With the U.S. economy still struggling and unemployment stubbornly above 8%, neither President Barack Obama nor his Republican presidential rival Mitt Romney, are keen to talk about their foreign trade policies.
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And in the dwindling days before the November presidential and Congressional elections, with the two candidates more or less tied in the polls, the last thing the average American voter wants to hear about is their trade platforms.
“Globalization isn’t necessarily sliced bread for Americans,” says Gary Hufbauer, at the Washington-based Peterson Institute for International Economics. This is despite the fact that the United States is the world’s largest trading nation, with about 13% of its economic output linked directly to exports.
Yet, for a growing number of U.S. businesses, international expansion and foreign exports is the answer to a feeble domestic market. In 2010, U.S. exports reached about $1.3 trillion and imports some $1.9 trillion. America’s 10 closest trading partners are Canada, China, Mexico, Japan, Germany, the United Kingdom, South Korea, France, Taiwan and Brazil.
In addition to membership in the World Trade Organization, the U.S. has free trade agreements with 19 countries: Australia , Bahrain, Canada and Mexico through NAFTA, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, Israel, Morocco, Nicaragua, Oman, Peru and Singapore.
During his first term, Obama signed three free trade agreements ― with Panama, South Korea and Colombia – and is currently negotiating the much broader Trans-Pacific Partnership (TPP) agreement. There are nine countries in the TPP, with Canada and Mexico expected to join before the end of the year, and South Korea and Japan possibly joining next year.
While both candidates have publicly said they support free trade, their trade philosophies pretty much follow party lines.
“Obama has been good on trade policy, but not great,” says Chris Sands, a trade analyst with the Hudson Institute in Washington. “He supports free trade but is sympathetic to protectionism for domestic political reasons, [such as] Buy American, subsidies and intervention for national champions like GM, use of regulation and litigation against foreign banks.”
While President Obama never sought Trade Promotion Authority – the key tool used by presidents to negotiate trade agreements relatively free of Congressional meddling – he is nevertheless pushing exports as a way of bolstering the domestic economy.
“Mitt Romney is a by-the-book and by-the-rules man,” Sands says. “He supports free markets at home and abroad, and seems genuinely offended by China’s cheating.”
At the top of Romney’s trade agenda is the creation of the Reagan Economic Zone, named after former President Ronald Reagan, who attempted something similar in the early 1980s. The zone would be open to nations committed to free enterprise and open markets. According to Romney’s written platform, this zone “will serve as a powerful engine for opening markets to our goods and services.”
Romney would also reinstate the president’s Trade Promotion Authority and pursue trade agreements with the European Union and emerging powerhouses such as Brazil and India.
Other trade positions from the two presidential candidates:
On domestic jobs:
Obama says: He wants to double exports by 2014, which would create as many as two million American jobs
Romney says: “For every additional $1 billion in U.S. exports, another 5,000 jobs are created in the United States,” he wrote in his Believe in America Plan released September, 2011
Obama says: He pledges to create more transition help for workers displaced by free trade and to enforce stronger labor, safety and environmental standards in new trade deals.
Romney says: “The fewer the barriers to cross-border commerce, the more economic growth we enjoy and the greater number of American jobs being brought into being.”
Obama says: He wants to ensure trade agreements are not a “one-way street,” and is pushing China on intellectual property rights.
Romney says: “If we want the Chinese to play by the rules, we must be willing to say ‘no more’ to a relationship that too often benefits them and harms us.” He would: increase resources to prevent the illegal entry of goods; pursue litigation against unfair trade practices; designate China a currency manipulator and impose countervailing duties; discontinue U.S. government procurement from China until China commits to [global trading rules.]
While Obama has brought a number of unfair trade cases against China to the World Trade Organization, he has held off declaring China a currency manipulator. “Romney has clearly promised to name China [a trade] enemy,” says Hufbauer. “His rhetoric is very much more in your face.”
Still, no matter which candidate is the victor in the election, U.S. trade policy will hinge on how quickly the U.S. economy recovers in coming months and years, says Sands.
“Under Obama, I expect slow going on trade to continue unless and until the economy turns around,” he says.
“Under Romney, I expect trade policy to be more conflictual,” Sands adds. “[There will be] more pressure on China, India, Brazil and Russia to behave according to the rules of global trade.”
In any event, for either Obama or Romney, there will be problems with Congress over the next four years, says Hufbauer. “For either president, I expect the Senate to throw up serious roadblocks.”