Concern over mixed messages on trade

In The Audacity of Hope, Barack Obama’s book, there is a passage in which the president-elect recounts a conversation about globalisation with Robert Rubin, Treasury secretary under Bill Clinton and an ardent free trader.

“It was hard to deny Rubin’s basic insight,” he wrote. “We can try to slow globalisation, but we can’t stop it. The US economy is now so integrated with the rest of the world ... that it’s even hard to imagine, much less [to] enforce, an effective regime of protectionism.”

On the campaign trail, however, Mr Obama often took a much tougher stance, singling out trade policy as one of the features of George W. Bush’s presidency that had failed the middle-class.

He has pledged to renegotiate the North American Free Trade Agreement; to rebalance the economic relationship with China; and to beef up the administration’s tools to challenge unfair trade.

His advisers have signalled any decision to open further new markets would come only after economic policies intended to benefit the middle-class were in place.

Thea Lee, policy director of the AFL-CIO union, which supported Mr Obama, expects him to keep his promises. “I think we will see a big shift in approach.”

Critics of Mr Obama say these changes could send the US spiralling towards economic isolationism. Some raise the spectre of the 1930 Smoot-Hawley Act, when the US ramped up tariffs on many imported goods, deepening the Great Depression.

But in Washington trade policy circles, few regard these fears as entirely justified. Experts say any “timeout” on further trade liberalisation would simply extend what congressional Democrats have forced by refusing to move along with bilateral agreements with South Korea and Colombia.

Seoul on Wednesday warned Mr Obama against pushing for a renegotiation of the countries’ trade pact.

Trade experts say Mr Obama could commit early on to concluding the Doha round of trade talks, in the knowledge that the important discussions will take place at the end of next year – after elections in India and turnover in the European Commission.

“I don’t think Senator Obama is knee-jerk anything,” says Brian Pomper, a Democratic trade lobbyist at Parven Pomper Strategies in Washington.

Yet nervousness remains. “[His] books hint that he’s a free trader, while his Senate votes suggest otherwise. But what’s most concerning has been campaign rhetoric that at times seems anti-trade,” said Bill Lane, Caterpillar’s Washington director for governmental affairs.