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The Candidates and Trade Policy

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What will trade policy be under the next president of the United States? Four experts share their insight.

BY LATIN AMERICA ADVISOR
Inter-American Dialogue

The Democratic rivals in the US presidential election, Sens. Hillary Clinton and Barack Obama, have stepped up their criticism of the North American Free Trade Agreement (NAFTA) ahead of the March 4 Democratic primary in Ohio, where many voters blame the 14 year-old trade agreement for a sharp decline in manufacturing jobs in the state. What are your predictions for US trade policy under a Clinton or Obama presidency? Under a McCain presidency?

Jim Kolbe, Senior Advisor for Global Strategies at McLarty Associates and a former Republican member of Congress from Arizona: On trade, as on Iraq, clear differences have emerged between the likely Republican presidential candidate and the two leading Democrats. Senator John McCain has consistently said through the preceding 12 months that trade is a cornerstone of our economic and national security policy, and that he would aggressively pursue a wide range of trade agreements that would liberalize the trading regime and open access in both US and foreign markets. The trade debate remained relatively benign on the Democrat side until the primaries reached the final crescendo in Ohio. There, because of real and significant job loss, the two remaining Democrat candidates have adopted harsh anti-trade rhetoric, each trying to outdo the other in denouncing trade agreements, particularly NAFTA. Senator Obama has accused Senator Clinton of being an architect of the NAFTA agreement, the final touches having been added by President Clinton who then worked hard for its adoption. Meanwhile, the senator from New York has promised to stop trade agreements that result in job losses. NAFTA has become the convenient whipping boy for an inevitable process of globalization. Still, it is hard to see how in either an Obama or Clinton administration such rhetoric could be ignored or turned off easily and their administration return to a policy of actively pursuing trade agreements—a policy that heretofore has crossed party lines and been a consistent theme of presidents from both parties.

Abraham Lowenthal, Professor of International Relations at the University of Southern California: The competitive scramble for votes in the Ohio primary has created the impression that, if elected, either Hillary Clinton or Barack Obama would scuttle NAFTA and abandon longstanding US efforts to expand international trade, particularly with the countries of Latin America and the Caribbean. What is most important about this attack on 'free trade' is that it responds to intensifying concerns among US workers, both blue and white collar, about the increasingly evident combination of recession and inflation. People are very worried about the subprime mortgage crisis, the accelerating decline in real estate values, the shrinking consumption rate, increasing healthcare costs, uncertain pension rights, and the weakening dollar. The gathering anxiety leads easily to the search for scapegoats, whether trade agreements, unauthorized immigrants, or greedy corporations. The next US president and Congress will have to tackle the challenge of rebalancing and restimulating the US economy as an urgent priority. As they focus on this crucial task, my guess is that the pros and cons of free trade agreements will be nowhere near the center of debate. Decisions about fiscal and monetary policy, taxes, budgets, entitlements, investment, safety nets, retraining, infrastructure, energy, and the environment will be the heart of the matter. If and when a new national strategy for economic recovery and growth can be fashioned, renewed emphasis on expanding trade is more likely than not, no matter who is elected in November. In that context, the 2007 agreement between the Bush administration and the Democratic leaders in Congress, and then with the government of Peru, is a likely model, and substantial programs for worker retraining and adjustment in the United States are probable.

Peter Hakim, President of the Inter-American Dialogue: The campaign rhetoric on trade from the Democratic candidates is disappointing—although not surprising. Nearly every serious study of NAFTA concludes that it has benefited the economies of both the US and Mexico, and both Hillary Clinton and Barack Obama know that. Their attacks on NAFTA are understandable given the constituencies they are trying to appeal to in Ohio and Pennsylvania, where free trade, globalization, and NAFTA are all anathema to most Democratic voters. Obama and Clinton say they are not opposed to free trade, but only to the specific deals that have been negotiated; but they provide no sense of what kind of deals they would support—and both absented themselves from the vote on the Peru FTA. I fear that their discourse now will make it more difficult for them to shape and support sensible trade policies if either of them makes it to the White House. NAFTA is probably not in any particular danger; there may be a review and some fiddling at the edges, but the US-Mexico-Canada agreement is far too entrenched—and too much has been invested in it—to introduce drastic changes. And I am still optimistic, regardless of who wins the presidency, that a way will be found to approve the Colombia agreement, given that it is a signed deal with an important US ally, but its prospects are not helped by the NAFTA bashing of the candidates. What worries me most is that a Democratic president will abandon US leadership of free trade efforts—in the Hemisphere and worldwide—which will make new agreements virtually impossible. Instead of railing against free trade and globalization, Barack Obama and Hillary Clinton would far better serve the workers of this country (and of Latin America) by focusing on how to expand and improve assistance for those who are left jobless or underemployed because of trade or technological change. In light of a spreading anti-globalization sentiment in the US (even among Republicans), John McCain may also find it difficult, particularly with a Democratic Congress, to lead on trade issues, just the way his leadership of immigration failed to produce decent legislation.

Cresencio Arcos, Counselor for Government Affairs at K&L Gates in Washington, DC, and a former US Ambassador to Honduras: US trade policy in the next administration will face close scrutiny regardless of who is the president. Obama will tend to be most critical and seek more guarantees for US workers and small businesses, as well as environmental conditioning. The blue-green issues will be avidly considered. Obama will not roll back existing trade agreements, but new trade agreements will not prosper under him. Clinton will be less dismissive of trade, but be attentive to existing US arrangements. However, she would be most amenable to including labor and environmental considerations. McCain would be more inclined to consider completing or getting the Colombia, Panama, and South Korea agreements approved. He will also be circumspect in initiating new trade agreements. Trade in the next administration will not be a high priority. The national and global conditions are not conducive to trade expansion.

Republished with permission from the Inter-American Dialogue's daily Latin America Advisor newsletter. 

 

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