Understanding Obama's Trade Stance...

...is quite challenging. As we've generally come to expect from Democratic contenders for America's top office, Obama strongly courted organized labor prior to softening his trade policies upon reaching office. Think of his Treasury Secretary Geithner wimping out on labeling China a currency manipulator or Obama "renegotiating NAFTA" (whatever that means). Nevertheless, there have been clear reminders to the effect that Obama cannot have it both ways in appeasing both the union crowd which has played a fairly large role in getting him elected and the more conventional "third way"-ish elements in his cabinet (and party) such as Larry Summers and the aforementioned Tim Geithner.

While preparing the posts below, I came across a very informative primer on Obama's trade policy which shows ambivalence overall given the contending forces he must deal with. (It's authored by Claude Barfield and Philip Levy of the AEI; in their recent histories, they helped craft US trade policy during the Bush administration.) To a non-negligible extent, these countervailing influences account for the ongoing schizophrenia in America's attitude towards trade. I of course suggest that you read the whole thing, though here are some of the juicier parts. First is their characterization of Obama as a "passive free trader" [!]:

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."

Good stuff, and that's only the opening paragraph. There's also mention of the Obama administration trying to waylay trade policy, although things will have to be better defined soon given the upcoming G-20 meeting in Pittsburgh where the Chinese will surely take issue with the recent tire tariffs. Also, remember that he's about to address the AFL-CIO:

Like most incoming administrations, in order to give itself breathing room, the Obama administration announced in January that it would undertake a full-scale review of U.S. trade policy before moving ahead with new initiatives or continuing or abandoning existing ones. In speeches and congressional hearings, administration officials stressed three initial priorities for early resolution: dealing with pending FTAs; a new, stronger enforcement policy for U.S. trade rules; and progress on the Doha round. To date, the record in each area has been spotty and replete with contradictions. Meanwhile, the much-vaunted trade policy review was finished in early June without any public announcement or major policy statement. The White House now promises that the president will deliver an important trade policy speech before he hosts the G20 Summit in Pittsburgh in September.

Speaking of which, the authors were aware that the Chinese would respond very negatively to tire tariffs well before the current mishap (this missive was written in August):

This means that, under China's accession agreement joining the WTO, Obama has the discretion to impose substantial trade restrictions on imports of Chinese tires. He must reach a decision by September. As a candidate, Obama criticized the Bush administration's failure to do so, alleging that the decision was made on ideological grounds...Meanwhile, Chinese leaders have made very clear that they would take great offense at new trade barriers imposed upon them.

And here is the conclusion:

In fairness to Obama, only six months have elapsed since his inauguration, and his record on trade policy, as in many other areas, is far from complete. That said, there are several observations and conclusions that can tentatively be drawn from the experiences and events of the first months.

First, for decades, parochial protectionist concerns in Congress have been balanced against free-trade presidents advocating the national interest. To date, Obama's style of leadership has hampered his ability to pursue this balancing role. In key incidents--"Buy America," the Mexican trucking mess, and climate change legislation--the White House's decision to hang back and first let Congress have its way resulted in protectionist outcomes. Further, the president's reticence has emboldened the already strong antiglobal Democratic faction in the House of Representatives. While this group does not control congressional trade policy, it showed its strength by enlisting over one hundred House Democrats to sign on to the protectionist TRADE Act of 2009 (double the number of Democrats who supported the bill in the last Congress).

Second, behind Congress's antiglobalization votes lies a formidable array of interest groups that Obama will have to face down or buy off with other measures, if he truly wants to advance a more competitive, open-market agenda, either through the WTO and the Doha round or through trade-liberalizing bilateral and regional agreements. The AFL-CIO and other powerful independent unions remain unrelenting in their opposition to further trade and investment liberalization, unless accompanied by trade and investment-destroying social and economic regulations and restrictions.

Third, Secretary of State Hillary Clinton has argued that economic diplomacy is a central element in advancing U.S. political and security interests. Obama must act soon to resolve the tensions between global leadership aspirations and rising economic nationalism at home. Whatever the economic impacts of the Korea and Colombia FTAs, they pale beside the political and security consequences of a U.S. rebuff and slapdown of these key regional democratic allies. "Yes we can" must take on an international economic dimension if the president wants the United States to retain its role as a leader of the free world.

Well hey, these guys are on the AEI payroll after all, so USA#1-style rah-rah is still the order of the day even with a Democrat if office.