BIZ Online NGLCC

The substantial increase in international trade in the last decade is either contributing to the U.S. economy's current woes or it's the nation's best chance to pull out of today's economic slump, observers say.

That such disparate views on globalization and international trade exist today points out how difficult it is to chart a political course for trade and its future. This fact is not lost on either of the presidential candidates, whose views reflect these stark differences.

Republican Sen. John McCain champions his party's commitment to opening U.S. markets to greater foreign trade and exports, which he believes will create more jobs rather than endanger existing ones. McCain also says that he would reduce barriers on trade by engaging in more joint efforts and formal agreements with other countries.

Meanwhile, Democratic Sen. Barack Obama has said that he believes in "fair trade" rather than free trade. He vows to pressure the World Trade Organization (WTO) to stop unfair subsidies by foreign nations for certain industries and to lift non-tariff barriers on U.S. exports. He has signaled his strong support for extending federal assistance for manufacturing workers displaced by global trade to cover service industry workers—a key sticking point in the breakdown of recent congressional trade talks.

Pending Trade Agreements

Sen. Obama would likely apply the brakes to the three free trade agreements with Panama, Colombia and South Korea still pending in Congress. He would find little if any objections from the Democratic Congress, which has been reluctant to sign on to agreements in the last year, particularly those with Colombia and South Korea, which have been opposed by labor unions and automobile companies, respectively.

Sen. McCain would likely be forced to use the bully pulpit of the presidency to win over reluctant Democrats to the free trade cause. While many people believe pressure from a President McCain would ensure the easy passage of agreements with Colombia and Panama, disagreements over South Korea's market barriers to U.S.-made automobiles would likely hold up swift passage.

NAFTA

The North American Free Trade Agreement, or NAFTA, is a major bone of contention between the two candidates. The 1997 pact among the United States, Canada and Mexico has been praised for boosting U.S. agriculture, textile, apparel and manufacturing industries, which were able to substantially increase exports and, in some cases, streamline costs by relocating plants to Mexico. But that meant lost jobs at home, with estimates varying from the hundreds of thousands to up to one million.

Obama would amend NAFTA to force American firms that move their operations to Mexico to observe U.S. labor and environmental safeguards, making it more difficult to export American jobs. John McCain opposes any changes to the treaty and has promised to honor NAFTA and all other international trade agreements as they are.

Labor & Environmental Standards

Economists and international trade experts say that while greater international trade brings enormous benefits to the economy, it must be paired with efforts to protect the environment, regulate capital markets and enforce food safety—an approach that the United States has historically balked at.

So far, John McCain has embraced a classical view of free trade and has declined to tie issues like the environment to global economic policy. Obama rejects the status quo on free trade, and is willing to link a host of political priorities to trade policy.

Each path carries its own risks and rewards.

An Obama-style trade policy could spur international movement on labor rights, the environment and consumer safety. But in the war against worldwide economic collapse, Barack Obama might have to pick his battles carefully to avoid antagonizing foreign nations that may feel these efforts at dictating labor and environmental standards are intrusive.

It's likely Sen. McCain would continue the Bush administration's efforts to increase the number of regional trade agreements as well as move more forcefully to establish multilateral agreements through the WTO, thus establishing more avenues for trade and stronger rules to encourage regulated trade between nations.