WASHINGTON — In a sign the 14-year-old North American Free Trade Agreement will remain in the spotlight in the presidential election, top policy advisers for the three leading presidential candidates defended their trade policies Thursday.
This story first appeared in the March 28, 2008 issue of WWD. Subscribe Today.
Senior advisers for Sens. Barack Obama (D., Ill.) and Hillary Rodham Clinton (D., N.Y.), who are locked in a tight race for the Democratic nomination, and Sen. John McCain, the presumptive Republican nominee, convened in one room in the nation’s capital to lay out the candidates’ positions on NAFTA, labor and environmental standards and aid for American workers who lose their jobs because of international trade. The event was sponsored by the Institute for Policy Innovation, a think tank based in Lewisville, Tex.
The advisers also touched briefly on China’s undervalued currency, which has been in the spotlight on Capitol Hill for the past two years.
Also on Thursday, Obama and Clinton offered competing economic plans on the campaign trail, as the Commerce Department reported that gross domestic product — the value of all goods and services produced in the U.S. — posted an anemic 0.6 percent annual rate increase in the fourth quarter of 2007, marking another sign the economy has weakened considerably.
At an appearance at a community college in Raleigh, N.C., Clinton proposed a $12.5 billion, five-year job retraining program, while Obama proposed relief for homeowners suffering from a crippling mortgage crisis and an additional $30 billion stimulus package to address the faltering U.S. economy.
At the same time, House Ways & Means Committee Democrats, led by chairman Charles Rangel (D., N.Y.), sent a letter to President Bush urging him to take a more aggressive stance against China’s currency, which critics claim is undervalued by as much as 40 percent, driving up the trade deficit and leading to job losses.
Clinton adviser Gary Gensler and Obama adviser Daniel Tarullo insisted the Democratic candidates are serious about renegotiating NAFTA to include stronger international labor and environmental provisions. They denied allegations by critics that it is just campaign rhetoric.
“Senator Clinton has been very clear and she is serious about this,” said Gensler. “She has said, ‘I will opt out of NAFTA unless we renegotiate.’ She believes and she is quite confident that as president she will be able do that.”
Tarullo said Obama has “a paper trail of continuity” on his position on NAFTA.
“We need to change [NAFTA] to put in binding labor and environmental standards,” he said, adding that those standards were shunted into a side agreement when NAFTA was enacted.
McCain adviser Doug Holtz-Eakin was alone among the three in opposing any NAFTA renegotiation.
“Demonizing trade agreements is a bad economic policy, it’s bad foreign policy,” said Holtz-Eakin. “Recent attempts to point to NAFTA as the source of grave difficulties in the U.S. manufacturing sector are at odds with any reputable study on the impact of the trade agreement on the U.S., Canada and Mexico. It sends the wrong signal to the number one and number two trading partners with the U.S. and makes our difficulties in establishing a U.S. presence in the globe even harder.”
As far as China being overshadowed by NAFTA in the debates, Gensler and Tarullo argued that their candidates have focused on China’s undervalued currency and both have pledged to address it. Obama and Clinton both support pending legislation in the Senate that would use trade remedy laws to impose higher duties on imported Chinese products if the country doesn’t reform its currency policy.
“Senator Obama is interested in reorienting trade policy,” Tarullo said. “There are opportunities and there are problems that have gone unaddressed, whether it is forms of subsidization or whether it be the larger backdrop of currency issues and currency manipulation.”
Gensler said after the forum that Clinton has spoken to both issues on the campaign trail.
“She feels [China’s undervalued currency] has disadvantaged Americans,” he said. “China has controlled their currency exchange rate and she feels as president that we have many things to discuss with the Chinese, many good parts in the relationship, and [then there’s] this one [undervalued currency], which she would be more focused on than the current administration.”
On pending trade pacts, Gensler and Tarullo said Clinton and Obama oppose free trade agreements with South Korea, Colombia and Panama, while Holtz-Eakin said McCain supports all three deals.