Obama and Constitutional Principals Or The Bill Of Rights

The lack of a clear vision for U.S. trade policy, combined with the reality that congressional Democrats particularly in the House of Representatives are deeply conflicted on trade and globalization, has produced a series of embarrassing, contradictory signals and gaffes by newly appointed Obama administration officials (not least USTR Kirk). The Obama administration's approach has led one perceptive observer, Craig VanGrasstek of Harvard's Kennedy School of Government, to label Obama a "passive free trade[r]." VanGrasstek concludes that the administration "has shown that it will take action to avoid being labeled protectionist, but it has yet to demonstrate any eagerness to make trade liberalization an important part of its economic recovery program."

This Outlook will review the trade policy actions of the first six months of the Obama administration and look for thematic implications. It will also discuss the particularly difficult constraints the administration faces in its trade dealings with Congress. Finally, it will consider what this portends for trade policy in the near future.

In last year's presidential election, Barack Obama took perhaps the most skeptical stance toward trade of any major candidate since Ross Perot. In Ohio, in March 2008, he proclaimed that the North American Free Trade Agreement (NAFTA) had cost the United States 1 million jobs.[3] He later vowed to withdraw from the agreement if Mexico and Canada refused to renegotiate its terms. He criticized U.S. multinational corporations for investment abroad and promised to address the practice through tax policy. Obama seemed all too ready to bow to the strong protectionist, or economic nationalist, elements of the Democratic Party.

As the general election approached, however, then-senator Obama tried to moderate his position. Without explicitly reversing himself, he spoke of his earlier rhetoric as "amplified and overheated." This allowed for some useful ambiguity going into the fall campaign. Those who were opposed to globalization could point to Obama's speeches and pledges to take action against trade. Those who favored a more internationalist approach could point to the tempering of his rhetoric and his basic devotion to warm multilateral relations.

This ambiguity was no less useful once Obama took office. The president had a range of ambitious economic proposals he wished to pursue, from a stimulus package to health care to reining in greenhouse gas emissions. Any action on trade threatened to dissolve the ambiguity and split key coalitions. Thus, the administration might well have liked to ignore trade for quite a while.

While it might have wanted to downplay trade, the Obama administration was not afforded that luxury. In January even before the administration formally took office the House of Representatives, as part of a broad stimulus package, included language that would have limited stimulus spending on certain products notably steel to goods made in America. The theory, initially endorsed by Vice President Joseph Biden, was that the purpose of the stimulus was to create American jobs, so why allow imports? The plan, which soon expanded to include manufactures more generally, generated strong opposition ...