The best Christmas present

LONDON, Dec. 24 (UPI) -- The best Christmas present the creaking global economy could hope to receive would be sudden agreement on the Doha Round of the world trade talks. Fat chance. It looks further away than ever, after Brazil and Canada just launched a new complaint against U.S. farm subsidies and India swore to block U.S. anti-dumping proposals.

This need not be a disaster, given that world trade has been expanding steadily without a new agreement on the Doha Round. But the real threat to the global trading system is more profound. It lies in the changing attitudes of American voters, who used to support free trade but increasingly question and even oppose it.

The latest NBC-Wall Street Journal poll, issued last week, found solid opposition to free trade and globalization in general. It found 55 percent of Republicans and 63 percent of Democrats saying that globalization had been bad for the United States. Only 28 percent said globalization was on the whole a good thing.

Moreover, 56 percent of Republicans said that free trade was bad for America, though the promotion of free trade has traditionally been a bipartisan policy of successive U.S. administrations, Republican and Democrat, since 1945.

The Roosevelt and Truman administrations promoted the "open door" of free trade to give American business the right to trade and export wherever they could. One of the first international breakthrough agreements of free trade was called the Kennedy Round, after President Kennedy in the 1960s.

The last one, known as the Uruguay Round, which paved the way for the establishment of the World Trade Organization, was launched and negotiated by the first Bush administration in 1991-92. And Bush's successor, Bill Clinton, split his own party to get the deal ratified with Republican votes.

More trade has meant more growth, for the United States and for the world as a whole; global gross domestic product has been growing at 5 percent a year, a rate at which even in Africa the numbers living in poverty should be halved within a decade. Indeed, globalization has been the prime factor in hauling more people out of poverty, by the hundreds of millions, than ever before in human history. But many individual workers and companies in Europe and North America have suffered from low-wage competition while their national economies have continued to grow.

And with the U.S. trade deficit in recent years running at more than $50 billion a month and more and more Americans fearing that their jobs might one day be outsourced to India or China, the political tide has turned. Bilateral free-trade agreements that the Bush administration has signed with South Korea, Panama and Colombia are stalled in Congress.

An even more ambitious agreement being proposed by the Bush administration to link the United States, Chile, Singapore, Brunei and New Zealand in a Pacific-region accord to reduce barriers to trade and foreign investment is unlikely to make progress in the looming U.S. election year.

And more trouble looms with China, through some variant of New York's Democratic Sen. Charles Schumer's bill to impose sweeping tariffs on Chinese goods unless Beijing sharply revalues its currency. The two leading Democratic presidential candidates, Sens. Hillary Clinton, D-N.Y., and Barrack Obama, D-Ill., have each endorsed it, despite fears that such an escalation could trigger a full-scale trade war with China. With China sitting on $1.5 trillion in (steadily devaluing) foreign exchange reserves and U.S. securities, such a trade war could have grim consequences.

The future looks grim for free trade if Americans elect a Democratic president next year, though Hillary Clinton used to be a convinced free trader, and free trade has on the whole been hugely beneficial to the U.S. economy over the past six decades.

And while President Bush continues to support free trade in principle, in practice his farm bills have been repeatedly challenged before the WTO as unfairly protectionist. Canada and Brazil have complained that massive U.S. farm subsidies breach trade rules, and after the U.S. Senate this month passed a $286 billion farm bill the WTO launched an investigation into subsidies for soy, wheat, corn, rice and other crops.

In fact, the Food and Energy Security Act should not really be called a farm bill. Overwhelmingly the money goes to energy, including biofuels. Agricultural Secretary Chuck Conner said the bill was "disappointing" and added, "We are indeed no closer to a good farm bill than we were before this Senate passed this bill."

Rising demand from China has sent prices soaring for food products, and the U.S. Department of Agriculture estimates that U.S. farm revenue will increase this year by almost $30 billion from 2006. Despite this booming market, the subsidies continue; U.S. commodity-crop growers received $21 billion in subsidy payments in 2006 and could get even more this year.

Sen. Richard Lugar, R-Ind., who is a farmer, said the current U.S. subsidy policy violates WTO rules. "Failure to move toward compliance will undoubtedly invite retaliatory tariffs that legally can be directed at any U.S. industry," Lugar warned Senate colleagues.

The Doha Round talks have been stalled by two big hurdles: the $300 billion in agricultural subsidies paid to farmers in Europe, the United States and Japan; and the tariffs on industrial goods and controls on service exports imposed by emerging markets such as China, India and Brazil, which seek to protect their own growing industries.

A wide-ranging deal to slash both subsidies and tariffs would give the global economy the shot in the arm it needs, with the troubled big Western banks restricting credit and the United States sliding toward recession. But the cause of free trade has run out of political support just when it is most needed.