U.S.

U.S. President Barack Obama talks with workers about the economy as he visits the Lordstown Complex General Motors Plant in Warren, Ohio, September 15, 2009. REUTERS/Larry Downing

President Barack Obama's decision to restrict tire imports from China shows a more activist approach to enforcing rights Washington has negotiated in trade deals, as well as making good on a promise to labor groups that helped elect him.

It's hands-on, instead of hands-off, said Rep. Sander Levin, a Michigan Democrat who chairs a key trade subcommittee in the House of Representatives. It indicates a willingness to look at the consequences of expanded trade and not to assume it will all work out in the wash, Levin said.

The president's decision to slap a 35-percent tariff on Chinese tires fits into a larger pattern that already shows unions and other critics of free trade agreements have a much bigger role in shaping trade policy than they did in the eight years under former President George W. Bush.

Groups such as the AFL-CIO labor federation said Bush ran roughshod over their concerns about increased imports from China and job anxiety caused by the 1994 North American Free Trade Agreement and similar deals Bush pursued.

I just want to make sure if we actually have rules written down, they mean something, Obama told CNBC television.

If we don't enforce the rules that are contained in our trade agreements, then it's very hard to have credibility, and it's hard to get the American people to support future trade agreements, Obama said.

RISKED LABOR BACKLASH

Obama, whose popularity has slipped in recent months, promised tougher enforcement of U.S. trade laws during last year's campaign and risked a labor backlash if he turned down the tire case, said Jeffrey Schott, senior fellow at the Peterson Institute for International Economics.

That could have further complicated an already difficult job of persuading Congress to approve healthcare reform, even

though that is a priority for the AFL-CIO and the steelworkers union which filed the tires case earlier this year.

The major point is that the president has not given priority to trade policy issues and therefore a lot of business has been left on the back burner, including pending free trade deals with Colombia, Panama and South Korea, Schott said.

Obama's go-slow approach on those three free trade pacts contrasts with the last Democrat in the White House. Former President Bill Clinton persuaded a reluctant Congress to pass NAFTA and also concluded the last major world trade accord.

Although labor groups have applauded Obama's action in the tire case, one top union official cautioned against putting too much weight on the decision, which was Obama was forced to decide by a statutory deadline of September 17.

He's making good on his promise that he would enforce our trade laws more effectively and we appreciate that, said Thea Lee, policy director for the AFL-CIO labor federation.

I don't think it tells you a whole lot beyond that. You know, whether he's a protectionist or a free trade president. I think he's neither, Lee said in a phone interview from Pittsburgh, where the 11-million-member union movement is holding its annual convention.

But it is a welcome change from Bush, who fell far short on the enforcement front, she said.

Obama imposed the tire duties under Section 421 of U.S. trade law, which allows the president to curb imports from China in response to a market-disrupting surge.

COMPLICATES U.S.-CHINA RELATIONS

China agreed to the provision when it joined the World Trade Organization in 2001. But until Friday night, Washington had never used it against Beijing.

The tire tariffs fall to 30 percent in the second year and 25 percent in the third before expiring.

Bush turned down four similar petitions and the U.S. International Trade Commission rejected two others.

China has called the tire restrictions an act of grave protectionism that it would challenge at the WTO and has also responded by launching a pair of anti-dumping investigations against imports of U.S. poultry and auto products.

Obama's decision certainly complicates the relationship at a time when the U.S. and China must work together to get the global economy back on the track, said John Veroneau, a former deputy U.S. trade representative who helped shaped Bush policy on Section 421.

The president will meet Chinese officials at a G20 summit next week in Pittsburgh, and again during a visit to China in November.

In case after case, Bush decided that restricting imports from China was not in the overall economic interest of the United States and would not protect jobs because other foreign suppliers would step in to fill in the gap.

Ed Gresser, director of the Democratic Leadership Council's trade policy shop, said he doubted approving the tire tariffs would make it easier for Obama to win approval of the three pending free trade agreements or to advance trade liberalization more generally.

The free trade pacts must be approved by a Congress controlled by Democrats who have asked for more action on labor and environmental protections in the partner countries.

This is probably not a key to unlock other trade policy, Gresser said.

But time will have to pass and more decisions will have to be made in order to judge whether the tires case represents a defining moment for Obama on trade, he said.

If Obama Achives a breakthrough in the long-running Doha round of world trade talks, the tires case will look insignificant in comparison, he said.

(Editing by Eric Walsh)