While Barack Obama's election was welcomed across the Atlantic and around the world, a persistent note of concern could be heard throughout the campaign from America's trading partners regarding the likely direction of U.S. trade policy under an Obama administration. A long bruising primary battle fought out in part in rustbelt areas of the United States, and aimed at appealing to organized labor and other key Democratic constituencies, saw the re-appearance of trade as a scapegoat for economic discontent.
Having secured the Democratic Party nomination, Obama's rhetoric on trade modulated considerably, but trade re-emerged as an issue in the closing days of the election in a battery of attack-ads run by Democratic challengers against Republican incumbents which may have helped tip several close races. A new cadre of anti-trade Democrats will be seated in the next Congress, and they appear to have wind in their sails. According to the Pew Global Attitudes survey, public support for trade in the United States dipped from 78 percent in 2002 to 53 percent last year -- the lowest level of support found in any of the 23 countries surveyed. The repercussions of the financial crisis and onset of recession will likely increase the protectionist backlash, as the last thing struggling workers and producers want is more intense world competition.
Given this domestic political environment, what might Obama's trade policy look like? What kind of prominence will be given to trade among the host of competing policy priorities for the new Administration as it takes office? What do Obama's chosen nominees for cabinet secretary posts with influence over trade policy say about the direction he is likely to pursue? And what concerns and aspirations are the various stakeholders in the U.S. trade debate currently articulating? Finally, what might the impact of a prospective lack of leadership from the United States be on the world trading system, which has been quietly in crisis for some time?
After seven years of negotiations, the Doha Round of trade negotiations at the World Trade Organization continues to limp along without any end in sight. World trade is contracting in the general economic slowdown, and countries around the world are already beginning to raise trade barriers. Bailouts of domestic sectors such as the automotive industry risk setting off beggar-thy-neighbor trade wars of a kind last seen in the 1930s. The latest analyses show that under current WTO disciplines some $1 trillion in annual trade is potentially at risk, living on borrowed time in the gap between bound and applied tariff rates and thus reversible at any moment and without any compensation to those whose trade is impacted.
The Bush Administration failed to restore any measure of bipartisanship to U.S. trade policy, practicing a kind of complacent multilateralism on trade made all the more unconvincing because of the lack of multilateral cooperation in other areas.
But the Obama Administration, professedly more multilateralist by instinct, will likely face a severe test of these credentials on the trade front -- one with significant economic implications for the United States, for U.S. trading partners, and for the global economy as a whole.
