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Good deals for the country have also meant job losses
Journal Graphic by Nicholas Weir
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Published: July 11, 2008
WASHINGTON - This story is part of an occasional series examining key issues in the presidential campaign.
Recent international trade deals have given Americans easy access to cheap clothes and DVD players while sending manufacturing jobs in North Carolina, Ohio and Michigan overseas.
John McCain loves these deals. Barack Obama doesn't.
With talk of the souring economy dominating the presidential election, free trade has emerged as a key debate point in the battle for the White House.
"There's a stark contrast between the two major presidential candidates on trade, probably the starkest we've seen in decades," said Dan Griswold, the director of the Center for Trade Policy Studies at the Cato Institute, a libertarian research center that supports free trade.
"McCain is an unabashed free-trader," he said. "Obama has a much more skeptical view about trade liberalization." In nearly 30 years in Congress, McCain has supported every major trade deal, including the North American Free Trade Agreement, which dropped economic barriers with Mexico and Canada in 1994, and the Central American Free Trade Agreement in 2005.
During trips to Mexico and Canada this summer, McCain reiterated his strong support for NAFTA in the face of calls from some Democrats and union leaders to renegotiate the deal.
And on a swing through Colombia this month, McCain pressed for a new trade pact with Colombia. The pact is currently stalled in Congress. As president, he said, he would like to see similar trade agreements cover all of North America and South America.
"Ninety-five percent of the world's consumers live outside the United States. Our future prosperity depends on opening more of these markets, not closing them," McCain said Monday at a town-hall meeting in Denver.
Obama, who joined the Senate in 2004, did not get a chance to vote on NAFTA but has said that he would have voted against it. He opposes the pending deal with Colombia, he said earlier this year, because it lacks sufficient protection for Colombia's labor unions.
Obama voted against CAFTA in 2005, saying that the deal did not do enough to guarantee that Central American manufacturers would adhere to the same environmental and labor standards as U.S.-based plants.
The trade deals severely reduced or eliminated tariffs on products imported into the United States. Factory workers in Latin America earn less than those in the United States, which makes many goods produced overseas cheaper than those produced here.
For this reason, union leaders have severely criticized NAFTA and other trade deals for providing an incentive for U.S. companies to move plants overseas.
A 2006 analysis by the Economic Policy Institute, a research center that has argued for retooling several trade deals, found that NAFTA alone caused the loss of 1 million jobs, mostly in the manufacturing sector. Among the hardest-hit states: Michigan, Indiana, Mississippi, Tennessee, North Carolina and Ohio.
During the primaries in those states and others, both Obama and Hillary Clinton often criticized NAFTA and other trade deals as hurtful to workers, and called for renegotiating or even abandoning the deals.
"I think we should use the hammer of a potential opt-out as leverage," Obama said during a debate with Clinton in February.
But in an interview with Fortune magazine after the primaries ended in June, Obama softened his stance on NAFTA. He backed away from opting out of the deals, but said he wants to talk to Mexican and Canadian leaders to see "how we can make this work for all people."
The softening, combined with Obama's votes in favor of smaller, separate trade deals with Peru and Oman, make it harder for trade watchers to envision trade policy under an Obama administration than in a McCain administration.
In addition to changing NAFTA, Obama also says he would "pressure the World Trade Organization" to enforce existing trade agreements, according to his Web site. Like McCain, Obama says he would improve programs aimed at retraining laid-off workers.
He cited deficiencies in retraining programs when he explained his vote against CAFTA in 2005.
"I've tried to tell these workers the truth -- that these jobs aren't coming back, that globalization is here to stay, and that they will have to train more and learn more to get the new jobs of tomorrow," he wrote in an op-ed in the Chicago Tribune at the time.
"But when they wonder how they will get this training and this education ... I cannot look them in the eyes and tell them that their government is doing a single thing about these problems," he wrote.
Free-traders acknowledge that trade deals such as NAFTA and CAFTA have cost textile and furniture jobs in North Carolina and automotive jobs in Michigan.
But, they argue, service-based industries and U.S. companies that export goods have benefited, while low-wage workers have been able to access cheaper goods.
Several recent economic studies of the impact of NAFTA have found the trade deal has had a positive impact on the country as a whole, but such an argument has not gained traction in parts of the country where the minuses have outweighed the pluses.
Take Michigan. Political analysts blamed McCain's early primary-season loss there to Mitt Romney, in part on McCain's position that automotive jobs lost to foreign competition would never return.
Carly Fiorina, a top economic adviser to McCain's campaign, acknowledged the challenge that the candidate faces in regions skeptical of free-trade deals. McCain supports expanding retraining programs for workers displaced by trade deals, she said this week.
"While free trade is very important to economic growth in this country, he has also been saying we need to help those who have been left behind," she said.
Tony Avirgan, who writes about trade policy for the Economic Policy Institute, said he expects McCain's stance on trade to be a liability in the key Rust Belt swing states of Ohio, Pennsylvania and Michigan.
"McCain says there's nothing wrong -- full speed ahead. Obama has recognized that there have been negative aspects to NAFTA," he said.
■ Sean Mussenden can be reached at 202-662-7668 or at smussenden@mediageneral.com.
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