Obama’s new tune on trade

June 14, 2009
By Howard LaFranchi
The Christian Science Monitor

Candidate Obama opposed new free-trade agreements and wanted to renegotiate NAFTA. A global slump has changed his mind.

WASHINGTON In the heat of last year’s Democratic primary in Ohio, when the party’s presidential nomination was in the balance, then-Sen. Barack Obama vilified US trade policy – as practiced by both the Bush and Clinton administrations. He opposed pending free-trade agreements with Panama, Colombia, and South Korea, and he advocated reopening and renegotiating the North American Free Trade Agreement.

Fifteen months later, President Obama is whistling a different trade tune.

Having named Texan and NAFTA advocate Ron Kirk his US trade representative, Obama is pushing for passage in Congress of the Panama trade pact, perhaps this fall. He wants the same for the Colombia and South Korea accords.

And NAFTA? White House aides let it be known around the time of the president’s April trip to Mexico that the regional trade agreement would not be renegotiated.

What happened? It’s the difference between running for president and formulating policy as president, some trade-policy analysts say. Obama, in tackling a global economic downturn that had worsened as the campaign went on, is coming down on the side of those who see expanded trade as part of a ticket out of the recession.

“You just knew that as president, [Obama] would have to come around to a more centrist view,” says David Orden, a trade-policy analyst with the International Food Policy Research Institute in Washington. He laments that the rhetoric during the presidential campaign was “not constructive for the public’s understanding of trade issues.”

Others say that just as Obama has charted a pragmatic foreign-policy course, he’ll take a similar path for trade policy.

“Given what we’ve seen so far, I’d expect the president to lay out a very pragmatic course for what the US should try to achieve through trade policy and negotiations,” says Jeffrey Schott, a trade-policy expert at the Peterson Institute for International Economics in Washington. That means Obama would integrate already-­negotiated trade pacts into a vision for America’s economic recovery.

Besides that, Mr. Schott says, “He’ll want the American people to understand how trade policy can be part of a strategy to promote economic development in poorer countries.”

But these trade watchers also advise Americans to “stay tuned.” The administration’s trade policy is a work in progress, they say, and will emerge over the coming months through a number of venues:

•As US officials pursue discussions with Panama over how to make that agreement more palatable to Congress.

•With international trade partners on completing the Doha Round of global trade talks.

•Maybe even in global climate talks, where trade and agriculture are seen as key issues in achieving a new accord on limiting greenhouse gases.

•In a major presidential speech laying out “a new framework for trade policy,” say administration officials.

“He’s trying to strike a balance, something between the free-trade model we’ve followed until now and an alternative that would reflect new interests like the fair wages needed to create consumers or a new emphasis on local supply and demand,” says Mary Tharin, a research fellow at the Council on Hemispheric Affairs in Washington (COHA). “But you have to say that, so far, he’s been pretty silent.”

Perhaps the “road map” to Obama’s overall trade policy will emerge by the end of summer, when the president is expected to deliver his major speech on trade. Though no date or venue for the talk has been set, unofficial word is that it could be timed to complement the Group of 20 summit that the United States will host in Pittsburgh on Sept. 24 and 25.

In addition to sharing his vision of a comprehensive trade policy, Obama could use such a speech for a more practical purpose. A broad trade-policy address “may be needed to set the stage before any kind of congressional debate can take place,” Schott says.

In other words, the administration doesn’t want to say “no” to the countries the Bush administration negotiated trade pacts with, Schott says, “so they are going to have to find a way to get the Congress to say ‘yes.’ ”

Already, some Democratic members of Congress are shouting their opposition to any new trade agreements. They’re also unveiling what is likely to be their battle theme: that the negotiated free-trade agreements (FTAs) were already wrong for the Bush years and would be an even bigger mistake for an America with high unemployment and struggling workers.

After Mr. Kirk told Congress last month that he was working “furiously” to win approval of the Panama trade pact, Rep. Michael Michaud (D) of Maine said, “The Panama FTA takes us in the wrong direction at a time when our energies should be devoted to getting our economy moving forward again.”

Representative Michaud, who is chairman of the House Trade Working Group, criticized the “recycling” of Bush-era accords and added, “We need to change our model.”

If a Democratic president facing stiff opposition from his own party on trade issues sounds familiar, it’s because President Clinton found himself in the same predicament over NAFTA in 1993. In fact, Obama seems to be following a Clinton example in pursuing approval of another administration’s controversial trade accords, says Mr. Orden, who is also a professor of agricultural and trade policy at Virginia Tech in Blacksburg.

“Clinton came in and negotiated side agreements to NAFTA without reopening the whole accord, and now we see Obama doing something very similar,” he says. Obama is opting to leave the Panama and other negotiated trade pacts untouched, while entering discussions with the governments in question to produce the kinds of concessions or additional points that might persuade Congress to go along, Orden says.

As for any effort to broadly redefine trade policy, Obama should beware of what happened to Mr. Clinton, Orden also says. “Clinton tried to bring the language of the environment and labor relations into world-trade proceedings, and he ended up frightening the developing countries and setting things back for some time,” he says. In the same way, Obama could unwittingly build a “thorns nest” with a trade speech that rubs developing countries the wrong way, he adds.

It’s not just the governments of developing countries that will be up in arms, Ms. Tharin of COHA says, if Obama follows through on “new directions” in trade.

“The World Bank and other international institutions, the big corporations and other elites see a strengthening of what we’ve already been doing as the way to get out of the economic downturn,” she says.

“If he really does try to come up with a ‘new frame work,’ ” she adds, “I expect to see a battle.”