Worlds apart on global trade

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By David M. Dickson

No economic issue presents a sharper contrast between the two U.S. presidential candidates than international trade.

With the annual U.S. trade deficit averaging $750 billion the past three years and trade-related job losses in key electoral battlegrounds, Democratic nominee Sen. Barack Obama has proved far more skeptical of open markets and international trade deals than Republican rival Sen. John McCain.

"On trade, there is a stark distinction between the two candidates," said Sallie James, a policy analyst at the Cato Institute, which favors unfettered trade.

Mr. Obama is "firmly in favor of government intervention," while Republican candidate John McCain "has an excellent and consistent record" supporting free trade, she told The Washington Times.

Mr. Obama's advisers bristle at the protectionist charge, saying it is the Bush administration's failure to enforce current trade deals and to assist workers whose jobs are lost from international competition that has led to falling public support for trade.

"Free trade is not the enemy," said Austan Goolsbee, a top economic adviser to Mr. Obama, but he added that "millions have been left out" of the benefits trade has provided to the U.S. economy.

Supporting "anything with the name 'free trade' on it is not doing the cause of open markets and globalization any favors," Mr. Goolsbee said at a recent New York forum sponsored by the Council on Foreign Relations, "and it's generating a giant backlash."

Labor unions and environmental groups, both of which have been critical of past free-trade accords, largely back Mr. Obama, heightening fears that an Obama administration and a Democratic Congress would show little interest in negotiating bilateral trade deals or concluding the Doha round of international trade talks.

During the primaries, Mr. Obama said he "will make sure we renegotiate" the North American Free Trade Agreement (NAFTA), using the threat to withdraw entirely to get changes. Mr. Obama has also pledged to strengthen labor and environmental standards in all future trade agreements.

"For all the successes of NAFTA," Mr. McCain told the Economic Club of Canada in June, "we have to defend it without equivocation in political debate because it is critical to the future of so many Canadian and American workers and businesses."

Mr. Obama, who voted against the Central American Free Trade Agreement (CAFTA) in 2005, also opposes the pending free-trade accords with Colombia and South Korea. Mr. McCain voted for CAFTA and favors the Colombian and Korean deals.

The Doha talks, which began in 2001 with the idea of helping developing countries, recently collapsed once again over the issue of farm subsidies and other agricultural trade barriers. For years, Mr. McCain has been one of Congress' most adamant opponents of farm subsidies, while Mr. Obama has strongly supported them.

Regarding China, Mr. Obama has co-sponsored a bill that would require the Treasury secretary to declare China a currency manipulator. He voted for a procedural measure that would have advanced a bill levying a 27.5 percent tariff on Chinese imports to counteract the alleged manipulation. Mr. McCain opposes both tactics.

Jason Furman, economic policy director for the Obama campaign, said it was inappropriate to compare Mr. Obama with previous nominees because "the world has changed, economic challenges have changed and globalization has changed."

To mitigate the public's growing skepticism about trade, Mr. Furman said, Mr. Obama would pursue comprehensive, complementary domestic policies, from expanded trade-adjustment assistance to more affordable health care, in order to reduce trade's contribution to rising inequality.

Mr. McCain, who also favors overhauling aid programs for workers displaced by trade, argues that his proposal to reduce the top corporate income-tax rate from 35 percent to 25 percent would be instrumental in creating high-paying jobs in the U.S. economy.

But even those sympathetic to the Democrat's candidacy in general express misgivings about the fate of trade policy in an Obama administration.

The Economist magazine, in a recent survey, concluded, "To free traders, trusting is Mr. Obama requires a lot more faith."

David R. Sands contributed to this report.