A
s the presidential candidates zero in on the economy as one of the central themes of the
2008 campaign, international trade and job creation are high on their agendas. While it is early in
the campaign and the candidates will fine-tune and modify their positions – depending on what
audience they are talking to at the time – they already have taken some positions of particular
interest to the US textile industry. Sens. John McCain and Barack Obama have significant
differences in their approaches to dealing with international trade and job preservation issues.
Virtually every political candidate, whether running for the presidency or Congress, espouses “free
and fair trade,” but those terms mean different things to different people.
Sen. McCain is more of a free trader than Sen. Obama, and McCain has labeled Obama “the most
protectionist candidate that the Democratic party has ever fielded.”
McCain voted for the North America Free Trade Agreement (NAFTA); permanent normal trade
relations for China that led to China’s accession to the World Trade Organization (WTO); most
favored nation treatment of Vietnam; the Andean Trade Preference Act with Peru, Colombia, Ecuador
and Bolivia; the Central America-Dominican Republic Free Trade Agreement (CAFTA-DR); and
legislation giving the president the “fast track” negotiating authority that was the key to some 25
free trade agreements the Bush administration has negotiated. While Obama was not in Congress when
NAFTA was approved, he has called for it to be renegotiated, as he believes the benefits of the
accord were oversold.
When NAFTA was being debated in Congress, it had the general support of US textile
manufacturers, but there were some dissenters. Textile industry officials now believe NAFTA has
been successful in promoting increased hemispheric trade, but they say its full potential has not
been reached because of competition from Chinese and other Far Eastern manufacturers.
Obama has promised to get together with the leaders of Mexico and Canada in an effort to
work out an agreement that would be favorable to American workers. However, renegotiation is easier
said than done in view of the many companies that have invested heavily in Mexico to take advantage
of the NAFTA provisions. US textile manufacturers for the most part still support the agreement,
and retailers also like it. On the other hand, organized labor sees it as a bust that has cost
hundreds of thousands of American jobs.
McCain is a staunch defender of NAFTA, and he recently said, “Demanding unilateral changes
and threatening to abrogate an agreement that has increased trade and prosperity is nothing more
than retreating behind protectionist walls.”
When it comes to new trade initiatives, both candidates support free trade agreements, but
each sees them in a different light. McCain points out that 95 percent of the world’s customers are
outside the United States, and says globalization is an opportunity for American workers now and in
the future.
“We need to be at the table when rules of access are negotiated in order to protect American
interests,” McCain said. He promises to support bilateral, multilateral and regional trade
agreements to reduce trade barriers and create markets for US goods. He does not believe trade
agreements should include environmental and worker rights provisions.
On the other hand, Obama believes labor and environmental standards are important elements
in international trade agreements. For that reason, he voted against CAFTA-DR because he does not
think it meets his criteria to spread good labor and environmental standards around the world. He
supports the WTO, but believes it must do more to enforce trade agreements and stop countries from
using unfair government subsidies to promote their exports.
Job Protection
When it comes to protecting US jobs, both candidates believe strongly in retraining and
education. Obama says he will work to update adjustment assistance to workers who lose their jobs
to import competition by extending the assistance to service industries. He also would create
flexible education accounts to help retrain workers and anticipate problems by providing retraining
assistance for workers before they lose their jobs in sectors of the economy that are vulnerable to
economic dislocation. He also supports increasing the minimum wage.
McCain also stresses the importance of education and retraining to make US workers
competitive in the global economy. In addition, he supports flexible training accounts to help
workers learn new skills. He would strengthen community college and other training programs for
displaced workers.
China Trade
The candidates have been notably quiet about trade with China despite a $256 billion
US-China trade deficit. Although they have expressed their concerns about “countries that illegally
subsidize their exports, manipulate their currency and protect their home markets,” China is rarely
singled out.
Obama has endorsed legislation that would use anti-dumping and countervailing duty laws to
impose punitive tariffs on countries that manipulate their currencies – an issue of major concern
to US textile manufacturers – and he says “it is long past the time for the United States to
confront the issue of unfair trade with China.” McCain is not a cosponsor of the currency
legislation.
Beyond that, there has been little mention of problems with China trade, which is
understandable in a political campaign. Many large multinational corporations have made substantial
investments in China, and because candidates rely on some of those companies for major campaign
contributions, they are not very likely to do anything to alienate China. In addition, major US
retailers are among the largest importers of goods from China, including textiles and apparel, and
they don’t want to rock the boat.
Obama says he will pressure the WTO to take measures to enforce trade agreements and stop
countries from continuing unfair government subsidies to their exporting industries, and continue
to maintain non-tariff barriers to imports. McCain also sees a need for the WTO to do a better job
of enforcing trade agreements.
Major problems continue to plague the Doha Round of trade liberalization negotiations at the
WTO. While some of the major participants, including the United States, still say it is possible to
successfully conclude the talks by the end-of-the-year target, the chances of that happening are
slim. The developed and developing countries remain poles apart on the questions of how and when to
cut tariffs, and they continue to fret over government subsidies, particularly those for
agriculture products. A five-year US Farm Bill passed by Congress this year has created additional
problems, as a number of countries have stated that it runs counter to the goals of the Doha Round.
The European Union’s top trade official, Peter Mandelson, recently said “the cracks have become
chasms.”
Nonetheless, Deputy US Trade Representative Peter Allgeier, while noting that negotiations
have reached a “critical stage,” said the United States plans to continue working to achieve a
successful outcome. He believes the Doha Round can generate “meaningful trade flows and new
economic opportunities for citizens throughout the world.”
Following a recent round of bilateral Strategic Economic Dialogue discussions in Annapolis,
Md., officials from both China and the United States said they have renewed their commitment to
work for a successful Doha Round.
The Doha Round Remains Bogged Down
Major problems continue to plague the Doha Round of trade liberalization negotiations at the
WTO. While some of the major participants, including the United States, still say it is possible to
successfully conclude the talks by the end-of-the-year target, the chances of that happening are
slim. The developed and developing countries remain poles apart on the questions of how and when to
cut tariffs, and they continue to fret over government subsidies, particularly those for
agriculture products. A five-year US Farm Bill passed by Congress this year has created additional
problems, as a number of countries have stated that it runs counter to the goals of the Doha Round.
The European Union’s top trade official, Peter Mandelson, recently said “the cracks have become
chasms.”
Nonetheless, Deputy US Trade Representative Peter Allgeier, while noting that negotiations
have reached a “critical stage,” said the United States plans to continue working to achieve a
successful outcome. He believes the Doha Round can generate “meaningful trade flows and new
economic opportunities for citizens throughout the world.” Following a recent round of
bilateral Strategic Economic Dialogue discussions in Annapolis, Md., officials from both China and
the United States said they have renewed their commitment to work for a successful Doha Round.
July/August 2008
