The Democrats intend to hamstring the Bush administration’s multilateral efforts, ostensibly to serve their labor and middle-class constituency, but also to deny the president as many foreign policy successes as possible in his final two years in office. The fast track authority Congress gave the administration in 2002, and which Bush has used to negotiate 10 bilateral trade accords, will almost certainly not be renewed this summer. That means any hope for the Doha Round of negotiations lies in its immediate resumption and conclusion by midyear. With intractable disagreements over farm subsidies and tariffs cleaving the developed and developing nations into warring camps, and other G7 nations consumed by their own internal political dramas, there is no chance this will occur.

Rising protectionist sentiment took a few scalps even during the allegedly free-trade Republicans’ lame duck Congress in November and December. A deal to open U.S. airlines to foreign ownership was abandoned in the face of union and industry opposition. In a business where leading players are recognized for having "only" filed for bankruptcy once or twice, the idea that it could suffer from new ideas or sources of capital is beyond comprehension.

Despite the worries about the Democrats’ embrace of the Republicans’ traditional antitrade mantle (Smoot, Hawley and Hoover were all Republicans, and the last three successful WTO negotiations rounds were concluded by Democratic administrations), rollback is less likely than stasis, and the status quo is still pretty good. The Democrats mumble about negotiating labor "fairness" provisions and supporting domestic industries with subsidies, but these moves could hardly be more damaging than the Bush administration’s blunders. Raising steel tariffs to obtain fast track authority and buttress his rustbelt constituency revealed the shallowness of Bush’s commitment to free trade. His egregious toadying to farm-belt voters by jacking up trade-distorting agricultural subsidies (which his Democratic predecessor had lowered) was worse. The one area where the administration’s trade policy matched its rhetoric was in the negotiation of the bilateral trade deals, eight of which have been ratified. Although the much-preferable multilateral negotiations were botched, these bilateral treaties are in accord with WTO standards, meaning that they do not need to be amended later if the WTO negotiations are resuscitated.

Or Beggar Yourself
Those with a taste for tortured historical analogies also hear a faint echo of the beggar-thy-neighbor competitive devaluations of the 1930s in the Treasury’s browbeating of the Chinese and others to let their currencies appreciate. As Worth went to press, the dollar was careening lugelike downward against the euro and yen, and managing a stately decline against the yuan, fulfilling, perhaps a little too fully, the aims of the Treasury. But again, today’s markets are driven more by expectations of monetary policy, and central bankers are not beholden to exporters or (with some notable exceptions) politicians.

Even so, as a policy issue, protectionism remains a danger. Economists say it breeds inefficiencies and makes commercial benefits accrue to special interests. For investors and entrepreneurs, the idea is to be at the receiving end of that accrual. As John Ferry writes in our cover story this month ("A World Divided") identifying opportunities is devilishly hard, due to shifting political factors. But smart or lucky individuals will benefit—and it pays to be among them.