A leading member of the majority Republican party in Congress says the mood of legislators is shifting away from free trade and toward trade protectionism.
Pennsylvania Congressman Phil English predicts that lawmakers in the next few months will take action to hold down the surge of Chinese exports into the U.S. market. Both Democrats and Republicans are dissatisfied with the modest two percent revaluation of the Chinese currency in July. Many lawmakers say a 20 percent revaluation is needed to redress an unfair trade advantage.
Speaking at Washington's Institute for International Economics Tuesday, Mr. English, a member of President Bush's Republican party, said the long-dominant bi-partisan view that free trade benefits the United States is breaking down.
"There is a perception that I don't think has been effectively rebutted that trade now is a zero sum game (has no gains) and is a dead end for the United States," Mr. English says.
Mr. English said most Democrats have now abandoned free trade and that without the support of at least some Democrats it is very difficult to win approval of trade liberalization. Even Mr. English, known as a free trader, appears to be questioning the merits of NAFTA, the North American Free Trade Agreement that came into force 11 years ago. Calling that accord a failure, Mr. English says NAFTA has held down U.S. wage growth and caused a shift of manufacturing employment to low-wage Mexico.
"While many observers of NAFTA cite only a shift of employment to different sectors of the economy, there have been large displacements of workers from particular fields, especially manufacturing," Mr. English says.
But Gary Hufbauer, co-author of a new study on NAFTA, disagrees. He says there is no evidence that NAFTA has depressed U.S. wages.
"We cannot detect a material change in U.S. wages between states and industries with a large volume of imports from Mexico and those with a small volume," Mr. Hufbauer says.
Mr. Hufbauer's study does not attempt to measure the wage effects of the surge of Mexican workers into the U.S. economy as immigration is not covered by NAFTA. But he describes as surreal the contention that NAFTA has caused a loss of U.S. jobs. Mr. Hufbauer says the U.S. economy created about 15 million jobs in the ten years that followed the adoption of NAFTA.