Tuesday, February 9, 2010

Obama Trade Policy: A Simple Explanation

If you're looking for a simple reason for why US trade policy has moved from the White House's backseat to its trunk, look no further than a new Financial Times piece on the four key advisers driving the President's priorities and policies:
Pundits, Democratic lawmakers and opinion pollsters offer a smorgasbord of reasons – from Mr Obama’s decision to devote his first year in office to healthcare reform, to the president’s inability to convince voters he can “feel their [economic] pain”, to the apparent ungovernability of today’s Washington. All may indeed have contributed to the quandary in which Mr Obama finds himself. But those around him have a more specific diagnosis – and one that is striking in its uniformity. The Obama White House is geared for campaigning rather than governing, they say.

In dozens of interviews with his closest allies and friends in Washington – most of them given unattributably in order to protect their access to the Oval Office – each observes that the president draws on the advice of a very tight circle. The inner core consists of just four people – Rahm Emanuel, the pugnacious chief of staff; David Axelrod and Valerie Jarrett, his senior advisers; and Robert Gibbs, his communications chief.

Two, Mr Emanuel and Mr Axelrod, have box-like offices within spitting distance of the Oval Office. The president, who is the first to keep a BlackBerry, rarely holds a meeting, including on national security, without some or all of them present.
As anyone who follows US politics or understands Public Choice Theory can tell you, free trade - with its diffused benefits, concentrated harms, media fearmongering and foreign bogeymen - is not a big political winner here in America.  It constantly polls poorly, and most mainstream approaches to "selling trade" to the American public not only are tepid, but also can end up reinforcing, rather than assuaging, free trade criticism and concern.  As such, Presidents must have a principled dedication to trade liberalization policies in order to be willing to expend the political capital necessary to promote and implement those policies. (This is why Dan Ikenson and I spent 50 pages last year trying to forge a new approach to selling trade in America - too bad the President didn't listen.)

So if this team of Chicago politicos - with little or no dedication to, or understanding of, free trade and its myriad benefits, yet fully aware of its political problems - is really driving the President's policy choices, and if the administration's principled free traders (like Geithner, Goolsbee, Summers and Roemer) are locked in a West Wing closet somewhere, is it any wonder why US FTAs languish, the WTO's Doha Round sits without an semblance of American leadership, and our trade policies reflect a failed-yet-politically-safe mercantilist outlook?

(If you're still wondering about the answer to that question, just think back to 2007-08 and Candidate Obama's stance on NAFTA.)

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