Obama Economic Policy: Clinton vs. Obama on Trade

This post begins our promised series reviewing Obama's economic policy program. On trade policy, both Clinton and Obama have taken pains to not paint themselves as protectionists, while at the same time echoing the critiques voiced by those opposed to trade agreements.

After looking closely at their statements and positions, my overall determination is that while their rhetoric is similar, Clinton has changed her stance quite sharply and is now more anti-trade than Obama. Specifically, she has announced her opposition to three pending trade agreements--Colombia, South Korea, and Panama--while Obama has not taken any position on these agreements. (More on these agreements below).

In terms of positions on earlier agreements that have come before the Senate, their records are identical. Both voted against the Dominican Republic-Central America Free Trade Agreement in June 2005, and both have said they would have voted for the Peru free trade accord in December 2007, although they were campaigning at the time and were not present for the vote.

Consider the positions they have on their websites. Here's a piece of Obama's economic policy page:

Obama believes that trade with foreign nations should strengthen the American economy and create more American jobs. He will stand firm against agreements that undermine our economic security.

• Fight for Fair Trade: Obama will fight for a trade policy that opens up foreign markets to support good American jobs. He will use trade agreements to spread good labor and environmental standards around the world and stand firm against agreements like the Central American Free Trade Agreement that fail to live up to those important benchmarks. Obama will also pressure the World Trade Organization to enforce trade agreements and stop countries from continuing unfair government subsidies to foreign exporters and nontariff barriers on U.S. exports.

• Amend the North American Free Trade Agreement: Obama believes that NAFTA and its potential were oversold to the American people. Obama will work with the leaders of Canada and Mexico to fix NAFTA so that it works for American workers.

• Improve Transition Assistance: To help all workers adapt to a rapidly changing economy, Obama would update the existing system of Trade Adjustment Assistance by extending it to service industries, creating flexible education accounts to help workers retrain, and
  providing retraining assistance for workers in sectors of the economy vulnerable to dislocation before they lose their jobs.

Clinton's October 8, 2007 economic policy press release says that she will do the following:

• Appoint a trade enforcement officer within the office of the United States Trade Representative (USTR) and double the size of USTR’s enforcement unit....
  

• Overhaul the Trade Adjustment Assistance (TAA) program ....

On Trade Adjustment Assistance, their positions are very similar. This is part of the standard center-left policy program to compensate those who lose out under trade agreements. Most economists favor this kind of policy because it is what a standard economic analysis points you towards: free trade increases overall income but has winners and losers, so the right approach is to use some of the income boost from lowering trade barriers to compensate the losers.

Apart from TAA, looking at these "official" economic policy programs--which were probably drafted by the candidates' economic policy advisors--you would think Obama is the greater trade skeptic. Clinton's promise to appoint another official in the trade rep's office is near meaningless, while Obama wants to amend NAFTA and is promising to demand that labor and environmental pacts be included in trade agreements.

Clinton, however, has taken a much more anti-trade position since her economic policy was issued in October.

Consider, for example, the responses to the Iowa Fair Trade Campaign questionnaire, which was issued (and presumably filled out by the candidates) in December. The Clinton and Obama positions are generally similar.

Both promise to renegotiate parts of NAFTA (Clinton: "As President I will review NAFTA and work with our trade partners to correct its shortcomings.") Both promise to include strong labor and environmental protections in trade agreements.

Clinton's position, however, has moved to a more anti-trade position than Obama, in two respects. First, she nows calls for what she refers to elsewhere as a "time out," i.e. a moratorium on ALL new trade agreements. Here's what she says in the Iowa questionnaire:

I will not enter into new trade agreements or seek trade promotion authority, until my administration has ... reviewed all of our existing agreements to determine whether they are benefiting our economy and our workers.

Along these lines, while trying to get the support of labor groups in Iowa in November, she announced she would oppose three pending trade deals: Colombia, Panama, and South Korea. Her opposition to the Colombian trade deal has drawn the criticism of the Colombian president, and Colombian sources tell me her opposition to the pact is well-known in the country.

Thus, the main conclusion is that Clinton has positioned herself as the greater protectionist compared to Obama. I'll consider the merits of these positions in a future post.

UPDATE: See this more recent post with new information.