FREE TRADE: REPUBLICANS MAY BE LOSING FAITH
Ever since Ronald Reagan came to Washington, free trade has been bedrock Republican philosophy. While Democrats flirted with protectionism, the Reagan and Bush Administrations launched the North American Free Trade Agreement, closer Asia-Pacific economic ties, and a global accord to lower tariffs--all with broad support.
But as the '96 campaign unfolds, mainstream Republicans' ardor for open markets shows signs of cooling, and that has Corporate America sweating. Exhibit A: GOP Presidential front-runner Bob Dole (R-Kan.), an avowed free-trader and early NAFTA fan, is expressing second thoughts, partly because trade with Mexico hasn't been the big U.S. job creator that backers promised. In November, the Senate Majority Leader called for a "cooling-off period" on new trade deals, a position that put him at odds with House Ways & Means Committee Chairman Bill Archer (R-Tex.) and other Republicans who favor Chile's quick entry into NAFTA.
CONSENSUS CRACKS. Dole is also pushing for a legal escape clause to let the U.S. wiggle out of the new World Trade Organization if it tramples on American sovereignty. His idea gained support in Congress after the WTO, in its first ruling, sided against the U.S. on Jan. 17 in a case brought by Brazil and Venezuela.
Dole's harder line on trade may be both an election-year ploy and a bow to the new Republican reality: the GOP's flirtation with economic nationalism. Although GOP Presidential newcomer Steve Forbes remains an unreconstructed free-trader, Republican candidate Pat Buchanan has tapped into middle-class economic insecurity with antitrade rhetoric. Indeed, he credits his victory in Louisiana's Feb. 6 GOP caucus in part to his attacks on multinationals moving jobs abroad.
That's causing the GOP's free-trade consensus to crack. "I fear a shift to protectionism," laments Representative David Dreier (R-Calif.), a trade stalwart. Many GOP rank-andfilers blame global competition for America's stagnant wages and vanishing jobs. That sentiment in 1994 helped elect House Republican freshmen who are cooler to free trade. "Once a Wall Street party, the GOP is increasingly a Main Street party," says Paula Stern, a former chair of the U.S. International Trade Commission.
It's little wonder that American companies are on edge, since many see their greatest growth abroad. "There is a deep concern in the business community" about growing GOP protectionism, says the Republican CEO of a major high-tech company. In fact, business already has been disappointed by its GOP allies. On Jan. 26, the Senate approved a bill that would make it easier for Florida farmers to obtain import relief against a flood of Mexican tomato shipments--with little opposition from Finance Committee Chairman William V. Roth Jr. (R-Del.), a free-trader. To the dismay of big business, Senator Alfonse M. D'Amato (R-N.Y.) has co-sponsored a resolution calling for restrictions on Mexican truckers operating in the U.S. And GOP China critics are threatening to scuttle White House plans to renew Beijing's preferential trade status in June.
Business groups gripe that the Senate has become noticeably more protectionist since Senate Finance Committee Chairman Bob Packwood (R-Ore.) resigned. "There is no obvious champion for open trade among Senate Republicans," complains one lobbyist.
Without strong GOP advocates, business can forget about an expansion of NAFTA, a proposed transatlantic free-trade deal, or a new round of global trade negotiations. In the long run, economic globalization may be unstoppable. But if the Republicans' newfound distrust of open markets proves to be more than convenient election-year politics, the next few years could be bleak indeed for free trade.EDITED BY OWEN ULLMANN BY AMY BORRUSReturn to top
A FIVE-FIGURE THANK YOU?
-- President Clinton has a new fan club in Lexington, Mass., home of Raytheon Co. According to new Federal Election Commission reports, 22 senior Raytheon officials each gave the legal maximum of $1,000 to Clinton's reelection campaign last November. Donors include Chief Executive Officer Dennis J. Picard, two executive vice-presidents, and two senior veeps. Why the largesse? Perhaps because intense Administration lobbying helped Raytheon win a $1.4 billion contract from Brazil in 1994 for an environmental surveillance system for the Amazon rain forest. And in 1995, the Administration fought attempts by a French company to steal the business away from the U.S. electronics giant. A Raytheon official insists the donations "have nothing to do with" the Administration's helping hand.EDITED BY OWEN ULLMANNReturn to top