Protectionism Back in Vogue

I've commented before that traditonal Democratic constituencies are trying to France-ify the US economy. Given the myriad commitments the US has made to maintain open markets, it's hard to directly implement protectionist policies. Rather, they will need to be indirect measures: restrictions on design and safety standards, targeting currency valuation, and pursuing extraneous regulation that has the effect of frustrating efforts to open markets.

Daniel Drezner catches one area where Democrats are already using that last tactic:

The Bush administration withdrew a plan on Tuesday to give European airlines more freedom to invest in American airlines and to participate in management decisions, bowing to opposition expected to deepen in a Democratic-controlled Congress.

The decision deals a blow to greater cooperation between United States and European airlines. Europe had made the investor rule a condition for putting in place the so-called open skies treaty with the United States, which is needed to allow airlines based in Europe or the United States to fly with little or no restrictions to each other’s territories. Such flights are now often subject to government-to-government negotiations.

The open skies treaty, which has been agreed to by the United States and the European Union, is far more important on both sides of the Atlantic than the separate foreign ownership rule. Europe could easily allow the open skies treaty to take effect at any time, but it has made such an issue of tying the two together that it now faces embarrassment if it appears to give in...

The foreign ownership proposal had been strongly opposed by influential members of Congress, unions and several major airlines led by Continental. British Airways was also cool to the idea because it would have allowed the open skies rules to go into effect, giving other airlines greater access to Heathrow Airport, which it dominates.

Representative James Oberstar, a Democrat from Minnesota who is expected to become chairman of the House Transportation and Infrastructure Committee, commended Ms. Peters for her decision. Mr. Oberstar said Ms. Peters chose to do the right thing in the face of strong pressure from the administration and from the European Union.

You would think that given the incredibly positive experience of opening air travel to competition, this might be one area where Congressional Democrats would welcome greater competition. You'd be wrong.

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