• Cover Story
• Table of
  Contents
• Contents By
  Topic
• Columns
  • Brownstein
  • Cook
  • Crook
  • Powers
  • Rauch
  • Stokes
  • Schneider
  • Taylor Jr.
• Regular
  Features
  • Hotline Extra
  • Inside Washington
  • Insiders Poll
  • K Street Corridor
  • People
  • The Week on the Hill

Special SeriesIssues & the Presidential CandidatesThis is part of a series examining the differences between Democrat Barack Obama and Republican John McCain on major issues in the presidential race.

• Graphic: Where They Stand
• Read the Entire Series

Opinion polls show weakening public support for free trade. Democrats are making tough-sounding promises to renegotiate the North American Free Trade Agreement. Trade frictions with China persist. The long-running Doha Round of multilateral negotiations is limping along. Action is pending in Congress on the bilateral Colombia and South Korea free-trade agreements. And GOP candidates are painting Democrats as head-in-the-sand protectionists.

Conditions seem to be ripe for putting trade front and center in the fall presidential campaign. Most experts say, however, that trade is likely to generate more smoke than fire, even though John McCain and Barack Obama have significant differences on the subject.

The consensus assumption in the Washington trade-policy community is that McCain would continue the Bush administration's initiatives. He is expected to pursue multilateral and bilateral trade liberalization (with his greater willingness to cut U.S. farm subsidies giving him more negotiating maneuverability), to apply just enough pressure on China to defuse congressional demands for tougher action, and to revamp aid for dislocated workers.

Obama has promised to improve labor and environmental standards in trade agreements, and a President Obama may want to tweak future deals accordingly. His campaign rhetoric has also emboldened trade critics in Congress, who may demand newly assertive action next year. But an Obama administration is more likely to attempt to shift the focus of the Washington trade debate in a less confrontational direction, by trying to allay Americans' anxiety about job security with domestic improvements in health care, education, job retraining, and the social safety net.

The media spilled a lot of ink during the spring Democratic primaries over Obama's promise to renegotiate NAFTA--the 1993 trade deal with Canada and Mexico--to bolster its safeguards for labor and to strengthen environmental standards. Yet the notable development in the primaries was the dog that did not bark. Despite an unprecedented U.S. trade deficit with China, the political bashing of Beijing was minimal compared with the criticism of Japan in the 1984, 1988, and 1992 campaigns.

Trade was not a major point of disagreement in the GOP presidential primaries either, except that McCain's straight talk on the issue probably cost him some votes. He told Michigan voters that the jobs they had lost to foreign competition would never come back. But he lost the Wolverine State to the more conservative and Michigan-born Mitt Romney for many reasons, not just trade.

Despite the focus on trade in the Democratic primaries, the issue rarely registers in public opinion polls as a specific entry on lists of pressing national concerns, even in the battleground Rust Belt states.

Nevertheless, when asked directly for their opinion on foreign trade, Americans are increasingly negative. Half of registered voters now think that trade threatens the economy, according to a CNN/Opinion Research poll in late June, the first time that a CNN survey found a majority of Americans holding this negative view. And the proportion of the population that thinks free trade leads to job losses grew from 48 percent in December 2006 to 61 percent in April 2008, according to surveys by the Pew Research Center.

Each candidate interprets these public sentiments as support for his trade views. "Both sides think this is a winning issue," said William Reinsch, president of the National Foreign Trade Council, a business lobby. "They think the people are with them. They can't both be right. And my gut tells me they are both wrong. For 20 years, people have been trying to make trade a campaign issue and they have never succeeded. At best, the debate will devolve into a discussion of American competitiveness, retraining, and dealing with the victims."

McCain traveled to Canada in June and Colombia in July to highlight his support for trade deals with those nations--agreements that Obama has criticized. Moreover, McCain often champions free trade on the campaign trail, even though his assertions arguably hurt him with some of the voters he is courting, including women, older Americans, and blue-collar workers who have traditionally been trade skeptics. Supporters ascribe McCain's outspokenness to his faith in a market-based economy and his internationalist views. His aides contend that his free-trade stance also makes good economic sense. "Export growth is saving us from a recession," said Douglas Holtz-Eakin, one of McCain's principal policy advisers. "That is an enormous success story."

Obama partisans say that their candidate is no less committed to open markets but that his stance on globalization is shaped by experience, not ideology. "The question is not whether you engage with the rest of the world," said Jason Furman, Obama's top economic adviser, "but how you engage. John McCain wants to continue George Bush's trade policies. And they have been part of an overall policy that has not worked for American workers."

Because of Obama's promise to renegotiate NAFTA, the deal has come to symbolize the differences between the two candidates on trade. "We have to defend [NAFTA] without equivocation in political debate," McCain said in Ottawa in June. "Demanding unilateral changes and threatening to abrogate an agreement that has increased trade and prosperity is nothing more than retreating behind protectionist walls."

In a June interview in Fortune magazine, Obama suggested that his anti-NAFTA rhetoric during the primary season may have been "overheated and amplified." His campaign's officials quickly clarified that statement, reasserting that their candidate had not changed his critique of the trade deal.

Despite the controversy surrounding Obama's NAFTA statements, few Washington trade experts expect this issue to gain much traction in an Obama administration. After all, renegotiating NAFTA would allow Canada and Mexico to raise their own concerns, which could be inimical to U.S. interests. "Do you really want to allow the Canadians to renegotiate the preferential access the United States has to Canadian energy?" Holtz-Eakin asked. And the Mexicans are likely to want restraints on American corn exports and greater access to U.S. highways for Mexican truckers, a controversial move that Obama has opposed in the Senate. Moreover, NAFTA renegotiation is not a priority for organized labor, which will focus its energies next year on making unionizing easier in the United States and on domestic measures to deal with the economic downturn.

Obama's supporters, and his opponents, predict that the NAFTA debate would likely lead to talks with the Canadians and Mexicans that might beef up the NAFTA side-letters covering labor and environmental standards, and to some commitment by the parties to more expeditiously handle complaints on these issues and to enforce judgments by NAFTA dispute panels when blue and green standards are found wanting.

Both business and labor sources say that investment issues may yet prove to be the wild card in such talks. NAFTA permits corporations to sue member governments if they believe that public policies, such as zoning, impede their investor rights under the agreement. Activist groups and state and local governments in the United States are uneasy with this provision, which could turn out to be the real NAFTA controversy in an Obama administration.

On China trade, the distinctions between the candidates are less stark. Both acknowledge that the United States benefits from economic engagement with China. And both have expressed concern about Chinese piracy of intellectual property and Beijing's failure to adequately police the health and safety risks of its exports. But Obama supports and McCain opposes legislation to pressure Beijing to appreciate its currency more rapidly. An Obama administration is also likely to ratchet up the Bush administration's efforts to knock down Chinese industrial subsidies.

Business lobbyists do not expect an Obama White House to launch a trade war with Beijing, however. Given Wall Street's continued fragility, Democrats will be no more likely than Republicans to want to spook global financial markets.

"I would hope that an Obama or a McCain administration would focus its attention on increasing U.S. access to China's market," said Calman Cohen, president of the Emergency Committee for American Trade, a group of America's largest exporters, "giving particular attention to how the Chinese are going to organize their economy and the Chinese efforts to support their domestic industries and restrict our ability to compete."

McCain has outspokenly supported both the Colombia and South Korea free-trade agreements, acknowledging Bogota's efforts in the drug war and Seoul's support in the Iraq war. A McCain administration would be expected to redouble Bush's efforts to win approval of both deals on Capitol Hill.

Obama has opposed both trade agreements. If the Democrats win the White House, business lobbyists hope (although it is probably a vain hope) that the current Congress will approve the Colombia agreement in a December lame-duck session to take this thorny issue off Obama's legislative agenda. Such a move would not sit well with organized labor. Resolving the South Korea impasse could prove even more difficult, given Korean farmers' violent opposition to the deal. A more likely scenario is for a President Obama to try to make both accords his own by "fixing" them--taking some time to at least cosmetically improve labor rights in Colombia and to gain more market access for U.S. automakers in Korea--before spending political capital to get congressional approval.

On multilateral trade negotiations, even if the Bush administration completes the outline of an agreement in the ongoing Doha Round, it will be up to the next administration to gain congressional passage. The likely drawn-out timetable for any Doha agreement may make it easier for an Obama White House to embrace the outcome of the Geneva negotiations later, rather than sooner, in his first term. And Congress has generally been more positive about global deals than about bilateral trade agreements.

Back at home, both candidates agree that globalization's victims need more government help. "Everything should be designed to help people get back to work," said McCain trade adviser Grant Aldonas, "to encourage employers to bring people back into the job market with a heavy emphasis on training and skills that allow them to succeed, along with their firms, in the global economy." To that end, McCain and Obama support broadening retraining benefits.

But both would go further. McCain would divert a portion of unemployment insurance tax payments into worker-controlled accounts. To combat the export of jobs, Obama has promised to eliminate the tax advantages granted to U.S. companies for their overseas operations.

In the fall campaign, the GOP will continue to attack Obama's trade stance, portraying him as backward-looking and a prisoner of organized labor. Democrats will characterize McCain's trade policy as insensitive to the human costs that Americans suffer when competing in a global economy. But any sound and fury over trade will likely be drowned out by the much broader campaign debate over the immediate and larger ills of the U.S. economy and over the wars in Iraq and Afghanistan.

Trade reached its zenith as a campaign concern in the primaries. This election will turn on other issues.