Democratic group urges shift in U.S. trade policy

By Doug Palmer

WASHINGTON (Reuters) - The next U.S. president should shift American trade policy away from an emphasis on bilateral free trade agreements to bigger accords with the world's leading economic powers, a new report from a centrist Democratic policy group said on Wednesday.

"The United States needs a new trade and financial strategy that reflects America's commercial interests," the Democratic Leadership Council said in "Winning in the World Economy (II)," a follow-up to the group's 1985 policy paper on the same topic.

"It should shift away from the FTA-focused approach of the Bush era, and focus instead on multilateral policy, targeting the largest markets and the growth sectors likely to lead America's economy in the 2010s and the 2020s," the DLC said.

The report comes as many supporters of Democratic presidential candidate Barack Obama are calling for a moratorium on new trade deals until what they view as problems with previous trade agreements are fixed.

Groups such as the AFL-CIO labor federation, the Teamsters union and the United Steelworkers, as well as many small and medium-sized manufacturers, blame trade agreements for millions of lost U.S. manufacturing jobs.

Obama has promised to renegotiate the North American Free Trade Agreement to include stronger labor and environmental provisions, and has opposed Bush administration free trade deals with Colombia, South Korea and Panama.

However, the first-term Illinois senator has not articulated a clear outline of what types of trade agreements he would pursue if elected president.

In contrast, Republican presidential candidate John McCain has warned of the risks of reopening NAFTA and embraced the Bush administration's bilateral free trade agenda.

The DLC urged whoever is elected president to push for approval next year of the Colombia, South Korea and Panama deals, with "clear and appropriate benchmarks" for addressing congressional concerns about anti-labor violence in Colombia and auto market openness in South Korea.

The next administration's No. 1 priority should be the successful conclusion of the long-running Doha round of world trade talks, now in their seventh year, the group said.

But whether or not a Doha deal is concluded, the United States should shift from President George W. Bush's emphasis on bilateral free trade pacts with mostly small countries to a multilateral approach with big economies such as the European Union, China, Canada, Mexico, Japan, India, Russia and the Middle East, the DLC recommended.

Those negotiations should also be focused in areas that represent the best growth opportunities for U.S. exports such as high-tech manufacturing, services and newly invented technologies, the group said.

The DLC report faulted the Bush administration for failing to aggressively challenge unfair foreign trade practices at the World Trade Organization and urged the next president to take a more vigorous approach.

It also called for abolishing tariffs on selected goods such as olive oil, clothes, textiles, leather and ceramics made in "major Muslim countries cooperating in the campaign against terror," as well as expanding trade benefits and other assistance for least-developed countries.

Congress should unilaterally eliminate tariffs on shoes, clothes, luggage and other products no longer made in America to save consumers billions of dollar per year, the DLC said.

(Editing by David Wiessler)