Obama’s “Free Trade” Follies: A Conversation With Global Trade Watch

Last month, just as populist protests against economic policies designed by and for America's top 1 percent were exploding across the country, the Obama administration pushed through Congress three long-stalled “free trade” agreements. These pro-corporate trade deals with Panama, Colombia and Korea were negotiated under George W. Bush, but long languished in Congress. In the past decade, increasing numbers of representatives have been elected on platforms criticizing North American Free Trade Agreement (NAFTA)-style agreements and instead promoting “fair trade.” Even Obama, as a candidate fending off Hillary Clinton in the Democratic primaries, once railed against such deals.

Why the president has flipped on the issue since taking office is something of a mystery. Analysis of the new trade deals shows that they are likely to cost more US jobs than they create (a net loss of 200,000 jobs, according to the Economic Policy Institute). And polls show that “free trade” is hardly a winning issue among voters.

Yet President Obama's “free trade” advocacy is hardly over. This past weekend, as Obama attended the Asia-Pacific Economic Cooperation conference in Honolulu, Hawaii, he pushed a nine-nation trans-Pacific trade pact based on the same model as the recently passed deals.

To figure out how trade politics have shaped up in this way, I spoke with Todd Tucker, research director of Public Citizen's Global Trade Watch. Tucker, along with Global Trade Watch director Lori Wallach, recently wrote in The American Prospect, “As he gears up for a difficult re-election campaign, President Obama risks losing key swing states that he won in 2008 because of a recent flip-flop on trade commitments.”

The two authors further noted, “These trade deals run exactly counter to Democrats' efforts to channel the anger of the Occupy Wall Street movement, and the contradiction was noticed.” In advance of the vote on the Panama, Colombia and Korea deals, protesters disrupted a meeting of the Democratic-run Senate Finance Committee, and marchers picketed Congressional offices in many states.

I asked Tucker about why the Obama administration would split its own party and court public anger in order to advance the “free trade” agenda.

Mark Engler: Global Trade Watch has done some great reports about “free trade” deals becoming less and less politically popular with voters, and about politicians winning seats by instead running on “fair trade” platforms. So, what was the political calculus for President Obama in passing the Panama, Colombia and Korea trade agreements?

Todd Tucker: I think that there were a few things going on. Primarily, the administration prioritized building camaraderie and linkage with the corporate community rather than voters. I think for some in the administration, that was probably a lot about fundraising. For other folks in the administration, I think it was just ideology – a feeling that they had a lot more in common with Wall Street than with some of the voters in Ohio or the Midwest who may be concerned about the impact of trade agreements.

In general, I sense that there's quite a bit of elitism in the administration. You saw this early in the 2008 election cycle, when you had Obama advisers such as Samantha Powers heaping scorn on Ohio's voters and their stance on NAFTA. A lot of those insiders look at voter opinion on trade deals as, at best, an uninformed emotional response and, at worst, as some sort of very backwards pathology. When Obama was giving his famous speech to San Francisco donors during the primary campaign, where he let slip that, “You have a lot of voters who are clinging to God and to guns,” he also mentioned anti-trade sentiment in the same breath.

ME: But, regardless of whatever elitism they might have, they're not stupid about getting votes. If anything, they're obsessed with these swing states. How do you think that enters into their political deliberations?

TT: I think they're often not as smart as we might think about how well the trade deals will go over with voters. Early in 2009, there was a proposal from the US Trade Representative to get the pending deals through Congress immediately. But, at that point, there were wiser political heads who were influential in the administration – people like David Axelrod, and Patrick Gaspard, and, surprisingly enough, Rahm Emanuel. The people running the political operation at the White House said, “This isn't smart.” The result was that there was no movement on the trade agreements for several years.

I think that something flipped at some point where the political folks lost some influence. Some groupings within the White House just see this through a foreign policy lens, of “Oh, our ally in Colombia needs this.” Along with them, you have those who are more in favor of the “free trade” model – a lot of the same people who had been active in the Clinton administration. They ultimately prevailed.

I don't think they were paying sufficient attention to how this was going to be perceived in the swing states. In the end, I think they were letting a programmatic inertia, inherited from the Bush administration, drive the agenda.

ME: There are serious reports – including a study by the government's own International Trade Commission – showing that these agreements will increase the US trade deficit, therefore costing domestic jobs. Do you think the White House just doesn't believe the jobs numbers or that it doesn't care?

TT: Shortly after President Obama's December 2010 trip to Korea, a talking point emerged that the trade deals were going to increase US exports and therefore support 70,000 jobs. As it turns out, the administration got that number by looking at just the export predictions – and not the import predictions. Why it was seen as even remotely credible, especially given the number of jobs that we need to be creating, is beyond me. That they would think that a policy that would create 70,000 jobs is even worth doing shows me that too many folks, including in the White House, don't have a good enough sense of the magnitude of the labor market problem they are facing.

ME: But do you think they really believe that the deals will create 70,000 jobs, or was that just a statistic created to sell the agreements politically?

TT: Someone at the White House knew what they were doing when they spliced off one page of the official projections from the subsequent page and didn't look at what the net impact was going to be. That was a decision to willfully distort their own research.

At Global Trade Watch, we tried every day with the reporters who were covering this issue to get this point across. We said, “Look, we're not asking you to take our economic projections versus their economic projections, or to engage in some sort of independent econometric investigation. All we're doing is saying that there are two pages in the government's own study that you need to look at in order to hold them accountable to the claims they're making.”

We put this to all the trade reporters, day after day, and hardly a one was willing to call the administration on its own trick. Whether it's because journalists are stretched too thin at these downsizing publications, or whether they're actually just being very partisan, for whatever reason the facts just never come out.

I think that if the facts had been consistently reported, we could have had a different outcome. The deals were sold – especially to a lot of the Tea Party freshmen – as something that we needed to do for job creation. If the representatives had realized, “Oh, wow, the government's own projections show that this is likely to increase the trade deficit and might cost jobs,” I think the tenor of the debate would have been a lot different.

ME: How did the administration get this through Congress, given the level of support for “fair trade” and opposition to NAFTA-style deals?

TT: First, the administration decided to make an unprecedented political calculation to go against the vast majority of its own political party.

Second, they got Tea Party freshmen to flip-flop on their own campaign commitments. I think the credit there goes to the Chamber of Commerce and the business lobbies. These groups went around, member by member, and gave elected officials highly biased and incorrect information about the likely impact of these deals – so much so that you even had Rand Paul, who campaigned against the “sovereignty-undermining World Trade Organization” and other trade agreements, vote for all three of these deals. It's incredible. A lot of the K Street lobbyists really earned their paychecks by rounding up the support.

ME: Do you personally consider this a betrayal by Obama, or did you expect it all along?

TT: In 2008, we saw a smart senator make a set of very far-reaching and specific commitments in his election campaign about changes he was going to make to trade policy. I think a lot of the Democratic base thought that was real. For him to throw the entirety of his campaign commitments on trade overboard is very disappointing. And it's a bit hard to understand, since it will come back to bite Democrats in the next election.

ME: Where do we go from here?

TT: The administration is moving forward with a major trans-Pacific agreement that's going to involve a lot of Asian and Latin American economies. From initial reports, it looks like this agreement is going to be as bad or worse than the most recent trade deals in terms of access to medicine, investment provisions, the environment and the corporate rights that are written into the agreement. So, I think the next step will involve working with allies in the affected countries to show that an alternative is possible. You need look no further than Obama's own campaign commitments to see an alternative.

As it relates to the political moment, I think that a lot of unions are taking close notes on which Democrats voted against workers' interests in these trade deals. Labor is going to be looking to reward or punish depending on how members voted. Certainly, the Democratic Congressional Campaign Committee is looking at a lot of the Tea Party members who flip-flopped on their campaign commitments. They are looking to run candidates against them who will be emphasizing the Tea Partiers' votes for off-shoring jobs. So, there's accountability work to be done.

But on the substance of trade, even if President Obama's not going to be the one to deliver change, there are a lot of folks that are working with the ideals he once espoused in mind. They are going to make it happen on way or another.