March 30 (Bloomberg) -- One of President Bill Clinton's enduring legacies was his hard-fought push for trade deals with Mexico and China. His wife is heading in another direction.
Senator Hillary Clinton, the front-runner for the 2008 Democratic presidential nomination, wonders why the North American Free Trade Agreement is ``continuing to drive hundreds of thousands, even millions, of people from Mexico into our country,'' she said in an interview. ``We just can't keep doing what we did in the 20th century.''
Somewhere along the Clintons' ``bridge to the 21st century'' -- their 1996 campaign mantra -- they parted ways on trade. Bill was a champion of the global economy and prodded Congress to approve Nafta in 1993 and China's entry into the World Trade Organization in 2001. Hillary, 59, says new deals may need to be put on hold pending a review -- an idea she calls ``a little timeout.''
Comments like that align her with union members and anti- globalization activists who say U.S. jobs are being sacrificed in the name of free trade. Clinton has expanded her circle of advisers beyond pro-trade associates such as former Treasury Secretary Robert Rubin, 68, and Deputy Secretary Roger Altman, 60, her top economic adviser, to include AFL-CIO officials and other free-trade critics.
`A Careful Line'
On the stump, she's more skeptical about globalization's benefits than her husband was. She ``is walking a careful line,'' said Jeff Faux, who supports the idea of a pause in trade deals and is the founding president of the Economic Policy Institute, a labor- affiliated research group in Washington. ``There's a difference between Hillary and Bill on this.''
A moratorium on trade agreements -- which would be used to beef up labor and environmental protections and provide more aid for domestic workers displaced by foreign competition -- is backed by labor leaders and some economists, who call it a ``strategic pause.''
The idea was rejected by Altman and Rubin as detrimental to the American economy at a forum in Washington last year. They didn't return telephone messages left at their offices.
Clinton's positioning on trade reflects the changing nature of the debate in the U.S., which increasingly focuses on concerns over outsourcing and the shift of jobs to other nations such as China and India rather than on the benefits of tariff reductions.
Grassroots Sentiment
It also -- as with Republicans grappling over illegal immigration -- demonstrates the extent to which grassroots sentiment can alter candidates' platforms.
A Bloomberg/Los Angeles Times poll conducted in January found 39 percent of Democrats believe free trade hurts the economy; only 18 percent say it is a benefit.
Both parties agree that a backlash on trade helped Democrats in the 2006 elections. West Virginia Senator Jay Rockefeller, a Democrat, said U.S. workers have been ``so decimated'' by unfettered competition that ``I think the American people understand they will be hit by it.''
Clinton promoted her husband's trade agenda for years, and friends say that she's a free-trader at heart. ``The simple fact is, nations with free-market systems do better,'' she said in a 1997 speech to the Corporate Council on Africa. ``Look around the globe: Those nations which have lowered trade barriers are prospering more than those that have not.''
Praise for Nafta
At the 1998 World Economic Forum in Davos, Switzerland, she praised corporations for mounting ``a very effective business effort in the U.S. on behalf of Nafta.'' She added: ``It is certainly clear that we have not by any means finished the job that has begun.''
Clinton ``is committed to free trade and to the growing role of the international economy,'' said Steven Rattner, a Clinton fundraiser and co-founder of Quadrangle Group LLC, a New York buyout firm. ``She would absolutely do the right thing as president.''
There was little evidence of a protectionist tilt to Clinton's trade views during either her 2000 campaign or first years in the Senate. She stressed issues such as homeland security and children's health care, and wasn't a major voice in trade-policy debates.
As she began to gear up for a White House run, Clinton became less of a free-trade booster and more skeptical about the payoff of globalization.
Opposing Cafta
She voted against the Central American Free Trade Agreement in 2005, saying the pact lacked strong protections for foreign workers and that President George W. Bush was failing to enforce existing trade laws.
She also joined her New York colleague, Senator Charles Schumer, in backing legislation imposing trade sanctions on Chinese exports unless the government in Beijing agreed to stop holding down the value of the yuan. Last month, she sent a letter to Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke warning about China's ownership of $350 billion of U.S. debt.
Clinton called on Paulson to adopt a proposal requiring a ``plan of action'' to reduce U.S. deficits when foreign-owned debt exceeds 25 percent of gross domestic product or the trade deficit reaches 5 percent of GDP.
In 2006, Clinton helped lead efforts to condemn the purchase of U.S. port facilities by DP World, a company based in Dubai, in the United Arab Emirates. At the same time, her husband was offering advice to Dubai's leaders, the Financial Times reported.
To help allay suspicions that she's been hijacked by free- traders from her husband's team, Clinton asked Thea Lee, the AFL- CIO's policy director, and Michael Wessel, who had been a top aide of Nafta foe and former House Democratic leader Richard Gephardt, into strategy discussions to debate pro-traders.
Negotiated by Bush
In her interview with Bloomberg, Clinton was careful to describe Nafta as having been negotiated by the administration of President George H.W. Bush ``and then pushed through Congress in the Clinton administration.''
Labor leaders, upset about job losses they blame on Nafta, remain suspicious that she is too influenced by Rubin, the vice chairman of Citigroup Inc. and an outspoken foe of protectionism.
``The Rubin wing of the Democratic Party is heading up policy direction'' for the Clinton campaign, said Leo Gerard, president of the United Steelworkers. That's ``going to be an issue'' with union members, he said. ``We don't need more of the same.''
Clinton supporters such as Rattner, 54, say she's trying to address the underside of globalization as more U.S. jobs move offshore. ``We all have to be sensitive to the fact that there is collateral damage,'' he said.