By Krista Hughes and Thomas Ferraro
WASHINGTON (Reuters) - President Barack Obama's push for authority to fast-track trade deals has hit a big setback in the form of opposition from his top fellow Democrat in Congress, but it is far from dead.
Senate Majority Leader Harry Reid's warning to policymakers on Wednesday "just to not push this right now" reflects concern about the domestic political agenda ahead of November's congressional elections, when free trade could be a damaging issue for many Democrats.
The unusually blunt public opposition came less than 24 hours after Obama noted the need for fast-track power in his State of the Union address, albeit less forcefully than business lobbyists and pro-trade Republicans would have liked.
The White House called Reid's office shortly after his comments to voice displeasure, a top Democratic party aide said.
"They were really upset," the aide said. But the aide said the White House did not try to get Reid to shift his position.
A bill before the House and Senate would grant the White House power to submit free trade deals to Congress for an up-or-down vote without amendments, something that would give trading partners peace of mind but that raises hackles among some lawmakers.
Add to that the genuine mistrust among some Democrats about the impact of trade deals on local jobs and industry and environmental standards, and it's a volatile mix.
With two major free trade deals hanging in the balance, the U.S. administration now faces even more pressure to win over skeptics on both sides of politics to pass trade promotion authority (TPA) as the electoral clock ticks down.
"Reid's put a strait-jacket on TPA for now," said Welles Orr, trade adviser for law firm Miller Chevalier and former congressional relations expert at the U.S. Trade Representative.
Aides insist that Reid, who controls what comes up on the Senate floor, has not decided to kill the bill but is not ready to embrace it either and has let the White House know he will not be an easy sell.
That leaves the White House with a tough decision on how much political capital to expend lining up support on a politically contentious measure ahead of the elections.
U.S. Trade Representative Michael Froman and his staff are lobbying lawmakers about the benefits of TPA and proposed trade pacts with Pacific Rim countries and the European Union, which would cover nearly two-thirds of global trade.
But he clearly has further to go.
"I'm with Harry on this," said Democratic Senator Sheldon Whitehouse of Rhode Island.
"There is all sorts of mischief that gets snuck into these trade agreements. We have seen real damage to our manufacturing sector as a result of them," Whitehouse said. "Allowing fast-track lets them get through Congress without proper scrutiny."
Reid's stance also struck a chord among some Republicans, who are generally more aligned with free trade than Democrats.
"I seldom agree with Harry, but this may be one time," said Republican Senator Lindsey Graham of South Carolina. "I've got concerns about it."
For trading partners, especially in Asia where negotiators had hoped to get agreement on the Trans-Pacific Partnership by the time Obama makes a trip to the region in April, the political uncertainty complicates an already-tight timeline.
Tacticians now have the option of pushing ahead with the TPA bill in the House, although it is currently lacking a Democrat co-sponsor; waiting for amendments to toughen up the negotiating objectives and make it more palatable to critics, or waiting for the administration to make greater effort to lobbying skeptics.
"They (the White House) have an opportunity to make its case. They should do that," another Senate Democratic leadership aide said, noting that fast track should not be considered dead in the Senate.
Despite differences on trade - the second aide said Reid "hasn't seen a trade deal that he has liked in a long time, if ever" - the Nevada senator has been perhaps the White House's most important ally in Congress.
In the past year alone, he has changed Senate rules to win confirmation of stalled Obama nominees and taken a lead in trying to ease Democratic outrage over the White House's botched rollout of its key healthcare law.
Part of the push-back may be a tactic to gain distance from a president whose popularity suffered in the wake of Obamacare, according to CNN/ORC and Gallup polls.
Matthew Green, associate professor of politics at the Catholic University of America, said Reid would not want to make his members take a difficult vote on a bill that subsequently would die in the House, risking their support for nothing.
"The control of the Senate is very much up for grabs. So I'm sure Reid is thinking, how might trade legislation help or hurt his most vulnerable members who are running for re-election?" he said.
Even if the bill does not pass in its current form, several leading Democrats, including the likely next chair of the Senate Finance Committee, Ron Wyden, have suggested they may back tweaks that could boost its chances of success - something Reid might have in mind as well.
"He's strengthening the hand of his colleagues who want a more protectionist version of the bill," said Daniel Ikenson, director of the Herbert A. Stiefel Center for Trade Policy Studies at the Cato Institute.
"I'd expect a competing bill to surface soon and then, hopefully, eventually, a compromise," he said.
(Reporting by Krista Hughes and Thomas Ferraro; Additional reporting by Roberta Rampton, Mark Felsenthal, David Lawder and Steve Holland; Editing by Ken Wills)