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Bush Campaigning as Free Trader

Never mind the Democratic broadsides about soaring trade deficits and lost manufacturing jobs. President Bush is campaigning as an unrepentant free trader and criticizing Democrat John Kerry (search) as an "economic isolationist."

Bush's secretary of Commerce, Don Evans (search), has gone even further, saying opponents of open trade are "waving a surrender flag rather than the American flag."

Yet for all the administration's tough rhetoric, some members of the president's own party are growing increasingly worried that his staunch defense of free trade won't sit well with voters concerned about jobs, including the shifting of jobs overseas.

"The Democrats are going to play on people's fears of losing jobs and outsourcing in a shameless way and we need to be more aggressive in answering back," said Sen. Lindsey Graham (search), R-S.C.

Graham said he was disappointed that the administration is refusing to support a bipartisan effort in Congress to penalize China with higher tariffs for linking its currency directly to the dollar, a practice that American manufacturers contend gives Chinese companies as much as a 40 percent price advantage.

Despite the GOP worries, Bush and his administration are pushing ahead with new trade deals.

Agreements with Australia, Morocco, five Central American countries and the Dominican Republic have been completed and are awaiting congressional approval. Bush also has directed his trade team, led by U.S. Trade Representative Robert Zoellick, to start negotiations with Thailand, Bahrain, Panama, Colombia and possibly other South American countries.

But the Republican-led Congress seems in no mood in an election year to vote on the trade pacts.

Bush sees tearing down barriers to U.S. exports as the answer to the economic threat posed by the loss of one in six U.S. manufacturing jobs over the past four years and a trade deficit that hit an all-time high of $489 billion last year.

"I believe this nation can compete anywhere, any time, any place, so long as the rules are fair," Bush said recently.

The administration wants to use the individual trade agreements to bolster momentum for the Doha Round of trade talks and separate negotiations to create a Free Trade Area of the Americas covering every country in the Western Hemisphere outside of Cuba.

But the Doha talks, conducted under the auspices of the World Trade Organization (search), have gone nowhere since a trade ministers' meeting in Cancun, Mexico, collapsed in disarray last September. Likewise, the administration has been unable to overcome serious obstacles in the hemispheric discussions, putting in jeopardy a January 2005 deadline for completing a deal.

Some trade analysts say the administration's rhetoric on free trade has not matched its negotiating offers, especially as the November elections draw closer.

In both the global trade discussions and the hemisphere-wide talks, the administration has been reluctant to make significant offers in such politically sensitive areas as agriculture and limiting the ability of U.S. companies to get anti-dumping tariffs imposed on foreign competitors.

Even in trade deals with Australia and the Central American countries, the administration carved out exceptions to the total elimination of trade barriers in such politically sensitive areas as sugar and dairy and beef products.

"Bush is talking the talk on free trade, but with an election approaching, he has been a little reluctant to walk the walk," said Gary Hufbauer, an economist at the Institute of International Economics, a Washington think tank.

Analysts see Bush's Democratic opponent, John Kerry (search), as going in the opposite direction.

Kerry, who has supported free trade agreements in Congress, is taking a tougher line on the campaign trail. He has gone after "Benedict Arnold" American companies who take advantage of U.S. tax laws to move jobs overseas and vowed to review all trade agreements in his first 120 days in office to make sure they provide adequate protections for American workers.

Kerry recently proposed overhauling corporate taxes to eliminate the deferral companies get on overseas earnings. Hufbauer said his review of the plan raised questions about whether it would be too complex to implement and might end up benefiting foreign companies at the expense of U.S.-based firms.

Many economists say the proposals by both Bush and Kerry will do little to get control of the soaring trade deficit.

Economists surveyed by the National Association for Business Economics said the deficit should be attacked by prodding foreign countries to do more to bolster domestic growth and thus boost the demand for U.S. goods. They also called for overhauling a U.S. tax system that they say favors spending over savings, resulting in a demand for goods that U.S. companies can't meet.