: abrogation of NAFTA, withdrawal from the World Trade Organization, and punitive tariffs on imports from Japan and developing nations.

WORKER FURY. Proposals like that have U.S. exporters jittery. "The U.S. market is simply not big enough" to sustain economic growth without exports, says Tracy J. O'Rourke, CEO of Varian Associates Inc. and chairman of the National Association of Manufacturers.

True enough. But rational arguments may be no match for the fury workers feel after years of layoffs and stagnant wages. Says Senator Richard G. Lugar (R-Ind.), a dogged free-trader: "People are searching for a scapegoat."

That's why naysayers are in the ascendancy. In the long run, globalization may prove as inexorable as the Industrial Revolution. But given today's widespread economic insecurity and the brutal Presidential campaign ahead, some short-term trade retrenchment may be inevitable.EDITED BY OWEN ULLMANN By Amy Borrus


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