When is the perfect the enemy of the good on trade?
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 ...
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?
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?
Daniel W. Drezner is a professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University and co-host of the Space the Nation podcast. Twitter: @dandrezner
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