Thursday, February 21, 2008

Obama on Trade, Reloaded

In an earlier post, I took a close look at Obama and Clinton's positions on trade and concluded that they are nearly identical, except that I couldn't find any position from Obama on the pending trade agreements with Colombia, Panama, and South Korea that Clinton opposes.

Now that Obama looks likely to be the nominee, his views on trade are getting new scrutiny, so it seems like a good time to revisit the issue and offer my own thoughts on what a progressive trade policy should look like.

First, I missed earlier this AP article from last October which says that Obama opposes the South Korea trade accord. But there's also this more recent statement in which he says that he has concerns but doesn't say he'll definitely vote against the accord:

The U.S.-Korea economic relationship has also benefited both nations and deepened our ties. I look forward as well to supporting ways to increase our bilateral trade and investment ties through agreements paying proper attention to our key industries and agricultural sectors, such as autos, rice, and beef, and to protection of labor and environmental standards. Regrettably,the U.S.-Korea Free Trade Agreement does not meet this standard.
(Thanks to the Custom House blog for pointing these out.)

Greg Mankiw says that it is an open question "whether Barack Obama is going to align himself with the economic centrists in the Democratic party or with the populists on the far left of the party. A key litmus test is trade, and so far it does not look good." Similarly, a couple Foreign Policy magazine bloggers seem to think that Obama is taking a sudden left turn on trade. (One of the FP bloggers claims incoherently that Obama wants to shove "protectionist agreements" - huh? - "down our trading partners throats.")

In my read, however, Obama's been quite consistent on trade. Indeed, if you look at my earlier post, you that his public statements on trade look very similar to what he's saying now. Here's what he said in his recent economic policy speech:
It’s also time to look to the future and figure out how to make trade work for American workers. I won’t stand here and tell you that we can – or should – stop free trade. We can’t stop every job from going overseas. But I also won’t stand here and accept an America where we do nothing to help American workers who have lost jobs and opportunities because of these trade agreements. And that’s a position of mine that doesn’t change based on who I’m talking to or the election I’m running in.

... when I am President, I will not sign another trade agreement unless it has protections for our environment and protections for American workers.
I read this as just a statement that trade agreements should include strong environmental and labor protections and compensation for those who lose out, which is basically the standard center-left position. He's tossed out some criticism of NAFTA, but that doesn't signal to me that he's going to be an anti-trader. (Unlike Clinton, he's never called for a freeze on new trade agreements.)

What is missing in Obama's position on trade--and indeed in the entire American dialogue on the issue--is any discussion of what trade means for developing countries. For many countries, trade is the way to achieving the economic growth needed to life their citizens out of poverty. Leaders and citizens of those countries see access to the U.S. market as crucial to progress.

The Colombia case is particularly acute because the country has suffered immensely fighting on the front lines of the Americans' drug war, with cocaine money fueling not only the drug cartels themselves, but also two armed groups--the guerrillas and paramilitaries--who have long since abandoned any political or legitimate goals and become simply organized criminal organizations dedicated to the drug trade and kidnapping. The current Colombian government, having made great strides in demobilizing the paramilitaries and isolating the guerrillas, is desperate to show some payoff for the people of Colombia, and the trade agreement with the U.S. is seen by many Colombians as the way forward. This is why Clinton's opposition to the Colombia trade deal is widely known in Colombia and has even criticized by the country's president.

Back when I was advising Howard Dean--who had positions similar to Obama's--I argued that Dean should be more pro-active in his trade position. At the time, Bush was pushing for a Free Trade Agreement of the Americas. Why not, I said, a Fair Trade Agreement of the Americas that would embrace trade agreements with serious labor and environmental provisions? The agreement could be a blueprint for shared prosperity for the continent, and would be embraced by the center-left governments of Lula in Brazil and Kirchner in Argentina. Obviously, I lost that argument, but I still think it's ultimately the right approach.

The signature Democratic sentiment is, in my view, "We're all in this together." Obama's great promise is that like Kennedy and LBJ, he can speak to many Americans who might not otherwise see themselves as part of that "we" and sweep them in the feeling that they, too, have a responsibility and a desire to share in making their country a better place. I hope that Obama as President--if not on the campaign trail--aims to take this message a step higher, to see the "we" embracing all of mankind, and that expanding trade with developing countries becomes part of this vision.

UPDATE: See this new post here.


Deadbeat said...

Was your advocacy of "fair" trade going to take into account repairing countries like Argentina from the neo-liberal (Washington consensus) policies that caused their problems?

The reason for the popularity of Hugo Chavez is that he represents a rejection to the Washington consensus and the meddling by the U.S. on the sovereignty of Latin America nations.

It seem to be that the U.S. owes the region an apology and an acknowledgment that the U.S. need a whole new approach to the people of Latin America. The first start is a rejection of the Monroe Doctrine. Latin American is NOT the U.S. "backyard" and the U.S. needs to relate to these nations as equals rather than their superiors.

donpedro said...

Thanks for the comment. You bring up several different points. I agree that part of Chavez's popularity has come from his anti-U.S. stance. I also agree that the U.S. should see other nations (in Latin American and elsewhere) as partners rather than inferiors.

You've made me think I should write a longer post on the Washington Consensus and Obama's international economic policy outlook.

Briefly, though, I don't think imposition of "the Washington consensus" (however you define it) by the U.S. can be blamed for Argentina's 2001-2002 crisis. First of all, the 1990s policies were not imposed by the U.S but were very much home grown, created by Argentine leaders. If you think mistakes were made, the people to blame are the people who enacted those policies. Second, it's not clear those policies were mistakes or that Argentina would be better off today if it had pursued a different set of policies.

The big mistake in Argentina was that the government stuck to a fixed exchange rate long after it was clear that it was not sustainable. (And note that under no definition of "Washington consensus" does it include fixed exchange rates.)

When it comes to the crisis, the only place you can really fault the IMF (or the U.S.) is in not meddling enough and pushing the Argentines to transition out of the fixed exchange rate sooner. If they had done so, say, in 1998, they would have avoided the crisis.

For more on this, I'd recommend the very good political history of the crisis: "And the Money Kept Rolling in (And Out): Wall Street, the IMF, And the Bankrupting of Argentina."

Soka said...

The really problem of the Argentina's 2001-2002 crisis itis not the States or any international financial institution. The really problem was that in that moment we didnt have idoneus goverment- administrators to release what would it happens by aplying those IFM policies recomendations.With Menem as a president and Cavallo as a the economist minester, we could had deppest problems so in some way I thanks God because after all that didnt happend and we are now much better than those days.And.. who care is the states treat latin america as the back yard? I mean come on,we are the only ones and totally responsibles for the country that each one member of latin america live in. Grow up man! The only reason why argentina is not a first world country itis because we dont fight for it.We dont respect ourselves as a society and you are looking for outside of our country to some other country to blame for our situation? The popularity of Chavez is pure marketing..did you visit Venezuelas this year? Im sure that many argentinians like chavez, I admit I also use to like the way he speak but I really dont want to live in a country like Venezuela right now and I can sure you that any argentine neither.
Maybe you are not agree with the exterior political of the united states and you also desagree that there are some countrys that they actually support to the what? When Peron let the Nazis come to Argentina do you belive that he cares about what the others country would say about that?No..and you know why? Because in that moment this country had so much money that no matter what we have done we knew that weve allways been treated like Kings and Quens just of money, and itis what its happened with the states right now. We been a glorious country in a time, and we could have 'that' country again because itis in our venes, in our blod, we showed the world ones how much talents we have...instand of blaming some other country for what we are right now ask yourself what happened to us? God bless Argentina.