Archive for Wednesday, October 22, 2008

US must foster free trade

October 22, 2008


Perhaps the most important question raised in the last presidential debate was the one that got the least media attention - whether a Barack Obama presidency would lead to U.S. protectionism, trade wars and a global depression.

Was that a fair accusation by Republican candidate John McCain? Or was it a low blow by a desperate politician who is running behind in the polls and seeking to discredit his Democratic rival?

The issue came up about halfway through the debate when McCain - noting that Obama "has never been south of the border" - attacked him for not supporting the U.S. free trade agreement with Colombia and for wanting to renegotiate the North American Free Trade Agreement with Mexico and Canada.

"I don't think there's any doubt that Senator Obama wants to restrict trade, and he wants to raise taxes," McCain said. "And the last president of the United States that tried that was Herbert Hoover, and we went from a deep recession into a depression."

Obama responded that "I believe in free trade," but he added that not every free trade deal is a good one. He said he opposes the Colombian deal because of human rights concerns over killings of union leaders in that country, and that he opposed NAFTA because he objected to its lack of proper labor and environmental clauses. But, on the other hand, he said, "I supported the Peruvian Free Trade Agreement, which was a well-structured agreement."

McCain supporters say Obama is pandering to U.S. labor unions, which are campaigning actively for him and which want to protect their members against foreign competition. Obama's current ads claiming that McCain's tax policies "shift jobs overseas" paint the Democrat's true feelings, Republicans say.

And they note that Obama's claim that he "supported" the Peruvian free trade deal is misleading because Obama did not actually cast a vote for it. Obama aides say their candidate missed the vote because he was attending an Iowa debate that day, but that Obama publicly endorsed the deal at the time.

If Obama is a closet protectionist, as the McCain camp claims, that would entail huge risks for the global economy.

The Great Depression of the 1930s was sparked by a 1929 stock market collapse, but really turned into a global depression after the United States passed the Smoot-Hawley Tariff Act on June 17, 1930, which raised U.S. customs duties for imports by up to 50 percent.

The tariff increases were aimed at helping domestic companies and generating jobs at home. Instead, other countries responded in kind, international trade plummeted by 33 percent over the next three years, U.S. exports collapsed and U.S. unemployment rose at record levels.

The lesson is clear: Adopting protectionist measures in a recession is playing with fire, McCain supporters (and many Obama fans, too) say.

My Opinion: I don't think Obama is a protectionist. The two times I interviewed him, he almost jumped from his seat when I asked him if he's anti-free trade. Like Bill Clinton before him, he would most likely switch to a more pro-free trade stance once in office.

What worries me is whether Obama would have the guts to go against the growing protectionist mood in the country at a time when America needs to open new export markets more than ever. A new Zogby poll shows that 59 percent of Americans support either revising or withdrawing from NAFTA.

And I wonder whether Obama would spend his political capital trying to persuade a Democratic-controlled Congress to support free trade.

Pollsters forecast that the Democrats will retain control of both chambers of Congress and may win a 60-seat filibuster-proof majority in the Senate. Twenty-three of the 35 Senate seats up for grabs are held by mostly pro-free trade Republicans, and many of them will be replaced by trade-skeptic Democrats, they say.

Granted, a landslide victory by Obama on Nov. 4 would give him enough political clout to sway Congress in the right direction. But an Obama win by a small margin with a more protectionist Congress and amid a growing isolationist sentiment would be a different story.

I have to confess that I like Obama on most issues. But on this one, I would like him to show more statesmanship. If the next president doesn't enthusiastically embrace free trade, the United States will be under growing domestic pressures to close its market to foreign goods, hurting the world economy - and itself.

- Andres Oppenheimer is a Latin America correspondent for the Miami Herald.


Daytrader23 9 years, 8 months ago

If Obama is a closet protectionist, as the McCain camp claims, that would entail huge risks for the global economy.--------------------------------------------------Actually even Alan Greenspan has said the the U.S needs to adopt a more protectionist policy in order to remain competitive in this new global economy. Obama said it right. We need to negotiate with our trading partners and have them accept more American goods in order to create more "fair trade". Right now the U.S imports way more then it exports and that is not free trade. This is why you don't take economic advise from a journalist.

just_another_bozo_on_this_bus 9 years, 8 months ago

The problem with the type of "free trade" that Oppenheimer seems to be advocating is that it's really just a code word for "free capital." It's main intent is to allow major corporations the ability to invest wherever the profits are best for them. That's almost invariably mean places where labor is cheap because the workers are poorly paid, forced to work under horrible conditions, with no ability to organize to demand better conditions. It also means places that have few if any environmental laws, so these companies can pollute these third-world to countries to their hearts' content. And nearly all political power in these countries is in the hands of a very small elite, who just happen to be partners with the multinational corporations doing business in their countries.Until "free trade" shills like Oppenheimer are willing to address these very real problems, they should be ignored.

jonas 9 years, 8 months ago

"We need to negotiate with our trading partners and have them accept more American goods in order to create more "fair trade"."That's the preliminary thought that the British used before they addicted the population of China to Opium. The problem is our consumer-driven lifestyle, not the fact that some underdeveloped or still-developing countries can't afford some of the very expensive products and services that we have to offer, to the degree that would match our voracious national consumption habits. Maybe the trade balance would be addressed simply by us taking some of the money that we have been spending (some of which doesn't belong to us anyway) and saved it, instead, allowing it to be invested in human capital and physical capital to increase our own productivity.

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