What's Obama's trade policy? So far, there isn't much of one

McClatchy NewspapersNovember 19, 2009 

US NEWS ENV-SHIPPOLLUTE 2 TC

The five-story-tall engines on oceangoing vessels burn some of the dirtiest oil- bottom of the barrel bunker- and churn out a substantial amount of the air pollution in American port cities, coastal communities along shipping lanes and hundreds of miles inland.

DEAN J. KOEPFLER — Dean J. Koepfler/The News Tribune/MCT

WASHINGTON — During his first 10 months in office, as global trade contracted sharply, President Barack Obama avoided pursuing free-trade pacts and limited his public moves on the trade front to high-profile and often politically popular retaliatory actions.

Critics say he's playing defense when he should be playing offense.

"There is no trade policy," said Fred Bergsten, a former senior Treasury Department official and the director of the Peterson Institute of International Economics, a Washington research group.

Before Obama's week-long trip to Asia, which ended Thursday, the president rarely mentioned international trade. To be fair, his tumultuous first year in office has presented numerous weighty challenges, including setting a new course for two unpopular wars, overhauling health insurance and rewriting regulations for the financial world.

Still, until the Asia trip, Obama only made trade headlines when he imposed penalties on Chinese tire imports and blocked Mexican truckers from crossing the U.S. border, a restriction that Mexico says violates the 1993 North American Free Trade agreement.

Previously negotiated free-trade deals with Panama, Colombia and South Korea languish in Congress with no push from the White House. It's all helped fuel the perception that for the first time in decades, the U.S. lacks a clear trade policy.

Since World War II, both Republican and Democratic presidents have pursued free-trade deals that opened markets for U.S. products. Obama hasn't rejected that record, but he's clearly hitting reboot.

His stance reflects the dominant view in his Democratic Party, whose union base often opposes trade pacts, and whose liberals echo their concerns. Some 128 Democrats in the House of Representatives — about half the Democratic caucus — are co-sponsoring legislation that would require a comprehensive review of the economic impact of existing trade agreements before any new ones are entered.

In February, Obama spelled out principles that would guide him in negotiating future trade agreements, and he's ordered a top-to-bottom review of trade policy.

Is Obama merely pausing before pursuing more trade deals?

"On trade, if you are not going forward then you are probably going backwards," said Susan Schwab, the U.S. trade representative from 2006 to 2009 and now a professor at the University of Maryland.

The Obama administration disputes the notion that it lacks a trade policy. A senior White House official told McClatchy that Obama's trip this week to Japan, Singapore, China and South Korea was partly designed to push the region toward a regional trade pact, called the Trans-Pacific Strategic Economic Partnership.

"His philosophy is that we need to be deeply engaged with Asia — economically and strategically. It's the fastest growing region of the world," said the official, who accompanied Obama to Asia and requested anonymity to speak freely. "Working there to create balanced growth and open markets could potentially add billions to U.S. exports and hundreds of thousands of new jobs in the United States."

While President George W. Bush focused on smaller trade deals, Obama wants a deeper engagement with Asia, the official said. Europe, Canada and Mexico historically have been the top U.S. trading partners, but Asia now buys about 26 percent of U.S. exports, a number the new administration intends to increase sharply.

"Our goal is to work to shape a full-blown trade pact that is broad in its membership, broad in its coverage and of the highest standards, reflecting the issues and values of the 21st Century and a meaningful effort to liberalize trade and further regional integration," the official said.

Jobs are the goal of the Asia push. The U.S. economy is being sapped of momentum by a 10.2 percent unemployment rate, and exports create both jobs and growth for an economy suffering from wilting consumption and lagging real estate.

"There is no question that they (the Obama team) have looked at the economic circumstances in which the United States finds itself, and restoring any good degree of wealth means rapid growth in exports, and one way to do that is opening up more markets," said Frank Vargo, vice president of international affairs for National Association of Manufacturers.

Playing defense on trade and merely "engaging" Asian nations, however, won't provide much short-term spark to the still-struggling global economy.

As recently as June, global merchandise trade was down by 15 percent over the same month in 2008, according to Gary Hufbauer, a top trade economist at the Peterson Institute. That contraction is the worst since the Great Depression, when global trade fell by 60 percent over a stretch of roughly five years.

Other nations, meanwhile, aren't pausing in pursuit of more trade. India, the world's second most populous nation after China and a large emerging market, is actively negotiating trade deals with the European Union and Japan, and is talking with Canada.

Asked Wednesday if a similar outreach awaits the U.S., Meera Shankar, India's ambassador to Washington, said all but no.

"We would be open to looking at a study that examines the costs and benefits of a similar arrangement with the United States, but I think this is something that can proceed only on the basis of a suitable comfort level on both sides," Shankar said. "And at the present juncture, we are not sure if that exists in the United States."

That's a stinging slap at the Obama administration, couched in diplomatic speak.

India and other trade partners are taking a message from the frozen free-trade deals negotiated by the Bush administration with Panama, Colombia and South Korea.

"All three of the outstanding free-trade agreements would immediately boost U.S. exports" and employment, said Schwab, the former U.S. Trade Representative.

Obama's shown little interest in them, however. His pick for U.S. trade representative, Ron Kirk, was a former mayor of Dallas whose trade experience was thin. Obama didn't pick a nominee for ambassador to the World Trade Organization until September. His choice, Michael Plunke, recently began the Senate confirmation process.

Many analysts conclude that trade isn't an Obama priority.

"It's not a second tier issue, more like a third or fourth tier issue," Hufbauer said.

Not so, said Carol Guthrie, a spokeswoman for the Office of the Trade Representative. The reviews of trade policy that Obama ordered will become a useful tool, she said.

"Those reviews have been done with an eye toward moving forward appropriately on a robust trade agenda," Guthrie said.

She listed unappreciated achievements, including deals with the EU and Chile to reopen markets to U.S. beef exports; expanding assistance to Americans who've lost their jobs to foreign competition; getting China to open more of its domestic market; and engaging big developing economies in one-on-one talks in search of a breakthrough on stalled global trade negotiations.

"There is no pause," Guthrie insisted.

What bothers the National Association of Manufacturers, however, is the lack of any public push by Obama to score a palpable trade success, such as wrapping up one the pending deals.

"The main difficulty with the administration's trade policy has been pushing it out into the future," Vargo said. "It's just the execution_ particularly in terms of the pending free-trade agreements — that is the problem."

Meanwhile, global negotiations under the auspices of the World Trade Organization remain stalled, partly because developing nations are waiting to see Obama's vision translated into action. Trade ministers from around the globe meet in Geneva at the end of the month to discuss how to revive the so-called Doha Round of trade negotiations.

ON THE WEB

Obama's trade policy agenda

Bergsten podcast on trans-Pacific partnership

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