When is the perfect the enemy of the good on trade?

Posted By Daniel W. Drezner Share

Susan Aaronson has an op-ed in today's Financial Times in which she tries to argue that, of the two major party candidates, Barack Obama "has the more optimistic vision of trade."  Here's the guts of her argument: 
Mr McCain sees trade as a means to the end of economic growth and trade agreements as simply economic instruments. He has said very little about how he would use trade agreements to address negative side effects of globalisation, such as pollution. Nor has he articulated how the US can ensure that the economic growth stimulated by trade is equitable. Beyond suggesting tax breaks for business, he has not explained how the US can ensure that companies remain in the US and continue to hire US workers, rather than rely on technologies to remain productive. To bolster his freer trade bona fides, he has stated: “Only risks to the security of our vital interests or egregious offences to our most cherished political values should disqualify a nation from entering into a free trade agreement with us.” But Mr McCain’s support for freer trade has limits – especially when important constituents are adamant about trade bans. As an example, he supports continued trade sanctions against Cuba and Iran and enhanced targeted sanctions against human rights abusing nations Zimbabwe and Burma. Mr Obama, in contrast, is a trade enthusiast as well as a trade agreements reformer. He sees trade as a means to the end of enhancing human welfare. Thus, he has stated: “From financiers to factory workers, we all have a stake in each other’s success.” He recognises that Americans cannot succeed unless globalisation promotes greater access to resources and opportunities for more of the world’s people (our future growth markets). Mr Obama also believes that trade agreements are essential tools of global governance. He recognises that public concerns about trade are really concerns about inadequate governance – instances where our trade partners are unwilling or unable to adopt and enforce rules to protect workers, consumers and the environment. Demanding such standards in bilateral agreements will not alter global market conditions or empower all workers. Nonetheless, trade agreements can, if properly written, improve both the supply and demand for good governance at the national and international level. Mr Obama also has put forth a consistently positive vision of the potential of trade to promote human rights. Many human rights activists think trade with human rights abusing regimes is a form of complicity that can indirectly perpetuate wrongdoing in countries such as Sudan. But Mr Obama has openly questioned this view, asking whether the US has more or less leverage with less commerce. He has argued that cutting off trade may not be the best (or only) strategy to bring democracy to Cuba or Iran.
I'll give this effort a B- because of the difficulty of the assignment.  Quoting Obama boilerplate on globalization doesn't make him a enthusiast of freer trade.  And Obama's reluctance to deploy economic sanctions is not really connected to his trade policy, since with the exception of Cuba the United States wouldn't be trading a lot with these countries anyway.  Aaronson also elides Obama's insistence on linking trade to employment when the link is weak to nonexistent.  Now, all that said, Aaronson is correct when she says Obama does not intend to be a protectionist.  I think that's true.  My question is whether his trade policies would be protectionist in their effect.  Given that:
  • Opening up NAFTA for renegotiation contains a 5% chance of a better agreement and a 95% chance of failure;
  • Our trading partners are going to be, at best, reluctant to accept all of Obama's proposed governance improvements;
I just don't see his trade policies going anywhere.  Obama has a perfect vision of where he wants trade politics to go -- whether this vision falls within the set of feasible politics is another question entirely.  One last point, which I've probably made before.  Free traders like myself are not averse to seeing improvements in labor standards, environmental protection, and the like.  We just think that these policies are much more likely to occur when a country gets richer -- and, hey, what do you know, trade can facilitate that enrichment.  UPDATE:  Aaronson responds (cogently as always) in the comments; see also Donald Coffin's comment.  ANOTHER UPDATE:  Secretary of Defense Robert Gates and Colombian Secretary of Defense Juan Manuel Santos have an op-ed in the New York Times that raises an awkward question for Obama's trade enthusiasm.  After recounting Colombia's success in battling FARC, they close: 
Finally, to achieve lasting peace and stability, Colombia must have more foreign investment and free trade. Congress’s approval of the trade promotion agreement would establish a commitment to open markets that would increase growth and investment. Moreover, it would allow American products to enter Colombia duty-free. Colombia’s hard-won freedom from violence can be sustained only through economic prosperity. Together, as partners, we must see Colombia’s transformation to completion. In winning the war, we must also consolidate the peace.
Question to Barack Obama:  in what way does opposing the U.S.-Colombia free trade agreement enhance the dignity of ordinary Colombians? 
 
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APPALLED MODERATE

5:35 PM ET

July 22, 2008

Back in the day -- when Dick

Back in the day -- when Dick Gephardt was a political candidate talking about the need for trade agreements to have environmental and labor standards, it always seemed likr all Dick and his AFL-CIO allies were trying to do was to make it impossible to pass trade agreements.

Well, arguments have consequences, and now what seemed to be a bogus argument made rescue protectionism from Pat Buchanan, now seems to have grown sincere adherents over the years. And I have to wonder whether, if the US passes Obama-esque trade enforced "governance improvements" (ACK!), whether the US would relish being on the other side of such agreements. Would Europe insist we put in their labor protections, before they lower tariffs? Would they demand our adoption of Kyoto, before free trading with us?

Micromanagement of other countries via trade seems a real offensive thing to do via treaty. Which always makes me why those most scandalized by US unilateralism think it is US trade policy's job to force smaller weaker countries to adopt US standard for everything. Of course, the reason could be simple: all of this argument is still a bogus argument to rescue protectionism from Pat Buchanan.

 

JOE M.

5:59 PM ET

July 22, 2008

Drezner, did you see this

Drezner, did you see this article:
http://www.nytimes.com/2008/07/22/health/research/22tb.html

I wonder what you think about it. For the same of argument, as neither of us have analyzed the data, I prefer you to refrain from arguing that the numbers are incorrect and stick to the issue raised in the report.

Thanks,
joe

 

DONALD A. COFFIN

8:08 PM ET

July 22, 2008

I think it's also important

I think it's also important to take seriously arguments such as the one made recently by Jagdish Bhagwati that bilateral (or even small, multilateral) trade agreements (CAFTA, NAFTA, etc.) are not moves toward free trade. The original GATT was a free-trade agreement, because it led to all but universal reductions in tariffs (and some other trade restrictions), especially through the "most-favored nation" provisions of the GATT agreements. But I can see no particular reason to provide preferences to trade between the US, Mexico, and Canada, while excluding the Dominican Republic, Haiti, Somalia, Bangaladesh, Singapore,...

Where potential presidents Obama and McCain would stand on all this is anyone's guess.

My own sense is that Obama is more open to arguement, while McCais is more likely to flop around from one position to another.

 

SUSAN AARONSON

8:23 PM ET

July 22, 2008

Thanks for these comments

Thanks for these comments which I agree with. An op ed gives you precious little room to assert the nuances; and an election year gives Democrats little room to manoeuver against some constiuencies such as unions that have never met a trade agreement they like. that said, it is past time to reassess how we use trade to advance human rights. It is true, as Sylvia Ostry, my hero, pointed out, that the US has long used trade agreements to promote transparency, rule of law as well as to bully other nations. But I can tell you that other nations want to copy the US approach on labor rights. It is actually working. Here's why. It increases both the supply of good governance (policymakers know they have to put money and expertise into labor rights) and it bolsters the demand for labor rights (by mandating greater public participation related to labor and the environment..... That said, I don't think bullying is the best way to change hearts and minds and I don't approve of all this emphasis on bilateral trade agreements to the detriment of the WTO. Thanks for reprinting my piece. Susan

 

APPALLED MODERATE

10:00 PM ET

July 22, 2008

Mr. Coffin's comment is a

Mr. Coffin's comment is a "perfect world" argument. Given the difficulty in getting GATT past, and the failure of the Doha round (as painstakaking documented through this blog) bilateral arrangements might be the only way to get freer trade accomplished.

Of course, if Sen. Obama is elected, the boost in US soft-power and reputation might make things possible internationally that are foreclosed to this administration and likely Sen McCain's.

 

US GRANT

11:40 AM ET

July 23, 2008

It is truly an old argument.

It is truly an old argument. McCain is of the school that would use the opportunity of a trade agreement with the US as a soft power tool to encourage change. Regimes with little or no willingness to change (Cuba, etc.) have no chance of entering into these lucrative agreements. Obama is of the school that would use the trade agreement itself to foster change. The theory is that we should enter into the agreement with the other country then they will change. This is what I got from the post. As Dr. Drezner stated, that rings hollow from Obama since he supposedly does not like trage agreements in the first place. The argument also loses credibility when NAFTA is trotted out as an example of the latter school of trade agreement. Gosh, yes, we simply MUST force those evil Mexicans and Canadians to encourage labor rights and environmental protection or we will have to see about nullifying NAFTA. What baloney! Are there no genuine leaders left in this country? Are there no objective journalists left, either?

 

ZATHRAS

5:41 PM ET

July 23, 2008

I do not know if Sen. Obama

I do not know if Sen. Obama is a protectionist, but Susan Aaronson is pretty clearly a projectionist.

There are many such people where Obama is concerned, people with strong views themselves on specific subjects who are able to convince themselves that general language from the candidate reflects his agreement with them. In fairness, they have little else to go on, given that Obama has next to no record in most areas of public policy.

Now, having no record cuts both ways. There is virtually nothing we've seen throughout the length of this campaign to indicate that Obama has any desire to "...manoeuver against....unions that have never met a trade agreement they like." Industrial unions are one of the organized interests that dominate the Democratic Party, and Obama spent the primaries appealing for their support. He could, theoretically, forget all about that after he's elected. How likely is it that he will? You tell me.

In the hierarchy of "the groups" influential in the Democratic Party, industrial unions were pushed downward during the 1990s, partly because they had come to represent a smaller number of workers but also because other groups strongly supportive of trade liberalization (like the technology and entertainment industries) had organized well enough politically to influence the Clinton administration in the direction of completing work done under Republican Presidents on trade agreements with Mexico, China and Canada. Things have changed; the interests that helped get NAFTA and the China deal passed don't care as much about bilateral deals like the one with Colombia (Doha is a different story, but that is also a much more complicated negotiation), while industrial unions are keen to show they still matter in Democratic politics, and have looked for a sign of this from Democratic politicians. So, the Colombia deal gets a big thumbs-down from Democrats in Congress, including Obama.

Does Obama himself -- as opposed to campaign staff posting items on his web site -- have views on trade independent of the power balance among organized interests active in the Democratic Party? Like a lot of people, I'd like to believe that he does, but I take a hard line against projectionism.

 

SAVE_THE_RUSTBELT

3:15 AM ET

July 24, 2008

It really does not matter

It really does not matter much, both Obama and McCain will screw over American workers for various diplomatic and economic (spelled RICH) objectives.

Obama will use a little vaseline, McCain will not. The Robert Rubin wing of the Dems will keep the government in the pocket of Wall Street.

As far as renegotiating NAFTA, that is like trying to raise the Titanic, a useless effort many years to late.

 

Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University.

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