House hands Clinton heavy defeat over free trade treaties

Bill Clinton yesterday shelved his attempt to obtain enhanced power to negotiate international trade agreements in one of the biggest political defeats of his presidency. Analysts in Washington compared the defeat to his first-term failure to pass a comprehensive reform of the health system and saw it as evidence that the tide of politics in the United States had turned against free trade.

Mr Clinton and his administration had worked into the early hours of yesterday morning, telephoning Democrats in the House of Representatives trying to persuade them to come over to his side, and Vice-President Al Gore had spent most of Thursday and Friday lobbying in the corridors of Congress. In the event, Mr Clinton was around 20 votes short in the House of Representatives, although the measure might have passed the Senate.

The frantic efforts by the administration on "fast track" made the defeat particularly embarrassing. But it was also a political blow to Mr Gore. The campaign against fast track, which would have deprived Congress of the authority to amend international trade agreements negotiated by the President, was spearheaded by Richard Gephardt, the man seen as one of Mr Gore's chief rivals for the Democratic nomination for the presidency in 2000.

In all, as many Democrats as Republicans opposed the measure, arguing that the 1993 North American Free Trade Agreement - strongly advocated by Mr Clinton - had harmed American workers by depressing wages and causing factory closures, especially in states bordering Mexico. They also complained that US companies on the Mexican side of the border had not met anti- pollution requirements.

Extra subsidies approved by Mr Clinton last week for US regions adversely affected by free-trade agreements proved insufficient to win over sceptics. Pressure from constituents was cited by many in Congress as the reason why they could not change their vote - suggesting increased public suspicion of free trade. All US presidents, from Gerald Ford onwards, enjoyed fast- track authority.

Mr Clinton tried to put a brave face on his defeat yesterday, insisting that he would reintroduce fast-track legislation "at an appropriate time"during the current Congress. White House sources had earlier said, however, that if the legislation did not pass now, it was unlikely to pass in the current presidency and trade officials said that Mr Clinton's ability to negotiate new free-trade agreements with Latin America - one of the main reasons he wanted the additional authority - would be greatly impaired.

Newt Gingrich, the House of Representatives Speaker, acknowledged that the US's leadership role on trade was now in jeopardy. "To lead, we have to be able to negotiate trade agreements that allow American products to compete in other markets. We're in very grave danger of losing our ability to compete," he said.