Sunday 19 Aug 2018 | 22:39 | SYDNEY
Sunday 19 Aug 2018 | 22:39 | SYDNEY

Trading places


Michael Fullilove


27 October 2008 08:13

In a recent post, Sam Roggeveen criticised Barack Obama’s protectionism. It’s one of the topics I address in the Lowy Institute Analysis I released a couple of days ago, ‘Hope or Glory? The Presidential Election, U.S. Foreign Policy and Australia’.

There’s no question Obama’s free market rhetoric has slipped during the presidential campaign. He was highly critical of the North American Free Trade Agreement (NAFTA) during the primary season, labelling it ‘a mistake’. He opposes the pending South Korea and Colombia FTAs in their current form and warns that FTAs should be required to meet tougher environmental and labour standards.

By contrast, McCain is remarkably consistent free trader. His boast that he is ‘the biggest free marketer and free trader that you will ever see’ is not an idle one: he may never have seen a free trade agreement he couldn’t vote for. He defends free trade even to its enemies, telling autoworkers in Michigan (a Republican primary that he went on to lose): ‘Some of the jobs that have left the state of Michigan are not coming back. They are not. And I am sorry to tell you that.’

Still, I think it’s hard to paint Obama convincingly as a protectionist. Everything we know about Obama – his comfort with globalization, his preference for multilateralism, his distaste for overt nationalism, and the identity of his economic advisers – points to him being an instinctive free trader. Shortly after defeating Senator Clinton, Obama walked back his position, admitting that ‘sometimes during campaigns the rhetoric gets overheated and amplified.’

On trade more than most international policy questions, the Congress can be just as influential as the president. From a free trader’s perspective, therefore, the operative question is not which candidate is the purer of the two, but rather, who would be in a better position to tone down the protectionist impulses of the next Congress, which is likely to be strongly Democratic? Opinions on this are divided. Some say that only a Democratic president with ‘fair trade’ credentials would be able to prevail upon congressional Democrats to create majorities in favour of free trade – as President Bill Clinton did in the 1990s. Others argue this underestimates the extent to which Democratic feelings have soured on free trade, and that McCain would be more likely and better placed to establish a bipartisan coalition in favour of it.