Sometimes worth listening to

Buried in the lower reaches of the latest softwood lumber update: one of the few people who even Bush might listen to puts in a good word against protectionism:

U.S. Federal Reserve chairman Alan Greenspan gave Canada some welcome ammunition Friday by warning that increased trade protectionism could come at an economic price.

"Developing protectionism regarding trade and our reluctance to place fiscal policy on a more sustainable path are threatening what may well be our most valued policy asset: the increased flexibility of our economy, which has fostered our extraordinary resilience to shocks," Greenspan said in a speech.

There's almost certainly a strong element of CYA in this quote. Regardless of the U.S.' trade policy, the housing bubble and foreign deficit are significant problems, and this may simply be a way to move some attention away from the Fed for a "recovery" that's managed to be wageless, jobless and unstable all at once.
In addition, it's not too difficult to anticipate Bushco arguing that the quote means that Canada should avoid retaliation while the U.S. does what it pleases.

But with the most-respected financial commentator in the U.S. taking an anti-protectionist line, there are two plausible positive results. At best, Bush could be forced to offer a more reasonable deal than the U.S. has ever done before on softwood lumber. At worst, the U.S. will do nothing differently, and the rest of the world will see that American protectionism is so deeply entrenched as to overcome even the U.S.' economic interests - which should give a lot of countries pause in deciding whether to enter into (or stay in) NAFTA-style treaties, and shift the balance of trade elsewhere. That wouldn't be a huge benefit in the short term, but enough small steps in that direction might well be the best long-term result.