4/19/08

Dems lay down for the Big Labor agenda

An administration-negotiated trade pact with South Korea should sail right through Congress, but will likely be held up by congressional Democrats. This pact would be a huge plus for U.S. exports since South Korea is among the 10 largest world economies and would add a sizable plus to America's outward shipments, as with the NAFTA deal.

The big hang-up for the past two years has been U.S. beef shipment holdups because of "mad cow disease" fears. This obstacle has now been eliminated and the signing of the pact would normally be imminent.

The problem is that any further U.S. trade agreements, no matter how propitious, would be dead on arrival.

The Congressional Democrats have already shown their protectionist hand due to their political alignment with organized labor, especially in a critical election year.

But the leftist Democrats would likely carry this negative trade stance into 2009, especially if they capture the White House in November.

This would reawaken the ghost of Smoot-Hawley, the congressional legislation responsible for putting up tariff walls in the early 1930s. This ushered in a period of protectionism, largely blamed for the longest depression in America's history (1930-1941), ending only with America's pre-World War II rearmament.

It would also put a crimp in the export boom, America's No. 1 hedge against a deepening recession. This new protectionism would tell the world that the U.S. in entering a new era of economic isolationism, with all the consequences that such action implies, as globalization has become irreversible worldwide.

- Morris R. Beschloss writes frequently for The Desert Sun. His "Global Economics" blog on mydesert.com is updated as news happens.

(mydesert.com)

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