Primary protectionism

MARCI McDONALD February 15 1988

Primary protectionism

MARCI McDONALD February 15 1988

Primary protectionism


The setting recalled a time when the world was a simpler place. In the drafty repair shed of the Boone and Scenic Valley railway station,

a whistle-stop 50km northwest of Des Moines, Iowa, Democrat Representative Richard Gephardt of Missouri, campaigning for his party’s presidential nomination, stood in front of an ancient yellow locomotive, which had become a museum piece. The engine served as a reminder of the era when Boone was a bustling railroad town and travelling salesmen fanned out across the Prairies by train from its 10 hotels. But passenger cars no longer stop in Boone, leaving the hotels shuttered and abandoned. And on a wintry afternoon last week a crowd of 50 farmers gathered in the rail shed to applaud Gephardt’s recipe for bringing back the good old days: a series of tough retaliatory measures against nations such as South Korea and Japan whose trade barriers keep U.S. goods out of their markets. Said Gephardt: “This election is about regaining control of our economic destiny. I want us to compete—to be strong again.”

That protectionist rallying cry—re-

peated in speeches and in a $390,000 television advertising blitz—had catapulted Gephardt into first place in the polls over his six Democratic rivals as they headed into the first major test in the 1988 presidential race this week: Iowa’s precinct caucuses. Indeed, media experts credited Gephardt’s powerful commercials on trade with reviving a

campaign that only a month ago appeared moribund. In one 60-second spot, Gephardt detailed nine separate tariffs that push the price of a Chrysler K carselling for $10,000 (U.S.) in the United States—to $48,000 (U.S.) in South Korea. Then he issued a threat: unless the Seoul government corrected the imbalance, “they’ll be left wondering how many

Americans are going to pay $48,000 for a [South Korean-built] Hyundai.”

Wall Street analysts have warned that Gephardt’s message could lead to an international trade war and even a recession. But the most powerful refutation of such arguments is in a 1987 paper published by the Democratic Leadership Council—a centrist organization which Gephardt himself cofounded. That study concluded that unfair trade practices accounted for only 20 per cent of the U.S. trade deficit, which built to a record of more than $230 billion last year. The major cause, said the study, was U.S. industry’s lack of competitiveness.

Still, Gephardt has struck a responsive chord among Iowa’s 30,000 autoworkers, who have seen plant closings and layoffs shrink their numbers by 14,000 over the past seven years. And he has won support from many of the state’s farmers, who are slowly recovering from a devastating farm depression. Said Boone corn grower Jim Heck: “Every day the trade imbalance is growing and growing. It might help if we got a little bit tough.” Critics caution that Gephardt’s call to arms may not sound as inviting in economically healthier states such as New Hampshire, site of the Feb. 16 presidential primary—which boasts the nation’s lowest unemployment rate. There, Gov. Michael Dukakis of neighboring Massachusetts, who vigorously opposes Gephardt’s protectionism, is the Democratic front-runner. But even Gephardt’s critics concede that the six-term congressman has turned the complex and once tedious topic of trade into one of the campaign’s hottest issues. And while Republican presidential hopefuls—VicePresident George Bush and Senate Minority Leader Robert Dole are leading that pack—have largely remained silent on trade issues, Gephardt has, as one Washington trade expert said, “made trade a populist issue; it’s the little guy against Wall Street.”

In fact, Gephardt’s congressional colleagues were watching his fortunes in Iowa to gauge just how deeply protectionist sentiments had captured the public imagination. And his success or failure was likely to determine how protectionist they would make the new omnibus trade bill currently under consideration. Said one leading senator’s

aide: “It’s clear there aren’t going to be any meaningful trade events on Capitol Hill until they see how Gephardt’s strategy works out.”

That possibility is particularly worrying to Canadian officials, who are clearly hoping for a swift passage through Congress for the U.S.-Canada free trade agreement. Gephardt first rode the trade issue into the public spotlight two

years ago with a controversial amendment to the omnibus trade bill. The socalled Gephardt amendment would impose retaliatory duties on countries with a record of unfair trade practices that register large surpluses with the United States. Gephardt insists that it is aimed at Japan and South Korea, not Canada. But as Michael Aho, a trade analyst with the New York-based Council on Foreign Relations, points out: “You write a law, and then the clever complainers come along and try to apply it to whoever they don’t like. That could be against Canada.”

In fact, Gephardt has repeatedly hailed the Canada-U.S. free trade pact as a model agreement. “It’s exactly the direction we should be moving in,” he told Maclean's. But in a Washington Post opinion piece last month, he betrayed either a misunderstanding of the accord or implied that Ottawa had been guilty of unfair trade practices. “When we refused Canadian demands for unequal advantages and were ready to let our mutual trade agreement expire,” he wrote, “Canada yielded.”

A recent poll indicates that Gephardt has tapped a growing reservoir of American fear over the country’s shaky economy. According to a survey by the World Policy Institute, a New York-based research group, 67 per cent of respondents think the U.S. economy has weakened in comparison with other nations. That mood may explain why Gephardt has moved from denying that his amendment is protectionist and now embraces the label. “If standing up for American workers and insisting on prying open foreign markets is protectionist,” he declared last fall, “then I want to be protectionist.” Gephardt’s emergence as a self-styled champion of the working man has provoked an outcry from Democrats who recall him as what one party veteran dubbed a “terminal centrist.” The 47year-old son of a milkman, Gephardt

has seemed to many to be the archetypal yuppie politician. And his apparently happy marriage to his college sweetheart, Jane Byrnes, with whom he has three children—all sharing his wholesome good looks—prompted Gephardt to joke in the midst of the Gary Hart scandal last May that his campaign was “the Dick and Jane show.”

Gephardt’s antiestablishment stance has also been ridiculed by those on Capitol Hill who know him as a consummate conciliator and political insider. His ability to endure mind-glazing legislative marathons to forge a final compromise earned him the nickname “Ironbutt.” Indeed, a measure of Gephardt’s credibility with congressional and party leaders is the fact that 80 of his House colleagues have endorsed him—and 34 of them flew out to Iowa in late January to declare their support on the state capitol steps. Remarked his Democratic rival, former governor of Arizona Bruce Babbitt: “When congressman Richard Gephardt, the lifelong Washington insider, becomes candidate Richard Gephardt, the scourge of the establishment, he shows a versatility of conviction that takes your breath away.”

The most potent criticism of Gephardt centres on his repeated aboutturns on policy—all chronicled in a precaucus radio commercial by his chief rival for the Iowa farm and labor vote, Illinois Senator Paul Simon. Gephardt’s most famous reversal came in 1985 when—on the eve of his decision to run for the White House—he dropped his long-standing support for a constitutional amendment against abortion.

But Simon has also taken Gephardt to task for lambasting Reaganomics while having voted for one of its centrepieces, the drastic 1981 tax cut. Said Gephardt: “I’d rather change and be right than be rigid and be wrong.” Still, trade analyst Aho points out that Gephardt’s ability to move with the prevailing winds could come in handy on the trade issue if he were ever voted into the White House. Said Aho: “Even if Dick were elected president, he won’t do what he says he will do. Within five minutes of taking office, the private sector would be knocking on his door and pointing out the cost of these measures.”

But both U.S. and Canadian politicians will be watching how Gephardt’s new simplified—some critics say simplistic-trade platform fares, especially as he moves into such southern primary states as North and South Carolina where the beleaguered U.S. textile industry will have a chance to register its protectionist sentiments. Said one Canadian trade official: “If Gephardt does well, then trade is going to be much more important in this election.”

— MARCI McDONALD in Des Moines