Businesses warily eye Democrats' trade position

By Nick Carey - Analysis

DETROIT (Reuters) - As the race to select a Democratic presidential nominee drags on, corporate chieftains and some trade groups are raising concerns about the candidates' free trade positions.

Free trade -- which many Americans blame for manufacturing job losses -- has been a recurrent theme of the Democratic contest. Sens. Barack Obama of Illinois and Hillary Clinton of New York have wooed blue-collar workers, promising to renegotiate the North American Free Trade Agreement and oppose a free trade deal with Colombia.

The candidates' comments about what they call trade inequities have scared off some corporate free-traders.

"We are very concerned at the rhetoric from the Democrats on trade," said Fred Smith, founder and chief executive of package delivery giant FedEx Corp. "Rhetoric like that is not helpful to the United States and is not borne out by any credible economist that I am aware of."

Smith is co-chairman of the national finance committee of presumptive Republican presidential nominee Sen. John McCain of Arizona.

The Democrat-controlled House of Representatives voted last week to delay action on the agreement with Colombia indefinitely. U.S, labor and human rights groups have opposed the pact, saying Colombia has not done enough to stop killings of trade unionists.

Both Obama and Clinton have also promised to get tough with China on trade and currency policies that they say have hurt U.S. companies and workers. The candidates, and other members of their party, have raised concerns about trying to compete in a climate where workers are paid so much less in China and other countries than in the United States.

But some executives warned that moving toward more protectionist policies would harm American companies.

"The worst-case scenario is an inward turn, a protectionist turn by the United States government," said Jim Owens, CEO of machinery maker Caterpillar Inc. "I think that would be catastrophically bad for huge multinationals that are winning in the international marketplace."

For his part, Owens praised McCain's free-trade stand. "He believes we can compete and win globally."

Executives argue that global trade has bolstered U.S. economic growth for years and provided cheap goods for American consumers. They admit this caused job losses for some workers, but say education and training programs would be more productive than what they call protectionism.

TWO SIDES OF THE ARGUMENT

Others in the manufacturing sector disagree with CEOs like Owens and say U.S. trade policy is in need of change.

Scott Paul, director of the Alliance for American Manufacturing -- a group representing some U.S. manufacturers and the United Steelworkers -- said that free trade and China's undervalued currency in particular were "a clear problem."

Earlier this week, the AAM held a manufacturing forum for presidential candidates in Pittsburgh, where Obama and Clinton both addressed their concerns about competing with China. McCain did not attend.