Reuters
By Doug Palmer
June 21, 2009

www.reuters.com

WASHINGTON, June 21 (Reuters) – After months of little U.S. action on trade, there are signs the issue could become more important for President Barack Obama, who heads to Italy in early July to meet with major trading partners.

"We’ve got to stop talking about trade as on the second page of the agenda, and put it on the first page of the agenda, along with the stimulus, education and healthcare," U.S. Trade Representative Ron Kirk said recently.

Trade has long been a divisive issue for Democrats, many of whom blame trade deals like the North American Free Trade Agreement for manufacturing job losses.

Obama, who criticized NAFTA during last year’s campaign, has moved slowly to build a new bipartisan consensus on trade while pushing more forcefully on domestic concerns like health care reform and climate change legislation.

A senior Republican accused the Democratic president of stalling on three pending free trade agreements with Panama, Colombia and South Korea and criticized the Democratic majority in Congress for not living up to deals made two years ago to help pass the pacts.

"All we’ve seen is false starts from the administration, and even more backsliding from the majority party, particularly in the House," Senator Charles Grassley said.

But Ed Gresser, global economy director for the Democratic Leadership Council, said he remained optimistic the trade deals would eventually be approved.

‘BIG ACHIEVEMENT’

"They’ve only been in office for five months and they’ve got some pretty big problems to deal with that they inherited. People have to be a little bit patient," Gresser said.

"If we get through this crisis without a big unraveling of the system, that’s a big achievement," Gresser said, giving Obama high grades for resisting protectionism.

But the fact that many Democrats blame trade agreements for job losses does not mean Obama can postpone votes on the free trade pacts forever, Gresser said.

Obama "has to grapple with trade in a way that supports the image of the United States as a leader and a guarantor of the global economy, rather than a disrupter," he said.

Obama is expected to deliver a speech in the coming weeks or months outlining his views on trade.

White House officials provide no date for that speech, but analysts hope it will signal the start of a more aggressive administration effort to win approval of the pending trade deals and to reinvigorate the Doha round of world trade talks, now in its eighth year.

G8 PRESSURE

Obama is expected to face pressure to move on the Doha round early next month, when he travels to Italy to meet with other leaders of the Group of Eight nations.

"For many of the closest allies of the United States … international trade and investment policy is a critical element of the overall relationship and it is essential that the United States demonstrate leadership," said Dan Price, who was a top White House adviser to former President George W. Bush.

Kirk, Obama’s top trade official, has made "very constructive statements" about the U.S. desire to conclude Doha and pursue trade liberalization generally, but "it is still early days in terms of seeing specific proposals," Price said.

Trading partners are still waiting to learn whether Obama will follow through on a Bush administration free trade initiative in the Asia Pacific region and bilateral investment treaty talks with China, Russia and India, he said.

Obama is probably moving about as quickly as politically possible on trade, said Jeffrey Schott, a senior fellow at the Peterson Institute on International Economics.

"The immensity of the economic problem and the sharp recession and the sharp spike in unemployment have created a very difficult political environment in which to pursue trade policy," Schott said.

As the economy improves and the government moves to shore up the social safety net, it should be easier for Obama to pursue a pro-trade agenda, he said. (Additional reporting by Roberta Rampton and Susan Cornwell; Editing by Jackie Frank)

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