Barack Obama on Trade Policy

Last Updated : Jul 24, 2012

Summary

Barack Obama has remained consistent in his views on trade throughout his various levels of public office. His overall view is that the agreements that the US enters into are generally not favorable to the US as there is not enough protection for US workers, foreign workers, or for the environment. During the 2008 election, Senator Obama opposed free trade agreements such as NAFTA and CAFTA noting the unfair nature of the agreements towards the US. After taking office, President Obama delayed action on several free trade agreements already in place for over a year. He then renegotiated many aspects of those agreements and touted the reductions in tariffs accomplished and the equalization of labor and environment standards. These agreements includes ones with South Korea, Columbia, the Asia Pacific, and Panama. President Obama has also pursued action against China through the WTO numerous times in his first term in office for various trade infractions.

Record As State Senator

In 2004, State Senator Obama debated Alan Keyes for the US Senate seat. When the issue of trade was raised, State Senator Obama stated that the US needed to enforce its trade agreements more effectively, that it should challenge China at the WTO for currency manipulation, and that the US needed to change its tax code to provide incentives to companies investing in the US and take away incentives to companies that move jobs overseas.

Record as Senator

As a Senator there were two votes that Barack Obama participated in. In 2005, Senator Obama voted against CAFTA, the Central American Free Trade Agreement. The following year, he voted in favor of the Oman Free Trade Agreement.

In Senator Obama's book, the Audacity of Hope, he noted that the world had become so interconnected that it would be unreasonable to think that a system of protectionism could be established and maintained. As an example, he noted that a tariff on steel could provide temporary relief for steel manufacturers, but that evenually all companies that use steel in the US would suffer.

2008 Presidential Campaign

During an early campaign event for the AFL-CIO, Senator Obama stated that when the US negotiates trade deals, is should make sure there are strong labor and environmental provisions in those trade deals. He noted that they had to be enforceable on some level so that the US could go to the WTO (World Trade Organization) and say labor provisions are not being enforced.

In an early debate with Senator Clinton, Senator Obama stated that while some trade deals can be beneficial to the US, NAFTA was bad. He stated that NAFTA should be renegotiated under the threat of an opt-out, but he would not opt-out of the agreement himself if elected.

The pattern of opposing NAFTA was repeated often throughout the 2008 campaign, especially while Senator Obama was still competing against Senator Clinton, whose husband signed the agreement into law. Senator Obama blamed the agreement for the loss of 50,000 jobs in Ohio alone and repeatedly asserted that the lack of enforcable labor rules was partially to blame for the problems resulting from the deal.

South Korea, Columbian, and Panama Free Trade Agreements

When President Obama assumed office previously negotiated trade deals with South Korea, Panama, and Columbia were stalled in Congress. President Obama did not move on these items for over 18 months while the Congress addressed the Stimulus and other matters. Eventually, changes were made to all three of these deals and all three passed the Senate on the same day in October of 2011 and went into affect on March 15, 2012.

President Obama traveled to South Korea in late 2010 to renegotiate the South Korean deal. In December of that year, the Obama administration reached a deal with South Korea to rework the trade agreement. The administration released three facts sheets on the deal, including a fact sheet on the highlights of the bill, a fact sheet on the economic value of the deal, and a fact sheet on the impact to the US auto market. The economic value of the bill states that improvements were made to the deal in areas including: auto exports, manufacturing exports, services, agricultural, investment, financial, government procurement, labor rights, and environment commitments.

Specifically, South Korea agreed to lower tariffs on autos and allow a 12 month window between the introduction of new environment standards and their application on US imports. Previously, large tariffs made US auto imports more expensive and the South Korean government would introduce new standards after new models of US autos were released with metrics specifically targetted to disqualify US autos. The fact sheet also claims that the new agreement holds South Korea obligated to respect fundamental labor rights, not to weaken the laws that reflect those rights in any way, and to effectively enforce labor laws designed to ensure a level playing field for American workers to compete.

The Panama Free Trade Agreement was renegotiated by the Obama administration and the administration touted the benefits of the package in the areas of intellectual property, government bidding, and labor rights.

  • A Level Playing Field for U.S. Investors: The Agreement ensures U.S. investors in Panama are protected against discriminatory or unlawful treatment, providing a neutral, transparent mechanism for dispute settlement.
  • Greater Protection for Intellectual Property Rights: The Agreement provides for better enforcement of intellectual property rights, including stronger protections for patents, trademarks and test data.
  • Commitments to Protect Labor Rights and the Environment: The Agreement commits both Parties to adopt, maintain, and enforce the five fundamental labor rights stated in the 1998 ILO Declaration on Fundamental
  • Principles and Rights at Work. Both Parties also commit to implement and enforce laws needed to fulfill their obligations under covered multilateral environmental agreements.
  • Fair and Open Government Procurement: Under the Agreement, U.S. suppliers are guaranteed nondiscriminatory treatment in bidding on Panamanian government procurement. An Open and Competitive Telecommunications Market: Panama has agreed to a regulatory framework that guarantees U.S. telecom companies access to Panamanian networks on reasonable, non-discriminatory terms.

The Columbian Free Trade agreement was similarly renegotiated before it went into affect. The Obama administration issued a number of papers heralding the benefits of the agreement, including papers on the overall benefits of the agreement, the benefits of the labor protections in that agreement, and the benefits to the agricultural exports.

Bring Jobs Home Act

In July of 2012, President Obama supported a bill that was introduced in the Senate by Debbie Stabenow of Michigan. Called the Bring Jobs Home Act, S 3364 would have granted businesses a tax credit for up to 20% of insourcing expenses incurred for eliminating a business located outside the United States and relocating it within the United States. It also would have denied a tax deduction for outsourcing expenses incurred in relocating a U.S. business outside the United States. It required an increase in the taxpayer's employment of full-time employees in the United States in order to claim the tax credit for insourcing expenses. It was unable to overcome a filibuster in the Senate.

 

Obama - Keyes Debate

In 2004, Barack Obama was campaigning for the US Senate seat in Illinois. In a radio debate with Ambassador Alan Keyes, he spoke about the US trade policy and stated that we needed to enforce our trade agreements more effectively

 

The Audacity of Hope

In one of his books, The Audacity of Hope, President Obama states that the level of technology and the integration of societies makes it virtually impossible for the US to enact isolationist economic policies. He notes late protectionist tariffs would only cause harm to US manufacturers in the long run.

 

Campaign Event - AFL-CIO

In May of 2007, Senator Obama appeared at an AFL-CIO forum in the beginning of the 2008 Presidential campaign. He was asked about NAFTA and how the people could trust him when it was a previous Democratic President that passed NAFTA.

 

Obama - Clinton Debate

In 2008, Senator Obama and Senator Clinton debated the results of NAFTA and whether or not they would opt out of NAFTA. Senator Obama stated that while some trade deals can be beneficial to the US, NAFTA was bad. He stated that NAFTA should be renegotiated under the threat of an opt-out, but he would not opt-out of the agreement.

 

Criticism of NAFTA

In February of 2008, Senator Obama was campaigning against Senator Clinton for the Presidency and spoke about his opposition to NAFTA and his belief that it has been detrimental to the US economy. Despite stating that the agreement had caused thousands of lost jobs, he said that repealing the agreement would result in a larger job loss.

While speaking at a campaign event in February of 2008, President Obama was critical of NAFTA and other free trade agreements. He noted that he was critical of the agreement prior to running for the Presidency.

In November of 2008, Senator Obama spoke about NAFTA during several debates. He stated that he opposed the agreement because enforceable measures were not present to ensure the labor and environmental standards that the US was held to, were present in Mexico.

 

 

South Korean Free Trade Agreement

Upon entering office, President Obama inherited a pending trade deal with South Korea which was initiated by President Bush. In November of 2010, President Obama traveled to South Korea to further negotiate the agreement and possibly complete it within weeks. He issued a letter in anticipation of the deal.

The two main areas of concern were cattle and cars. South Korea enjoyed no restrictions in selling it's cars in the US, but had environmental standards which were more strict than US standards and would force US automakers to reconfigure their models before they could be sold in South Korea. South Korea also did not allow cattle which was slaughtered when it was more than 30 months old to be sold in that country - a reaction to mad cow disease.

In December of 2010, the Obama administration announced that it had resolved the outstanding issues with the South Korean free trade agreement and that Congress would soon be given an agreement to ratify. Not long after that announcement, the White House began to disseminate information as to the terms of the new deal. This included a fact sheet on the highlights of the bill, a fact sheet on the economic value of the deal, and a fact sheet on the impact to the US auto market.

The fact sheet on the bill claims that the South Korean act will add 70,000 jobs and add 10 to 11 billion dollars to US exports. The fact sheet notes the following items that are addressed in the agreements.

  • More market access for American auto workers
  • Economic benefits for Americans because of access to South Korean markets
  • A more level playing field for manufacturers and farmers
  • More products sold to South Korea in manufacturing, services, and agriculture
  • A more competitive environment for American goods overseas

The fact sheet concerning the economic benefits of the South Korean Free Trade Agreement is shown below in full. The sheet highlights 8 areas in which the free trade agreement improves upon previous agreements. The Obama administration also issued statements through the Trade Ambassador Ron Kirk noting the signing of the trade agreements and the dates they went into affect, and President Obama spoke in praise of the agreement.

 

Panama Free Trade Agreement

The Panama Free Trade Agreement was also renegotiated by the Obama administration. The administration also released a fact sheet noting several benefits of the agreement. These benefits include a reduction and removal of a large number of tariffs and making it easier for American companies to compete for Panama construction projects.

The fact sheet claimed that U.S. industrial and agricultural goods faced an average Panamanian tariff of 7 percent and 15 percent, respectively, with some tariffs as high as 81 percent and 260 percent, respectively. The agreement would remove over 87 percent of U.S. exports of consumer and industrial products to Panama became duty-free immediately. Remaining tariffs will be phased out over ten years under the agreement. Over half of current U.S. agricultural trade will also receive immediate duty-free treatment, with most of the remaining tariffs to be eliminated within 15 years.

 The Agreement ensures U.S. investors in Panama are protected against discriminatory or unlawful treatment, providing a neutral, transparent mechanism for dispute settlement. The Agreement provides for better enforcement of intellectual property rights, including stronger protections for patents, trademarks and test data. The Agreement commits both Parties to adopt, maintain, and enforce the five fundamental labor rights stated in the 1998 ILO Declaration on Fundamental Principles and Rights at Work. Both Parties also commit to implement and enforce laws needed to fulfill their obligations under covered multilateral environmental agreements. Under the Agreement, U.S. suppliers are guaranteed nondiscriminatory treatment in bidding on Panamanian government procurement.

 

Columbian Free Trade Agreement

Before the Columbian Free Trade agreement went into affect, the Obama administration issued a number of papers heralding the benefits of the agreement. These papers highlight the history of the US-Columbia trade relationship, the benefits of the Columbian Free Trade Agreement, labor protections in that agreement, and benefits to the agricultural exports.

 

Voting Record

Oman Free Trade Agreement

In June of 2006, the Senate passed the Oman Free Trade Agreement 60-34. The agreement conferred free trade status with the country of Oman in the middle-east. Barack Obama voted in favor of the Oman Free Trade Agreement.

Barack Obama voted in favor of the Oman Free Trade Agreement.

Central American Free Trade Agreement (CAFTA)

In July of 2005, the Central American Free Trade Agreement was passed by the Senate 55-45. The agreement opened free trade agreements with the Dominican Republic, El Salvador, Costa Rica, Guatemala, Honduras, and Nicaragua. Barack Obama voted against CAFTA.

Barack Obama voted against CAFTA.

 

Sponsored and Cosponsored Legislation

This representative has not been identified as sponsoring or cosponsoring significant legislation related to this title.

References

[1] Website: ABC News Article: Obama Knocks Clinton, But Wouldn't Ax NAFTA Author: JAKE TAPPER Accessed on: 11/22/2010

[2] Website: The Economist Article: Obama is the free trader free traders have been waiting for Author: The Economist - Blog Accessed on: 11/22/2010

[3] Website: The Washington Post Article: U.S., South Korea fail to reach free-trade deal Author: Howard Schneider and Scott Wilson Accessed on: 11/22/2010

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