A little ‘pro-trade’ will go a long way

On the international economic scene, President Obama’s first year featured more style than substance. He was warmly welcomed by world leaders. There were grand proclamations of intent covering free trade, coordinated fiscal action, financial regulation, and the environment. And the G-8 was supplanted by the G-20.

Yet most of the tricky substantive questions were kicked down the road. The administration did not pass any trade agreements, nor even make any significant advances. Countries pretty much did what they liked on the fiscal front, each balancing concerns about joblessness and creditworthiness in its own way. The administration could barely persuade its own party’s committee chairman of its plans for financial regulation, much less the rest of the world. And we can simply take note of the outcome of Copenhagen.

So what can the administration do moving forward? One of the problems with kicking issues down the road is that they rarely get easier and interlocutors get impatient. The international impasses over fiscal action, financial regulation, and the environment are rooted in the various countries’ domestic political constraints and will not soon be overcome.

Trade is a little different. Yes, there are some significant differences that have stalled the Doha round of global talks. But the Obama administration might make significant headway, if it could just overcome its own domestic political hurdles. The president has spoken of support for Doha and of interest in a trans-pacific trade agreement. For other countries to take him seriously, however, he’ll need to establish his bona fides. He could do it by passing the pending FTA with South Korea. 

At a blow, he would lend credibility to his claims of being pro-trade and market-oriented, he would help secure a major U.S. role in Asia, he would have an instance of bipartisan cooperation that could play well with voters, and he would demonstrate his independence from labor unions.

Let me be clear — the labor unions would hate this. The president would also have to face off against a growing anti-trade chorus within the Democratic Party. But the president said on his visit to Korea that he’d like to get the deal done, sooner or later. Doing it sooner could send a dramatic and positive signal and clear the way for greater accomplishments in the rest of his term.