Hammering NAFTA

In Mexico City yesterday, signatories of the North American Free Trade Agreement (NAFTA) were highly critical of statements made by Democrats Hillary Clinton and Barack Obama during their Tuesday debate indicating they would "opt-out" of the trade pact.

"I will say we will opt out of NAFTA unless we renegotiate," said Clinton.

Obama concurred: "We should use the hammer of a potential opt-out."

But as Michael Luo points out today in The New York Times, despite the harsh rhetoric, the candidates have staked out nuanced positions on NAFTA. Luo quotes David Gergen, an adivser to President Bill Clinton as saying that Senator Clinton was "extremely enthusiastic" about the trade agreement while it was being crafted. As recently as 2004, she claimed that NAFTA had been "good for New York and good for America."

Obama, for his part, while consistently hammering NAFTA, has not differed from Senator Clinton at all when voting in the Senate on trade issues. As Eduardo Porter notes in his article, "Nafta Is a Sweet Deal, So Why Are They So Sour?," the real benefits from a dismantling of the agreement would accrue to powerful industrial and agricultural special interests "who survive behind protective barriers." Specifically, American Big Sugar and Mexican corn farmers.

So why are Clinton and Obama itching to prove just how much more opposed to NAFTA they are then the other guy?

It's Ohio, stupid. The hotly contested state has lost hundreds of thousands of manufacturing jobs in the last five years.

In Ohio, which has lost nearly 225,000 manufacturing jobs since 2001, NAFTA is an easy target. For many working-class Ohioans – and the voters Sens. Barack Obama and Hillary Rodham Clinton hope to win in Tuesday's critical primary – it stands as a symbol for much that troubles their state. Against that backdrop, say experts, it's not surprising it's become a political piñata.

Candidates tiptoe around trade

An unusual story from Bloomberg's Hans Nichols and Julianna Goldman this morning. Unusual how? Well, for starters, it treats trade as a complex issue with wide-ranging, and by no means uniform, consequences.

Democratic presidential hopefuls are tip-toeing around an inconvenient economic fact: Iowa and New Hampshire, the states hosting the 2008 campaign's first contests, benefit from free-trade policies that many residents nonetheless blame for lost jobs. Hillary Clinton, Barack Obama and John Edwards are seeking to avoid alienating workers from agriculture and other export- intensive industries while appealing to those from U.S.-focused businesses that have fallen behind, especially union members.

In the past I have accused presidential candidates from both parties of engaging in "Campaign Protectionism." I have also offered an explanation for the unsettling phenomenon of declining support for free trade in the U.S.. Namely, the benefits are disguised while the costs are highly visible. Opportunistic politicians have often exploited this perception gap to great advantage. Hillary Clinton, especially, has wavered on support for free trade, giving the appearance of a naked play for labor union votes. Along with Obama and Edwards, she opposed the U.S.-South Korea free-trade agreement. Now, in this Bloomberg report, some nuances emerge.

"You have winners and losers from trade,'' New York Senator Clinton said at a Dec. 13 debate in Iowa. People "are gaining because we're exporting,'' she said, while others have lost jobs.

The location of this remark is significant. Support for Edwards is strong in Iowa and he is known as a union favorite. Could this be the beginnings of a navigation back towards the center in anticipation a general election campaign?

Sometimes, as in New Hampshire, trade's 'winners and losers' live side-by-side, making it difficult to tailor the message to the audience. Moreover, the unique juxtaposition of the Iowa caucuses and New Hampshire primaries presents a difficult challenge to a candidate's desire for consistency. Nichols and Goldman cite poll numbers showing the two states are mirror images on free-trade: New Hamphire in favor, Iowa against.

Trade Triangulation?

Hillary Clinton says she will support the Peru FTA but not agreements with Colombia or Panama. From Bloomberg:

Clinton said she's opposing the Colombia deal because she's concerned about violence against trade unionists in the country and can't support the Panama agreement because the head of the nation's National Assembly is a fugitive from justice in the U.S.

"I have long said that we need smart trade policies that advance labor rights, the environment and our economic standing in the world,'' Clinton said in a statement released by her campaign. "As president, in my first months in office, I will take a time-out from new trade deals to assess their impact before going forward.''

It looks like we are starting to see a clearer picture of the future of U.S. trade policy (read the Policy Innovations article on this topic here)--something like trade triangulation.