Newsflash: Obama Continues to Punt on Trade

Trade is the largest campaign issue to be completely ignored by Obama. We've at least had proposals (sometimes legislation) for fiscal stimulus, cap and trade, Main Street bailouts (e.g. Big Three), and health care reform, plus a major shift in our strategy in Afghanistan. But very little on trade other than oblique, hypocritical references in G20 communiques to "avoid protectionism".

Perhaps this is to be expected -- Obama does have a lot on his plate at the moment, and he's only been in office for a little over 7 months -- but perhaps not. During the campaign Obama couched the review of trade treaties as a major plank of his efforts to support Main Street. Trade was just below health care in this regard. Meanwhile, Obama has unabashedly used the economic crisis to open every can of worms but trade, so it's not proper to say that he's taking things one at a time. Moreover, Obama has three FTAs sitting on his desk that have been negotiated, agreed to, and signed; he hasn't sent any of them to Congress for ratification. The virtual lack of any movement on any trade-related issue is actually somewhat stunning.

So IELPB got a little excited when U.S. Trade Rep. Kirk indicated that Obama would issue his first major trade policy sometime before the G-20 meetings later this month. Alas, such excitement was misplaced:

Washington Trade Daily just tweeted:

USTR Kirk just told reporters President Obama will deliver his long-awaited trade policy speech sometime before the G-20 meeting Sept 24.

"Long-awaited" is right. I had been expecting to spend much of the past few months blogging about the new Obama trade policy, but there has not been much to blog about. I wonder if Kirk and Obama talked about the speech during their golf outing yesterday. It's good to hear that the top trade person has direct access to the President!

UPDATE: Sigh. Washington Trade Daily has the following update:

USTR now says no Obama speech on trade soon. But will say something before the September 24 Pittsburgh G-20. A "tweet" maybe?

If that "pre-G-20 statement" is anything like past G-20-related statements, there will be very little substance. Which is unfortunate.

Stranger Than Fiction

A rare nervous moment for Obama:

This week, President Obama hosted South Korean President Lee Myung-Bak at the White House. The meeting was cordial, of course, and the countries vowed their mutual allegiance, of course. But everyone had to tiptoe around the elephant in the room: the Korea-U.S. Free Trade Agreement. ...

The Koreans did their part: The government opened its market to some U.S. beef exports, a politically difficult and highly divisive move that brought over a million protesters into the streets of Seoul and threatened to bring down the Korean cabinet. The United States did... nothing. We left the Koreans standing at the altar. Democrats in Congress, including then-Senator Obama, opposed the agreement. Perhaps the most significant reason given for opposition was that the Korean government meddled too much in its auto sector.

Seriously.

Actually, Korea had agreed to cut its tariffs on autos and to take some measures to address its non-tariff auto trade barriers; however, opponents contended that those measures would not go far enough. This criticism, of course, predated the Obama administration's decision to take over much of the U.S. auto sector and erect its own non-tariff trade barriers.

IPE@UNC covered the proposed U.S./S. Korea free trade deal in a series of posts.

It's really too bad Obama and Myung-Bak tiptoed around the controversy. Yawn. Things would have been different if the meeting had taken place in Seoul rather than Washington. The South Korean parliament deals with such matters much differently:

Hillary, on Trade Policy

"Well what I have called for is a time-out which is really a review of existing trade agreements and where they are benefiting our workers and our economy and where the provision should be strengthened to benefit the rising standards of living across the world and I also want to have a more comprehensive and thoughtful trade policy for the 21st century. There is nothing protectionist about this. It is a responsible course."

I struggle to figure out what exactly she is saying. She wants trade agreements that benefit our workers and economy; is she saying that current agreements do not benefit our economy? And what workers in particular? Workers at Microsoft and GlaxoSmithKline are doing fine under current agreements, while workers at GM and Ford are doing less well. So which group of workers is she talking about? Or are research scientists not workers in the parlance of the Democrats?

I also don't know what she means by strengthening provisions "to benefit the rising standards of living across the world." Quite apart from the tortured synatax, is she implicitly claiming that workers across the world are getting poorer as a result of trade? There is no evidence to support this claim. Moreover, if she cares about improving the standard of living "across the world" then the simple solution is to open the US market to goods produced by low-income people in the rest of the world. But, that seems to cut against her desire to protect the incomes of American manufacturing workers and suggests the need for acceleration of negotiations rather than a pause.

What bothers me more broadly is that in spite of calling for a new trade policy for the 21st century, Hillary neither seems to recognize the nature of the dilemma (how to assist import-competing sectors without killing the export-oriented sectors in the US and the rest of the world) nor offers even the slightest whisper of a policy. And it is not hard to think of a very simple solution to the dilemma: liberalize and use active labor market policies to help people transition out of import competing sectors. We can do this all on our own--no need for a pause, a review, or any lengthy and complicated international negotiations.

Doha Update

Negotiations are again underway in Geneva. The most recent summary contains optimistic news, as the U.S. has indicated a willingness to accept a lower-than-previously-stated binding on trade-distorting agricultural subsidies.

"US agriculture negotiator Joe Glauber suggested that Washington could accept capping its trade-distorting farm payments at between $13 and 16.4 billion dollars, the range for a potential deal outlined in July by the chair of the WTO agriculture talks."

There is also less encouraging news concerning the congressional constraint:

"An even more formidable obstacle than finding consensus on a Doha tariff and subsidy package might be getting it through the US Congress in the foreseeable future.

House agriculture committee chair Collin Peterson (Democrat-Minnesota) has vowed to oppose deeper farm subsidy cuts barring dramatically expanded market access elsewhere, despite the soaring value of US agricultural exports. The Democratic leadership is loath to risk fragile support in newly-won rural districts by pushing farm reform. Extra cuts to cotton subsidies appear to be an especially hard sell.

(Maybe a WTO agreement requires proportional representation and a parliamentary system in the United States.)

The Financial Times suggests that the current view on much of Capitol Hill is that between the Bush administration's diminished political capital and Democrats' scepticism about economic globalisation, the Doha Round will have to wait until a new administration takes control of the White House in 2009."

That last statement seems a bit of a non sequitur: Put a Democrat in the White House as well as the majority party and the Dems become more enthusiastic about globalization? I don't understand that logic.

Dems and Trade

Democrats dither, according to David Ignatius, who asks some important questions we might all usefully ponder as we head toward 2008.

"Are today's Democrats a party of open markets and economic development, or of market restrictions and job protection?

The answer is that leading Democrats seem to want both -- they favor economic development overseas but not at the cost of U.S. jobs."

Okay, we all want to have our cake and eat it too. The question is, when it comes time to make a decision, what do they do? They dither:

"Democratic leaders in Congress say they may bring trade agreements with Panama and Peru up for a vote this fall, after gaining concessions on workers' rights and the environment. As for the Colombia agreement, it appears dead for this year. The Democratic presidential candidates, meanwhile, are scurrying to follow the party's base, rather than trying to lead it, on trade. The Democrats want to turn a page, but in the case of Latin America, they may be turning it backward."