Putting Fetters on Free Trade

Like a ferocious summer thunderstorm building on Washington's horizon, an anti-free-trade atmosphere is gathering strength on Capitol Hill.

This time, the storm is not blowing in on the usual concerns about protecting American jobs and industries. Instead, Congress is applying trade sanctions to so many countries - either as punishment or out of national-security concerns - that the trend could substantially clip free trade overall.

Lawmakers are putting up so many trade barriers that they threaten President Clinton's role as a world leader, some analysts and businesspeople warn.

As Congress leans more heavily on the trade brakes, the effect is "a very critical tipping" of the scale away from global free trade, says Raymond Vernon, an international affairs expert at Harvard University's Kennedy School of Government. As a result, he warns, the president "will just slip out of the leadership position" on shaping the rules of global trade.

So far, this season is seeing far more congressional activity on this issue than usual:

* Lawmakers said this week that Mr. Clinton can expect a bigger-than-normal fight over China's most-favored-nation (MFN) trade status when they take up the annual review in late July.

Congress is concerned about a possible transfer of missile technology from US companies to China, as well as illegal campaign contributions from China. Last month, the House voted nearly unanimously to halt launches of US satellites in China because of the potential for technology transfer.

* Nuclear testing by India and Pakistan has forced President Clinton to invoke sweeping sanctions against both countries, as required by law. But the White House hasn't expressed enthusiasm for the sanctions requirement.

White House spokesman Mike McCurry said the law gave the president no choice: "It's not a question of what he wanted. We have a law on the books that requires nothing less." He added that Mr. Clinton, like most presidents, prefers flexibility in foreign policy. Mr. McCurry also made the point that sanctions hurt American businesses.

* In light of the security issues with China, India, and Pakistan, the prospect does not look good for a bipartisan House bill that would put the brake on the use of sanctions.

"Congress is very sanctions-oriented. We've just gone overboard," especially in cases where the US acts alone, says Rep. Lee Hamilton (D) of Indiana, a cosponsor of the legislation. The bill calls for a 60-day cooling-down period so that a cost-benefit study can be done before a sanction is implemented.

Not everyone sees the Congress-White House tug of war over the boundaries of free trade as a bad thing. Lawmakers "are showing a willingness to consider slowing down globalization" and to ask whether "this is always good for the country," says economist Robert Scott of the Economic Policy Institute here.

Lawmakers concerned about security are not the only hands gripping the sanctions stick. The House recently passed a bill requiring the US to apply trade sanctions to countries practicing religious persecution, although it allowed for the possibility of a presidential waiver. The Senate is working out its own version. Clinton is threatening a veto.

These brakes on trade follow several other setbacks for the White House, including last fall's congressional denial of fast-track trade negotiating authority for the president, and congressional footdragging on funding for the International Monetary Fund and the United Nations.

Don't fence him in

All this is not lost on the White House, which is concerned about the effect of Congress's trade decisions on the president's ability to conduct foreign policy.

For instance, the White House is having to rethink part of its strategy for the China summit later this month. It had intended to offer more cooperation in aerospace with China in return for progress on non-proliferation. Now it is only talking about broad "commercial" incentives.

While disturbed by much of the trade-related action in Congress, a White House official insists that, in the long run, the trend toward globalization can't be turned back: "Are we concerned people are trying to put speed bumps in front of our ability to lead? Yes. Do we have a choice? No."

The trade president

Changing world dynamics, such as the end of the cold war and the telecommunications revolution, argue for continued US export growth.

Although Clinton has tried to identify himself as a president especially committed to expanding free trade, it's a rare president in modern history who hasn't made this argument.

"In each administration, we've moved further. It's because the world has changed," says Mark Rosenker, vice president of the Electronic Industries Alliance, an industry that has watched its exports nearly quadruple in 10 years.

While Mr. Rosenker believes the technology-transfer controversy with China is serious and should be investigated, he is concerned about the message sent by the India and Pakistan sanctions. "You're dealing with a mind set, and it can permeate other markets," he warns. With sanctions, he says, "you send signals. We're seen as an unreliable trading partner."