Obama Trade Policy Turns Toward the Center

President Barack Obama seems to be adopting a pro-trade agenda.

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If Obama’s trade agenda becomes too liberalizing, he risks alienating lawmakers who were elected on “fair trade” platforms, vowing to mitigate the impact of trade on U.S. workers and change policy in Washington. He also risks angering one of his largest political constituencies and donors — organized labor — which is broadly wary of trade agreements due to the impact it has had on the shrinking U.S. workforce and the generally lower labor standards in low-cost manufacturing countries. Obama already is walking a delicate line with labor over the bailout of the car industry, which has seen Chrysler file for chapter 11 and perhaps general motors, leading to the expected loss of thousands of jobs.

Responding to perceptions the administration might be taking a pro-trade stance, Carol Guthrie, assistant USTR for public and media affairs, said, “The president’s trade policy agenda as released earlier this year has made clear that the U.S. intends to have a robust trade policy that works for America’s working families, opening markets around the world in order to create better paying jobs here at home at a time when those jobs are sorely needed due the economic crisis.

“That’s what Ambassador Kirk and the Office of the USTR have been tasked to do,” Guthrie added, “and we are moving forward on that task all the while making a concerted effort to address many Americans concerns about how our trade policy is formulated and making sure that existing and pending trade efforts reflect our values on important issues such as the rights of workers and the environment and the need to enforce American’s rights under trade policy.”

But trade experts noted the first inklings of a shift in tone on trade from the campaign trail to the Obama presidency came in the form of two recent announcements by the administration.

First, the Treasury Department declined to cite China for “manipulating” its currency in a biannual report released last month. Such a move could have potentially led to sanctions at the World Trade Organization if China failed to increase the value of its currency.

Obama railed against China on the campaign trail, saying he would crack down on what many claim is the country’s undervalued currency and any other trade infractions that broke global trade rules. Treasury’s decision to refrain from taking an aggressive stance against China disappointed some Capitol Hill lawmakers. This disappointed many in the domestic industry who expected Treasury to be tougher on China’s currency policy, especially after comments from Treasury Secretary Timothy Geithner during his confirmation hearing that he and Obama thought China was manipulating its currency. However, Obama followed that by saying “this is not a time for a trade war,” setting up the nonaction last month.

Less than a week later, Kirk indicated the administration would pivot away from a controversial campaign pledge made by Obama to renegotiate NAFTA. Kirk said the changes Obama supported, integrating external labor and environmental provisions, into the main text of the agreement could be achieved without reopening the agreement.

Kirk has also been actively voicing his intention to push forward pending trade pacts negotiated by the Bush administration with Panama, Colombia and South Korea, as well as an intention to work toward a successful conclusion to the Doha round of trade talks that faltered last year. (See related story on page 12).

Industry executives said they are heartened by the changes in Obama’s stance on trade.

“I am encouraged by President Obama’s change in tone and approach to trade compared with the campaign and the rhetoric in the fall,” said Mark Jaeger, senior vice president and general counsel for Jockey International. “The Obama administration seems to be signaling that the U.S. will maintain a leadership role in pursuing trade agreements.”

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